N-CSR 1 tv523158_ncsr.htm N-CSR

 

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 811-22475

 

Excelsior Private Markets Fund II (TI), LLC

(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

Excelsior Private Markets Fund II (TI), LLC

c/o 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: 1-212-476-8800

 

Date of fiscal year end: March 31

 

Date of reporting period: March 31, 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. Section 3507.

 

 

  

 

Item 1. Reports to Stockholders.

 

Excelsior Private Markets Fund II (TI), LLC

 

Financial Statements

 

For the year ended March 31, 2019

 

 

 

 

Excelsior Private Markets Fund II (TI), LLC

Year ended March 31, 2019

Index   Page No.
     
FINANCIAL INFORMATION (Audited)    
     
Statement of Assets, Liabilities and Members’ Equity – Net Assets   1
     
Statement of Operations   2
     
Statements of Changes in Members’ Equity – Net Assets   3
     
Statement of Cash Flows   4
     
Financial Highlights   5
     
Notes to Financial Statements   6 – 12
     
Report of the Independent Registered Public Accounting Firm   13
     
ADDITIONAL INFORMATION (Unaudited)    
     
Proxy Voting and Portfolio Holdings   14
     
Board of Managers of the TI Fund   15
     
Officers of the TI Fund   16 – 17
     
Excelsior Private Markets Fund II (Master), LLC Financial Statements (Audited)   18 - 39

 

 

 

 

Excelsior Private Markets Fund II (TI), LLC
Statement of Assets, Liabilities and Members’ Equity – Net Assets
As of March 31, 2019

 

Assets     
      
Investment in the Company, at fair value  $50,680,957 
Cash and cash equivalents   431,461 
Other assets   970 
      
Total Assets  $51,113,388 
      
Liabilities     
      
Management fee payable  $62,753 
Audit fee payable   8,700 
Administration service fee payable   4,900 
Other payables   1,553 
      
Total Liabilities   77,906 
      
Commitments and contingencies (see Note 4)     
      
Members’ Equity - Net Assets  $51,035,482 
      
Units of Membership Interests outstanding (unlimited units authorized)   47,212.61 
Net Asset Value Per Unit  $1,080.97 

 

The accompanying notes and attached financial statements of Excelsior Private Markets Fund II (Master), LLC are an integral part of these financial statements.

 

1

 

 

Excelsior Private Markets Fund II (TI), LLC
Statement of Operations
Year ended March 31, 2019

 

Net Investment Loss Allocated from the Company:     
      
Interest income  $57,956 
Expenses   (735,209)
      
Total Net Investment Loss Allocated from the Company   (677,253)
      
Fund Income:     
Interest income   6,795 
      
Total Fund Income   6,795 
      
Fund Expenses:     
      
Management fee   265,273 
Administration service fees   19,525 
Audit fees   9,200 
Custody fees   7,999 
Other fees   8,743 
      
Total Fund Expenses   310,740 
      
Net Investment Loss   (981,198)
      
Net Realized and Change in Unrealized Gain on Investment in the Company (Note 2)     
      
Net realized gain on investment in the Company   4,320,576 
Net change in unrealized appreciation on investment in the Company   2,332,388 
      
Net Realized and Change in Unrealized Gain on Investment in the Company   6,652,964 
      
Net Increase in Members’ Equity – Net Assets Resulting from Operations  $5,671,766 

 

The accompanying notes and attached financial statements of Excelsior Private Markets Fund II (Master), LLC are an integral part of these financial statements.

 

2

 

 

Excelsior Private Markets Fund II (TI), LLC
Statements of Changes in Members’ Equity – Net Assets

 

For the year ended March 31, 2018

 

   Members’ Equity   Investment Adviser   Total 
Members’ committed equity  $60,247,475   $-   $60,247,475 
                
Members’ equity at April 1, 2017  $50,253,501   $290,513   $50,544,014 
Distributions to Members   (4,970,417)   -    (4,970,417)
Net investment loss   (1,033,810)   -    (1,033,810)
Net realized gain on investment in the Company   4,416,720    -    4,416,720 
Net change in unrealized appreciation on investment in the Company   4,088,761    -    4,088,761 
Net change in incentive carried interest   (373,584)   373,584    - 
Members’ equity at March 31, 2018  $52,381,171   $664,097   $53,045,268 

 

For the year ended March 31, 2019

 

   Members’ Equity   Investment Adviser   Total 
Members’ committed equity  $60,247,475   $-   $60,247,475 
                
Members’ equity at April 1, 2018  $52,381,171   $664,097   $53,045,268 
Distributions to Members   (7,681,552)   -    (7,681,552)
Net investment loss   (981,198)   -    (981,198)
Net realized gain on investment in the Company   4,320,576    -    4,320,576 
Net change in unrealized appreciation on investment in the Company   2,332,388    -    2,332,388 
Net change in incentive carried interest   (283,588)   283,588    - 
Members’ equity at March 31, 2019  $50,087,797   $947,685   $51,035,482 

 

The accompanying notes and attached financial statements of Excelsior Private Markets Fund II (Master), LLC are an integral part of these financial statements.

 

3

 

 

Excelsior Private Markets Fund II (TI), LLC
Statement of Cash Flows
Year ended March 31, 2019

 

CASH FLOWS FROM OPERATING ACTIVITIES     
      
Net change in Members’ Equity – Net Assets resulting from operations  $5,671,766 
Adjustments to reconcile net change in Members’ Equity – Net Assets resulting from operations to net cash used in operating activities:     
Distributions from the Company   8,133,408 
Change in fair value of investment in the Company   (5,975,711)
Changes in assets and liabilities related to operations     
(Increase) decrease in other assets   (580)
Increase (decrease) in management fee payable   (3,463)
Increase (decrease) in audit fee payable   257 
Increase (decrease) in administration service fee payable   (9,725)
Increase (decrease) in other payables   (44)
      
Net cash provided by (used in) operating activities   7,815,908 
      
CASH FLOWS FROM FINANCING ACTIVITIES     
      
Members' capital distributed   (7,681,552)
      
Net cash provided by (used in) financing activities   (7,681,552)
      
Net change in cash and cash equivalents   134,356 
Cash and cash equivalents at beginning of year   297,105 
      
Cash and cash equivalents at end of year  $431,461 

 

The accompanying notes and attached financial statements of Excelsior Private Markets Fund II (Master), LLC are an integral part of these financial statements.

 

4

 

 

Excelsior Private Markets Fund II (TI), LLC
Financial Highlights

 

   For the year ended
March 31, 2019		   For the year ended
March 31, 2018		   For the year ended
March 31, 2017		   For the year ended
March 31, 2016		   For the year ended
March 31, 2015		 
Per Unit Operating Performance (1)                         
                          
NET ASSET VALUE, BEGINNING OF PERIOD  $1,123.54   $1,070.56   $997.02   $941.07   $844.73 
INCOME FROM INVESTMENT OPERATIONS:                         
Net investment loss   (20.78)   (21.89)   (23.71)   (25.90)   (32.29)
Net realized and change in unrealized gain on investment in the Company   140.91    180.15    97.25    81.85    128.63 
Net increase/(decrease) in net assets resulting from operations   120.13    158.26    73.54    55.95    96.34 
                          
DISTRIBUTIONS TO MEMBERS:                         
Net change in Members’ Equity - Net Assets due to distributions to Members   (162.70)   (105.28)   -    -    - 
NET ASSET VALUE, END OF PERIOD  $1,080.97   $1,123.54   $1,070.56   $997.02   $941.07 
TOTAL NET ASSET VALUE RETURN (1), (2), (3)   11.00%   15.02%   7.38%   5.94%   11.40%
                          
RATIOS AND SUPPLEMENTAL DATA:                         
Members’ Equity - Net Assets, end of period in thousands (000's)  $51,035   $53,045   $50,544   $45,264   $34,484 
Ratios to average Members’ Equity - Net Assets: (4)                         
Expenses excluding incentive carried interest   1.99%   2.05%   2.34%   2.73%   3.70%
Net change in incentive carried interest   0.54%   0.72%   0.31%   0.03%   0.42%
Expenses including incentive carried interest   2.53%   2.77%   2.65%   2.76%   4.12%
Net investment loss excluding incentive carried interest   (1.87)%   (1.99)%   (2.33)%   (2.73)%   (3.70)%
                          
INTERNAL RATES OF RETURN:                         
Internal Rate of Return before incentive carried interest (5)   11.04%   10.97%   9.91%   10.78%   12.97%
Internal Rate of Return after incentive carried interest (5)   10.75%   10.71%   9.74%   10.67%   12.81%

 

(1)Selected data for a unit of Membership 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 TI Fund during the period and assumes distributions, if any, were reinvested. The TI Fund’s units are not traded in any market; therefore, the market value total investment return is not calculated.
(3)Total investment return, based on per unit net asset value reflects the changes in net asset value based on the effects of offering costs, the performance of the Fund during the period and assumes distributions, if any, were reinvested. The Fund’s units are not traded in any market, therefore, the market value total investment return is not calculated.
(4)Ratios include expenses allocated from the Company.
(5)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 before and after incentive carried interest at the end of the period as of each measurement date.

 

The accompanying notes and attached financial statements of Excelsior Private Markets Fund II (Master), LLC are an

integral part of these financial statements.

 

5

 

 

Excelsior Private Markets Fund II (TI), LLC
Notes to Financial Statements
March 31, 2019

 

1. Organization

 

Excelsior Private Markets Fund II (TI), LLC (the “TI 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 TI Fund was organized as a Delaware limited liability company on September 8, 2010. The TI Fund commenced operations on August 10, 2011. The duration of the TI Fund is ten years from the final subscription closing date (the “Final Closing”), which occurred on July 1, 2012, subject to two two-year extensions which may be approved by the Board of Managers of the TI Fund (the “Board” or the “Board of Managers”). Thereafter, the term of the TI Fund may be extended by consent of majority-in-interest of its Members as defined in the TI Fund’s limited liability company agreement (the “LLC Agreement”).

 

The TI Fund’s investment objective is to provide attractive long-term returns. The TI Fund pursues its investment objective by investing substantially all of its assets in Excelsior Private Markets Fund II (Master), LLC (the “Company”). The Company seeks to achieve its objective primarily by investing in private equity funds and other collective investment vehicles or accounts (the “Portfolio Funds”). Neither the Company, the TI 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 Company or the TI Fund will achieve its investment objective. The Portfolio Funds are not registered as investment companies under the Investment Company Act.

 

The financial statements of the Company, including the Company’s Schedule of Investments, are attached to this report and should be read in conjunction with the TI Fund’s financial statements. The percentage of the Company’s members’ contributed capital owned by the TI Fund at March 31, 2019 was approximately 40.18%.

 

The Board has overall responsibility to manage and supervise the operation of the TI Fund. The Board exercises the same powers, authority and responsibilities on behalf of the TI Fund as are customarily exercised by directors of a typical investment company registered under the Investment Company Act organized as a corporation. 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 Portfolio Funds and to manage the day-to-day operations of the Company.

 

2. Significant Accounting Policies

 

The TI 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 TI Fund in the preparation of its financial statements.

 

6

 

 

Excelsior Private Markets Fund II (TI), LLC
Notes to Financial Statements
March 31, 2019

 

A. Basis of Accounting

The TI 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 TI Fund are maintained in U.S. dollars.

 

B. Valuation of Investments

The value of the TI Fund’s investment in the Company reflects the TI Fund’s proportionate interest in the total members’ contributed capital of the Company at March 31, 2019. Valuation of the investments held by the Company is discussed in Note 2 of the Company's financial statements, attached to these financial statements.

