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NB Private Equity Partners Ltd. — Net Asset Value 2017
Sep 28, 2017
6280_iss_2017-09-28_ea0429d7-9a7e-4006-b494-3b2ddac9405c.pdf
Net Asset Value
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FUND OBJECTIVE
NB Private Equity Partners Limited ("NBPE" or the "Company") is a closed-end investment company registered under the laws of Guernsey managed by NB Alternatives Advisers LLC (the "Investment Manager"), an indirect wholly owned subsidiary of Neuberger Berman Group LLC.
Our investment objective is to produce attractive returns on capital by investing directly into Private Equity backed companies with a focus on capital efficient strategies while managing risk through portfolio diversification. NBPE pursues diversification across capital structure, asset class, vintage year, geography, industry and sponsor. MANAGER COMMENTARY
- FUND MANAGER: NB ALTERNATIVES
- 30 years private equity investing experience
- Approximately \$50 billion of commitments managed
- Stable team with over 120 investment professionals with global presence
- Investments with over 200 private equity firms
During August, NBPE funded new investments in the debt and equity of OB Hospitalist, a healthcare service provider. NBPE also funded its previously announced investment in ByLight, a provider of IT cyber solutions.
In terms of distributions, NBPE received \$26.8 million from equity co-investments, of which \$24.6 million was received as a result of the sale of Ortholite and Patheon; additional Patheon proceeds were received subsequent to this reporting period. In addition, NBPE received \$2.3 million of distributions from partial equity co-investment realisations, including \$1.7 million from Black Knight Financial Services (NYSE: BKFS) and The Warranty Group. Income investments distributed \$1.9 million of principal and interest to NBPE during August.
On 31 August 2017, NBPE paid the second 2017 semi-annual dividend of \$0.25 (£0.19) per Share, for a total 2017 dividend payment of \$0.50 (£0.39) per Share.
Funds Direct Equity Investments Income Investments
NET ASSET VALUE DEVELOPMENT
(\$ in millions, unless otherwise noted)
| 31 August | 31 July 2017 | |
|---|---|---|
| Summary of NAV of Ordinary Shares | (Unaudited) | (Unaudited) |
| Direct Investments | ||
| Direct Equity Investments | \$533.1 | \$552.8 |
| Income Investments | \$135.4 | \$131.0 |
| Total Direct Investments | \$668.5 | \$683.8 |
| Fund Investments | \$126.8 | \$127.7 |
| Total Private Equity Investments | \$795.3 | \$811.5 |
| Cash and Cash Equivalents | \$71.5 | \$61.4 |
| Credit Facility Outstanding | - | |
| 2022 ZDP Share Liability, incl. Forward Currency Contract | (\$67.1) | (\$68.4) |
| Dividend Payable | - | (\$12.2) |
| Net Other Assets (Liabilities), incl. Minority Interest | (\$3.4) | \$0.1 |
| Net Asset Value | \$796.3 | \$792.4 |
| Net Asset Value per Share * | \$16.32 | \$16.24 |
| Net Asset Value per Share Including 2017 Dividends * | \$16.82 | \$16.74 |
| Net Asset Value (GBP per Share)6 | £12.62 | £12.29 |
| Closing Share Price (London Stock Exchange) | £10.14 | £10.26 |
| Premium (Discount) | (19.6%) | (16.5%) |
| Summary of Private Equity Exposure | ||
| Estimated Fair Value of Private Equity Investments | \$795.3 | \$811.5 |
| Adjusted Unfunded Private Equity Commitments** | \$19.9 | \$20.7 |
| Adjusted Total Private Equity Exposure | \$815.2 | \$832.2 |
| Private Equity Investment Level | 100% | 102% |
| Cash + Undrawn Committed Credit Facility | \$221.5 | \$211.4 |
| Adjusted Commitment Cover Ratio** | 1113% | 1021% |
| (In £) | ||
| Net Asset Value of the 2017 ZDP Shares*** | £51.9 | £51.7 |
| 2022 ZDP Net Asset Value per Share *** | 103.84p | 103.50p |
| Closing Share Price (LSE) for 2022 ZDP shares | 108.25p | 107.00p |
