NB Private Equity Partners (NBPE) is unique in the listed private equity (LPE) sector, given that the portfolio consists primarily of co-investments. It is now almost entirely invested in the equity of private companies. Given the range and quality of managers that NBPE invests with, the portfolio can be seen as a good representation of the top tier of US and global private equity deals.
NBPE is currently invested in a total of 120 companies, accessed through over 55 different third party private equity sponsors. The team hopes to increasingly focus its investments, making fewer but somewhat larger investments. At the current stage, the portfolio’s top ten equity holdings represent 26% of the total portfolio – not dissimilar to a traditional (quoted) equity fund.
With so many companies and ‘sponsors’, it is unlikely that investors are exposed to significant specific or key man risk. Whilst being diversified, NBPE offers exposure to a number of key industries: including technology, media and telecoms [TMT] (27%), healthcare (16%), industrials (14%) and consumer (16%). NB focuses on partnering with high quality sponsors, looking for specialist and deep industry knowledge from its partners, and an ability to source differentiated investments as well as deliver operational ‘value-add’ to investments.
With a high deal-flow of potential deals, and no obligation to invest in any of them, NB should be able to better maintain a fully-invested position for the trust, thereby reducing cash drag with, importantly, no pressure to commit to deals in the future. This is reflected in the numbers: NBPE remains the most fully invested LPE trust in the peer group.
In September 2018, the company announced a clarified dividend pay-out policy of 3% per annum or greater dividend yield on NAV. At the 30 September 2019 share price, NBPE’s dividend yield was 4.2%, which compares with a 3.8% weighted average dividend yield for the AIC Global Equity Income and 3.9% for the AIC UK Equity Income sectors.