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NB Private Equity Partners (NBPE)

01/10/2025

Results analysis from Kepler Trust Intelligence

NB Private Equity Partners (NBPE) has released its interim results for the six months to 30/06/2025. The net asset value (NAV) total return was 4% over the period, whilst the share price total return was -7.6%. The private investment portfolio reported revenue and EBITDA growth of 8.8% and 9.8% respectively, representing only a slight moderation of EBITDA growth from the previous financial year. Valuations declined modestly, and now stand at a weighted average of 15.4x on an EV/ EBITDA basis. Since 2021, the managers note that the portfolio's overall valuation multiple has contracted significantly.

Performance across NBPE's 10 largest private investments, which represent 31% of the portfolio, has been particularly strong, reporting weighted average LTM (last twelve month) revenue growth of 13.7% and LTM EBITDA growth of 15.9%. Given the maturity of the portfolio (average age of portfolio 5.6 years), the managers report that they believe the portfolio has a number of high quality 'exit ready' companies which should drive liquidity and performance as markets improve.

NBPE continues to maintain a strong balance sheet, supported by its co-investment model and minimal unfunded commitments. The investment level was 101%, at the lower end of the target 100-110% range. This financial flexibility allows NBPE to pursue new investments, maintain dividend payments, and fund an increasing level of share buybacks without compromising balance sheet stability. Since June the board have increased the level of buybacks, repurchasing approximately $5.8m worth. This buyback activity has been in addition to the $0.94 per share, or approximately $43m, returned to shareholders this year by way of dividends.

Kepler View

In our view, it is a strong positive for prospects that NBPE's largest investments are growing fastest. Optimism on prospects for a recovery in the private equity exit environment were running high at the start of 2025, which were blown off course by President Trump unleashing his barrage of tariffs in April. We are hopeful that the last quarter of 2025, and the run into the year-end might see momentum build once again. With the largest companies in the portfolio driving performance, NBPE is primed for just such an eventuality, with the companies most able to 'move the needle' in NAV terms performing well and potentially 'exit-ready'.

The discount to NAV of 30% remains wide in absolute terms, but is broadly in-line with peers. Yet in our view, NBPE offers a unique proposition that is especially well placed to navigate a continued slowdown in private equity deal activity. On the other hand, the portfolio looks increasingly well placed to benefit should exit conditions improve. It does not pay two layers of fees on the vast majority of co-investments, making it cost-effective relative to many peers. As such, for investors who can take a long-term view, the discount to NAV could represent an opportune entry point.

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