Investing in private
companies to generate
long-term growth
2023 Annual Report
Overview Chairman’s
statement
Managers review Top 20
companies
Navigating value
creation in private
equity
ESG
03 08 15 22 24 26
NB Private Equity Partners invests directly
in private companies, alongside some of the
worlds leading private equitymanagers
02
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
STRATEGIC REPORT
03 Overview
08 Chairman’s statement
12 Our business model
13 KPIs
15 Manager’s review
22 Top 20 companies
24 Navigating value creation
in private equity
26 ESG
32 People and culture
36 Stakeholder engagement
40 Risk management
44 Going concern and viability
GOVERNANCE
47 Governance overview
48 The Board
50 Corporate governance
57 Directors’ report
60 Investment objective and policy
61 Remuneration report
64 Report of the Audit Committee
68 Statement of Compliance with the
AIC Code of Corporate Governance
69 Statement of Directors’
responsibilities
FINANCIALS
71 Independent Auditor’s Report
75 Consolidated financial statements
81 Notes to consolidated financial
statements
OTHER
98 AIFMD Disclosures
100 Schedule of investments
103 Append ix
108 Glossary
110 Directors, Advisors and
contactinformation
111 Useful infor mation
113 How to Invest
114 Endnotes
NB Private Equity Partners (“NBPE”)
is managed by the private markets division
of Neuberger Berman (the “Manager”
or the “Investment Manager”), a leading
private markets investor. NBPE leverages
the strength of Neuberger Bermans
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.
The architectural photography used in this report displays
Neuberger Berman oces in New York, London, Hong Kong,
Toronto, Boston, Dubai, Frankfurt and Tokyo.
37.0%
100
0
NBPE NAV Total Return ($)
3
One year Three years Five years
MSCI World Index Total Return ($)
4
2.3%
83.5%
87.3%
25.2%
24.4%
80
60
40
20
OVERVIEW
NAV growth
Cumulative at 31 December 2023 (% Total Return)
Our year
in numbers
Performance highlights
12 months to 31 December 2023
$0.94
Dividends per share
4.4%
Dividend yield on share price
2.3%
1
NAV Total Return ($)
9.4%
1
Total Shareholder Return (£)
2.1x
2
Average multiple of cost
on realisations
$171m
Proceeds received in 2023
››
See footnotes on pages 114 -115
03
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Investing in private
companies to generate
long-term growth
Long-term secular
growth trends
Companies that are expected
to benefit from higher
growth rates due
tolong-term trends or
behaviour changes:
Companies which exploit
structural changes driven
by changes in customer
demand
Creates new sources of
demand, which can often
be sustainable over long
periods (versus more
cyclical demand)
Not confined to any one
type of business or sector
With a focus on two core themes
NBPE track record
Businesses with low
expected cyclicality
These companies tend to
becharacterised by more
defensive sectors or
endmarkets:
Generally companies which
are less susceptible to
changes in overall GDP
May oer reasonable
downside protection
during periods of
economic contraction
Can often be ‘essential
services’ or quasi-
infrastructure, such as waste
management, insurance
or other mission-critical
products or services
Access to an active investment model
As owners, rather than minority shareholders, private equity
managers can drive strategy and change to build long-term
value, and generate returns that have outperformed public
markets over multiple cycles.
A bespoke portfolio
Co-investing alongside leading private equity managers
provides direct exposure to private companies and allows
NBPE to build a portfolio of the best opportunities, leveraging
the strength of Neuberger Berman’s network.
2.4x
5
Average multiple of cost on
realisations (five years)
39%
6
Average uplift on
realisations (five years)
16.1%
Average gross IRR on direct
equity investments (five years)
OVERVIEW
Patricia Miller Zollar
Managing Director, Member
of the Investment Committee
››
See footnotes on pages 114 -115
STRATEGIC REPORT
04
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
04
Anthony Tutrone
Global Head of NB Alternatives,
Managing Director, Member
of the Investment Committee
$17bn
Secondaries
$34bn
Primaries
$16bn
Private debt
$6bn
Capital solutions
$4bn
Direct specialty
strategies
$110bn+
8,9
Private equity
commitments managed
$34bn
Co-investments
OVERVIEW
Leveraging the strength
of the Neuberger Berman
Private Markets platform
An industry leader
The Private Markets platform at Neuberger
Berman is industry-leading, with robust
dealflow, demonstrated access and selectivity,
and a vast network of relationships.
NBPE leverages the strength of the
Neuberger Berman Private Markets
platform to seek the most attractive direct
co-investment opportunities.
With more than 430 private market
professionals across 12 global locations, the
strength and depth of the relationships
across the platform are the principal source of
deal flow for the co-investment programme.
Neuberger Berman focuses on the best
opportunities, controlling the investment
decision at entry, investing deal by deal, with
ESG assessments made at the manager and
company level.
410+
10
Limited partner Advisory
Committee seats
745+
7
Fund commitments
~25
11
Years average
experience among
Managing Directors
27
14
ESG investing
professionals
5
12,13
Policy, Governance
and Strategy
››
See footnotes on pages 114-115
05
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
David Stonberg
Deputy Head of NB Alternatives and Global
Co-Head of Private Equity Co-Investments,
Managing Director, Member of the
Investment Committee
OVERVIEW
Tech, Media & Telecom 22%
Consumer/E-commerce 21%
Industrials/Industrial
Technology
18%
Business Services 12%
Financial Services 12%
Healthcare 9%
Energy 1%
Other 5%
North America 72%
Europe 25%
Asia/RoW 3%
We have a portfolio of
87 companies alongside
53 private equity managers
A portfolio that is built investment
by investment
Diversified across sector, manager, geography and company size.
NBPE’s portfolio is built from the bottom up, investment
by investment, investing in high-quality companies with
resilient business models, high barriers to entry and recurring
revenue streams.
Sector Geography
71%
Fair value in Top 30
companies
15. 2%
15
LTM EBITDA growth
(at December 2023)
$1.3bn
Portfolio
11.4%
15
LTM revenue growth
(at December 2023)
93%
Fair value in private
investments
5.3%
Aggregate increase in private
company valuations (ex-FX)
››
See footnotes on pages 114-115
STRATEGIC REPORT
06
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
< 40 companies
87 companies
500+ companies
1
53
50+
Medium
Very low
High
Single layer, higher
performance fee
1.0%−1.5%
vehicle management fee
15%20%
performance fee
Single layer, lower
performance fee
1.5%
vehicle management fee
7.5%
performance fee
Double layer, higher
performance fee
0.8%−1.5%
vehicle management fee
1.5%−2.0%
underlying fund
management fee
20%
performance fee
We oer the best
of both worlds
Listed Private Equity funds bridge
the gap between private and public
equity, andare typically split between
specialistsingle manager’ direct
investors andhighly diversified
‘fundoffunds’.
NBPE’s co-investment approach aims
to combine the best of both the direct
and‘fund of funds’ models.
Portfolio company
diversification
NBPE oers investors
exposure to a well-
diversified portfolio of
companies, with visibility
of key underlying positions.
Number of
PE managers
Investing alongside
numerous leading private
equity managers limits
typical single manager
and strategy risk.
Over-commitment
level
NBPE’s deal-by-deal
investment approach
means that it can be more
capital ecient and
remain fully invested
without taking on
over-commitment risk.
Fees
98%
16
of the direct
investment portfolio
incurs neither
management nor
performance fees to
underlying third-party
managers.
Typical
single
manager
NBPE
Typical
fund of
funds
Top 10 concentration
50%+
Top 10 concentration
34%
Top 10 concentration
~10%
OVERVIEW
NBPE’s portfolio is:
Diversified
Across sectors, private equity managers
and company size
Capital ecient
We control the investment decision
at entry, and can be tactical in choosing
the opportunities and responding to
market conditions
Fee ecient
A single layer of fees
Responsible
ESG assessments made at both the
manager and the company level
››
See footnotes on pages 114-115
STRATEGIC REPORT
07
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
CHAIRMAN’S STATEMENT
NBPE ended the year with net assets of $1.3bn
($28.07 per share), a 2.3% total return for the
12 months. Growth has once again been
driven by the private portfolio companies,
which delivered a 5.3% constant currency
return, which was partially oset by weaker
performance from our quoted holdings.
Private Portfolio Increase
5.3%
Constant Currency Basis
Continued portfolio company
growth and execution of value
creation strategies
On a weighted average basis, the portfolio
generated last twelve month (LTM) Revenue
and EBITDA growth of 11.4% and 15.2%
respectively
15
. Many of the companies within
our portfolio provide essential products
or services which enable other businesses
to function, or are otherwise well positioned
to be resilient even in an uncertain economic
climate. Supported by an improving macro-
economic outlook in the second half of the
year, it was the resilience of these businesses,
as well as a focus on growth by private equity
and portfolio company managers, that drove
our portfolio’s return. In particular, M&A
was a significant focus for private equity
managers. Several companies within the
portfolio completed highly attractive
M&A transactions, which in some cases
fundamentally transformed their businesses.
We are excited by the prospects for these
companies. At the same time, organic growth
also positively contributed to overall growth
within the portfolio.
Significant realisation activity
in 2023 demonstrates the
attractiveness of portfolio
companies to strategic and
financial buyers
In general, 2023 was a dicult year for private
equity exits, with industry-wide deal volumes
about 30% lower than in 2022, and about
45% lower than 2021 levels. Despite this,
NBPE’s portfolio generated $171 million
of cash proceeds from 12 partial and full exits.
A further $39 million was received post
year end from transactions which had been
announced but had not yet closed, taking
total announced realisations to $210 million
19
.
Overall, we believe the level of cash proceeds
received by NBPE – a 42% increase relative to
2022 – speaks to the high-quality, and the
“in demand” nature of many of the companies
in the portfolio. Realisations in 2023 were at
an average of 2.1x
2
cost and an 11%
17
uplift to
carrying value.
We believe the current market
environment is well suited to
private equity investing.
William Maltby
Chairman
››
See footnotes on pages 114-115
08
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Improving sentiment, but wide
discounts persist across the
listed private equity sector
NBPE’s share price increased 9.4% on a total
return basis in 2023, narrowing the discount
to NAV from 32% at the beginning of the year
to 24% as of 31 December 2023, broadly
in line with other direct focused listed private
equity funds. Despite this positive share price
performance and improving sentiment more
generally for listed private equity, discounts
remain wide for many funds in the sector.
We believe NBPE’s co-investment model –
oering the transparency and fee eciency
of direct investments, while allowing for
prudent manager diversification – positions
NBPE uniquely. The Board is united in its
strong conviction that NBPE’s discount level
does not reflect the strength of its model
or the quality of its portfolio. We continue
to expand and enhance our investor relations
Total proceeds received
$171m
in 2023
Follow-on investments
in the year to support
transformative M&A
One of the advantages of NBPE’s co-
investment model is that the Manager’s
investment team can be highly selective, with
new investment decisions taken on a case by
case basis. The team can choose its pace of
investment activity depending on the
portfolio construction and market outlook,
as well as ensuring the maintenance of a
strong balance sheet. During the year, NBPE
invested $22 million including follow-on
opportunities in existing portfolio companies
to support M&A and transformative
acquisitions. The Company ended the year
with an investment level of 101%, which
is at the lower end of the long-term target
investment level range of 100-110%.
Neuberger Berman maintained a strong
pipeline of potential new co-investments
throughout the year and, given NBPE’s
investment level at the year end, we anticipate
new investment activity for NBPE to increase
in 2024. Since the year end NBPE has deployed
$38 million into two new investments in the
healthcare sector; Benecon, an employee
health benefits solutions provider, and Zeus,
a leader in mission-critical components for
lifesaving medical procedures. At 31 March
2024 the investment level was 102%.
Strong balance sheet
and liquidity
NBPE ended the year with a strong balance
sheet and available liquidity of $376 million
(comprised of $166 million of cash/liquid
investments and $210 million of available
capacity on the Company’s credit facility).
As previously announced, NBPE intends
to repay the 2024 ZDP final entitlement
of £65 million ($83 million) at maturity
in October 2024.
Ten years of dividend payments
In 2023, NBPE paid $44 million of dividends to
shareholders. This marks the 10th consecutive
year of dividends paid to shareholders, which
total $316 million in capital returned by way
of dividends as of 31 December 2023. Over the
same time period, the dividend has grown from
$0.20 per share to $0.47 per share, representing
a compound annual growth rate of 8.5%.
The Directors view this as very attractive
dividend growth over a decade. The dividend
plays an important role as one of the pillars
of our approach to capital allocation (see
page 10) and we recognise the importance
to shareholders of maintaining the Company’s
annual dividend yield target at 3.0% of NAV
or greater. We believe this long history
of reliable dividend payments demonstrates
the Company’s focus on prudent balance
sheet management.
Summary balance sheet
$m
31 Dec 2023
(Audited)
31 Dec 2022
(Audited)
Direct equity investments $1,223.5 $1,286.4
Income investments $90.0 $107.3
Total investments
*
$1,321.3 $1,401.4
Investment level 101% 106%
Cash and Cash Equivalents/Liquid Investments $165.8 $7.0
Credit facility drawn ($90.0)
ZDPs ($80.4) ($72.8)
Other ($11. 2) ($8.4)
Net Asset Value $1,305.5 $1, 327.3
NAV per share ($) $28.07 $28.38
NAV per share (£) £22.02 £23.59
* Total investments include approximately $7.8 million of fund investments as of 31 December 2023
and $7.7 million as of 31 December 2022
CHAIRMAN’S STATEMENT
Dividend growth $ per share
0.58
0.57
0.94
0.72
0.94
1.00
0.75
0.50
0.25
1.25
19 20 21 22 23
0.00
››
See footnotes on pages 114-115
09
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
initiatives to increase NBPE’s profile among
existing and new investors. Towards the end
of the year we were delighted to welcome
Luke Mason, who now leads NBPE’s investor
relations eorts, to the Neuberger Berman
London team.
Discounts remain relatively wide across the
entire investment company sector, not helped
by the current cost disclosure regime which
the Board believes disadvantages investment
companies unfairly compared with
competing products leading to sub-optimal
investor decisions. Extensive eorts are being
made by a coordinated group of fund
managers, brokers, parliamentarians and
others, working alongside the London Stock
Exchange, to campaign for a change in this
regime. The Board of NBPE is proactively
supporting these eorts.
During the course of 2023, NBPE repurchased
$5 million of shares, resulting in a NAV
accretion of $0.05 per share. The Board
believes that buybacks can be an attractive
tactical use of capital in certain market
environments and in January 2024, alongside
the Company’s first half 2024 dividend,
we increased the amount of capital allocated
for share repurchases. During the first quarter
of 2024, NBPE repurchased an additional
$5.4 million of shares, resulting in additional
NAV accretion of $0.04 per share.
CHAIRMAN’S STATEMENT
NBPEs objective is to invest in
private companies to generate
long-term growth.
The Board oversees the capital allocation
framework for the Company. Alongside
allocating capital to NBPE’s investment
programme, the Board is committed to
NBPE’s long-term dividend policy and
regularly reviews the capital allocated
to the Company’s buyback policy. As part
of this framework, the Board considers,
among other factors, the financial position
of the Company, use and cost of leverage,
the Company’s investment level relative
to its target and the vintage year
diversification of the portfolio.
New investments
NBPE’s co-investment model provides
flexibility, with new investment decisions
being made on a real-time basis, balanced
against the pace of realisations as well
as other capital requirements. As a result,
NBPE can manage its overall investment
level without the need for significant
unfunded commitments. While the
investment level may temporarily rise above
or fall below its target for periods of time,
over the long term, the Board and the
Manager believe that a target investment
level in the range of 100110% is optimal.
We believe that NBPE’s strategy of investing
in high-quality private companies and
aiming to deliver strong compounding
returns over time will drive the best
long-term performance for shareholders.
New investments should drive long-term
NAV growth and are also considered in the
context of the existing portfolio in order to
maintain appropriate levels of
diversification. Given NBPE’s objective
and the Board’s focus on driving long-term
returns for shareholders, the Board
considers new investments to be the core
use of NBPE’s capital.
Dividends
The Directors remain committed to the
Company’s dividend policy of targeting an
annualised yield on NAV of 3.0% or greater,
with the goal of maintaining or progressively
increasing the level of dividends over time.
The dividend underpins NBPE’s Total
Shareholder Return. It allows shareholders
the opportunity to participate directly in the
performance of the underlying portfolio
and is the primary method of returning
capital to shareholders. Since the Board
implemented a dividend policy in 2013,
taking into account the 1H 2024 dividend
payment, the Company will have returned
$338 million to investors through a semi-
annual dividend.
Share buybacks
The Board believes that buybacks can be an
attractive tactical use of capital in certain
market environments. Inherently, buybacks
can represent an opportunity to purchase
the Company’s shares at a discount to NAV
per share, realise a return that is immediately
NAV accretive and invest in a portfolio that
is performing well and is well known by
the Manager.
The effectiveness of buybacks in NAV
per share accretion, providing liquidity
in the shares under certain circumstances
and in signalling the Board’s confidence
in the prospects of NBPE’s portfolio, are well
understood by the Board.
Approach to capital allocation
10
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Board evolution
As stated in the 2022 Annual report, the
Directors decided to increase the size of the
Board temporarily from five to six Directors,
as part of its succession planning process.
In particular, we were keen to recruit early for
the succession of the current Audit Chair, John
Falla, who is due to retire at the 2025 AGM
after nine years of service on the Board.
As part of this planning, Pawan (Pav) Dhir
was appointed to the Board in September,
who brings over three decades of global
experience in finance and private equity,
as well as in the wider asset and wealth
management sectors. In addition to the Board
evolution we have made a small number of
non-material changes to NBPE’s investment
policy to reflect how the portfolio is managed
today which can be found on p.60.
Outlook
We believe the current market environment
is well-suited to private equity: as control
owners, private equity managers are able
to drive value at their portfolio companies.
Private ownership allows companies to
innovate, invest, restructure and optimise
away from the short-term pressures of public
ownership. In addition, Neuberger Berman
is well positioned to source highly attractive
private equity transactions across its $110bn
private markets’ platform, especially as many
other co-investors have scaled back their
private equity activity. Private equity managers
are increasingly looking to partner with larger
and more experienced co-investors to reduce
co-investment syndication risk, or to provide
alternative liquidity solutions. Given the scale
of the Neuberger Berman platform and its
large experienced team, we believe that the
outlook for new investment opportunity
remains strong.
The NBPE portfolio is well positioned given
the ‘all-weather’ investment approach the
Neuberger Berman team has followed for
many years. The portfolio is focused
on two key themes, long-term secular
growth and/or business with low cyclicality
and is invested in well-diversified, industry
leading businesses, with attractive cash flow
generation and resilient business models,
made alongside some of the most experienced
and well-resourced private equity managers
globally. The ability of these private equity
managers to deliver across market cycles and
to execute and drive value creation leading
to growth at the underlying company is what
sets them apart.
William Maltby
Chairman
23 April 2024
Total Share Return (£)
vs. FTSE All-Share (cumulative)
CHAIRMAN’S STATEMENT
0
25
100
75
50
7.9%
One year Three year Five year
9.4%
28.1%
106.8%
63.0%
37.7%
NBPE Share Price (GBP) Total Returns
FTSE All-Share (GBP) Total Returns
18
››
See footnotes on pages 114-115
11
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
How NBPE creates value
OUR BUSINESS MODEL
Our purpose
To give shareholders access to the long-term
returns available from a portfolio of direct
investments in highly attractive private
companies by leveraging the strength
of the Neuberger Berman global platform,
while investing responsibly to create value
for our stakeholders.
Supported by the strengths
of Neuberger Berman
Strength and depth of the team
Expertise and strong track record
Extensive insight into the private
equity marketplace
Highly selective investment approach
Strong ESG credentials
Client-focused culture
Integrated private markets
investment platform
Investing globally, with a
focus on the U.S
NBPE’s portfolio is geographically
representative of the global private
equity market, of which the U.S. is the
largest market.
Focusing on buyout transactions
NBPE’s primary focus is on buyout
transactions(acquisition of a controlling
interest in a company); for example,
take-privates, buyouts of family
businesses, carve-outs or divisional sales.
Growth strategies are usually through
some combination of organic revenue
growth, cost eciencies or M&A.
…in a flexible and disciplined
way that builds resilience…
Investing on a deal-by-deal basis
Investment decisions are taken on a
deal-by-deal basis. NBPE can speed up
orslow down its investment pace,
depending onmarket conditions.
Prudently managed balance sheet
Disciplined capital allocation and access
to the long-term credit facility ensure
NBPE can be fully invested, without the
need forsignificant long-term o-balance
sheet commitments.
…and a co-investment model
that sets NBPE apart.
Co-investing alongside leading
private equity managers in their core
area of expertise
NBPE generates long-term growth by
investing in a portfolio of direct investments
in high-quality private companies.
Building a resilient portfolio
NBPE’s portfolio is built investment by
investment, rather than through funds.
Co-investing allows NBPE to invest alongside
a wide selection of top-tier private equity
managers. Neuberger Berman focuses on
backing business models that it believes will
deliver sustainable earnings growth from
long-term secular growth trends and/or from
lower expected cyclicality due to their sectors
orend markets.
12
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
One year Three year Five year
2.3%
37.0%
83.5%
100
0
50
NAV Total Return cumulative, $
2.3%
1
2023
Total Shareholder Return cumulative, £
Rationale
Reflects the growth in the value of the Company’s assets
less its liabilities. It includes all the components of NBPE’s
investment performance, is shown net of all costs and
includes dividends paid
Measures performance in the delivery of shareholder
value, after considering share price movements
(capitalgrowth) and any dividends paid in the period
A reliable source of income is important for shareholders.
NBPE targets an annualised dividend yieldof 3.0%
of NAV
NAV total return ($) Total shareholder return (£) Dividend growth over time
NAV Total Return increased by 2.3%¹
Five-year cumulative NAV Total Return of 83%¹
Performance driven by the 5.3% constant currency
return from NBPE’s private portfolio companies and
foreign exchange tailwinds, which has been partially
oset by weaker performance from our quoted holdings
Increase of 9.4% in Share Price Total Return during 2023
1
Five-year cumulative Share Price Total Return of 106.8%
1
Dividend maintained at $0.94 in 2023, a 3.3%
yield on NAV and a 4.4% yield on the share price at
31 December 2023
$316m of capital returned via dividends over the past
10 years
Capital appreciation through growth in net asset
valueover time while returning capital by paying
asemi-annual dividend
Shareholder returns through long-term capital growth
and dividend
Returning capital to shareholders by paying asemi-
annual dividend
Progress
Link to
objectives
Examples of
related
factors that
we monitor
Performance and valuations of the underlying
investments
Eciency of NBPE’s balance sheet
Ongoing charges ratio
Rate of NAV growth
Share price performance relative to wider public markets
and listed private equity peer group
Level of discount in absolute terms and relative to the
wider listed private equity peer group
Trading liquidity and demand for NBPE’s shares
Available liquidity
Proceeds received and expected during the year
Investment pipeline
KEY PERFORMANCE INDICATORS
One year Three year Five year
9.4%
63.0%
106.8%
100
0
150
50
13
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
9.4%
1
2023
Dividend growth $ per share
19 20 21 22 23
0.57
0.58
0.72
0.94
0.94
0.75
0
1.25
0.50
0.25
1.0
$0.94
dividends
4.4%
yield on share price
10.5%
five year dividend
growth CAGR
››
See footnotes on pages 114 -115
Rationale
Realisations are one of the drivers of NAV growth and
a source of liquidity to make new investments and
dividend payments
Maintain a prudent investment pace based on the
levelof portfolio realisations, quality of investment
pipeline and market environment
Maintaining a robust financial position and strong asset
coverage in a range of forecast scenarios. NBPE has a
long-term investment level target range of 100%110%
Maintain healthy pace of
realisations and uplift on exit
Invest selectively in new investment
opportunities over time
Prudent and ecient balance
sheet management
$210 million of realisations announced
19
; $171 million
ofproceeds received
Realisations at an 11%
17
uplift to values three quarters
prior to an announced exit and a 2.1x
2
multiple to cost
10-year average annual liquidity of ~21% of the opening
portfolio value
$22 million deployed in the year, including several
follow-on opportunities in existing portfolio companies,
to support M&A and transformative acquisitions
Investing in key themes
Available liquidity of $376 million ($166 million of cash/
liquid investments and $210 million of available capacity
from the Company’s credit facility)
101% investment level at 31 December 2023
Unfunded commitments are adjusted for amounts
theManager believes are unlikely to be called.
Asof31December 2023, unadjusted unfunded
commitments were $81.9 million (a coverage ratio of
459%
20
). Adjusted commitments were $33.3 million
(an adjusted commitment coverage ratio of 1,128%)
Capital appreciation through growth in net asset
valueover time while returning capital by paying a
semi-annual dividend
Capital appreciation through growth in net asset
valueover time through a highly selective
investmentapproach
Long-term investment target level range of 100%110%
Progress
Link to
objectives
Examples of
related
factors that
we monitor
Vintage year diversification, maturity of the portfolio,
average holding periods
Uplifts to carrying value and cost
Liquidity as a percentage of opening portfolio
Available liquidity and realisation outlook
Balance sheet strength
Market environment and pricing
Available liquidity and realisation outlook
Compliance with financial covenants of RCF
KEY PERFORMANCE INDICATORS
Total proceeds received $m
21 22 23
389
120
171
300
0
500
200
100
400
$171m
proceeds received
11%
2023 uplift to
carrying value three
quarters prior
17
2.1x
2
original cost
Total new investment $m
21 22 23
168
55
22
150
0
250
100
50
200
Maturity profile/total liquidity $m
Total liquidity ZDP 24
376
-80
100
200
-100
400
0
300
$1.5bn
gross assets
101%
invested
$166m
cash/liquid investments
$210m
undrawn credit facility
14
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
$22m
invested in 2023
››
See footnotes on pages 114 -115
››
See footnotes on pages 114 -115
15
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Private portfolio driving value
During 2023, NBPEs private investment
portfolio appreciated in value by 5.3%
on a constant currency basis, which was
driven by the strong operating performance
of the underlying private companies,
alongside continued realisation activity.
This performance was partially oset by
a fall in value of our public investments,
which declined by 2.8% in aggregate.
Foreign exchange provided a small tailwind
to the Sterling and Euro portfolio valuations.
Taken together, the portfolio generated
a return of 4.9%
21
in the 12 months.
Peter von Lehe, JD
Managing Director,
Head of Investment Solutions and Strategy,
Member of InvestmentCommittee
Paul Daggett, CFA
Managing Director,
Member of Investment Committee
MANAGER’S REVIEW
Continued strong operating
performance driving value
16
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NBPE’s portfolio is built investment by
investment from the bottom-up by co-
investing alongside some of the world’s
leading private equity managers. This allows
us to pick what we believe are the most
attractive investment opportunities, sourced
from our $110bn Private Markets platform.
We focus on resilient business models across
two key themes: long-term secular growth
and/or companies with low expected
cyclicality. Long-term secular growth
investments are expected to benefit from
higher and sustainable long-term growth
across economic cycles, driven by favourable
tailwinds from demand trends or shifts
in behaviour. Businesses with lower expected
cyclicality often service more defensive end
markets, are often “essential services” and
may oer reasonable downside protection
during periods of economic weakness.
In both cases, we seek to partner with private
equity managers with deep domain experience,
who demonstrate the ability and track record
to add value and drive earnings growth.
While we do not set specific industry or
geographic targets, the portfolio naturally
gravitates to certain industries, based on the
factors discussed above. The largest industry
concentrations are technology, media and
telecom (TMT), consumer/e-commerce and
industrials/industrial technology. In each
of these industries, there is meaningful
exposure to a broad set of attractive sub-
sectors and end-markets. We believe the
companies in our portfolio are dierentiated
and highly attractive, which can grow revenue
and EBITDA meaningfully over time given
characteristics such as large-scale competitive
positioning, mission-critical products or
services and diversified end markets.
An attractive portfolio
of co-investments
As at 31 December 2023, NBPE’s portfolio of
co-investments was comprised of 87 private
companies invested alongside 53 private
equity managers, valued at $1,224 million,
or 93% of fair value of the portfolio. There
were 14 public companies in the portfolio,
companies which have IPO’d in recent years and
where NBPE retained a portion of the
investment. Following a number of full and
partial stock sales during 2023, the public
portfolio now represents 10% of fair value and
we expect this to continue to reduce over time.
Software
49%
Technology services
21%
Telecom & media
14%
Hardware
7%
Fintech
6%
Consumer internet
3%
Tech, media & telecom
22%
Industrials/industrial
technology
18%
Consumer/e-commerce
21%
Other
5%
Energy
1%
Business services
12%
Financial services
12%
Healthcare
9%
Industrial technology
36%
Specialty chemicals
23%
Distribution
16%
Manufactured products
& packaging 7%
Fleet & environmental
services and other 18%
Significant exposure to attractive sub-sectors
MANAGER’S REVIEW
Resilience amid
ongoing uncertainty
MANAGER’S REVIEW
In this quest for reliability, these
investors are often turning towards
companies providing mission-critical
products and services.
The term ‘mission-critical’ refers
to systems, applications, products
or services which are essential
to the fundamental operations of
a business – as failure could disrupt
productivity or impair the business’
operations and potentially trigger
significant losses.
It is easy to associate the term
mission-critical’ exclusively with
industries such as technology,
telecommunications, transportation
and power – given the immediate,
visible disruption likely to ensue
should operations suddenly halt.
However, there is a vast array of
companies across diverse industries
providing pivotal functions. Disruptions
to these companies could in turn
aect the ability of customers to
maintain production or functionality.
In addition to providing predictable
cash flows and having an ability to
successfully operate with leverage –
key qualities sought after by private
equity funds – providers of mission-
critical products and services often
display high customer retention,
enabling the companies to pass
on reasonable cost increases where
necessary. This is an incredibly
valuable attribute for investors
in today’s economic climate.
In a focus on resilient growth,
we shine a spotlight on a number
of appealing mission-critical
opportunities and look at three
very dierent companies, operating
in diverse sectors, but all providing
applications that are core to businesses
and industries running eciently.
The economic environment has undeniably become more challenging
thanwhat we have been accustomed to over the past decade or more.
Withuncertainty in the economic outlook likely to continue for the
foreseeable future, private equity investors are understandably
prioritisingcompanies displaying resilient, consistent revenue streams.
Case study
Specialist solutions
Specialty chemicals and servicesprovider
Industrials Platinum Equity
$50m
Value at
31 December 2023
In 2021, NBPE co-invested in Solenis,
aleading provider of special chemicals
and solutions to water-intensive
industries, alongside Platinum Equity.
With more than 16,100 employees
and 69manufacturing facilities,
its operations span 130 countries.
The solutions Solenis provides are
critical to its customers, providing
an essential input without which
these businesses could not fulfil
products for their end customers.
For instance, without purified water,
paper mills would be unable to
produce paper, the key component
of the food packaging industry –
or without certain chemical solutions,
adhesive producers would not be
able to manufacture wood adhesive
for use in furniture manufacturing.
Solenis stands as a key player in large,
growing and resilient markets,
driving high customer retention
and strong reoccurring revenues.
This resilience is further amplified
by the company’s accretive
acquisitions. Since NBPE’s original
investment, the company has
completed six acquisitions including
the $4.6 billion transformative
acquisition of Diversey in July. These
acquisitions have created a company
with significantly increased scale,
broader global reach and the ability
to oer a ‘one-stop shop’ suite
of solutions for water management,
cleaning and hygiene issues on
a global basis. These strategic moves
position Solenis as an even more
valuable partner for its customers.
17
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
MANAGER’S REVIEW
Monroe Engineering is another
mission-critical company we have
invested in, alongside AEA Investors.
The company supplies a wide range
of engineered products – including
fasteners, casters, hinges, handles
and magnets to various end markets
such as aerospace, defence, medical,
renewable energy, transportation,
consumer goods and other diversified
industrial markets.
For example, its hinges are used in
manufacturing conveyor
dishwashing machines, which are
essential in the hospitality sector.
With a comprehensive selection of
both standard and custom-
engineered products, Monroe caters
to customers looking to simplify their
component design and procurement
process. Additionally, with exposure
to 20 dierent end markets,
Monroe’s essential products are
relied on by a local customer base,
helping to build stable longer-term
revenues. Since our investment in
2021, Monroe has continued to grow
through acquisition and is now
NBPE’s 12th largest company as of
31 December 2023.
Critical components
Industrials AEA Investors
Distributor of mission-critical standard
and custom-engineered products
$32m
Value at
31 December 2023
Case study continued
Headquartered in Rome, the
Engineering Group is a digital
transformation company. The business
develops and manages innovative
solutions for business areas where
digitalisation is having the biggest
impact. It operates in multiple market
segments (from finance to healthcare,
from utilities tomanufacturing and
many more), providing clients with
technology, software, system
integration and consulting services
with a focus on solutions that drive
value and improve processes. For
example, inthe healthcare sector,
it designs systems to digitise processes
and leverage technologies to improve
patient care, quality of work of
medical operators and the overall
sustainability of healthcare systems.
In the utilities sector, it has developed
an end-to-end water management
system to manage and reduce water
loss. The system digitises information,
locates leaks, shares data in real time,
performs predictive analysis of water
network deterioration, and alerts and
manages field teams. The business
has grown organically and through
M&A and with a diversified portfolio
built around proprietary solutions,
best-of-breed market solutions
andmanaged services it has built
a leading market position in Italy
and an expanding global footprint.
Mission-critical technology
driving eciencies
$26 m
Value at 31 December 2023
Technology/IT NB Renaissance
Provider of systems integration,
consulting and outsourcing services
Our portfolio includes multiple other companies within the mission-critical theme.
The unique attributes of these groups, including indispensable services and high customer
retention, help build steady and reoccurring revenue streams. As a result, these companies
should significantly contribute to the resilience of our portfolio – even amid the continued
challenging economic conditions.
18
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
19
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
MANAGER’S REVIEW
Demonstrated resilience
across the portfolio
Strong underlying growth and resilience
continued to drive positive performance
of NBPE’s private companies in 2023 despite
continued challenges in the operating
environment. Sectors such as consumer,
industrials, TMT and financial services
in particular saw robust end market demand
with growth driven by a combination
of organic growth and M&A. In certain cases,
growth momentum was driven by new
product launches and pricing initiatives,
and combined with cost savings initiatives
and operational eciency, bottom-line
performance grew meaningfully in a number
of companies. Eective cost management
for a number of companies remained a key focus
during the year, and in some cases, these eorts
were to partially oset declines experienced in
EBITDA. A further driver of performance is the
focus by management teams and private equity
managers on strategic initiatives. These
initiatives can take a variety of forms including
product research and development, reducing
time to market, improving customer experiences
or transforming parts of organisations
to position for accelerated future growth.
In general, a number of companies made
progress during the year in areas such as this,
which we believe should ultimately produce
benefits in the coming quarters.
In particular, three companies driving
significant growth in the year were Action,
Solenis and Branded Cities. Action increased
in value by over 35% during 2023, driven by
strong like for like sales growth and new store
openings, including the first two new stores
in Portugal. During 2023, Action surpassed
10 billion in sales for the first time in its
history (net sales increased 28% year over
year) and the company added 303 net new
stores to reach more than 2,560 stores overall.
The company continues to focus on expansion
opportunities while providing customers
with products across a number of categories
at competitive prices.
Solenis continues to drive meaningful value
for its customer base. For example, for pulp
and paper mill customers, Solenis identified
a chemistry change to remove solids from mill
water systems, helping customers with cost
savings while reducing chemical deliveries
per month (and fewer chemicals used overall),
ultimately making mills safer and more
environmentally friendly. We believe Solenis
continues to drive meaningful value for its
customers, serving to address critical needs,
and believe the company is well positioned
for future growth. Our investment in Solenis
was written up by $13 million in the year.
Branded Cities, a leading outdoor media
and advertising company, has premier digital
and static signage across some of the largest
markets in the US and Canada, situated in
some of the world’s most iconic locations
including the Las Vegas Strip, Times Square,
and West Hollywood. In 2023, the company
continued to see strong momentum,
launching a number of new initiatives during
the year. For example, in March 2023, the
company announced an exclusive partnership
with Caesar’s Entertainment to build and sell
digital advertising and marketing campaigns
on new full motion displays on the Las Vegas
Strip. In late 2023, the company also announced
plans to launch a new and exclusive transit
digital network in the midtown bus terminal,
a major transit hub in New York City. NBPE’s
investment in Branded Cities was written up
by $16 million in the year.
$69m
Total portfolio value change
0
50
100
150
200
250
Total portfolio
value change
Impact of
foreign exchange
Total value
change of
quoted
companies
Total value
change private
All other
negative
Top 5
negative
All other
positive
Top 10 positive
105
47
(50)
(37)
64
69
(5)
9
Key performance drivers in 2023, $m
››
See footnotes on pages 114 -115
20
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Both management teams and private equity
managers remain focused on long-term
strategic initiatives, including ways to lower
costs and identify supply chain savings,
seeking eciencies in working capital
management, expanding distribution
footprints, enhancing profitability and
launching new product pipelines. In several
instances, companies continued to pursue
accretive M&A opportunities to further
expand end-markets and contribute to future
growth, positioning the companies for higher
top and bottom line growth over time.
There are also a number of companies which
continued to face headwinds within their
respective markets, which impacted revenue
and EBITDA growth and valuations. Private
equity managers continue to work through
issues by focusing closely on the underlying
operating trends and enacting measures,
as needed, to stabilise and ultimately
improve operations.
