NB Distressed Debt Investment Fund has published its 2024 annual report, providing an update on realisations, distributions, and plans for the fund’s eventual wind-down. The company reported mixed performance across its share classes during the year, though it says it has entered what it hopes will be the final stage of asset harvesting.
Since inception, the fund has returned over US$132.8m to holders of the ordinary share class (NBDD), or 107% of original capital, and US$333.0m to holders of the extended life class (NBDX), equating to 93% of original capital. The new global class (NBDG) has returned £69.5m, or 63% of original capital.
NAVs fell across all share classes during 2024. NBDD’s NAV per share declined by 6.4% to US$0.7557, NBDX’s by 10.1% to US$0.9271, and NBDG’s by 18.7% to £0.5073, with losses driven primarily by markdowns in containers & packaging and surface transport holdings. The manager highlighted delays in exits and weaker-than-expected valuations as key headwinds.
Two asset realisations took place in each of NBDD and NBDX, and one in NBDG, bringing total exits since inception to 159 across all share classes. Exit A3 – a multi-class holding – was a significant drag, generating losses across the board. The manager continues to target further realisations in the near term and expects to commence the final liquidation of NBDD first, potentially followed by NBDX and NBDG.
Distributions made during 2024 included capital returns of US$0.1242 per share (NBDX) and £0.0537 per share (NBDG), paid in December. The board reiterated its policy of favouring redemptions over share buybacks, noting that resolutions on buybacks had received limited support at the AGM. It also acknowledged opposition to the chairman’s re-election, linked to his extended tenure, but confirmed that over 80% of shareholders had voted in favour of his continuation.
The investment manager, Neuberger Berman, has continued to waive its fees since March 2021, a move the board says helps preserve capital during the wind-down phase. Cash levels are rising as assets are sold, though regulatory and tax considerations are expected to delay the release of some funds until final liquidation.
The fund expects to make a final compulsory redemption of outstanding shares in each class once 90% of total value (NAV plus distributions) has been returned. Remaining funds may then be distributed by the appointed liquidator.
The board will provide updates via market announcements as further realisations occur.
[QD comment MR: These latest results from NB Distressed Debt Investment Fund will offer some reassurance to investors, with continued capital returns and further progress towards winding down. However, the pace remains slow and shareholders may be frustrated by the lengthy tail of realisations and the uncertainty around final redemption timing.
The decision to favour redemptions over buybacks remains logical in the context of a shrinking portfolio and, with the fee waiver, the manager has no incentive to drag this process out any longer than is needed. However, with certain realisations coming in below expectations, this is likely testing shareholders’ patience.
The board’s cautious tone suggests that while the end may be in sight, it is not yet imminent. Investors will be hoping that the coming year finally delivers the clean exit that has long been promised.]