| Premium (Discount) | 4.2% | 3.4% |
PORTFOLIO ACTIVITY 5 BALANCE SHEET DEVELOPMENT
ORDINARY SHARE INFORMATION
| Trading Symbol: | NBPE | |
|---|---|---|
| Exchanges: | Euronext & LSE | |
| Euronext Admission Date: | 25 July 2007 | |
| LSE Admission Date: | 30 June 2009 | |
| Traded Currency: | GBP (LSE); USD (Euronext) | |
| Bloomberg Ticker: | NBPE NA, NBPE LN | |
| Reuters Ticker: | NBPE.AS, NBPE.L | |
| ISIN: | GG00B1ZBD492 | |
| Common: | 030991001 | |
| Semi-annual Dividends:3 | \$0.25 per share | |
| Annualised Dividend Yield:3 | 3.7% on share price, 3.1% on NAV |
ZDP SHARE INFORMATION
| Trading Symbol: | NBPP |
|---|---|
| Exchanges: | LSE |
| Admission Date: | 16 September 2016 |
| Base Currency: | GBP |
| Bloomberg Ticker: | NBPP:LN |
| Reuters: | NBPEO.L |
| ISIN: | G00BD0FRW63 |
| SEDOL: | BD0FRW6 |
| GRY at Issuance: | 4.0% |
| Share Life: | 30 September 2022 |
| Capital Entitlement: | 126.74p |
*As of 31 August 2017 and 31 July 2017, there were 48,790,564 class A ordinary shares and 10,000 class B ordinary shares outstanding, with 3,150,408 class A ordinary shares held in treasury. ** Unfunded commitments are adjusted for amounts the Manager believes are unlikely to be called. As of 31 August 2017 (31 July), unadjusted unfunded commitments are \$254.2 million (\$ 257.0 million), total private equity exposure is \$1.1 billion (\$1.1 billion) and the unadjusted commitment coverage ratio is 87.1% (82.2%). *** As of 31 August 2017 and 31 July 2017 there were 50,000,000 2022 ZDP shares outstanding. Note: Numbers may not sum due to rounding.
ASSET CLASS AND INVESTMENT TYPE BY FAIR VALUE YEAR OF INVESTMENT BY FAIR VALUE
GEOGRAPHY BY FAIR VALUE INDUSTRY BY FAIR VALUE
DIVERSIFICATION BY INVESTMENT TYPE
\$0 \$100 \$200 \$300 \$400 \$500 \$600 \$700 \$800 \$900
(\$'s in millions)
\$126.8
Funds Direct Equity Investments Income Investments
\$533.1
\$135.4
\$795.3
Top 3 Income Investments by NBPE NAV (excluding credit
- opportunities investments)
- Linxens: \$10.0 million
- Schumacher: \$9.7 million
- GCA Services: \$9.1 million
Top 3 Direct Equity Investments by NBPE NAV
- Extraction Oil & Gas (NASDAQ: XOG): \$21.4 million
- USI Insurance: \$20.0 million
- ProAmpac: \$19.1 million
Top 3 Fund Investments by NBPE NAV
- Catalyst Fund III: \$14.2 million
- NB Crossroads Fund XVIII Mid-cap Buyout: \$12.4 million
- Bertram Growth Capital II: \$9.6 million
VALUATION METHODOLOGY
The Company carries its private direct equity investments on its books at fair value using the best information it has reasonably available to determine or estimate fair value. Publicly traded securities are valued based on quoted prices as of the last day of the relevant period less discounts to reflect legal restrictions, if any, that affect marketability. The Company determines such values for publicly traded securities held directly as well as known public positions held in the underlying private direct equity investments on a look-through basis. The Company estimates fair value for private interests based on a methodology that begins with the most recent information available from the general partner of the underlying fund or the lead investor of a direct equity investment, and considers subsequent transactions, such as drawdowns or distributions, as well as other information judged to be reliable that reports or indicates valuation changes, including realizations and other portfolio company events. The Company proactively re-values its investments before it has received updated information from the fund manager or lead investor if it becomes aware of material events that justify a change in valuation. If the Company concludes that it is probable an investment will be sold, the Company will adjust the fair value to the amount the Company expects to realize from the sale, net of transaction costs.