 

C. 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 TI Fund's custodian.

 

Cash and cash equivalents on the Statement of Assets, Liabilities and Members’ Equity – Net Assets can include deposits in money market accounts, which are classified as Level 1 assets. As of March 31, 2019, the TI Fund held $431,461 in an overnight sweep that is deposited into a money market account.

 

D. 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 these 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.

 

E. Investment Gains and Losses

The TI Fund records its share of the Company’s investment income, expenses, and realized and unrealized gains and losses in proportion to the TI Fund’s aggregate commitment to the Company. The Company’s income and expense recognition policies are discussed in Note 2 of the Company’s financial statements, attached to these financial statements.

 

F. Income Taxes

The TI Fund is a limited liability company that is treated as a partnership for tax reporting. Tax basis income and losses are passed through to Members and, accordingly, there is no provision for income taxes reflected in these financial statements. The TI Fund has a tax year end of December 31.

 

Differences arise in the computation of Members’ equity for financial reporting in accordance with GAAP and Members’ equity for federal and state income tax reporting. These differences

 

7

 

 

Excelsior Private Markets Fund II (TI), LLC
Notes to Financial Statements
March 31, 2019

 

are primarily due to the fact that unrealized gains and losses are allocated for financial reporting purposes and are not allocated for federal and state income tax reporting purposes.

 

The cost of the TI Fund’s investment in the Company for federal income tax purposes is based on amounts reported to the TI Fund on Schedule K-1 from the Company. As of March 31, 2019, the TI Fund had not received information to determine the tax cost of the Company. Based on the amounts reported to the TI Fund on Schedule K-1 as of December 31, 2017, and after adjustment for purchases and sales between December 31, 2017 and March 31, 2019, the estimated cost of the TI Fund’s investment in the Company at March 31, 2019, for federal income tax purposes aggregated $25,668,329. The net and gross unrealized appreciation for federal income tax purposes on the TI Fund's investment in the Company was estimated to be $25,012,628.

 

The TI Fund files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the TI Fund is subject to examination by 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 statute of limitations is from the year 2015 forward (with limited exceptions). Financial Accounting Standards Board (“FASB”) ASC 740-10 Income Taxes requires the Sub-Adviser to determine whether a tax position of the TI 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 these 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 TI Fund’s tax positions for the current tax year and has concluded that no provision for taxes is required in the TI Fund’s financial statements for the year ended March 31, 2019. The TI Fund recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in the Statement of Operations. During the year ended March 31, 2019, the TI Fund did not incur any interest or penalties.

 

G. Restrictions on Transfers

Interests of the TI Fund (“Interests”) are generally not transferable. No Member 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. Fund Expenses

The Fund bears its own expenses and, indirectly bears a pro rata portion of the Company’s expenses incurred in the course of business on an accrual basis, including, but not limited to, the following: management Fees (as defined herein); Independent Manager’s fees; legal fees; administration; auditing; tax preparation fees; custodial fees; costs of insurance; and registration expenses.

 

8

 

 

Excelsior Private Markets Fund II (TI), LLC
Notes to Financial Statements
March 31, 2019

 

3. Advisory Fee, Management Fee, Administration Service Fee and Related Party Transactions

 

The Registered Investment Adviser provides investment advisory services to the Company 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 TI Fund, including providing office space and other support services, maintaining files and records, and preparing and filing various regulatory materials. In consideration of the advisory and other services provided by the Registered Investment Adviser, the Company pays the Registered Investment Adviser an investment advisory fee (the “Advisory Fee”) quarterly in arrears at the annual rate of 1.0% as follows: (i) during the period from the initial closing until the fifth anniversary of the Final Closing, based on the total capital commitments (the “Underlying Commitments”) entered into by the Company with respect to investments in the Portfolio Funds; and (ii) beginning on the fifth anniversary of the Final Closing and thereafter, based on the net asset value of the Company. For the year ended March 31, 2019, the Company incurred Advisory Fees, as per the income statement totaling $1,320,444, of which $530,542 was allocated to the TI Fund.

 

In consideration for the services provided under the Management Agreement, the TI Fund pays the Registered Investment Adviser a management fee (the “Management Fee”) quarterly in arrears at the annual rate of 0.50% as follows: (i) during the period from the initial closing until the fifth anniversary of the Final Closing, based on the Underlying Commitments attributable to the TI Fund (based on the TI Fund’s commitments to the Company relative to those of the Feeder Funds invested in the Company) and (ii) beginning on the fifth anniversary of the Final Closing and thereafter, based on the net asset value of the Company. For the year ended March 31, 2019, the TI Fund incurred Management Fees totaling $265,273.

 

The Registered Investment Adviser has voluntarily reduced its Advisory Fee and/or Management Fee to the extent necessary to ensure that the combined Advisory Fee and Management Fee paid does not exceed the amount that would have been paid using the annual rate of 1.5% of total commitments from Members, measured over the life of the TI Fund. Any such fee reduction will not, however, impact the Registered Investment Adviser’s right to receive Incentive Carried Interest, if any.

 

Certain general and administrative expenses, such as occupancy and personnel costs, are borne by the Registered Investment Adviser and are not reflected in these financial statements.

 

Pursuant to an Administrative and Accounting Services Agreement, the TI Fund retains UMB Fund Services, Inc. (the “Administrator”), a subsidiary of UMB Financial Corporation, to provide administration, custodial, accounting, tax preparation, and investor services to the TI Fund. In consideration for these services, the TI Fund pays the Administrator a fixed fee of $4,875 per calendar quarter. For the year ended March 31, 2019, the TI Fund incurred administration service fees totaling $19,525.

 

9

 

 

Excelsior Private Markets Fund II (TI), LLC
Notes to Financial Statements
March 31, 2019

 

The Board consists of six managers, each of whom is not an “interested person” of the TI Fund as defined by Section 2(a)(19) of the Investment Company Act (the “Independent Managers”). Effective January 1, 2016, the Independent Managers are each paid an annual retainer of $35,000. The Independent Managers are also reimbursed for out of pocket expenses in connection with providing their services. For the year ended March 31, 2019, the Company incurred $210,000 in Independent Managers’ fees, of which $84,376 was allocated to the TI Fund.

 

As of March 31, 2019, two persons had ownership of approximately 41.50% and 5.31% of the TI Fund’s total commitments and are treated as “affiliated persons”, as defined in the Investment Company Act (the “Affiliated Persons”). The affiliation between the Affiliated Persons and the TI Fund is based solely on the commitments made and percentage ownership.

 

4. Capital Commitments from Members

 

At March 31, 2019, capital commitments from Members totaled $60,247,475. Capital contributions received by the TI Fund with regard to satisfying Member commitments totaled $41,570,758, which represents approximately 69% of committed capital at March 31, 2019. As of March 31, 2019, the TI Fund had distributed $18,676,717, of which $4,819,798 is recallable.

 

Capital contributions will be credited to Members’ capital accounts and units will be issued when paid. Capital contributions will be determined based on a percentage of commitments. During the year ended March 31, 2019, the TI Fund did not issue any units.

 

The net profits or net losses of the TI Fund are allocated to Members in a manner that takes into account the amount of cash that would be distributed based upon a hypothetical liquidation, such that it would follow the distributions as outlined below.

 

Distributions will be made of available cash (net of reserves that the Board deems reasonable) or other net investment proceeds to Members at such times and in such amounts as determined by the Board of Managers in its sole discretion and in accordance with Members’ respective percentage interests, as defined in the LLC Agreement. Distributions from the TI Fund are made in the following priority:

 

(a) First, to Members of the TI Fund until they have received a 125% return of all drawn commitments; and

 

(b) Then, a 95% - 5% split between the Members and the Registered Investment Adviser, respectively.

 

Incentive Carried Interest is accrued based on the net asset value (“NAV”) of the TI Fund at each quarter-end as an allocation of profits, to the extent there is an amount to be accrued. The Statement of Changes in Members’ Equity – Net Assets discloses the amount payable and paid to the Registered Investment Adviser in the period in which it occurs. As of March 31, 2019 and 2018, the accrued and unpaid Incentive Carried Interest was $947,685 and $664,097.

 

10

 

 

Excelsior Private Markets Fund II (TI), LLC
Notes to Financial Statements
March 31, 2019

 

5. Indemnifications

 

In the normal course of business, the TI Fund enters into contracts that provide general indemnifications. The TI Fund’s maximum exposure under these agreements is dependent on future claims that may be made against the TI Fund, and therefore cannot be determined; however, based on the Registered Investment Adviser’s experience, the risk of loss from such claims is considered remote.

 

6. 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 Company’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 Company 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 Company. The Company’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 Company will be able to realize the value of such investments in a timely manner, if at all.

 

The Company believes that its liquidity and capital resources are adequate to satisfy its operational needs as well as the continuation of its investment program.

 

This portfolio strategy presents a high degree of business and financial risk due to the nature of underlying companies in which the Portfolio Funds invest, which may include entities with little operating history, minimal capitalization, operations in new or developing industries, and concentration of investments in one industry or geographical area.

 

If the Company defaults on its commitment or fails to satisfy capital calls, it will be subject to significant penalties, including the complete forfeiture of the Company’s investment in the Portfolio Fund. This may impair the ability of the Company to pursue its investment program, force the Company to borrow or otherwise impair the value of the Company’s investments (including the complete devaluation of the Company). In addition, defaults by Members on their commitments to the TI Fund, may cause the Company to, in turn, default on its commitment to a Portfolio Fund. In this case, the Company, and especially the non-defaulting Members, 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.

 

11

 

 

Excelsior Private Markets Fund II (TI), LLC
Notes to Financial Statements
March 31, 2019

 

7. Subsequent Events

 

The TI Fund has evaluated all events subsequent to March 31, 2019, through the date these financial statements were available to be issued and has determined that there were no subsequent events that require disclosure.

 

12

 

 

 

 

  KPMG LLP
Two Financial Center
60 South Street
Boston, MA 02111

 

Report of Independent Registered Public Accounting Firm

 

To the Members and Board of Managers

Excelsior Private Markets Fund II (TI), LLC:

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets, liabilities and members’ equity – net assets of Excelsior Private Markets Fund II (TI), LLC (the Company), as of March 31, 2019, the related statements of operations and cash flows for the year then ended, the statements of changes in members’ equity – net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements), and the financial highlights for each of the years in the three-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Company as of March 31, 2019, the results of its operations and cash flows for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended, in conformity with U.S. generally accepted accounting principles. The financial highlights for each of the years in the two-year period ended March 31, 2016, were audited by other independent registered public accountants whose reports, dated May 27, 2016 and May 29, 2015, expressed an unqualified opinion on those financial highlights.

 

Basis for Opinion

 

These financial statements and financial highlights are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of March 31, 2019, by examination of the underlying records of Excelsior Private Markets Fund II (Master), LLC. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.

 

 

 

We have served as the auditor of one or more Excelsior and NB Crossroads Private Markets investment companies since 2016.

 

Boston, Massachusetts

May 30, 2019

 

 

KPMG LLP is a Delaware limited liability partnership and the U.S. member

firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss entity.

 

 

13

 

 

Excelsior Private Markets Fund II (TI), LLC
Additional Information (Unaudited)
March 31, 2019

 

Proxy Voting and Portfolio Holdings

 

A description of the TI Fund’s policies and procedures used to determine how to vote proxies relating to the TI Fund’s portfolio securities, as well as information regarding proxy votes cast by the TI Fund (if any) during the most recent twelve month period ended June 30, is available without charge, upon request, by calling the TI Fund at 212-476-8800 or on the website of the Securities and Exchange Commission (the “SEC”) at http://www.sec.gov. The TI Fund did not receive any proxy solicitations during the year ended March 31, 2019.

