UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-23315
NB Crossroads Private Markets Fund V Holdings LP
(Exact name of registrant as specified in charter)
325 North Saint Paul Street
49th Floor
Dallas, TX 75201
(Address of principal executive offices) (Zip code)
James Bowden, Chief Executive Officer and President
Neuberger Berman Investment Advisers LLC
53 State Street
Boston, MA 02109
(Name and address of agent for service)
Registrant’s telephone number, including area code: (212) 476-8800
Date of fiscal year end: March 31
Date of reporting period: September 30, 2019
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
NB Crossroads Private Markets Fund V Holdings LP
Financial Statements
(Unaudited)
For the six months ended September 30, 2019
NB Crossroads Private Markets Fund V Holdings LP
For the six months ended September 30, 2019
| NBCrossroads Private Markets Fund V Holdings LP |
| Statementof Assets, Liabilities and Partners’ Capital – Net Assets |
| Asof September 30, 2019 (Unaudited) |
| Assets | | | | |
| | | | | |
| Investments, at fair value (cost $93,649,076) | | $ | 99,818,307 | |
| Cash and cash equivalents | | | 6,902,507 | |
| Deferred financing costs | | | 252,940 | |
| Prepaid insurance | | | 51,368 | |
| Interest receivable | | | 5,424 | |
| | | | | |
| Total Assets | | $ | 107,030,546 | |
| | | | | |
| Liabilities | | | | |
| | | | | |
| Loan payable | | $ | 8,000,000 | |
| Advisory fees payable | | | 925,526 | |
| Due to portfolio funds | | | 682,180 | |
| Due to affiliates | | | 90,445 | |
| Professional fees payable | | | 75,454 | |
| Legal fees payable | | | 44,498 | |
| Other payables | | | 18,112 | |
| | | | | |
| Total Liabilities | | $ | 9,836,215 | |
| | | | | |
| Commitments and contingencies (Note 5) | | | | |
| | | | | |
| Partners’ Capital - Net Assets | | $ | 97,194,331 | |
| | | | | |
| Units of Master Fund Interests outstanding (unlimited units authorized) | | | 107,247.53 | |
| Net Asset Value Per Unit | | $ | 906.26 | |
The accompanying notes are an integral part of these financial statements.
| NB Crossroads Private Markets Fund V Holdings LP |
| Schedule of Investments |
| September 30, 2019 (Unaudited) |
| Investments / Co-investments(A),(B),(D) | | Acquisition Type | | Acquisition Dates(C) | | Geographic Region(E) | | Cost | | | Fair Value | |
| Large-cap Buyout (18.27%) | | | | | | | | | | | | | | |
| Advent International GPE IX Limited Partnership | | Primary | | - | | North America | | $ | 73,681 | | | $ | - | |
| EQT VIII Co-Investment (H) SCSp | | Co-Investment | | 09/2019 | | North America | | | 1,200,463 | | | | 1,200,000 | |
| H&F Unite Partners, L.P. | | Co-Investment | | 05/2019 | | North America | | | 1,300,841 | | | | 1,304,328 | |
| Hellman & Friedman Capital Partners IX, L.P. | | Primary | | - | | North America | | | 41,416 | | | | - | |
| KKR Ascend Co-Invest L.P. | | Co-Investment | | 05/2019 | | North America | | | 2,600,000 | | | | 2,600,000 | |
| KKR Banff Co-Investment L.P. | | Co-Investment | | 10/2018 | | North America | | | 2,250,000 | | | | 2,475,000 | |
| KKR European Fund V (USD) SCSp | | Primary | | - | | Europe | | | 90,015 | | | | - | |
| KKR Precise Co-Invest L.P. | | Co-Investment | | 05/2019 | | Europe | | | 4,500,000 | | | | 4,865,770 | |
| KKR Starlight Co-Invest II L.P. | | Co-Investment | | 12/2018 | | North America | | | 2,250,000 | | | | 2,102,285 | |
| NB HUB Aggregator LP | | Co-Investment | | 11/2018 | | North America | | | 1,516,060 | | | | 1,654,197 | |
| TPG Healthcare Partners, L.P. | | Primary | | - | | North America | | | 10,399 | | | | - | |
| TPG Partners VIII, L.P. | | Primary | | - | | North America | | | 43,630 | | | | - | |
| Vertex Aggregator LP | | Co-Investment | | 08/2018 | | North America | | | 1,200,307 | | | | 1,559,897 | |
| | | | | | | | | | 17,076,812 | | | | 17,761,477 | |
| Small and Mid-cap Buyout (62.26%) | | | | | | | | | | | | | | |
| Advent Global Technology Limited Partnership | | Primary | | - | | North America | | | 75,999 | | | | - | |
| AEA Investors Fund VII, L.P. | | Primary | | - | | North America | | | 51,375 | | | | - | |
| Aquiline Financial Services Fund IV L.P. | | Primary | | - | | North America | | | - | | | | - | |
| Aquiline Relation Co-Invest L.P. | | Co-Investment | | 07/2019 | | North America | | | 1,414,707 | | | | 1,400,000 | |
| ARL Holdings, LLC(F) | | Co-Investment | | 04/2019 | | North America | | | 1,400,000 | | | | 1,400,000 | |
| Arsenal Capital Partners Fund V LP | | Primary | | 07/2019 | | North America | | | 3,226,291 | | | | 3,148,526 | |
| Arsenal IO Co-Invest 1 LP | | Co-Investment | | 07/2019 | | North America | | | 2,100,000 | | | | 2,100,000 | |
| BRI Investments LLC(F) | | Co-Investment | | 08/2019 | | North America | | | 2,800,000 | | | | 2,800,000 | |
| BU Adhesives Co-Investment III SCSP | | Co-Investment | | 01/2019 | | Europe | | | 1,289,998 | | | | 1,233,492 | |
| Buzzard Midstream Infrastructure Co-Invest Pooling, L.P | | Co-Investment | | 03/2019-09/2019 | | North America | | | 3,558,107 | | | | 3,547,753 | |
| Carlyle Prime Coinvestment, L.P. | | Co-Investment | | - | | North America | | | - | | | | - | |
| Elm Bidco, L.P. | | Co-Investment | | 02/2019 | | North America | | | 2,300,000 | | | | 2,300,000 | |
| Greenbriar Coinvestment BDP, L.P. | | Co-Investment | | 12/2018 | | North America | | | 1,324,938 | | | | 1,652,020 | |
| Holley Parent Holdings, LLC(F) | | Co-Investment | | 10/2018 | | North America | | | 1,900,000 | | | | 1,862,000 | |
| Marmor Co-Investment, L.P. | | Secondary | | 09/2019 | | Europe | | | 5,788,180 | | | | 5,726,537 | |
| NB Mafalda S.a.r.l | | Co-Investment | | 07/2019 | | Europe | | | 4,535,505 | | | | 4,381,411 | |
| Oak Hill Capital Partners V, L.P. | | Primary | | - | | North America | | | 206,157 | | | | - | |
| Oakley Capital IV-B SCSP | | Primary | | 05/2019-09/2019 | | Europe | | | 502,971 | | | | 363,765 | |
| Plaskolite PPC Investor LLC | | Co-Investment | | 12/2018 | | North America | | | 1,400,000 | | | | 1,301,438 | |