Lower valuation and leverage
multiples
Across the portfolio, on a weighted average
basis, the LTM EBITDA valuation multiple was
14.9x
22
at 31 December 2023, which compared
to a valuation multiple of 15.2x at the end of
the prior year. The valuation multiple declined
slightly year over year. The 5.3% increase
in private valuations during the year was
primarily driven by the operating performance
of the companies.
The weighted average net leverage multiple
was 5.3x
22,23
across the portfolio compared
to 5.5x at 31 December 2022. In certain
companies within the portfolio, leverage
multiples increased, reflective of M&A activity
funded with debt, while other companies saw
leverage multiples decline as a result of strong
earnings growth; on balance, this led to
an overall lower portfolio leverage multiple.
We continue to believe leverage levels are
prudent across the portfolio and capital
structures at the underlying companies are
broadly optimised for the current macro
environment with limited near-term
maturities and the vast majority of leverage
by value is in companies with cov-lite debt
terms. In addition, the portfolio has a strong
average interest coverage ratio. Looking across
the interest coverage ratio of NBPE’s top 30
companies, which represents 72% of the value
of private companies, the average interest
coverage ratio at 31 December 2023 was well
above the market average.
Continued EBITDA
and revenue growth
The portfolio reported another year of
strong operating performance, generating
aggregate last twelve month (LTM) revenue
and EBITDA growth of 11.4% and 15.2%
respectively
15
, with a number of companies
reporting EBITDA growth in excess of 20%.
EBITDA growth outpaced revenue growth
in the year, a function of the active ownership
of the investments, with operational
improvements and synergies from M&A
being reflected in the bottom line. LTM
revenue growth slowed in the year, with
weighted average top line growth impacted
by challenges facing certain companies,
driven by the macro environment or short
term company specific issues, such as the
timing of bookings.
Selective investments
during 2023
NBPE’s investment model means that it can
be highly selective when deploying capital,
taking into account market conditions and
balance sheet strength. During 2023, NBPE
deployed $22 million to new investments,
which consisted primarily of follow-ons in
Solenis and Renaissance Learning in order
to fund transformative acquisition
opportunities. We viewed both of these
as attractive opportunities to put additional
capital to work in investments we knew well
and in which we were already achieving
successful results, alongside good
management teams and private equity
sponsors. In both of these instances, the
transformative M&A meaningfully
contributed to operating performance during
the year, with both companies achieving
strong EBITDA growth rates during 2023.
Realisation activity picked-up
in the second half of 2023
In terms of realisation activity, it was largely
a year of two halves. During the first six
months of 2023, NBPE received $45 million
of realisations and the outlook at that time
remained uncertain. However, by the latter
half of the year, realisation activity increased
meaningfully with a number of transactions
closed or announced. Together, total cash
received during 2023 was $171 million,
or 12% of the opening portfolio value,
and there was a further $39 million of
expected proceeds from investments which
MANAGER’S REVIEW
20232022
14.9
15.2
5
10
15
20
Valuation multiples declined YoY
14.9x
22
5.3x
22,23
EBITDA valuation
multiple
Net debt/EBITDA
15. 2%
15
LTM EBITDA growth
11.4%
15
LTM Revenue growth
21
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
were announced but had not yet closed at the
end of 2023 (all of which closed in the first
quarter of 2024).
Realisations during 2023 were driven by full
and partial sales of companies within the
private portfolio, of which sales to strategic
and financial buyers represented nearly 60%
of the realisation proceeds during the year.
The three most notable realisations in the
year were the partial sale of USI, an insurance
brokerage firm, where we were able to
crystallise gains of approximately $30 million,
the full sales of our holdings in Melissa and
Doug, a toy manufacturing company and FV
Hospital, a hospital operator in Vietnam, both
to strategic buyers. These exits were further
increased by a number of smaller realisations
across the portfolio. In total, these smaller
realisations produced additional proceeds
to NBPE of $40 million, largely driven by
minority sales, as well as partial and full sales
of NBPE’s quoted holdings. As a result of the
stock sales during the year, there were four
public positions which were fully exited.
Together with full and partial sales from
quoted holdings, NBPE’s 2023 exits were
achieved at a 2.1x
2
gross multiple of capital
an d 11%
17
uplift to the carrying value three
quarters prior to the announced exit. The
uplift figure is below the trailing five year
uplift of 39%
6
, reflecting a number of factors,
including the realisations of a number of
smaller more mature investments, however,
we believe this uplift helps to validate current
carrying values.
Outlook and well positioned
for new investments
We believe the investment portfolio remains
well-positioned in the current environment
and the resilient nature of many of the
businesses means the portfolio is suited for
a range of economic conditions.
Ongoing operational enhancements
combined with prior initiatives means many
portfolio companies are becoming more
ecient, which ultimately, should prove
beneficial moving forward. M&A continues
to be a meaningful driver to complement
organic growth strategies and we are pleased
with accretive M&A in the portfolio to date.
With a weighted average age of 4.9 years
across the portfolio, many of the companies
have meaningful progress in terms of their
value creation timelines and we believe will
be in-demand assets when the exit
environment normalises.
MANAGER’S REVIEW
Types of exit
Sale to PE/Investor 35%
Sale to Strategic 23%
IPO 5%
Sale of Public Stock 15%
Income Portfolio 13%
Other Portfolio Realisations 9%
USI provides consulting and brokerage services across
property, casualty and employee benefits, mostly
to mid-market US companies. NBPE co-invested
$20 million alongside KKR’s core private equity
strategy when it acquired USI in 2017. USI operates in
a highly fragmented market, with thousands of small
independent insurance agents, and over the past six
years has completed numerous acquisitions under
KKR’s ownership, growing revenue by 2.5x. In addition
to adding scale, USI has leveraged M&A to extend its
geographic reach and build out its product
capabilities. Alongside its acquisition strategy, USI
management continues to execute organic growth
initiatives through investment in producer hiring and
technology to enhance sales eectiveness, improve
client experience, and streamline training processes.
In December 2023, NBPE partially realised some of its
holding in USI, receiving proceeds of $44 million and
crystallising some of the gains made on the investment
to date. At 31 December 2023, NBPE’s remaining
holding was valued at $18 million.
Realisation
spotlight
Financial Services
Since year end we have deployed $38 million
to two new investments, Benecon and Zeus,
each operating in dierent segments of the
healthcare space. We continue to carefully
select what we believe are the best companies
to complement the existing portfolio, balanced
against the pace of realisations and maintaining
a strong balance sheet.
Neuberger Berman
23 April 2024
››
See footnotes on pages 114 -115
1
6 7
3 4 5
8 9 10
2
Sticky and diverse customer base/
trusted provider
Natural barriers to entry, benefitting
from scale
Mid-life investment/transformative M&A
Industrials Platinum Equity
Specialty chemicals
and services provider
22
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Grow store network and expand
to other European countries
Strengthen supply chain
Operational enhancements
Strong M&A track record in a
fragmented, consolidating industry
Secular tailwinds support share gains
for independent platforms
Multiple levers for organic growth and
value creation
Growth driven by megatrends
Strong value proposition with
attractive financial characteristics
Embedded growth options
Compelling strategic rationale for
the combination of two businesses
Market leader with enduring
competitive advantages
Attractive financial profile and free
cash flow generation
Consumer 3i Financial Services Reverence Capital Industrials THL
Healthcare Veritas Capital
European
discount retailer
Independent network of
wealth management firms
Leading provider of
automation technology
Payment accuracy and
clinical software solutions
for the healthcare industry
$85.6m
$38.6m
$56.5m
$35.0m
$49.9m
$34.8m
$48.6m $40.0m
$32.8m
6%
3%
4%
3%
4%
3%
4%
3%
3%
2%
Market leader
Defensive business model
B2C sales opportunity
Strong cash flow generation
Business Services TDR Capital
Leading provider of vehicle
remarketing services
(OB: AUTO)
TOP 20 COMPANIES
Low expected cyclicality end markets
Essential service with ‘utility-like’
characteristics
Attractive financial profile with stable
cash flow
Business Services Not disclosed
Business services
company
Business combinations create a highly
attractive position inthe market
Blue chip customer base
Strong secular growth
Lower cyclicality in end-market
customers
Technology/IT Francisco Partners
Cyber security and secure
access solutions
$33.4m
Barriers to entry lead to competitive
advantage
High-quality assets in leading locations
Leading private equity manager in the
media space
North American advertising
media company
Communications/Media Shamrock Capital
Strong value proposition and focus
on customer outcomes
Leading technology platform
Attractive market dynamics and track
record of strong financial performance
Financial Services Cinven
Wealth management
technology platform
23
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
11
Established platform with experienced
management team
Unique business model
Strong free cash flow with revenue visibility
Leading market position with diverse
end markets
Significant growth opportunities
Proven acquisition platform
Large scale and competitive positioning
High barriers to entry
Attractive entry price
Market-leading business with attractive
financial profile and strong cash flow
characteristics
Significant cost savings opportunity
Experienced sponsor with strong track
record in the consumer/retail sector
Market-leading businesses
Recent M&A has diversified revenue
streams and reducedcyclicality
Continued execution of accretive M&A
Leading technology company in Italy
Attractive IT services market with secular
growth from digitaltransformation
Consumer Neuberger Berman
Industrials AEA Investors
Consumer Neuberger BermanBusiness Services Sycamore Partners
Financial Services Further Global/
Stone Point
Technology/IT NB Renaissance/
Bain Capital
Portfolio of consumer-branded
IP assets, licensed to third parties
with a number of internally
managed DTC platforms
Distributor of mission-critical
standard and custom-
engineered products
Ticket exchange and resale
platform for buyers
andsellers
Provider of oce supplies
through a business-to-
business platform and retail
Multinational financial
consultancy firm
Provider of systems
integration, consulting and
outsourcing services
$31.9m
$2 8.4m
$30.6m
$26.7m
$30.1m
$26.4m
$29.0m
$25.9m
$28.7m
$23.9m
2%
2%
2%
2%
2%
2%
2%
2%
2%
2%
TOP 20 COMPANIES
12 13 14 15
16
17 18 19 20
Favourable environmental services
industry dynamics
Sticky and diverse customer base
Fragmented industry provides
opportunities for M&A
Business Services BC Partners
Waste management
services
Large addressable market with secular
tailwinds
Strong barriers to entry and sticky
customer base, with recurring and
diversified revenue across products/SKUs,
customers, capabilities and
manufacturing facilities
Healthcare JLL Partners
Outsourced medical device
manufacturer
Scaled business with diversified end
markets
Large underlying market with positive
growth trends
Attractive financial profile
Business Services Trilantic Capital
Partners
Professional services provider
specialising in stang and
consulting services
(NYSE: GFL)
Rapidly growing market driven
by e-commerce
Strong market position
High visibility on revenue
Industrials THL
Systems and solutions
utilised in distribution
centres
Peter von Lehe, JD
Head of Investment
Solutions and Strategy
STRATEGIC REPORT GOVERNANCE OTHERFINANCIALS
24
NB Private Equity Partners Annual Report 2023
Over the past few decades,
private equity has generated
strong absolute returns
and has meaningfully
outperformed public equity.
We identify seven levers that private equity
managers use to generate returns depending
on the idiosyncrasies of investee companies
and general market conditions.
While all seven value-creation levers are
relevant across time, the eectiveness
of each lever is determined by not only
the idiosyncratic nature of each transaction,
but also the prevailing market and operating
conditions during the ownership period.
Accordingly, investors need to consider which
levers are most likely to be eective today
and over the lifetime of their current holdings.
Investment
Selection
NAVIGATING VALUE CREATION IN PRIVATE EQUITY
The seven value-creation levers
Skill-based value creation levers
increasingly important
Selecting companies that stand to benefit from secular tailwinds,
resilient business models, high barriers to entry, recurring or
re-occurring revenue and the potential to create sustainable
earnings growth.
Management
Incentivisation
Recruiting, retaining and motivating experienced managers
to oversee the business operations of a company. Meaningful
management incentive plans increase alignment and can
improve exit outcomes for private equity investors and senior
management teams.
Resources and
Capital
to Support
Growth
Allocating the operating resources and/or capital to a company
to expand products and services, augment distribution and sales
eorts, and/or increase geographic footprint. If properly
implemented, these tools can bend the growth curve of
a company upwards.
Operational
Improvement
Providing resources for optimising revenue and pricing, cutting
costs, enhancing procurement and consolidating vendors,
re-tooling sales incentives and otherwise improving margins.
Strategic M&A
Sourcing, executing and integrating corporate acquisitions −
preferably at accretive valuation multiples − to bolster supply
chains, expand products and services, and access new customers.
M&A can also be used to deleverage capital structures and
provide interest coverage relief.
Free Cash Flow
Generation/
Debt Paydown
Using a company’s free cash flow to pay down debt both
increases equity in the capital structure and lessens future
interest costs.
Multiple
Expansion
Participating in an increase in the multiple of
earnings at which a company is valued.
25
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Selection and skills-based
levers remain highly eective
The first five levers − Investment Selection,
Management Incentivisation, Resources and
Capital to Support Growth, Operational
Improvement and Strategic M&A − are all
about investing in companies that have the
potential to grow their earnings and then
helping them to do so. Pulling these levers
requires significant skills and resources that
in our view not all private equity managers
possess, which means execution will vary
widely. These levers are also very
transaction-specific and much less reliant
than the last two levers on market
conditions. This means managers who do
have the necessary capabilities can still pull
these levers to create value, even in today’s
more challenging environment.
Market-dependent levers have
largely fallen away
Unlike the selection and skills-based levers,
Free Cash Flow Generation/Debt Paydown
and Multiple Expansion are primarily
market-driven and not meaningfully
dependent on manager skill or company
quality. Today, high interest rates are
consuming the free cash flow available for
debt paydown and full valuation multiples
make it less likely that managers will be able
to sell a company they buy today at a higher
multiple tomorrow.
With two value-creation levers out of action
or even detracting from returns, and the
remaining ones dependent on idiosyncratic
asset selection and skills-based capabilities,
we believe there will be a higher dispersion of
performance across managers and transactions.
We believe private equity can continue to generate attractive
returns, but greater reliance on skills-based value-creation levers
is likely to lead to higher dispersion of performance.
Private equity’s value-creation
levers
Given the wider band of expected outcomes,
we believe strong due diligence skills and
a highly selective investment approach are
essential in the current environment. But we
also think wider dispersion means selectivity
needs to be balanced with diversification;
portfolios should be suciently diversified
to mitigate risk, but not so diversified that
they become private equity indexes. In our
view, achieving this balance requires robust
deal flow − the larger the opportunity set,
the easier it is to be selective without
becoming too concentrated.
While past performance has never guaranteed
future results, we believe shifting market
conditions make traditional analysis of
historical track records even less relevant.
Understanding how a manager generated
returns in the past is as important as
considering what those returns were.
To further complicate this analysis, achieving
past success by making full use of market
dependent levers does not in itself disqualify
a manager from achieving success
prospectively − in our view, the best managers
make money by pulling the most eective
levers at the appropriate time. Complete
due diligence now requires a holistic approach
that incorporates selection and skills-based
capabilities. This implies a full understanding
of the managers market outlook, sourcing
capability, relationship network, industry
expertise, operating toolkit and more.
Market conditions favour
co-investing
Finally, as part of a diversified private markets
portfolio, we believe co-investments are
particularly well suited to present market
conditions. Co-investing involves partnering
with a private equity manager to provide
equity capital for a single company outside
of a traditional fund structure.
These methods of implementation can deliver
critical insights into a manager’s command
of the value-creation levers, particularly those
we believe to be more eective in the current
market environment. When thoughtfully
implemented, these strategies oer the
opportunity to own high-quality businesses
alongside top-tier managers in their core
areas of expertise.
REQUIRES
MANAGER EXPERTISE AND EXECUTION
Investment
Selection
Free Cash Flow Generation/
Debt Paydown
Management
Incentivisation
Multiple
Expansion
Resources and Capital
to Support Growth
Operational
Improvement
Strategic
M&A
REQUIRES
ACCOMMODATIVE ENVIRONMENT
NAVIGATING VALUE CREATION IN PRIVATE EQUITY
ESG is integral to our firm
Neuberger Berman believes that integrating
ESG considerations throughout the
investment process can potentially lead
to more consistent and better investment
outcomes by helping to identify both
material risks and opportunities to drive
value. We are focused on long-term
partnerships and seek to engage with
investee General Partners to promote
ESG integration
NBPE benefits from the ESG leadership
and resources of Neuberger Berman
Deep resources
Dedicated ESG resources: 27 ESG investing
professionals supporting the deepening of
ESG integration into investment strategies
across various asset classes
14
2023 UN PRI assessment: In our 2023 PRI
Assessment, Neuberger Berman scored
above the median of all reporting signatories
and large investment management peers
globally for our ESG integration eorts in
every UN PRI reported category. Neuberger
Berman achieved top scores in multiple
categories including the Policy, Governance
and Strategy category (formerly, Investment
and Stewardship Policy) and the Indirect –
Private Equity category
12
Responsible Investment Policy: Dedicated
NBPE Responsible Investment Policy
formalises NBPE’s commitment to integrating
ESG throughout its investment process
Direct investments
ESG integration: ESG analysis is a part of due
diligence for direct investments and is included
in Investment Committee memorandums
for potential investments by NBPE. Due
diligence of direct investments includes
an assessment of industry-specific material
ESG factors, alongside the ESG integration
of the lead General Partner (“GP”)
UN Sustainable Development Goal (UN SDG)
Thematic Alignment: As a value-add to its
fundamental due diligence, the Manager
seeks to assess company UN SDG
thematic alignment potential as further
evidence of a companys ability to
deliver long-term value
NB Private Equity Partners Annual Report 2023
A focus on
ESG across the
investment process
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
››
See footnotes on pages 114-115
26
GOVERNANCE OTHERFINANCIALSSTRATEGIC REPORT
Amplify
Seek to achieve a financial goal
by investing in high-quality issuers
with sustainable business models,
practices, products or services and
leadership on relevant ESG factors
Simultaneously seeking to minimise exposure
to companies with potentialadverse social
and/or environmental impacts
Assess
Consider material ESG factors
alongside traditional factors
ininvestment decision-making.
ESG factors are generally no more
significant than other factors in the
investment selection process
Material ESG factors are formally incorporated
in Investment Committeememoranda
Avoid
Ability to exclude particular
companies or whole sectors from
the investable universe
NBPE seeks to avoid companies that produce
controversial weapons, tobacco,civilian
firearms, fossil fuels andprivate prisons. NBPE
also seeks to avoid companies with known
serious controversies related to human rights
orserious damage to the environment,
including as outlined by the United Nations
Global Compact (UNGC) and OECD Guidelines
for Multinational Enterprises. Please refer
to the NBPE Responsible Investment Policy
for detailed avoidance information
Our policy is centred on the objective
of seeking to achieve better
investment outcomes through
incorporating Environmental, Social
and Governance (ESG) considerations
into theinvestment process.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
››
See footnotes on pages 114-115
27
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
e three pillars of
NBPE’s Responsible
Investment Policy
24
How ESG is integrated into
the investment process
Neuberger Berman Private
Equity is able to leverage
itsposition as a diversified
asset manager, integrating
ESG insights in order to
identify opportunities
withrespect to direct private
markets investments.
Private equity can be
well-aligned to
ESG integration
Private equity investors
have the potential to drive
improvements.
How ESG materiality
is assessed
When conducting due diligence on
direct investments, the investment team
uses our proprietary NB Materiality
Matrix to assess industry-specific ESG
factors that are likely to be financially
material (informedbythe firm’s research
sector
experts)
31
as well as the lead GP’s
level of ESG integration based on our
Manager ESG Scorecard.
How ESG factors can aectvaluations
Sector focus
Private equity managers tend to focus
on sectors that are less resource intensive
or asset heavy. As such, these also tend
to be sectors that are more ecient
and experience less volatility, benefitting
from secular tailwinds
Deep due diligence
Private equity managers are able
to conduct deep and meaningful
due diligence on a company’s specific
ESG factors that are financially material
Control
Private equity managers own and control
their portfolio companies and may
improve the environmental, social
or governance aspects of a company
during ownership
Day-to-day operations
Incremental improvements may have
positive implications for profits
Examples
Proactive approach to environmental
issues, such as resource consumption
andwaste management, may lower
operating costs
Conscientious employee policies
may lead to greater retention
and productivity
Tail risks
Addressing systematic ESG issues that
have the potential to aect business
Examples
Seeking to understand climate risk on
portfolio companies may mitigate risks
associated with extreme weather
Pre-empting potential ESG issues
maymitigate risk of breaches and
cost ofcompliance
Environmental Social Workforce Supply chain Leadership & governance
Emissions Water
management
Data privacy
&security
Pricing
transparency
Health &
safety
Human capital
development
Product safety
& integrity
Materials
sourcing
Innovation Policy &
regulation risk
Consumer goods
Extractives/Minerals
Financials
Food & beverage
Healthcare
Infrastructure
Represents a subset of factors for illustrative and discussion purposes only
25
. Shading indicates factors that are likely to be financially material.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
››
See footnotes on pages 114-115
28
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NBPE portfolio through a
UN Sustainable Development
Goal (UNSDG) thematic lens
26
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
79%
Neutral potential
UN SDG thematic
alignment
12%
2%
No potential UN SDG
thematic alignment
28
Companies that have
a mixed orunknown
benefitto people
orthe environment,
as outlined by the
UN SDGs
Potential moderate UN SDGs
thematic alignment
19%
of the portfolio has a
potential thematic
alignment towards
benefitting people or the
environment, as outlined
by the UN SDGs
27
8%
Companies that may have an overall
positive benefit to people or the
environment, such as outlined
by the UNSDG themes
Companies whose products or
services oer solutionsto long-term
social andenvironmental
challenges, such as those outlined
by the UNSDGs in addition to
additional social or environmental
dimensions as defined by the
Impact Management Project
Companies whose products and
services may potentially conflict with
the promotion of positive outcomes
for people or the environment
Overview
Concord Biotech (Concord) is one
of India’s largest fermentation-
based active pharmaceutical
ingredient (API) manufacturers.
Concord develops and
manufactures advanced life-saving
drugs across niche and complex
molecules for use in therapeutic
segments such as
immunosuppressants, anti-
infectives and oncology. Concord
has established a strong presence
and distribution network in over
70 countries spanning North
America, Europe and Asia.
Quadria has collaborated with
Concord to further its commitment
towards making a positive social
impact by promoting life-saving
drug products and increasing
availability of critical
pharmaceuticals in India and other
emerging markets.
Alignment with UN
Sustainable
Development Goal 3.4:
By 2030, reduce by one-third
premature mortality from
non-communicable diseases
through prevention and
treatment and promote mental
health and wellbeing.
Spotlight
Concord
Biotech
29
Ownership timeline
In June 2016, NBPE made
a co-investment in
Concord Biotech,
alongside Quadria Capital
Over the course of the
ownership period,
Concord more than
tripled its sales as a result
of robust organic
growth, substantial
capacity expansion,
and a focus on innovation
In August 2023, Concord
filed for IPO. The oering
size of INR 15.5 billion
was one of the largest
pharma IPOs in the past few
years. The IPO experienced
overwhelming demand
across investor categories
2017 through 2019: Concord
underwent several positive
inspections from regulatory
bodies, including the US Food
and Drug Administration, and
received Good Manufacturing
Practices (GMP) certification
for its two facilities
In 2021, Concord began
operations at its new API
manufacturing facility,
which is intended to cater
to the regulated market (EU, US,
etc.). The expansion doubled
its fermentation capacity to
1,500 m
3
, making it one of the
largest fermentation facilities
globally for non-penicillin
small molecules
Throughout the ownership
period, Quadria supported
Concord on ESG initiatives,
including measures to reduce
water consumption at its
manufacturing plants, as well
as strengthening employee
training practices and
responsible sourcing policies
Notable investment milestones
Notable company milestones
››
See footnotes on pages 114-115
Potential high UN SDGs
thematic alignment
Amounts may not add up
to 100% due to rounding
29
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
ESG Data Convergence Initiative
Neuberger Berman Private Equity is a signatory
to the ESG Data Convergence Initiative,
an industry collaboration representing 400+
limited partners and GPs (as of March 2024),
which seeks to standardise ESG metrics
and provide a mechanism for comparative
reporting for the private market industry.
Neuberger Berman Private Equity requests
the standard set of ESG metrics from GPs and
their portfolio companies on an annual basis.
Neuberger Bermans
2023 ESG highlights
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Over the past year, the private
equity ESG Investing team at
Neuberger Berman has been
focused on ESG enhancements
and engagements to advance
the private equity industry.
Neuberger Berman Private
Equity believes fostering
a dialogue with private equity
managers on ESG topics is
an important part of our role
in the ecosystem.
We engage with GPs through group and
one-on-one settings to provide guidance
and support that seeks to improve their ESG
integration practices. Given increasing focus
on such topics across the industry, ESG data
initiatives and climate-related topics have
become a growing focus. The following
are some highlights, with a focus on
engagements and industry collaboration.
Neuberger Berman Private Equity
GP Engagement Series
In late 2023, Neuberger Berman Private
Equity hosted an engagement webinar
for GPs focused on practical tools for climate
analysis in private equity. The webinar
included a presentation of the Private
Markets Decarbonization Roadmap, by
Bain & Co. In addition, Watershed, a carbon
accounting platform, presented
a demonstration of how companies can
measure, report and manage their emissions.
The questions from webinar participants
focused on data availability challenges facing
private markets investors and best practices
for reporting climate-related metrics and
progress to investors seeking this information.
30
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Thought leadership
In 2023, the private markets ESG investing
team at Neuberger Berman published a white
paper titled Navigating Climate Analysis in
Private Equity. The paper outlines some of the
challenges related to climate analysis across
the private equity industry, as well as the work
Neuberger Berman Private Equity undertook
to address these challenges by developing a
resource to potentially assess climate risk and
net zero alignment of a private equity
portfolio. As part of its broader industry
engagement, in 2023, Neuberger Berman
Private Equity contributed this resource for
GPs to the Private Markets Decarbonization
Roadmap, developed by Bain on behalf of the
initiative Climat International (iCI) and the
Sustainable Markets Initiative’s Private Equity
Task Force.
Reporting
Neuberger Berman reports to clients through
regular updates to the ESG section on the
firm’s website, a firm-wide Annual ESG
Report, as well as an annual Private Markets
ESG report. In 2023, Neuberger Berman also
published its inaugural firm-level Task Force
on Climate-Related Financial Disclosures
(TCFD) Report, covering the 1 January, 2022
through 31 December, 2022 period. The report
provides a firm-level overview of how we
consider climate risks and opportunities
across both client investment portfolios and
our own business strategy and operations.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Key highlights of the report include:
The suite of climate tools we oer clients
across asset classes;
The innovative climate investment
strategies for clients that desire such
products, including those that we created
in partnership with clients;
Key examples of our engagement with
issuers on financially material climate risks
and opportunities; and
A deep-dive on climate metrics across
our portfolios and operations.
Neuberger Berman’s climate-related
corporate strategy is reviewed annually
and amended as needed. More information
and up to date TCFD reporting is available
on our website: Reporting & Policies |
Neuberger Berman (nb.com)
As a rm, Neuberger Berman is
committed to the Task Force on
Climate-related Financial Disclosure
(TCFD), and we are committed to
understanding our climate-related risks,
while managing those risks that are
material to the portfolio
31
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
MANAGER – PEOPLE & CULTURE
An award-winning culture
For 10 consecutive years
30
, Neuberger
Berman has been named first or second in
Pensions & Investments Best Places to Work
in Money Management survey (among those
with 1,000 employees or more)
Neuberger Bermans business
principles
Our clients come first
We are passionate about investing
We invest in our people
We motivate through alignment
We continuously improve and innovate
Our culture is key to our long-term success
Neuberger Berman,
a client-led partnership
As a private, independent,
employee-owned investment
manager, Neuberger Berman
has the freedom to focus
exclusively on investing for
itsclients forthe long term.
By design, Neuberger
Bermanattracts individuals who
share a passion for investing and
who thrive in an environment
of rigorous analysis, challenging
dialogue, and professional
andpersonalrespect.
98%
Retention levels of NB Private Markets Managing
Directors and Principals
8
Jonathan Shofet
Global Head of Private
Investment Portfolios
and Co-Investments
››
See footnotes on pages 114-115
32
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Neuberger Bermans
commitment to equity,
inclusion and diversity
We believe firms perform better
for clients and stakeholders
when there isadiverse
population, and atruly equitable
and inclusive environment.
Diversity alone is not enough.
Equity
To be ‘equitable’ is to level the playing field for all
Inclusion
An environment where everyone can flourish
and be their best selves
Diversity
We look for a breadth of diversity across
many characteristics
Joana Rocha Sca
Head of Europe Private Equity
34%
11
of Neuberger Berman Private
Markets employees are female
21%
11
of Neuberger Berman Private Markets
Managing Directors are female
››
See footnotes on pages 114-115
33
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
MANAGER – PEOPLE & CULTURE
The Investment Committee has an average of more than
30years of professional experience and has worked
together for an average of more than 20 years.
e Investment Committee
MANAGER – PEOPLE & CULTURE
MANAGING DIRECTOR
Anthony Tutrone
Global Head of NB Alternatives
MANAGING DIRECTOR
Peter von Lehe, JD
Head of Investment Solutions and Strategy
MANAGING DIRECTOR
Paul Daggett, CFA
MANAGING DIRECTOR
Patricia Miller Zollar
MANAGING DIRECTOR
David Stonberg
Deputy Head of NB Alternatives and the Global
Co-Head of Private Equity Co-Investments
MANAGING DIRECTOR
Joana Rocha Sca
Head of Europe Private Equity
36 YEARS
of industry
experience
30 YEARS
of industry
experience
33 YEARS
of industry
experience
25 YEARS
of industry
experience
25 YEARS
of industry
experience
37 YEARS
of industry
experience
34
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
e Investment Committee continued
MANAGER – PEOPLE & CULTURE
38 YEARS
of industry
experience
MANAGING DIRECTOR
Michael Kramer
MANAGING DIRECTOR
Elizabeth Traxler
SENIOR ADVISOR TO THE NEUBERGER BERMAN
PRIVATE EQUITY DIVISION
Brien Smith
MANAGING DIRECTOR
Jonathan Shofet
Global Head of Private Investment
Portfolios and Co-Investments
MANAGING DIRECTOR
Jacquelyn Wang
MANAGING DIRECTOR
Kent Chen, CFA
Head of Asia Private Equity
28 YEARS
of industry
experience
22 YEARS
of industry
experience
22 YEARS
of industry
experience
42 YEARS
of industry
experience
31 YEARS
of industry
experience
27 YEARS
of industry
experience
MANAGING DIRECTOR
David Morse
Global Co-Head of Private Equity Co-Investments
35
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
STAKEHOLDER ENGAGEMENTSTAKEHOLDER ENGAGEMENT
How the Board engages
with stakeholders
STAKEHOLDER ENGAGEMENT
GOVERNANCE
The Directors are responsible for acting in a way that they consider, in good faith, is most likely to promote
the success of the Company for the benefit of its members as a whole. In doing so, they have had regard to
the factors set out in Section 172(1)(a) to (f) of the UK Companies Act 2006, which includes the needs of
stakeholders and wider society. As NBPE is a Guernsey company, this legislation does not directly apply to
it, but the Board is cognisant of the importance of these matters, and by virtue of the requirement set out in
the AIC Code of Corporate Governance, holds itself to these standards.
The Board provides appropriate training to all new Directors, which includes training on their duties,
and maintains a programme of continuing development. More details on Director induction and Board
evaluation can be found on pages 50 and 51.
Set out below is a summary of NBPE’s key stakeholder groups and how it engages with them, in addition
to examples of key topics of relevance to the stakeholder groups and how their interests have been
considered in decision making. As an investment company, the Company does not have any employees.
SHAREHOLDERS
The support of the Company’s current
and future shareholders is critical
to the continued success of the
business and the achievement of its
strategic objectives.
The Board understands that, in addition
to performance, shareholders also
place great emphasis on governance,
regulatory compliance and ESG. The
Company’s business is conducted
taking these factors into account.
HOW THE BOARD ENGAGES KEY TOPICS IN THE YEAR EXAMPLES OF CONSIDERING STAKEHOLDER INTERESTS
The Board welcomes the views of shareholders and
places great importance on communication with
its shareholders.
The Board maintains awareness of shareholder views
by means of regular updates and insights from the
Investment Manager and advisers.
Key communication channels with shareholders include:
Shareholder engagement: Representatives from the
Investment Manager, regularly meet with analysts and
existing, new and potential shareholders. The
Investment Manager also presents at industry
conferences. Feedback from these meetings is shared
with the Board.
Publications: In addition to the Annual Report,
the Company publishes monthly NAV updates and
factsheets, and investor presentations to provide
regular financial updates throughout the year.
Capital Markets Event and AGM: The Directors
are available to meet shareholders through NBPE’s
annual Capital Markets Day (or virtual equivalent)
or via the AGM.
Website: To provide significant transparency and help
inform investors, all the Company’s publications are
available on the website.
Shareholder concerns: Shareholders may also contact
the Chairman, Senior Independent Director and other
Directors through the Company Secretary.
Portfolio performance, including the impact
of the inflationary environment, and elevated
interest rates
How portfolio companies navigated
operational challenges and inflationary
pressures, and impacts to supply chains
Discussions around the general state of
markets/economy and the rising cost of living
and the impact on companies in the portfolio
Information on any new investments and
realisations
Shareholder communications
Share price performance, discount and
buybacks
Appointment of Jeeries to repurchase
shares at their discretion, based on criteria
set by the Board
Dividend policy
Approach to capital allocation framework
Private equity market environment
Information on the Company’s Responsible
Investment Policy
Balance sheet management, including the
maturity and final payo of the 2024 ZDPs
The Investment Manager’s appointment
of a new Head of Investor Relations for NBPE
The Board comprises six independent directors.
The AGM that took place on 15 June 2023 provided
an opportunity for shareholders to engage with
the Board.
The Board reviewed and discussed the underlying
performance of portfolio companies in the context
of the broader operating environment.
The Board held numerous discussions throughout the
year with Company advisers related to the share price
discount to NAV. In June 2023, the Board announced
Jeeries was appointed to repurchase shares at their
discretion, based on criteria set by the Board. During
2023, Jeeries purchased 258,424 Class A shares.
The Capital Markets Day was held virtually on
5 October 2023. Shareholders were able to ask
questions, via a Q&A facility. A replay was made
available on the website for any shareholders unable
to attend.
To enhance the Company’s outreach and
communications with shareholders, the Investment
Manager appointed a new Head of Investor Relations
for NBPE.
STRATEGIC REPORT
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NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
STAKEHOLDER ENGAGEMENT
INVESTMENT MANAGER
It is important that the Board
maintains a strong relationship with
the Investment Manager. The Company
leverages the strength of Neuberger
Berman’s Private Equity platform
to seek the most attractive direct
investment opportunities.
The Investment Manager prepares
detailed financial reports for the Board
on the portfolio, performance, cash
flow modelling and other financial data
to help guide discussions and decisions.
HOW THE BOARD ENGAGES KEY TOPICS IN THE YEAR EXAMPLES OF CONSIDERING STAKEHOLDER INTERESTS
The Board maintains good relationships with key
members of the Investment Manager’s investment
team, as well as other functions, including finance,
legal and investor relations.
The Investment Manager also interacts with other
service providers as necessary for the day-to-day
management of the Company.
The Directors review financial reports prepared by the
Investment Manager ahead of each quarterly Board
meeting. Annually, the Audit Committee reviews
detailed reports from financial models prepared to
support the Company’s Viability Statement. In
conjunction with the Investment Manager, the Audit
Committee reviews and monitors the Company’s
investment level and investment pacing forecasts
contained within the support of the Viability Statement.
Portfolio performance, including the impact
of the inflationary environment, elevated
interest rates, and supply chains and other
macro economic risks
Information on any new investments and
realisations
Private equity market environment
Information on the Company’s Responsible
Investment Policy
Developments in the Manager’s ESG policies
and reporting
Balance sheet management, including the
maturity and final payo of the 2024 ZDPs
Share price performance and discount
Investment level and cash flow forecasts
Debt maturities
Approach to capital allocation framework
The Manager and the Company work together
to ensure they are aligned. Both share a mutual interest
in the success of the investments as well as the Company’s
perception and reputation in the marketplace.
Both the Manager and the Board strive to maintain
a strong working relationship to achieve these goals.
The Board reviewed detailed financial model forecasts
prepared by the Manager to assist with cash
forecasting and available liquidity.
INVESTEE ENTITIES
The Investment Manager is
responsible for executing the
Company’s overall investment policy
and objective, as approved by the
Board. As such, day-to-day
engagement with underlying private
equity managers, and investee
companies is undertaken by the
Investment Manager.
HOW THE BOARD ENGAGES KEY TOPICS IN THE YEAR EXAMPLES OF CONSIDERING STAKEHOLDER INTERESTS
The Board receives updates at each scheduled Board
meeting from the Manager on the investment
portfolio, including regular valuation reports and
detailed portfolio and returns analyses.
The Investment Manager maintains a wide
range of private equity networks and close
relationships with leading private equity
managers globally. The Investment Manager
regularly conducts discussion of key private
equity topics, including deal sourcing, market
environment, fundraising, team composition,
investment performance and monitoring,
ESG and other factors with various managers.
