×

We reviewed NBPE’s business model in our initiation, Co-investments generating superior performance. We noted the high-secular-growth and downside-resilient investee companies, the value added by General Partners (GPs), the good co-investing cashflow and return profile and the value added by NB. The 2023 results, reviewed in our May note, Wider operating company EBITDA margins in 2023, confirmed all these trends. The key numbers were i) NAV p/sh. $28.07 (£22.02), ii) private portfolio +5.3% in 2023 on a const. ccy. basis, iii) EV/LTM EBITDA 14.9x, and iv) debt/EBITDA 5.3x. The portfolio company weighted average LTM growth in revenue and EBITDA was 11.4% and 15.2%, respectively, with margins widening.

  • Model offsetting rate pressure: In our note, Value creation in a higher-rate environment, we examined why NBPE’s GP return targets were unchanged in a higher-rate environment. That note explored how they were going to be achieved and, in 2023, the GPs delivered superior EBITDA growth.
  • May factsheet: NBPE delivered a 0.6% monthly $ NAV total return (three-year annualised 7%), 2024 realisations $122m and investments $75m (May portfolio value $1.3bn). There is $380m of available liquidity and the trust is at 101% investment level as a % of NAV. Action, the largest holding, is 6.8% of fair value.
  • Valuation: The 26% discount is in line with most direct peers (average 27% exc. HGT), but it rose sharply in 2022, to twice historical levels (10%-15%). Our notes consider what may lead to a reversion to these levels. The discount appears absolutely and relatively anomalous with a resilient, conservative NAV.
  • Risks: Sentiment to costs, the cycle, modest residual positions in highly rated listed companies following IPOs in 2020-21, the duration of the discount and valuation are the key issues for NBPE, as they are across the whole listed PE sector. However, they are sentiment issues, and do not reflect reality, as we see it. The benefits from the current strategy may not yet be fully appreciated.
  • Investment summary: With 97% of the portfolio invested in direct equity, co-investments, NBPE is the most focused listed vehicle in the low-cost, attractive co-investment subsector of the market-beating PE sector. The company and GP selection have proved resilient in downturns, and consistent, large premiums on exit should give investors comfort in the NAV. Its portfolio is diversified by name, sector, GP and geographically, but it has enough concentration for individual investments to add value. The discount is anomalous with long-term, market-beating returns.
Download the full report

Request a meeting

If you'd like to be introduced to the team at NB Private Equity Partners, get in touch.

Request a meeting
Download the full report