 

The TI 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 TI Fund’s N-PORT filings are in the EDGAR database on the SEC’s website at www.sec.gov or by calling Neuberger Berman at 212-476-8800.

 

14

 

 

Excelsior Private Markets Fund II (TI), LLC
Board of Managers of the TI Fund (Unaudited)
March 31, 2019

 

Information pertaining to the Board of Managers of the TI Fund is set forth below.

 

            Number of    
            Funds in Fund    
    Term of Office       Complex*    
Name, Position(s) Held,   and Length of   Principal Occupation During Past 5   Overseen by   Other Directorships Held by Manager
Address, and Year of Birth   Time Served   Years   Manager   During Past 5 Years
Disinterested Managers
 

Virginia G. Breen, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1964)

   Term Indefinite – Since 2015   Partner, Chelsea Partners (7/11 to present); Partner, Sienna Ventures (2003 to 12/2011); Partner, Blue Rock Capital (8/1995 to 12/2011); Private Investor and Trustee/Board Member.   15   Director, Modus Link Global Solutions, Inc. (4/01 to 12/13);  Director, Jones Lang LaSalle Property Trust, Inc.;  Trustee/Director, UBS A&Q Registered Fund Complex (5 funds) and Director, Calamos Fund Complex (22 funds); Paylocity Holding Corp.
                 

Alan Brott, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1942)

   Term Indefinite – Since Inception   Consultant (since 10/1991); Associate Professor, Columbia University (2000- 2017); Former Partner of Ernst & Young.   16   Manager of Man FRM Alternative Multi-Strategy Fund LLC; Director of Grosvenor Registered Multi-Strategy Funds (4 funds); Director of Hedge Fund Guided Portfolio Solution (part of the Grosvenor complex); Director of Stone Harbor Investment Funds (8 funds), Stone Harbor Emerging Markets Income Fund and Stone Harbor Emerging Markets Total Income Fund.
                 

Victor F. Imbimbo, Jr., Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1952)

   Term Indefinite – Since Inception   President and CEO of Caring Today, LLC, an information and support resource for the family caregiver market; Former President for North America TBWA\World Health, a division of TBWA Worldwide, and Executive Vice President of TBWA\New York.   16   Manager of Man FRM Alternative Multi-Strategy Fund LLC.
                 

Thomas F. McDevitt, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1956)

   Term Indefinite – Since 2015   Managing Partner of Edgewood Capital Partners and President of Edgewood Capital Advisors (5/2002 to present).   15   Director of Jones Lang LaSalle Property Trust, Inc. (12/04 to 06/15).
                 

Stephen V. Murphy, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1945)

   Term Indefinite – Since Inception   President of S.V. Murphy & Co, an investment banking firm.   16   Manager of Man FRM Alternative Multi-Strategy Fund LLC; Director of The First of Long Island Corporation and The First National Bank of Long Island.
                 

Thomas G. Yellin, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1954)

   Term Indefinite – Since Inception   President of The Documentary Group (since 6/2006); Former President of PJ Productions (from 8/2002 to 6/2006); Former Executive Producer of ABC News (from 8/1989 to 12/2002).   15   Director of Grosvenor Registered Multi-Strategy Funds (4 funds); Director of Hedge Fund Guided Portfolio Solution (part of the Grosvenor complex); Manager of Man FRM Alternative Multi-Strategy Fund LLC.

 

* As of March 31, 2019 the “Fund Complex” consists of Excelsior Venture Partners III, LLC (“EVP III”), Excelsior Private Markets Fund II (Master), LLC, Excelsior Private Markets Fund II (TI), LLC, Excelsior Private Markets Fund II (TE), LLC, Excelsior Private Markets Fund III (Master), LLC, Excelsior Private Markets Fund III (TI), LLC, Excelsior Private Markets Fund III (TE), LLC, NB Crossroads Private Markets Fund IV Holdings LLC, NB Crossroads Private Markets Fund IV (TE) – Client LLC, NB Crossroads Private Markets Fund IV (TI) – Client LLC, 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, NB Crossroads Private Markets Fund V (TI) Advisory LP, NB Crossroads Private Markets Fund V Holdings LP and UST Global Private Markets Fund, LLC.

 

15

 

 

Excelsior Private Markets Fund II (TI), LLC
Officers of the TI Fund (Unaudited)
March 31, 2019

 

Information pertaining to the Officers of the TI Fund is set forth below.

 

    Position(s)   Term of Office and    
    Held with the   Length of Time   Principal Occupation During Past 5
Name, Address* and Age   Company   Served   Years
Officers who are not Managers
 

James D. Bowden

(1953)

   Chief Executive Officer and President  

Term — Indefinite;

Length — since 2018

   Managing Director, Neuberger Berman LLC, since 2015. Formerly, Managing Director, Bank of America; Manager and Vice President, Merrill Lynch Alternative Investments LLC (2013-2015); Executive Vice President, Bank of America Capital Advisors LLC (1998-2013).
             

Claudia A. Brandon

(1956)

   Executive Vice President and Secretary  

Term — Indefinite;

Length — since 2015

   Senior Vice President, Neuberger Berman LLC, since 2007 and Employee since 1999; Senior Vice President, NBIA, since 2008 and Assistant Secretary since 2004. Formerly, Vice President, Neuberger Berman LLC (2002-2006), Vice President – Mutual Fund Board Relations, NBIA (2000-2008), Vice President, NBIA (1986-1999) and Employee (1984-1999).
             

Mark Bonner

(1977)

   Assistant Treasurer  

Term — Indefinite;

Length — since 2015

   Senior Vice President, Neuberger Berman LLC, since 2015. Formerly, Senior Vice President, Bank of America; Merrill Lynch Alternative Investments LLC (2006-2015); Manager, Advent International Corporation (2004-2006); Senior Associate, PricewaterhouseCoopers LLP (1999-2004).
             

Savonne Ferguson

(1973)

   Chief Compliance Officer  

Term — Indefinite;

Length — since 2018

   Chief Compliance Officer (Mutual Funds) and Associate General Counsel, NBIA, since 2018. Formerly, Vice President T. Rowe Price Group, Inc. (2018), Vice President and Senior Legal Counsel, T. Rowe Price Associates, Inc. (2014-2018), Vice President and Director of Regulatory Fund Administration, PNC Capital Advisors, LLC (2009-2014), Secretary, PNC Funds and PNC Advantage Funds (2010-2014).
             

Corey A. Issing

(1978)

   Chief Legal Officer (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002)  

Term — Indefinite;

Length — since 2016

   General Counsel and Head of Compliance – Mutual Funds since 2016 and Managing Director, NBIA, since 2017. Formerly, Associate General Counsel (2015-2016), Counsel (2007-2015), Senior Vice President (2013-2016), Vice President (2009-2013).

 

16

 

 

Excelsior Private Markets Fund II (TI), LLC
Officers of the TI Fund (Unaudited)
March 31, 2019

 

Information pertaining to the Officers of the TI Fund is set forth below.

 

    Position(s)   Term of Office and    
    Held with the   Length of Time   Principal Occupation During Past 5
Name, Address* and Age   Company   Served   Years
Officers who are not Managers
 

Sheila James

(1965)

   Assistant Secretary  

Term — Indefinite;

Length — since 2015

   Vice President, Neuberger Berman LLC, since 2008 and Employee since 1999; Vice President, NBIA, since 2008. Formerly, Assistant Vice President, Neuberger Berman LLC (2007-2008); Employee, NBIA (1991-1999).
             

Brian Kerrane

(1969)

   Vice President  

Term — Indefinite;

Length — since 2015

   Managing Director, Neuberger Berman LLC, since 2013; Chief Operating Officer – Mutual Funds and Managing Director, NBIA, since 2015. Formerly, Senior Vice President, Neuberger Berman LLC (2006 to 2014), Vice President, NBIA (2008-2015) and Employee since 1991.
             

Josephine Marone

(1963)

   Assistant Secretary  

Term — Indefinite;

Length — since 2015

   Senior Paralegal, Neuberger Berman LLC, since 2007 and Employee since 2007.
             

John M. McGovern

(1970)

   Treasurer  

Term — Indefinite;

Length — since 2015

   Senior Vice President, Neuberger Berman LLC, since 2007; Senior Vice President, NBIA, since 2007 and Employee since 1993. Formerly, Vice President, Neuberger Berman LLC (2004-2006), Assistant Treasurer (2002-2005).
             

Brien Smith

(1957)

   Vice President  

Term — Indefinite;

Length — since 2017

   Managing Director, Neuberger Berman LLC, since 2005. Chief Operating Officer of NB Private Equity Division since 2017.

 

* The business address of each listed person is 1290 Avenue of the Americas, New York, NY 10104, except for James D. Bowden and Mark Bonner whose business address is 53 State Street, 13th Floor, Boston, MA 02109; and Brien Smith whose business address is 325 North Saint Paul St. 49th Floor Dallas, TX 75201.

 

All officers of the TI Fund are employees and/or officers of the Investment Adviser. Officers of the TI Fund are elected by the Managers and hold office until they resign, are removed or are otherwise disqualified to serve.

 

Alternative investments are sold to qualified investors only by a Confidential Offering Memorandum. An investment in an alternative investment fund is speculative and should not constitute a complete investment program. The information presented in this report is current as of the date noted, is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy interests in the TI Fund. This is not, and under no circumstances is to be construed as, an offer to sell or a solicitation to buy any of the securities or investments referenced, nor does this information constitute investment advice or recommendations with respect to any of the securities or investments used. Past performance is no guarantee of future results. Additional information is available upon request.

 

17

 

 

Excelsior Private Markets Fund II (master), LLC

 

Financial Statements

 

For the year ended March 31, 2019

 

 

 

 

Excelsior Private Markets Fund II (Master), LLC

For the year ended March 31, 2019

Index   Page No.
     
FINANCIAL INFORMATION (Audited)    
     
Statement of Assets, Liabilities and Members’ Equity – Net Assets   1
     
Schedule of Investments   2
     
Statement of Operations   3
     
Statements of Changes in Members’ Equity – Net Assets   4
     
Statement of Cash Flows   5
     
Financial Highlights   6
     
Notes to Financial Statements   7 – 16
     
Report of the Independent Registered Public Accounting Firm   17
     
ADDITIONAL INFORMATION (Unaudited)    
     
Proxy Voting and Portfolio Holdings   18
     
Board of Managers of the Company   19
     
Officers of the Company   20 - 21

 

 

 

 

Excelsior Private Markets Fund II (Master), LLC
Statement of Assets, Liabilities and Members’ Equity – Net Assets
As of March 31, 2019

 

Assets     
      
Investments, at fair value (cost of $76,937,550)  $118,037,404 
Cash and cash equivalents   8,149,506 
Prepaid insurance   14,598 
Other assets   13,279 
      
Total Assets  $126,214,787 
      
Liabilities     
      
Advisory fee payable  $312,363 
Deferred contingent fee payable   108,171 
Audit fee payable   52,900 
Administration service fees payable   27,752 
Legal fees payable   21,634 
Other payables   1,061 
      
Total Liabilities  $523,881 
      
Commitments and contingencies (See Note 6)     
      
Members’ Equity - Net Assets  $125,690,906 
      
Units of Membership Interests outstanding (unlimited units authorized)   66,271.05 
Net Asset Value Per Unit  $1,896.62 

 

The accompanying notes are an integral part of these financial statements.