| Quadria Capital Fund II, L.P. | | Primary | | 06/2019-09/2019 | | Asia | | | 212,387 | | | | 69,096 | |
| RCP Artemis Co-Invest, L.P. | | Co-Investment | | 07/2019 | | North America | | | 3,100,000 | | | | 3,100,000 | |
| Rockbridge Portfolio Fund I L.P. | | Secondary | | 12/2018-09/2019 | | North America | | | 1,762,192 | | | | 2,472,777 | |
| SS Acquisitions, Inc.(F) | | Co-Investment | | 09/2019 | | North America | | | 1,000,000 | | | | 1,000,000 | |
| Summit Partners Growth Equity Fund X, L.P. | | Primary | | - | | North America | | | - | | | | - | |
| The Veritas Capital Fund VII, L.P. | | Primary | | - | | North America | | | - | | | | - | |
| THL Equity Fund VIII Investors (Agiliti), L.P. | | Co-Investment | | 01/2019 | | North America | | | 4,311,763 | | | | 6,467,387 | |
| THL Equity Fund VIII Investors (Automate), L.P. | | Co-Investment | | 07/2019 | | Europe | | | 3,891,892 | | | | 3,938,623 | |
| Thomas H. Lee Equity Fund VI (2019), L.P. | | Secondary | | 06/2019-07/2019 | | North America | | | 5,335,629 | | | | 6,247,575 | |
| Wind Point Partners CV1, L.P. | | Secondary | | 09/2018-09/2019 | | North America | | | 2,474,871 | | | | 4,000,000 | |
| | | | | | | | | | 55,962,962 | | | | 60,512,400 | |
| Special Situations (13.02%) | | | | | | | | | | | | | | |
| American Industrial Partners Capital Fund VII, L.P. | | Primary | | - | | North America | | | 41,602 | | | | - | |
| Amulet Capital OHPE Co-Invest, L.P. | | Co-Investment | | 03/2019 | | North America | | | 2,307,807 | | | | 2,290,208 | |
| Centerbridge Special Credit Partners, L.P. | | Secondary | | 02/2019-08/2019 | | North America | | | 937,003 | | | | 1,057,492 | |
| Cerberus AIR Partners, L.P. | | Co-Investment | | 02/2019 | | Europe | | | 2,992,424 | | | | 2,857,406 | |
| Dragon Co-Investment Partners, L.P. | | Co-Investment | | 09/2019 | | North America | | | 1,076,923 | | | | 1,076,923 | |
| East Private Investments, LLC(F) | | Co-Investment | | 07/2019 | | North America | | | 2,800,000 | | | | 2,800,000 | |
| Verscend Intermediate Holding Corp.(F) | | Co-Investment | | 08/2018 | | North America | | | 2,503,008 | | | | 2,570,508 | |
| | | | | | | | | | 12,658,767 | | | | 12,652,537 | |
The accompanying notes are an integral part of these financial statements.
| NB Crossroads Private Markets Fund V Holdings LP |
| Schedule of Investments |
| September 30, 2019 (Unaudited) |
| Investments / Co-investments(A),(B),(D) | | Acquisition Type | | Acquisition Dates(C) | | Geographic Region(E) | | Cost | | | Fair Value | |
| Venture Capital (9.15%) | | | | | | | | | | | | | | |
| 3L Capital Fund I, LP | | Primary | | 04/2019-08/2019 | | North America | | | 3,877,999 | | | | 5,084,331 | |
| GGV Capital VII L.P. | | Primary | | 01/2019-07/2019 | | North America | | | 725,200 | | | | 659,248 | |
| GGV Capital VII Plus L.P. | | Primary | | 05/2019-07/2019 | | North America | | | 210,700 | | | | 211,248 | |
| GGV Discovery Fund II, L.P. | | Primary | | 01/2019-09/2019 | | North America | | | 533,000 | | | | 527,121 | |
| Level Equity Growth Partners IV, L.P. | | Primary | | 11/2018-08/2019 | | North America | | | 2,155,730 | | | | 1,982,300 | |
| Lightspeed China Partners IV, L.P. | | Primary | | - | | Asia | | | - | | | | - | |
| Lightspeed China Partners Select I, L.P. | | Primary | | 04/2019-07/2019 | | Asia | | | 400,000 | | | | 427,645 | |
| TA XIII-A, L.P. | | Primary | | - | | North America | | | 47,906 | | | | - | |
| | | | | | | | | | 7,950,535 | | | | 8,891,893 | |
| | | | | | | | | | | | | | | |
| Total Investments (cost $93,649,076) (102.70%) | | | | | | | | | | | | | 99,818,307 | |
| Other Assets & Liabilities (Net) (-2.70%) | | | | | | | | | | | | | (2,623,976 | ) |
| Partners' Capital - Net Assets (100.00%) | | | | | | | | | | | | $ | 97,194,331 | |
| (A) | Non-income producing securities, which are restricted as to public resale and illiquid. |
| (B) | Total cost of illiquid and restricted securities at September 30, 2019 aggregated $93,649,076. Total fair value of illiquid and restricted securities at |
| | September 30, 2019 was $99,818,307 or 102.70% of net assets. |
| (C) | Acquisition Dates cover from original investment date to the last acquisition date and is required disclosure for restricted securities only. |
| (D) | All percentages are calculated as fair value divided by the Master Fund's Partners' Capital - Net Assets. |
| (E) | Geographic Region is based on where a Portfolio Fund is headquartered and may be different from where the Portfolio Fund invests. |
| (F) | The fair value of the investment was determined using a significant unobservable input. |
The accompanying notes are an integral part of these financial statements.
NB Crossroads Private Markets Fund V Holdings LP
Statement of Operations
For the six months ended September 30, 2019 (Unaudited)
| Investment Income: | | | | |
| | | | | |
| Dividend income | | $ | 150,496 | |
| Other income | | | 76,560 | |
| Interest income | | | 20,994 | |
| | | | | |
| Total Investment Income | | | 248,050 | |
| | | | | |
| Operating Expenses: | | | | |
| | | | | |
| Advisory fees | | | 1,604,866 | |
| Legal fees | | | 301,006 | |
| Interest expense | | | 222,581 | |
| Independent Directors' fees | | | 105,000 | |
| Professional fees | | | 70,288 | |
| Administration service fees | | | 63,500 | |
| Financing costs | | | 57,216 | |
| Insurance expense | | | 28,118 | |
| Other fees | | | 35,618 | |
| | | | | |
| Total Operating Expenses | | | 2,488,193 | |
| | | | | |
| Net Investment Loss | | | (2,240,143 | ) |
| | | | | |
| Net Realized and Change in Unrealized Gain on Investments (Note 2) | | | | |
| | | | | |
| Net realized gain on investments | | | 195,544 | |
| Net change in unrealized appreciation on investments | | | 4,123,279 | |
| | | | | |
| Net Realized and Change in Unrealized Gain on Investments | | | 4,318,823 | |
| | | | | |
| Net increase in Partners’ Capital – Net Assets Resulting from Operations | | $ | 2,078,680 | |
The accompanying notes are an integral part of these financial statements.
