Neuberger Berman Vehicle Snubs U.S. Funds

Neuberger Berman’s European listed vehicle NB Private Equity Partners Limited anticipates reducing its pace of U.S. fund commitments in the months ahead to focus on building up its exposure to Europe and the rest of the world.

Peter Von Lehe, managing director of Neuberger Berman and a member of NBPE’s Investment Committee, said the aim of the vehicle has been to commit capital steadily across investment cycles. Along with European and international funds, sectors of most interest to NBPE include secondaries, distressed funds and small-cap and mid-cap buyout funds. The vehicle also has a small appetite for venture capital funds.

NBPE, which is listed on both Euronext Amsterdam and the specialist fund market of the London Stock Exchange, is managed by the 50-person private equity investment team of NB Alternatives based in Dallas. As of Jan. 3, the vehicle’s total private equity exposure stood at $675.9 million. Of this amount, $520.7 million is the estimated fair value and $155.3 million is the amount of unfunded commitments. North America-based funds account for about three-quarters (78 percent) of these assets; Europe, 18 percent; and the rest of the world, 4 percent.

NB Private Equity Partners, previously known as Lehman Brothers Private Equity Partners, is a rarity among listed vehicles in Europe in that it has cash to commit to new funds. Its cash and undrawn committed credit facility stands at $245.5 million. This exceeds unfunded private equity commitments by approximately $90.2 million. The pool of capital was boosted at the end of November last year thanks to $50 million raised through the successful placing of zero dividend preference shares on the London Stock Exchange.

By sector, as of Jan. 31, large-cap buyout funds accounted for about 30 percent of the listed fund-of-funds’s portfolio; large-cap buyout co-investments, 3 percent; mid-cap buyout funds, 21 percent; mid-cap buyout co-investments, 9 percent; special situations funds, 26 percent; special situations co-investments, 1 percent; growth and venture capital funds, 8 percent; and secondary purchases, 2 percent. In terms of industry focus, energy and utilities accounted for about 18 percent of assets; financial services, 12 percent; consumer and retail, 11 percent; industrials, 10 percent; technology and IT 8, percent; health care 7, percent; communications and media 7, percent; business services 5, percent; transportation, 4 percent; and the remaining 18 percent are undisclosed investments.

Funds backed by NBPE in the United States include American Capital Equity II, Apollo Investment Fund V, Clayton, Dubilier & Rice Fund VII, J.C. Flowers II, KKR 2006 Fund, KKR Millennium Fund, NB Crossroads Fund XVIII and Thomas H. Lee Equity Fund VI. In Europe, they include Clessidra Capital Partners, Doughty Hanson & Co IV, Investitori Associati III and Terra Firma Capital Partners III.

Established in 1939, NBPE’s parent, Neuberger Berman, managed approximately $158 billion in assets as of 30 June 2009. The NB Alternatives group of Neuberger Berman manages more than $13 billion of client assets and includes private equity funds of funds, secondary and co-investment businesses, a funds of hedge funds business, the Alternative Investment Solutions Group and Capital Analytics.