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In, NB: adding value in attractive co-investment sector and CM day: 6 November fireworks, we noted that NBPE is uniquely focused on the PE co-investment sector. In our view, this sector has appealing return, cashflow, asset selection, risk management, and PE manager access characteristics. Looking forward to 2025, we expect the key themes to be i) growing deal activity, including exits, ii) an increase in the correlation between operating company EBITDA growth and NAV growth, iii) NB platform’s unique benefits generating high levels of investment opportunities, and iv) multiple levers for value creation, meaning that bottom-line return expectations are unchanged.

  • December estimated NAV: The estimated end-2024 NAV, announced 28 January, was $26.91/£21.49, a total return of -2.2% in the month. Yet, 92% of the portfolio is still valued at 30 September, with updated year-end valuations only coming in over the next few weeks. Last year, the change was small.
  • Buybacks: NBPE announced its first buyback since February 2024 on 9 January 2025. Shares bought back are being cancelled rather than added to the 3.15m already held in treasury. Additional returns to investors include dividends with a 1H’25 dividend of $0.47, announced on 14 January.
  • Valuation: The 29% discount is in line with direct peers (average 30% exc. HGT). It rose sharply in 2022, to well above historical levels (10%-15%). We detail in our thematic notes what may lead to a rerating back to these levels. The discount appears to be absolutely and relatively anomalous.
  • Risks: Sentiment to costs, the cycle (including higher-for-longer interest rates), modest residual listed holdings following 2020-21 IPOs, 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 current strategy’s benefits may not be fully appreciated.
  • Investment summary: With 98% 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 long-term, market-beating PE sector. The company and PE manager selection have proved resilient in downturns, and continued premiums on exit should give investors comfort in the NAV. Its portfolio is diversified by name, sector, PE manager and geographically, but it has enough concentration for individual investments to add value. The discount is anomalous with long-term, market-beating returns.
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