NB Crossroads Private Markets Fund V Holdings LP
Statement of Changes in Partners’ Capital – Net Assets
For the Period May 18, 2018 (Commencement of Operations) through March 31, 2019 (Audited)
| | | Partners'
Capital | | | Special Limited
Partner | | | Total | |
| Partners' committed capital | | $ | 312,226,696 | | | $ | 3,153,805 | | | $ | 315,380,501 | |
| | | | | | | | | | | | | |
| Partners' capital at May 18, 2018 | | $ | - | | | $ | - | | | $ | - | |
| Capital contributions | | | 42,150,604 | | | | 425,764 | | | | 42,576,368 | |
| Offering costs | | | (266,571 | ) | | | (2,693 | ) | | | (269,264 | ) |
| Net investment loss | | | (2,974,208 | ) | | | (30,043 | ) | | | (3,004,251 | ) |
| Net change in unrealized appreciation on investments | | | 2,025,492 | | | | 20,460 | | | | 2,045,952 | |
| Partners' capital at March 31, 2019 | | $ | 40,935,317 | | | $ | 413,488 | | | $ | 41,348,805 | |
For the six months ended September 30, 2019 (Unaudited)
| | | Partners'
Capital | | | Special Limited
Partner | | | Total | |
| Partners' committed capital | | $ | 334,676,696 | | | $ | 3,380,573 | | | $ | 338,057,269 | |
| | | | | | | | | | | | | |
| Partners' capital at April 1, 2019 | | $ | 40,935,317 | | | $ | 413,488 | | | $ | 41,348,805 | |
| Capital contributions | | | 53,232,254 | | | | 537,700 | | | | 53,769,954 | |
| Capital distributions | | | (3,108 | ) | | | - | | | | (3,108 | ) |
| Net investment loss | | | (2,217,741 | ) | | | (22,402 | ) | | | (2,240,143 | ) |
| Net realized gain on investments | | | 193,589 | | | | 1,955 | | | | 195,544 | |
| Net change in unrealized appreciation on investments | | | 4,082,046 | | | | 41,233 | | | | 4,123,279 | |
| Partners' capital at September 30, 2019 | | $ | 96,222,357 | | | $ | 971,974 | | | $ | 97,194,331 | |
The accompanying notes are an integral part of these financial statements.
NB Crossroads Private Markets Fund V Holdings LP
Statement of Cash Flows
For the six months ended September 30, 2019 (Unaudited)
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | |
| | | | | |
| Net Change in Partners’ Capital – Net Assets resulting from operations | | $ | 2,078,680 | |
| Adjustments to reconcile net change in Partners’ Capital – Net Assets resulting from operations to net cash used in operating activities: | | | | |
| Purchases of investments | | | (55,107,836 | ) |
| Proceeds received from investments | | | 778,916 | |
| Net realized gain on investments | | | (195,544 | ) |
| Net change in unrealized (appreciation) depreciation on investments | | | (4,123,279 | ) |
| Net change in accretion of PIK dividend | | | (150,496 | ) |
| Changes in assets and liabilities related to operations | | | | |
| (Increase) decrease in deferred financing costs | | | 57,216 | |
| (Increase) decrease in prepaid insurance | | | (30,818 | ) |
| (Increase) decrease in interest receivable | | | 1,628 | |
| Increase (decrease) in advisory fees payable | | | 892,247 | |
| Increase (decrease) in due to affiliates | | | 37,676 | |
| Increase (decrease) in professional fees payable | | | 14,905 | |
| Increase (decrease) in legal fees payable | | | 7,694 | |
| Increase (decrease) in financing costs payable | | | (87,420 | ) |
| Increase (decrease) in other payables | | | 17,205 | |
| Increase (decrease) in administration service fees payable | | | (31,750 | ) |
| | | | | |
| Net cash provided by (used in) operating activities | | | (55,840,976 | ) |
| | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | |
| | | | | |
| Borrowings from line of credit | | | 38,800,000 | |
| Payments to line of credit | | | (30,800,000 | ) |
| Contributions from Partners | | | 53,769,954 | |
| Distributions to Partners | | | (3,108 | ) |
| | | | | |
| Net cash provided by (used in) financing activities | | | 61,766,846 | |
| | | | | |
| Net change in cash and cash equivalents | | | 5,925,870 | |
| Cash and cash equivalents at beginning of period | | | 976,637 | |
| | | | | |
| Cash and cash equivalents at end of period | | $ | 6,902,507 | |
| | | | | |
| Noncash activities | | | | |
| Distributions totaling $3,108 were made to the TE Fund and TE Advisory Fund | | | | |
| for taxes paid and/or accrued on behalf of the TE Fund and TE Advisory Fund. | | | | |
The accompanying notes are an integral part of these financial statements.
