NB Private Equity Partners Limited

Against challenging markets and macroeconomic headwinds, we believe NBPE's performance has been resilient. This has been the case both from a net asset value perspective and with respect to operating performance of most of our underlying portfolio companies. Our private investments, which represent almost 90% of the portfolio, appreciated in value by 4.4% on a constant currency basis, with strong operating performance more than outweighing the drop in valuation multiples, which declined by over two turns of EBITDA over the year. However, this resilient performance was outweighed by a decline in value of our publicly listed holdings and foreign exchange headwinds, which resulted in an aggregate NAV decline of 7.5% on a total return basis in 2022. Since the beginning of 2023, our public investments have started to recover and have increased in total value by over 10% in the first three months of the year. While NAV in 2022 was clearly impacted by significant volatility in public markets and the macroeconomic environment, over the long term, NBPE's NAV growth continues to be strong. We have generated a cumulative total return of 63% and 89% over three and five years, respectively, materially outperforming the MSCI World Index.

At the highest level, the key driver of MVP's performance has been the result of our focus on investing in companies that we believe can benefit from either long-term secular growth or lower secularity in markets in which they operate. This means that many of MVP's portfolio companies share certain characteristics, which we believe make them more resilient. These include some combination of leading market positions, strong free cash flow generation, pricing power, and or recurring or reoccurring revenues. We build MVP's portfolio investment by investment, and the portfolio as a whole has been constructed to perform across a range of economic environments. We believe that MVP's portfolio companies are generally navigating this difficult operating environment well, which resulted in an aggregate 4.4% increase in the value of our private companies during 2022. This reflects strong overall operating performance, both through organic growth and M&A. In 2022, average LTN revenue in EBITDA growth was approximately 14% and 12% respectively. This is a reflection of resilience operating performance of a number of companies, which outweighed those companies that have been more affected by the challenging operating environments. Overall, we believe that the portfolio is well positioned to continue to navigate the current market and deliver value over the long term.

Exits across the private equity industry slowed in 2022, and NBPE was no different. After a record year for realizations in 2021, NBPE had $143 million of announced realizations in 2022, with underlying companies sold or partially sold to a range of buyers, including strategics and other private equity managers. In aggregate, these realizations were at a 2.7 times multiple of cost, which is in line with our five-year average of a 2.4 times multiple of invested capital. From an uplift perspective, a number of these companies were already valued at or near their expected sales value at December 2021, so our uplift figure was 6%, more muted than our five-year average of 37%.

The NV Private Markets platform continues to generate strong co-investment deal flow, with 522 opportunities reviewed in 2022, and we consider new opportunities for NVP on an ongoing basis. However, one of the advantages of NVP's model is that we invest on a deal-by-deal basis and can deliberately control our pace of investment depending on the economic outlook and investment environment. Given the challenging macro environment on our current 106% investment level, we've been highly selective in terms of new investments over the past year. We did complete two new investments in 2022, a $26 million investment into a leading UK wealth manager with what we think is a differentiated business model and a proprietary in-house technology platform, and a $15 million reinvestment into an existing portfolio company that has performed strongly over time.

We believe that NBPE has a strategy that is differentiated from other listed private equity vehicles. We invest directly into companies alongside top-tier private equity managers in their core areas of expertise through equity co-investments. We're able to do this by leveraging the broad private markets platform of the company's manager, Neuberger Burma. We build our portfolio investment by investment rather than through funds. This allows us to actively allocate our capital to sectors and strategies which we believe are most attractive for the current and expected environment. Investing alongside a broad range of managers also allows us to build an appropriately diversified portfolio. As of December 2022, we were invested in 93 co-investments alongside 56 private equity managers, and our top 20 investments made up 51% of our NAV. NBPE's direct co-investment approach also allows us to be capital efficient and prudently manage our balance sheet. We can increase or decrease our investment pacing based upon NBPE's current capital position and the market environment. This allows NBPE to mitigate the over-commitment risk inherent in a fund-based investment strategy, which is particularly important in times of volatility and uncertainty as we are facing today. NBPE is fee efficient. We typically don't pay management fees or carry to the lead private equity managers, and our fees are lower than a typical direct private equity vehicle. This results in NBPE having what we believe is a low all-in fee structure compared to its peer group. Finally, NBPE has a dividend policy of paying out at least 3% of NAV to investors annually. In 2022, we paid investors $44 million in dividends, a 3.3% yield on NAV and a 4.9% yield on our share price as of December of 2022.

We believe that private equity has a number of structural advantages relative to public equities, and that these may be particularly important in a more difficult economic environment. First of all, private equity doesn't have to manage the quarterly earnings targets. This means that companies can be positioned to optimize their prospects for the long term. Depending on the company, in a difficult environment such as today's, this may mean quickly implementing operational efficiencies. Or conversely, it may mean investing in the business to grow market share when others are atrenching. Buyout funds are typically control owners of assets and usually bring operational value and capabilities to their portfolio companies. This means that they should be able to quickly adapt, utilize their sector expertise, and work with management to implement operational improvements in their companies. Finally, a common avenue for growth in private equity-backed companies is through M&A. In a more difficult operating environment, M&A may be even more achievable at reasonable prices, possibly allowing a company to grow market share, enter new geographies or new markets through either multiple smaller acquisitions or larger, more strategic combinations. For all these reasons, we think that the private equity model is well positioned to weather the environment and to continue to create long-term value for portfolio companies.