The Investment Manager strives to be a solutions
provider and strategic partner to underlying private
equity managers, which ultimately, over time,
strengthens and cultivates the relationship.
STRATEGIC REPORT
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NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
STAKEHOLDER ENGAGEMENT
LENDERS
The Company’s co-investment model
means that NBPE can respond to
market conditions and be capital
ecient. NBPE does not need to take
o-balance sheet risk in the form of
unfunded commitments to achieve
a target investment level.
In order to achieve this, the Company’s
lenders provide the Company with
debt and debt-like financing with
maturity dates, fixed capital
entitlements which bear interest and
fees at various interest and fee rates.
HOW THE BOARD ENGAGES KEY TOPICS IN THE YEAR EXAMPLES OF CONSIDERING STAKEHOLDER INTERESTS
At the overall direction of the Board, members of the
Investment Manager’s finance and investment teams
maintain dialogue with the Company’s bank and
lender counterparties.
Feedback on these discussions is shared with the Board
at the quarterly Board meetings, or as required.
The lenders are focused on asset coverage,
valuation of assets and key financial ratios on
the Company’s liquidity and financial position.
The Investment Manager keeps the Company’s lenders
aware of portfolio developments throughout the year
through both public disclosures and private investment
monitoring reports.
In addition, the Company provides detailed compliance
reports to the Company’s credit facility lender and the
Board, showing asset coverage, ratios and covenant tests.
Information regarding the Companys current
borrowing can be found at Note 4 to the Financial
Statements on page 90.
OTHER SERVICE PROVIDERS
The Company’s service providers work
with the Investment Manager,
Company Secretary and Board to
achieve the Company’s objectives.
Other service providers include but
are not limited to: fund administrators,
tax accountants, auditors, brokers,
investor relations, legal counsel,
marketing and advisory services,
external research, and media relations.
HOW THE BOARD ENGAGES KEY TOPICS IN THE YEAR EXAMPLES OF CONSIDERING STAKEHOLDER INTERESTS
The Board maintains regular contact with its key service
providers and receives regular reporting from them,
both through the Board and committee meetings,
as well as outside the regular Board meeting cycle.
The Management Engagement Committee
formally assesses performance, fees and
continuing appointments annually to ensure
that the key service providers continue to
function at an acceptable level and are
appropriately remunerated to deliver the
expected level of service.
The Management Engagement Committee
reviews and evaluates the financial reporting
control environments in place at each service
provider.
The Company’s service providers have been carefully
selected for their relevant expertise. Their advice,
as well as their needs and views, are routinely
considered by the Board.
More information concerning the service provider
review undertaken by the Management Engagement
Committee can be found on page 55.
STRATEGIC REPORT
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NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
STAKEHOLDER ENGAGEMENT
THE COMMUNITY AND THE ENVIRONMENT
NBPE believes investing responsibly
and incorporating material ESG
considerations can help inform the
assessment of overall investment risk
and opportunities.
To reflect the Company’s ongoing
commitment to ESG, the Company
published a Responsible Investment
Policy in 2020 and updated it in
September 2023.
HOW THE BOARD ENGAGES KEY TOPICS IN THE YEAR EXAMPLES OF CONSIDERING STAKEHOLDER INTERESTS
ESG issues are a standard part of the Investment
Manager’s investment process, and increasingly
integral to the Board’s thinking.
The Investment Manager integrates ESG considerations
throughout the investment process by helping to
identify both material risks and opportunities, and
the Board, through the Audit Committee, receives
regular updates on the Manager’s ESG practice and
the evolution of its ESG policies. The Board reviews the
Company’s compliance with its Responsible
Investment Policy.
In addition to the regular updates from the
Investment Manager’s ESG team, the Board,
through the Audit Committee, receives and
discusses detailed analysis of the sustainability
impact of the portfolio on an annual basis,
which includes details on material ESG risks
of underlying portfolio companies.
ESG considerations and the impact of the Company
on the community and environment are regular topics
at Board meetings.
More information concerning the Company’s approach
to ESG can be found on pages 26 to 31.
STRATEGIC REPORT
39
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Risk management framework
The Board considers the risk management
framework with investment, financial,
strategic, operational and external risks
tobe the principal risks and uncertainties
ofthe Company. Within each of the five
principal risks and uncertainties categories
on pages 41 to 43, the Directors have
identified a number of key underlying risks.
While it is not possible to identify and manage
every risk to the Company, the Directors seek
to identify the key underlying risks within
each category where possible.
Each identified key underlying risk includes
information on the controls relied upon
by the Board, andthe responsible provider
or providers. Through a matrix, each key
underlying risk iscolour-coded between
green (low-risk) and red (high/elevated risk)
along with the potential risk impact to
the Company and how the risk has changed
over time. Emerging risks are also identified
separately on the matrix. Judgement
is applied to determine these assessments
andthe Board considers any changes to
the assessments of the key underlying risks
onaquarterly basis. Not all risks can
be eliminated; therefore, there is only
a reasonable assurance against fraud,
misstatements or losses to the Company.
The Board is ultimately responsible for the
identification and assessment of risk as well
as for monitoring the key risks to the
Company on an ongoing basis. The Board has
appointed the Investment Manager as AIFM,
which is responsible for the day to day
identification and monitoring of risks and
maintenance of the Company’s Risk Matrix,
changes to which are reviewed on a quarterly
basis. The risk matrix identifies risks
categorised bythe principal risks and
uncertainties. Theprincipal risks identified
by the Board areset out on pages 41 to 43.
The Board also monitors the outlook of the
key underlying risks to assess future risk areas.
As of 31 December 2023, the Board identified
several underlying risks which were
determined to have an elevated or high-risk
outlook. These risks included sovereign
and political factors, the general market
environment and elevated interest rates
for a sustained period. In addition, the Board
considered the risks related to cyber and
cyber attacks as an elevated risk, with
the potential to highly impact the Company.
The Board further noted no successful cyber
attacks had occurred to date.
The Board considers emerging risks as those
which can be identified in the current
environment, but which are inherently
longer-term in nature or uncertain as to
theirtiming. The Board further recognises
emerging risks are dicult to quantify
and highly uncertain as to if and when they
may impact the Company and to what extent.
However, the Board considers a number
of emerging risks to the Company, which
include: the general market environment
and impacts from inflation and rising interest
rates; geopolitical risks; the share price discount
to NAV; and cyber risks. The Board believes the
Company is mitigating these risks to the extent
possible and noted the robust investment and
portfolio monitoring procedures by the
Manager to understand the operating
environment of portfolio companies, including
dialogues with lead private equity managers.
Investment
Committee**
Valuation
Committee**
Investment
Risk Committee
Operational
Risk Committee
NBPE Board of Directors
NBPE Audit Committee
Investment Manager: NB Private Markets
*
Independent assurance Internal audit
Independent control units
that collaborate
Infrastructure
Technology
Business
Technology
Operations
Finance
Legal
Compliance
Asset
Management
Guideline
Oversight
Investment
Risk
Operational
Risk
* NB Private Markets is a general description of the business of the Investment Manager, NB Alternatives Advisers
LLC; there has been no change to the Investment Manager of NBPE
** Highlights represent committees of the Investment Manager; other committees presented above are resources
of the parent company, Neuberger Berman, of the Investment Manager
RISK MANAGEMENT
Independent teams
that collaborate to
identify and
mitigate risk
STRATEGIC REPORT
40
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
The table below shows a summary of the key underlying risks within each of the five principal risks and uncertainties identified by the Board.
The status below shows whether the principal risks are increasing, decreasing or not changing compared with the previous year.
PRINCIPAL RISKS AND UNCERTAINTIES
Principal risks and uncertainties
INVESTMENT RISK
KEY RISK POTENTIAL IMPACT KEY CONTROLS ASSESSMENT
Investment decisions – Selecting investments to generate
the best risk-adjusted returns
Sub-optimal risk-return investment decisions could lead
the Company to higher risk investments to generate a desired
level of return.
Highly experienced Manager with deep team
Extensive due diligence process
ESG-integrated investment process
Thorough investment underwriting and duediligence
Regular Board review of Manager performance, operations
and capabilities
Robust, consistent valuation processes
Monthly NAV updates
Quarterly valuation review
Annual audit and semi-annual review
Manager review of portfolio and monitoring offoreign
exchange exposure when analysing new investments,
if applicable
Performance – Achieving base case of investment thesis
and meeting long-term objectives
Inconsistent investment performance would impact
the Company’s financial position.
Valuations – Misstatements to NAV The valuation of investments directly impacts the Company’s
financial position, key ratios/covenants and performance.
Foreign exchange – Fluctuations of exchange rates
of non-USD investments in local currency relative to USD
Fluctuations of exchange rates can impact performance when
translated to dollars.
FINANCIAL RISK
KEY RISK POTENTIAL IMPACT KEY CONTROLS ASSESSMENT
Liquidity management – Inadequacy of cash balances
for short-term needs; short-term liquid investments in the form
of US Treasury bills for ecient cash management purposes
Credit facility – Availability of borrowings and maintenance
ofcovenants
ZDP liability – Ability to repay at maturity
Foreign exchange – Fluctuations in GBP/USD exchange rate
for Sterling denominated liabilities
Poor management of near-term cash requirements and
of liquid investment portfolio or credit facility borrowings
impacts the Company’s ability to make new investments
and carry out day-to-day operations.
The 2024 ZDP securities mature in October 2024.
The Company’s creditworthiness would be materially impacted
bynot meeting liabilities when they come due.
Monitoring of cash balances
Review of management reports and financials
Monitoring of headroom and financial ratios
Monthly calculations of liability
Known final capital entitlement and maturitydate
Ability to fully or partially hedge currency risk through forward
currency contracts
STRATEGIC REPORT
41
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
PRINCIPAL RISKS AND UNCERTAINTIES
STRATEGIC RISK
KEY RISK POTENTIAL IMPACT KEY CONTROLS ASSESSMENT
Share price discount – Monitoring of share price discount
to NAV
Meeting business objectives – Ability to meet business
and investment objectives in current environment
A failure within strategic risks could impact the Company’s
reputation and performance.
Over time, the Company has completed a number of initiatives
aimed at enhancing shareholder value and narrowing the
discount, from portfolio construction, investor relations
initiatives, dividend policy, approach to capital allocation
and share buybacks.
Monitoring discount and review market research
Strategic investor relations programme
Periodic review of appropriateness of investment objective
and policy
Appointment of Jeeries, at their sole discretion, to repurchase
shares, based on criteria set by the Board
OPERATIONAL RISK
KEY RISK POTENTIAL IMPACT KEY CONTROLS ASSESSMENT
Legal/Compliance – Investment activity legal risks,including
investing within policy limits and compliance with regulations
Litigation – Legal action brought against the Company
or the Board
Business operations and continuity – Day-to-day operations
and management of the Company. Frameworks for business
continuity
Internal policies and procedures – Policies and procedures of
Investment Manager and key service providers of the Company
Governance – Company governance and oversight by the Board
Key professionals – Retention of key sta
Cyber/IT Security – Protection and defence against cyber attacks
Legal and compliance risks and the potential of litigation
action create significant risk and uncertainty if brought against
the Company, Boardor Manager.
Company operations are carried out by the Investment
Manager and the Administrator; a negative event at either
could impact the Company’s ability to operate day-to-day.
Policies and procedures at key service providers designed
to reduce or mitigate risks to the Company as a policy violation
could be impactful.
The Board oversees all aspects of the Company.
The Company itself has no operations or employees and instead
relies on those of key service providers. A loss of key professionals
could impact the ability of the Company to operate.
The Board considers the risks related to cyber attacks and
overall cyber security frameworks, believing that the risks from
a cyber attack have the potential to highly impact the
Company. The policies and procedures at the Investment
Manager and US Administrator include specific defences
against attacks, as well as reviews of contingency practices
and recovery procedures.
Cyber attacks at the underlying portfolio company level have the
potential to impact valuations and therefore the value of NBPE’s
investment portfolio. Risks related to IT systems and cyber are
considered in the investment decision process.
Reliance on in-house legal teams of the Manager and
external counsel
Legal negotiations and procedures to ensure adherence
to investment guidelines
Reliance on operational sta of the Manager and US
Administrator
Reviews of service providers to ensure control environments
are adequate
Business Continuity Plans of Manager and other main service
providers
Policies and procedures of the Manager and service providers
and internal controls designed to pick up potential issues
Assessment processes; review of best practices
Resources of the Manager for attracting and retaining talent
Policies and procedures related to information security at the
Investment Manager and other service providers
In the event of a cyber attack, notification by service provider
to the Board
STRATEGIC REPORT
42
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
PRINCIPAL RISKS AND UNCERTAINTIES
EXTERNAL RISK
KEY RISK POTENTIAL IMPACT KEY CONTROLS ASSESSMENT
Sovereign/Political risks – Changes in economical and
politicalenvironment
General market/Investment environment
Changes in marketor regulatory environment
Inflationary environment and supply chain risks
Interest rate environment
External risks impact the Company’s investment portfolio
to varying degrees, which could have animpact on the
Company’s performance.
External risks are inherently dicult to forecast andimpacts
are uncertain. Portfolio companies are adapting to higher
interest rates and changes within the operating environment,
where necessary. This has the potential to impact investment
valuations over time.
The Board and Manager are aware of the general market
environment and global risks generally
Risk mitigation is dicult, other than during the investment
analysis phase prior to making a newinvestment
Investment Manager maintains discussions with underlying
general partners to assess and understand potential exposure/
degree of impact
Consultation with other outside advisers
STRATEGIC REPORT
43
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Going concern and Viability Statements
Going concern
The Group’s principal activity and investment
objectives are described on pages 57 and 60
of the Report, and the Group’s financial
position is stated on page 75 of theReport.
Note 11 of the Consolidated Financial
Statements describes the Group’s risks with
respect to market, credit and liquidity risk.
On page 90 of the report, the Group’s
liquidity and available borrowing facilities
are described.
The Group’s cash flows are provided on page
80 of the Report. Given the Group’s cash flows
and financial position, the Directors believe
the Group has the financial resources to meet
its financial commitments as they fall due. The
Company has the resources to repay the 2024
ZDPs on their scheduled maturity in October.
Therefore, having considered a 12-month
horizon from the date of authorisation of this
annual financial report, the Directors have a
reasonable expectation that the Group has
adequate resources to continue to operate
into the foreseeable future and accordingly
the Consolidated Financial Statements have
been prepared on a going concern basis.
The Directors have selected a three-year
window for evaluating the potential impact
to the Group on the following basis:
Investments are subject to overall financial
market and economic conditions. Projecting
long-term financial and economic conditions
is inherently dicult, but a three-year
window is a reasonable time horizon.
Value creation plans are executed over
anumber of years and private equity
managers generally take a longer-term view
on performance, rather than a focus on
‘quarterly earnings’; three to five years is a
typical holding period target for private
equity managers.
Medium-term outlook of underlying
Company performance is typically assessed
for valuation purposes.
The outstanding class of ZDP Shares will
mature in October 2024. The Group’s ability
to refinance or repay the 2024 ZDPs isa
short-term risk as they mature within
the three-year forecast period. The Company
has no other financings maturing within
the three-year forecast period.
Based on the 31 December 2023 GBP/USD
exchange rate of $1.27, the final capital
entitlement of the 2024 ZDP Shares is
approximately $80 million. To evaluate the
Company’s financial position, the Directors
reviewed a financial model prepared by the
Investment Manager. The financial model
includes projections of cash flows, expenses
and liabilities, as well as NAV growth
assumptions to evaluate loan to value and
coverage test ratios.
The Board believes the Company is in a
healthy financial position and able to meet
upcoming liabilities when they mature.
TheDirectors further note the Company’s
$300 million revolving credit facility was
$90 million drawn as of 31 December 2023
and the Company had approximately
$115 million of liquid investments held
in the form of US Treasury Bills. Further,
the borrowing availability period extends
to 2029, beyond the maturity of the 2024
ZDP Shares. The Board noted the
credit facility, liquid investments, or a
combination of the two could be used
to repay the 2024 ZDP Shares.
Viability Statement
The Board has evaluated the
long-term prospects of the
Group, beyond the 12-month
time horizon assumption within
the going concern framework.
Further details of the forecast
and the process for assessing
long-term prospects of the
Group are set out in this section
and the Board believes this
analysis provides a reasonable
basis to support the viability
of the Group.
GOING CONCERN AND VIABILITY STATEMENTS
STRATEGIC REPORT
44
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
decline in 2024 and no growth in 2025
and2026. Further, this case only assumed
$193 million of realisations during 2024,
ofwhich $39 million had been received
through Q1 2024. 2025 and 2026 assumed
only a limited amount of realisations below
historical averages.
The key findings from this analysis and
discussions with the Manager was that, in both
cases, NBPE could continue to fund its existing
commitments, pay dividends, maintain
reserves allocated to share buybacks as well
as continue to pay ongoing expenses. Further,
the findings showed the Company would have
borrowing capacity available to repay the
2024 ZDPs atmaturity. The downside case
showed ahigher investment level in later
periods ofthe forecast (as a result of the
decline invaluations). Over the forecast
period of the downside case, NBPE
maintained ample liquidity and LTV ratios;
in addition, the 2024 ZDPs had a healthy
coverage cushion prior to their repayment
in October 2024 in the model. In light of this
analysis, the Directors concluded the
Company could continue to operate over
the three-year viability window.
The Manager discussed the key financial
assumptions and findings of the model with
the Board. The model forecasts returns and
cash flows on an asset-by-asset and on a total
portfolio basis toevaluate cash and
investment pacing considerations and the
Manager selected two cases to evaluate the
viability of the Company over the three-year
window. Both cases included expected
realisations from signed but not yet closed
transactions as well as pending new
investments funded subsequent to this
reporting period.
The base case made further assumptions
ofNAV growth and additional realisations,
both of which were below the long-term
averages of the Company. The model also
assumed a certain pace of re-investment,
based on the level of realisations from the
portfolio. The Manager views this as a
reasonable case to evaluate the prospects
of the Company based on historical levels
of portfolio realisations over time.
However, the Directors recognise that overall
market conditions represent a continued risk
and uncertainty for the Company. In light of
this, the Manager prepared a second forecast
case which was a downside case scenario,
indicative of a deep recession and slow
recovery. This case assumed a 10% NAV
GOING CONCERN AND VIABILITY STATEMENTS
STRATEGIC REPORT
45
NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Governance
GOVERNANCE
47 Governance overview
48 The Board
50 Corporate governance
57 Directors’ report
60 Investment objective and policy
61 Remuneration report
64 Report of the Audit Committee
68 Statement of Compliance with
the AIC Code of Corporate Governance
69 Statement of Directors’ responsibilities
46
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Board structure and committees
Board of Directors
William Maltby
Chairman, Independent Director
Trudi Clark
Independent Director
Pawan Dhir
Independent Director
Audit Committee
John Martyn Falla
C
Trudi Clark
Pawan Dhir
Louisa Symington-Mills
Wilken von Hodenberg
Provides oversight and reassurance
to the Board, specifically with regard to
the integrity of the Company’s financial
reporting, audit arrangements, risk
management, and internal control
processes and governance framework.
Management Engagement Committee
Trudi Clark
C
Pawan Dhir
John Martyn Falla
William Maltby
Louisa Symington-Mills
Wilken von Hodenberg
Reviews annually the performance
of the Investment Manager and the
terms of the Investment Management
Agreement. Additionally, the
Committee reviews the performance
and terms of engagement of other key
service providers to the Company.
Nomination and Remuneration Committee
Trudi Clark
C
Pawan Dhir
John Martyn Falla
William Maltby
Louisa Symington-Mills
Wilken von Hodenberg
Assists the Board in filling vacancies
on the Board and its committees and
to review and make recommendations
regarding Board structure, size
and composition. Additionally,
the Committee reviews the
remuneration of the Chairman and
Non-Executive Directors.
Good corporate governance
is fundamental to the way
NBPE conducts business.
Eective oversight of strategy and risk
is particularly important to promote
the long-term success of the Company.
The Chairman is responsible for ensuring
that the Board upholds a high standard
of corporate governance and operates
eectively and eciently, promoting
a culture of openness and debate.
The Board seeks to be responsive to both
the evolving regulatory environment and
changing expectations about the role of
business in society. In particular, the Board
seeks to ensure that its own culture and
that of the Manager are aligned with the
Company’s purpose and values, and that
the Company has the necessary service
providers with the appropriate financial
and human resources to deliver its strategy.
William Maltby
Chairman
Committee Chair
››
P64
››
P54
››
P55
C
GOVERNANCE OVERVIEW
John Martyn Falla
Independent Director
Louisa Symington-Mills
Independent Director
Wilken von Hodenberg
Senior Independent Director
47
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
e Board
William Maltby
Chairman, Independent Director
M
N&R
Appointed 21 March 2019
Background and experience
William Maltby was vice chairman of Investment Banking at
Deutsche Bank where he worked for more than 25 years.
Mr Maltby spent a further six years as a Senior Adviser to the
Investment Banking Division of Deutsche Bank. Mr Maltby
was a corporate financier specialising in financial sponsors
(private equity) and leveraged finance, and was head
of Deutsche Bank’s European Financial Sponsor Coverage
and Leveraged Finance businesses. He joined Morgan
Grenfell in 1984 which was acquired by Deutsche Bank
in 1989.
Mr Maltby was chairman of Mithras Investment Trust Plc,
a private equity fund of funds investment trust listed on
the London Stock Exchange from 2012 to 2018, when it
completed a successful realisation strategy.
Mr Maltby is also chairman of Ekins Guinness LLP.
He qualified as a Chartered Accountant with Peat Marwick
and has a law degree from the University of Cambridge.
Contribution to NBPE
Mr Maltby’s expertise brings a wealth of knowledge of
listed investment trusts, investment banking and private
equity to the Board, in addition to being an experienced
and eective Chairman.
Other public directorships
Mr Maltby has no other public company directorships.
The Board is responsible for
oversight of NBPE, and for
eective stewardship of the
Company’s aairs.
Matrix of skills and experience
Board member
Investment
Trusts
Private
Equity
Asset
Management
Investment
Banking
Finance/
Audit
William Maltby
Trudi Clark
Pawan Dhir
John Martyn Falla
Louisa Symington-Mills
Wilken von Hodenberg
M
Management Engagement Committee
A
Audit Committee
N&R
Nomination and RemunerationCommittee
Committee chair
THE BOARD
Trudi Clark
Independent Director
M
A
N&R
Appointed 24 April 2017
Background and experience
Trudi Clark qualified as a chartered accountant with Robson
Rhodes in Birmingham, after graduating in Business
Studies. Moving to Guernsey in 1987, Ms Clark joined KPMG
where she was responsible for an audit portfolio including
some of the major financial institutions in Guernsey.
After 10 years in public practice, Ms Clark was recruited
by the Bank of Bermuda as Head of European Internal Audit,
later moving into corporate banking. In 1995, Ms Clark
joined Schroders in the Channel Islands as CFO. Ms Clark
was promoted in 2000 to Banking Director and Managing
Director in 2003.
From 2006 to 2009, Ms Clark established a family oce,
specialising in alternative investments. From 2009 to 2018,
Ms Clark returned to public practice specialising in
corporate restructuring services. Ms Clark has several
non-executive director appointments for companies, both
listed and non-listed, investing in property, private equity
and other assets.
Contribution to NBPE
Ms Clark has significant expertise in both accountancy
and Guernsey regulations, as well as being an experienced
non-executive director of public companies, all of which have
proven beneficial to both the Board and its committees.
Other public directorships
The Schiehallion Fund Limited and Taylor Maritime
Investments Ltd.
48
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
John Martyn Falla
Independent Director
M
A
N&R
Appointed 21 December 2015
Background and experience
John Falla, a resident of Guernsey, is an Associate of the
Institute of Chartered Accountants in England and Wales.
Mr Falla has a degree in Property Valuation and
Management from City University London and is a
Chartered Fellow of the Chartered Institute for Securities
and Investment, holding their diploma. Mr Falla qualified
as a chartered accountant with Ernst and Young in London,
before transferring to their Corporate Finance Department,
specialising in the valuation of unquoted shares and
securities, including private equity holdings. On Mr Falla’s
return to Guernsey in 1996, he worked for an International
Bank before joining The International Stock Exchange
(formerly Channel Islands Stock Exchange) in 1998 on
its launch as a member of the Market Authority.
In 2000, Mr Falla joined the Edmond de Rothschild Group.
Although based in Guernsey, he provided corporate
finance advice to international clients including open
and closed-ended funds, and institutions with significant
property interests. Mr Falla was also a director of a number
of Edmond de Rothschild operating and investment
entities. Mr Falla has been a non-executive director
of London listed companies for a number of years, and
is now a full-time non-executive director and consultant.
Contribution to NBPE
Mr Falla has significant expertise as an accountant and
as a non-executive director of London listed companies
for over 10 years, both of which contribute to his role
as a non-executive director of the Company and as Chair
of the Audit Committee.
Other public directorships
Marble Point Loan Financing Limited and Baker Steel
Resources Trust Limited.
Louisa Symington-Mills
Independent Director
M
A
N&R
Appointed 15 June 2021
Background and experience
Louisa Symington-Mills has extensive experience of the
listed private equity sector. She was a listed alternative
investment funds equity research analyst at Royal Bank
of Scotland and Jeeries, with a particular focus on listed
private equity investment companies. She has played a key
role in increasing awareness and understanding of listed
private equity.
She subsequently became chief operating ocer at LPEQ
(now part of Invest Europe), an international association
of listed private equity companies, and is now an
award-winning entrepreneur. Ms Symington-Mills began
her career at M&G Investment Management in 2003
and has an English Literature degree from the University
of Durham.
Contribution to NBPE
Ms Symington-Mills’ experience in listed private equity,
and as a research analyst, provides a depth of insight to the
Board during meetings. Her input is particularly valued
during discussions with the Company’s corporate brokers
and other investor relations advisers.
Other public directorships
Ms Symington-Mills has no other public company
directorships.
THE BOARD
Pawan Dhir
Independent Director
M
A
N&R
Appointed 19 September 2023
Background and experience
Pawan Dhir has over three decades of global experience
in finance in private equity, as well as the wider asset
and wealth management sectors. He has held a number
of leadership positions in finance, audit, risk management
and valuations, including specialising in the valuation
of unquoted shares and securities.
Mr Dhir worked for UBS for nearly 25 years, where he was
latterly Managing Director and Global Head of Financial
Accounting & Controlling and was previously at Morgan
Stanley. He is a Fellow of the Institute of Chartered
Accountants in England and Wales, having qualified with
Coopers & Lybrand. Mr Dhir graduated from the University
of Manchester with a BSc in Physics. He is a non-executive
Director and Audit Chair at the Royal Free London NHS
Foundation Trust and holds a number of Board Trustee
positions in the educational sector.
Contribution to NBPE
Mr Dhir’s experience in finance as well as being
an experienced non-executive director and Audit Chair
is significantly valuable to the Board and its committees.
Other public directorships
Mr Dhir has no other public company directorships.
Wilken von Hodenberg
Senior Independent Director
M
A
N&R
Appointed 21 March 2019
Background and experience
Wilken von Hodenberg is a businessperson with 40 years
of experience in private equity, investment banking
and senior management. Mr von Hodenberg has been
at the head of five dierent entities and for some years
occupied the position of chairman of the German Private
Equity & Venture Capital Association.
Mr von Hodenberg was a member of the Supervisory Board
for Deutsche Beteiligungs AG from 2013 until February
2020. He is also a non-executive director of eCapital
Entrepreneurial Partners AG; and became vice chair of
Wepa SE in April 2022.
From 2000 to 2013 Mr von Hodenberg was CEO of
Deutsche Beteiligungs AG. He also served as a managing
director of Merrill Lynch in Frankfurt (1998 to 2000). Prior
to this Mr von Hodenberg was managing director at Baring
Brothers GmbH (1993 to 1997). From 1990 to 1992 he was
CFO of Tengelmann Group, a major German retailing
group. He started his career at JPMorgan in New York
and Frankfurt (1983 to 1989). Mr von Hodenberg holds
a Law degree from the University of Hamburg.
Contribution to NBPE
Mr von Hodenberg’s private equity investment expertise
is highly valuable for Board discussions and of particular
relevance for the Company.
Other public directorships
Sloman Neptun AG.
49
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
The Directors are committed
to robust standards of
corporate governance.
The Board of NBPE has considered the
Principles and Provisions of the AIC Code
of Corporate Governance (“AIC Code”).
The AIC Code addresses the Principles and
Provisions set out in the UK Corporate
Governance Code (the “UK Code”), as well
as setting out additional Provisions on issues
that are of specific relevance to NBPE. The
Board considers that reporting against the
Principles and Provisions of the AIC Code,
which has been endorsed by the Guernsey
Financial Services Commission, provides more
relevant information to shareholders.
The AIC Code is available on the AIC website
(www.theaic.co.uk). It includes an explanation
of how the AIC Code adapts the Principles and
Provisions set out in the UK Code to make them
relevant for investment companies.
Further information on the Company’s
compliance with the AIC Code can be found
on page 68.
The Company is also subject to the Alternative
Investment Fund Managers Directive
(“AIFMD”) and has a management agreement
with NB Alternatives Advisers, LLC (the
“Investment Manager” or the “Manager”)
to act as its Alternative Investment Fund
Manager (“AIFM”).
In addition, the new Director also spends time
with representatives of the Company
Secretary, the Investment Manager and other
key service providers in order to learn more
about their processes and procedures.
The induction process covers a number of key
business areas and teams, including:
meetings with the Board and Chairman
to discuss the Companys business, operations
and governance; meetings with the Company’s
Investment Manager to look at the Company’s
portfolio, investment management and
operations; meetings with the Company’s
administrator to discuss legal and regulatory
obligations and requirements, processes and
governance generally; meetings with the
Company’s corporate brokers to discuss
investor perceptions, capital markets, and the
development of the Company’s shareholder
base; and meetings with the Companys
Auditors,PR and marketing advisers.
The Board provides appropriate training to all
new Directors, which includes training on their
duties, including those under Section 172
of the UK Companies Act 2006, and provides
refresher courses from time to time. When
a new Director joins the Board, they receive
training, including details of regulatory and
legal duties as a director of a Guernsey domiciled
investment company listed on the Main Market
of the London Stock Exchange. Furthermore,
the Chairman reviews the training and
development needs of each Director during
the annual Board evaluation process.
Composition and
independence
The Board currently comprises six Non-
Executive Directors. It is the Directors’ intention
for the size of the Board to decrease to five
Directors following Mr Falla’s retirement
at the 2025 AGM.
The Board regularly reviews the independence
of its members and, having due regard to the
definitions and current guidelines on
independence under the AIC Code, considers
all Directors to be independent and confirms
that the Chairman was independent on
appointment and has remained so during his
tenure. Biographies of each Director can be
found on pages 48 and 49.
Induction and training
Directors are provided, on a regular basis,
with key information on the Companys
policies, regulatory requirements and its
internal controls. Regulatory and legislative
changes aecting Directors’ responsibilities
are advised to the Board as they arise, along
with changes to best practice by, among
others, the Company Secretary and the
Auditors. Advisers to the Company also
prepare reports for the Board from time to
time on relevant topics and issues. In addition,
Directors attend relevant seminars and events
to allow them to refresh their skills and
knowledge and keep up with changes within
the investment company industry.
When a new Director is appointed to the
Board, they are provided with relevant
information regarding the Company and their
duties and responsibilities as a Director.
Performance evaluation
and eectiveness
In accordance with Provision 26 of the AIC
code, the Company undergoes an annual
evaluation of the Board’s performance, its
committees, the Chair and the individual
Directors. An external evaluation takes place
every three years. In other years, the process
takes place in the form of questionnaires and
discussion and helps ensure that the Board’s
operations remain aligned with the culture,
purpose and values of the Company, and help
identify areas for improvement. The Senior
Independent Director leads the appraisal
of the Chairman’s performance. An external
independent review of the Board’s
performance was undertaken by Fletcher
Jones Limited in 2022.
In 2023, under the mandate of the Nomination
and Remuneration Committee, the Directors
completed an internal performance evaluation
of the Board and its committees, individual
Directors and the Chairman. The evaluation
was conducted using tailored annual
performance questionnaires to assess Directors’
feedback on various areas including:
(i) Investment Matters; (ii) Composition and
Independence; (iii) Board Processes;
(iv) Relationships and Communication;
(v) Shareholder Value; (vi) Knowledge and
Skills; as well as any additional information
that may be required to facilitate better Board
discussions. The responses were collated by
the Company Secretary and presented to the
Board for consideration. The Board held an
extensive discussion and concluded that the
2023 annual performance evaluation of the
Corporate governance
GOVERNANCE
50
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Board, its committees, the Chair and the
individual Directors was satisfactory taking
into account the Directors’ eective
contribution and relevant skills and experience
that the Board deemed to be appropriate
to the requirements of the Company.
Directors’ time commitments
At the time a new Director is appointed to the
Company, consideration is given to his or her
time commitments and availability in order
to fulfil the role. A schedule of each Director’s
appointments is tabled quarterly for each
Board meeting. In the year under review,
all Directors were considered to have
sucient time to commit to their respective
roles on the Board, taking account of their
external appointments.
Diversity and inclusion
The Board’s ongoing objective is to have
an appropriately diversified representation
by gender, ethnic background, skills and
experience. Details of the Directors’ wide
range of experience and skills which contribute
towards creating a balanced and inclusive
decision-making environment and overall
eective operation of the Board, can be
found in their biographies and in the skills
matrix on pages 48 and 49.
The Board supports the requirements in the
Listing Rules, to provide detail on whether
the board has met with specific board diversity
targets, on a comply or explain basis, reflecting
the recommendations set by both the FTSE for
Women Leaders Review on gender diversity
and the Parker Review regarding minority
ethnicity representation on boards.
The Board currently has two female Directors
making the gender balance 33% female and
67% male, and one Director from a minority
ethnic background. As part of the Board’s
succession planning, which takes account of
future retirements of directors upon reaching
nine years of service and the skills that they
bring that will need replacement, Pawan Dhir
joined the Board in September 2023 as
Mr Falla’s successor, temporarily taking the
total Board size to six Directors. The Board
composition is intended to decrease to five
Directors following Mr Falla’s retirement at
the 2025 AGM, consequently shifting the
gender balance back to 40% female and 60%
male, thereby meeting the FTSE for Women
Leaders target by the end of 2025. The Board
is cognisant that a female director does not
currently hold one of the senior positions
(that are applicable to the Company) of either
the Chair or the Senior Independent Director,
but notes Trudi Clark chairs both the
Management Engagement Committee and
Nomination and Remuneration Committee.
Gender diversity
Director
Number
ofBoard
members in
scope
Percentage
ofthe Board
Number
ofsenior
positions on
the Board
(CEO,CFO, SID
and Chair)*
Men 4 67% 2
Women 2 33% 0
Not specified/prefer not to say 0 0% 0
* As the roles of CEO and CFO are not applicable for investment trusts, this criteria cannot be met in full
Ethnic diversity
During the year, the Company met the Parker Review target of having a person from a
minority ethnic group on the Board by the end of 2024.
Director
Number
ofBoard
members in
scope
Percentage
ofthe Board
Number
ofsenior
positions on
the Board
(CEO,CFO, SID
and Chair)*
White British or other White (including minority white
groups) 5 83% 2
Mixed/multiple ethnic groups
Asian/Asian British 1 17%
Black/African/Caribbean/Black British
Other ethnic group (including Arab)
Not specified/preferred not to say
* The data in the tables above was collected using a self-assessment questionnaire reflecting the categories
set out in the table, which each of the relevant individuals was requested to complete
The Board acknowledges the importance of gender and minority ethnic diversity within
the Boardroom. While all future appointments will be made based on merit, the
consideration of the Board’s diversity will form an integral part of succession planning.
The Board’s long-term succession plan takes account of future retirements of directors upon
reaching nine years of service and the skills that they bring that will need replacement.
GOVERNANCE
51
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Role of Senior Independent
Director
The Senior Independent Director (“SID”) works
closely with the Chairman and ensures each
of the Non-Executive Directors’ concerns are
heard, and is available to attend meetings
with a range of major shareholders to
understand potential concerns. The SID Roles
and Responsibilities Policy can be found on
the Company’s website.
Board and committee meetings
The Board meets at least four times a year
to discuss Company developments and
ongoing activities. This includes reviewing
and evaluating capital allocation, the
dividend, monitoring and adapting, as
necessary, the investment strategy, and
reviewing the financial and investment
performance of the Company and its investor
relations programme. The Investment
Manager and the Company’s Administrator
furnish the Directors with relevant materials,
including investment reports, risk analysis
and other documents in a timely manner prior
to each Board meeting. In addition, an
agenda is circulated to the Directors prior to
the meeting and the Directors may consider
additional topics for discussion prior to each
Board meeting. Representatives from the
Investment Manager attend the meetings
to report to the Board on relevant matters
regarding investment performance and
investment activities. Other service providers
to the Company are invited to speak at Board
meetings on relevant matters, as necessary.
In addition to the four quarterly Board meetings,
there were other ad hoc Board meetings
throughout the year to approve various
documentation, dividend payments and other
matters. The quorum for any Board meeting
is two Directors but attendance by all Directors
at each meeting is strongly encouraged.
During 2023, there were four quarterly Board
meetings. The table below conveys the
number of Board and committee meetings
attended and, in brackets, the number of
scheduled meetings.