NB Crossroads Private Markets Fund V Holdings LP
Financial Highlights
| | | For the six months
ended September 30,
2019 (Unaudited) | | | Period from
May 18, 2018
(Commencement of
Operations) through
March 31, 2019 | |
| Per Unit Operating Performance (1) | | | | | | | | |
| | | | | | | | | |
| NET ASSET VALUE, BEGINNING OF PERIOD | | $ | 876.74 | | | $ | 1,000.00 | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | |
| Net investment loss | | | (26.93 | ) | | | (185.04 | ) |
| Net realized and unrealized gain on investments | | | 56.48 | | | | 61.78 | |
| Net increase in net assets resulting from operations | | | 29.55 | | | | (123.26 | ) |
| | | | | | | | | |
| DISTRIBUTIONS TO PARTNERS: | | | | | | | | |
| Net change in Partners’ Capital - Net Assets due to distributions to Partners | | | (0.03 | ) | | | - | |
| NET ASSET VALUE, END OF PERIOD | | $ | 906.26 | | | $ | 876.74 | |
| TOTAL NET ASSET VALUE RETURN (1), (2), (3) | | | 3.37 | % | | | (2.91 | )%(4) |
| | | | | | | | | |
| RATIOS AND SUPPLEMENTAL DATA: | | | | | | | | |
| Partners’ Capital - Net Assets, end of period in thousands (000’s) | | $ | 97,194 | | | $ | 41,349 | |
| Ratios to Average Partners' Capital - Net Assets: (5), (6) | | | | | | | | |
| Expenses | | | 7.56 | % | | | 27.10 | % |
| Net investment loss | | | (6.76 | )% | | | (25.30 | )% |
| Portfolio Turnover Rate (7) | | | 1.32 | % | | | 0.00 | % |
| | | | | | | | | |
| INTERNAL RATES OF RETURN: | | | | | | | | |
| Internal Rate of Return (8) | | | 1.98 | % | | | (9.80 | )% |
| (1) | | Selected data for a unit of Master Fund Interest outstanding throughout each period. |
| (2) | | Total investment return, based on per unit net asset value, reflects the changes in net asset value based on the effects of organizational costs, the performance of the Master Fund during the period and assumes distributions, if any, were reinvested. The Master Fund's units are not traded in any market; therefore, the market value total investment |
| | | return is not calculated. |
| (3) | | Total investment return is not annualized. |
| (4) | | Total return and the ratios to average Partners' Capital - Net Assets is calculated for the Master Fund taken as a whole. Total return is calculated using a commitment-weighted rate of return methodology based on the timing of closings during the period May 18, 2018 (Commencement of Operations) through March 31, 2019. As a result, an individual Partner's return may vary from these returns and ratios based on the timing of their capital transactions. |
| (5) | | Ratios do not reflect the Master Fund's proportional share of the net investment income (loss) and expenses, including any performance-based fees, of the Portfolio Funds. |
| (6) | | For the six months ended September 30, 2019, the ratios are annualized. For the period May 18, 2018 (Commencement of Operations) through March 31, 2019, the expense and net investment loss ratios are based on a very limited operating period and, as such, may not be meaningful. |
| (7) | | Proceeds received from investments are included in the portfolio turnover rate. |
| (8) | | The Internal Rate of Return is computed based on the actual dates of the cash inflows and outflows since inception and the ending net assets at the end of the period as of each measurement date. For the period May 18, 2018 (Commencement of Operations) through March 31, 2019, the Internal Rate of Return is based on a limited operating period and, as such, may not be meaningful. |
The accompanying notes are an integral part of these financial statements.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
1. Organization
NB Crossroads Private Markets Fund V Holdings LP (the “Master Fund”) is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Master Fund was organized as a Delaware limited partnership on March 30, 2017. The Master Fund commenced operations on May 18, 2018 (the “Initial Closing”). The term of the Master Fund will continue until December 31, 2028, the end of the year following the tenth anniversary of the Initial Closing, subject to two one-year extensions which may be approved by the Board of Directors of the Master Fund (the “Board” or the “Board of Directors”). Thereafter, the term of the Master Fund may be extended by consent of a majority-in-interest of its Partners as defined in the Master Fund’s limited partnership agreement (the “LP Agreement”).
The Master Fund’s investment objective is to provide attractive long-term returns. The Master Fund seeks to achieve its objective by investing in a diversified global portfolio of high quality third-party private equity funds (“Portfolio Funds”) including secondary investments in underlying Portfolio Funds acquired from investors in such Portfolio Funds (each, a “Secondary Investment”), and by co-investing directly in portfolio companies alongside Portfolio Funds and other private equity firms (each, a “Co-Investment”). Neither the Master Fund nor the Registered Investment Adviser (as defined below) guarantees any level of return or risk on investments and there can be no assurance that the Master Fund will achieve its investment objective. The Portfolio Funds are not registered as investment companies under the Investment Company Act.
NB Crossroads Private Markets Fund V (TI) LP (the “TI Fund”), NB Crossroads Private Markets Fund V (TI) Advisory LP (the “TI Advisory Fund”), NB Crossroads Private Markets Fund V (TE) LP (the “TE Fund”) and NB Crossroads Private Markets Fund V (TE) Advisory LP (the “TE Advisory Fund” and together with the TI Fund, TI Advisory Fund and TE Fund, the “Feeder Funds”) each pursue their investment objectives by investing substantially all of their assets in the Master Fund. Each Feeder Fund is a Delaware limited partnership that is registered under the Investment Company Act as a non-diversified, closed-end management investment company. The TE Fund and the TE Advisory Fund invest indirectly in the Master Fund through NB Crossroads Private Markets Fund V (Offshore), Client LP (the “Offshore Client Fund”) and NB Crossroads Private Markets Fund V (Offshore), Advisory LP (the “Offshore Advisory Fund”), each a Cayman Islands exempted partnership. The percentage of the TE Fund and TE Advisory Fund’s partners’ capital owned by the Offshore Client Fund and Offshore Advisory Fund is 100% and 100% respectively. The financial position and results of operations of the Offshore Client Fund and Offshore Advisory Fund have been consolidated within the TE Fund’s and TE Advisory Fund’s consolidated financial statements, respectively. The Offshore Client Fund, Offshore Advisory Fund and the Feeder Funds have the same investment objective and substantially the same investment policies as the Master Fund (except that the Offshore Client Fund, Offshore Advisory Fund and the Feeder Funds pursue their investment objectives by investing in the Master Fund).
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
The Board has overall responsibility to manage and supervise the operations of the Master Fund. The Board exercises the same powers, authority and responsibilities on behalf of the Master Fund as are customarily exercised by directors of a typical investment company registered under the Investment Company Act. The Board has engaged Neuberger Berman Investment Advisers LLC (“NBIA” or “Registered Investment Adviser”) and NB Alternatives Advisers LLC (“NBAA” or “Sub-Adviser”) to provide investment advice regarding the selection of the Master Fund’s investments and to manage the day-to-day operations of the Master Fund.
The Master Fund operates as a vehicle for the investment of substantially all of the assets of the Feeder Funds as partners of the Master Fund. As of September 30, 2019, the TI Fund’s, TI Advisory Fund’s, TE Fund’s and TE Advisory Fund’s ownership of the Master Fund’s Partners’ contributed capital was 57.51%, 4.23%, 29.89% and 7.37%, respectively, with a NB affiliate’s (“Special Limited Partner”) (who is also a Partner of the Master Fund) percentage ownership of the Master Fund’s Partners’ contributed capital being 1%.
2. Significant Accounting Policies
The Master Fund meets the definition of an investment company and follows the accounting and reporting guidance as issued through Accounting Standards Codification (“ASC”) 946,Financial Services – Investment Companies. The following is a summary of significant accounting policies followed by the Master Fund in the preparation of its financial statements.
A. Basis of Accounting
The Master Fund’s policy is to prepare its financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Consequently, income and the related assets are recognized when earned, and expenses and the related liabilities are recognized when incurred. The books and records of the Master Fund are maintained in U.S. dollars.
B. Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and the differences could be material.
C. Valuation of Investments
The Master Fund computes its Net Asset Value (“NAV”) as of the last business day of each fiscal quarter and at such other times as deemed appropriate by the Registered Investment Adviser and the Sub-Adviser in accordance with valuation principles set forth below, or may be determined from time to time, pursuant to the valuation procedures (the “Procedures”) established by the Board.
