Australian LPs miss out on Neuberger Berman fund-of-funds

"It's what you hear from Australian investors all the time," says Brock Williams (pictured), who manages the new fund's Asia Pacific allocation. "Theirs is a market which is very fee sensitive, but they're probably missing out by not participating in what we think are very attractive risk-adjusted and absolute returns."

He adds that LPs are taking a short-term fee focus and not thinking about the long-term benefits of private equity. It is a familiar refrain to those who follow the superannuation debate, where the introduction of a low-cost, low-fee default super fund is leading to a reduction in private equity allocations.

Less concern for fees was shown by Japanese banks and insurance firms, however, who represent around 10% of NB Crossroads 2010's LP base. "We've been developing relationships out of Japan for a long time and want to capitalize on them," says Williams.

Only 10% of the fund corpus will be committed to Asia-based GPs, although Neuberger expects to increase its allocation to the region. At present, the firm sees the US as its most compelling opportunity, particularly in senior securities in the special situations arena. These assets offer a "better risk-return trade-off than venturing into the more exotic places" such as China and India, where Williams says the firm is working to find the most effective small and mid-sized managers.

"We'll be focusing mainly on regional and country funds," he says. "In special situations, though, we're looking more pan-regional, because the countries which are most interesting from a distressed perspective are going to depend on how economies go and where the opportunities are."

While NB Crossroads 2010 is sector-agnostic, the fund's manager notes that local GPs are gravitating towards companies the consumer, healthcare and industrial sectors. The vehicle has already made commitments to two Asian funds and a further three are expected during the investment period.

Investors subscribed $10-50 million each to participate in the fund, which has a standard lifespan of 10+1+1. It plans to make investments of $5-50 million in around 12-15 GPs per year in the buyouts, special situations and venture capital fields. Neuberger Berman employs 175 private equity professionals across its four offices, but just two of these - Williams and one other - are based out of the investor's Asian offices in Hong Kong.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Fund-of-funds
• Fundraising
• Europe
• Neuberger Berman
• Fund-of-funds
• Fundraising
• Europe