NB Private Equity Partners Limited, a private equity fund-of-funds, is planning to sell off its interest in eight large-cap buyout fund investments for around $101.8 million, with details about the sales portfolio to be launched later. The funds will be used to launch a capital return policy and for strategic portfolio repositioning.
NB Private Equity Partners Limited (“NBPE” or “the Company”), a closed-end private equity fund of funds investment company, today announces a strategic asset sale, an ongoing capital return policy and a strategic repositioning of its portfolio.
“Our strategic asset sale, capital return policy and strategic portfolio repositioning announced today prove the high quality of NBPE’s investment portfolio and add to the strength of our capital position. These actions are a continuation of our previous steps such as repurchasing 5.8% of the ordinary shares pursuant to our liquidity enhancement programme and the dual listing of NBPE’s shares on the LSE and Euronext exchanges, all of which are consistent with increasing shareholder value,” said Talmai Morgan, Independent Chairman. NBPE also announces an updated unaudited net asset value (“NAV”) of $9.63 per share as of 30 September 2010, which represents an increase of 1.2% compared to the unaudited NAV per Share of $9.52 at 31 August 2010. In addition, NBPE announces that an investor conference call will be held on Friday, 15 October 2010 in order to discuss these recent developments.
Strategic Asset Sale
NBPE has reached agreements in principle to sell its interest in eight large-cap buyout fund investments for an aggregate 5.1% discount to NBPE’s carrying value of $108.6 million as of the last reporting date (31 August 2010) (together, the “Strategic Asset Sale”). These fund interests represent approximately 18% of NBPE’s private equity portfolio value as of 30 September 2010. This Strategic Asset Sale, which is expected to close over the next six to twelve weeks, will also release NBPE from approximately $24.1 million of related unfunded commitments as of 31 August 2010. Including fees and expenses, the Strategic Asset Sale will be dilutive to NAV per share by approximately $0.13, or 1.4%, as of 31 August 2010. Additional details regarding the transactions and the sales portfolio will be provided at a later date. NBPE intends to use the proceeds from the Strategic Asset Sale to launch an ongoing capital return policy and for strategic portfolio repositioning, each of which is described below.
NBPE believes the Strategic Asset Sale demonstrates the high quality of the Company’s portfolio and its marketability in the secondary private equity market, which generally continues to value NBPE’s assets at a significant premium compared to the public market for NBPE’s class A ordinary shares (the “Shares”). NBPE believes that, when combined with accretive Share repurchases, this transaction should enable the Company to enhance the NAV per Share over time.
Capital Return Policy
NBPE is implementing a new policy (the “Capital Return Policy”) of ongoing returns of capital to holders of its Shares. These ongoing returns of capital will be at the discretion of the Company’s Directors. The Capital Return Policy will be initiated immediately using a portion of the proceeds from the Strategic Asset Sale. Beginning with the half-year period commencing 1 January 2011, the Company intends to return 50% of the realized net increase in NAV attributable to the Shares for the preceding six-month period to Shareholders by way of Share
repurchases, dividends or such other means as the Directors consider most efficient. Future returns of capital under the Capital Return Policy will be announced by NBPE at the time of reporting its financial results for each respective six-month period.
The Capital Return Policy has been introduced as a long-term capital management feature of the Company and will operate on an ongoing basis until further notice. The policy has been made possible by virtue of NBPE’s strong financial position.
The Directors will have discretion as to the manner in which capital will be returned to Shareholders. However, given the prevailing discount level, NBPE currently expects to use Share repurchases as the most appropriate means of returning capital to Shareholders, including by increasing the amount of cash allocated to the Company’s liquidity enhancement programme. This will have the additional benefit of enhancing the Company’s NAV per Share. The Company’s Liquidity Enhancement Contract with The Royal Bank of Scotland N.V. has been amended accordingly.
Shares repurchased by NBPE will either be cancelled or held in treasury (provided that NBPE shall not at any time hold Shares in treasury representing more than 10% of its issued share capital).
NBPE will make daily notifications as necessary in relation to the repurchase and/or sale of Shares. Strategic Portfolio Repositioning
In addition to implementing its Capital Return Policy, NBPE expects to use the proceeds from the Strategic Asset Sale to strategically reposition its investment portfolio to have a higher allocation to direct and yield-oriented investments. NBPE expects the portfolio repositioning to reduce the duration of its portfolio, increase transparency for Shareholders, reduce the overall expense ratio and continue its policy of maintaining a conservative over-commitment level.
Monthly NAV Update
As of 30 September 2010, NBPE’s unaudited NAV per Share (as adjusted for the Strategic Asset Sale) was $9.63, which represents an increase of 1.2% compared to the unaudited NAV per Share of $9.52 at 31 August 2010. In addition to the Strategic Asset Sale, NBPE notes that on 6 October 2010, Dresser, Inc. (“Dresser”), one of the Company’s largest private co-investments and underlying holdings, announced that it has agreed to be acquired by General Electric Co. for approximately $3 billion. The transaction is subject to customary closing conditions including U.S. and European regulatory approval and is expected to close promptly after receiving regulatory approval.