The Board has approved the Procedures pursuant to which the Master Fund values its interests in the Portfolio Funds and other investments. The Board has delegated to the Sub-Adviser general responsibility for determining the value of the assets held by the Master Fund. The value of the Master Fund’s interests is based on information reasonably available at the time the valuation is made and the Sub-Adviser believes to be reliable.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
It is expected that most of the Portfolio Funds in which the Master Fund invests will meet the criteria set forth under the Financial Accounting Standards Board (“FASB”) ASC Topic 820,Fair Value Measurement (“ASC 820”) permitting the use of the practical expedient to determine the fair value of the Portfolio Fund investments. ASC 820 provides that, in valuing alternative investments that do not have quoted market prices but calculate NAV per share or equivalent, an investor may determine fair value by using the NAV reported to the investor by the underlying investment. To the extent ASC 820 is applicable to a Portfolio Fund, the Sub-Adviser generally will value the Master Fund’s investment in the Portfolio Fund based primarily upon the value reported to the Master Fund by the Portfolio Fund or the lead investor of a direct co-investment as of each quarter-end, determined by the Portfolio Fund in accordance with its own valuation policies.
FASB ASC 820-10,“Fair Value Measurements” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). FASB ASC 820-10-35-40 to 54 provides three levels of the fair value hierarchy as follows:
| Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities that the Master Fund has the ability to access; |
| | |
| Level 2 | Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data; |
| | |
| Level 3 | Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Master Fund’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available. |
Most Portfolio Funds are structured as closed-end, commitment-based private investment funds to which the Master Fund commits a specified amount of capital upon inception of the Portfolio Fund (i.e., committed capital) which is then drawn down over a specified period of the Portfolio Fund's life. Such Portfolio Funds generally do not provide redemption options for investors and, subsequent to final closing, do not permit subscriptions by new or existing investors. Accordingly, the Master Fund generally holds interests in Portfolio Funds for which there is no active market, although, in some situations, a transaction may occur in the "secondary market" where an investor purchases a limited partner’s existing interest and remaining commitment.
Assumptions used by the Sub-Adviser due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Master Fund's results of operations and financial condition.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
The following table presents the investments carried on the Statement of Assets, Liabilities and Partners’ Capital - Net Assets by level within the valuation hierarchy as of September 30, 2019.
| | | Level 1 | | | Level 2 | | | Level 3 | | | Net Asset Value | | | Total | |
| Assets: | | | | | | | | | | | | | | | | | | | | |
| Large-cap Buyout | | $ | - | | | $ | - | | | $ | - | | | $ | 17,761,477 | | | $ | 17,761,477 | |
| Small and Mid-cap Buyout | | | - | | | | - | | | | 7,062,000 | | | | 53,450,400 | | | | 60,512,400 | |
| Special Situations | | | - | | | | - | | | | 5,370,508 | | | | 7,282,029 | | | | 12,652,537 | |
| Venture | | | - | | | | - | | | | - | | | | 8,891,893 | | | | 8,891,893 | |
| Total | | $ | - | | | $ | - | | | $ | 12,432,508 | | | $ | 87,385,799 | | | $ | 99,818,307 | |
Significant Unobservable Inputs
As of September 30, 2019, the Master Fund had investments valued at $99,818,307. The fair value of investments valued at $87,385,799 in the Master Fund's Schedule of Investments have been valued at the unadjusted NAV reported by the managers of the investments.
The classification of an investment within Level 3 is based upon the significance of the unobservable inputs to the overall fair value measurement. The following table summarizes the valuation methodologies and inputs used for investments categorized in Level 3 as of September 30, 2019.
| | | | | | | | | Unobservable Inputs |
| Investments | | | Fair Value
09/30/2019 | | | Valuation
Methodologies | | Variable | | Value/Range | | Weighted
Average1 |
| | | | | | | | | | | | | |
| Small and Mid-cap Buyout | | $ | 1,862,000 | | | Third Party Valuation | | LTM EBITDA | | 8.7x | | N/A |
| | | | | | | | | | | | | |
| Small and Mid-cap Buyout | | | 5,200,000 | | | Recent Transactional Value | | N/A | | N/A | | N/A |
| | | | | | | | | | | | | |
| Special Situations | | | 2,570,508 | | | Market Approach | | LTM EBITDA | | 13.8x | | N/A |
| | | | | | | | | | | | | |
| Special Situations | | | 2,800,000 | | | Recent Transactional Value | | N/A | | N/A | | N/A |
| | | | | | | | | | | | | |
| Total | | $ | 12,432,508 | | | | | | | | | |
1Inputs weighted based on fair value of investments in range.
During the period ended September 30, 2019, purchases of and sales from Level 3 investments were as follows:
| Purchases | | | Sales | |
| $ | 8,000,000 | | | $ | - | |
During the period ended September 30, 2019 unrealized depreciation and realized gains from Level 3 investments were $38,000 and $0, respectively.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
The Master Fund recognizes transfers into and out of the levels indicated above at the end of the reporting period. There were no transfers into or out of Level 3 during the period ended September 30, 2019.
The estimated remaining life of the Master Fund’s Portfolio Funds as of September 30, 2019 is one to ten years, with the possibility of extensions by each of the Portfolio Funds.
D. Cash and Cash Equivalents
Cash and cash equivalents consist primarily of cash and short term investments which are readily convertible into cash and have an original maturity of three months or less. UMB Bank N.A. serves as the Master Fund’s custodian.
Cash and cash equivalents on the Statements of Assets, Liabilities and Partners’ Capital – Net Assets can include deposits in money market accounts, which are classified as Level 1 assets. As of September 30, 2019, the Master Fund held $6,902,507, in an overnight sweep that is deposited into a money market account.
E. Investment Gains and Losses
The Master Fund records distributions of cash or in-kind securities from the Portfolio Funds based on the information from distribution notices when distributions are received. The Master Fund recognizes within the Statement of Operations its share of realized gains or (losses), the Master Fund's change in net unrealized appreciation/(depreciation) and the Master Fund’s share of net investment income or (loss) based upon information received regarding distributions from managers of the Portfolio Funds. The Master Fund may also recognize realized losses based upon information received from the Portfolio Fund managers for write-offs taken in the underlying portfolio. Changes in unrealized appreciation/(depreciation) on investments within the Statement of Operations includes the Master Fund’s share of interest and dividends, realized (but undistributed) and unrealized gains and losses on security transactions, and expenses of each Portfolio Fund.
The Portfolio Funds may make in-kind distributions to the Master Fund and, particularly in the event of a dissolution of a Portfolio Fund, such distributions may contain securities that are not marketable. While the general policy of the Master Fund will be to liquidate such investment and distribute proceeds to Partners, under certain circumstances when deemed appropriate by the Board, a Partner may receive in-kind distributions from the Master Fund.
F. Income Taxes
The Master Fund is treated as a partnership for U.S. federal income tax reporting. Tax basis income and losses are passed through to the individual partners and, accordingly, there is no provision for U.S. federal of state income taxes reflected in these financial statements. The Master Fund has a tax year end of December 31.
