RCS - NB Private Equity - Results analysis from Kepler Trust Intelligence

NB Private Equity PartnersAnnouncement

30/09/2022 14:15

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RNS Number : 3982B  NB Private Equity Partners Limited  30 September 2022

NB Private Equity Partners (NBPE)

30/09/2022

 

Results analysis from Kepler Trust Intelligence

Declines in the value of NBPE's quoted holdings drove a fall in NAV of -8.1%
on a total return basis to $1.3 billion ($28.67 per share) as at 30/06/2022,
which compares to the MSCI World Index ($) return of -20.3%. Against this, and
including the negative impact of foreign exchange movements on non-US$
investments, the valuations of NBPE's private companies, as a whole, were
broadly unchanged. In constant currencies, these companies delivered a return
of 2.7% over the first half.

Kepler View

During the first half of the year it is unsurprising that investment activity
was muted, with the NB Private Equity Partners (NBPE) team investing in one
opportunity (a $26 million investment in True Potential, a leading UK based
wealth manager). That said, the team continue to see realisations from
investments, with $114 million of announced transactions at an average 26%
uplift to value three quarters prior to an exit announcement (to 31/08/2022).

Of more relevance in our view is the underlying earnings of the portfolio. The
managers report that during the first half of the year their "private
companies grew weighted average LTM revenue and EBITDA by 27% and 20%,
respectively. Energy is not a significant input cost across the portfolio, and
while we have seen some margin pressure in certain parts of the portfolio, we
believe the portfolio is well positioned to navigate the current environment
and deliver value over the long term". Reflecting this, valuations have fallen
only slightly through Q2 2022.

NBPE is currently 106% invested, which means the team is not under pressure to
invest over the short term. The board state in the interims that they
recognise the importance of income to shareholders, and so have maintained the
dividend, despite the decline in NAV over the first half.

NBPE's discount has widened significantly this year, as have investment trusts
generally, and the listed private equity sector. JPMorgan Cazenove estimate
that NBPE's discount (adjusting the latest NAV for subsequent FX moves and
share price changes of the c 12% of NAV exposed to quoted holdings) is c. 39%.
One might reasonably expect that if the world tips into recession, then
earnings growth will be impacted. However, NB point out that the private
equity managers who NBPE invests alongside are high quality private equity
managers with the skills and expertise to navigate challenging environments.
They are also experienced at quickly getting onto the front foot to help
investee companies benefit from competitors' weakness.

NBPE is holding a capital markets event on Thursday 6 October 2022 at 2pm.

Participants may register for the event here
(https://www.globenewswire.com/Tracker?data=rh4RnAnqsKrIJyhZZ4KTspVeNV42ocYzAYZ0shue8ZftrAHnVbwTxHxoActR4UqpfX2l9pkHq4uAgnyoiP0LpUsqo9QhW9wwuOY96Wj_K8cgtYGng_xNIG3ChbQIVwTOaIOYLnvRCgjS5nujSyMAas1npcW2b01a9vc7f-p3KmdJbU1JBnj-Vui3LJ1tDSU3DnpXJIiPG6C2ytczw6miXvuUCjmFTmMI-6ly9S1qRQh7Su7fRzU3ONnzaYJe3xI8SYHvLlb6R34MwN1pX45deFV_nfXTSnRkfWhB9PqPJi8BHxsDx_64FFgFWBEyMsmrHB52GtCMMIcUnCfjJiD_Qw==)

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