Investing in private companies
to generate long-term growth
Annual Report 2021
$401m
2
83%
3
3.3x
Announced realisations Realisation uplift Return on cost
45%
1
65%
1
$0.72
NAV Total Return ($) Total Shareholder Return (£) Dividends per share
Delivering strong NAV growth
Outperforming the MSCI World Index TR
4
NB Private Equity Partners (“NBPE”) invests
directly in private companies, alongside some of
the world’s leading private equity managers.
NBPE is managed by the private equity division of Neuberger Berman
(the “Manager” or the “Investment Manager”), a leading private
markets investor. NBPE leverages the strength of Neuberger Berman’s
platform, relationships, deal flow and expertise to access the most
attractive investment opportunities, providing shareholders with access
to a portfolio of direct investments diversified by manager, sector,
geographyand size.
2021 marks the strongest year for
performance in NBPE’s history,
and our third consecutive year
of double-digit growth.”
Peter von Lehe, Head of Investment Solutions and Strategy, Managing Director
Neuberger Berman
Performance highlights
12 months to 31 December 2021
STRATEGIC REPORT GOVERNANCE FINANCIALS OTHER NB Private Equity Partners Annual Report 2021
NAV Total Return ($)
MSCI World Index TR ($)
45%
22%
94%
83%
132%
107%
NAV Total Return
5
Cumulative at 31 December 2021 (% total return)
One year Three year Five year
››
P114 Notes to page IFC
NB Private Equity Partners
Annual Report 2021
STRATEGIC REPORT
02 Chairman’s statement
05 Private equity –
accessing true alpha
08 Why invest in NBPE?
09 Our Manager
11 Our business model
13 Our investment strategy
16 Portfolio at a glance
17 Investing in two core themes
18 Manager’s review
27 Top 20 companies
29 Key Performance Indicators
31 Environmental, Social
and Governance
39 Manager – people & culture
43 Stakeholder engagement
46 Risk management
47 Principal risks and uncertainties
49 Going concern and
Viability Statements
GOVERNANCE
52 Governance overview
53 The Board
55 Governance
61 Directors’ Report
64 Investment Objective and Policy
65 Remuneration Report
67 Report of the Audit Committee
71 Statement of Directors’
Responsibilities
FINANCIALS
74 Independent Auditor’s Report
79 Consolidated financial statements
84 Notes to consolidated
financial statements
OTHER
99 AIFMD Disclosures
101 Schedule of Investments
104 Appendix
108 Glossary
110 Directors, Advisors and
contact information
111 Useful information
113 How to Invest
nbprivateequitypartners.com
– Latest Insights and case studies
– Portfolio information
– Responsible investing
– All investor materials
Interview with the Manager,
Neuberger Berman
25
For more
information
on our Top 20
companies
About NB Private Equity Partners
25
Portfolio company
case studies
22››
Constellation Automotive
20››
24›› 27››
AutoStore Auctane
Chairman’s statement
A record year
I am delighted to report on a year
of excellent performance. We finished
the year with net assets of $1.5bn,
an increase of 45% on a total return
basis, marking the third consecutive year
of double digit NAV growth. Performance
was driven by a record level of realisations
at significant uplifts to 31 December
2020 values and cost, as well as strong
operating performance in companies
across the portfolio.
The groundwork for last year’s
performance began a number of years
ago. Benefitting from Neuberger
Berman’s deep network of relationships
within the private equity industry and
its expertise in analysing investments,
the portfolio is proactively positioned
in line with two core themes: long-term
secular growth and/or businesses with
low cyclicality. This focus has meant
that the portfolio has been and remains
well positioned to weather an uncertain
macro-economic environment, while
benefitting from secular tailwinds such
as tech-enabled services, automation
and e-commerce.
High-quality
companies continue
delivering growth
Our strong performance speaks to the
quality and resilience of the portfolio
in a year dominated by the challenges
presented by COVID-19, with portfolio
companies successfully navigating the
uncertain economic environment to
deliver weighted average last 12-month
(LTM) revenue and EBITDA growth
of 27% and 28%
6
respectively. There
were over $400 million of announced
realisations, at average uplifts of 83%
relative to 31 December 2020 values
and a 3.3x multiple of cost on the
14 full or partial realisations during the
year. NBPE’s assets have been attractive
to financial and strategic buyers, as
well as to public markets. As investors
increasingly seek assets that are resilient
to macro-economic headwinds, and
given the maturity of the portfolio, we are
optimistic that realisations will continue
in 2022.