Differences arise in the computation of Partners’ capital for financial reporting in accordance with GAAP and Partners’ capital for U.S. federal and state income tax reporting. These differences are primarily due to the fact that unrealized gains and losses are allocated for financial reporting purposes and are not allocated for U.S. federal and state income tax reporting purposes.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
The cost of the Portfolio Funds for federal income tax purposes is based on amounts reported to the Master Fund on Schedule K-1 from the Portfolio Funds. As of September 30, 2019, the Master Fund had not received information to determine the tax cost of the investments. Based on the amounts reported to the Master Fund on Schedule K-1 as of December 31, 2018, and after adjustment for purchases and sales between December 31, 2018 and September 30, 2019, the estimated cost of the investments at September 30, 2019, for federal income tax purposes aggregated $93,040,481. The net unrealized appreciation for federal income tax purposes was estimated to be $6,777,826. The net unrealized appreciation consisted of gross unrealized appreciation and gross unrealized depreciation of $8,647,484 and $1,869,658, respectively.
The Master Fund files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Master Fund is subject to examination by U.S. federal, state, local and foreign jurisdictions, where applicable. As of December 31, 2018 the tax years that remain subject to examination by the major tax jurisdictions under the statue of limitations is from the year 2018 forward (with limited expectations). FASB ASC 740-10,Income Taxes requires the Sub-Adviser to determine whether a tax position of the Master Fund is more likely than not to be sustained upon examination by taxing authorities, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Sub-Adviser has reviewed the Master Fund’s tax positions for the current tax period and has concluded that no provision for taxes is required in the Master Fund’s financial statements for the six months ended September 30, 2019. The Master Fund recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in the Statement of Operations. During the six months ended September 30, 2019, the Master Fund did not incur any interest or penalties.
G. Restrictions on Transfers
Interests of the Master Fund (“Interests”) are generally not transferable. No Partner may assign, sell, transfer, pledge, hypothecate or otherwise dispose of any of its Interests without the prior written consent of the Board which may be granted or withheld in the Board’s sole discretion, and in compliance with applicable securities and tax laws.
H. Fees of the Portfolio Funds
Each Portfolio Fund will charge its investors (including the Master Fund) expenses, including asset-based management fees and performance-based fees, which are referred to as an allocation of profits. In addition to the Master Fund level expenses shown on the Master Fund’s Statement of Operations, Partners of the Master Fund will indirectly bear the fees and expenses charged by the Portfolio Funds. These fees are reflected in the valuations of the Portfolio Funds and are not reflected in the ratios to average net assets in the Master Fund’s Financial Highlights.
I. Master Fund Expenses
The Master Fund bears all expenses incurred in the course of business on an accrual basis, including, but not limited to, the following: Advisory Fees (as defined herein); investment related expenses; legal fees; administration; auditing; tax preparation fees; custodial fees; registration expenses; Independent Directors’ fees (as defined herein); and expenses of meetings of the Board.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
J. Foreign Currency Translation
The Master Fund has foreign investments which require the Master Fund to translate these investments into U.S. dollars. For foreign investments for which the functional currency is not the U.S. dollar, the fair values of the investments are translated into the U.S. dollar equivalent using period end exchange rates. The resulting translation adjustments are recorded as unrealized appreciation or depreciation on investments.
Contributed capital to and distributions received from these foreign Portfolio Funds are translated into the U.S. dollar equivalent using exchange rates on the date of the transaction.
Conversion gains and losses resulting from changes in foreign exchange rates during the reporting period and gains and losses realized upon settlement of foreign currency transactions are reported in the Statement of Operations. The Master Fund does not isolate the portion of the results of operations arising as a result of changes in foreign exchange rates on investment transactions from the fluctuations arising from changes in the fair value of these investments.
3. Advisory Fee, Administration Service Fee and Related Party Transactions
The Registered Investment Adviser provides investment advisory services to the Master Fund and incurs research, travel and other expenses related to the selection and monitoring of Portfolio Funds. Further, the Registered Investment Adviser provides certain management and administrative services to the Feeder Funds, including providing office space and other support services, maintaining files and records, and preparing and filing various regulatory materials. In consideration for such services, the Master Fund pays the Registered Investment Adviser an investment advisory fee (the "Advisory Fee") quarterly in arrears based on an annual rate of 0.85% following the Master Fund’s Commencement of Operations through the end of year eight and then 0.30% for the remaining life of the Master Fund, in each case based on the Partners’ total capital commitments. For the six months ended September 30, 2019, the Master Fund incurred Advisory Fees totaling $1,604,866.
Pursuant to an Administrative and Accounting Services Agreement, the Master Fund retains UMB Fund Services, Inc. (the “Administrator”), a subsidiary of UMB Financial Corporation, to provide administration, accounting, tax preparation and investor services to the Master Fund. In consideration for these services, the Master Fund pays the Administrator a tiered fee between 0.01% and 0.02%, based on the first day of each calendar quarter’s net assets, subject to a minimum quarterly fee. For the six months ended September 30, 2019, the Master Fund incurred administration service fees totaling $63,500.
The Board consists of six directors, each of whom is not an “interested person” of the Master Fund as defined by Section 2(a)(19) of the Investment Company Act (the “Independent Directors”). Currently, the Independent Directors are each paid an annual retainer of $175,000 for serving on the boards of the funds in the fund complex. Compensation to the Board is paid and expensed by the Master Fund on a quarterly basis. The Independent Directors are also reimbursed for out of pocket expenses in connection with providing their services to the Master Fund. For the six months ended September 30, 2019, the Master Fund incurred $105,000 in Independent Directors’ fees.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
4. Capital Commitments from Partners
At September 30, 2019, capital commitments from Partners totaled $338,057,269. Capital contributions received by the Master Fund with regard to satisfying Partner commitments totaled $96,346,322, which represents approximately 28.5% of committed capital at September 30, 2019.
Capital contributions will be credited to Partners’ capital accounts and units will be issued when paid. Capital contributions will be determined based on a percentage of commitments. During the six months ended September 30, 2019, the Master Fund issued 68,085.60 units.
The net profits or net losses of the Master Fund are allocated to Partners in a manner that takes into account the amount of cash that would be distributed based upon a hypothetical liquidation, such that allocations are based on Partners’ percentage interests, as defined in the Master Fund's LP Agreement.
Distributions shall be made of available cash (net of reserves that the Board deems reasonable) or other net investment proceeds to Partners at such times and in such amounts as determined by the Board of Directors in its sole discretion and in accordance with Partners’ respective percentage interests, as defined in the LP Agreement.
5. Capital Commitments of the Master Fund to Investments
As of September 30, 2019, the Master Fund had total capital commitments of $279,376,988 to the investments with remaining unfunded commitments to the investments totaling $186,371,573 as listed below:
| Assets: | | Unfunded
Commitment | |
| Large-cap Buyout | | $ | 34,300,000 | |
| Small and Mid-cap Buyout | | | 105,565,900 | |
| Special Situations | | | 16,355,141 | |
| Venture | | | 30,150,532 | |
| Total | | $ | 186,371,573 | |
6. Description of the Investments
Due to the nature of the Portfolio Funds, the Master Fund cannot liquidate its positions in the Portfolio Funds except through distributions from the Portfolio Funds, which are made at the discretion of the Portfolio Funds or sponsor of the Co-Investment. The Master Fund has no right to demand repayment of its investment in the Portfolio Funds or Co-Investments.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
The following underlying investments represents 5% or more of Partners’ Capital – Net Assets of the Master Fund.
