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Neuberger Berman

Neuberger Berman

Globally, Neuberger Berman has a 35-year track record managing private equity investments, during which we have achieved a strong track record by actively managing a portfolio that is diversified not only across different industries and regions but also enterprise values, lead sponsors, and vintage. With a track record of more than 120 fully realised direct equity co-investments, we believe our process of co-investing is a winning formula.

Our scale is one of several key advantages, with more than US$110 billion of private market assets under management. Our relationships with more than 600 private equity funds also enables us to be highly selective in sourcing and selecting co-investment partners for what we believe are the best deal opportunities available.

For the first time, we are offering our private equity strategy in a semi-liquid format to Australian investors through the Neuberger Berman Global Private Equity Access Fund (AUD), a feeder fund into one of our offshore private equity master funds.

To hear about what else makes our private equity strategy a standout from the competition, click the video below or read the edited transcript below. The video and accompanying transcript provide factual information about the fund, its strategy and the Neuberger Berman private equity platform. It is not financial product advice and investors should speak to their financial advisor before making any decision relating to the fund.



Edited transcript below

Hi, my name is Gabriel Ng and I'm a managing director in Neuberger Berman's private equity team. Today I'm here to talk about Neuberger Berman's Global Private Equity Access Fund (AUD).

Neuberger Berman is a global asset manager with over 80 years of investing experience. The firm has approximately US$427 billion of assets under management across three main asset classes: public equities, fixed income and alternatives. We are 100% independent and employee-owned, with an extensive global presence and a highly stable senior team with a 96% retention rate. Within private markets, Neuberger Berman has over US$110 billion of assets under management with investment experience spanning more than 35 years.

On the primary side of the business, we have committed capital to private equity funds globally, investing in multiple strategies, including small mid-cap, large-cap, growth equity, venture capital and special situations. This important primary capital we provide to our GP partners helps us to form strategic partnerships with these leading PE sponsors on co-investments, as well as secondary transactions.

We also have a private credit business, as well as other direct specialty strategies. As you can see, we're focused on providing GP-centric solutions to our partners, thereby strengthening our relationships and role within the broader private equity ecosystem.

To execute the various private markets strategies, we have invested in a global team of more than 300 professionals. Approximately half of us focus on investments and the other half perform various supporting functions.

Putting together our experience in creating investment solutions in private equity as well as in investments, we have brought together the Neuberger Berman Global Private Equity Access Fund (AUD). This is an Australian unit trust that seeks to provide attractive long-term capital appreciation by providing exposure to an actively managed portfolios of private equity assets.

Importantly, the fund aims to address traditional challenges faced by individuals like illiquidity, management of capital calls, subscription process and investment minimums. Firstly, the fund has a low minimum investment requirement, making it more accessible compared to traditional PE funds, which require a significantly higher quantum of capital commitments. 

Secondly, the fund also offers monthly subscriptions and redemptions. 

Thirdly, the commitment is fully funded upfront and invested in the portfolio, eliminating the uncertainty of capital calls over a long period of time. And finally, we have a simple subscription process for incoming investors.

Next, I would like to elaborate on the underlying strategies and portfolio construction. In terms of portfolio construction, the fund will provide investors exposure to private equity assets predominantly through two strategies.

The first is direct investments into companies, co-investing alongside leading private equity sponsors. Co-investments are expected to provide long-term capital appreciation with fee efficiency as the vast majority of these opportunities are sourced with no additional economics paid. Co-investments are expected to comprise approximately 55 to 70% of the capital deployed.

The second strategy is secondary investments investing in both GP-led transactions, as well as purchasing LP interests in private equity funds from other limited partners. Secondaries are expected to be complementary by providing early cash flow benefits, as well as a greater velocity of distributions due to the more seasoned nature of the portfolios we acquire and, at the same time, also achieving capital appreciation. Secondaries are expected to comprise between 15 to 30% of the underlying portfolio.

The remaining 15% of the underlying portfolio will be invested into short-term liquid fixed-income securities, mainly U.S. treasury bills, which allow us to manage redemptions and fund's liquidity while earning a compelling yield. 