 

1

 

 

Excelsior Private Markets Fund II (Master), LLC
Schedule of Investments
As of March 31, 2019

 

Portfolio Funds (A),(B),(D)  Acquisition Type  Acquisition Dates (C)  Geographic Region (E)  Cost   Fair Value 
                  
Buyout/Growth (51.53%)                   
Advent International GPE VII-B, L.P.  Primary  8/2012 - 2/2018  North America  $4,765,953   $8,416,638 
Apax US VII, L.P.  Secondary  12/2011 - 11/2013  North America   1,470,093    2,641,418 
Apax VIII - B, L.P.  Primary  6/2013 - 12/2016  Europe   2,443,715    4,266,320 
BC European Capital IX  Primary  3/2012 - 1/2019  Europe   1,324,129    1,934,049 
FTV IV, L.P.  Primary  12/2012 - 3/2019  North America   4,767,098    9,804,417 
Green Equity Investors VI, L.P.  Primary  11/2012 - 1/2019  North America   6,928,074    9,723,998 
Grey Mountain Partners Fund III, L.P.  Primary  7/2013 - 1/2019  North America   3,480,731    6,600,128 
HgCapital 7 C, L.P.  Primary  12/2013 - 3/2018  Europe   2,928,914    5,712,900 
Platinum Equity Capital Partners III, L.P.  Secondary  10/2013 - 12/2018  North America   2,145,225    2,577,447 
Silver Lake Kraftwerk Fund, L.P.  Primary  12/2012 - 12/2018  North America   2,255,205    2,226,546 
SPC Partners V, L.P.  Primary  7/2012 - 3/2019  North America   8,053,549    8,253,616 
Thomas H. Lee Equity Fund VI, L.P.  Secondary  4/2012 - 3/2019  North America   2,243,442    1,980,939 
Vision Capital Partners VII, L.P.  Secondary  7/2012 - 8/2018  Europe   1,269,214    626,292 
             44,075,342    64,764,708 
Special Situations (7.88%)                   
ArcLight Energy Partners Fund V, L.P.  Primary  12/2011 - 2/2016  North America   2,173,613    1,872,840 
Lone Star Real Estate Fund III (U.S.), L.P.  Primary  5/2014 - 4/2017  North America   2,401,685    946,362 
Ridgewood Energy Oil & Gas Fund II, L.P.  Primary  5/2013 - 3/2019  North America   5,569,103    4,708,625 
Royalty Opportunities S.àr.l.  Primary  8/2011 - 1/2015  Europe   2,506,957    2,370,389 
             12,651,358    9,898,216 
Venture Capital (34.50%)                   
Battery Ventures X Side Fund, L.P.  Primary  7/2013 - 3/2019  North America   1,350,871    2,780,000 
Battery Ventures X, L.P.  Primary  6/2013 - 12/2018  North America   2,367,463    3,240,000 
DFJ Growth 2013, L.P.  Primary  7/2013 - 12/2018  North America   6,837,298    14,236,240 
Francisco Partners, L.P.  Secondary  4/2012  North America   266,174    39,194 
Intersouth Partners V, L.P.  Secondary  3/2012  North America   115,733    8,881 
InterWest Partners IX, L.P.  Secondary  12/2011 - 9/2016  North America   511,752    445,052 
InterWest Partners VIII, L.P.  Secondary  12/2011  North America   535,714    414,450 
InterWest Partners X, L.P.  Secondary  12/2011 - 10/2018  North America   968,429    1,370,332 
Lightspeed China Partners I, L.P.  Primary  5/2012 - 6/2015  North America   1,087,025    7,077,957 
Lightspeed Venture Partners IX, L.P.  Primary  3/2012 - 3/2019  North America   1,861,067    4,841,975 
Polaris Venture Partners III, L.P.  Secondary  3/2012  North America   137,319    60,004 
Trinity Ventures XI, L.P.  Primary  4/2013 - 2/2019  North America   4,172,005    8,860,395 
             20,210,850    43,374,480 
                    
Total Investments in Portfolio Funds (cost $76,937,550) (93.91%)           118,037,404 
Other Assets & Liabilities (Net) (6.09%)           7,653,502 
Members’ Equity - Net Assets (100.00%)          $125,690,906 

 

(A)Non-income producing securities, which are restricted as to public resale and liquidity.
(B)Total cost of illiquid and restricted securities at March 31, 2019 aggregated $76,937,550.Total fair value of illiquid and restricted securities at March 31, 2019 was $118,037,404 or 93.91% 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 Company’s Members’ Equity - Net Assets.
(E)Geographic Region is based on where a Portfolio Fund is headquartered and may be different from where the Portfolio Fund invests.

 

The accompanying notes are an integral part of these financial statements.

 

2

 

 

Excelsior Private Markets Fund II (Master), LLC
Statement of Operations
For the year ended March 31, 2019

 

Investment Income:     
      
Interest income  $144,244 
      
Total Investment Income   144,244 
      
Operating Expenses:     
      
Advisory fees   1,320,444 
Independent Managers’ fees   210,000 
Administration service fees   114,208 
Legal fees   70,705 
Audit fees   53,400 
Insurance fees   44,310 
Other fees   16,764 
      
Total Operating Expenses   1,829,831 
      
Net Investment Loss   (1,685,587)
      
Net Realized and Change in Unrealized Gain on Investments (Note 2)     
Net realized gain on investments   10,753,304 
Net change in unrealized appreciation on investments   5,805,091 
Net change in unrealized appreciation on foreign currency   (106)
      
Net Realized and Change in Unrealized Gain on Investments and Foreign Currency   16,558,289 
      
Net Increase in Members’ Equity – Net Assets Resulting from Operations  $14,872,702 

 

The accompanying notes are an integral part of these financial statements.

 

3

 

 

Excelsior Private Markets Fund II (Master), LLC
Statements of Changes in Members’ Equity – Net Assets

 

For the year ended March 31, 2018

 

   Members’ Equity 
Members’ committed equity  $149,947,465 
      
Members’ equity at April 1, 2017  $124,991,739 
Capital distributions   (13,308,013)
Net investment loss   (1,758,432)
Net realized gain on investments   10,992,593 
Net change in unrealized appreciation on investments and foreign currency   10,176,351 
Members’ equity at March 31, 2018  $131,094,238 

 

For the year ended March 31, 2019

 

   Members’ Equity 
Members’ committed equity  $149,947,465 
      
Members’ equity at April 1, 2018  $131,094,238 
Capital distributions   (20,276,034)
Net investment loss   (1,685,587)
Net realized gain on investments   10,753,304 
Net change in unrealized appreciation on investments and foreign currency   5,804,985 
Members’ equity at March 31, 2019  $125,690,906 

 

The accompanying notes are an integral part of these financial statements.

 

4

 

 

Excelsior Private Markets Fund II (Master), LLC
Statement of Cash Flows
For the year ended March 31, 2019

 

CASH FLOWS FROM OPERATING ACTIVITIES     
      
Net Change in Members’ Equity – Net Assets resulting from operations  $14,872,702 
Adjustments to reconcile net change in Members’ Equity – Net Assets resulting from operations to net cash provided by operating activities:     
Contributions to investments in Portfolio Funds   (3,840,973)
Proceeds received from investments   28,995,217 
Net realized gain on investments   (10,753,304)
Net change in unrealized appreciation on investments   (5,805,091)
Net change in unrealized appreciation on foreign currency   106 
Changes in assets and liabilities related to operations     
(Increase) decrease in prepaid insurance   (14,598)
(Increase) decrease in other assets   10,512 
Increase (decrease) in advisory fee payable   (17,240)
Increase (decrease) in deferred contingent fee payable   71,318 
Increase (decrease) in tax payable   (52,461)
Increase (decrease) in administrative service fees payable   (57,743)
Increase (decrease) in audit fee payable   (3,337)
Increase (decrease) in legal fees payable   21,634 
Increase (decrease) in other payables   135 
      
Net cash provided by (used in) operating activities   23,426,877 
      
CASH FLOWS FROM FINANCING ACTIVITIES     
      
Distributions to Members   (20,276,034)
      
Net cash provided by financing activities   (20,276,034)
      
Effect of exchange rate changes on cash   (106)
      
Net change in cash and cash equivalents   3,150,737 
Cash and cash equivalents at beginning of year   4,998,769 
      
Cash and cash equivalents at end of year  $8,149,506 
      
Noncash activities     
Receipt of in-kind distributions of securities from     
Portfolio Funds, at fair value on the date of distribution  $2,184,012 
      
Distribution of $33,127 made to the TE Fund for taxes paid and/or accrued on behalf of the TE Fund.     

 

The accompanying notes are an integral part of these financial statements.

 

5

 

 

Excelsior Private Markets Fund II (Master), LLC
Financial Highlights

 

   For the year ended
March 31, 2019		   For the year ended
March 31, 2018		   For the year ended
March 31, 2017		   For the year ended
March 31, 2016		   For the year ended
March 31, 2015		 
Per Unit Operating Performance (1)                         
                          
NET ASSET VALUE, BEGINNING OF PERIOD  $1,978.16   $1,886.07   $1,741.95   $1,630.46   $1,446.49 
INCOME FROM INVESTMENT OPERATIONS:                         
Net investment loss   (25.43)   (26.53)   (27.99)   (31.12)   (37.87)
Net realized and change in unrealized gain on investments   249.85    319.43    173.03    143.79    221.84 
Net increase in net assets resulting from operations   224.42    292.90    145.04    112.67    183.97 
                          
DISTRIBUTIONS TO MEMBERS:                         
Net change in Members’ Equity - Net Assets due to distributions to Members   (305.96)   (200.81)   (0.92)   (1.18)   - 
NET ASSET VALUE, END OF PERIOD  $1,896.62   $1,978.16   $1,886.07   $1,741.95   $1,630.46 
TOTAL NET ASSET VALUE RETURN (1), (2), (3)   11.72%   15.82%   8.32%   6.91%   12.72%
                          
RATIOS AND SUPPLEMENTAL DATA:                         
Members’ Equity - Net Assets, end of period in thousands (000's)  $125,691   $131,094   $124,992   $111,350   $85,943 
Ratios to average Members’ Equity - Net Assets: (4)                         
Expenses   1.41%   1.42%   1.58%   1.88%   2.53%
Net investment loss   (1.30)%   (1.37)%   (1.57)%   (1.88)%   (2.53)%
Portfolio Turnover Rate (5)   3.09%   5.05%   15.70%   13.62%   21.48%
                          
INTERNAL RATE OF RETURN:                         
Internal Rate of Return (6)   12.79%   12.89%   12.07%   13.44%   16.59%

 

(1)Selected data for a unit of Membership 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 Company during the period and assumes distributions, if any, were reinvested. The Company’s units are not traded in any market; therefore, the market value total investment return is not calculated.
(3)Total investment return, based on per unit net asset value reflects the changes in net asset value based on the effects of offering costs, the performance of the Company during the period and assumes distributions, if any, were reinvested. The Company’s units are not traded in any market, therefore, the market value total investment return is not calculated.
(4)Ratios do not reflect the Company’s proportional share of the net investment income (loss) and expenses, including any performance-based fees, of the Portfolio Funds.
(5)Proceeds received from investments are included in the portfolio turnover rate.
(6)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.

 

The accompanying notes are an integral part of these financial statements.

 

6

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

1. Organization

 

Excelsior Private Markets Fund II (Master), LLC (the “Company”) is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company was organized as a Delaware limited liability company on September 8, 2010. The Company commenced operations on August 10, 2011. The duration of the Company is ten years from the final subscription closing date (the “Final Closing”), which occurred on July 1, 2012, subject to two two-year extensions which may be approved by the Board of Managers of the Company (the “Board” or the “Board of Managers”). Thereafter, the term of the Company may be extended by consent of a majority-in-interest of its Members as defined in the Company’s limited liability company agreement (the “LLC Agreement”).