Prior to the announcement, Dresser was the second largest company in NBPE’s portfolio based on fair value. Based on the expected sale value, NBPE increased its carrying value in Dresser by over 66% for the purposes of the 30 September 2010 unaudited NAV. In aggregate, the change in value of Dresser was accretive to NAV by approximately $0.15 per Share.
Taking all these events into account, during September, NBPE’s portfolio value increased due to $7.7 million of unrealized gains related to the announced acquisition of Dresser, $2.3 million of unrealized gains on public equity securities, $2.2 million of unrealized gains on credit-related fund investments and $1.4 million of positive foreign exchange adjustments. These gains in value were offset by $6.8 million of net write-downs (including fees and expenses) to reflect the Strategic Asset Sale.
The value of NBPE’s private equity portfolio as presented in the September 2010 monthly report was based on the following information:
* 22% of the private equity fair value was held in credit-related fund investments that were re-valued as of 30 September 2010
* 18% of the private equity fair value was held in certain large-cap buyout fund investments that were valued at the amount of expected sale proceeds as of 30 September 2010
* 4% of the private equity fair value was held in publicly traded securities that were re-valued as of 30 September 2010
* 3% of the private equity fair value was held in Dresser and was valued conservatively based on the amount of expected sale proceeds as of 30 September 2010
* 37% of the private equity fair value was held in private equity fund investments using valuation information through 30 June 2010
* 16% of the private equity fair value was held in private co-investments using valuation information through 30 June 2010 or marked at cost for new co-investments completed during the third quarter
NBPE expects to issue its interim management report for the period ending 30 September 2010 in November. The report will include unaudited financial information prepared in accordance with accounting principles generally accepted in the United States. NBPE is required to consider, and will consider, all known material information in preparing such report, including information that may become known subsequent to the issuance of this monthly NAV update. Accordingly, amounts included in the interim management report may differ from this monthly NAV update.
A breakdown of NBPE’s NAV can be obtained in the September 2010 monthly report,
which is published on the Company’s website at
www.nbprivateequitypartners.com/default.aspx. The monthly report should be read
in conjunction with this announcement.
Investor Conference Call
In order to discuss the Company’s recent developments, NBPE will host an
investor conference call at 3:30pm CEST / 2:30pm BST / 9:30am EDT on Friday, 15
October 2010. The investor call can be accessed by dialing +1-866-919-8155
(U.S.) or +1-706-634-9866 (International) with the access code 18473920. Please
ask for “the NBPE investor call.”
A playback facility will be available two hours after the conference call. The
playback facility can be accessed for two weeks following the call by dialing
+1-800-642-1687 (U.S.) or +1-706-645-9291 (International). The code to access
the recording is 18473920. A webcast of the investor call will also be available
on the Investor Presentations page in the Investor Relations section of NBPE’s
website within several days after the call.
An investor presentation will be available prior to the call on the home page of the Company’s website at www.nbprivateequitypartners.com/default.aspx.
For further information, please contact:
NBPE Investor Relations +1 214 647 9593
Financial Dynamics +44 20 7269 7114
About NB Private Equity Partners Limited
NBPE is a closed-end private equity fund of funds investment company with Class
A ordinary shares admitted to trading on Euronext Amsterdam and the Specialist
Fund Market of the London Stock Exchange. NBPE has ZDP shares admitted to
trading on the Specialist Fund Market of the London Stock Exchange and the Daily
Official List of the Channel Islands Stock Exchange. NBPE holds a diversified
portfolio of private equity fund investments and direct co-investments selected
by the NB Alternatives group of Neuberger Berman, diversified across private
equity asset class, geography, industry, vintage year and sponsor. Established
in 1939, Neuberger Berman is one of the world’s largest private, independent
employee-controlled asset management companies, managing approximately $169
billion in assets as of 30 June 2010.
This press release appears as a matter of record only and does not constitute an offer to sell or a solicitation of an offer to purchase any security.
NBPE is established as a closed-end investment company domiciled in Guernsey.
NBPE has received the necessary consent of the Guernsey Financial Services
Commission and the States of Guernsey Policy Council. NBPE is registered with
the Dutch Authority for the Financial Markets as a collective investment scheme
which may offer participations in The Netherlands pursuant to article 2:66 of
the Financial Markets Supervision Act (Wet op het financial toezicht). All
investments are subject to risk. Past performance is no guarantee of future
returns. The value of investments may fluctuate. Results achieved in the past
are no guarantee of future results. This document is not intended to constitute
legal, tax or accounting advice or investment recommendations. Prospective
investors are advised to seek expert legal, financial, tax and other
professional advice before making any investment decision. Statements contained
in this document that are not historical facts are based on current
expectations, estimates, projections, opinions and beliefs of NBPE’s investment
manager. Such statements involve known and unknown risks, uncertainties and
other factors, and undue reliance should not be placed thereon. Additionally,
this document contains “forward-looking statements.” Actual events or results or
the actual performance of NBPE may differ materially from those reflected or
contemplated in such targets or forward-looking statements.
The Royal Bank of Scotland N.V. (“RBS”) is acting for NBPE and no one else in
connection with the repurchase and sale out of treasury of the Shares pursuant
to the Liquidity Enhancement Contract and will not be responsible to anyone
other than NBPE for providing the protections afforded to clients of RBS or for
providing advice in relation to such repurchases or sales, or to the matters referred to in this announcement.