Director Board meeting
Audit
Committee MEC NRC
William Maltby 4 (4) 3 (3) 1 (1) 3 (3)
Trudi Clark 4 (4) 3 (3) 1 (1) 3 (3)
Pawan Dhir 1 (1) 1 (1) 1 (1) 1 (1)
John Martyn Falla 4 (4) 3 (3) 1 (1) 3 (3)
Louisa Symington-Mills 4 (4) 3 (3) 1 (1) 3 (3)
Wilken von Hodenberg 4 (4) 3 (3) 1 (1) 3 (3)
In the unlikely event of any Directors being unable to attend Board or committee meetings,
the relevant Directors would be contacted by the Chairman before and/or after the meeting
to ensure they are aware of the issues being discussed and to obtain their input.
Tenure of Independent Non-
Executive Directors
Each Non-Executive Director is appointed by
a letter of appointment on an ongoing basis,
and shareholders vote on whether to elect/
re-elect him or her at every AGM. A Non-
Executive Director will only be proposed for
re-election at an AGM if the Board is satised
with the Non-Executive Director’s performance,
independence and ongoing time commitment.
The Board has adopted a policy on tenure that
is considered appropriate for an investment
company. The Board does not believe that
length of service, by itself, leads to a closer
relationship with the Investment Manager or
necessarily aects a Director’s independence.
The Board’s tenure and succession policy
seeks to ensure that the Board is well balanced
and will be refreshed from time to time by the
appointment of new Directors with the skills
and experience necessary to replace those lost
by Directors’ retirements. Directors must be
able to demonstrate their commitment to the
Company. The Board seeks to encompass past
and current experience of various areas relevant
to the Company’s business.
Chair tenure policy
The Company’s policy on Chair tenure is that
the Chair should normally serve no longer than
nine years as a Director but, when it is in the best
interests of the Company, shareholders and
stakeholders, the Chair may serve for a limited
time beyond that. Such circumstances may
include, but not be limited to, periods of
succession planning or to provide stability
during a period of major change in the Company.
In such circumstances, the independence of the
other Directors will ensure that the Board as a
whole remains independent.
Role of the Board
It is the responsibility of the Board to ensure
that there is eective stewardship of the
Company’s aairs. Strategic issues are
determined by the Board. A formal schedule
of operational matters reserved for the Board
has been adopted in order to enable it to
discharge its responsibilities, and enable
Directors to have full and timely access to
relevant information.
Role of the Chair
The Chairman leads the Board and is
responsible for ensuring that the Board
upholds a high standard of corporate
governance and operates eectively and
eciently, promoting a culture of openness
and debate.
GOVERNANCE
Tenure years
0–3 years 33.3%
46 years 33.3%
7+ years 33.3%
52
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
The Investment Manager’s report to the
Board included:
Investment performance and portfolio
composition: the Board reviewed detailed
performance of underlying portfolio
company investments as well as detailed
analysis on the underlying portfolio
composition as a whole. The Board
evaluated the portfolio to assist in decisions
regarding dividends paid by the Company
as well as capital allocated to the Company’s
buyback programme.
Company financial position and net asset
value (NAV): the Board reviewed the
Company’s financial position and the
performance of the Company’s NAV.
Returns information: the Board evaluated
both the NAV per share return and the NAV
Total Return, including the Company’s
dividends.
In addition, the Board arranges for
presentations from the Company’s brokers
and other advisers and service providers on
matters relevant to the Company’s business.
The Board maintains regular contact with the
Company’s service providers, both formally
and informally, to ensure that they are
updated on all issues and kept abreast of the
latest developments.
The Board gives feedback on all relevant items
discussed to help achieve success for the
benefit of shareholders as a whole.
The Board recognises that much of the
decision making, particularly with respect to
underlying investments, is delegated to the
Investment Manager as per the Investment
Management Agreement; however, the
Board regularly reviews information to ensure
decisions are in line with the overall strategy
set by the Board. In addition to the regular
updates from the Investment Manager, the
Board conducts a detailed annual review
of the investment portfolio, and arranges
periodic visits at Neuberger Berman’s
headquarters in New York, NY to meet with
representatives of the Investment Manager
and hold detailed discussions around strategy
and the business model of the Company.
Director indemnity
To the extent permitted by the Companies
(Guernsey) Law, 2008 (as amended), the
Company’s Articles of Incorporation
indemnify the Directors out of the Company’s
assets from and against all liabilities in respect
of which they may be lawfully indemnified,
except for any liability (if any) as they shall
incur or sustain by or through their own wilful
act, gross negligence or default.
During the year, the Company has maintained
insurance cover for its Directors and ocers
under a directors and ocers liability
insurance policy.
Disclosures required under
LR 9.8.4R
The Financial Conduct Authority’s Listing Rule
9.8.4R requires that the Company includes
certain information relating to arrangements
made between a controlling shareholder
and the Company, waivers of Directors’ fees,
and long-term incentive schemes in force.
The Directors confirm that there are no
disclosures to be made in this regard.
Conflicts of interest
The Company has adopted a policy requiring
Directors to disclose any conflicts of interest,
including those resulting from significant
shares held in the Company or an investee
company and other directorships,
shareholdings or historic employment linked
to the Investment Manager. In accordance
with the policy, any such conflicts require
approval from the remainder of the Board.
A list of each Director’s directorships is tabled
at each quarterly meeting and the Board
considers any potential arising conflicts at
each Board meeting held prior to proceeding
with any business. Currently there are no
conflicts in respect of any Director.
Company Secretary
The Directors also have access to the
advice and services of the Company
Secretary, Ocorian Administration
(Guernsey) Limited, which is responsible
to the Board for ensuring the timely
delivery of information and reports and
for ensuring that statutory obligations of
the Company are met.
Flow of information
The Company places great emphasis on
the flow of information from the
Investment Manager to the Board,
ensuring that the Directors have relevant
information to make informed decisions
for the benefit of the shareholders.
At Board and ad hoc meetings, the
Manager provides the Board with key
information regarding the underlying
investments, ideas for new initiatives that
will help drive shareholder value, and
continual feedback from shareholders.
This information assists the Board’s
evaluation of the Company’s key
performance indicators, found on pages
13 and 14 of the Strategic Report.
GOVERNANCE
53
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Anti-bribery
and corruption policy
The Manager has processes in place to ensure
that bribery and corruption do not take place
within the Manager or the Company. These
include formal policies and regular training
for all sta. The Board has reviewed these
processes and found them adequate.
Environmental policy
Due to the Company’s premium listing on the
London Stock Exchange, the Company
is required to disclose its environmental
policy. As an investment company, NBPE is not
required to report against the Task Force
on Climate-Related Financial Disclosures
(“TCFD”) framework; however, understanding
and managing climate-related risks and
opportunities based on the TCFD’s
recommendations is part of the Investment
Manager’s Responsible Investment Policy.
Further information on the social and
environmental policies of the Manager
can be found in the Environmental, Social
and Governance section on pages 26 to 31
and in the Manager’s ESG report, which
can be found on the Companys website
https://www.nbprivateequitypartners.com/
en/responsible-investing.
Whistleblowing policy
and arrangements
The Board and the Audit Committee have
been made aware of the processes the
Investment Manager has in place to ensure
that sta of the Investment Manager may
in confidence raise concerns about possible
improprieties in matters of financial reporting
or other matters and ensure that arrangements
are in place for the proportionate and
independent investigation of such matters
and follow-up action. The Investment
Manager has established and implemented
processes. These include formal policies
and regular training for all sta. The Board
was satisfied that the processes in place
are appropriate.
Board committees
The terms of reference for all committees
described below are available on the
Company’s website.
Management Engagement
Committee
Details of the composition of the
Management Engagement Committee
(“MEC”) can be found on page 47. The MEC
meets at least once a year pursuant to the
Committee’s terms of reference, and at other
times as required by the Board.
The principal duties of the MEC are to:
Review the terms of the Investment
Management Agreement, as well as any
other key service providers;
Propose any changes to the terms of the
Investment Management Agreement, or that
of any other key service provider agreement
that it considers necessary and desirable as a
result of its review;
Review the fees payable to the Investment
Manager to ensure that it does not
encourage excessive risk and that it rewards
demonstrable superior performance;
Review the overall performance of the
Investment Manager and other key service
providers;
Satisfy itself that the duties of the parties as
set out in the relevant agreements are being
performed as required;
Consider any changes proposed by the parties
to the terms of the relevant agreements and
to review, at the intervals provided for in the
agreements, the amount and terms of
payment of the parties’ remuneration;
Consider any specific matters relating to the
engagement of the parties which the Board
may request;
Report to the Board on its conclusions and
to make recommendations in respect of any
matters within its remit; and
Ensure that service providers are not
operating conflicts of interest in accordance
with Authorised Closed Ended Investment
Scheme Rules.
The Company has agreements with service
providers, the following of which are
considered significant:
NB Alternatives Advisers LLC, as Investment
Manager, pursuant to an Investment
Management Agreement
MUFG Capital Analytics LLC, as US
Administrator
Ocorian Administration (Guernsey) Limited,
as Company Secretary and Guernsey
Administrator
Link Market Services, as Registrar
Bank of New York, as Depositary
Bank of America Merrill Lynch (cash
custodian), US Bank (cash & securities
custodian), and Neuberger Berman
(securities custodian), together as Custodians
Jeeries and Stifel, as joint Corporate Brokers
Herbert Smith Freehills and Carey Olsen, as
Legal Counsel
Kepler Partners, as Investor Marketing
Advisor
Kaso Legg Communications as Public
Relations Advisor
AS&I Consulting Limited, as Investor &
Communications Advisor
PricewaterhouseCoopers Dallas, as Tax
Advisor
Friend Studio, as Annual Report Designer
Hardman & Co, as Research & Consulting
Advisor
GOVERNANCE
54
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Information regarding the consolidated fees
paid to service providers can be found on
Note 10 to the Financial Statements.
During 2023, the MEC conducted a review
of the key service providers, including the
Investment Manager, to ensure terms of the
contract are executed and remain in the best
interest of shareholders. The MEC invited
each of the key service providers, through
a questionnaire, to give the Board a self-
assessment review of their performance
during the year, in addition to providing
information, and relevant policies, regarding
eective internal controls, appropriate
disaster recovery/business continuity
arrangements, technology to maintain
information security and client confidentiality,
compliance with anti-bribery and corruption
laws, details on the prevention of the
facilitation of tax evasion, compliance with
data protection legislation, their organisation’s
ESG considerations, and any details regarding
cyber-attacks. The MEC reviewed each of the
questionnaires and held a discussion
regarding the performance of each of the
Company’s key service providers, level of
service and service contracts. Following this
discussion, the MEC was satisfied with the
Service Providers’ internal controls and the
level of service the Company was receiving
from each of the key service providers.
Audit Committee
Details of the composition of the Audit
Committee can be found on page 47.
All Directors on the Committee bring
relevant experience and perspectives;
the composition of the Audit Committee
is considered appropriate for the Company’s
size and strategy.
Details of the role of the Audit Committee
can be found in the Audit Committee Report
on page 64.
A full copy of the Audit Committee terms of
reference are available on the Company’s
website and from the Company Secretary.
Nomination and Remuneration
Committee
Details of the composition of the Nomination
and Remuneration Committee (“NRC”)
can be found on page 47.
The duties and responsibilities of the
Committee are summarised below:
Nomination
Identifying and nominating, for approval by
the Board, suitable candidates to fill Board
vacancies
Considering the services of external advisers
to facilitate a director search
To review regularly the Board structure,
taking into consideration the skills,
knowledge, diversity and experience
of the Board
To review the results of the annual Board
evaluation process
To review annually the time requirements
from the Non-Executive Directors
Succession planning
Remuneration
To agree and determine the remuneration of
the Chairman and Non-Executive Directors
while ensuring that no Director is involved in
any decisions regarding their own
remuneration and taking into consideration
all relevant legal and regulatory compliance
To obtain reliable and up-to-date information
regarding remuneration in other comparable
companies
To review and consider any additional ad hoc
payments in relation to duties undertaken
over and above normal business
During 2023, as part of the ongoing
succession plan, Trust Associates, an
independent external agency with no
connection to the Company or any of its
Directors, was engaged to support the search
for candidates in order to appoint a new
Director. Trust Associates sourced potential
candidates in line with the Company’s
diversity policy to ensure a diverse skill set,
capabilities and experience that are relevant
to the Company were added to the Board.
Following the process, the Committee
recommended to the Board the appointment
of Mr Pawan Dhir as Mr Falla’s successor.
Further details of the Committee’s activities
can be found in the Remuneration report on
pages 61 to 63.
Internal controls
As explained in more detail in the Report of
the Audit Committee, the Board, as advised
by the Audit Committee, monitors the risks
facing the Company and the controls put in
place to help mitigate those risks. The
Company itself has no premises nor
employees, and operates by delegating
functions to service providers subject to the
oversight of the Board. Further details on the
assessment of the internal controls of the
service providers can be found on page 66.
In line with the FRC guidance, the Audit
Committee keeps under review the need
for an internal function. The Audit Committee
is satisfied that the systems of internal control
of the Company, the Investment Manager
and the Administrators are adequate to fulfil
the Board’s obligation in this regard and
that currently an internal audit function is
not necessary.
GOVERNANCE
55
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Purpose and culture
The Company’s purpose is to give shareholders
access to the long-term returns available from
a portfolio of direct investments in highly
attractive private companies by leveraging
the strength of the Neuberger Berman global
platform, while investing responsibly to
create value for our stakeholders.
The Directors believe that maintaining a
healthy corporate culture among the Board
and in its interaction with the Investment
Manager, shareholders and other
stakeholders will support the delivery of the
Company’s purpose, values and strategy.
As part of this, the Board recognises the
importance of ensuring that the Board’s
culture and that of the Investment Manager
are aligned.
The Board, together with the Investment
Manager, promotes and facilitates a strong
culture of communication, respect and trust
through ongoing dialogue and engagement
with its service providers.
As the Company has no employees and acts
through the Investment Manager, the Board
continues to monitor culture on an ongoing
basis via feedback from shareholders,
the Investment Manager or input from
other advisers.
As part of this culture, the Board and
Investment Manager believe responsible
investing is an important part of operating
in today’s society and assessing overall
investment risk and opportunities (see page
26). For more information on the Company’s
Responsible Investment policy and the
Investment Manager’s culture and values,
please see pages 26 to 33.
Stakeholder engagement
NBPE’s Section 172 statement, which details
engagements with stakeholders during the
year, can be found on pages 36 to 39.
Shareholder communication
The Board welcomes shareholders’ views and
places great importance on communication
with the Company’s shareholders.
Both the Company’s Annual Report and
consolidated financial statements, containing
a detailed review of performance and of
changes to the investment portfolio, and
monthly factsheets with details of the
Company’s strategy and performance, the
financial position of the Company and the
underlying diversification of the portfolio,
are made available to investors through the
Company’s website. Investor presentations
are also available on the Company’s website.
A structured programme of shareholder
presentations by the Investment Manager
to institutional shareholders takes place
following the publication of the Annual
Report and quarterly updates. In addition,
the Chairman and the Board members are
available to meet shareholders.
NBPE also holds an annual Capital Markets
Day. Last year’s event was held virtually
on 5 October 2023 to update shareholders
and research analysts on the Company’s
performance and investment activities
during the year. A recording of the event
is available on the Company’s website.
The Company maintains a website which
contains comprehensive information.
Detailed information is presented on the
Company’s investment strategy, share
information, the Investment Manager’s
platform and team, insights from the
Investment Manager’s team of investment
professionals, and investment performance,
as well as an investor centre, which has a
library of all publications and details of how
to register for Company notifications.
During 2023, the Investment Manager
recruited a new UK-based Head of Investor
Relations at Neuberger Berman to oversee
the Company’s investor-related activities,
address shareholder enquiries and provide
regular market feedback to the Board.
In addition, the Board receives regular
updates from the Company’s brokers and
is kept informed of all material discussions
with investors and analysts, which helps the
Directors develop their understanding
of shareholders’ views and expectations.
A detailed list of the Company’s major
shareholders is reviewed at each quarterly
Board meeting.
William Maltby
Chairman
23 April 2024
GOVERNANCE
56
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Purchase of shares
The Company is authorised, in accordance
with Section 315 of the Companies
(Guernsey) Law 2008, as amended (the
“Companies Law”), subject to the Listing
Rules made by the United Kingdom Financial
Conduct Authority and all other applicable
legislation and regulations, to make market
acquisitions (within the meaning of Section
316 of the Companies Law) of its own Class A
Shares (as defined in the Company’s Articles
of Incorporation), which may be cancelled or
held as treasury shares, provided that:
i. The maximum number of Class A Shares
authorised to be purchased under this
authority shall be 7,009,478 Class A Shares
(being 14.99%. of the Class A Shares in issue
(excluding Class A Shares held in treasury)) as
at 16 May 2023;
ii. The minimum price (exclusive of expenses)
which may be paid for a Class A Share is
U.S.$0.01;
iii. The maximum price (exclusive of expenses)
which may be paid for a Class A Share shall be
not more than an amount equal to the higher
of (a) 5%. above the average mid-market
value of the Class A Shares on the regulated
market where the repurchase is carried out
for the five business days prior to the day the
purchase is made; and (b) the higher of (i) the
price of the last independent trade and
(ii) the highest current independent bid price,
in each case on the regulated market where
the purchase is carried out; and
The Directors’ report should be
read in conjunction with the
Strategic report (pages 2 to 45)
and the Remuneration report
(pages 61 to 63), which are
incorporated here by reference.
The Directors present their annual
financial report and consolidated financial
statements of NB Private Equity Partners
Limited and its subsidiaries for the year
ended 31 December 2023.
Principal activity
NBPE is a closed-ended investment company,
which invests in direct private equity backed
companies, and is registered in Guernsey.
The Company’s registered oce is PO Box 26,
Floor 2, Trafalgar Court, Les Banques, St. Peter
Port, Guernsey GY1 4LY. The Company’s Class
A Ordinary Shares are listed and admitted
to trading on the Main Market of the London
Stock Exchange under the symbol “NBPE”
and “NBPU”, corresponding to the Sterling
and U.S. Dollar quotes, respectively. NBPE has
2024 ZDP Shares admitted to trading on the
Specialist Fund Segment under the symbol
“NBPS” (see Note 1 of the consolidated
financial statements).
Investment policy
The Company’s investment policy is set out
on page 60.
iv. such authority expires on the date which
is 15 months from the date of passing of
the resolution or, if earlier, at the end of the
Company’s Annual General Meeting to be
held in June 2024 (unless previously
renewed, revoked or varied by the Company
by special resolution) save that the Company
may make a contract to acquire Class A
Shares under this authority before its expiry
which will or may be executed wholly or
partly after its expiration and the Company
may make an acquisition of Class A Shares
pursuant to such a contract.
The authority will only be exercised if the
Directors believe that to do so would be in
the best interest of shareholders generally.
Any shares purchased under this authority
would be at a discount to net asset value
(NAV) per share and therefore accretive to the
NAV per share for the remaining shareholders.
Investment Manager
The Company is managed by NB Alternatives
Advisers, LLC pursuant to an Investment
Management Agreement, dated 2 May 2017.
Subject to the Board’s overall strategic
direction and instructions, the Investment
Manager makes all of the Company’s
investment decisions. The Manager has been
appointed since 2007, and remains
appointed, unless terminated by the
Company with 30 days prior written notice
and approved by an ordinary resolution or
with immediate eect under certain
conditions. The Manager is responsible for
the day-to-day management of the Company,
sourcing, evaluating and making investment
decisions related to the Company.
Directors’ report
DIRECTORS’ REPORT
Political donations and policy
The Company does not pay any political
donations in cash or in-kind.
Directors
Details of the Directors can be found on pages
48 and 49, including a list of other public
company directorships. The Directors review
their independence and oer themselves up
for re-election annually.
Detail of the Boards Diversity Policy in its
consideration of any new or additional
Directors can be found on page 51 and
on the Company’s website.
Articles of Incorporation
Holders of the Company’s Class A Ordinary
Shares enjoy the rights set out in the
Company’s Articles of Incorporation and
The Companies (Guernsey) Law, 2008, as
amended. Holders of the Class A Ordinary
Shares have the right to receive notice of
general meetings of the Company and have
the right to vote at all general meetings;
however, Class A Ordinary Shareholders have
no right to vote on a 2024 ZDP Liquidation
Resolution or a 2024 ZDP Reconstruction
Resolution (as such terms are defined in
the Company’s Articles of Incorporation).
The Company’s Articles of Incorporation
may be amended by special resolution in
a general meeting.
57
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
The Manager makes the decisions regarding
individual investments in line with the
investment strategy set by the Board. The
Manager’s team of professionals is also
responsible for managing the Companys
assets, including monitoring the Company’s
investment portfolio and assigning valuations
to the Company’s investments based on the
Company’s valuation methodology, which
can be found on page 103. The Investment
Manager is also responsible for executing the
Company’s investor relations programme.
The Board keeps the performance of the
Investment Manager under regular review.
The ongoing review of the Investment
Manager includes activities and performance
over the course of the year, including, but not
limited to, overall investment performance,
portfolio risk, cash flow projections,
assessment of internal controls, fees payable
by the Company to the Manager, as well as a
review of the Company’s peer group.
The Board believes the Investment Manager’s
experience, track record, team and platform
is advantageous to the Company and the
Investment Manager’s continued
appointment is in the best interest of
shareholders.
Other service providers
Administrative and accounting services are
provided by MUFG Capital Analytics LLC, as
Administrator, with Ocorian Administration
(Guernsey) Limited, acting as Company
Secretary and Guernsey Administrator. The
Board has also appointed Bank of New York to
act as the Company’s Depositary (as required
by the AIFM Directive) (the “Depositary”)
subject to the terms and conditions of a
Depositary Agreement, dated 25 July 2007,
the AIFM and the Depositary. Bank of America
Merrill Lynch, US Bank and Neuberger Berman
also perform custody functions for the
Company’s cash, and cash and securities.
Full details of all of the Company’s service
providers and the Board’s engagement with
them are set out on pages 54 to 55.
Dividend policy
The Company instituted a long-term policy of
paying sustainable dividends to shareholders
in 2013. The Company targets an annualised
dividend yield of 3.0% or greater on NAV,
with the goal to maintain or progressively
increase the level of dividends over time.
Historically, a dividend has been paid
semi-annually in line with NBPE’s dividend
target. Prior to each dividend announcement,
the Board reviews the appropriateness of the
dividend payment in light of macroeconomic
activity and the financial position of the
Company. In times of extraordinary
circumstances, the Board does not guarantee
a dividend, but rather evaluates the suitability
of a dividend payment based on the
magnitude of the situation.
Dividends are declared in U.S. dollars and
normally paid in pounds Sterling, but the
Company also oers both a currency election
for shareholders wishing to be paid in U.S.
dollars and a dividend re-investment plan for
shareholders who wish to re-invest their
dividends to grow their shareholding. Please
reference pages 90 and 91 for the credit
facility and ZDP terms regarding dividends.
Results and dividends
The financial results for the year ended
31 December 2023 are included in the
consolidated financial statements, beginning
on page 75. As of 31 December 2023, the NAV
attributable to the Class A Shares was
$1,305.5 million (2022:$1,327.3 million),
which represents a decrease of $21.8 million
(2022: decrease of $153.0 million). On
12 January 2023, the Company declared
the first semi-annual dividend of $0.47 per
share and on 16 July 2023 declared an interim
dividend of $0.47 per share. Both dividends
were approved in line with NBPE’s dividend
policy and resulted in total dividends of
$0.94 per share ($44 million) paid during
2023. Including the dividend payment, the
NAV Total Return for the year was 2.3%
(2022: (7.5%)), assuming the re-investment
of dividends on the ex-dividend date.
Fee analysis
NBPE’s rate of ongoing charges, as defined
by the Association of Investment Companies
(“AIC”) ratio, was 1.94% for the year ended
31 December 2023 (2022:1.90%). The
ongoing charges were calculated in
accordance with the AIC methodology and
exclude interest and financing costs and other
items not deemed to be ongoing in nature
and therefore may dier from the total
expense ratio found in Note 12 of the
consolidated financial statements on page 97,
which was prepared in conformity with U.S.
GAAP. The complete methodology can be
found on the AICs website.
Total ongoing expenses in 2023 were
$25.4 million (2022:US$25.6 million), or
1.94%, based on the average 2023 NAV.
Note that percentages of ongoing charges
are based on the average 2023 NAV and may
dier from contractual rates based on 2023
private equity fair value. Other ongoing
charges consisted of fees and other expenses
to third-party providers for ongoing services
to the Company. In accordance with the AIC
methodology, the performance fee payable
to the Investment Manager is excluded from
the calculation.
Ongoing charge
Value
(US$ in m)
% Ongoing
charge
Management fee 20.5 1.56%
Fund
administration fee 1.3 0.10%
Other expenses 3.6 0.28%
Total ongoing
charges 25.4 1.94%
Approximately 98% of the direct investment
portfolio (measured on 31 December 2023 fair
value) is on a no management fee, no carried
interest basis to the underlying sponsor.
At the Company level, NBPE’s management
fee is 1.5% of private equity fair value
(payable quarterly) and a 7.5% performance
fee after achieving a 7.5% hurdle rate and
subject to a highwater mark. There are no
management or performance fees related to
investments held for cash management
purposes. The Directors believe these fees are
favourable relative to other listed direct
funds, which often carry higher overall fee
levels and listed fund of funds, which typically
have a double layer of fees (charged at the
DIRECTORS’ REPORT
58
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
vehicle level and underlying fund level).
The performance fee was last paid in 2021.
The Directors believe the fee eciency from
the Company’s co-investment strategy
provides investors with diversified private
equity access at a lower total cost than most
other listed private equity vehicles.
Consumer Duty
The Financial Conduct Authority (“FCA”)
introduced a new Principle for Businesses
(Principle 12) on 31 July 2023, applicable to
UK authorised firms that ‘have a material
influence over, or determine, retail customer
outcomes’ throughout the lifecycle of the
products and services that firms provide to
customers. The new Principle and associated
rules and guidance are collectively known
as the Consumer Duty.
The Company is not an FCA authorised firm
and therefore not subject to the new
implemented Principle; however, the
Company is aware that underlying
distributors could fall within scope of the
Consumer Duty requirements. The Board
reviews annually the internal value assessment
undertaken by the Investment Manager.
Share capital
As at 31 December 2023, 46,502,606 Class A
Shares were issued and outstanding;
3,150,408 Treasury Shares, representing
6.77% of the Company’s issued share capital.
Major shareholders
As of 31 December 2023, insofar as is known
to NBPE, the shareholders below held, either
directly or indirectly, greater than 5.0% of the
Class A Shares in issue (excluding Class A
Shares held in treasury). Note that the
amounts below may have subsequently
fluctuated after 31 December 2023:
Shareholder Shares held
% Ownership
of Class A
Shares
Quilter PLC 5,793,326 12.4%
Evelyn Partners Limited 8,597,863 8.3%
Schroders plc 3,691,218 7.0%
City of London
Investment Group PLC 2,626,047 5.6%
New Jersey Division of
Investment 2,475,000 5.3%
Risks and risk management
The Group is exposed to financial risks such
as price risk, interest rate risk, credit risk and
liquidity risk, and the management and
monitoring of these risks are detailed on the
Principal Risks and Uncertainties on pages
41 to 43 and in Note 11 to the Consolidated
Financial Statements on page 96.
Annual Report
After due consideration, the Board believes
the Annual Report and Accounts, taken as a
whole, are fair, balanced and understandable
and is therefore of the opinion that the
Annual Report provides the information
necessary for shareholders to assess the
position, performance, strategy and business
model of the Company.
The Board recommends that the Annual
Report, the Report of the Directors and the
Independent Auditors’ Report for the year
ended 31 December 2023 are received and
adopted by shareholders and a resolution
concerning this will be proposed at the AGM.
Independent Auditors
The Directors will propose the reappointment
of KPMG Channel Islands Limited as the
Company’s Auditors, and resolutions
concerning this, and the remuneration
of the Company’s Auditors will be proposed
at the AGM.
At the time that this report was approved,
so far as each of the Directors is aware:
There is no relevant audit information of
which the Auditors are unaware; and
Each Director has taken all the steps they
ought to have taken to make themselves
aware of any audit information and to
establish that the Auditors are aware of
that information.
Annual General Meeting
The Company’s AGM will be held in Guernsey
at Floor 2, Trafalgar Court, Les Banques,
St. Peter Port, GY1 4LY, Guernsey at 1:45pm
on 12 June 2024. Formal notice will be sent
to registered shareholders in advance.
Subsequent events
Significant subsequent events have been
disclosed in Note 13 to the Consolidated
Financial Statements on page 97.
By order of the Board:
William Maltby
Chairman
23 April 2024
DIRECTORS’ REPORT
59
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Investment objective
NBPE seeks capital appreciation through
growth in net asset value (NAV) over time
while returning capital by paying a semi-
annual dividend.
The Company’s investment objective is to
produce attractive returns by investing mainly
in the direct equity of private equity-backed
companies while managing investment risk
through diversification across vintage year,
geography, industry and sponsor. The vast
majority of direct investments are made with
no management fee/no carried interest
payable to third-party private equity
sponsors, oering greater fee eciency than
other listed private equity companies.
Investment policy
In order to achieve its investment objective,
the Company intends to maintain a diversified
portfolio of private equity related assets
composed predominantly of direct private
equity investments. Direct private equity
investments are direct investments in
underlying private companies and are made
alongside private equity managers.
Cash and short-term
investments
In addition to the investments referred
to above, the Company may also hold cash
and may temporarily invest such cash in cash
equivalents, money market instruments,
government securities, asset-backed securities
and other investment grade securities, pending
investment in private equity related assets
or opportunistic investments or otherwise for
ecient portfolio management. The Company
may also utilise (either directly or via investment
in a collective investment vehicle) the services of
an aliate of the Investment Manager or a third
party to manage this excess cash. If a third party
or an aliate of the Investment Manager is
so appointed, the Company may pay a market
rate for those services.
Investment restrictions
The Company will not invest more than
10%, in aggregate, of its total assets in other
UK-listed closed-ended investment funds.
In addition, the Company may make other
opportunistic investments from time to time,
provided that such investments will account
for no more than 10% of the Company’s gross
assets at the time the opportunistic investment
is made without approval from a majority
of the Board and, in any event, no more than
20% of the Company’s gross assets at the
time the opportunistic investment is made.
The Company’s investments can be made
across dierent levels of the capital structure
of investee entities. There are no restrictions
on the type or form of investments or
securities which the Company may hold.
The Company may make its investments either
directly or indirectly through intermediary
holding vehicles or collective investment
vehicles (including co-investment vehicles)
managed by either an aliate of the
Investment Manager or third-party managers.
Diversification and investment
guidelines
The Company intends to maintain portfolio
diversification across some or all of the
following metrics: company, vintage year,
geography, industry and sponsor.
Diversification is dynamic and varies
according to where the most attractive
opportunities arise. However, no single
exposure to an investee entity will account for
more than 20% of the Company’s gross assets
(as at the time of making such investment).
Investment objective and policy
INVESTMENT OBJECTIVE AND POLICY
60
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
The Nomination and
Remuneration Committee
(“NRC”) assists the Board with
remuneration duties.
Details on the NRC’s responsibilities can be
found on page 55. During a remuneration
review, the NRC takes into account the time
commitments and responsibilities of the
Directors and other factors which it deems
necessary, including the recommendations of
the AIC Code and any relevant legal
requirements. The NRC also takes into
consideration relevant remuneration data
collated in respect of comparable companies.
The NRC meets once per year and reports to
the Board on all matters within its duties and
responsibilities. The Company’s remuneration
policy is available on the Company’s website.
Details of the NRC’s activities during the year
can be found on page 55.
appropriate to award an additional fee for
chairing the nomination and remuneration
and management engagement committees,
given the additional time commitment required
for this role. The additional fees paid to the
Chairman of the Audit Committee and the SID
remain unchanged.
In respect of 2024, the following additional
fees (above the base non-executive fee) are
proposed:
Premium for Chairman £35,000
Premium for Senior Independent
Director £5,500
Premium for Chairman of the Audit
Committee £11,000
Premium for Chairman of Nomination
and Remuneration Committee £2,750
Premium for Chairman of Management
Engagement Committee £2,750
The below table reflects actual fees paid for
2023 and 2022 and the expected fees for
2024 (using an increase of 4.0% versus the
GPRI rate of 6.3% as at 31 December 2023)
and the additional fees noted above:
2024 2023 2022
Chairman £94,847 £80,231 £75,690
Chairman of the
Audit Committee £70,847 £68,612 £64,728
Senior
Independent
Director £65,347 £63,078 £59,508
Chairman of the
NRC and
MEC committees £65,347 £57,545 £54,288
Non-Executive
Directors £59,847 £57,545 £54,288
Subsidiary
appointments £11,509 £11,066 £10,440
Components of annual
remuneration
The Company pays a fee to the Independent
Directors for their work related to the Company’s
business. The fees for the Directors are
determined within the limit set out in the
Company’s Articles of Incorporation. The
present limit is an aggregate of £450,000
per annum. This total limit cannot be changed
without seeking shareholder approval at a
general meeting.
The fees, which are subject to an annual
increase based on the rise in the Guernsey
Retail Price Index (“GRPI”), subject to a 1% per
annum minimum, are paid quarterly in
arrears. For the 12 months to 31 December
2023, the GRPI decreased to 6.3%, compared
with 8.5% in 2022. While the Directors’ fees
are subject to an increase at the rate of GRPI,
the Board also considers any increase in the
context of the Board evaluation, the time
committed to the business, the increasing
regulatory and governance demands and
market trends for directors’ fees more
generally. Having undergone this assessment
the Directors consider an increase of 4.0%
to the Director’s base non-executive fee
of £57,545 to be appropriate. Directors are
not entitled to any bonus, long-term incentive
plans or other benefits.
The Committee has also reviewed the
additional fees paid to the Chairman, the SID
and to directors chairing the various
committees. In particular, the Committee felt
that the fee paid to the Chairman was not
reflective of the time demanded for the role
or market trends. Equally it was felt
Directors’ appointment
The Company’s Memorandum and Articles
of Incorporation provides the requirements
of the Company regarding the appointment
and removal of Directors, a copy of which
is available for inspection from the Registered
Oce of the Company. No Director has
a service contract with the Company.
Notice period
There is no Director resignation notice period
stipulated within the Company’s Articles
of Incorporation, any Director may resign
in writing to the Board at any time.
Statement of consideration of
conditions elsewhere in the
Company
The Company does not have any operations
and therefore no employees. As a result, the
Board does not consider pay and employment
conditions of any employees.
Remuneration report
REMUNERATION REPORT
61
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Directors’ remuneration and
aggregate shareholder
distributions
The table below compares the total Directors’
remuneration paid with total distributions
to shareholders for the years ended
31 December 2023 and 2022. While this
disclosure is a statutory requirement, the
Directors view this as not a meaningful
comparison as the Company has no operations,
and therefore, no employees and the Company’s
objective is long-term NAV growth over time,
of which dividends form only a portion of
shareholders’ overall return.
2023 2022
Directors
remuneration $444,001 $387, 6 47
2022 2021
Dividends paid $43,843,309 $43,964,768
Share buybacks
Total shareholder
distributions $43,843,309 $43,964,768
Remuneration by Director and year
2023 2022
William Maltby £80,231 £75,690
Trudi Clark* £63,078 £59,508
Pawan Dhir** £16,263
John Falla* £74,145 £69,948
Louisa Symington-Mills £57,545 £54,288
Wilken von Hodenberg £63,078 £59,508
Total £354,339 £318,942
The Chairman of the Board, William Maltby, was the highest paid Director for the year 2022.
* The two Guernsey resident Directors (Trudi Clark and John Falla) also act as directors for the Guernsey subsidiaries
for which they each received an annual fee of £5,533 for the 12 months to 31 December 2023
** Pawan Dhir was appointed to the Board on 19 September 2023
Shareholdings of the Directors
There is no requirement under the Company’s Articles of Association or the terms of their
appointment for the Directors to hold shares in the Company. The Directors’ interests in
Class A Shares of $0.01 each as at 31 March 2024 were as follows:
31 March 2024 2023 2022
William Maltby** 24,390 23,853 23,298
Trudi Clark 7,680 6,433 6,433
Pawan Dhir 1,600
John Falla 10,000 10,000 10,000
Louisa Symington-Mills 1,350 1,350
Wilken von Hodenberg* 99,425 99,425 97,541
* Total includes a closely associated person related to Wilken von Hodenberg who holds 45,712.5 shares
of the Company
** Total includes a closely associated person related to William Maltby who holds 5,721 shares of the Company
REMUNERATION REPORT
62
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Performance graph
In setting the Directors’ remuneration,
consideration is given to the size and relative
performance of the Company. A performance
graph which measures the Companys Total
0
2013 2014 2015 2016 2017 2018 2019 2020 2021
2022
NBPE Total Shareholder Return FTSE All-Share Total Return
500
300
400
200
100
2023
Total Shareholder Return
Resolution to approve
Directors’ remuneration
While Guernsey-registered companies are
not obliged to prepare and publish a
Directors’ Remuneration report, an ordinary
resolution will be put to the shareholders
seeking approval of the Remuneration report
within the Annual Report and Accounts; this
vote will be advisory only, but the Directors
of the Company will take the outcome of the
vote into consideration when reviewing and
setting the Directors’ remuneration.