 

The Company’s investment objective is to provide attractive long-term returns. The Company seeks to achieve its objective primarily by investing in private equity funds and other collective investment vehicles or accounts pursuing investment strategies in buyout/growth, venture capital, and special situations (distressed debt, mezzanine, natural resources, opportunistic, real estate, royalties, and other private equity strategies perceived to be attractive by the Registered Investment Adviser) (collectively the "Portfolio Funds"). Neither the Company 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 Company will achieve its investment objective. The Portfolio Funds are not registered as investment companies under the Investment Company Act.

 

Excelsior Private Markets Fund II (TI), LLC (the “TI Fund”) and Excelsior Private Markets Fund II (TE), LLC (the “TE Fund”), each a Delaware limited liability company that is registered under the Investment Company Act as a non-diversified, closed-end management investment company, and Excelsior Private Markets Fund II (Offshore), LDC, a Cayman Islands limited duration company (the “Offshore Fund,” and together with the TI Fund and the TE Fund, the “Feeder Funds”), pursue their investment objectives by investing substantially all of their assets in the Company.  The percentage of the Offshore Fund's shareholders’ capital owned by the TE Fund is 100%. The financial position and results of operations of the Offshore Fund have been consolidated within the TE Fund's consolidated financial statements. The Feeder Funds have the same investment objective and substantially the same investment policies as the Company (except that the Feeder Funds pursue their investment objectives by investing in the Company).

 

The Board has overall responsibility to manage and supervise the operations of the Company. The Board exercises the same powers, authority and responsibilities on behalf of the Company as are customarily exercised by directors of a typical investment company registered under the Investment Company Act organized as a corporation. 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 Portfolio Funds and to manage the day-to-day operations of the Company.

 

7

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

The Company operates as a vehicle for the investment of substantially all of the assets of the Feeder Funds as members of the Company (“Members”).  As of March 31, 2019, the TI Fund’s and the TE Fund’s ownership of the Company’s Members’ contributed capital was 40.18% and 59.82%, respectively, with a NB affiliate’s (who is also a Member of the Company) percentage ownership of the Company’s Members’ contributed capital being insignificant.

 

2. Significant Accounting Policies

 

The Company 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 Company in the preparation of its financial statements.

 

A. Basis of Accounting

The Company’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 Company are maintained in U.S. dollars.

 

B. Valuation of Investments

The Company 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 as 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 Company 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 Company.  The value of the Company’s interests is based on information reasonably available at the time the valuation is made and the Sub-Adviser believes to be reliable. 

 

It is expected that most of the Portfolio Funds in which the Company 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 Company’s investment in the Portfolio Fund based primarily upon the value reported to the Company by the Portfolio Fund as of each quarter-end, determined by the Portfolio Fund in accordance with its own valuation policies. As of March 31, 2019, investments valued using the practical expedient with a fair value of $118,037,404 are excluded from the fair value hierarchy.

 

8

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

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 1Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access;

 

Level 2Observable 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 3Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Company’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 Company 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 Company 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.

 

The estimated remaining life of the Company’s Portfolio Funds as of March 31, 2019 is one to six years, with the possibility of extensions by each of the Portfolio Funds.

 

C. 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 Company’s custodian.

 

Cash and cash equivalents on the Statement of Assets, Liabilities and Members’ Equity – Net Assets can include deposits in money market accounts, which are classified as Level 1 assets. As of March 31, 2019, the Company held $8,149,506 in an overnight sweep that is deposited into a money market account.

 

9

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

D. 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.

 

E. Investment Gains and Losses

The Company records distributions of cash or in-kind securities from the Portfolio Funds based on the information from distribution notices when distributions are received. The Company recognizes within the Statement of Operations its share of realized gains or (losses), and the Company’s change in net unrealized appreciation/(depreciation) and the Company’s share of net investment loss based upon information received regarding distributions from managers of the Portfolio Funds. The Company may also recognize realized losses based upon information received from the Portfolio Fund managers for write-offs taken in the underlying portfolio. Change in unrealized appreciation/(depreciation) on investments within the Statement of Operations includes the Company’s share of interest and dividends, realized (but undistributed) and unrealized gains and losses on security transactions, and expenses of each Portfolio Fund.

 

The Company entered into an agreement with a third party seller of underlying Portfolio Funds to purchase their interests in those Portfolio Funds.  Based on the agreement, the third party seller is due to receive a payment if those underlying Portfolio Funds outperform a specific hurdle rate, up to a maximum payment of $599,578.  As of March 31, 2019, the total deferred contingent fee payable was $108,172.

 

The Portfolio Funds may make in-kind distributions to the Company and, particularly in the event of the dissolution of a Portfolio Fund, such distributions may contain securities that are not marketable. While the general policy of the Company will be to liquidate such investment and distribute proceeds to Members, under certain circumstances when deemed appropriate by the Board, a Member may receive in-kind distributions from the Company.

 

F. Income Taxes

The Company is a limited liability company that is treated as a partnership for tax reporting. Tax basis income and losses are passed through to Members and, accordingly, there is no provision for income taxes reflected in these financial statements. The Company has a tax year end of December 31.

 

Differences arise in the computation of Members’ equity for financial reporting in accordance with GAAP and Members’ equity for 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 federal and state income tax reporting purposes.

 

The cost of the Portfolio Funds for federal income tax purposes is based on amounts reported to the Company on Schedule K-1 from the Portfolio Funds. As of March 31, 2019, the Company had not received information to determine the tax cost of the Portfolio Funds. Based on the amounts reported

 

10

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

to the Company on Schedule K-1 as of December 31, 2017, and after adjustment for purchases and sales between December 31, 2017 and March 31, 2019, the estimated cost of the Portfolio Funds at March 31, 2019, for federal income tax purposes aggregated $55,374,246. The net unrealized appreciation for federal income tax purposes was estimated to be $62,663,158. The net unrealized appreciation consisted of gross unrealized appreciation and gross unrealized depreciation of $63,994,067 and $1,330,909, respectively.

 

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by 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 statute of limitations is from the year 2015 forward (with limited exceptions). FASB ASC 740-10 Income Taxes requires the Sub-Adviser to determine whether a tax position of the Company 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 Company's tax positions for the current tax year and has concluded that no provision for taxes is required in the Company's financial statements for the year ended March 31, 2019. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in the Statement of Operations. During the year ended March 31, 2019, the Company did not incur any interest or penalties.

 

G. Restrictions on Transfers

Interests of the Company (“Interests”) are generally not transferable. No Member 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 Company) expenses, including asset-based management fees and performance-based fees, which are referred to as an allocation of profits. In addition to the Company level expenses shown on the Company’s Statement of Operations, Members of the Company 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 Company’s Financial Highlights.

 

I. Company Expenses

The Company 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 Manager’s fees; and expenses of meetings of the Board.

 

11

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

J. Foreign Currency Translation

The Company has foreign investments which require the Company 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 Company 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.

 

K. Recent Accounting Pronouncements

In August of 2018, the FASB issued ASU 2018-13 Topic 820, Disclosure Framework – Changes to the Disclosure Requirement for Fair Value Measurement. ASU 2018-13 removes the requirement to disclose the valuation policy for Level 3 investments and provides modifications to the requirements for disclosure on Level 3 investments as well as transfers within the fair value hierarchy. This update is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company has early adopted.  This guidance does not have a material impact on the Company’s financial statements.

 

3. Advisory Fee, Administration Service Fee and Related Party Transactions

 

The Registered Investment Adviser provides investment advisory services to the Company 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 TI Fund and the TE Fund, 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 Company pays the Registered Investment Adviser an investment advisory fee (the “Advisory Fee”) quarterly in arrears at the annual rate of 1.0% as follows: (i) during the period from the initial closing until the fifth anniversary of the Final Closing, based on the total capital commitments (the “Underlying Commitments”) entered into by the Company with respect to investments in the Portfolio Funds; and (ii) beginning on the fifth anniversary of the Final Closing and thereafter, based on the net asset value of the Company. For the year ended March 31, 2019, the Company incurred Advisory Fee, as per income statement totaling $1,320,444.

 

The Registered Investment Adviser has voluntarily reduced its Advisory Fee to the extent necessary to ensure that the Advisory Fee paid does not exceed the amount that would have been paid using the annual rate of 1.5% of total commitments from Members, measured over the life of the Company.

 

12

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

Any such fee reduction will not, however, impact the Registered Investment Adviser’s right to receive incentive carried interest, if any.

 

Pursuant to an Administrative and Accounting Services Agreement, the Company retains UMB Fund Services, Inc. (the “Administrator”), a subsidiary of UMB Financial Corporation, to provide administration, custodial, accounting, tax preparation and investor services to the Company. In consideration for these services, the Company pays the Administrator a tiered fee between 0.01% and 0.02%, based on the first day of each calendar quarters net assets, subject to a minimum quarterly fee. For the year ended March 31, 2019, the Company incurred administration service fees totaling $114,208.

 

The Board consists of six managers, each of whom is not an “interested person” of the Company as defined by Section 2(a)(19) of the Investment Company Act (the “Independent Managers”). Effective January 1, 2016, the Independent Managers are each paid an annual retainer of $35,000. The Independent Managers are also reimbursed for out of pocket expenses in connection with providing their services to the Company. For the year ended March 31, 2019, the Company incurred $210,000 in Independent Managers’ fees.

 

4. Capital Commitments from Members

 

At March 31, 2019 and 2018, capital commitments from Members totaled $149,947,465. Capital contributions received by the Company with regard to satisfying Member commitments totaled $83,295,817, which represents 55.6% of committed capital at both March 31, 2019 and 2018.

 

Capital contributions will be credited to Members’ capital accounts and units will be issued when paid. Capital contributions will be determined based on a percentage of commitments. For the year ended March 31, 2019 the Company did not issue any units.

 

Distributions will be made of available cash (net of reserves that the Board deems reasonable) or other net investment proceeds to Members at such times and in such amounts as determined by the Board of Managers in its sole discretion and in accordance with Members’ respective percentage interests, as defined in the LLC Agreement. As of March 31, 2019, the Company had distributed $33,810,156 to the Feeder Funds.

 

5. Allocations of Capital and Net Profits or Net Losses to Members

 

The net profits or net losses of the Company are allocated to Members 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 Members’ percentage interests, as defined in the LLC Agreement.

 

13

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

6. Capital Commitments of the Company to Portfolio Funds

 

As of March 31, 2019, the Company had total capital commitments of $140,804,551 to the Portfolio Funds with remaining unfunded commitments to the Portfolio Funds totaling $12,856,169 as listed below:

 

Portfolio Funds:  Unfunded
Commitment		 
Buyout/Growth  $8,272,260 
Special Situations   2,374,623 
Venture Capital   2,209,286 
Total  $12,856,169 

 

7. Description of the Portfolio Funds

 

Due to the nature of the Portfolio Funds, the Company 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. The Company has no right to demand repayment of its investment in the Portfolio Funds.

 

The following Portfolio Funds represent 5% or more of Members’ Equity – Net Assets of the Company. Thus, the Portfolio Funds’ investment objectives are disclosed below.

 

DFJ Growth 2013, L.P. represents 11.33% of Members’ Equity – Net Assets of the Company as of March 31, 2019. The objective of DFJ Growth 2013, L.P. is making venture capital investments, both domestically and globally.

 

FTV IV, L.P. represents 7.80% of Members’ Equity – Net Assets of the Company as of March 31, 2019.  The objective of FTV IV, L.P. is investing primarily in privately held companies that offer solutions to the global financial services industry focusing on business services and software.

 

Green Equity Investors VI, L.P. represents 7.74% of Members’ Equity – Net Assets of the Company as of March 31, 2019. The objective of Green Equity Investors VI, L.P. is long-term equity appreciation, principally through equity and equity-related investments in established businesses acquired in management buyouts or other transactions generally on a leveraged basis.