Talking about diversification, the underlying portfolio will predominantly comprise buyout assets but targets diversification across lead sponsors, industry, geography, vintage, and also the size of companies. The underlying portfolio will mainly be invested in North American markets, as well as Europe, with some exposure to other parts of the world, including Asia Pacific.

Taking the roads less travelled

Next, I'd like to do a deep dive into the first strategy that underpins the fund. On co-investments, you'll see that on the pie chart, two-thirds of our capital has historically been invested into harder-to-access and more differentiated deal flow in the form of co-underwrites and mid-life transactions.

For co-underwrites, this typically involves a transaction where the equity commitment is simply too large for the private equity sponsor's fund to fully absorb, either because of size or diversification limits. Therefore, our capital is critical to the sponsor putting together a fully financed offer and also the ultimate completion of the deal. In situations like this, we, together with a small handful of other co-underwriters, will typically spend several weeks working alongside the lead sponsor through diligence with greater access to information and also a better understanding of the deal dynamics, ultimately forming a richer due diligence experience for us.

If we do prevail in these transactions, we are typically committing a larger equity ticket to an asset that we know very well and have formed a strong conviction on.

In mid-life situations, we are typically investing in a portfolio company, which a PE sponsor has already owned for several years. Oftentimes, we are providing a bespoke capital solution to help the company either make a transformative bolt-on acquisition, buy out older shareholders, or even provide a partial exit to the sponsor. 

These mid-life transactions are often negotiated directly between the lead private equity sponsor and us and, therefore, are less competitive.

Mid-life co-investments are typically shorter in duration, as the sponsors have already owned the asset for a few years and therefore, is likely keen to derive an exit within two to three years from the time that we invest. We sometimes realise a multiple arbitrage in such situations as we're buying in with a minority discount, but a sponsor might be exiting with a control premium.

Last but not least, we still invest a third of our capital in more traditional syndicated co-investment deals. These deals represent attractive opportunities, but we're certainly more focused on the differentiated and harder-to-access deal flow in the form of co-underwrites and mid-life co-investments.

We cherry-pick the best opportunities

Taking a deep dive into what really makes the co-investment strategy work, a big part of that is the sourcing channels that we have. The ability to leverage our relationships and investment in more than 600 active private equity funds helps us to maintain a robust deal sourcing engine. Having a broad funnel of deals enables us to be highly selective and to cherry-pick the best opportunities to include in the portfolio.

As you can see in the bar chart, our deal flow has significantly increased in recent years, and in the past three years alone, we have evaluated a total of more than 1,300 co-investment opportunities, but we only committed to about 13% of them, highlighting our selectivity and the high underwriting standards that we set.

As a result of our robust differentiated sourcing and high selectivity, we have generated strong co-investment returns for our investors over the last 13 years. In total, we have invested over 17 billion of capital into 368 direct co-investment deals. 

Moving to the second key strategy of the fund on secondaries and doing a deeper dive here, we employ a very targeted fundamentals-based approach to secondary investing. We are not a secondary buyer, which typically uses leverage to acquire large private equity portfolios. Rather, we tend to take a more rifle-shot approach and like to buy single-line LP interests in a more exclusive or limited competition setup. 

As you can see, approximately 76% of closed transactions are single-fund acquisitions and approximately 96% of transactions are exclusive or limited in nature. We focus predominantly on the buyout asset class where we're able to underwrite performance and exit with a higher degree of certainty.

In addition to acquiring LP interests at attractive pricing, we're also able to structure and lead complex GP-led transactions in the form of continuation funds, strip sales or team spinouts. Our position in the private equity ecosystem as a long-term partner with primary pockets of capital makes us a preferred secondary buyer, which many PE sponsors want to work with.

I hope this gives you a good overview of the fund, the underlying strategies and why Neuberger Berman has the capabilities and the platform to deliver the returns for our investors.

If you have any further questions on this offering, please do not hesitate to contact my colleagues, Matt and Gavin, who are based locally in Australia. Thank you for your time. 

Unique characteristics mean unique opportunity

At a time when investors are cautious about the return outlook for traditional public markets, private equity offers important long-term advantages, including strong historical returns and diversification benefits. Find out more.

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Neuberger Berman Global Private Equity Access Fund (AUD)
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