The Directors’ Remuneration report for
the year ended 31 December 2022 was
approved by shareholders at the AGM held
on 15 June 2023 and the votes cast by proxy
were as follows:
Remuneration Report
For (including discretionary) 21,911,702 votes
Against 96,273 votes
Withheld 3,093 votes
Statement of consideration
of shareholder views
The Board noted that 99.55% of shareholders
voted in favour of the Directors’ Remuneration
report at the AGM held in 2023.
On behalf of the Board:
Trudi Clark
Chair
23 April 2024
REMUNERATION REPORT
Shareholder Return (share price and
dividends) (“TSR”) over the period from
31 December 2013 against that of a broad
equity market index is shown below. This is
calculated by reference to the Company’s
share price including dividend re-investment.
63
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Role of the Audit Committee
The Audit Committee assisted the Board in
carrying out its responsibilities in relation
to the financial reporting requirements, risk
identification and management, and the
assessment of internal controls. It also managed
the Company’s relationship with KPMG. The
Audit Committee also monitors the compliance
of the Company with its published ESG policy,
as reported by the Investment Manager.
The primary function of the Audit Committee
is to provide oversight and reassurances to
the Board, specifically with regard to:
The Company’s financial reporting, including
finalisation of its Annual Reports;
Audit arrangements, including competency
and independence of the external Auditors;
Risk management, including identifying and
managing the Company’s principal risks;
Internal controls; and
The Company’s governance framework.
Composition of the Committee
Details of the composition of the Audit
Committee can be found on page 47.
Committee meetings
The Audit Committee meets at least three
times a year and met three times in 2023.
All Committee members were present at
these three meetings. Only members and the
secretary of the Audit Committee have the
right to attend Audit Committee meetings.
However, the Chairman of the Board and
representatives of the Investment Manager
and the Administrator are invited to attend
Audit Committee meetings on a regular basis,
and other non-members may be invited to
attend all or part of the meeting as and when
appropriate and necessary. The Company’s
Independent Auditor, which is currently
KPMG, is also invited on a regular basis.
The Audit Committee determines, in
conjunction with the Independent Auditor,
when to meet with the Auditor.
Meetings of the Audit Committee generally
take place prior to the Company Board
meeting and the Committee reported to
the Board as part of a separate agenda item,
on the activities of the Audit Committee
and matters of particular relevance to the
Board in the conduct of their work.
The Audit Committee meets with the
Independent Auditor without the Manager
and Administrator present to seek their views
on the quality of the control environment
and the processes around the preparation
of the financial statements.
Report of the Audit Committee
REPORT OF THE AUDIT COMMITTEE
64
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Key areas of focus
During 2023, the Audit Committee was
involved with monitoring valuations and
evaluating the Companys capital position
and key financial ratios. In addition, the Audit
Committee reviewed valuation analysis
prepared by the Investment Manager on
a quarterly basis, which includes cash flow
forecasts and the performance of the
underlying investments. Such information
is used to evaluate the impact on the
Company’s capital structure and allocation.
The Audit Committee also reviews the ESG
characteristics of the portfolio as reported by
the Investment Manager.
The Audit Committee also conducted
a review of auditor independence,
and eectiveness, and reviewed the full-year
audit plan with the Investment Manager
and KPMG. In addition, the Audit Committee
reviewed and held detailed discussions on
the Annual Report and consolidated financial
statements including a robust assessment
of the principal risks, as well as reviewing
and challenging the viability analysis before
its approval.
The key areas of focus for the Committee
for the year 2023 were:
Financial statements and reportingmatters
The Audit Committee reviews with the
Investment Manager, US Administrator and
KPMG the appropriateness of the semi-
annual and annual financial statements. The
Committee focuses on, among other matters:
The quality and acceptability of accounting
policies and practices;
The clarity of the disclosures and compliance
with financial reporting standards and
relevant financial governance reporting
requirements;
Material areas in which significant
judgements have been applied or where
there has been discussion with KPMG;
whether the annual financial report and
consolidated financial statements, taken as a
whole, are fair, balanced and understandable
and provide the information necessary for
shareholders to assess the Company’s
performance, business model and strategy;
and
Any correspondence from regulators
in relation to financial reporting
To aid its review, the Audit Committee
considered reports from the Investment
Manager, US Administrator, the Company
Secretary, and also reports from the
Independent Auditor on the outcomes
of their half-year review and annual audit.
During the year, the Audit Committee
reviewed the Company’s Annual Report and
interim financial statements for the period
ended 30 June 2023 (the “Interim Financial
Statements”) before recommending approval
to the Board. The Committee considered the
Interim Financial Statements and Annual
Report to be fair and balanced, and provided
the Company’s shareholders with the
information necessary to assess the Company’s
performance, business model and strategy,
and was satisfied that narratives provided
were consistent with all numerical disclosures.
Audit planning and
key audit matters
The Audit Committee provided oversight to the
planning of the audit in respect of the
Company’s annual accounts for the period
ended 31 December 2023. The following details
the key audit matters and how the Company’s
Independent Auditor addressed them:
Valuation of investments
The valuation of the Company private equity
investments are considered a significant area
of focus as it represents the majority of the
NAV for the Group. The Auditors made
enquiries with the Investment Manager to
understand the processes and procedures
around operational due diligence, ongoing
monitoring of the underlying investments
and the control over the valuations of all
private equity investments. The Auditors then
tested the design and implementation of the
controls which monitor and approve the
valuation of investments.
The Independent Auditors did not report any
significant dierences between the
valuations used by the Company and the work
performed during their testing process.
Similar to prior years, the Independent
Auditors noted they had utilised their
in-house valuation experts to assist with the
audit of valuations and used a number of
techniques to evaluate the valuation of
selected investments.
REPORT OF THE AUDIT COMMITTEE
65
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Audit planning and
key audit matters (continued)
The Audit Committee noted that the
Investment Manager’s valuation
methodology for direct equity investments
begins with the most recently available
financial information obtained from the
underlying companies or sponsors. The
Investment Manager noted to the Audit
Committee that the valuation process used
by the Investment Manager was consistent
with the prior year. For investments where
the Manager was invested in the same
security at the same underlying cost basis
as the lead private equity sponsor, the
Investment Manager utilised the practical
expedient valuation methodology. Generally,
this approach relied on using the best
information from the private equity sponsor,
including but not limited to: audited financial
statements, co-investment holding vehicle
financial statements or capital accounts,
or other financial information deemed
reliable by the Investment Manager.
The Independent Auditor reviewed the
supporting financial information for
investments valued under the practical
expedient methodology.
Management override of controls
The Auditors reviewed accounting estimates
for biases by evaluating whether judgements
and decisions in making accounting
estimates, even if individually reasonable,
indicated a possible bias. They additionally
reviewed the minutes of both the Board and
the Audit Committee.
Compliance with the AIC Code
of Corporate Governance
The Audit Committee continued to monitor
the Company’s governance framework and
compliance with the AIC Code of Corporate
Governance (the “AIC Code”). In 2023, the
Audit Committee undertook a review of the
Company’s compliance with the AIC Code’s
stipulated provisions. The Audit Committee
proposed that certain updates be made to
provide a clearer reflection of the Company’s
manner of compliance and remains satisfied
that the Company upholds satisfactory
compliance with the provisions of the AIC
Code. Detail on where stakeholders can find
further information within the Annual Report
on how the Company has complied with the
various principles of the AIC Code can be
found on page 68.
Internal control
andrisk assessment
During the year, the Audit Committee
received reports from the Investment
Manager, which as AIFM, assesses the
Company’s internal controls on an ongoing
basis, and reviewed any changes to
significant risks.
Each quarter, the Board receives a formal risk
report from the Investment Manager, which
provides a summary of the elevated residual
risks to the Company. The Audit Committee
monitored the key areas of elevated risk
including those that are not directly the
responsibility of the Investment Manager.
The Investment Manager has established
an internal control framework to provide
reasonable, but not absolute, assurance on
the eectiveness of internal controls
operated on behalf of its clients.
Annually, and in accordance with Provision 33
of the AIC Code, the Board undertakes a full
review of the Company’s business risks which
have been analysed and recorded in the
principal risks and uncertainties matrix.
Following the review, the Audit Committee
confirmed that it was satisfied with the key
underlying assumptions of the viability
statement and the resulting forecast
prepared. The Audit Committee regularly
discussed the ongoing external risks
associated with general market conditions,
including, but not limited to, elevated interest
rates, heightened inflation, operational
performance of underlying investments and
other matters. It also considered the impact
of climate change both on the investment risk
environment, but also on the emerging
regulatory requirements for disclosures
by investing entities on such matters.
The principal risks and uncertainties of the
Company and respective controls are outlined
in the risk matrix as set out on pages 41 to 43
of the Strategic report.
The eectiveness of the internal controls at
the Investment Manager is assessed by the
Investment Manager’s compliance and risk
department on an ongoing basis.
Furthermore, the Management Engagement
Committee undergoes an annual review
whereby the Investment Manager and the
Company’s service providers populate
responses regarding their control
environment and internal control systems,
which are reported to the Audit Committee.
The Audit Committee confirms that it
reviewed the eectiveness of the Company’s
system of internal controls for the year ended
31 December 2023 and through to the
approval date of this annual financial report
and that no issues were noted.
REPORT OF THE AUDIT COMMITTEE
66
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Terms of engagement
The Audit Committee reviewed the audit
scope and fee proposal through engagement
letters and Audit Committee reports issued
by KPMG to the Directors. The Committee
approved the fees for audit services for 2023
after a review of the level and nature of work
to be performed. The Board was satisfied that
the fees were appropriate for the scope of the
work required.
The Independent Auditors were remunerated
$315,500 in relation to the 2023 annual audit
(2022 fee:$290,000). They received a fee of
$50,000 (2022:$40,000) to reflect more
accurately the cost associated with the review
of the interim report.
Auditor eectiveness
The Audit Committee received a detailed
audit plan from the Auditors, identifying their
assessment of the key risks. For the 2023
financial year, the significant risk identified
was the valuation of the private equity
investments. This risk is tracked through the
year and the Audit Committee challenged the
work done by the Auditors to test
management’s assumptions. The Audit
Committee assessed the eectiveness of the
audit process in addressing these matters
through the reporting received from the
Auditors at both the half-year and year-end
meetings. In addition, the Audit Committee
sought feedback from the Investment
Manager and US Administrator on the
eectiveness of the audit process.
For the 2023 financial year, the Audit
Committee was satisfied that there had been
appropriate focus and challenge on the
primary areas of audit risk and assessed the
quality of the audit process to be appropriate.
Independent audit
andappointment
KPMG is NBPE’s Independent Auditor. KPMG
performed an audit of the Company’s
consolidated financial statements in
accordance with applicable law and
International Standards on Auditing (UK).
Prior to beginning the audit,the Audit
Committee received a report from the
Independent Auditors andreviewed the
scope of the audit, identified significant audit
risk and areas ofaudit focus as well as the
terms of the audit engagement.
The Audit Committee understands the
importance of auditor independence
and,during 2023, the Audit Committee
reviewed the independence and objectivity
of KPMG. In accordance with the FRC Ethical
Standards, the Company is subject to mandatory
audit director rotation and Mr Rachid Frihmat
was appointed as the signing audit partner
for the current financial year following the
rotation of Mr Neale Jehan. The Audit
Committee met with Mr Frihmat to assess his
background and independence at the start
of the Company’s financial year. The Audit
Committee received areport from KPMG
describing its independence, controls and
current practices to safeguard and maintain
auditor independence. KPMG confirmed that
it did not perform any work with respectto the
Internal audit
The Company itself does not have an internal
audit function, but instead relies on the
internal audit functions and departments of
the Investment Manager and other service
providers. The Audit Committee notes the
independent segregation of duties due to
having separate Investment Management,
US Administrator and Depository functions.
Due to the presence of an internal audit
function within the Investment Manager and
US Administrator, the Audit Committee is
satisfied that the control environment is
sucient to mitigate risks to the Company,
without the need to establish its own internal
audit function.
REPORT OF THE AUDIT COMMITTEE
preparation of the financial statements or
valuations, the taking of management
decisions, or provision ofinvestment advice.
The Audit Committee also focused on
thenon-audit services, which requires
theconsent of the Audit Committee,
adescription of which is shown in the
tablebelow.
Non-audit work Description
Review of Interim
Financial
Statements
A review of the
Company’s interim
financial statements
was undertaken by
KPMG in 2023.
There was no other non-audit work performed
by KPMG during the year other than described
above. The Audit Committee was satised that
the level of non-audit services did not conflict
with their statutory audit responsibilities.
The Audit Committee reviewed the
eectiveness and independence of the Auditor
and believes that the performance of the
Independent Auditor remains satisfactory,
and that it provides eective challenge
to the Board and the Investment Manager.
The Audit Committee continues to monitor
the performance of the Independent Auditor
annually and considers its independence and
objectivity, having due regard to the appropriate
guidelines. KPMG was reappointed after an
open tender process completed in 2019.
The Audit Committee has a policy to conduct
a tender process at least every 10 years and to
rotate auditors at least every 20 years, as
recommended by the UK Statutory Auditors
and Third Country Auditors Regulations 2016.
67
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
REPORT OF THE AUDIT COMMITTEEREPORT OF THE AUDIT COMMITTEE
1. Board Leadership and Purpose
Purpose
Page 56
Strategy
Page 60
Values and culture
Page 56
Shareholder engagement
Pages 36 and 56
Stakeholder engagement
Pages 36 to 39
2. Division of Responsibilities
Director independence
Page 50
Board meetings
Page 52
Relationship with Investment Manager
Page 37
Management Engagement Committee
Page 54
3. Composition, Succession and Evaluation
Remuneration and Nominations Committee
Page 55
Director re-election
Page 52
Use of external search agency
Page 55
Board evaluation
Page 50
4. Audit, Risk and Internal Control
Audit Committee
Pages 64 to 67
Emerging and principal risks
Pages 40 to 43
Risk management and internal control systems
Pages 40 and 66
Going concern statement
Page 44
Viability statement
Page 44
5. Remuneration
Directors’ Remuneration Report
Page 61
Committee evaluation
An internal evaluation of the Board, its
committees and individual Directors was
carried out during 2023 in the form of
questionnaires to determine eectiveness
and performance in various areas. The review
concluded that the Audit Committee was
operating eectively.
Terms of reference
The Audit Committee’s terms of reference
were reviewed during the year and subject
to minor updates related to monitoring
the Company’s ESG Policy and making
recommendations the Committee deems
necessary and appropriate to the Board,
the Committee concluded that they remained
relevant and up to date. The terms of
reference can be found on the Company’s
website at www.nbprivateequitypartners.
com/en/investors/corporate-governance.
Conclusion
As Audit Committee Chairman, I was pleased
with the work performed during the year. In
addition, I was satisfied with the level of work
performed by the Investment Manager, and
the Administrator in relation to the preparation
of the Company’s consolidated financial
statements and the thoroughness of the
year-end audit process conducted by KPMG.
John Martyn Falla
Audit Committee Chairman
23 April 2024
The Board has considered the principles and
provisions of the AIC Code. The AIC Code
addresses all the principles and provisions
set out in the 2018 UK Corporate Governance
Code (the “UK Code”), as well as setting out
additional provisions on issues that are
of specific relevance to the Company. The AIC
Code has been endorsed by the Financial
Reporting Council and the Guernsey Financial
Services Commission (“GFSC”). By reporting
against the AIC Code, the Company is
meeting its obligations under the UK Code,
the GFSC Finance Sector Code of Corporate
Governance, as amended in November 2021,
and the associated disclosure requirements set
out under paragraph 9.8.6R of the Financial
Conduct Authority’s Listing Rules. The Board
considers that reporting against the principles
and provisions of the AIC Code provides more
relevant information to stakeholders.
The Company has complied with the
Principles and Provisions of the AIC Code,
except as set out below:
The role of the chief executive;
Executive Directors’ remuneration; and
The need for an internal audit function.
The Board considers these provisions are
not relevant to the position of NBPE, being
an externally managed investment company.
In particular, all of the Companys day-to-day
management and administrative functions
are outsourced to third parties. As a result,
the Company has no executive directors,
employees or internal operations.
The Company has therefore not reported
further in respect of these provisions.
The AIC Code is available on the AIC website:
www.theaic.co.uk.
Set out below is where stakeholders can find
further information within the Annual Report
about how the Company has complied with
the various principles and provisions of the
AIC Code.
68
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
Statement of Compliance with the
AIC Code of Corporate Governance
Annual financial report
and consolidated
financial statements
The Directors are responsible for preparing
the annual financial report and consolidated
financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to
prepare consolidated financial statements for
each financial year. Under the law they have
chosen to prepare the consolidated financial
statements in conformity with U.S. generally
accepted accounting principles (“U.S. GAAP”)
and applicable law.
Under company law the Directors must not
approve the consolidated financial
statements unless they are satised that they
give a true and fair view of the state of aairs
of the Group and of its profit or loss for that
period. In preparing these financial
statements, the Directors are required to:
Select suitable accounting policies and then
apply them consistently;
Make judgements and estimates that are
reasonable, relevant and reliable;
State whether applicable accounting
standards have been followed, subject to any
material departures disclosed and explained
in the financial statements;
Assess the Group’s ability to continue as a
going concern, disclosing, as applicable,
matters related to going concern; and
Responsibility statement
of the Directors in respect
of the annual financial report
The Directors confirmed that, to the best
of their knowledge:
The consolidated financial statements,
prepared in conformity with U.S. GAAP, give
a true and fair view of the assets, liabilities,
financial position and profit or loss of the
Company and the undertakings included in
the consolidation taken as a whole as
required by the Disclosure Guidance and
Transparency Rules (“DTR”) 4.1.12R and are
in compliance with the requirements set out
in The Companies (Guernsey) Law, 2008
(as amended); and
The annual financial report includes a fair
review of the information required by DTR
4.1.8R and DTR 4.1.11R of the Disclosure
Guidance and Transparency Rules, which
provides an indication of important events that
have occurred since the end of the financial
year and the likely future development of the
Company and a description of principal risks
and uncertainties during the year.
We consider that the annual financial report
and consolidated financial statements,
taken as a whole, are fair, balanced
and understandable and provide the
information necessary for shareholders
to assess the Company’s position and
performance, business model and strategy.
Use the going concern basis of accounting
unless liquidation is imminent.
The Directors are responsible for keeping
proper accounting records that are sucient
to show and explain the Company’s
transactions and disclose with reasonable
accuracy at any time the financial position of
the Company and enable them to ensure that
the financial statements comply with The
Companies (Guernsey) Law, 2008 (as
amended). They are responsible for such
internal controls as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to fraud
or error, and have general responsibility for
taking such steps as are reasonably open to
them to safeguard the assets of the Company
and to prevent and detect fraud and other
irregularities.
Disclosure of information
to Auditor
The Directors confirmed that, so far as they
were each aware, there is no relevant audit
information of which the Company’s Auditor
was unaware; and each Director took all the
steps that he/she ought to have taken
as a Director to make himself/herself aware
of any relevant audit information and
to establish that the Company’s Auditor
is aware of that information.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website, and for the preparation
and dissemination of financial statements.
Legislation in Guernsey governing the
preparation and dissemination of financial
statements may dier from legislation in
other jurisdictions.
By order of the Board
William Maltby
Director
John Martyn Falla
Director
23 April 2024
Statement of Directors’ responsibilities
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
69
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
CONSOLIDATED FINANCIAL STATEMENTS
Financials
71 Independent Auditor’s Report
75 Consolidated financial statements
81 Notes to consolidated financial statements
NB Private Equity Partners Annual Report 2023
70
OTHERFINANCIALSGOVERNANCESTRATEGIC REPORT
INDEPENDENT AUDITOR’S REPORT
Independent Auditor’s report
to the members of NB Private Equity Partners Limited
Our opinion is unmodified
We have audited the consolidated financial
statements of NB Private Equity Partners Limited
(the “Company) and its subsidiaries (together,
the “Group”), which comprise the consolidated
balance sheet and the consolidated condensed
schedules of investments as at 31 December
2023, the consolidated statements of operations
and changes in net assets and cash flows for the
year then ended, and notes, comprising
significant accounting policies and other
explanatory information.
In our opinion, the
accompanying consolidated
financial statements:
give a true and fair view of the financial position
of the Group as at 31 December 2023, and of the
Group’s financial performance and cash flows
for the year then ended;
are prepared in accordance with U.S. generally
accepted accounting principles (“US GAAP”);
and
comply with the Companies (Guernsey)
Law, 2008.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities
are described below. We have fulfilled our
ethical responsibilities under, and are independent
of the Company and Group in accordance with,
UK ethical requirements including the FRC
Ethical Standard as required by the Crown
Dependencies’ Audit Rules and Guidance.
We believe that the audit evidence we have
obtained is a sucient and appropriate basis
for our opinion.
Key audit matters: our
assessment of the risks
of material misstatement
Key audit matters are those matters that,
in our professional judgment, were of most
significance in the audit of the consolidated
financial statements and include the most
significant assessed risks of material
misstatement (whether or not due to fraud)
identified by us, including those which had the
greatest eect on: the overall audit strategy;
the allocation of resources in the audit;
and directing the eorts of the engagement
team. These matters were addressed in the
context of our audit of the consolidated financial
statements as a whole, and in forming our
opinion thereon, and we do not provide
a separate opinion on these matters. In arriving
at our audit opinion above, the key audit matter
was as follows (unchanged from 2022):
Valuation of private
equityinvestments The risk Our response
$1,321,345,503; (2022:
$1,401,430,601)
Refer to pages 64 to 68
of the Audit
Committee Report,
pages 76 to 78 of the
consolidated
condensed schedule of
investments, note 2
accounting policy and
note 3 disclosures
Basis:
The Group’s private equity
investment portfolio represents
the most significant balance on
the consolidated balance sheet
and is the principal driver of the
Group’s net asset value (2023:
101.0%; 2022: 105.4%).
The investment portfolio is
comprised of Direct Equity
Investments, Fund Investments
and Income Investments
(together the “Investments”).
Certain Direct Equity and all
Fund Investments, representing
84% of the fair value of
Investments, are valued using
the net asset value as a practical
expedient in conformity with
U.S. GAAP to determine the fair
value of the underlying Direct
Equity and Fund Investments,
adjusted if considered necessary
by the Investment Manager.
The remaining Direct Equity
Investments, representing 9%
of the fair value of Investments,
are valued using comparable
company multiples, third party
valuation or listed prices,
as applicable.
Income Investments,
representing 7% of the fair value
of Investments, are valued based
on valuation models that take
into account the factors relevant
to each investment and use
relevant third party market data
where available (“Model
Valuations”). Any remaining
Income Investments are valued
using third party data sources.
Our audit procedures included:
Controls evaluation:
We tested the design and implementation
of the Investment Manager’s review control
in relation to the valuation of Investments.
Challenging managements’
assumptions and inputs
including use of KPMG valuation
specialist:
For all Investments we assessed the
appropriateness of the valuation technique
used to estimate fair value.
For a selection of Direct Equity and Fund
Investments, chosen on the basis of their
fair value:
We confirmed their fair values to supporting
information, including audited information
where available, such as: financial
statements, limited partner capital account
statements, lead sponsor or co-investor
information or other information provided
by the underlying funds’ general partners,
investee managers or similar.
For investments using a guideline public
companies multiple approach, we obtained
the valuation provided by the sponsor and
assessed assumptions based on observable
market data. We assessed the reliability
of information obtained.
For unaudited information we either
obtained the information directly or
assessed the Investment Manager’s process
for obtaining this information and
conducted retrospective testing to confirm
its reliability.
For audited information, we assessed the
appropriateness of the accounting
framework utilized and whether the audit
opinion was modified.
For listed Direct Equity Investments we
independently priced these to a third
party source.
71
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
INDEPENDENT AUDITOR’S REPORT
Valuation of private
equityinvestments The risk Our response
Risk:
The valuation of the Group’s
Investments is considered a
significant area of our audit,
given that it represents the
majority of the net assets of the
Group. The valuation risk
incorporates both a risk of fraud
and error given the significance
of estimates and judgements
that may be involved in the
determination of fair value.
For a selection of Income Investments,
chosen on the basis of their fair value, where
market quotes were available, we used our
KPMG valuation specialist to independently
value them based on prices obtained from
third party pricing vendors.
For the remaining population of Income
Investments, we made a selection of Model
Valuations, chosen on the basis of their fair
value. We corroborated key inputs in the
Model Valuations to supporting
documentation such as management
accounts. With the support of our KPMG
valuation specialist, we challenged the key
assumptions used, such as comparable
multiples and market yields.
Assessing transparency:
We also considered the Group’s disclosures
(see Note 3) in relation to the use of estimates
and judgments regarding the fair value of
investments and the Group’s investment
valuation policies adopted and the fair value
disclosures in note 2 and note 3 for
conformity with U.S. GAAP.
The group team performed the audit of the
Group as if it was a single aggregated set of
financial information. The audit was performed
using the materiality level set out above and
covered 100% of total group revenue, total
group profit before tax, and total group assets
and liabilities.
Going concern
The directors have prepared the consolidated
financial statements on the going concern basis
as they do not intend to liquidate the Group
or the Company or to cease their operations, and
as they have concluded that the Group and the
Company’s financial position means that this is
realistic. They have also concluded that there are
no material uncertainties that could have cast
significant doubt over their ability to continue as
a going concern for at least a year from the date
of approval of the consolidated financial
statements (the “going concern period”).
In our evaluation of the directors’ conclusions, we
considered the inherent risks to the Group and the
Company’s business model and analysed how
those risks might aect the Group and the
Company’s financial resources or ability to continue
operations over the going concern period. The risks
that we considered most likely to aect the Group
and the Company’s financial resources or ability
to continue operations over this period were:
Availability of capital to meet operating costs
and other financial commitments;
The ability of the Group to comply with debt
covenants; and
The ability of the Company to repay the
outstanding Zero Dividend Preference shares
upon their maturity.
We considered whether these risks could
plausibly aect the liquidity in the going concern
period by comparing severe, but plausible
downside scenarios that could arise from these
risks individually and collectively against the
level of available financial resources indicated
by the Group’s financial forecasts.
We considered whether the going concern
disclosure in note 2 to the financial statements
gives a full and accurate description of the
directors’ assessment of going concern.
Our conclusions based on this work:
we consider that the directors’ use of the
going concern basis of accounting in the
preparation of the consolidated financial
statements is appropriate;
we have not identified, and concur with the
directors’ assessment that there is not,
a material uncertainty related to events or
conditions that, individually or collectively, may
cast significant doubt on the Group and the
Company’s ability to continue as a going
concern for the going concern period; and
we have nothing material to add or draw
attention to in relation to the directors’
statement in the notes to the consolidated
financial statements on the use of the going
concern basis of accounting with no material
uncertainties that may cast significant doubt
over the Group and the Company’s use
of that basis for the going concern period,
and that statement is materially consistent
with the consolidated financial statements
and our audit knowledge.
However, as we cannot predict all future events
or conditions and as subsequent events may
result in outcomes that are inconsistent with
judgements that were reasonable at the time
they were made, the above conclusions are not
a guarantee that the Group and the Company
will continue in operation.
Our application of materiality andan
overview of the scope ofour audit
Materiality for the consolidated financial
statements as a whole was set at $27,100,000,
determined with reference to a benchmark of
group net assets of $1,307,489,836 of which it
represents approximately 2.0% (2022: 2.0%).
In line with our audit methodology, our procedures
on individual account balances and disclosures
were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the
risk that individually immaterial misstatements in
individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality for the Group was set at
75.0% (2022: 75.0%) of materiality for the financial
statements as a whole, which equates to
$20,300,000. We applied this percentage in our
determination of performance materiality because
we did not identify any factors indicating an
elevated level of risk.
We reported to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding $1,355,000, in addition to other
identified misstatements that warranted
reporting on qualitative grounds.
Our audit of the Group was undertaken to the
materiality level specified above, which has
informed our identification of significant risks
of material misstatement and the associated
audit procedures performed in those areas
as detailed above.
72
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
INDEPENDENT AUDITOR’S REPORT
Fraud and breaches of lawsand
regulations – ability to detect
Identifying and responding to risks
of material misstatement due to fraud
To identify risks of material misstatement due
to fraud (“fraud risks”) we assessed events
or conditions that could indicate an incentive
or pressure to commit fraud or provide an
opportunity to commit fraud. Our risk
assessment procedures included:
enquiring of management as to the Group’s
policies and procedures to prevent and detect
fraud as well as enquiring whether
management have knowledge of any actual,
suspected or alleged fraud;
reading minutes of meetings of those charged
with governance; and
using analytical procedures to identify any
unusual or unexpected relationships.
As required by auditing standards, and taking
into account possible incentives or pressures
to misstate performance and our overall
knowledge of the control environment, we
perform procedures to address the risk of
management override of controls, in particular
the risk that management may be in a position
to make inappropriate accounting entries, and
the risk of bias in accounting estimates such
as valuation of unquoted investments. On this
audit we do not believe there is a fraud risk
related to revenue recognition because the
Group’s revenue streams are simple in nature
with respect to accounting policy choice, and
are easily verifiable to external data sources
or agreements with little or no requirement for
estimation from management. We did not
identify any additional fraud risks.
The Group is subject to other laws and regulations
where the consequences of non-compliance could
have a material eect on amounts or disclosures in
the consolidated financial statements, for instance
through the imposition of fines or litigation or
impacts on the Group and the Company’s ability
to operate. We identified financial services
regulation as being the area most likely to have
such an eect, recognising the regulated nature
of the Group’s activities and its legal form. Auditing
standards limit the required audit procedures
to identify non-compliance with these laws and
regulations to enquiry of management and
inspection of regulatory and legal correspondence,
if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect
that breach.
Context of the ability of the audit to detect
fraud or breaches of law or regulation
Owing to the inherent limitations of an audit,
there is an unavoidable risk that we may not
have detected some material misstatements
in the consolidated financial statements, even
though we have properly planned and
performed our audit in accordance with
auditing standards. For example, the further
removed non-compliance with laws and
regulations is from the events and transactions
reflected in the consolidated financial statements,
the less likely the inherently limited procedures
required by auditing standards would identify it.
We performed procedures including:
identifying journal entries and other adjustments
to test based on risk criteria and comparing any
identified entries to supporting documentation;
incorporating an element of unpredictability
in our audit procedures; and
assessing significant accounting estimates
for bias.
Further detail in respect of valuation of
unquoted investments is set out in the key audit
matter section of this report.
Identifying and responding to risks of
material misstatement due to non-
compliance with laws and regulations
We identified areas of laws and regulations that
could reasonably be expected to have a material
eect on the consolidated financial statements
from our sector experience and through
discussion with management (as required by
auditing standards), and from inspection of the
Group’s regulatory and legal correspondence,
if any, and discussed with management the
policies and procedures regarding compliance
with laws and regulations. As the Group is
regulated, our assessment of risks involved
gaining an understanding of the control
environment including the entity’s procedures
for complying with regulatory requirements.
The Group is subject to laws and regulations that
directly aect the consolidated financial
statements including financial reporting
legislation and taxation legislation and we
assessed the extent of compliance with these
laws and regulations as part of our procedures
on the related financial statement items.
In addition, as with any audit, there remains a
higher risk of non-detection of fraud, as this may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal
controls. Our audit procedures are designed
to detect material misstatement. We are not
responsible for preventing non-compliance
or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other
information. The other information comprises
the information included in the annual financial
report but does not include the consolidated
financial statements and our auditor’s report
thereon. Our opinion on the consolidated financial
statements does not cover the other information
and we do not express an audit opinion or any
form of assurance conclusion thereon.
In connection with our audit of the consolidated
financial statements, our responsibility is to read
the other information and, in doing so, consider
whether the other information is materially
inconsistent with the consolidated financial
statements or our knowledge obtained in the
audit, or otherwise appears to be materially
misstated. If, based on the work we have
performed, we conclude that there is a material
misstatement of this other information, we are
required to report that fact. We have nothing
to report in this regard.
73
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
INDEPENDENT AUDITOR’S REPORT
Disclosures of emerging and principal
risks and longer term viability
We are required to perform procedures to
identify whether there is a material
inconsistency between the directors’ disclosures
in respect of emerging and principal risks and
the viability statement, and the consolidated
financial statements and our audit knowledge.
We have nothing material to add or draw
attention to in relation to:
the directors’ confirmation within the viability
statement (pages 44 and 45) that they have
carried out a robust assessment of the emerging
and principal risks facing the Group, including
those that would threaten its business model,
future performance, solvency or liquidity;
the emerging and principal risks disclosures
describing these risks and explaining how they
are being managed or mitigated;
the directors’ explanation in the viability
statement (pages 44 and 45) as to how they
have assessed the prospects of the Group, over
what period they have done so and why they
consider that period to be appropriate, and
their statement as to whether they have a
reasonable expectation that the Group will
be able to continue in operation and meet its
liabilities as they fall due over the period
of their assessment, including any related
disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the viability
statement, set out on pages 44 and 45 under the
Listing Rules. Based on the above procedures,
we have concluded that the above disclosures
are materially consistent with the consolidated
financial statements and our audit knowledge.
We have nothing to report on other
matters on which we are required
to report by exception
We have nothing to report in respect of the
following matters where the Companies
(Guernsey) Law, 2008 requires us to report
to you if, in our opinion:
the Company has not kept proper accounting
records; or
the consolidated financial statements are not
in agreement with the accounting records; or
we have not received all the information and
explanations, which to the best of our
knowledge and belief are necessary for the
purpose of our audit.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set
out on page 69, the directors are responsible for:
the preparation of the consolidated financial
statements including being satisfied that they
give a true and fair view; such internal control
as they determine is necessary to enable the
preparation of consolidated financial
statements that are free from material
misstatement, whether due to fraud or error;
assessing the Group and Company’s ability
to continue as a going concern, disclosing,
as applicable, matters related to going concern;
and using the going concern basis of accounting
unless liquidation is imminent.
Auditor’s responsibilities
Our objectives are to obtain reasonable
assurance about whether the consolidated
financial statements as a whole are free from
material misstatement, whether due to fraud
or error, and to issue our opinion in an auditor’s
report. Reasonable assurance is a high level
Corporate governance disclosures
We are required to perform procedures to identify
whether there is a material inconsistency
between the directors’ corporate governance
disclosures and the consolidated financial
statements and our audit knowledge.
Based on those procedures, we have concluded
that each of the following is materially
consistent with the consolidated financial
statements and our audit knowledge:
the directors’ statement that they consider that
the annual financial report and consolidated
financial statements taken as a whole is fair,
balanced and understandable, and provides
the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy;
the section of the annual financial report
describing the work of the Audit Committee,
including the significant issues that the audit
committee considered in relation to the
financial statements, and how these issues
were addressed; and
the section of the annual financial report that
describes the review of the eectiveness of
the Group’s risk management and internal
control systems.
We are required to review the part of Corporate
Governance Statement relating to the Group’s
compliance with the provisions of the UK
Corporate Governance Code specified by the
Listing Rules for our review. We have nothing
to report in this respect.
of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
the consolidated financial statements.
A fuller description of our responsibilities
is provided on the FRC’s website at www.frc.org.
uk/auditorsresponsibilities.
The purpose of this report and
restrictions on its use by persons
other than the Company’s members
as a body
This report is made solely to the Company’s
members, as a body, in accordance with section
262 of the Companies (Guernsey) Law, 2008 and,
in respect of any further matters on which we
have agreed to report, on terms we have agreed
with the Company. Our audit work has been
undertaken so that we might state to the
Company’s members those matters we are
required to state to them in an auditor’s report
and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the Company
and the Company’s members, as a body, for our
audit work, for this report, or for the opinions we
have formed.