THL Equity Fund VIII Investors (Agiliti), L.P. represents 6.65% of Partners’ Capital – Net Assets of the Master Fund as of September 30, 2019. The fund is a medical equipment management and services company.
Thomas H. Lee Equity Fund VI (2019), L.P. represents 6.43% of Partners’ Capital – Net Assets of the Master Fund as of September 30, 2019. The objective of Thomas H. Lee Equity Fund VI (2019), L.P. is to provide investors gains from equity appreciation by making follow-on investments.
Marmor Co-Investment, L.P. represents 5.89% of Partners’ Capital – Net Assets of the Master Fund as of September 30, 2019. The fund invests in a hotel chain.
3L Capital Fund I, LP represents 5.23% of Partners’ Capital – Net Assets of the Master Fund as of September 30, 2019. The objective of 3L Capital Fund I, L.P. is to realize long-term capital appreciation from venture capital and growth equity investments.
KKR Precise Co-Invest, L.P. represents 5.01% of Partners’ Capital – Net Assets of the Master Fund as of September 30, 2019. The fund invests in a leading provider of business application software.
7. Line of Credit
The Master Fund entered into a revolving line of credit agreement (the “Credit Agreement”) with Bank OZK, dated December 19, 2018, under which the Master Fund can borrow an aggregate principal amount of $25,000,000 for the temporary financing of investments and payment of expenses under the specified terms. The line of credit is secured by the Master Fund’s unfunded Partners’ capital commitments. The Credit Agreement has a maturity date of December 17, 2021.
As of September 30, 2019, the Master Fund owed $8,000,000 in principal to the bank. Interest is charged on the outstanding principal amount at the rate per annum as set forth in the Credit Agreement. Interest is due and payable as set forth in the Credit Agreement, and is included in interest expense in the Statement of Operations. During the six months ended September 30, 2019, the Master Fund has drawn $38,800,000 from the line of credit, as such the Master Fund incurred $222,581 of interest expense. In relation to entering the Credit Agreement, the Master Fund incurred origination fees and other legal costs (“Financing Costs”). These Financing Costs will be amortized over the term of the loan. For the six months ended September 30, 2019, the Master Fund expensed $57,216 of Financing Costs as shown in the Statement of Operations.
8. Indemnifications
In the normal course of business, the Master Fund enters into contracts that provide general indemnifications. The Master Fund’s maximum exposure under these agreements is dependent on future claims that may be made against the Master Fund, and therefore cannot be established; however, based on the Registered Investment Adviser’s experience, the risk of loss from such claims is considered remote.
| NB Crossroads Private Markets Fund V Holdings LP |
| Notes to the Financial Statements |
| September 30, 2019 (Unaudited) |
Many of the Portfolio Funds’ partnership agreements contain provisions that allow them to recycle or recall distributions made to the Master Fund. Accordingly, the unfunded commitments disclosed under Note 5 reflect both amounts undrawn to satisfy commitments and distributions that are recallable, as applicable.
9. Concentrations of Market, Credit, Liquidity, Industry, Currency and Capital Call Risk
Due to the inherent uncertainty of valuations, estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the difference could be material. The Master Fund’s investments are subject, directly or indirectly, to various risk factors including market, credit, industry, currency and capital call risk. Certain investments are made internationally, which may subject the investments to additional risks resulting from political or economic conditions in such countries or regions and the possible imposition of adverse governmental laws or currency exchange restrictions affecting such countries or regions. Market risk represents the potential loss in value of financial instruments caused by movements in market variables, such as interest and foreign exchange rates and equity prices. The Master Fund may have a concentration of investments, as permitted by its registration statement, in a particular industry or sector. Investment performance of the sector may have a significant impact on the performance of the Master Fund. The Master Fund's investments are also subject to the risk associated with investing in private equity securities. The investments in private equity securities are illiquid, can be subject to various restrictions on resale, and there can be no assurance that the Master Fund will be able to realize the value of such investments in a timely manner if at all.
The Master Fund believes that its liquidity and capital resources are adequate to satisfy its operational needs as well as the continuation of its investment program.
If the Master Fund defaults on its commitment or fails to satisfy capital calls, it will be subject to significant penalties, including the complete forfeiture of the Master Fund’s investment in the Portfolio Fund. This may impair the ability of the Master Fund to pursue its investment program, force the Master Fund to borrow or otherwise impair the value of the Master Fund’s investments (including the complete devaluation of the Master Fund). In addition, defaults by Partners on their commitments to the Master Fund, may cause the Master Fund to, in turn, default on its commitment to a Portfolio Fund. In this case, the Master Fund, and especially the non-defaulting Partners, will bear the penalties of such default as outlined above. While the Registered Investment Adviser has taken steps to mitigate this risk, there is no guarantee that such measures will be sufficient or successful.
10. Subsequent Events
The Master Fund has evaluated all events subsequent to September 30, 2019, through the date these financial statements were issued and has determined that there were no subsequent events that require disclosure.
| NB Crossroads Private Markets Fund V Holdings LP |
| Supplemental Information |
| September 30, 2019 (Unaudited) |
Proxy Voting and Portfolio Holdings
A description of the Master Fund’s policies and procedures used to determine how to vote proxies relating to the Master Fund’s portfolio securities, as well as information regarding proxy votes cast by the Master Fund (if any) during the most recent twelve month period ended June 30, is available without charge, upon request, by calling the Master Fund at 212-476-8800 or on the website of the Securities and Exchange Commission (the “SEC”) athttp://www.sec.gov. The Master Fund did not receive any proxy solicitations during the period ended September 30, 2019.
The Master Fund files a complete schedule of portfolio holdings on Form N-PORT with the SEC for the first and third quarters of each fiscal year. The Master Fund’s N-PORT filings are in the EDGAR database on the SEC’s website atwww.sec.gov or by calling Neuberger Berman at 212-476-8800.
| NB Crossroads Private Markets Fund V Holdings LP |
| Advisory and Sub-Advisory Agreement Approval |
| September 30, 2019 (Unaudited) |
Advisory and Sub-Advisory Agreement Approval
The Board of Directors (the “Board”) of NB Crossroads Private Markets Fund V Holdings LP (the “Master Fund”) considered the approval of the Investment Advisory Agreement between the Master Fund and Neuberger Berman Investment Advisers LLC (“NBIA”) and the Sub-Advisory Agreement between NBIA, on behalf of the Master Fund, and NB Alternatives Advisers LLC (“NBAA” and, together with NBIA, “Neuberger Berman”), at a meeting held on July 30, 2019 (the “Meeting”). The Board is comprised solely of Independent Managers, and, in connection with its deliberations regarding matters relating to the Investment Advisory Agreement and the Sub-Advisory Agreement (together, the “Agreements”), the Independent Managers were represented and assisted by independent legal counsel. In considering the renewal of the Agreements, the Board considered all factors that it believed to be relevant, including those discussed below. The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.
