Neuberger PE co-investment fund to seek Asian deals
Neuberger Berman has closed its second co-investment fund at $1.1 billion, which will invest globally, including in Asia-Pacific.
NB Strategic Co-Investment Partners Fund II (NBCIP II), which invests alongside major private equity firms for buyout and growth finance deals globally, surpassed its $750 million target. It is the follow-on vehicle to NBCIP I, which closed in 2006 at $1.6 billion.
Fund II's Asian investor base comprises less than 5% of the total AUM, but represents an increase in capital from the region compared to Fund I, says a Neuberger Berman spokesman.
The limited partners for Fund II comprise some 25 institutions that include public and corporate pensions, global asset managers, insurance firms, endowments and foundations. The investors are from Asia, Europe, Latin America and North America, with a large proportion having previously invested in Fund I. The fund is not open to retail investors.
Fund II has made nine investments to date totalling around $185 million in Latin America, the US and Europe. Neuberger Berman expects to make about 30 total investments from the vehicle. Asia has not been an investment destination for the fund yet, but it is considered "an important region", says the spokesman.
One of Neuberger Berman's most recent co-investment deals was in the 3i Group-led acquisition of Brazilian eyewear retailer Óticas Carol, with a total deal value of about $55 million. Siguler Guff is the other co-investor in the buyout, which will see the funds acquire 100% of the company from a Brazilian entrepreneur.
Neuberger Berman manages more than $200 billion in AUM across a wide range of products. In the alternatives space, its offerings include hedge funds and a fund of PE funds.
Some large institutions, such as sovereign wealth funds and pensions, have increasingly been making direct co-investments alongside large buyout firms, but doing so is generally limited to the biggest, longest-established and most experienced investors.
Gaining access to co-investments via a dedicated fund enables institutions to participate in big deals, but with a perceived lower risk than if they were an LP of the leading investor in the buyout.
NBCIP II is among the bigger co-investment funds that have been established recently. Lexington Partners is targeting $1.5 billion for its third co-investment vehicle, while New York Life Capital Partners is seeking $800 million for its second fund in the category.
Co-investment funds have grown in importance since the financial crisis, as they provide an important source of capital amid an environment of lower leverage.