Rachid Frihmat
For and on behalf of KPMG
Channel Islands Limited
Chartered Accountants and
RecognisedAuditors
Guernsey
23 April 2024
74
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
CONSOLIDATED FINANCIAL STATEMENTS
2023 2022
Assets
Investments at fair value:
Private equity investments
Cost of $780,503,840 at 31 December 2023 and $840,971,544 at 31 December 2022 $1,321,345,503 $1,401,430,601
Government obligations
Cost of $115,157,505 at 31 December 2023 and $0 at 31 December 2022 115,181,468
Cash and cash equivalents 50,617,431 7,034,276
Other assets 2,336,264 2,662,851
Distributions and sales proceeds receivable from investments 333,138 199,924
Total assets $1,489,813,804 $1,411,327,652
Liabilities and share capital
Liabilities:
ZDP Share liability $80,428,778 $72,800,912
Credit facility loan 90,000,000
Payables to Investment Manager and aliates 4,895,272 5,177,372
Accrued expenses and other liabilities 6,975,041 4,126,709
Net deferred tax liability 24,877 9,113
Total liabilities $182,323,968 $82,114,106
Share capital:
Class A Shares, $0.01 par value, 500,000,000 shares authorised,
49,653,014 shares issued and 46,502,606 shares outstanding at 31 December 2023 $496,530 $ 49 9,115
49,911,438 shares issued and 46,761,030 shares outstanding at 31 December 2022
Class B Shares, $0.01 par value, 100,000 shares authorised,
10,000 shares issued and outstanding 100 100
Additional paid-in capital 491,555,393 496,559,065
Retained earnings 822,682,245 839,456,403
Less cost of treasury stock purchased (3,150,408 shares) (9,248,460) (9,248,460)
Total net assets of the controlling interest $1,305,485,808 $1,327,266,223
Net assets of the noncontrolling interest $2,004,028 $1,9 47,323
Total net assets $1,307, 489,836 $1,329,213,546
Total liabilities and net assets $1,489,813,804 $1,411,327,652
Net asset value per share for Class A Shares and Class B Shares $28.07 $28.38
Net asset value per share for Class A Shares and Class B Shares (GBP) £22.02 £23.59
Net asset value per 2024 ZDP Share (Pence) 126.18 121.04
The consolidated financial statements were approved by the Board of Directors on 23 April 2024 and signed on its behalf by
William Maltby John Falla
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated balance sheets
31 December 2023 and 31 December 2022
75
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated condensed schedules of investments
31 December 2023 and 31 December 2022
Private equity investments Cost Fair Value
Unfunded
Commitment
Private Equity
(1)
Exposure
2023
Direct equity investments
NB Alternatives Direct Co-investment Program A $43,905,518 $19,573,022 $17,102,040 $36,675,062
NB Alternatives Direct Co-investment Program B 74,332,209 170,167, 212 19,340,324 189,507,536
NB Renaissance Programs 10,587,835 23,890,095 9,603,804 33,493,899
Marquee Brands 26,047,730 30,573,581 3,410,816 33,984,397
Direct equity investments
(2)(3)
534,272,602 979,327,04 4 2,529,601 981,856,645
Total direct equity investments $689,145,894 $1,223,530,954 $51,986,585 $1,275,517,539
Income Investments
NB Credit Opportunities Program $25,043,808 $37,927,794 $11,981,976 $49,909,770
NB Specialty Finance Program 8,259,427 7,750,000 15,000,000 22,750,000
Income investments 48,817,095 44,326,526 44,326,526
Total income investments $82,120,330 $90,004,320 $26,981,976 $116,986,296
Fund investments $9, 237,616 $7,810, 229 $5,318,896 $13,129,125
Total investments $780,503,840 $1,321,345,503 $84,287,457 $1,405,632,960
2022
Direct equity investments
NB Alternatives Direct Co-investment Program A $46,212,909 $39,055,204 $18,274,463 $57,329,667
NB Alternatives Direct Co-investment Program B 74,940,419 174,540,368 20,794,076 195,334,444
NB Renaissance Programs 7,791,651 20,790,191 10,537,743 31,327,934
NB Healthcare Credit Investment Program (Equity) 1,599,864 8,018 4,146,718 4,154,736
Marquee Brands 26,133,313 28,544,245 3,410,816 31,955,061
Direct equity investments
(2)(3)
574,858,103 1,023,499,804 3,731,282 1,027,231,086
Total direct equity investments $731,536,259 $1,286,437,830 $60,895,098 $1,347,332,928
Income Investments
NB Credit Opportunities Program $27,823,406 $39,650,000 $11,981,976 $51,631,976
NB Specialty Finance Program 27,70 8,871 27,524,276 15,000,000 42,524,276
Income investments 44,071,383 40,14 8,251 40,148,251
Total income investments $99,603,660 $107,322,527 $26,981,976 $134,304,503
Fund investments $9,831,625 $7, 670, 24 4 $8,169,742 $15,839,986
Total investments $840,971,544 $1,401,430,601 $96,046,816 $1,497,477,417
(1): Private equity exposure is the sum of fair value and unfunded commitment.
(2): Includes direct equity investments into companies and co-investment vehicles.
(3): This includes investment(s) above 5% of net asset value. See Note 3.
76
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated condensed schedules of investments
31 December 2023 and 31 December 2022
Investment Description Geography Industry Cost Fair Value
2023
Government obligations
Treasury Bill 0% 1/18/2024 USA Sovereign $12,966,797 $12,969,450
Treasury Bill 0% 2/6/2024 USA Sovereign 27, 810,9 03 27,818,058
Treasury Bill 0% 2/29/2024 USA Sovereign 14,869,685 14,872,800
Treasury Bill 0% 4/2/2024 USA Sovereign 5,004,141 5,003,623
Treasury Bill 0% 4/16/2024 USA Sovereign 15,010,757 15,010,671
Treasury Bill 0% 5/9/2024 USA Sovereign 15,009,923 15,009,866
Treasury Bill 0% 5/23/2024 USA Sovereign 24,485,299 24,497,000
Total government obligations $115,157,505 $115,181,468
As of 31 December 2022, the Group did not hold any government obligations.
77
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated condensed schedules of investments
31 December 2023 and 31 December 2022
Geographic diversity of private equity investments
(1)
Fair Value
2023
Fair Value
2022
North America $961,966,491 $1,024,091,245
Europe 319,680,132 325,117,876
Asia/rest of world 39,698,880 52,221,480
$1,321,345,503 $1,401,430,601
Industry diversity of private equity investments
(2)
2023 2022
Consumer 21.0% 19.9%
Technology/IT 18.2% 18.0%
Industrials 17.8% 15.3%
Business services 12.1% 12.2%
Financial services 11.9% 14.3%
Healthcare 9.3% 10.0%
Diversified/undisclosed/other 3.8% 5.3%
Communications/media 3.3% 2.6%
Transportation 1.4% 1.1%
Energy 1.2% 1.3%
100.0% 100.0%
Asset class diversification of private equity investments
(3)
2023 2022
Direct Equity Investments
Mid-cap buyout 47.3% 47.1%
Large-cap buyout 32.2% 32.4%
Special situation 10.2% 7. 8%
Growth equity 3.2% 4.8%
Income investments 6.8% 7.7%
Growth/venture funds 0.3% 0.2%
100.0% 100.0%
(1): Geography is determined by location of the headquarters of the underlying portfolio companies in funds and direct co-investments.
A portion of our fund investments may relate to cash or other assets or liabilities that they hold and for which we do not have adequate information to assign a geographic location.
(2): Industry diversity is based on underlying portfolio companies and direct co-investments which may be held through either co-investments or NB-managed vehicles. Percentages are calculated based on the total portfolio value.
(3): Asset class diversification is based on the net asset value of underlying fund investments and co-investments. Percentages are calculated based on the total portfolio value.
The accompanying notes are an integral part of the consolidated financial statements.
78
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statements of operations and changes in net assets
For the years ended 31 December 2023 and 2022
2023 2022
Interest and dividend income (net of foreign withholding taxes of $2,263 for 2023 and $7,261 for 2022) $7,054,768 $4,544,339
Expenses
Investment management and services $20,512,023 $21,144,589
Finance costs
Credit facility 8,892,744 5,999,532
ZDP Shares 3,281,037 6,039,881
Administration and professional fees 4,909,508 4,485,332
Total expenses $37,595,312 $37,669,334
Net investment loss $(30,540,544) $(33,124,995)
Tax expense 721,007 2,260,993
Net investment loss after taxes $(31,261,551) $(35,385,988)
Realised and unrealised gains (losses)
Realised gain on investment and translation of foreign currencies $82,483,081 $53,440,560
Net change in unrealised loss on investments, net of tax expense of $15,764 for 2023 and $9,113 for 2022 (24,095,674) (127,109,675)
Net realised and change in unrealised gain (loss) $58,387,407 $(73,669,115)
Net increase (decrease) in net assets resulting from operations $27,125, 856 $(109,055,103)
Less net (increase) decrease in net assets resulting from operations attributable to the noncontrolling interest (56,705) 107,312
Net increase (decrease) in net assets resulting from operations attributable to the controlling interest $27,0 69,151 $(10 8,947,791)
Net assets at beginning of period attributable to the controlling interest $1,327,266,223 $1,480,178,782
Less dividend payment (43,843,309) (43,964,768)
Less cost of stock repurchased and cancelled (258,424 shares for 2023 and 0 shares for 2022) (5,006,257)
Net assets at end of period attributable to the controlling interest $1,305,485,808 $1,327,266,223
Earnings (loss) per share for Class A Shares and Class B Shares of the controlling interest $0.58 $(2.33)
Earnings (loss) per share for Class A Shares and Class B Shares of the controlling interest (GBP) £0.47 £(1.88)
The accompanying notes are an integral part of the consolidated financial statements.
79
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statements of cash ows
For the years ended 31 December 2023 and 2022
2023 2022
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations attributable to the controlling interest $27,0 69,151 $(108,947,791)
Net increase (decrease) in net assets resulting from operations attributable to the noncontrolling interest 56,705 (107,312)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realised gain on investments and translation of foreign currencies (82,483,081) (53,440,560)
Net change in unrealised loss on investments, net of tax expense 24,095,674 127,109,675
Contributions to private equity investments (6,706,951) (3,664,041)
Purchases of private equity investments (15,308,316) (36,203,158)
Distributions from private equity investments 132,874,039 55,978,140
Proceeds from sale of private equity investments 36,906,862 63,520,093
Purchases of government obligations (143,910,794)
Proceeds from sale of government obligations 30,000,000
In-kind payment of interest income and change in accrued interest (5,995,497) (3,840,330)
Amortisation of finance costs 404,217 647,74 6
Amortisation of purchase premium/discount (OID), net (35,723) (56,667)
Change in other assets (241,185) 283,491
Change in payables to Investment Manager and aliates (282,100) (37,965,276)
Change in current tax liability 685,067 2,283,798
Change in accrued expenses and other liabilities 5,304,653 5,292,475
Net cash provided by operating activities $2,432,721 $10,890,283
Cash flows from financing activities:
Dividend payment $(43,843,309) $(43,964,768)
Redemption of 2022 Zero Dividend Preference Shares (68,100,570)
Stock repurchased and cancelled (5,006,257)
Borrowings from credit facility 120,000,000 30,000,000
Payments to credit facility (30,000,000) (30,000,000)
Net cash provided by (used in) financing activities $41,150,434 $(112,065,338)
Eect of exchange rates on cash balances (8,277,356)
Net increase (decrease) in cash and cash equivalents $43,583,155 $(109,452,411)
Cash and cash equivalents at beginning of period 7,034,276 116,486,687
Cash and cash equivalents at end of period $50,617, 431 $7,034,276
Supplemental cash flow information
Credit facility financing costs paid $6,606,935 $5,552,971
Taxes paid $37,712 $7,045
Taxes refunded $1,772 $29,850
The accompanying notes are an integral part of the consolidated financial statements.
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Description of the Group
NB Private Equity Partners Limited (the “Company”) and its subsidiaries, collectively
(the “Group”) is a closed-ended investment company registered in Guernsey.
The registered oce is Floor 2, Trafalgar Court, St Peter Port, Guernsey, GY1 4LY.
The principal activity of the Group is to invest in direct private equity investments by
co-investing alongside leading private equity sponsors in their core areas of expertise.
The Company’s Class A Shares are listed and admitted to trading on the Premium
Segment of the Main Market of the London Stock Exchange (“Main Market”) under
the symbols “NBPE” and “NBPU” corresponding to Sterling and U.S. dollar quotes,
respectively. NBPE has a class of Zero Dividend Preference (“ZDP”) Shares maturing
in 2024 (see note 5) which is listed and admitted to trading on the Specialist Fund
Segment of the Main Market of the London Stock Exchange (“Specialist Fund
Segment”) under the symbol “NBPS”.
The Group is managed by NB Alternatives Advisers LLC (“Investment Manager”),
a subsidiary of Neuberger Berman Group LLC (“NBG”), pursuant to an Investment
Management Agreement. The Investment Manager serves as the registered
investment adviser under the Investment Advisers Act of 1940.
Note 2 – Summary of significant accounting policies
Basis of presentation
These consolidated financial statements present a true and fair view of the financial
position, profit or loss and cash flows and have been prepared in conformity with U.S.
generally accepted accounting principles (“U.S. GAAP”) and are in compliance with the
Companies (Guernsey) Law, 2008 (as amended). All adjustments considered necessary
for the fair presentation of the consolidated financial statements for the periods
presented have been included. These consolidated financial statements are presented
in U.S. dollars.
The Group is an investment company and follows the accounting and reporting
guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) Topic 946, Financial Services – Investment Companies. Accordingly,
the Group reflects its investments on the Consolidated Balance Sheets at their estimated
fair values, with unrealised gains and losses resulting from changes in fair value reflected
in net change in unrealised gain (loss) on investments and forward foreign exchange
contracts in the Consolidated Statements of Operations and Changes in Net Assets.
The Group does not consolidate majority-owned or controlled portfolio companies.
The Group does not provide any financial support to any of its investments beyond the
investment amount to which it committed.
The Directors considered that it is appropriate to adopt a going concern basis of accounting
in preparing the consolidated financial statements. In reaching this assessment, the Directors
have considered a wide range of information relating to present and future conditions
including the balance sheets, future projections, cash flows and the longer-term
strategy of the business.
Principles of consolidation
The consolidated financial statements include accounts of the Company consolidated
with the accounts of all its subsidiaries in which it holds a controlling financial interest
as of the financial statement date. All inter-group balances have been eliminated.
The Company’s partially owned subsidiary, NB PEP Investments, LP (incorporated)
is incorporated in Guernsey.
The Company’s wholly-owned subsidiaries, NB PEP Holdings Limited, NB PEP
Investments I, LP, NB PEP Investments LP Limited and NB PEP Investments Limited
are incorporated in Guernsey.
The Company’s wholly-owned subsidiary, NB PEP Investments DE, LP is incorporated
in Delaware and operates in the United States.
Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with U.S. GAAP
requires the Directors to make estimates and judgements that aect the reported
amounts of certain assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could
dier from those estimates.
The following estimates and assumptions were used at 31 December 2023 and
31 December 2022 to estimate the fair value of each class of financial instruments:
Cash and cash equivalents – The carrying value reasonably approximates fair value due
to the short-term nature of these instruments.
Government obligations – Further information on valuation is provided in the Fair Value
Measurements section below.
Other assets (excluding forward currency contracts) – The carrying value reasonably
approximates fair value.
Distributions and sales proceeds receivable from investments – The carrying value
reasonably approximates fair value.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ZDP Share liability – The carrying value reasonably approximates fair value (see note 5).
Credit Facility Loan – The carrying value reasonably approximates fair value.
Payables to Investment Manager and aliates – The carrying value reasonably
approximates fair value.
Accrued expenses and other liabilities – The carrying value reasonably approximates
fair value.
Private equity investments – Further information on valuation is provided in the Fair
Value Measurements section below.
Fair Value measurements
It is expected that most of the investments in which the Group invests will meet the
criteria set forth under FASB ASC 820 Fair Value Measurement and Disclosures (“ASC
820”) permitting the use of the practical expedient to determine the fair value of the
investments. ASC 820 provides that, in valuing alternative investments that do not
have quoted market prices but calculate net asset value (“NAV”) per share or
equivalent, an investor may determine fair value by using the NAV reported to the
investor by the underlying investment. To the extent ASC 820 is applicable to
an investment, the Investment Manager will value the Group’s investment based
primarily on the value reported to the Group by the investment or by the lead investor/
sponsor of a direct co-investment as of each quarter-end, as determined by the
investments in accordance with its own valuation policies.
ASC 820-10 Fair Value Measurements and Disclosure establishes a fair value hierarchy that
prioritises the inputs to valuation techniques used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). ASC 820-10-35-39 to 55 provides three levels of the fair
value hierarchy as follows:
Level 1: Quoted prices are available in active markets for identical investments as of
the reporting date.
Level 2: Pricing inputs are other than quoted prices in active markets, which are either
directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs are unobservable for the investment and include situations
where there is little, if any, market activity for the investment. The inputs used
in the determination of the fair value require significant management
judgement or estimation.
Observable inputs refer broadly to the assumptions that market participants would
use in pricing the asset or liability, including assumptions about risk, based on market
data obtained from sources independent of the Group. Unobservable inputs reflect the
Group’s own assumptions about the assumptions market participants would use in pricing
the asset or liability based on the information available. The inputs or methodology used
for valuing assets or liabilities may not be an indication of the risks associated with
investing in those assets or liabilities. The Group generally uses the NAV reported
by the investments as a primary input in its valuation utilising the practical expedient
method of determining fair value; however, adjustments to the reported NAV may
be made based on various factors, including, but not limited to, the attributes of the
interest held, including the rights and obligations, any restrictions or illiquidity on such
interest, any potential clawbacks by the investments and the fair value of the
investments’ portfolio or other assets and liabilities. Investments that are measured
at fair value using the NAV per share (or its equivalent) practical expedient are not
categorised in the fair value hierarchy.
Government obligations
The fair value of U.S. Treasury Bills is based on dealer quotations. U.S. Treasury Bills
in this portfolio are categorised as Level 1 of the fair value hierarchy.
Realised gains and losses on investments
Purchases and sales of investments are recorded on a trade-date basis. Realised gains
and losses from sales of investments are determined on a specific identification basis.
For investments in private equity investments, the Group records its share of realised
gains and losses incurred when the Investment Manager knows that the private equity
investment has realised its interest in a portfolio company and the Investment
Manager has sucient information to quantify the amount. For all other investments,
realised gains and losses are recognised in the Consolidated Statements of Operations
and Changes in Net Assets in the year in which they arise.
Net change in unrealised gains and losses on investments
Gains and losses arising from changes in value are recorded as an increase or decrease in
the unrealised gains or losses of investments based on the methodology described above.
Foreign currency
Assets and liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at the reporting date. Transactions denominated in foreign currencies,
including purchases and sales of investments, and income and expenses, are translated
82
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
into U.S. dollar amounts on the date of such transactions. Adjustments arising from
foreign currency transactions are reflected in the net realised gain (loss) on investments
and forward foreign exchange contracts and the net change in unrealised gain (loss)
on investments and forward foreign exchange contracts on the Consolidated
Statements of Operations and Changes in Net Assets.
The Group’s investments of which capital is denominated in foreign currency are translated
into U.S. dollars based on rates of exchange at the reporting date. The cumulative
eect of translation to U.S. dollars has increased the fair value of the Group’s foreign
investments by $9,201,227 for the year ended 31 December 2023. The cumulative
eect of translation to U.S. dollars decreased the fair value of the Group’s foreign
investments by $24,580,105 for the year ended 31 December 2022.
The ZDP Shares are denominated in Sterling (see note 5 and note 6). The Group
has unfunded commitments denominated in currencies other than U.S. dollars.
At 31 December 2023, the unfunded commitments that are in Euros and Sterling
amounted to €9,080,803 and £32,138, respectively (31 December 2022: €10,531,115
and £32,138). They have been included in the Consolidated Condensed Schedules
of Investments at the U.S. dollar exchange rates in eect at 31 December 2023 and
31 December 2022. The eect on the unfunded commitment of the change in the
exchange rates between Euros and U.S. dollars was an increase in the U.S. dollar
obligations of $294,762 for 31 December 2023 and a decrease in the U.S. dollar
obligations of $759,592 for 31 December 2022.
The eect on the unfunded commitment of the change in the exchange rates between
Sterling and U.S. dollars was an increase in the U.S. dollar obligations of $2,311
for 31 December 2023 and a decrease in the U.S. dollar obligations of $5,212 for
31 December 2022.
Investment transactions and investment income
Investment transactions are accounted for on a trade-date basis. Investments are
recognised when the Group incurs an obligation to acquire a financial instrument
and assume the risk of any gain or loss or incurs an obligation to sell a financial
instrument and forego the risk of any gain or loss. Investment transactions that have
not yet settled are reported as receivable from investment or payable to investment.
The Group earns interest and dividends from direct investments and from cash and cash
equivalents. The Group records dividends on the ex-dividend date, net of withholding
tax, if any, and interest, on an accrual basis when earned, provided the Investment
Manager knows the information or is able to reliably estimate it. Otherwise, the Group
records the investment income when it is reported by the private equity investments.
Discounts received or premiums paid in connection with the acquisition of loans are
amortised into interest income using the eective interest method over the contractual
life of the related loan. Payment-in-kind (“PIK”) interest is computed at the contractual
rate specified in the loan agreement for any portion of the interest which may be added
to the principal balance of a loan rather than paid in cash by the obligator on the scheduled
interest payment date. PIK interest is added to the principal balance of the loan and recorded
as interest income. Prepayment premiums include fee income from securities settled prior
to maturity date, and are recorded as interest income in the Consolidated Statements of
Operations and Changes in Net Assets.
For the year ended 31 December 2023, total interest and dividend income was
$7,054,768, of which $73,948 was dividends, and $6,980,820 was interest income.
For the year ended 31 December 2022, total interest and dividend income was
$4,544,339, of which $57,782 was dividends, and $4,486,557 was interest income.
Cash and cash equivalents
Cash and cash equivalents represent cash held in accounts at banks and liquid
investments with original maturities of three months or less. Cash equivalents are
carried at cost plus accrued interest, which approximates fair value. At 31 December
2023 and 31 December 2022, cash and cash equivalents consisted of $50,617,431
and $7,034,276, respectively, held in operating accounts with Bank of America Merrill
Lynch and U.S. Bank. Cash equivalents are held for the purpose of meeting short-term
liquidity requirements, rather than for investment purposes.
As of 31 December 2023 and 31 December 2022, the cash equivalents were
$14,858,215 and nil, respectively. Cash and cash equivalents are subject to credit risk
to the extent those balances exceed applicable Federal Deposit Insurance Corporation
(“FDIC”) or Securities Investor Protection Corporation (“SIPC”) limitations.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income taxes
The Company is registered in Guernsey as an exempt company. The States of Guernsey
Income Tax Authority has granted the Group an exemption from Guernsey income tax
under the provision of the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and
the Group has been charged an annual exemption fee of £1,200 (2022: £1,200).
Generally, income that the Group derives from the investments may be subject to taxes
imposed by the U.S. or other countries and will impact the Group’s eective tax rate.
In accordance with FASB ASC 740-10, Income Taxes, the Group is required to determine
whether its tax positions are more likely than not to be sustained upon examination
by the applicable taxing authority based on the technical merits of the position. Tax
positions not deemed to meet a more-likely-than-not threshold would be recorded as
a tax expense in the current year.
The Group files tax returns as prescribed by the tax laws of the jurisdictions in which it
operates. In the normal course of business, the Group is subject to examination by U.S.
federal, state, local and foreign jurisdictions, where applicable. The Group’s U.S.
federal income tax returns are open under the normal three-year statute of limitations
and therefore subject to examination. The Investment Manager does not expect that
the total amount of unrecognised tax benefits will materially change over the next
twelve months.
Investments made in entities that generate U.S. source investment income may subject
the Group to certain U.S. federal and state income tax consequences. A U.S.
withholding tax at the rate of 30% may be applied on the Group’s distributive share
of any U.S. sourced dividends and interest (subject to certain exemptions) and certain
other income that the Group receives directly or through one or more entities treated
as either partnerships or disregarded entities for U.S. federal income tax purposes.
Investments made in entities that generate business income that is eectively
connected with a U.S. trade or business may subject the Group to certain U.S. federal
and state income tax consequences. Generally, the U.S. imposes withholding tax
on eectively connected income at the highest U.S. rate (generally 21%). In addition,
the Group may also be subject to a branch profits tax which can be imposed at a rate
of up to 23.7% of the after-tax profits treated as eectively connected income
associated with a U.S. trade or business. As such, the aggregate U.S. tax liability on
eectively connected income may approximate 44.7% given the two levels of tax.
The Group recognises a tax benefit in the consolidated financial statements only when
it is more likely than not that the position will be sustained upon examination by
the relevant taxing authority based on the technical merits of the position. To date,
the Group has not provided any reserves for taxes as all related tax benefits have been
fully recognised. Although the Investment Manager believes uncertain tax positions
have been adequately assessed, the Investment Manager acknowledges that these
matters require significant judgement and no assurance can be given that the final tax
outcome of these matters will not be dierent.
Deferred taxes are recorded to reflect the tax benefit and consequences of future
years’ dierences between the tax basis of assets and liabilities and their financial
reporting basis. The Group records a valuation allowance to reduce deferred tax assets
if it is more likely than not that some portion or all of the deferred tax assets will not be
realised. Management subsequently adjusts the valuation allowance as the expected
realisability of the deferred tax assets changes such that the valuation allowance is
sucient to cover the portion of the asset that will not be realised. The Group records
the tax associated with any transactions with U.S. or other tax consequences when the
Group recognises the related income (see note 7).
Shareholders in certain jurisdictions may have individual income tax consequences
from ownership of the Group’s shares. The Group has not accounted for any such tax
consequences in these consolidated financial statements. For example, the Investment
Manager expects the Group and certain of its non-U.S. corporate subsidiaries to be
treated as passive foreign investment corporations (“PFICs”) under U.S. tax rules.
For this purpose, the PFIC regime should not give rise to additional tax at the level
of the Group or its subsidiaries. Instead, certain U.S. investors in the Group may need
to make tax elections and comply with certain U.S. reporting requirements related
to their investments in the PFICs in order to potentially manage the adverse U.S. tax
consequences associated with the regime.
Forward foreign exchange contracts
Forward foreign exchange contracts are reported on the balance sheets at fair value
and included either in other assets or accrued expenses and other liabilities,
depending on each contract’s unrealised position (appreciated/depreciated) relative
to its notional value as of the end of the reporting periods. See note 6.
Forward foreign exchange contracts involve elements of market risk in excess of the
amounts reflected on the consolidated financial statements. The Group bears the risk
of an unfavourable change in the foreign exchange rate underlying the forward foreign
exchange contract as well as risks from the potential inability of the counterparties
to meet the terms of their contracts.
84
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dividends to shareholders
The Group pays dividends semi-annually to shareholders upon approval by the Board
of Directors subject to the passing of the ZDP Cover Test (see note 5) and the solvency
test under Guernsey law. Liabilities for dividends to shareholders are recorded on the
ex-dividend date.
The Company may declare dividend payments from time to time. Prior to each dividend
announcement, the Board reviews the appropriateness of the dividend payment in light
of macro-economic activity and the financial position of the Company. The Company
targets an annualised dividend yield of 3.0% or greater on NAV which has been paid
out semi-annually.
Operating expenses
Operating expenses are recognised when incurred. Operating expenses include
amounts directly incurred by the Group as part of its operations, and do not include
amounts incurred from the operations of the Group’s investments. These operating
expenses are included in administration and professional fees on the Consolidated
Statement of Operations.
Carried interest
Carried interest amounts due to the Special Limited Partner (an aliate of the
Investment Manager, see note 10) are computed and accrued at each period end
based on period-to-date results in accordance with the terms of the Third Amended
and Restated Limited Partnership Agreement of NB PEP Investments LP (Incorporated).
For the purposes of calculating the incentive allocation payable to the Special Limited
Partner, the value of any fund investments made by the Group in other Neuberger
Berman Funds (“NB Funds”) in respect of which the Investment Manager or an aliate
receives a fee or other remuneration shall be excluded from the calculation.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3 – Investments
The Group invests in a diversified portfolio of direct private equity companies (see note 2). As required by ASC 820, financial assets and liabilities are classified in their entirety
based on the lowest level of input that is significant to the fair value measurement. The Group has assessed these positions and concluded that all private equity companies not
valued using the practical expedient, with the exception of marketable securities, are classified as either Level 2 or Level 3 due to significant unobservable inputs. Marketable securities
distributed from a private equity company are classified as Level 1. The Group values equity securities that are traded on a national securities exchange at their last reported sales price.
There were two marketable securities held by the Group as of 31 December 2023 and 31 December 2022.
The following table details the Group’s financial assets and liabilities that were accounted for at fair value as of 31 December 2023 and 31 December 2022 by level and fair
value hierarchy.
As of 31 December 2023
Assets (Liabilities) Accounted for at Fair Value
Level 1 Level 2 Level 3
Investments
measured at
net asset value
1
Total
Common stock $6,784,603 $6,556,933 $– $– $13,341,536
Government obligations 115,181,468 115,181,468
Private equity companies 235,297 206,759,351 1,101,009,319 1,308,003,967
Totals $121,966,071 $6,792,230 $206,759,351 $1,101,009,319 $1,436,526,971
As of 31 December 2022
Assets (Liabilities) Accounted for at Fair Value
Level 1 Level 2 Level 3
Investments
measured at
net asset value
1
Total
Common stock $4,759,318 $8,987,311 $– $– $13,746,629
Private equity companies 195,780,024 1,191,903,948 1,387,683,972
Totals $4,759,318 $8,987,311 $ 195,780,024 $1,191,903,948 $1,401,430,601
1 Certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been categorised in the fair value hierarchy. The fair value amounts presented in this table are intended to
permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Condensed Schedules of Investments.
Significant investments:
At 31 December 2023, the Group’s share of the following underlying private equity company exceeded 5% of net asset value.
Company (Legal Entity Name) Industry Country
Fair Value
2023
Fair Value as a
Percentage of
net asset value
3i 2020 Co-investment 1 SCSp (Action) (LP Interest)
Consumer/Retail Netherlands $85,631,976 6.56%
At 31 December 2022, the Group’s share of the following underlying private equity company exceeded 5% of net asset value.
Company (Legal Entity Name) Industry Country
Fair Value
2022
Fair Value as a
Percentage of
net asset value
3i 2020 Co-investment 1 SCSp (Action) (LP Interest) Consumer/Retail Netherlands $72,177,584 5.44%
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarises the changes in the fair value of the Group’s Level 3 private equity investments for the year ended 31 December 2023.
(dollars in thousands)
For the Year Ended 31 December 2023
Large-cap Buyout Mid-cap Buyout Special Situations Growth/Venture Income Investments
Total Private
Equity Investments
Balance, 31 December 2022 $38,312 $84,149 $13,383 $19,789 $40,147 $195,780
Purchases of investments and/or contributions to investments 278 278
Realised gain (loss) on investments 353 312 13 4,815 5,493
Changes in unrealised gain (loss) of investments still held at the reporting date 5,002 (280) (4,538) (3,972) (637) (4,425)
Changes in unrealised gain (loss) of investments sold during the period 64 (245) (13) (194)
Distributions from investments (353) (721) (13) (1,087)
Transfers into level 3 15,387 15,387
Transfers out of level 3 (4,473) (4,473)
Balance, 31 December 2023 $43,314 $99,598 $8,191 $11, 331 $44,325 $206,759
Investments were transferred into Level 3 as management’s fair value estimate included significant unobservable inputs. Investments were transferred out of Level 3 into Level 2.
The following table summarises changes in the fair value of the Company’s Level 3 private equity investments for the year ended 31 December 2022.
For the Year Ended 31 December 2022
(dollars in thousands) Large-cap Buyout Mid-cap Buyout Special Situations Growth/Venture Income Investments
Total Private Equity
Investments
Balance, 31 December 2021
$36,269 $93,070 $21,836 $19,279 $37, 226 $207,680
Purchases of investments and/or contributions to investments
7,29 0 1,760 202 9,252
Realised gain (loss) on investments
8,915 58 387 3,887 13,247
Changes in unrealised gain (loss) of investments still held at the reporting date
2,556 5,501 (9,204) 548 (966) (1,565)
Changes in unrealised gain (loss) of investments sold during the period
(9,394) (240) (9,634)
Distributions from investments
(513) (18,175) (1,067) (387) (20,142)
Transfers out of level 3
(3,058) (3,058)
Balance, 31 December 2022
$38,312 $84,149 $13,383 $19,789 $40,147 $195,780
There were no transfers into Level 3. Investments were transferred out of Level 3 into Investments Measured at Net Asset Value.
87
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarises the valuation methodologies and inputs used for private equity investments categorised in Level 3 as of 31 December 2023.
(dollars in thousands)
Private Equity Investments Fair Value 31 December 2023 Valuation Methodologies Unobservable Inputs
1
Ranges (Weighted Average)
2
Impact to Valuation from an
Increase in Input
3
Direct equity investments
Large-cap buyout $43,314 Market Comparable Companies LTM EBITDA 12.8x Increase
Market Comparable Companies LTM Revenue 23.0x Increase
Market Comparable Companies NTM EBITDA 20.0x Increase
Mid-cap buyout 99,598 Escrow Value Escrow 1.0x Increase
Market Comparable Companies LTM EBITDA 8.8x-15.0x (13.4x) Increase
Special situations 8,191 Market Comparable Companies LTM EBITDA 9.4x Increase
Market Comparable Companies LTM Net Revenue 1.0x Increase
Growth/venture 11,331 Market Comparable Companies LTM Net Revenue 1.8x-2.5x (1.9x) Increase
Market Comparable Companies LTM EBITDA 27.2 x Increase
Income investments 44,325 Market Comparable Companies LTM EBITDA 9.6x-11.9x (11.6x) Increase
Total $206,759
1. LTM means Last Twelve Months, EBITDA means Earnings Before Interest Taxes Depreciation and Amortisation, NTM means Next Twelve Months.
2. Inputs weighted based on fair value of investments in range.
3. Unless otherwise noted, this column represents the directional change in the fair value of Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input
would have the opposite eect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarises the valuation methodologies and inputs used for private equity investments categorised in Level 3 as of 31 December 2022.
(dollars in thousands)
Private Equity Investments Fair Value 31 December 2022 Valuation Methodologies Unobservable Inputs
1
Ranges (Weighted Average)
2
Impact to Valuation from an
Increase in Input
3
Direct equity investments
Large-cap buyout $38,312 Market Comparable Companies LTM EBITDA 12.8x-21.0x (15.6x) Increase
Mid-cap buyout 84,149 Escrow Value Escrow 1.0x Increase
Income Approach Discount Rate 12.0x Increase
Market Comparable Companies LTM Revenue 3.9x Increase
Market Comparable Companies LTM EBITDA 11.0x-14.3x (13.3x) Increase
Special situations 13,383 Market Comparable Companies LTM EBITDA 9.0x Increase
Market Comparable Companies LTM Net Revenue 2.0x Increase
Escrow Value Escrow 1.0x Increase
Growth/venture 19,789 Market Comparable Companies LTM Net Revenue 1.5x-6.0x (4.6x) Increase
Escrow Value Escrow 1.0x Increase
Income investments 40,147 Market Comparable Companies LTM EBITDA 9.6x-15.8x (14.9x) Increase
Total $195,780
1. LTM means Last Twelve Months, EBITDA means Earnings Before Interest Taxes Depreciation and Amortisation, Boed means Barrels of oil equivalent per day
2. Inputs weighted based on fair value of investments in range.
3. Unless otherwise noted, this column represents the directional change in the fair value of Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input
would have the opposite eect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Since 31 December 2022, there have been no changes in valuation methodologies
within Level 2 and Level 3 that have had a material impact on the valuation of private
equity investments.
In the case of direct equity investments and income investments, the Investment
Manager does not control the timing of exits but at the time of investment, typically
expects investment durations to be meaningfully shorter than fund investments.
Therefore, although some fund and direct investments may take 10-15 years to reach
final realisation, the Investment Manager expects the majority of the Group’s invested
capital in the current portfolio to be returned in much shorter timeframes. Generally,
fund investments have a defined term and no right to withdraw. In the case of fund
investments, fund lives are typically ten years; however, a series of extensions often
mean the lives can extend significantly beyond this. It should be noted that the Group’s
fund investments are legacy assets, non-core to the current strategy and are in
realisation mode.
Note 4 – Credit facility
As of 31 December 2023, a subsidiary of the Company had a $300.0 million secured
revolving credit facility (the “MassMutual Facility”) with Massachusetts Mutual Life
Insurance Company (“MassMutual”). The ten year borrowing availability period of the
MassMutual Facility expires on 23 December 2029, while the MassMutual Facility
matures on 23 December 2031. For the years ended 31 December 2023 and 2022,
the borrowings from the MassMutual Facility were $120,000,000 and $30,000,000,
respectively, and the payments to the MassMutual Facility were $30,000,000 and
$30,000,000, respectively. The outstanding balances of the MassMutual Facility were
$90,000,000 at 31 December 2023 and nil at 31 December 2022.
Under the MassMutual Facility, the Group is required to meet certain portfolio
concentration tests and certain loan-to-value ratios not to exceed 45% through
23 December 2027 with step-downs each year thereafter until reaching 0% on
23 December 2029 and through maturity. In addition, the MassMutual Facility limits
the incurrence of loan-to-value ratios above 45%, additional indebtedness, asset sales,
acquisitions, mergers, liens, portfolio asset assignments, or other matters customarily
restricted in such agreements. The MassMutual Facility defines change in control as a
change in the Companys ownership structure of certain of its subsidiaries or the event
in which the Group is no longer managed by the Investment Manager or an aliate.
A change in control would trigger an event of default under the MassMutual Facility.
At 31 December 2023, the Group met all requirements under the MassMutual Facility.
The MassMutual Facility is secured by a security interest in the cash flows from the
underlying investments of the Group.
Under the MassMutual Facility, the interest rate through 30 June 2023 was calculated
as the greater of either LIBOR or 1% plus 2.875% per annum. On 30 June 2023 the
MassMutual Facility was amended for the interest rate calculation from greater of
either LIBOR or 1% plus 2.875% to SOFR plus 2.875% per annum, subject to a credit
spread adjustment. The amended Credit Facility agreement results in no material
economic changes to the facility.
The Group is required to pay a commitment fee calculated as 0.55% per annum on the
average daily balance of the unused facility amount. The Group is subject to a minimum
utilisation of 30% of the facility size, or $90.0 million, beginning eighteen months after
the closing date or 23 June 2021.
If the minimum utilisation is not met, the Group is required to pay the amount of
interest that would have been accrued on the minimum usage amount less any
outstanding advances. As of 31 December 2023, the Group met the minimum
utilisation requirement, only the commitment fee applied.
The following table summarises the Group’s finance costs incurred and expensed
under the MassMutual Facility for the years ended 31 December 2023 and 2022.