In determining whether to approve each Agreement, the Board noted that it had, through its counsel, requested certain information in connection with the approval of the Agreements and discussed with management of Neuberger Berman certain matters. The Board considered all information it deemed reasonably necessary to evaluate the terms of the Agreements. The Board reviewed materials furnished by NBIA and NBAA, including information regarding NBIA and NBAA, their affiliates, personnel, operations and NBIA’s financial condition. The Board’s counsel reviewed with the Board its duties and responsibilities under state and common law and under the Investment Company Act with respect to the approval of investment advisory agreements.
The Board reviewed and considered NBIA’s financial condition, noting that both NBIA and NBAA are wholly-owned, indirect subsidiaries of Neuberger Berman Group LLC. Specifically, the Board reviewed and considered financial statements of NBIA and other financial information for NBIA. The Board determined that NBIA is solvent and sufficiently well capitalized to perform the ongoing responsibilities to the Master Fund and to satisfy its obligations under the Investment Company Act and the Investment Advisory Agreement.
The Board discussed and reviewed the Advisory Fee, together with the fee paid by NBIA to NBAA out of the Advisory Fee (the “Sub-Advisory Fee”), and the appropriateness of such Advisory Fee. The Board reviewed and considered how the Advisory Fee and Sub-Advisory Fee for the Master Fund reflects the economies of scale for the benefit of the members of the Master Fund, noting that as the Master Fund is still in a commitment period, economies of scale were not a significant factor for the Master Fund. During its discussion of the Advisory Fee and Sub-Advisory Fee, the Board also considered the incentive carried interest to be received by NBIA or its affiliate. The Board also reviewed and considered the fees or other payments to be received by NBIA, NBAA and their affiliates, including the distribution and service fee payable by the Master Funds’ feeder funds, NB Crossroads Private Markets Fund V (TE) LP, NB Crossroads Private Markets Fund V (TI) LP, NB Crossroads Private Markets Fund V (TE) Advisory LP and NB Crossroads Private Markets Fund V (TI) Advisory LP, to an affiliate. Specifically, the Board reviewed and considered a comparison of fees charged by investment advisers to fund peers of the Master Fund, and fees charged by NBIA, NBAA or their affiliates with respect to other funds of funds programs. The Board noted, in comparing fee structures of the Master Fund with those of non-registered funds, the additional administrative, financial reporting and legal services provided by Neuberger Berman to the Master Fund. The Board concluded that Advisory Fee and Sub-Advisory Fee were reasonable.
NB Crossroads Private Markets Fund V Holdings LP
Advisory and Sub-Advisory Agreement Approval
September 30, 2019 (Unaudited)
The Board discussed and reviewed the nature, extent and quality of services rendered to the Master Fund by NBIA and NBAA. The Board discussed the structure and capabilities of Neuberger Berman, including technology and operation support, which support the services provided to the Master Fund. The Board also considered Neuberger Berman’s extensive administrative and compliance infrastructure. The Board also reviewed and discussed the experience and qualifications of key personnel of Neuberger Berman, including the qualifications of the portfolio managers to manage the Master Fund, including their experience managing funds of private funds, including other registered funds of private equity funds that the Board oversees, and the background and expertise of the key personnel and amount of time they would be able to devote to the Master Fund’s affairs. There was also a discussion on performance analytics and the various indices and benchmarks used for the Master Fund. The Board concluded that, in light of the particular requirements of the Master Fund, it was satisfied with the professional qualifications and overall commitment to the Master Fund of the portfolio management team.
The Board discussed Neuberger Berman’s profitability and, after reviewing this information, and other information discussed at the meeting, determined that the profitability relating to the Master Fund was not disproportionately large so that it bore no reasonable relationship to the services rendered and also determined that, given the overall performance of the Master Fund and Neuberger Berman’s service levels, the current profitability of Neuberger Berman resulting from its relationship to the Master Fund was not excessive.
The Board also continued its review in an executive session in which independent legal counsel was present. At the conclusion of these discussions, the Board agreed that it had been furnished with sufficient information to make an informed business decision with respect to the renewal of the Agreements. Based on the information provided to the Board, and the considerations and conclusions described above, the Board, including each of the Independent Managers, determined to approve the continuance of the Agreements. In approving the continuation of the Agreements, the Board considered these conclusions and determinations and also relied on its previous knowledge, gained through meetings and other interactions with Neuberger Berman, of NBIA and NBAA and the services provided to the Fund by NBIA and NBAA. The Board also relied on information received on a routine and regular basis throughout the year relating to the operations and compliance infrastructure of the Fund and the investment management and other services provided under the Agreements, including information on the comparative and absolute investment performance of the Fund. Certain aspects of these arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on their consideration of the Fund’s arrangements, or substantially similar arrangements for other NBAA-advised funds that the Board oversees, in prior years.
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
(a) The Schedule of Investments is included as part of the report to partners filed under Item 1 of this form.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable for semi-annual reports.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
(a) Not applicable.
(b) As of the date of this filing, there have been no changes in any of the portfolio managers identified in the most recent annual report on Form N-CSR.
Item 9. Purchase of Equity Securities By Close-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which partners may recommend nominees to the Board.
Item 11. Controls and Procedures.
(a) The Registrant's Principal Executive Officer and Principal Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) were effective as of a date within 90 days prior to the filing date of this report, based on their evaluation of the effectiveness of the Registrant's disclosure controls and procedures, as required by Rule 30a-3(b) of the 1940 Act.
(b) There were no changes in the Registrant's internal control over financial reporting that occurred during the Registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
(a) The Fund did not engage in any securities lending activity during the period ended September 30, 2019.
(b) The Fund did not engage in any securities lending activity and did not engage a securities lending agent during the period ended September 30, 2019.
Item 13. Exhibits.
| (a)(2) | Separate certifications for the Registrant's Principal Executive Officer and Principal Financial Officer, as required by Rule 30a-2(a) under the 1940 Act are filed herewith. |
| (b) | Certification pursuant to Section 906 of the Sarbanes-Oxley Act is furnished herewith. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NB Crossroads Private Markets Fund V Holdings LP
| By | /s/ James Bowden | |
| | James Bowden | |
| | Chief Executive Officer and President | |
| Date: December 9, 2019 | | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By | /s/ James Bowden | |
| | James Bowden | |
| | Chief Executive Officer and President | |
| | (Principal Executive Officer) | |
| Date: December 9, 2019 | | |
| By | /s/ John M. McGovern | |
| | John M. McGovern | |
| | Treasurer | |
| | (Principal Financial Officer) | |
| Date: December 9, 2019 | | |