65%
Total Shareholder Return
1
65%
109%
18%
27%
30%
131%
One year
NBPE Share Price (GBP) Total Returns
FTSE All Share (GBP) Total Returns
7
Cumulative return as at 31 December 2021
over time periods shown
Three year Five year
Share price total return (GBP)
% total return
Our strong performance speaks
to the quality and resilience of
the portfolio, and the benefits
of our focus on investing in two
core themes; secular growth and
companies with low cyclicality.”
William Maltby Chairman
02
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››
P114 Notes to page 02
Chairman’s statement continued
decision to maximise the strength
and flexibility of NBPE’s balance sheet
in uncertain times. Since we are fully
invested, we are under no pressure to
invest and are being highly selective.
Share price outpaces
FTSE All-Share
The share price generated a total return
of 65% during the year, outperforming
the FTSE All-Share Total Return
7
, which
returned 18%. NBPE was highlighted by
the Association of Investment Companies
as a Top 10 performing investment trust
in 2021, one of only two listed private
equity investment trusts to be included.
Volatility and sentiment towards risk
assets in 2022 has meant that some of
these gains have been given up in the first
quarter. We have seen share prices across
the listed private equity sector retreat
and discounts widen again, as concerns
around inflation, and more recently
Russia’s invasion of Ukraine, overshadow
the outlook.
NBPE’s portfolio has deliberately
been positioned for a range of
macro-economic conditions. With a
focus on secular growth and/or low
cyclicality we believe the portfolio
will continue to generate value for
shareholders. We do not believe the
current share price reflects the value
or prospects of these companies and
remain very focused on narrowing
the discount.
Selective investment
in high-quality
private companies
We made nine new investments
during the year, investing $144 million
into attractive, market-leading businesses
in sectors backed by megatrends,
high-growth or secular tailwinds, and in
many cases, high barriers to entry or the
delivery of mission-critical products or
services. Key sectors included technology,
industrials, consumer/e-commerce and
business and financial services. We are
excited by the potential of these new
portfolio companies.
Strong balance sheet
and significant liquidity
The record level of proceeds received
in 2021 meant that we finished the
year with $116 million of cash and an
undrawn $300 million credit line. This
puts the Company in a strong position
to take advantage of new investment
opportunities, as well as repay the 2022
ZDPs which mature in September.
NBPE’s co-investment model enables
the Company to be nimble and capital
efficient. By investing on a deal-by-
deal basis our Manager can adjust
the investment pace as necessary.
This allows us to position the portfolio
for prevailing market conditions. It also
means that we do not need to take
off-balance sheet risk by over-committing
to underlying funds in order to achieve a
target investment level.
Over the year, our investment level
moved from 110% to 106%, below our
long-term target level of 110%-115%.
This is in part a reflection of the high
level of realisations, but also a deliberate
A growing dividend
Our dividend allows shareholders to
participate in NBPE’s NAV growth
directly and we have a policy to pay
an annualised yield of 3.0% of NAV
through semi-annual dividend payments
to shareholders. Given the Company’s
significant growth in NAV, NBPE’s
dividends to shareholders in 2021 totalled
$0.72 per share, versus $0.58 per share
paid in 2020, an increase of 24%.
In January 2022, subsequent to
this reporting period, the Company
declared its first 2022 semi-annual
dividend of $0.47 per share, a further
increase of 15% from the Company’s
August 2021 dividend.
