Neuberger Private Equity Partners Limited (LON:NBPE) is the topic of conversation when Hardman & Co’s Analyst Mark Thomas caught up with DirectorsTalk for an exclusive interview.
Q1: Mark, your recent report on NB Private Equity Partners, it sits behind a disclaimer. Can you just remind us why that’s there?
A1: It’s a very standard disclaimer that many investment companies have and nothing to worry about. In essence, for regulatory reasons, there are some countries like the US where the report should not be read. In the UK, because private equity is not seen as a simple asset class, the report should really be looked at by professional and qualified investors. But as I say, it’s a very standard report and absolutely nothing to worry about.
Q2: Now, your recent piece is called ‘First Half 26 Results, Foot on the Accelerator’, can you just tell us a little bit about that?
A2: What NBPE’s end-June results showed was an acceleration in a number of areas.
Firstly, there was an acceleration in investment companies’ EBITDA growth, which was up 12% year on year against 10% growth that was seen at the end of 2025. Now, in our view, the key driver to long-term value creation is the EBITDA growth of the companies. So, that’s very good.
Realisations are also accelerating and NBPE now expects full year 2026 to be at least 18% of opening NAV against a three-year average of 13.5%. So an acceleration there.
Investment is on the way up with Neuberger, the manager, continuing to accelerate the number of opportunities that it generates on the platform, with 2026 being nearly three times the level that was seen in 2020.
Immediate returns to shareholders are also accelerating with more buybacks and a dividend yield which is now approaching 5%.
NBPE’s exit-ready mature portfolio and multiple market dynamics are very favourable to realisations in the medium term, which in our view may be a trigger to closing the discount.
Q3: Global uncertainties, they would appear to make exits much harder, but you’re expressing considerable confidence in the outlook for them. Why is that?
A3: I would say we’re looking at medium-term realisations are looking to be very strong and there are five key drivers that we’ve identified.
Firstly, NBPE has a mature exit-ready portfolio, so when conditions are good, it is a good stock of companies to sell.
Secondly, industry-wide dry powder is very high, following large fundraisers which were done a few years ago and relatively modest deployment since. Over the next few years, this dry powder will have to be deployed, or it will have to be returned to investor and importantly, the dry powder is concentrated in the larger funds who make natural buyers for NBPE investments.
The third driver is that GPs are seeking liquidity because their investors are demanding it.
Fourth, in our view, AI efficiency gains mean that many more deals can now hit hurdle rate returns. Private equity has had a great record in implementing digitalisation and the effective implementation of technology, including AI, is a core incremental benefit that private equity managers bring to investee companies.
Fifth, the private equity market is very dynamic and new exit options have been created such as continuation funds.
Now, in the short term, there may be noise with weak and strong quarters. We saw weak quarters in the second quarter of 2022 with the Ukraine invasion and in 2024 with all the noise around tariffs, only for there to be very strong fourth quarters in both years.
It won’t be a smooth path, but structurally, there are many reasons to believe in good realisations going forward.
Q4: Now, more realisations generate cash for new investments and immediate shareholder returns. What can you tell me about those?
A4: In our view, the key reason why NBPE is accelerating now, accelerating new investments and capital returns, is because it can see with much greater certainty future cash being generated.
It has, for some years, had a super-conservative approach to having a strong balance sheet, retaining cash, for example, to repay long-term debt in 2022 and 2024 and limiting new investments.
Why? Because it accelerated exits into the very attractive, highly rated sales that it could achieve in 2020 and 2021. So, the outlook in the following years was complicated, both by uncertain times, and also by having a portfolio with relatively few investments that were ready for exit, and which would then generate cash.
Now, the portfolio is mature, and while there is volatility quarter to quarter, there is much more visibility on that cash generation. Some of this can go into accelerated investment, and some of it can go into accelerated immediate returns through buybacks in particular.
So, in June 2026, NBPE allocated a further $120 million to buybacks, doubling the total allocation. And of this, $164 million had been deployed at the time of the results, repurchasing 8.3 million shares at a discount of 28%.
Critically, that added 5.6% to the NAV, so very accretive.
Q5: Finally, can you tell me about the risks?
A5: Sentiment, costs, the cycle potentially higher for longer, and the realisation environment, realisation volatility, the duration of the discount, and potential AI disruption to software businesses are all issues for NeubergerPrivateEquityPartners, as they are across the listed sector.
In our view, they are sentiment issues, and they do not reflect the reality as we see it.
