We believe that NBPE has a strategy that is differentiated from other listed private equity vehicles. We invest directly into companies alongside top-tier private equity managers in their core areas of expertise through equity co-investments. We're able to do this by leveraging the broad private markets platform of the company's manager, Neuberger Berman. We build our portfolio investment by investment rather than through funds. This allows us to actively allocate our capital to sectors, strategies, and companies which we believe are most attractive for the current and expected environment. Investing alongside a broad range of managers also allows us to build an appropriately diversified portfolio. As of August 2023, our $1.3 billion portfolio was invested in 89 direct equity co-investments, alongside 54 private equity managers. Our top 30 private companies made up 67% of our net asset value. NBPE's direct co-investment approach also allows us to be capital efficient and prudently manage our balance sheet. We can increase or decrease our investment pacing based upon NBPE's current capital position and the overall market environment. This allows NBPE to mitigate the overcommitment risk inherent in a funds-based investment strategy, which is particularly important in times of uncertainty. NBPE is fee efficient. We typically don't pay management fees or carry to the lead private equity managers, and our fees are lower than a typical direct private equity vehicle. This results in NBPE having what we believe is a low all-in fee structure compared with its peer group. Finally, NBPE has a dividend policy of paying out at least 3% of NAV to investors annually. In 2023, we paid investors $44 million in dividends. As of August 31, 2023, NBPE reported a 3.4% annualized yield on NAV, and a 4.8% yield on our share price. NBPE reported a NAV total return of 4.8% in the first half, driven by a 3.8% return on our private companies on a constant currency basis, and further supported by positive returns from some of our quoted holdings and foreign exchange. This growth has been driven by strong operating performance across our underlying companies, with our portfolio reporting revenue and EBITDA growth of 14.9% and 15.4%, respectively, in the last 12 months through June 30, 2023. As this operating performance demonstrates, our underlying portfolio companies are generally adapting well to the current operating environment, despite continued headwinds such as elevated inflation and higher interest rates. Our NAV year-to-date total return through August was 1.8%, which was the result of a decline of our quoted holdings and negative FX adjustments in July and August. The most important driver of performance in the private portfolio was the strong overall operating performance of the underlying companies in the first half of the year. All sectors contributed to this revenue and EBITDA growth, and valuation increases were broadly distributed across industries. But the weighted average EBITDA and revenue growth in the financial services and consumer sectors were particularly strong. As well as strong organic operating performance, M&A continues to be a notable theme in the portfolio. This applies to companies that have been in our portfolio for both the short and long term, and illustrates that value creation can happen throughout the life of a private equity investment. Looking at NBPE's largest 30 private companies, more than two-thirds have completed M&A transactions during their holding periods to date, and we think this has often been a notable source of value creation over the course of their ownership. Despite a generally challenging exit market for private equity in the first three quarters of the year, in NBPE's portfolio, we've had $127 million of announced realizations through September, which compares to $120 million received for the whole of 2022. Of this, $45 million of proceeds were received in the first half of the year, the largest of which was the partial liquidity received from Action, which remains NBPE's largest portfolio company holding today, and NBPE took advantage of an opportunity to crystallize some of the gains from that investment. Since June, we've received an additional $20 million of proceeds, and are expecting a further $62 million from transactions that have been announced but have not yet closed, and further partial sales of public stock. Apart from the partial realization of Action, realizations year-to-date have been driven by investments outside of our largest 10 companies and were from smaller and more mature investments. These were successful investments for NBPE, but from smaller positions, and we're pleased to have had these successful exits and have the opportunity to reinvest the proceeds. The majority of these exits have been to strategic buyers or private equity investors. However, almost 20% of realizations have been through the sell-down of quoted holdings by GPs following portfolio company IPOs in recent years. These now public investments have been very successful for NBPE. However, given the volatility that quoted holdings can bring to NAV, we're pleased to see value being crystallized through these sell-downs. NBPE's co-investment model means we can be highly selective in choosing both when we invest, while also allowing us to patiently select investments which we think are the right fit for NBPE's portfolio. In addition, we've had opportunities to deploy capital into certain existing performing companies to support M&A and growth. We think investing in successful companies that both lead sponsors and Neuberger Berman already know well, can offer attractive investment opportunities for the portfolio.... We invested a total of $20 million in the first eight months of the year, including deploying an additional $13 million into Solenis and Renaissance Learning to support transformative acquisitions for these existing portfolio companies. Each of these companies have already generated successful returns for NBPE, and we think the acquisitions they've made will build on the original investment thesis and extend their growth prospects, and we're optimistic about the prospects of each company. Looking forward, at an investment level of 109% as of August 31st, NBPE remains under no pressure to invest, and will continue to balance the pace of investment activity to ensure we maintain a strong balance sheet. Neuberger Berman continues to manage very strong and active co-investment deal flow, and with available liquidity of $277 million as of August 31st, we're well positioned to find attractive investments which are a good fit for the portfolio at the right time. With the recent realization activity we've seen, we'll be closely monitoring these opportunities. We continue to believe that NBPE's resilient performance is a result of our focus on two key themes: investing in companies that we believe can benefit from long-term secular growth, and/or lower cyclicality in the markets in which they operate. This means that many of NBPE's portfolio companies share certain characteristics, which we think can make them more resilient across a range of economic conditions. These include resilient business models, mission-critical products or services, such as those which are essential for other businesses to function, leading market positions, pricing power, strong free cash flow generation, and/or recurring or reoccurring revenues. In addition to these themes, we aim to co-invest alongside high-quality private equity managers in their core areas of expertise. In more uncertain economic environments, these lead managers work with their management to optimize portfolio companies' performance and to balance resiliency with opportunities for growth, organically or through M&A. For all these reasons, we're optimistic about the positioning of our portfolio and the prospects for our portfolio companies. We believe that private equity has a number of structural advantages relative to public equities, and these may be particularly important in a more difficult economic environment. First of all, private equity doesn't have to manage the quarterly earnings targets. This means that companies can be positioned to optimize their prospects for the long term. Depending upon the company, this may mean quickly implementing operational efficiencies, or it may mean further investing in the business to grow market share while others are retrenching. Buyout funds are typically control owners of assets and seek to bring operational value-add capabilities to their portfolio companies. This means that they should be able to quickly adapt, utilize their sector expertise, and work with management to implement operating improvements in their companies. Finally, a common avenue for growth in private equity-backed companies is through M&A, which can allow a company to grow market share and enter new geographies or markets through acquisitions. For all these reasons, we think that the private equity model is well positioned to continue to create long-term value in portfolio companies.
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