2120191817
$0.50
$0.53
$0.57
$0.58
$0.72
As at 31 December 2021
Dividend growth
US$ per share
24%
growth in
20
21 vs. 2020
Summary balance sheet
$m
31 Dec 2021
(Audited)
31 Dec 2020
(Audited)
Direct equity investments $1,430.2 $1,091.6
Income investments $125.1 $140.5
Total investments
*
$1,569.3 $1,254.6
Investment level 106% 119%
Cash $116.5 $3.0
Credit facility drawn – ($35.0)
ZDPs ($162.0) ($157.0)
Other ($43.6) ($14.0)
Net Asset Value $1,480.2 $1,051.7
NAV per share ($) $31.65 $22.49
NAV per share (£) £23.37 £16.45
* Total investments include approximately $14.0 million of fund investments as of 31 December 2021 and
$22.5 million as of 31 December 2020
03
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››
P114 Notes to page 03
A focus on ESG and
responsible investment
The Board continues to increase its
focus on ESG and Responsible Investing,
benefitting from the expertise at
Neuberger Berman, which is a leader
in this field. For two consecutive years,
Neuberger Berman has been awarded
an A+ for ESG integration, the top score
given by the UN-supported Principles for
Responsible Investment (PRI), and in 2020
became part of the PRI Leaders’ Group.
The PRI Leaders’ Group showcases
signatories at the cutting edge of
responsible investment and Neuberger
Berman was one of only 20 investors to
be named.
Both the Board and Neuberger
Berman have a firmly held view that
better outcomes, both financial and
non-financial, can be achieved through
incorporating ESG considerations into
investment decisions. We are fortunate
that ESG considerations have been a
core part of the investment process
over many years and 99% of NBPE’s
portfolio does not have significant
adverse sustainability potential. More
information on Neuberger Berman’s
approach to ESG can be found on
pages 31 to 38.
A refreshed,
independent board
We were delighted to welcome Louisa
Symington-Mills to the Board in June
2021. Louisa brings significant buy
and sell-side private equity and broader
listed private equity experience, which
we believe will complement the Board’s
expertise. We now have a Board of five
independent Directors, with a broad cross
section of business skills and experience.
Expanding our investor
relations programme
We have continued to expand our
investor relations programme and
launched several new initiatives during
the year, including a new website,
factsheet and a greater focus on
increasing the Company’s profile among
new and existing investors. In March
2022, NBPE was promoted to the FTSE
250 Index, an important milestone for
the Company, and I would like to thank
our shareholders for their continued
support. We remain focused on
expanding our shareholder base and
raising the Company’s profile among
both retail and institutional investors.
Market environment
The last two years have been defined by
the broader healthcare and economic
impacts of COVID-19 and the world’s
adjustment to changes in work and
lifestyle habits. As vaccines paved the
way for an easing of restrictions and the
reopening of economies, 2021 marked
a turning point for many economies
with a strong rebound in growth, albeit
clouded by inflationary pressures, and the
prospect of higher interest rates. Against
this backdrop, the portfolio has continued
to perform incredibly well.
Looking ahead
Volatility increased across markets at the
start of 2022, with many indices declining
significantly in the early months of the
year. The terrible events in Ukraine have
led to heightened volatility in markets as
governments grapple with the potential
longer-term impacts to economies and
international relations, not to mention the
devastating humanitarian crisis.
We believe the private equity model
– control ownership of underlying
companies – is a significant advantage
in this uncertain environment. Private
equity managers can be quick to react to
change, and importantly take advantage
of opportunities. For NBPE, our focus
on secular growth and low cyclicality
has resulted in a portfolio that should
be relatively resilient to inflationary
pressures. Energy is not a significant
input cost across the portfolio and many
of NBPE’s portfolio companies provide
critical solutions to their clients; we would
therefore expect less pressure on margins.
In addition, over 70% of NBPE’s portfolio
companies are headquartered in the US,
and 25% in Western Europe; the portfolio
has no direct investment exposure to
Russia, Ukraine or Belarus.
Despite the obvious challenges that the
current uncertain environment presents,
we are optimistic about the future for
the portfolio. We enter 2022 in a strong
financial position and with a portfolio that
is well positioned to generate significant
value for shareholders.
William Maltby
Chairman
25 April 2022
Chairman’s statement continued
Board evolution
Louisa Symington-
Mills joined the Board
in June 2021 and has
significant experience
in the listed private
equity sector.
53››
Board biographies
NBPE has a strong track record
and a unique co-investment
model, and I am excited about
working with the rest of
the Board as NBPE seeks to
engage with a wider range
ofinvestors.”
Louisa Symington-Mills
Independent Director
04
STRATEGIC REPORT GOVERNANCE FINANCIALS OTHER NB Private Equity Partners Annual Report 2021