31 December 2023 31 December 2022
Interest expense $3,125,154 $235,545
Undrawn commitment fees 1,171,042 1,171,041
Servicing fees and breakage costs 50,861 40,722
Amortisation of capitalised debt issuance costs 264,567 264,567
Minimum utilisation fees 4,281,120 4,287,657
Total Credit Facility Finance Costs $8,892,744 $5,999,532
As of 31 December 2023 and 31 December 2022, unamortised capitalised debt
issuance costs (included in Other assets on the Consolidated Balance Sheets) were
$2,112,203 and $2,376,770, respectively. Capitalised amounts are being amortised
on a straight-line basis over the terms of the applicable credit facility.
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 – Zero Dividend Preference Shares (“ZDP Shares”)
On 30 September 2022, the 2022 ZDP Shares were redeemed and delisted from the
Specialist Fund Segment.
As of 31 December 2023, there were 50,000,000 ZDP Shares (the “2024 ZDP Shares”)
outstanding at a Gross Redemption Yield of 4.25%. The 2024 ZDP Shares were issued
pursuant to the Initial Placing and Oer for Subscription at a price per 2024 ZDP Share
of 100 pence. The holders of the 2024 ZDP Shares will have a final capital entitlement
of 130.63 pence on the repayment date of 30 October 2024.
The 2024 ZDP Shares rank prior to the Class A and Class B Shares in respect of
repayment of the final entitlement. However, they rank behind any borrowings that
remain outstanding. They carry no entitlement to income and their entire return takes
the form of capital. The 2024 ZDP Shares require the Company to satisfy their respective
ZDP Cover Test (the “Test) prior to taking certain actions. In summary, the Test requires
that for the 2024 ZDPs the Gross Assets divided by the liabilities adjusting for the final
2024 ZDP liabilities should be greater than 2.75. The details of the restrictions and the
Tests are set out in the ZDP Prospectus. Unless the Test is satisfied, the Company is not
permitted to pay any dividend or other distribution out of capital reserves. A voluntary
liquidation or winding-up of the Company would require ZDP Shareholder approval
where such winding-up is to take eect prior to the relevant ZDP repayment date.
The following table reconciles the liability for ZDP Shares, which approximates fair
value, for the year ended 31 December 2023 and the year ended 31 December 2022.
ZDP Shares Pounds Sterling U.S. Dollars
Liability, 31 December 2021 £119,595,183 $161,985,696
Net change in accrued interest on 2022 ZDP Shares 1,830,558 2,456,277
Net change in accrued interest on 2024 ZDP Shares 2,465,426 3,200,424
Redemption of 2022 ZDP Shares (63,370,000) (68,100,570)
Currency conversion (26,740,915)
Liability, 31 December 2022 £60,521,167 $72,800,912
Net change in accrued interest on 2024 ZDP Shares 2,570,123 3,141,388
Currency conversion 4,486,478
Liability, 31 December 2023 £63,091,290 $80,428,778
The total liability balance related to the 2024 ZDP Shares was £63,091,290 (equivalent
of $80,428,778) and £60,521,167 (equivalent of $72,800,912) as of 31 December 2023
and 31 December 2022, respectively.
As of 31 December 2023, the 2024 ZDP Shares were the only outstanding ZDP share class.
ZDP Shares are measured at amortised cost. Capitalised oering costs are being amortised
using the eective interest rate method. The unamortised balance of capitalised oering
costs of the 2024 ZDP Shares at 31 December 2023 was $116,151 and the unamortised
balance of capitalised oering costs of the 2024 ZDP Shares at 31 December 2022
was $255,801.
Note 6 – Forward foreign exchange contracts
The Group currently does not employ specific hedging techniques to reduce the risks
of adverse movements in securities prices, currency exchange rates and interest rates;
however, the investments may employ such techniques. While hedging techniques
may reduce certain risks, such transactions themselves may entail other risks. Thus,
while the investments may benefit from the use of these hedging mechanisms,
unanticipated changes in securities prices, currency exchange rates or interest rates
may result in poorer overall performance for the investments than if they had not
entered into such hedging transactions. The Group may utilise forward foreign
currency contracts to hedge, in part, the risk associated with the Sterling contractual
liability for the issued ZDP Shares (see note 5).
As of 31 December 2023 and 31 December 2022, the Group did not hold any active
forward foreign currency contracts.
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 – Income taxes
The Group is exempt from Guernsey tax on income derived from non-Guernsey
sources. However, certain of its underlying investments generate income that is
subject to tax in other jurisdictions, principally the United States (“U.S.”). The Group
has recorded the following amounts related to such taxes:
31 December 2023 31 December 2022
Current tax expense $721,007 $2,260,993
Deferred tax expense 15,764 9,113
Total tax expense $736,771 $2,270,106
31 December 2023 31 December 2022
Gross deferred tax assets $6,934,094 $7,872,867
Valuation allowance (6,934,094) (7,872,867)
Net deferred tax assets
Gross deferred tax liabilities (24,877) (9,113)
Net deferred tax liabilities $(24,877) $(9,113)
Current tax expense (benefit) is reflected in Net investment income/(loss) and deferred
tax expense (benefit) is reflected in Net change in unrealised gain/(loss) on the
Consolidated Statements of Operations and Changes in Net Assets. Net deferred tax
liabilities are related to net unrealised gains and gross deferred tax assets, oset by a
valuation allowance, are related to unrealised losses on investments held in entities
that file separate tax returns.
The Group has no gross unrecognised tax benefits. The Group is subject to examination
by tax regulators under the three-year statute of limitations.
Note 8 – Earnings (loss) per Share
The computations for earnings (loss) per share for the years ended 31 December 2023
and 2022 are as follows:
2023 2022
Net increase (decrease) in net assets resulting from
operations attributable to the controlling interest $27,069,151 $(108,947,791)
Divided by weighted average shares outstanding for
Class A Shares and Class B Shares of the controlling interest 46,626,795 46,771,030
Earnings (loss) per share for Class A Shares and
Class B Shares of the controlling interest $0.58 $(2.33)
In accordance with Article 104(2) of the Commission Delegated Regulation (EU) No 231/2013
(and the UK version of this regulation which is part of UK law by virtue of the European
Union (Withdrawal) Act 2018), the Group is required to disclose additional information
on the classification of the balances presented within the net realised gain (loss)
on investments and forward foreign exchange contracts, and net change in unrealised
gain (loss) on investments and forward foreign exchange contracts presented on the
Consolidated Statements of Operations and Changes in Net Assets. For the years
ended 31 December 2023 and 2022, the balances include the following:
Classification of Realised Gain (Loss) and Unrealised Gain (Loss)
(1)
31 December 2023 31 December 2022
Realised gain on investments $86,868,749 $85,321,404
Realised loss on investments (4,385,668) (31,880,844)
Net realised gain on investments $82,483,081 $53,440,560
Unrealised gain on investments $130,978,416 $138,811,079
Unrealised loss on investment
(2)
(155,058,326) (265,911,641)
Net unrealised loss on investments $(24,079,910) $(127,10 0,562)
(1) Above amounts are presented gross and, as such, exclude the tax expense (benefit) reported on the
Consolidated Statements of Operations and Changes in Net Assets
(2) Includes unrealised gain reversal of $63,363,744 and $76,798,321 for the periods ended 31 December 2023
and 2022, respectively, as a result of realised investment transactions.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 – Share capital, including treasury stock
Class A Shareholders have the right to vote on all resolutions proposed at general
meetings of the Company, including resolutions relating to the appointment, election,
re-election and removal of Directors. The Company’s Class B Shares, which were issued
at the time of the initial public oering to a Guernsey charitable trust, whose trustee is
First Directors Limited (“Trustee”), usually carry no voting rights at general meetings of
the Company. However, in the event the level of ownership of Class A Shares by U.S.
residents (excluding any Class A Shares held in treasury) exceeds 35% on any date
determined by the Directors (based on an analysis of share ownership information
available to the Company), the Class B Shares will carry voting rights in relation to “Director
Resolutions” (as such term is defined in the Company’s articles of incorporation). In this
event, Class B Shares will automatically carry such voting rights to dilute the voting
power of the Class A Shareholders with respect to Director Resolutions to the extent
necessary to reduce the percentage of votes exercisable by U.S. residents in relation
to the Director Resolutions to not more than 35%. Each Class A Share and Class B Share
participates equally in profits and losses. There have been no changes to the legal form
or nature of the Class A Shares nor to the reporting currency of the Company’s
consolidated financial statements (which will remain in U.S. dollars) as a result of the
Main Market quote being in Sterling as well as U.S. dollars. Additional paid-in capital
(“APIC”) is the excess amount paid by shareholders over the par value of shares.
The Company’s APIC is included on the Consolidated Balance Sheets.
The following table summarises the Company’s shares at 31 December 2023 and 2022.
31 December 2023 31 December 2022
Class A Shares outstanding 46,502,606 46,761,030
Class B Shares outstanding 10,000 10,000
46,512,606 46,771,030
Class A Shares held in treasury – number of shares 3,150,408 3,150,408
Class A Shares held in treasury – cost $9,248,460 $9,248,460
The Company currently has shareholder authority to repurchase shares in the market,
the aggregate value of which may be up to 14.99% of the Class A Shares in issue
(excluding Class A Shares held in treasury) at the time the authority is granted; such
authority will expire on the date which is 15 months from the date of passing of this
resolution or, if earlier, at the end of the Annual General Meeting (“AGM”) of the
Company to be held in June 2024. The maximum price which may be paid for a Class A
Share is an amount equal to the higher of (i) the price of the last independent trade and
(ii) the highest current independent bid, in each case, with respect to the Class A Shares
on the relevant exchange (being the Main Market).
The Company entered into a share buyback agreement with Jeeries International
Limited (“Jeeries”) on 5 October 2022, subject to renewals.
During 2023, the Company purchased and cancelled a total of 258,424 shares of its
Class A stock (0.55% of the issued and outstanding shares as of 31 December 2022)
pursuant to general authority granted by shareholders of the Company and the share
buy-back agreement with Jeeries International Limited. The Company did not
purchase any of its shares during the year ended 31 December 2022.
Note 10 – Management of the Group and other related
party transactions
Management and Guernsey administration
The Group is managed by the Investment Manager for a management fee calculated at the
end of each calendar quarter equal to 37.5 basis points (150 basis points per annum) of
the fair value of the private equity and opportunistic investments. For purposes of this
computation, the fair value is reduced by the fair value of any investment for which the
Investment Manager is separately compensated for investment management services.
The Investment Manager is not entitled to a management fee on: (i) the value of any fund
investments held by the Company in NB Funds in respect of which the Investment Manager
or an aliate receives a fee or other remuneration; or (ii) the value of any holdings in cash
and short-term investments (the definition of which shall be determined in good faith by
the Investment Manager, and shall include holdings in money market funds (whether
managed by the Investment Manager, an aliate of the Investment Manager or a third
party manager)). For the years ended 31 December 2023 and 2022, the management fee
expenses were $20,512,023 and $21,144,589, respectively, and are included in Investment
management and services on the Consolidated Statement of Operations and Changes
in Net Assets. As of 31 December 2023 and 2022, Investment Management fees payable
to the Investment Manager and its aliates were $4,895,272 and $5,177,372,
respectively. If the Company terminates the Investment Management Agreement
without cause, the Company shall pay a termination fee equal to: seven years
of management fees, plus an amount equal to seven times the mean average incentive
allocation of the three performance periods immediately preceding the termination,
plus all underwriting, placement and other expenses borne by the Investment
Manager or aliates in connection with the Company’s Initial Public Oering.
Administration and professional fees include fees for Directors, independent third
party accounting and administrative services, audit, tax, and assurance services,
trustee, legal, listing and other items. The Group pays to Ocorian Administration
(Guernsey) Limited (“Ocorian”), an aliate of the Trustee Shares, a fee for providing
93
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
certain administrative functions relating to certain corporate services and Guernsey
regulatory matters aecting the Group. Fees for these services are paid as invoiced
by Ocorian. The Group paid Ocorian $398,170 and $287,062 for the years ended
31 December 2023 and 2022, respectively, for such services. The Group also paid
MUFG Capital Analytics LLC, an independent third party fund administrator, $1,300,000
($325,000 quarterly) for each of the years ended 31 December 2023 and 2022. These
fees are included in Administration and professional fees on the Consolidated
Statements of Operations and Changes in Net Assets.
Directors’ fees are paid in Sterling and they are based on each Director’s position
on the Company’s Board. Directors’ fees are subject to an annual increase equivalent
to the annual rise in the Guernsey retail price index, subject to a 1% per annum minimum,
and is limited to 6% per annum maximum. For the year ended 31 December 2023,
Directors’ fees were as follows: Chairman received £80,231 annually (£20,058 quarterly),
Audit Chairman received £68,612 annually (£17,153 quarterly), Senior independent
Director received £63,078 annually (£15,770 quarterly), and Non-executive independent
Directors each received £57,545 annually (£14,386 quarterly). As of 31 December 2023,
an additional fee was assessed in the amount of £11,066 annually and payable to two
Directors (£5,533 each) for serving as directors of the Guernsey Subsidiaries of the
Company. At 31 December 2023 the beneficial interests of the Directors in the issued
share capital of the Company was 142,308 ordinary shares.
For the years ended 31 December 2023 and 2022, the Group paid the independent
directors a total of $444,001 (of which $13,863 related to services provided to the
Guernsey Subsidiaries of the Company) and $387,647 (of which $12,629 related
to services provided to the Guernsey Subsidiaries of the Company), respectively.
Related parties
In order to execute on its investing activities, the Investment Manager may create
an intermediary entity for tax, legal, or other purposes. These intermediary entities
do not charge management fees nor incentive allocations. Additionally, the Group may
co-invest with other entities with the same Investment Manager as the Group.
Special Limited Partner’s non-controlling interest
in subsidiary
An aliate of the Investment Manager is a Special Limited Partner in a consolidated
partnership subsidiary. At 31 December 2023 and 31 December 2022, the non-controlling
interest of $2,004,028 and $1,947,323, respectively, represented the Special Limited
Partners capital contribution to the partnership subsidiary and income allocation.
The following table reconciles the carrying amount of net assets, net assets attributable
to the controlling interest and net assets attributable to the non-controlling interest
at 31 December 2023 and 2022.
Controlling Interest
Noncontrolling
Interest Total
Net assets balance,
31 December 2021 $1,480,178,782 $2,054,635 $1,482,233,417
Net increase (decrease) in net assets
resulting from operations (108,947,791) (107,312) (109,055,103)
Dividend payment (43,964,768) (43,964,768)
Net assets balance,
31 December 2022 $1,327,266,223 $1,947,323 $1,329,213,546
Net increase (decrease) in net assets
resulting from operations 27,069,151 56,705 27,125,856
Dividend payment (43,843,309) (43,843,309)
Cost of stock repurchased and cancelled
(258,424 shares) (5,006,257) (5,006,257)
Net assets balance,
31 December 2023 $1,305,485,808 $2,004,028 $1, 307,489,836
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Carried interest
The Special Limited Partner is entitled to a carried interest in an amount that is, in general, equal to 7.5% of the Group’s consolidated net increase in net assets resulting from
operations, adjusted by withdrawals, distributions and capital contributions, for a fiscal year in the event that the Group’s internal rate of return for such period, based on the
NAV, exceeds 7.5%. For the purposes of this computation, the value of any private equity fund investment in NB Funds in respect of which the Investment Manager or an aliate
receives a fee or other remuneration shall be excluded from the calculation of the incentive allocation payable to the Special Limited Partner. If losses are incurred for a period,
no carried interest will be earned for any period until the subsequent net profits exceed the cumulative net losses. Carried interest is also accrued and paid on any economic gain
that the Group realises on treasury stock transactions. Carried interest is accrued periodically and paid in the subsequent year. As of 31 December 2023 and 31 December 2022,
carried interest of nil was accrued, respectively.
Private equity investments with NBG subsidiaries
The Group holds limited partner interests in private equity fund investments and direct investment programs that are managed by subsidiaries of NBG (“NB-Aliated
Investments”). NB-Aliated Investments will not result in any duplicative NBG investment management fees and carry charged to the Group. Below is a summary of the Group’s
positions in NB-Aliated Investments.
NB-Aliated Investments (dollars in millions) Fair Value
(1)
Committed Funded Unfunded
2023
NB-Aliated Programs
NB Alternatives Direct Co-investment Programs $189.7 $275.0 $238.6 $36.4
NB Renaissance Programs 23.9 41.2 31.6 9.6
Marquee Brands 30.6 30.0 26.6 3.4
NB Credit Opportunities Program 37.9 50.0 38.0 12.0
NB Specialty Finance Program 7.7 50.0 35.0 15.0
Total NB-Aliated Investments $289.8 $446.2 $369.8 $76.4
2022
NB-Aliated Programs
NB Alternatives Direct Co-investment Programs $213.6 $275.0 $235.9 $39.1
NB Renaissance Programs 20.8 40.0 29.5 10.5
Marquee Brands 28.5 30.0 26.6 3.4
NB Healthcare Credit Investment Program
(2)
0.0 50.0 45.9 4.1
NB Credit Opportunities Program 39.7 50.0 38.0 12.0
NB Specialty Finance Program 27.5 50.0 35.0 15.0
Total NB-Aliated Investments $330.1 $495.0 $410.9 $84.1
(1) Fair value does not include distributions. At 31 December 2023 and 31 December 2022, the total distributions from NB-Aliated Investments were $472.1 and $421.0, respectively.
(2) Fair value was not zero, but rounded to zero.
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 – Risks and contingencies
Market risk
The Group’s exposure to financial risks is both direct (through its holdings of assets
and liabilities directly subject to these risks) and indirect (through the impact of these
risks on the overall valuation of its private equity companies). The Group’s private
equity companies are generally not traded in an active market, but are indirectly
exposed to market price risk arising from uncertainties about future values of the
investments held. Each fund investment of the Group holds a portfolio of investments
in underlying companies. These portfolio company investments vary as to type
of security held by the underlying partnership (debt or equity, publicly traded or
privately held), stage of operations, industry, geographic location and geographic
distribution of operations and size, all of which may impact the susceptibility of their
valuation to market price risk.
Market conditions for publicly traded and privately held investments in portfolio
companies held by the partnerships may aect their value in a manner similar to the
potential impact on direct co-investments made by the Group in privately held securities.
The fund investments of the Group may also hold financial instruments (including debt
and derivative instruments) in addition to their investments in portfolio companies that
are susceptible to market price risk and therefore may also aect the value of the Group’s
investment in the partnerships. As with any individual investment, market prices may
vary from composite index movements.
Credit risk
Credit risk is the risk of losses due to the failure of a counterparty to perform according
to the terms of a contract. The Group may invest in a range of debt securities directly
or in funds which do so. Until such investments are sold or are paid in full at maturity,
the Group is exposed to credit risk relating to whether the issuer will meet its obligations
when the securities come due.
The cash and other liquid securities held can subject the Group to a concentration of credit
risk. The Investment Manager attempts to mitigate the credit risk that exists with cash
deposits and other liquid securities by regularly monitoring the credit ratings of such
financial institutions and evaluating from time to time whether to hold some of the
Group’s cash and cash equivalents in U.S. Treasuries or other highly liquid securities.
The Group’s investments are subject to various risk factors including market and credit
risk, interest rate and foreign exchange risk, inflation risk, and the risks associated with
investing in private securities. Non-U.S. dollar denominated investments may result in
foreign exchange losses caused by devaluations and exchange rate fluctuations.
In addition, consequences of political, social, economic, diplomatic changes, or public
health condition may have disruptive eects on market prices or fair valuations
of foreign investments.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its obligations as they fall
due. The Investment Manager mitigates this risk by monitoring the suciency of cash
balances and availability under the Credit Facility (see note 4) to meet expected liquidity
requirements for investment funding and operating expenses.
Contingencies
In the normal course of business, the Group enters into contracts that contain a variety
of representations and warranties which provide general indemnifications. The
Group’s maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the Group that have not yet occurred.
The Investment Manager expects the risk of loss to be remote and does not expect these
to have a material adverse eect on the consolidated financial statements of the Group.
96
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12 – Financial highlights
The following ratios with respect to the Class A Shares and Class B Shares have been
computed for the years ended 31 December 2023 and 2022:
Per share operating performance
(based on average shares outstanding during the year)
For the Year Ended
31 December 2023
For the Year Ended
31 December 2022
Beginning net asset value $28.38 $31.65
Net increase in net assets resulting from operations:
Net investment income (loss) (0.67) (0.71)
Net realised and unrealised gain (loss) 1.25 (1.62)
Dividend payment (0.94) (0.94)
Stock repurchased and cancelled 0.05
Ending net asset value $28.07 $28.38
Total return
(based on change in net asset value per share)
For the Year Ended
31 December 2023
For the Year Ended
31 December 2022
Total return before carried interest 2.22% (7.36%)
Carried interest
Total return after carried interest 2.22% (7.36%)
Net investment income (loss) and expense ratios
(based on weighted average net assets)
For the Year Ended
31 December 2023
For the Year Ended
31 December 2022
Net investment income (loss), excluding carried interest (2.36%) (2.40%)
Expense ratios:
Expenses before interest and carried interest 2.36% 2.30%
Interest expense 0.48% 0.43%
Carried interest
Expense ratios total 2.84% 2.73%
Net investment income (loss) is interest income earned net of expenses, including
management fees and other expenses consistent with the presentation within the
Consolidated Statements of Operations and Changes in Net Assets. Expenses do not
include the expenses of the underlying private equity investment partnerships.
Individual shareholder returns may dier from the ratios presented based on diering
entry dates into the Group.
Note 13 – Subsequent events
On 29 February 2024, the Group paid a dividend of $0.47 per Ordinary Share
to shareholders of record on 19 January 2024.
The Investment Manager and the Board of Directors have evaluated events through
23 April 2024, the date the financial statements are available to be issued and have
determined there were no other subsequent events that require adjustment to,
or disclosure in, the financial statements.
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTHERFINANCIALS
NB Private Equity Partners (the “Fund”) AIFMD Disclosure Addendum
to the 2023 Annual Report
AIFMD DISCLOSURES
1. Changes to Article 23(1) AIFMD Disclosures
Directive 2011/61/EU on Alternative Investment Fund Managers (“AIFMD”) requires
certain information to be made available to investors in alternative investment funds
(“AIFs”) before they invest and requires that material changes to this information be
disclosed in the annual report of each AIF.
There have been no material changes (other than those reflected in the financial
statements) to this information requiring disclosure.
2. Leverage
For the purpose of this disclosure, leverage is any method by which an AIF’s exposure is
increased, whether through borrowing of cash or securities, or leverage embedded in
foreign exchange forward contracts or by any other means.
The AIFMD requires that each leverage ratio be expressed as the ratio between an AIF’s
exposure and its net asset value (“NAV”), and prescribes two required methodologies,
the gross methodology and the commitment methodology, for calculating such
exposure. Using the methodologies prescribed under the AIFMD, the leverage of the
Fund as at 30 September 2023 is disclosed below:
Leverage calculated pursuant to the gross methodology: 1.05
Leverage calculated pursuant to the commitment methodology: 1.06
3. Liquidity and risk management systems
The portfolio managers and risk management professionals of NB Alternative Advisers LLC
(the “AIFM”) regularly review the investment performance and the portfolio composition
of the Fund in the light of the Fund’s investment objective, policy and strategy; the principal
risks and investment or economic uncertainties that have been identified as relevant to the
Fund; internal risk measures and the interests and profile of investors.
The AIFM assesses the Funds current and prospective need for liquidity on an
on-going basis and ensures that liquidity is available when required. The risk profile
of the Fund as assessed as at 30 September 2023 was as follows:
3.1 Market risk profile
The market risk indicators contained in the Annex IV regulatory reporting template
were not applicable to the Fund.
3.2 Counterparty risk profile
As at 30 September 2023, the counterparty to which the Fund had the greatest
mark-to-market net counterparty credit exposure, measured as a % of the NAV of the
Fund was Bank of America/Merrill Lynch. This credit exposure amounted to 0.93%
of the Fund’s NAV.
As at 30 September 2023, the counterparty that had the greatest mark-to-market net
counterparty credit exposure to the Fund, measured as a % of the NAV of the Fund was
Massachusetts Mutual Life Insurance Company. This credit exposure amounted to
6.71% of the Fund’s NAV.
3.3 Liquidity profile
3.3.1 Portfolio liquidity profile
100 per cent of the portfolio in incapable of being liquidated within 365 days, i.e. it would
take more than 365 days to liquidate any or all of the portfolio.
As at 30 September 2023, the Fund had USD 15,783,348 unencumbered cash available to it.
3.3.2 Investor liquidity profile
100 percent of investor equity is incapable of being redeemed within 365 days.
Investors do not have any withdrawal or redemption rights in the ordinary course.
However, shares are freely traded on the London Stock Exchange
3.3.3 Investor redemption
Investors to not have any withdrawal or redemption rights in the ordinary course.
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4. Report on remuneration
The Neuberger Berman Compensation Committee is responsible for the compensation
practices within the Neuberger Berman group, and Neuberger Berman also operates a
structure throughout the group to ensure appropriate involvement and oversight of the
compensation process, so that compensation within the group rewards success whilst
reflecting appropriate behaviours.
Neuberger Berman recognises the need to ensure that compensation arrangements do
not give rise to conflicts of interest, and this is achieved through the compensation policies
as well as through the operation of specific policies governing conflicts of interests.
Neuberger Berman’s compensation philosophy is one that focuses on rewarding
performance and incentivizing employees. Employees at Neuberger Berman may receive
compensation in the form of base salary, discretionary bonuses and/or production
compensation. Investment professionals receive a fixed salary and are eligible for an
annual bonus. The annual bonus for an individual investment professional is paid from a
“bonus pool” made available to the portfolio management team with which the
investment professional is associated. Once the final size of the available bonus pool is
determined, individual bonuses are determined based on a number of factors including
the aggregate investment performance of all strategies managed by the individual
(including the three-year track record in order to emphasize long-term performance),
eective risk management, leadership and team building, and overall contribution to the
success of Neuberger Berman.
Neuberger Berman considers a variety of factors in determining fixed and variable
compensation for employees, including firm performance, individual performance, overall
contribution to the team, collaboration with colleagues across the firm, eective
partnering with clients to achieve goals, risk management and the overall investment
performance. Neuberger Berman strives to create a compensation process that is fair,
transparent, and competitive with the market.
A portion of bonuses may be awarded in the form of contingent or deferred cash
compensation, including under the “Contingent Compensation Plan”, which serves
as a means to further align the interests of employees with the interest of clients, as well
as rewarding continued employment. Under the Contingent Compensation Plan a
percentage of a participant’s compensation is awarded in deferred contingent form.
Contingent amounts take the form of a notional investment based on a portfolio of
Neuberger Berman investment strategies and/or a contingent equity award, and Neuberger
Berman believes that this gives each participant further incentive to operate as a prudent risk
manager and to collaborate with colleagues to maximise performance across all business
areas. The programs specify vesting and forfeiture terms, including that vesting is normally
dependent on continued employment and contingent amounts can be forfeited in cases
including misconduct or the participants participating in detrimental activity.
The proportion of the total remuneration of the sta of the AIFM attributable to the Fund,
calculated with reference to the proportion of the value of the assets of the Fund managed
by the AIFM to the value of all assets managed by the AIFM, was USD 2,043,254 representing
USD 521,040 of fixed compensation and USD 1,522,213 of variable compensation. There
were 224 sta of the AIFM who shared in the remuneration paid by the AIFM.
Compensation by the AIFM to senior management and sta whose actions had a material
impact on the risk profile on the Fund in respect of 2023 was USD 133,122,080 in relation to
senior management and USD 1,333,987 in respect of ‘risk takers’. The compensation figure
for senior management has not been apportioned, while the compensation figure for risk
takers has been apportioned by reference to the number of AIFs whose risk profile was
materially impacted by each individual sta member.
As of 31 December 2023, and 31 December 2022, carried interest of nil was accrued,
respectively.
5. European Taxonomy Regulation
Regulation (EU) 2020/852 (the “Taxonomy Regulation”) requires fund managers such
as the AIFM to disclose the extent of their alignment to the Taxonomy Regulation in the
annual report for each fund they manage. As the Fund is not classified as an Article 8
or Article 9 fund under Regulation (EU) 2019/2088 (“SFDR”), the following statement
must be disclosed in the annual report for the Fund:
The investments underlying this financial product do not take into account the EU criteria
for environmentally sustainable economic activities.
April 2024
AIFMD DISCLOSURES
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Schedule of investments (unaudited)
Company/Investment Name Principal Geography Investment Date Description
Fair Value
$ M
Action Europe Jan-20 European discount retailer $85.6
Osaic U.S. Jul-19 Independent broker dealer 56.5
Solenis Global Sep-21 Specialty chemicals and services provider 49.9
AutoStore (OB.AUTO) Europe Jul-19 Leading provider of automation technology 48.6
Branded Cities Network U.S. Nov-17 North American advertising media company 40.0
Cotiviti U.S. Aug-18 Payment accuracy and solutions for the healthcare industry 38.6
NB Alternatives Credit Opportunities Program Global Sep-16 Diversified credit portfolio 37.9
BeyondTrust U.S. Jun-18 Cyber security and secure access solutions 35.0
Business Services Company* U.S. Oct-17 Business services company 34.8
Constellation Automotive UK Nov-19 Provider of vehicle remarketing services 33.4
True Potential Europe Jan-22 Wealth management technology platform serving advisors and retail clients 32.8
Monroe Engineering U.S. Dec-21 Industrial products distributor 31.9
Marquee Brands Global Dec-14 Portfolio of consumer branded IP assets, licensed to third parties 30.6
Kroll Global Mar-20 Multinational financial consultancy firm 30.1
GFL (NYSE: GFL) U.S/Canada Jul-18 Waste management services 29.0
Fortna U.S./Europe Apr-17 Systems and solutions utilised in distribution centres 28.7
Staples U.S. Sep -17 Provider of oce supplies through a business-to-business platform and retail 28.4
Viant U.S. Jun-18 Outsourced medical device manufacturer 26.7
Stubhub U.S. Feb-20 Ticket exchange and resale company 26.4
Engineering Europe Jul-20 Italy-based provider of systems integration, consulting and outsourcing services 25.9
Addison Group U.S. Dec-21 Professional services provider specialising in stang and consulting services 23.9
Auctane U.S. Oct-21 E-commerce shipping software provider 23.3
Excelitas U.S. Nov-17 Sensing, optics and illumination technology 21.9
Solace Systems U.S./Canada Apr-16 Enterprise messaging solutions 21.2
Agiliti (NYSE: AGTI) U.S. Jan-19 Medical equipment management and services 19.8
Renaissance Learning U.S. Jun-18 K-12 educational software & learning solutions 19.6
Exact Netherlands Aug-19 Accounting and ERP software for small to medium-sized businesses 18.7
Bylight U.S. Aug-17 Provider of IT and technology infrastructure cyber solutions 18.4
USI U.S. Jun-17 Insurance brokerage and consulting services 18.4
Qpark Europe Oct-17 European parking services operator 17.9
FV Hospital Vietnam Jun-17 Leading hospital provider in Vietnam 17.3
RealPage U.S. Apr-21 Provides software solutions to the rental housing industry 16.7
Tendam Spain Oct-17 Spanish apparel retailer 16.6
CH Guenther U.S. May-18 Supplier of mixes, snacks and meals and other value-added food products for consumers 16.6
SCHEDULE OF INVESTMENTS
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Company/Investment Name Principal Geography Investment Date Description
Fair Value
$ M
Melissa & Doug U.S. Jul-17 Specialty toy company 16.5
Chemical Guys U.S. Sep-21 Direct to consumer automotive products brand 15.8
Petsmart/Chewy (NYSE: CHWY) U.S. Jun-15 Online and oine pet supplies retailer 15.0
Peraton U.S. May-21 Provider of enterprise IT services serving the U.S. government 14.4
Wind River Environmental U.S. Apr-17 Waste management services provider 13.5
Xplor Technologies U.S. Jun-18 Credit card payment processing 10.6
SafeFleet U.S. May-18 Safety and productivity solutions for fleet vehicles 9.6
Nextlevel U.S. Aug-18 Designer and supplier of fashion-basic apparel 8.8
Milani U.S. Jun-18 Cosmetics and beauty products 8.7
OnPoint U.S. Mar-17 Provider of repair, maintenance and fleet management services 8.6
ZPG UK Jul-18 Digital property data and software company 8.3
Hub Global Mar-19 Leading global insurance brokerage 8.1
NB Specialty Finance Program Global Oct-18 Small balance loan portfolio 7.8
Lasko Products U.S. Nov-16 Manufacturer of portable fans and ceramic heaters 7.5
Verifone Global Aug-18 Electronic payment technology 7.0
Unity Technologies (NYSE:U) U.S. Jun-21 Business platform for app developers 6.7
ProAmpac U.S. Dec-20 Leading global supplier of flexible packaging 6.6
Holley (NYSE: HLLY) U.S. Oct-18 Automotive performance company 6.6
Syniti U.S. Dec-17 Data management solutions provider 6.5
Healthcare Company – In-home Devices U.S. Jun-18 Provider of pump medications and in-home intravenous infusion 6.2
Saguaro North America Jul-13 E&P company pursuing unconventional light oil/liquids-rich gas properties 6.0
CrownRock Minerals U.S. Aug-18 Minerals acquisition platform 6.0
Carestream U.S. Apr-16 Utilises digital imaging equipment and captures two billion images annually 5.7
Edelman U.S. Aug-18 Independent financial planning firm 5.7
Destination Restaurants U.S. Nov-19 U.S. restaurant chain 5.7
Vitru (NASDAQ: VTRU) Brazil Jun-18 Post secondary education company 5.6
Plaskolite U.S. Dec-18 Largest manufacturer of thermoplastic sheets in North America 5.4
Centro U.S. Jun-15 Provider of digital advertising management solutions 5.0
Leaseplan (XPAR: ALD) Europe Apr-16 Fleet management services 5.0
Rino Mastrotto Group Europe Apr-20 Leading producer of premium leather 4.9
Italian Mid-Market Buyout Portfolio Europe Jun-18 Italian mid-market buyout portfolio 4.8
SICIT Europe Jan-22 Producer of high value-added products such as biostimulants for agriculture 4.0
Husky Injection Molding U.S. Sep-18 Designs and manufacturers injection moulding equipment 3.9
Catalyst Fund III North America Mar-11 Legacy fund investment targeting North American companies 3.5
SCHEDULE OF INVESTMENTS
101
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
Company/Investment Name Principal Geography Investment Date Description
Fair Value
$ M
Inflection Energy U.S. Oct-14 Dry gas exploration company in the Marcellus Shale 3.4
BK China U.S. Nov-18 Franchise of over 800 Burger King locations in mainland China 3.2
Brightview (NYSE: BV) U.S. Dec-13 Commercial landscape and turf maintenance 3.2
Mills Fleet Farms U.S. Feb-16 Value-based retailer with 35 stores in the Midwest U.S. 3.0
Aster/DM Healthcare (NSEI: ASTERDM) Middle East Jun-14 Operator of hospitals, clinics and pharmacies 3.0
Vertiv (NYSE: VRT) U.S. Nov-16 Provider of data centre infrastructure 2.7
DBAG Expansion Capital Fund Europe Jan-12 Legacy fund investment targeting investments in Germany 2.7
Accedian U.S. Apr-17 Network testing equipment and software 2.7
Healthcare Services Company NA Feb-18 Healthcare services company 2.4
Undisclosed Financial Services Company North America May-21 Undisclosed fintech company 2.1
Syniverse Technologies U.S. Feb -11 Global telecommunications technology solutions 2.1
Neopharmed Europe Jun-23 Specialty pharmaceuticals company 2.0
Hydro Europe Apr-20 Largest European manufacturer of hydraulic components 2.0
Inetum Europe July-22 IT services and solutions provider headquartered in France 2.0
Arbo Europe Jun-22 Italian distributor of heating, sanitary, plumbing, and air conditioning system spare parts 1.9
Corona Industrials South America Jun-14 Building materials company 1.7
U-Power Europe Jun-23 Leading European provider of safety shoes and work wear 1.5
Innovacare U.S. Apr-20 Operates leading Medicare Advantage plan and Medicaid plan 1.4
Into University Partnerships UK Apr-13 Collegiate recruitment, placement and education 1.3
Digital River (Equity) U.S. Feb-15 Digital e-commerce, payments and marketing solutions 1.1
Kyobo Life Insurance Co. S. Korea Dec-07 Life insurance in Korea 1.0
NG Capital Partners I, L.P. Peru M ay -11 Legacy fund investment targeting investments in Peru 0.9
Taylor Precision Products U.S. Jul-12 Consumer & food service measurement products 0.7
Bending Spoons Europe Jun-23 Mobile application developer and publisher 0.5
LookingGlass Cyber Solutions (NASDAQ: ZFOX) U.S. Feb-15 Cyber security technology company 0.2
Snagajob U.S. Jun-16 Job search and human capital management provider 0.1
Bertram Growth Capital II U.S. Sep-10 Legacy fund investment targeting lower middle-market companies 0.0
Other Direct Equity Investments (13.2)
Other Debt Investments
Other Fund Investments 0.7
Total Portfolio $1,321
SCHEDULE OF INVESTMENTS
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
Valuation methodology
Equity
It is expected that most of the investments in which the Fund invests will meet the
criteria set forth under FASB ASC 820 Fair Value Measurement (“ASC 820”) permitting
the use of the practical expedient to determine the fair value of the investments. ASC
820 provides that, in valuing alternative investments that do not have quoted market
prices, but calculate NAV per share or equivalent, an investor may determine fair value
by using the NAV reported to the investor by the underlying investment. To the extent
practical expedient is applicable to an investment, the Manager will value the Fund’s
investment based primarily on the value reported to the Fund by the investment or by
the lead investor of a direct co-investment as of each quarter-end, as determined by
the investments in accordance with its own valuation policies. The Fund generally uses
the NAV reported by the investments as a primary input in its valuation; however,
adjustments to the reported NAV may be made based on various factors, including,
but not limited to, the attributes of the interest held, including the rights and
obligations, any restrictions or illiquidity on such interest, any potential clawbacks by
the investments and the fair value of the investments’ investment portfolio or other
assets and liabilities. The valuation process for investments categorised in Level 3 of the
fair value hierarchy is completed on a quarterly basis and is designed to subject the
valuation of Level 3 investments to an appropriate level of consistency, oversight and
review. The Manager has responsibility for the valuation process and the preparation
of the fair value of investments reported in the financial statements. The Manager
performs initial and ongoing investment monitoring and valuation assessments.