 

Trinity Ventures XI, L.P. represents 7.05% of Members’ Equity – Net Assets of the Company as of March 31, 2019. The objective of Trinity Ventures XI, L.P. is to provide select investors with the opportunity to realize long-term appreciation, generally from venture capital investments.

 

Advent International GPE VII-B, L.P. represents 6.70% of Members’ Equity – Net Assets of the Company as of March 31, 2019. The objective of Advent International GPE VII-B, L.P. is to provide risk capital for and make investments in, development stage and other small and medium sized businesses primarily in Europe and North America.

 

14

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

SPC Partners V, L.P. represents 6.57% of Members’ Equity – Net Assets of the Company as of March 31, 2019. SPC Partners V, L.P. will target superior returns through long-term appreciation of primarily equity and equity-related investments.

 

Lightspeed China Partners I, L.P. represents 5.63% of Members’ Equity – Net Assets of the Company as of March 31, 2019. The objective of Lightspeed China Partners I, L.P. is realizing capital appreciation through investments in securities (whether debt, equity or any combination thereof) issued primarily in early stage and/or expansion stage companies in China.

 

Grey Mountain Partners Fund III, L.P. represents 5.25% of Members’ Equity – Net Assets of the Company as of March 31, 2019. The objective of Grey Mountain Partners Fund III, L.P. is to realize capital appreciation through debt and equity investments, or any combination thereof.

 

8. Indemnifications

 

In the normal course of business, the Company enters into contracts that provide general indemnifications. The Company’s maximum exposure under these agreements is dependent on future claims that may be made against the Company, and therefore cannot be determined; however, based on the Registered Investment Adviser’s experience, the risk of loss from such claims is considered remote.

 

Many of the Portfolio Funds’ partnership agreements contain provisions that allow them to recycle or recall distributions made to the Company. Accordingly, the unfunded commitments disclosed under Note 6 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 Company’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 Company 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 Company. The Company’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 Company will be able to realize the value of such investments in a timely manner, if at all.

 

15

 

 

Excelsior Private Markets Fund II (Master), LLC
Notes to Financial Statements
Year ended March 31, 2019

 

The Company believes that its liquidity and capital resources are adequate to satisfy its operational needs as well as the continuation of its investment program.

 

This portfolio strategy presents a high degree of business and financial risk due to the nature of underlying companies in which the Portfolio Funds invest, which may include entities with little operating history, minimal capitalization, operations in new or developing industries, and concentration of investments in one industry or geographical area.

 

If the Company defaults on its commitment or fails to satisfy capital calls, it will be subject to significant penalties, including the complete forfeiture of the Company’s investment in the Portfolio Fund. This may impair the ability of the Company to pursue its investment program, force the Company to borrow or otherwise impair the value of the Company’s investments (including the complete devaluation of the Company). In addition, defaults by Members on their commitments to the Company, may cause the Company to, in turn, default on its commitment to a Portfolio Fund. In this case, the Company, and especially the non-defaulting Members, 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 Company has evaluated all events subsequent to March 31, 2019, through the date these financial statements were available to be issued and has determined that there were no subsequent events that require disclosure.

 

16

 

 

 

 

  KPMG LLP
Two Financial Center
60 South Street
Boston, MA 02111

 

Report of Independent Registered Public Accounting Firm

 

To the Members and Board of Managers

Excelsior Private Markets Fund II (Master), LLC:

 

Opinion on the Financial Statements

 

We have audited the accompanying statement of assets, liabilities and members’ equity – net assets of Excelsior Private Markets Fund II (Master), LLC (the Company), including the schedule of investments, as of March 31, 2019, the related statements of operations and cash flows for the year then ended, the statements of changes in members’ equity – net assets for each of the years in the two-year period then ended, and the related notes (collectively, the financial statements), and the financial highlights for each of the years in the three-year period then ended. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Company as of March 31, 2019, the results of its operations and cash flows for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the three-year period then ended, in conformity with U.S. generally accepted accounting principles. The financial highlights for each of the years in the two-year period ended March 31, 2016, were audited by other independent registered public accountants whose reports, dated May 27, 2016 and May 29, 2015, expressed an unqualified opinion on those financial highlights.

 

Basis for Opinion

 

These financial statements and financial highlights are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of March 31, 2019, by correspondence with the underlying fund managers or by other appropriate auditing procedures where replies from underlying fund managers were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.

 

 

 

We have served as the auditor of one or more Excelsior and NB Crossroads Private Markets investment companies since 2016.

 

Boston, Massachusetts

May 30, 2019

 

 

KPMG LLP is a Delaware limited liability partnership and the U.S. member

firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss entity.

 

 

17

 

 

Excelsior Private Markets Fund II (Master), LLC
Additional Information (Unaudited)
March 31, 2019

 

Proxy Voting and Portfolio Holdings

 

A description of the Company’s policies and procedures used to determine how to vote proxies relating to the Company’s portfolio securities, as well as information regarding proxy votes cast by the Company (if any) during the most recent twelve month period ended June 30, is available without charge, upon request, by calling the Company at 212-476-8800 or on the website of the Securities and Exchange Commission (the “SEC”) at http://www.sec.gov. The Company did not receive any proxy solicitations during the year ended March 31, 2019.

 

The Company 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 Company’s N-PORT filings are in the EDGAR database on the SEC’s website at www.sec.gov or by calling Neuberger Berman at 212-476-8800.

 

18

 

 

Excelsior Private Markets Fund II (Master), LLC
Board of Managers of the Company (Unaudited)
March 31, 2019

 

Information pertaining to the Board of Managers of the Company is set forth below.

 

            Number of    
            Funds in Fund    
    Term of Office       Complex*    
Name, Position(s) Held,   and Length of   Principal Occupation During Past 5   Overseen by   Other Directorships Held by Manager
Address, and Year of Birth   Time Served   Years   Manager   During Past 5 Years
Disinterested Managers
 

Virginia G. Breen, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1964)

   Term Indefinite – Since 2015   Partner, Chelsea Partners (7/11 to present); Partner, Sienna Ventures (2003 to 12/2011); Partner, Blue Rock Capital (8/1995 to 12/2011); Private Investor and Trustee/Board Member.   15   Director, Modus Link Global Solutions, Inc. (4/01 to 12/13);  Director, Jones Lang LaSalle Property Trust, Inc.;  Trustee/Director, UBS A&Q Registered Fund Complex (5 funds) and Director, Calamos Fund Complex (22 funds); Paylocity Holding Corp.
                 

Alan Brott, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1942)

   Term Indefinite – Since Inception   Consultant (since 10/1991); Associate Professor, Columbia University (2000- 2017); Former Partner of Ernst & Young.   16   Manager of Man FRM Alternative Multi-Strategy Fund LLC; Director of Grosvenor Registered Multi-Strategy Funds (4 funds); Director of Hedge Fund Guided Portfolio Solution (part of the Grosvenor complex); Director of Stone Harbor Investment Funds (8 funds), Stone Harbor Emerging Markets Income Fund and Stone Harbor Emerging Markets Total Income Fund.
                 

Victor F. Imbimbo, Jr., Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1952)

   Term Indefinite – Since Inception   President and CEO of Caring Today, LLC, an information and support resource for the family caregiver market; Former President for North America TBWA\World Health, a division of TBWA Worldwide, and Executive Vice President of TBWA\New York.   16   Manager of Man FRM Alternative Multi-Strategy Fund LLC.
                 

Thomas F. McDevitt, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1956)

   Term Indefinite – Since 2015   Managing Partner of Edgewood Capital Partners and President of Edgewood Capital Advisors (5/2002 to present).   15   Director of Jones Lang LaSalle Property Trust, Inc. (12/04 to 06/15).
                 

Stephen V. Murphy, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1945)

   Term Indefinite – Since Inception   President of S.V. Murphy & Co, an investment banking firm.   16   Manager of Man FRM Alternative Multi-Strategy Fund LLC; Director of The First of Long Island Corporation and The First National Bank of Long Island.
                 

Thomas G. Yellin, Manager

 

1290 Avenue of the Americas

New York, NY 10104

(1954)

   Term Indefinite – Since Inception   President of The Documentary Group (since 6/2006); Former President of PJ Productions (from 8/2002 to 6/2006); Former Executive Producer of ABC News (from 8/1989 to 12/2002).   15   Director of Grosvenor Registered Multi-Strategy Funds (4 funds); Director of Hedge Fund Guided Portfolio Solution (part of the Grosvenor complex); Manager of Man FRM Alternative Multi-Strategy Fund LLC.

 

* As of March 31, 2019 the “Fund Complex” consists of Excelsior Venture Partners III, LLC (“EVP III”), Excelsior Private Markets Fund II (Master), LLC, Excelsior Private Markets Fund II (TI), LLC, Excelsior Private Markets Fund II (TE), LLC, Excelsior Private Markets Fund III (Master), LLC, Excelsior Private Markets Fund III (TI), LLC, Excelsior Private Markets Fund III (TE), LLC, NB Crossroads Private Markets Fund IV Holdings LLC, NB Crossroads Private Markets Fund IV (TE) – Client LLC, NB Crossroads Private Markets Fund IV (TI) – Client LLC, 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, NB Crossroads Private Markets Fund V (TI) Advisory LP, NB Crossroads Private Markets Fund V Holdings LP and UST Global Private Markets Fund, LLC.

 

19

 

 

Excelsior Private Markets Fund II (Master), LLC
Officers of the Company (Unaudited)
March 31, 2019

 

Information pertaining to the Officers of the Company is set forth below.

 

    Position(s)   Term of Office and    
    Held with the   Length of Time   Principal Occupation During Past 5
Name, Address* and Age   Company   Served   Years
Officers who are not Managers
 

James D. Bowden

(1953)

   Chief Executive Officer and President  

Term — Indefinite;

Length — since 2018

   Managing Director, Neuberger Berman LLC, since 2015. Formerly, Managing Director, Bank of America; Manager and Vice President, Merrill Lynch Alternative Investments LLC (2013-2015); Executive Vice President, Bank of America Capital Advisors LLC (1998-2013).
             

Claudia A. Brandon

(1956)

   Executive Vice President and Secretary  

Term — Indefinite;

Length — since 2015

   Senior Vice President, Neuberger Berman LLC, since 2007 and Employee since 1999; Senior Vice President, NBIA, since 2008 and Assistant Secretary since 2004. Formerly, Vice President, Neuberger Berman LLC (2002-2006), Vice President – Mutual Fund Board Relations, NBIA (2000-2008), Vice President, NBIA (1986-1999) and Employee (1984-1999).
             

Mark Bonner

(1977)

   Assistant Treasurer  

Term — Indefinite;

Length — since 2015

   Senior Vice President, Neuberger Berman LLC, since 2015. Formerly, Senior Vice President, Bank of America; Merrill Lynch Alternative Investments LLC (2006-2015); Manager, Advent International Corporation (2004-2006); Senior Associate, PricewaterhouseCoopers LLP (1999-2004).
             

Savonne Ferguson

(1973)

   Chief Compliance Officer  

Term — Indefinite;

Length — since 2018

   Chief Compliance Officer (Mutual Funds) and Associate General Counsel, NBIA, since 2018. Formerly, Vice President T. Rowe Price Group, Inc. (2018), Vice President and Senior Legal Counsel, T. Rowe Price Associates, Inc. (2014-2018), Vice President and Director of Regulatory Fund Administration, PNC Capital Advisors, LLC (2009-2014), Secretary, PNC Funds and PNC Advantage Funds (2010-2014).
             

