William Maltby, who has recently become chairman of NB Private Equity Partners, says even though the investment proposition enables NBPE to gain direct access to private equity, “for most individuals [NBPE’s] profile is not there”.
He adds: “That part explains why the shares are at such a significant discount [to net asset value].”
Mr Maltby said shares at NBPE trade at about a 25 per cent discount to the net asset value.
A high discount is a barometer of weaker demand, while a shrinking discount represents higher demand.
Challenges ahead
Mr Maltby says improving on marketing is necessary to close the discount.
“It is quite a big challenge; we are not going to click our fingers on it, but we are setting up a big programme and working very hard to up our game on the marketing and the investor relations side of things,” he says.
He cites private equity companies HG Capital and 3i Group as companies to learn from.
“In the sector you can see examples where people have got it right. While we are diversified and effectively a collective scheme, you have got some good single managers.”
Mr Maltby was vice-chairman of investment banking at Deutsche Bank, where he worked for more than 25 years.
He was a corporate financier specialising in financial sponsors and leveraged finance. He joined Morgan Grenfell in 1984, which was acquired by Deutsche Bank in 1989.
Prior to that, Mr Maltby was chairman of Mithras Investment Trust.
He says the Mithras shares were too small and illiquid and the trust had a “very stubborn discount that couldn’t be closed”.
This was one of the key reasons prompting his departure.
Pursuing private equity
Mr Maltby worked on a transaction related to the privatisation of British Rail, which led him to pursue private equity fulltime and embark on a corporate finance career.
“I thought private equity was a part-time job at that time, but it later became the biggest part of the corporate finance business at Deutsche Bank.
“I ceased being an employee of Deutsche Bank in 2010 because I wanted to have a more plural life.”
NBPE is backed by private equity manager Neuberger Berman.
NBPE consists of 85 per cent co-investments.
All investment decisions are taken by Neuberger Berman.
Investments
Mr Maltby says the fund is dominated by 75 per cent of US equities because, according to Mr Maltby, that is where the best opportunities have been recently.
NBPE consists of a portfolio of about 100 underlying companies. The investments are diversified by underlying private equity companies.
Mr Maltby explains that because NBPE is based on direct investments, there are minimal fees to be incurred.
“There are a lot of fund-of-funds firms listed. Most of them run on the basis of having commitments to funds and that has two effects: you have to pay the fees and you have to meet the capital commitments.”
Making deals
Mr Maltby says: “Neuberger Berman has a very large equity business and it invests a huge amount of money into the funds of private equity firms.
“If you are a large investor in their funds and you have a major private equity firm, they will give you a little sliver of their deals.”
He says this is normally around about 5 per cent, which will be exempt of fees.
He cites the example of private equity platform KKR.
“Neuberger Berman [may] get a 5 per cent sliver of say a KKR deal, on which you do not pay KKR’s fees. You don’t have its annual management fee, you don’t have the fund fees and you don’t have that carrier.
“Most people can’t access private equity just because the commitments they would have to make to a private equity firm. [A deal like] KKR probably sets a minimum [required capital] of about $10m (£7.7bn) to invest in its funds.”
Mr Maltby adds that the company’s core focus in the immediate term is to increase awareness of the trust.
He says he came to the company when “I was approached by a headhunter at Mithras”, and still did not know NBPE existed.
Therefore, he has stressed that increasing awareness of the trust is a principal part of the company’s five-year plan.
Saloni Sardana is a features writer at FTAdviser and Financial Adviser