In determining the fair value of investments, the Manager reviews periodic investor
reports and interim and annual audited financial statements received from the
investments, reviews material quarter-over-quarter changes in valuation, and assesses
the impact of macro-market factors on the performance of the investments.
Debt
Debt investments made on a primary basis are generally carried at cost plus accrued
interest, if any. Investments made through the secondary market are generally marked
based on market quotations, to the extent available, and the Manager will take into
account current pricing and liquidity of the security.
For primary issuance debt investments, the Manager estimates the enterprise value of each
portfolio company and compares such amount to the total amount of the company’s debt
as well as the level of debt senior to the Company’s interest. Estimates of enterprise
value are based on a specific measure (such as EBITDA, free cash flow, net income, book
value or NAV) believed to be most relevant for the given company and compares this
metric in relation to comparable company valuations (market trading and transactions)
based on the same metric. In determining the enterprise value, the Manager will further
consider thecompanies’ acquisition price, credit metrics, historical and projected
operational and performance, liquidity as well as industry trends, general economic
conditions, scale and competitive advantages along with other factors deemed relevant.
Valuation adjustments are made if estimated enterprise value does not support
the value of the debt security the Company is invested in and securities senior to
the Company’s position.
If the principal repayment of debt and any accrued interest is supported by the
enterprise value analysis described above, the Manager will next consider current
market conditions including pricing quotations for the same security and yields for
similar investments.
For investments made on a secondary basis, to the extent market quotations for the
security are available, the Manager will take into account current pricing and liquidity.
Liquidity may be estimated by the spread between bid and oer prices and other available
measures of market liquidity, including number and size of recent trades and liquidity
scores. If the Manager believes market yields for similar investments have changed
substantially since the pricing of the security, the Manager will perform a discounted
cashow analysis, based on the expected future cash flows of the debt securities and
current market rates. The Manager will also consider the maturity of the investment,
compliance with covenants and ability to pay cash interest when estimating the fair
value of debt investments.
APPENDIX
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
Forward-looking statements
This report contains certain forward-looking statements. Forward-looking
statements speak only as of the date of the document in which they are made
and relate to expectations, beliefs, projections (including anticipated economic
performance and financial condition), future plans and strategies, anticipated events
or trends and similar expressions concerning matters that are not historical facts, and
are subject to risks and uncertainties including, but not limited to, statements as to:
future operating results;
business prospects and the prospects of the Company’s investments;
the impact of investments the Company expects to make;
the dependence of future success on the general economy and its impact on the
industries in which the Company invests;
the ability of the investments to achieve their objectives;
dierences between the investment objective and the investment objectives of the
private equity funds in which the Company invests;
the rate at which capital is deployed in private equity investments, co-investments
and opportunistic investments;
expected financings and investments;
the continuation of the Investment Company as the service provider and the continued
aliation with the Investment Company of its key investment professionals;
the adequacy of the Company’s cash resources and working capital; and
the timing of cash flows, if any, from the operations of the underlying private equity
funds and the underlying portfolio companies.
In some cases, forward-looking statements may be identified by terms such as
anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,“
“potential,” “should,” “will,” and “would,” or the negative of those terms or other
comparable terminology.
The forward-looking statements are based on the beliefs, assumptions and expectations
of the future performance, taking into account all information currently available to the
Company. These beliefs, assumptions and expectations are subject to risks and
uncertainties and can change as a result of many possible events or factors, not all of
which are known to the Company or are within the Company’s control. If a change
occurs, the business, financial condition, liquidity and results of operations may vary
materially from those expressed in the forward-looking statements. Factors and
events that could cause the business, financial condition, liquidity and results of
operations to vary materially include, among other things, general economic
conditions, securities market conditions, private equity market conditions, the level
and volatility of interest rates and equity prices, competitive conditions, liquidity of
global markets, international and regional political conditions, macroeconomic factors
(including but not limited to war, civil unrest, natural disasters, pandemics, or
epidemics) regulatory and legislative developments, monetary and fiscal policy,
investor sentiment, availability and cost of capital, technological changes and events,
outcome of legal proceedings, changes in currency values, inflation, credit ratings and
the size, volume and timing of transactions, as well as other risks described elsewhere
in this report and the prospectus relating to the Company’s IPO and the Company’s
prospectus relating to the ZDP Shares.
The foregoing is not a comprehensive list of the risks and uncertainties to which the
Company is subject. Except as required by applicable law, the Company undertakes no
obligation to update or revise any forward-looking statements to reflect any change in
theCompany’s expectations, or any changes in events, conditions or circumstances on
which the forward-looking statement is based. In light of these risks, uncertainties and
assumptions, the events described by the Company’s forward-looking statements
might not occur. The Company qualifies any and all of the forward-looking statements
by these cautionary factors.
APPENDIX
104
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
Alternative performance calculations
Alternative Performance Measures (“APMs”) is a term defined by the European Securities and Markets Authority as “financial measures of historical or future performance, financial
position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.
APMs are used in this report if considered by the Board and the Manager to be the most relevant basis for shareholders in assessing the overall performance of the Company and for
comparing the performance of the Company to its peers, taking into account industry practice.
One Year NAV Total Return Calculation
NAV per share
(USD) Dividend (USD)
Dividend
Compounding
Factor
NAV per Ordinary Share at year end
as per Statement of Financial Position in
December 2022 (A) $28.38
Semi-annual dividend per Ordinary Share
declared in respect of year $27.91 $0.47 1.0168
Semi-annual dividend per Ordinary Share
declared in respect of year $27.96 $0.47 1.0168
NAV per Ordinary Share at end of year as per
Statement of Financial Position in December
2023 (B) $28.07
NAV total return per Ordinary Share
(B/A)*C – 1 2.3%
Product of
dividend
compounding (C) 1.0339
Three-year NAV Total Return Calculation
NAV per share
(USD) Dividend (USD)
Dividend
Compounding
Factor
NAV per Ordinary Share at year end
as per Statement of Financial Position in
December 2020 (A) $22.49
2021 Semi-annual dividend $22.18 $0.31 1.0140
2021 Semi-annual dividend $28.24 $0.41 1.0145
2022 Semi-annual dividend $31.18 $0.47 1.0151
2022 Semi-annual dividend $28.20 $0.47 1.0167
2023 Semi-annual dividend $27.91 $0.47 1.0168
2023 Semi-annual dividend $27.96 $0.47 1.0168
NAV per Ordinary Share at end of year as per
Statement of Financial Position in December
2023 (B) $28.07
NAV Total Return per Ordinary Share
(B/A)*C – 1 37.0%
Product of
dividend
compounding (C) 1.0976
Five Year NAV Total Return Calculation
NAV per share
(USD) Dividend (USD)
Dividend
Compounding
Factor
NAV per ordinary share as per Statement of
Financial Position in December 2018 (A) $17.87
2018 Semi-annual Dividend $17.79 $0.28 1.0157
2019 Semi-annual Dividend $18.83 $0.29 1.0154
2019 Semi-annual Dividend $18.82 $0.29 1.0154
2020 Semi-annual Dividend $17.99 $0.29 1.0161
2020 Semi-annual Dividend $22.18 $0.31 1.0140
2021 Semi-annual Dividend $28.24 $0.41 1.0145
2021 Semi-annual Dividend $31.18 $0.47 1.0151
2022 Semi-annual Dividend $28.20 $0.47 1.0167
2022 Semi-annual Dividend $27.91 $0.47 1.0168
2023 Semi-annual Dividend $27.96 $0.47 1.0168
NAV per ordinary share as per Statement of
Financial Position in December 2023 (B) $28.07
NAV total return per ordinary share
(B/A)*C – 1 83.5%
Product of
Dividend
Compounding (C) 1.1681
APPENDIX
105
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
One Year Share Price Total Return Calculation
Share price
(GBP) Dividend (GBP)
Dividend
Compounding
Factor
Share price as per the London Stock Exchange
on 31 December 2022 (A) £16.00
2023 Semi-annual Dividend £15.90 £0.38 1.0239
2023 Semi-annual Dividend £15.58 £0.37 1.0235
Share price per the London Stock Exchange
on 31 December 2023 (B) £16.70
Share price total return per ordinary share
(B/A)*C – 1 9.4%
Product of
Dividend
Compounding (C) 1.0479
Three Year Share Price Total Return Calculation
Share price
(GBP) Dividend (GBP)
Dividend
Compounding
Factor
Share price at year end as per the London Stock
Exchange on 31 December 2020 (A) £11.65
2021 Semi-annual dividend £11. 85 £0.23 1.0191
2021 Semi-annual dividend £15.30 £0.30 1.0195
2022 Semi-annual dividend £17.75 £0.34 1.0194
2022 Semi-annual dividend £15.75 £0.39 1.0246
2023 Semi-annual dividend £15.90 £0.38 1.0239
2023 Semi-annual dividend £15.58 £0.37 1.0235
Share price at year end as per
the London Stock Exchange on
31 December 2023 (B) £16.70
Share price total return per Ordinary Share
(B/A)*C – 1 63.0%
Product of
dividend
compounding (C) 1.1371
Five Year Share Price Total Return Calculation
Share price
(GBP) Dividend (GBP)
Dividend
Compounding
Factor
Share price as per the London Stock Exchange
on 31 December 2018 (A) £9.97
2018 Semi-annual Dividend £10.90 £0.21 1.0196
2019 Semi-annual Dividend £11. 25 £0.23 1.0207
2019 Semi-annual Dividend £11.95 £0.22 1.0185
2020 Semi-annual Dividend £9.30 £0.23 1.0245
2020 Semi-annual Dividend £11. 85 £0.23 1.0191
2021 Semi-annual Dividend £15.30 £0.30 1.0195
2021 Semi-annual Dividend £17.75 £0.34 1.0194
2022 Semi-annual Dividend £15.75 £0.39 1.0246
2022 Semi-annual Dividend £15.90 £0.38 1.0239
2023 Semi-annual Dividend £15.58 £0.37 1.0235
Share price per the London Stock Exchange
on 31 December 2023 (B) £16.70
Share price total return per ordinary share
(B/A)*C – 1 106.8%
Product of
Dividend
Compounding (C) 1.2347
APPENDIX
106
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
Total 2023 Realisation Calculation $ in millions
Proceeds from sale of private equity investments (A) $132.9
Distributions from private equity investments (B) $36.9
Interest and dividend income (C) $0.8
2023 portfolio realisations (A+B+C) $170.6
Multiple of Capital Calculation
Exit proceeds from full exits over the last five years (A) $383.1
Invested capital into full exits over the last five years (B) $160.6
Multiple on invested capital (A/B) 2.4x
Realisation Uplift Calculation
Aggregate realisation value at sale/IPO over the last five years (A) $803.8
Three quarters prior aggregate valuation over the last five years (B) $576.2
Average uplift (A/B) –1 39.5%
Adjusted Commitment Coverage
Cash + liquid investments + undrawn committed credit facility (A) $375.8
Adjusted unfunded private equity exposure (B) $33.3
Adjusted commitment coverage ratio (A/B) – 1 1,128%
* Unfunded commitments are adjusted for amounts the Manager believes are unlikely to be called.
Share Price Yield
Annualised 2023 Dividend (GBP equivalent) (A) £0.74
Share price on 31 December 2023 (B) £16.70
Share Price Yield (A/B) – 1 4.4%
Realisation Uplift Full/Partial Sales (Including Pending Sales)
Aggregate realisation value at sale/IPO (A) $150.3
Three quarters prior aggregate valuation (B) $135.9
Average uplift (A/B) – 1 10.6%
Multiple of Capital Calculation Full/Partial Sales (Including Pending Sales)
Aggregate realisation value at sale/IPO (A) $150.3
Invested capital into 2023 direct equity investment exits (B) $71.2
Multiple on invested capital (A/B) 2.1x
APPENDIX
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
Buyout is the purchase of a controlling interest in a company.
Compound Annual Growth Rate (“CAGR”) represents the annual growth rate of
an investment over a specified period of time longer than one year.
Carried interest is equivalent to a performance fee. This represents a share of the
profits that will accrue to the underlying private equity managers, after achievement
of an agreed preferred return.
Co-investment is a direct investment in a company alongside a private equity fund.
Debt Multiple Ratio of net debt to EBITDA.
Direct equity investments are investments in a single underlying company.
Discount arises when a company’s shares trade at a discount to NAV. In this circumstance,
the price that an investor pays or receives for a share would be less than the value
attributable to it by reference to the underlying assets. The discount is the dierence
between the share price and the NAV, expressed as a percentage of the NAV. For
example, if the NAV was l00p and the share price was 90p, the discount would be 10%.
Dry powder is capital raised and available to invest but not yet deployed.
EBITDA stands for earnings before interest, tax, depreciation and amortisation,
which is awidely used performance measure in the private equity industry.
Enterprise value is the aggregate value of a company’s entire issued share capital
and netdebt.
Exit is the realisation of an investment usually through trade sale, sale by public
oering (including IPO), or sale to a financial buyer.
FTSE AII-Share Index Total Return is the change in the level of the FTSE AII-Share
Index, assuming that dividends are re-invested on the ex-dividend date.
Full realisations are exit events (e.g. trade sale, sale by public oering, or sale to
a financial buyer) following which the residual exposure to an underlying company
is zero or immaterial.
Fund-of-funds is a private equity fund that invests in a portfolio of several private
equity funds to achieve, compared with a direct investment fund, a broader
diversification of risk, including individual private equity manager risk.
General Partner (“GP”) is the entity managing a private equity fund that has been
established as a limited partnership. This is commonly referred to as the Manager.
Initial Public Oering (“IPO”) is an oering by a company of its share capital to the
public with a view to seeking an admission of its shares to a recognised stock exchange.
Internal Rate of Return (“IRR) is a measure of the rate of return received by an
investor
in a fund. It is calculated from cash drawn from and returned to the investor together
with the residual value of the investment.
Last Twelve Months (“LTM”) refers to the timeframe of the immediately preceding
12months in reference to a financial metric used to evaluate the Company’s performance.
Limited Partner (“LP”) is an institution or individual who commits capital to a private
equity fund established as a limited partnership. These investors are generally
protected from legal actions and any losses beyond the original investment.
Market capitalisation Share price multiplied by the number of shares outstanding.
Multiple of cost or invested capital (“MOIC” or cost multiple) A common measure
of private equity performance, MOIC is calculated by dividing the fund’s cumulative
distributions and residual value by the paid-in capital.
Net asset value (“NAV”) Amount by which the value of assets of a fund exceeds
liabilities, reflecting the value of an investor’s attributable holding.
Net asset value per share (“NAV per share”) is the value of the Company’s net assets
attributable to one Ordinary Share. It is calculated by dividing ‘shareholders’ funds’ by
the total number of Ordinary Shares in issue. Shareholders’ funds are calculated by
deducting current and long-term liabilities, and any provision for liabilities and
charges, from the Company’s total assets.
Net asset value per share Total Return is the change in the Company’s net asset value
per share, assuming that dividends are re-invested on the ex-dividend date.
Glossary (unaudited)
GLOSSARY
108
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
GLOSSARY
Net debt is calculated as the total short-term and long-term debt in a business, less
cash and cash equivalents.
Net debt to EBITDA is the ratio of a company’s net debt to its LTM EBITDA
Premium occurs when the share price is higher than the NAV and investors would
therefore be paying more than the value attributable to the shares by reference to the
underlying assets.
Public to private (“P2P”) or take private, is the purchase of all of a listed company’s
shares and the subsequent delisting of the company, funded with a mixture of debt
and unquoted equity.
Quoted company is any company whose shares are listed or traded on a recognised
stockexchange.
Realisation proceeds are amounts received by the Company from the sale of
a portfoliocompany, which may be in the form of capital proceeds or income such
as interestor dividends.
Realisations – multiple to cost is the average return from full and partial exits
in theperiod.
Realisations – uplift to carrying value is the aggregate uplift on full and partial exits
Share price Total Return is the change in the Company’s share price, assuming that
dividends are re-invested on the day that they are paid.
Total Return is a performance measure that assumes the notional re-investment
of dividends. This is a measure commonly used by the listed private equity sector
and listed companies in general.
Undrawn commitments are commitments to funds that have not yet been
drawn down.
Valuation multiples are earnings or revenue multiples applied in valuing
a business enterprise.
Vintage is the year in which a private equity fund makes its first investment.
109
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
Directors, Advisors and contact information
DIRECTORS, ADVISORS AND CONTACT INFORMATION
Board of Directors
William Maltby (Chairman)
Trudi Clark
Pawan Dhir (appointed 19 September 2023)
John Falla
Louisa Symington-Mills
Wilken von Hodenberg
Registered Oce
NB Private Equity Partners Limited
P.O. Box 286 Floor 2
Trafalgar Court, Les Banques
St. Peter Port, Guernsey GY1 4LY
Channel Islands
Tel: +44-(0)1481-742-742
Fax: +44-(0)1481-728-452
Investment Manager
NB Alternatives Advisers LLC
325 North St. Paul Street, Suite 4900
Dallas, TX 75201
United States of America
Tel: +1-214- 647-9593
Fax: +1-214- 6 47-9501
Email: IR_NBPE@nb.com
Guernsey Administrator
Ocorian Administration (Guernsey) Limited
Trafalgar Court, Les Banques
St. Peter Port, Guernsey GY1 4LY
Channel Islands
Tel: +44-(0)1481-742-742
Fax: +44-(0)1481-728-452
US Administrator
MUFG Capital Analytics LLC
325 North St. Paul Street, Suite 4700
Dallas, TX 75201
United States of America
Independent Auditors
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St. Peter Port, Guernsey GY1 1WR
Tel: +44 (0) 1481 721000
Fax: +44 (0) 1481 722373
Depositary Bank
The Bank of New York
101 Barclay Street, 22nd Floor
New York, NY 10286
United States of America
Tel: +1-212-815-2715
Fax: +1-212-571-3050
Paying Agent
Jeeries International Limited
68 Upper Thames Street
London EC4V 3BJ
Tel: +44 (0) 20 7029 8766
Joint Corporate Brokers
Jeeries International Limited
100 Bishopsgate
London EC2N 4JL
Tel: +44 (0) 20 7029 8766
Stifel Nicolaus Europe Limited
150 Cheapside
London, EC2V 6ET
Tel: +44 (0) 20 7710 7600
Registrar
Link Market Services (Guernsey) Limited
Mont Crevelt House,
Bulwer Avenue
St. Sampsons
GY2 4LH
Guernsey Channel Islands
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STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
Useful information
Financial calendar
Approximate timing
Monthly NAV update
Generally 10-15 days after month-end
Annual financial report
April
Interim Report
September
Key Information Document Update
Annually, following release of the annual
financial report.
All announcements can be viewed on the
Company’s website –
www.nbprivateequitypartners.com.
Register to receive news alerts
Please register for news alerts on the
Company’s website –
https://www.nbprivateequitypartners.com/
en/investors/news-and-alerts.
Events timing
Annual General Meeting
June
Capital Markets Day
November 2024
Dividends
Semi-annual
Payment of dividends
Dividends are declared in U.S. dollars and paid
in pounds Sterling, but the Company also
oers both a Currency Election for US
shareholders and a dividend re-investment
plan for shareholders who wish to reinvest
their dividends to grow their shareholding.
The foreign exchange rate at which dividends
declared will be converted into pounds
Sterling will be at the spot rate priorto the
payment of the dividend.
Dividend information
The dividend documents on the Company’s
website provide information to Shareholders
regarding NBPE’s Dividend Re-investment
Plan and USD Dividend Election for as well as
election forms for each of the options. Investors
should read the dividend documentation
carefully prior to choosing an election.
Ifanelection is notmade, investors will receive
cash dividends in Sterling. Shareholders are
advised to consult with a tax advisor concerning
potential tax consequences of an election.
Anyone acting for the account or benefit of a
U.S. person who elects to receive additional
shares through the dividend re-investment
plan would need to sign a QualifiedPurchaser
certification, which is available on
the website. The completed forms should be
returned to NBPE’s Investor Relations
department by email at
IR_NBPE@nb.com or by the Investment
Manager’s mailingaddress (see page 110 for
contact information).
For further information on the Dividend
Re-investment Plan and Currency Election,
please contact the Company’s registrar, Link
Market Services, at
enquiries@linkgroup.co.uk.
Please see Links mailing address below.
USEFUL INFORMATION
111
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
AIC
The Company is a member of the Association
of Investment Companies
(https://www.theaic.co.uk/).
USEFUL INFORMATION
Registrar services
Communications with shareholders are mailed
to the address held on the share register.
Any notifications and enquiries relating to
registered shareholdings, including achange
of address or other amendment, should be
directed to Link Asset Services.
Address:
Link Asset Services
PXS 1
34 Beckenham Road
Beckenham BR3 4ZF
http://ips.linkassetservices.com/
Email: enquiries@linkgroup.co.uk
By phone:
UK: +44 (0) 333 300 1950
From overseas: +44 20 333 300 1950. Calls
outside the United Kingdom will be charged
at the applicable international rate. Link Asset
Services are open between 9.00am and
5.30pm, Monday to Friday, excluding public
holidays in England and Wales.
E-communications for shareholders
NBPE would like to encourage shareholders
to receive shareholder documents electronically,
via our website or email notification instead of
hard copy format. This is a faster and more
environmentally friendly way of receiving
shareholder documents.
The online Share Portal from our registrar, Link
Asset Services, provides all the information
required regarding your shares. Through the
Share Portal, shareholders can access details
of their holdings in NBPE online. You can also
make changes to address details and dividend
payment preferences online.
Shareholders who wish to receive future
communications via electronic means can
register this preference through the Share
Portal (https://www.signalshares.com/).
ISIN/SEDOL numbers
The ISIN, SEDOL numbers and ticker for the
Company’s Ordinary Shares are as follows:
£ share class US$ share class
Ticker: NBPE NBPU
ISIN GG00B1ZBD492 GG00B1ZBD492
SEDOL B28ZZX8 BD9PCY4
Information about the 2024 ZDP shares:
2024
Capital entitlement 130.63p
Maturity 20 Oct 24
GRY at issue 4.25%
Ticker NBP5
ISIN GG00BD96PR19
SEDOL BD96PR1
112
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
How to invest
NBPE is listed on the London Stock Exchange
and its sharescan be bought and sold just as
those of any other listed company.
A straightforward way for individuals to
purchase and hold shares in the Company is to
contact a stockbroker, savings plan provider or
online investment platform. NBPE’s shares may
be purchased under the ticker symbol NBPE.
To help people trying to choose a platform,
the Association of Investment Companies
(“AIC”) provides up-to-date information on
the platforms where investment companies
are available, and what you’ll pay to invest
on each platform (https://www.theaic.co.uk/
availability-on-platforms).
If you’d prefer to use a financial adviser, advice
on how tofind one can be found at
https://www.thepfs.org/yourmoney/
find-an-adviser/.
ISA status
The Company’s shares are eligible for
tax-ecient wrappers such as Individual
Savings Accounts (“ISAs”), Junior ISAs, and
Self Invested Personal Pensions (“SIPPs”).
Information about ISAs and SIPPs, as well
as general adviceon saving and investing,
can be found on the government’s free
and independent service at
www.moneyadviceservice.org.uk.
As with any investment into a company listed
on the stock market, you should remember
that:
the value of your investment and the income
you get from it can fall as well as rise, so you
may not get back the amount you invested;
and
past performance is no guarantee of future
performance.
This is a medium- to long-term investment so
you should be prepared to invest your money
for at least five years. If you are uncertain
about any aspect of your decision to invest,
you should consider seeking independent
financial advice.
HOW TO INVEST
113
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
1 Assumes re-investment of dividends at the closing
NAV or share price on the ex-dividend date.
2 Returns are presented on a “gross” basis (i.e. they do
not reflect the management fees, carried interest,
transaction costs and other expenses that may be
paid by investors, which may be significant and will
lower returns). Past performance is not a guarantee
of future returns.
3 All performance figures assume re-investment of
dividends at NAV on the ex-dividend date and reflect
cumulative returns over the relevant time periods
shown and are not annualised returns.
4 The MSCI World Index captures large and mid-cap
representation across 23 Developed Markets (DM)
countries. With 1,465 constituents as of 29 March
2024, the index covers approximately 85% of the
free float-adjusted market capitalisation in each
country (MSCI World Factsheet, 29 March 2024,
the latest available). The benchmark performance
is presented for illustrative purposes only to show
general trends in the market for the relevant
periods shown. The investment objectives and
strategies in the benchmark may be dierent than
the investment objectives and strategies of NBPE
and may have dierent risk and reward profiles.
A variety of factors may cause this comparison to
be an inaccurate benchmark for any particular
fund and the benchmarks do not necessarily
represent the actual investment strategy of a fund.
It should not be assumed that any correlations to
the benchmark based on historical returns would
persist in the future. Indexes are unmanaged and
are not available for direct investment. Investing
entails risks, including possible loss of principal.
Past performance is no guarantee of future results.
5 Includes full and partial exits only over the last five
years. Returns are presented on a “gross” basis (i.e.
they do not reflect the management fees, carried
interest, transaction costs and other expenses that
may be paid by investors, which may be significant
and may lower returns).
6 Includes full and partial exits over the last five years.
Returns are presented on a “gross” basis (i.e. they do
not reflect the management fees, carried interest,
transaction costs and other expenses that may be
paid by investors, which may be significant and may
lower returns).
7 As of June 30, 2023.
8 As of December 31, 2023.
9 Please note beginning December 31, 2023, NB
Private Markets revised the Aggregate Committed
Capital calculation methodology. As of December
31, 2023 and going forward, Aggregate Committed
Capital represents total commitments to active
vehicles (including commitments in the process
of documentation or finalization) managed by
NB Private Markets. Prior to December 31, 2023,
Aggregate Committed Capital reflected total
committed capital since inception in 1987,
including liquidated vehicles. Using the previous
methodology, NB Private Markets Aggregate
Committed Capital was $123 billion as of December
31, 2023, broken down as follows: Primaries, $41 bn;
Co-Investments, $36 bn; Secondaries, $20 bn;
Private Debt, $16 bn; Capital Solutions, $6 bn; and
Direct Specialty Strategies, $5 bn.
10 Includes Limited Partner Advisory Committee seats
and observer seats for PIPCO and Secondaries since
inception as of December 31, 2023.
11 As of January 31, 2024.
12 For illustrative and discussion purposes only. PRI
grades are based on information reported directly
by PRI signatories, of which investment managers
totaled 3,123 for 2023, 2,791 for 2021, 1,545 for 2020
and 1,247 for 2019. All PRI signatories are eligible
to participate and must complete a questionnaire
to be included. All PRI signatories are eligible to
participate and must complete a questionnaire to
be included. The underlying information submitted
by signatories is not audited by the PRI or any other
party acting on its behalf. Signatories report on their
responsible investment activities by responding to
asset-specific modules in the Reporting Framework.
Each module houses a variety of indicators that
address specific topics of responsible investment.
Signatories’ answers are then assessed and results
are compiled into an Assessment Report. Neuberger
Berman pays a fee to be a member of PRI and the
grades are only available to PRI members. Ratings
referenced do not reflect the experiences of any
Neuberger Berman client and readers should not
view such information as representative of any
particular client’s experience or assume that they
will have a similar investment experience as any
previous or existing client. Awards and ratings are
not indicative of the past or future performance
of any Neuberger Berman product or service.
Moreover, the underlying information has not
been audited by the PRI or any other party acting
on its behalf. While every eort has been made to
produce a fair representation of performance, no
representations or warranties are made as to the
accuracy of the information presented, and no
responsibility or liability can be accepted for damage
caused by use of or reliance on the information
contained within this report. Information about PRI
grades is sourced entirely from PRI and Neuberger
Berman makes no representations, warranties or
opinions based on that information.
13 Based on the average scores of reporting investment
management signatories globally with AUM greater
than $50bn.
14 As of March 31, 2024.
15 Revenue & EBITDA Growth: Past performance
is no guarantee of future results. Fair value as
of 31 December 2023 and the data is subject to
the following adjustments: 1) Excludes public
companies, Marquee Brands and other investments
not valued on multiples of EBITDA. 2) Analysis based
on 65 private companies. 3) The private companies
included in the data represent approximately 84%
of the total direct equity portfolio. 4) The following
exclusions to the data were made: a)EBITDA
growth of one company (approximately 2% of
value) was excluded from the data as the Manager
believed the growth rate was an outlier due to an
extraordinary high percentage change b) EBITDA
growth of one company (less than 1% of value)
was excluded due to the anomalous percentage
change c) three companies (less than 1% of direct
equity fair value) were held less than one year and
excluded from data due to noncomparable periods
of revenue and/or EBITDA prior to private equity
ownership. The Portfolio company operating
metrics are based on the most recently available
(unaudited) financial information for each company
and based on as reported by the lead private equity
sponsor to the Manager as of 19 April 2024. Where
necessary, estimates were used, which include
pro forma adjusted EBITDA and other EBITDA
adjustments, pro forma revenue adjustments, run-
rate adjustments for acquisitions, and annualised
quarterly operating metrics. LTM periods as of
31/12/23 and 30/9/23 and 31/12/22 and 30/9/22.
LTM revenue and LTM EBITDA growth rates are
weighted by fair value.
16 Approximately 98% of the direct investment
portfolio (measured on 31 December 2023 fair
value) is on a no management fee, no carry basis
to underlying third-party GPs. Key Information
Document is available on NBPE’s website.
17 Represents uplift from valuation versus the
valuation three quarters prior to an announced exit.
Includes partial realisations. Returns are presented
on a “gross” basis (i.e. they do not reflect the
management fees, carried interest, transaction costs
and other expenses that may be paid by investors,
which may be significant and will lower returns).
Past performance is not a guarantee of future returns.
18 The FTSE All-Share Index represents the
performance of all eligible companies listed on
the London Stock Exchange’s (LSE) main market,
which pass screening for size and liquidity. The index
captures 98% of the UK’s market capitalization
(FTSE All Share Factsheet, 28 March 2024, the latest
data available). The benchmark performance is
presented for illustrative purposes only to show
general trends in the market for the relevant
periods shown. The investment objectives and
strategies in the benchmark may be dierent than
the investment objectives and strategies of NBPE
and may have dierent risk and reward profiles.
A variety of factors may cause this comparison to
be an inaccurate benchmark for any particular
fund and the benchmarks do not necessarily
represent the actual investment strategy of a fund.
It should not be assumed that any correlations to
the benchmark based on historical returns would
persist in the future. Indexes are unmanaged and
are not available for direct investment. Investing
entails risks, including possible loss of principal.
Past performance is no guarantee of future results.
19 Realisations announced in 2023, not all of which had
closed. $171 million received during 2023, of which
$20 million was received in 2023 from announced
transactions during 2022.
20 Unfunded commitments are adjusted for amounts
the Manager believes are unlikely to be called.
As of 31 December 2023, actual unfunded
commitments are comprised of $49.6 million,
$27.0, and $5.3 million to direct equity investments,
income investments, and fund investments,
respectively. Unfunded amounts are to funds only
and exclude direct investments committed to but
not yet closed.
21 Assume re-investment of dividends at NAV on the
ex-dividend date.
22 Valuation & Leverage: Past performance is no
guarantee of future results. Fair value as of 31
December 2023 and subject to the following
adjustments. 1) Excludes public companies,
Marquee Brands and other investments not valued
on a multiple of EBITDA. 2) Based on 65 private
companies which are valued based on EV/EBITDA
metrics, but excludes two companies due to the
following: a) one company used an industry-specific
metric as a measurement of cash flow b) one
company was valued based on a recent transaction
pricing. 3) The private companies included in the
data represents 74% of direct equity investment
fair value. 4) Companies not valued on multiples
of trailing EBITDA are excluded from valuation
statistics. 5) Leverage statistics exclude companies
with net cash position and leverage data represents
75% of direct equity investment fair value. Portfolio
company operating metrics are based on the most
recently available (unaudited) financial information
for each company and are as reported by the lead
private equity sponsor to the Manager as of 19 April
2024, based on reporting periods as of 31 December
2023 and 30 September 2023. EV and leverage data
is weighted by fair value.
23 Debt Covenant Statistics: Past performance
is no guarantee of future results. Fair value as
of 31 December 2023, subject to the following
adjustments. 1) Excludes public companies.
ENDNOTES
114
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
2) Analysis based only on the top 30 private direct
equity companies and excludes Marquee Brands.
3) The private companies included in the data
represent approximately 69% of the total direct
equity portfolio. 4) Debt covenant analysis does not
consider springing debt covenants which may apply
to certain draw percentages of underlying company
revolvers. Portfolio company debt details are based
on the most recently available (unaudited) financial
information for each company and based on as
reported by the lead private equity sponsor to the
Manager as of 19 April 2024.
Debt Maturity: Past performance is no guarantee
of future results. Based on 31 December 2023 fair
value, with investment fair values weighted by the
company’s debt to total capitalization ratio. Fair
value is also subject to the following adjustments:
1) Excludes public companies. 2) Analysis based only
on the top 30 private direct equity companies and
excludes Marquee Brands. 3) The private companies
included in the data represent approximately 69% of
the total direct equity portfolio. Portfolio company
debt details are based on the most recently available
(unaudited) financial information for each company
and based on as reported by the lead private equity
sponsor to the Manager as of 19 April 2024.
Interest Coverage Ratio: Past performance is
no guarantee of future results. Based on LTM
31 December 2023 and LTM 30 September 2023
and weighted by fair value. Fair value is also subject
to the following adjustments: 1) excludes public
companies 2) analysis is based only on the top
30 private direct equity companies and excludes
Marquee Brands 3) the private companies included
in the data represent approximately 69% of the total
direct equity portfolio. 4) Two companies, totalling
$38 million of value were excluded from the values
due to having no debt or negative EBITDA. 5) Two
companies, totalling $34 million of value were
excluded as they were announced realisations which
were pending closing. Other portfolio company
debt details are based on the most recently available
(unaudited) financial information for each company
and based on as reported by the lead private equity
sponsor to the Manager as of 19 April 2024.
24 Investment strategies’ ESG integration approaches
may evolve over time. Unless explicitly noted,
the ESG integration processes described in this
document apply solely to the Private Equity
Investment Portfolios and Co-investment Platform
(“NB Private Equity”).
25 For illustrative and discussion purposes only.
This material is intended as a broad overview of the
portfolio managers’ style, philosophy and process
and is subject to change without notice. ESG ratings
for equities and fixed income are the Central
Research Analysts’ view of the environmental,
social and governance characteristics of a company
on material factors relative to the peer group.
The summary output of the material factors
evaluated by the Central Research Analysts
are summarized as a proprietary resource available
to the firm. ESG ratings developed for public
securities are not directly applied to private markets.
Subject to Neuberger Berman’s policies and
procedures, including certain information barriers
within Neuberger Berman that are designed to
prevent the misuse by Neuberger Berman and its
personnel of material information regarding issuers
of securities that has not been publicly disseminated.
26 Based on direct investment portfolio fair value
and NBAA analysis as 31 December 2023; analysis
excludes third-party funds (which are past their
investment period but which may call capital
for reserves or follow-ons) and funds that are
not deemed ESG integrated by the Manager. In
aggregate these exclusions represent approximately
1% of fair value. There can be no assurance that
NBPE will achieve comparable results in the future,
that targeted diversification or asset allocations will
be met, or that NBPE will be able to implement its
investment strategy and investment approach or
achieve its investment objective.
27 Based on Neuberger Berman Private Equity Analysis.
28 No potential UN SDG Thematic Alignment reflects
investments made prior to NBPE adopting its
Responsible & Sustainable Investment Policy in 2020.
29 This material is intended as a broad overview of the
portfolio manager’s style, philosophy and investment
process and is subject to change without notice. This
or any other case study discussed in this material does
not represent all past investments. It should not be
assumed that an investment in any case study listed
was or will be profitable. The information supplied
about an investment is intended to show investment
process and not performance.
30 As of December 31, 2023. Among organizations with
over 1,000 employees by Pensions & Investments
Best Places to Work in Money Management survey.
For additional information on the criteria for the
award, please visit The Best Places to Work in Money
Management in 2023 | Pensions & Investments
(pionline.com).
31 Subject to Neuberger Berman’s policies and
procedures, including certain information barriers
within Neuberger Berman that are designed to
prevent the misuse by Neuberger Berman and its
personnel of material information regarding issuers
of securities that has not been publicly disseminated.
ENDNOTES
115
STRATEGIC REPORT NB Private Equity Partners Annual Report 2023GOVERNANCE OTH ERFINANCIALS
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