Corey A. Issing

(1978)

   Chief Legal Officer (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002)  

Term — Indefinite;

Length — since 2016

   General Counsel and Head of Compliance – Mutual Funds since 2016 and Managing Director, NBIA, since 2017. Formerly, Associate General Counsel (2015-2016), Counsel (2007-2015), Senior Vice President (2013-2016), Vice President (2009-2013).

 

20

 

 

Excelsior Private Markets Fund II (Master), LLC
Officers of the Company (Unaudited)
March 31, 2019

 

Information pertaining to the Officers of the Company is set forth below.

 

    Position(s)   Term of Office and    
    Held with the   Length of Time   Principal Occupation During Past 5
Name, Address* and Age   Company   Served   Years
Officers who are not Managers
 

Sheila James

(1965)

   Assistant Secretary  

Term — Indefinite;

Length — since 2015

   Vice President, Neuberger Berman LLC, since 2008 and Employee since 1999; Vice President, NBIA, since 2008. Formerly, Assistant Vice President, Neuberger Berman LLC (2007-2008); Employee, NBIA (1991-1999).
             

Brian Kerrane

(1969)

   Vice President  

Term — Indefinite;

Length — since 2015

   Managing Director, Neuberger Berman LLC, since 2013; Chief Operating Officer – Mutual Funds and Managing Director, NBIA, since 2015. Formerly, Senior Vice President, Neuberger Berman LLC (2006 to 2014), Vice President, NBIA (2008-2015) and Employee since 1991.
             

Josephine Marone

(1963)

   Assistant Secretary  

Term — Indefinite;

Length — since 2015

   Senior Paralegal, Neuberger Berman LLC, since 2007 and Employee since 2007.
             

John M. McGovern

(1970)

   Treasurer  

Term — Indefinite;

Length — since 2015

   Senior Vice President, Neuberger Berman LLC, since 2007; Senior Vice President, NBIA, since 2007 and Employee since 1993. Formerly, Vice President, Neuberger Berman LLC (2004-2006), Assistant Treasurer (2002-2005).
             

Brien Smith

(1957)

   Vice President  

Term — Indefinite;

Length — since 2017

   Managing Director, Neuberger Berman LLC, since 2005. Chief Operating Officer of NB Private Equity Division since 2017.

 

* The business address of each listed person is 1290 Avenue of the Americas, New York, NY 10104, except for James D. Bowden and Mark Bonner whose business address is 53 State Street, 13th Floor, Boston, MA 02109; and Brien Smith whose business address is 325 North Saint Paul St. 49th Floor Dallas, TX 75201.

 

All officers of the Company are employees and/or officers of the Investment Adviser. Officers of the Company are elected by the Managers and hold office until they resign, are removed or are otherwise disqualified to serve.

 

Alternative investments are sold to qualified investors only by a Confidential Offering Memorandum. An investment in an alternative investment fund is speculative and should not constitute a complete investment program. The information presented in this report is current as of the date noted, is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy interests in the Company. This is not, and under no circumstances is to be construed as, an offer to sell or a solicitation to buy any of the securities or investments referenced, nor does this information constitute investment advice or recommendations with respect to any of the securities or investments used. Past performance is no guarantee of future results. Additional information is available upon request.

 

21

 

 

Item 2. Code of Ethics.

 

The Registrant (or the “Fund”) has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, there were no substantive amendments to or waivers from the code of ethics.

 

A copy of the Code of Ethics is incorporated by reference to Excelsior Venture Partners III, LLC’s Form N-CSR, Investment Company Act file number 811-22386 (filed January 7, 2019). The Code of Ethics is also available, without charge, by calling 1-800-877-9700 (toll-free).

 

Item 3. Audit Committee Financial Expert.

 

The Board of Managers (the “Board”) of the Registrant has determined that Alan Brott and Stephen V. Murphy possess the technical attributes to qualify as the audit committee's financial experts and that each of them is an "independent" Manager pursuant to paragraph (a)(2) of Item 3 on Form N-CSR.

 

Item 4. Principal Accountant Fees and Services.

 

KPMG, LLP serves as independent registered public accounting firm to the Registrant.

 

(a) Audit Fees

 

The aggregate fees, billed for professional services rendered by the Registrant's principal accountant for the audit of the Registrant's annual financial statements and security counts required under Rule 17f-2 of the Investment Company Act of 1940 (the "1940 Act") for the fiscal years ended March 31, 2018 and March 31, 2019 were $8,612 and $9,200 respectively.

 

(b) Audit-Related Fees

 

There were no audit-related services provided by the principal accountant to the Registrant for the last two fiscal years.

 

(c) Tax Fees

 

The principal accountant for the audit of the Registrant's annual financial statements billed no fees for tax compliance, tax advice or tax planning services to the Registrant during the last two fiscal years.

 

(d) All Other Fees

 

The principal accountant billed no other fees to the Registrant during the last two fiscal years.

 

(e) (1) During its regularly scheduled periodic meetings, the Registrant's audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the Registrant. The audit committee has delegated pre-approval authority to its Chairman for any subsequent new engagements that arise between regularly scheduled meeting dates provided that any such pre-approved fees are presented to the audit committee at its next regularly scheduled meeting.

 

 

  

 

(e) (2) None of the services described in paragraphs (b)-(d) above were approved by the Registrant’s audit committee pursuant to the “de minimis exception” in paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

 

(f) Not applicable.

 

(g) The amount of non-audit fees that were billed by the Registrant's accountant for services rendered to:

 

(i) the Registrant, and (ii) the Registrant's investment adviser and any control person of the adviser that provides ongoing services to the Registrant for the fiscal year ended March 31, 2019, were $0 and $0, respectively.

 

The amount of non-audit fees that were billed by the Registrant's accountant for services rendered to: (i) the Registrant, and (ii) the Registrant's investment adviser and any control person of the adviser that provides ongoing services to the Registrant for the fiscal year ended March 31, 2018, were $0 and $0, respectively.

 

(h) The Registrant's audit committee has considered whether the provision of non-audit services that may be rendered to the Registrant's investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. No such services were rendered.

 

Item 5. Audit Committee of Listed Registrants.

 

Not applicable.

 

Item 6. Schedule of Investments.

 

(a) The Schedule of Investments is included as part of the report to members 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.

 

Subject to the Board’s oversight, the Registrant has delegated responsibility to vote any proxies the Registrant may receive to the Investment Adviser, Neuberger Berman Investment Advisers LLC (“NBIA”).

 

NBIA is required by the Board to vote proxies related to portfolio securities in the best interests of the Registrant and its members. The Board permits NBIA to contract with a third party to obtain proxy voting and related services, including research of current issues.

 

NBIA has implemented written Proxy Voting Policies and Procedures (“Proxy Voting Policy”) that are designed to reasonably ensure that NBIA votes proxies prudently and in the best interest of its advisory clients for whom NBIA has voting authority, including the Registrant. The Proxy Voting Policy also describes how NBIA addresses any conflicts that may arise between its interests and those of its clients with respect to proxy voting.

 

 

  

 

NBIA’s Governance and Proxy Committee (“Proxy Committee”) is responsible for developing, authorizing, implementing and updating the Proxy Voting Policy, overseeing the proxy voting process and engaging and overseeing any independent third-party vendor as a voting delegate to review, monitor and/or vote proxies. In order to apply the Proxy Voting Policy noted above in a timely and consistent manner, NBIA utilizes Glass, Lewis & Co. (“Glass Lewis”) to vote proxies in accordance with NBIA’s voting guidelines or, in instances where a material conflict has been determined to exist, in accordance with the voting recommendations of Glass Lewis.

 

NBIA retains final authority and fiduciary responsibility for proxy voting. NBIA believes that this process is reasonably designed to address material conflicts of interest that may arise between NBIA and a client as to how proxies are voted.

 

In the event that an investment professional at NBIA believes that it is in the best interests of a client or clients to vote proxies in a manner inconsistent with NBIA’s proxy voting guidelines, the Proxy Committee will review information submitted by the investment professional to determine that there is no material conflict of interest between NBIA and the client with respect to the voting of the proxy in that manner.

 

If the Proxy Committee determines that the voting of a proxy as recommended by the investment professional would not be appropriate, the Proxy Committee shall: (i) take no further action, in which case Glass Lewis shall vote such proxy in accordance with the proxy voting guidelines or as Glass Lewis recommends; (ii) disclose such conflict to the client or clients and obtain written direction from the client as to how to vote the proxy; (iii) suggest that the client or clients engage another party to determine how to vote the proxy; or (iv) engage another independent third party to determine how to vote the proxy.

 

Information on how the Registrant voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge by calling the Registrant toll-free at 866-637-2587 or by accessing the website of the Securities and Exchange Commission (the “SEC”) at http://www.sec.gov.

 

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

 

(a)(1) Identification of Portfolio Manager(s) or Management Team Members and Description of Role of Portfolio Manager(s) or Management Team Member - As of March 31, 2019:

 

Neuberger Berman Private Equity’s investment team is responsible for the day-to-day management of the Fund and, along with other members of NB Private Equity, serves as the day-to-day interface with the members of the Investment Committee, which serve as the Fund’s Portfolio Fund Managers. The Investment Committee and other senior private equity investment personnel also have responsibility for managing private equity investments made on behalf of third-party investors, sourcing new investment opportunities, performing due diligence on all new investment opportunities and monitoring existing investments.

 

The Investment Committee is responsible for the development, selection, and ongoing monitoring and realization of investments:

 

James Bowden is a Managing Director of Neuberger Berman. Previously, Mr. Bowden was a Managing Director at Bank of America / Merrill Lynch, managing the group’s private equity fund of funds business since its inception in 1998. In that capacity he led the private placement capital raising activities, directed investment origination and has ongoing management and administration responsibilities for the Bank of America fund of funds business. Mr. Bowden’s career covers a variety of private equity, commercial banking and management consulting positions. Prior to joining Bank of America / Merrill Lynch, he served as the manager of the Chicago office of Corporate Credit Examination Services for Continental Bank, where he had responsibility for the independent oversight of the Private Equity Investing and Midwest Commercial Banking Division. Earlier in his career, he was a Managing Consultant in the Financial Advisory Services practice of Coopers & Lybrand, specializing in corporate turnarounds and previously focused on commercial lending and problem loan workouts during his time at Continental Bank, Citicorp and the American National Bank of Chicago. Mr. Bowden received his M.B.A. and B.B.A. from the University of Michigan. Mr. Bowden is a Certified Public Accountant.

 

 

  

 

John P. Buser is a Managing Director of Neuberger Berman and Executive Vice Chairman of NB Alternatives. He is also a member of the Private Investment Portfolios, Co Investment, Latin America Private Equity, Northbound and Secondary Investment Committees. Before joining Neuberger Berman in 1999, Mr. Buser was a partner at the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P., where he had extensive experience in the practice of domestic and international income taxation during his 17 year tenure. Mr. Buser was admitted to the State Bar of Texas in 1982 after receiving his J.D. from Harvard Law School. Prior to attending law school, Mr. Buser graduated summa cum laude with a B.S. in accounting from Kansas State University.

 

Kent Chen is a Managing Director of Neuberger Berman and leader of the firm’s private equity efforts in the Asia Pacific region. He is also a member of the Private Investment Portfolios and Co-Investment Investment Committees. Mr. Chen joined Neuberger Berman in May 2015 from the Hong Kong Monetary Authority (“HKMA”) after 17 years in central banking in various positions including Deputy Chief Representative of the HKMA’s New York Office and Advisor to the Executive Director for China at the International Monetary Fund in Washington D.C. Beginning in 2008, Mr. Chen helped to establish the HKMA’s private equity program, comprising of global buyout, Asia private equity and global energy investments. Before joining the HKMA in 1998, Mr. Chen was Head of China Research at Daiwa Securities in Hong Kong covering the Chinese stocks market with a focus on infrastructure, energy and power equipment stocks. Mr. Chen has been awarded the Chartered Financial Analyst designation and earned a Master of M.P.A from Columbia University, M.B.A from University of Hull and Bachelor of Science in Economics from University of London.