For debt investments, the Company estimates the enterprise value of each portfolio company and compares such amount to the total amount of such portfolio company's debt, as well as the level of debt senior to our interest in such portfolio company. Estimates of enterprise value are based on a specific measure (such as EBITDA, free cash flow, net income, book value or NAV) believed to be most relevant for the given portfolio company and compares this metric in relation to comparable company valuations (market trading and transactions) based on the same metric. In determining the enterprise value, the Company will further consider the portfolio companies' acquisition price, credit metrics, historical and projected operational and financial performance, liquidity as well as industry trends, general economic conditions, scale and competitive advantages along with other factors deemed relevant. Valuation adjustments are made if estimated enterprise value does not support the value of the debt security in which the Company is invested and securities senior to NBPE's position.
If the principal repayment of debt and any accrued interest is supported by the enterprise value analysis described above, the Company will next consider current market conditions including pricing quotations for the same security and yields for similar investments. To the extent market quotations for the security are available, the Company will take into account current pricing and liquidity. Liquidity may be estimated by the spread between bid and offer prices and other available measures of market liquidity, including number and size of recent trades and liquidity scores. If the Company believes market yields for similar investments have changed substantially since the pricing of our security, the Company will perform a discounted cash flow analysis, based on the expected future cash flows of the debt securities and current market rates. The Company will also consider the maturity of the investment, compliance with covenants and ability to pay cash interest when estimating the fair value of our debt investment.
TRADING VOLUME
During the month of August, NBPE's aggregate trading volume on the London Stock Exchange, Euronext Amsterdam, and over-the-counter trading platforms was 710,239 Class A ordinary shares, which represents an average daily trading volume of approximately 32,284 Class A ordinary shares.
INVESTMENT MANAGER REGISTERED OFFICE
NB Alternatives Advisers LLC 325 N. Saint Paul Street Suite 4900 Dallas, TX 75201
Email: [email protected] Tel: +1.214.647.9593 Fax:+1.214.647.9501
NB Private Equity Partners Limited P.O. Box 225 Heritage Hall, Le Marchant Street www.nbprivateequitypartners.com St. Peter Port, Guernsey GY1 4HY Channel Islands Tel.+44-(0)1481.716.000 Fax.+44-(0)1481.728.452
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- Figures provided are unaudited and subject to change. Certain numbers may not total due to rounding.
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- Other includes realised gains, investment income not classified as yield income, expenses, the ZDP liability and value changes to other assets and liabilities.
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- NBPE declared a \$0.25 per Share dividend on 20 July 2017, paid on 31 August 2017 (£0.19, based on a GBP/USD rate of \$1.299). On an annualised basis, this dividend payment represents a dividend yield of 3.1% based on the estimated 31 August 2017 NAV and 3.7% based on the London Stock Exchange closing price of
- £10.14 on 31 August 2017. 4. The diversification analysis by asset class and investment type is based on the fair value of underlying direct/co-investments and fund investments. The diversification analysis by year of investment, geography and industry is based on the diversification of underlying portfolio company investments at fair value as estimated by the Investment Manager. The year of investment is calculated at the portfolio company level and is defined as the date of capital deployment into a particular underlying investment. The diversification by year of investment also includes an allocation of net cash flows and valuation adjustments made since financial statements were last received from the investment sponsor. Accordingly, the actual diversification of the Company's investment portfolio and the diversification of the Company's investment portfolio on an ongoing basis may vary from the foregoing information.
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- Direct equity investment diversification includes all equity, including associated equity from income investments.
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- Based on 31 August 2017 GBP/USD FX of \$1.293 and 31 July 2017 GBP/USD FX of \$1.322.
This document is not intended to be an investment advertisement or sales instrument; it constitutes neither an offer nor an attempt to solicit offers for the securities described herein. This report was prepared using financial information contained in NBPE's books and records as of the reporting date. This information is believed to be accurate but has not been audited by a third party. This report describes past performance, which may not be indicative of future results. None of NBPE or the Investment Manager accepts any liability for actions taken on the basis of the information provided.
NBPE is registered with the Dutch Authority for the Financial Markets as a collective investment scheme which may offer participations in The Netherlands pursuant to article 2:66 of the Financial Markets Supervision Act (Wet op het financieel toezicht). All investments are subject to risk. Past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results.