 

Michael Kramer is a Managing Director of Neuberger Berman. He is a member of the Co-Investment, Credit Opportunities, Marquee Brands and Private Investment Portfolios Investment Committees as well as a member of the Board of Directors for Marquee Brands. Before joining Neuberger Berman in 2006, Mr. Kramer was a vice president at The Cypress Group, a private equity firm with $3.5 billion under management. Prior thereto, he worked as an analyst at PaineWebber Incorporated. Mr. Kramer holds an M.B.A. from Harvard Business School and a B.A., cum laude, from Harvard College.

 

John H. Massey is the Chairman of the Neuberger Berman Private Investment Portfolios Investment Committee. He is also a member of the Co-Investment Investment Committee. In 1996, Mr. Massey was elected as one of the original members of the board of directors of the PineBridge Fund Group. Mr. Massey is active as a private investor and corporate director. Previously, he was Chairman and CEO of Life Partners Group, Inc., a NYSE listed company. Over the last 35 years, Mr. Massey has also served in numerous executive leadership positions with other publicly held companies including Gulf Broadcast Corporation, Anderson Clayton & Co., and Gulf United Corporation. He began his career in 1966 with Republic National Bank of Dallas as an investment analyst. Mr. Massey currently serves on the boards of several financial institutions, including Central Texas Bankshare Holdings, and Hill Bancshares Holdings, Inc., among others. He is also the principal shareholder of Columbus State Bank in Columbus, Texas and Hill Bank and Trust Company in Weimar, Texas. Mr. Massey received the Most Distinguished Alumnus award from SMU’s Cox School of Business in 1993. In 2009, he and Mrs. Massey were jointly named Most Distinguished Alumnus by The University of Texas from the Dallas/Fort Worth area. He currently serves as Chair of the Board of Trustees of the University of Texas School of Law and as an Advisory Board Member of the McCombs School of Business at The University of Texas. He is also active in oil and gas, agricultural and wildlife conservation activities in Colorado County and Matagorda County, Texas. Mr. Massey received a B.B.A. from Southern Methodist University and an M.B.A. from Cornell University. He also earned an L.L.B. from The University of Texas at Austin. He received his Chartered Financial Analyst designation and has been a member of the State Bar of Texas since 1966.

 

 

  

 

David Morse is a Managing Director of Neuberger Berman, and is the Global Co-Head of Private Equity Co-Investments. He is also a member of Co-Investment, Private Debt and Private Investment Portfolios Investment Committees. Mr. Morse is currently a Board Observer of Salient Solutions, Behavioral Health Group, Taylor Precision Investments, Gabriel Brothers’ Stores, and Extraction Oil and Gas, all of which are portfolio companies of our dedicated co-investment funds. Mr. Morse joined Lehman Brothers in 2003 as a Managing Director and principal in the Merchant Banking Group where he helped raise and invest Lehman Brothers Merchant Banking Partners III L.P. Prior to joining Lehman Brothers, Mr. Morse was a founding Partner of Hampshire Equity Partners (and its predecessor entities). Founded in 1993, Hampshire is a middle-market private equity and corporate restructuring firm with $825 million of committed capital over three private equity funds. Prior to Hampshire, Mr. Morse worked in GE Capital’s Corporate Finance Group providing one-stop financings to middle-market buyouts. Mr. Morse began his career in 1984 in Chemical Bank’s middle-market lending group. Mr. Morse holds an M.B.A. from the Tuck School of Business at Dartmouth College and a B.A. in Economics from Hamilton College. Mr. Morse is a member of the M.B.A. Advisory Board of the Tuck School, a member of the Alumni Council of Hamilton College, and a member of the Board of Trustees of the Berkshire School.

 

Joana P. Rocha Scaff is a Managing Director of Neuberger Berman, Head of Europe Private Equity and a member of the Co-Investment, Latin America Private Equity and Private Investment Portfolios Investment Committees. Previously, Ms. Scaff worked in investment banking covering primarily the telecommunications, media and information services sectors. Ms. Scaff worked in the investment banking division of Lehman Brothers, and prior to that at Citigroup Global Markets and Espirito Santo Investment. She advised on corporate transactions including mergers and acquisitions, financial restructurings and public equity and debt offerings in the United States, Europe and Brazil. Ms. Scaff received her M.B.A. from Columbia Business School and her B.A. in Business Management and Administration from the Universidade Catolica of Lisbon. Ms. Scaff is a member of the LP Committee of the BCVA – British Private Equity & Venture Capital Association.

 

Jonathan D. Shofet is the Global Head of the Firm’s Private Investment Portfolios group and is a Managing Director of Neuberger Berman. He is also a member of the Private Investment Portfolios and Co-Investment Investment Committees. Prior to joining Neuberger Berman in 2005, Mr. Shofet was a member of the Lehman Brothers Private Equity division, focusing on mid-through late-stage equity investments primarily in the technology, communications and media sectors. Prior to that, Mr. Shofet was a member of the Lehman Brothers Investment Banking division, where he focused on public and private financings, as well as strategic advisory in the real estate, technology and utility sectors. Mr. Shofet sits on the Limited Partner Advisory Boards of a number of funds including those managed by Amulet Capital, Beacon Capital Partners, Castlelake Airline Credit and Credit Strategies, Cerbeus Institutional Partners, Clearlake Capital, ComVest Investment Partners, DFW Capital, Monomoy Capital Partners, Platinum Equity, Siris Partners, Tengram Capital Partners, Thomas H. Lee Partners and Vector Capital Partners. He is also a Board Observer for several private companies. Mr. Shofet holds a B.A. from Binghamton University, where he graduated summa cum laude, Phi Beta Kappa.

 

Brien P. Smith is a Managing Director of Neuberger Berman and the Chief Operating Officer of the Neuberger Berman Private Equity Division. He is also a member of the Private Investment Portfolios, Co-Investment, Latin America Private Equity and Private Debt Investment Committees. Mr. Smith sits on the Limited Partner Advisory Boards of a number of investment relationships on behalf of Neuberger Berman funds. Prior to joining Neuberger Berman in 2001, Mr. Smith worked in the middle market private equity firm Mason Best Company, L.P., and its affiliates. While at Mason Best, Mr. Smith served in a number of roles, including executing private equity investments and dispositions, arranging transaction financing and restructuring underperforming investments. Mr. Smith began his career at Arthur Andersen & Co. where he focused on the financial services sector in the southwest. Mr. Smith sits on the Red McCombs School of Business Advisory Council at the University of Texas at Austin. He is also a director of National Autotech Inc. and has also served on a number of other boards of directors. Mr. Smith received a Master’s in Professional Accounting and a B.B.A. from the University of Texas at Austin.

 

 

  

 

David S. Stonberg is a Managing Director of Neuberger Berman and is the Global Co-Head of Private Equity Co-Investments. He is also a member of the Co-Investment, Private Investment Portfolios, Renaissance and Secondary Investment Committees. Before joining Neuberger Berman in 2002, Mr. Stonberg held several positions within Lehman Brothers’ Investment Banking Division including providing traditional corporate and advisory services to clients as well as leading internal strategic and organizational initiatives for Lehman Brothers. Mr. Stonberg began his career in the Mergers and Acquisitions Group at Lazard Frères. Mr. Stonberg is also a member of the Neuberger Berman Risk Committee. Mr. Stonberg holds an M.B.A. from the Stern School of New York University and a B.S.E. from the Wharton School of the University of Pennsylvania.

 

Anthony D. Tutrone is the Global Head of Neuberger Berman Private Equity and a Managing Director of Neuberger Berman. He is a member of all Neuberger Berman Private Equity’s Investment Committees. Mr. Tutrone is a member of Neuberger Berman's Partnership, Operating, and Asset Allocation Committees. Prior to starting at Neuberger Berman, from 1994 to 2001, Mr. Tutrone was a Managing Director and founding member of The Cypress Group, a private equity firm focused on middle market buyouts with approximately $3.5 billion in assets under management. Mr. Tutrone began his career at Lehman Brothers in 1986, starting in Investment Banking and in 1987 becoming one of the original members of the firm’s Merchant Banking Group. This group managed a $1.2 billion private equity fund focused on middle market buyouts. He has been a member of the board of directors of several public and private companies and has sat on the advisory boards of several private equity funds. Mr. Tutrone earned an M.B.A. from Harvard Business School and a B.A. in Economics from Columbia University.

 

Peter J. Von Lehe is the head of Investment Solutions and Strategy and is a Managing Director of Neuberger Berman. He is also a member of the Athyrium, Private Investment Portfolios, Co-Investment, Marquee Brands and Renaissance Investment Committees. Mr. von Lehe sits on the Limited Partner Advisory Boards of a number of investment relationships globally on behalf of Neuberger Berman funds. Previously, Mr. von Lehe was a Managing Director and Deputy Head of the Private Equity Fund of Funds unit of Swiss Re Company. There, Mr. von Lehe was responsible for investment analysis and product structuring and worked in both New York and Zurich. Before that, he was an attorney with the law firm of Willkie Farr & Gallagher LLP in New York focusing on corporate finance and private equity transactions. He began his career as a financial analyst for a utility company, where he was responsible for econometric modeling. Mr. von Lehe received a B.S. with Honors in Economics from the University of Iowa and a J.D. with High Distinction, from the University of Iowa College of Law. He is a member of the New York Bar.

 

Patricia Miller Zollar is a Managing Director of Neuberger Berman.  Within the alternatives business, she is responsible for managing a bespoke Co-Investment Separate Account and leading the NorthBound Emerging Managers Private Equity Fund, a private equity fund which invests in private equity partnership interests and co-investments. She is also a member of the Co-Investment, Private Investment Portfolios, and NorthBound Investment Committees.  Before the management buyout of Neuberger, Ms. Zollar co-headed and co-founded the Lehman Brothers Partnership Solutions Group (“PSG”), a Wall Street business focused on developing strategic opportunities with women- and minority-owned financial services firms. The innovation of the Partnership Solutions Group was chronicled in a case study for the Harvard Business School. Before rejoining Lehman Brothers in 2004, Ms. Zollar was a vice president in the Asset Management Division of Goldman Sachs.  Ms. Zollar began her career as a Certified Public Accountant in the Audit Division of Deloitte & Touche. She received her MBA from Harvard Business School and her B.S., with highest distinction, from North Carolina A&T State University, where she formerly served as Chairperson of the Board of Trustees and is the recipient of an honorary Doctorate degree. Ms. Zollar is a member of the Executive Leadership Council and serves on the executive board of the National Association of Investment Companies and The Apollo Theater.

 

 

  

 

(a)(2) Other Accounts Managed by Portfolio Manager(s) or Management Team Member - As of March 31, 2019:

 

The following tables set forth information about funds and accounts other than the Registrant for which a member of the Portfolio Management Team is primarily responsible for the day-to-day portfolio management as of March 31, 2019, unless indicated otherwise.

 

James D. Bowden

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   13   $2,254,380,000   0   N/A  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  13  $2,254,380,000  0  N/A  

 

Kent Chen

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number  Total Assets  Number  Total Assets  Number  Total Assets  
6 

$1,083,254,293

  35  $14,362,496,574  70  $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  35  $14,362,496,574  70  $18,346,908,601  

 

 

  

 

John P. Buser

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   39   $21,924,786,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  39  $21,924,786,574  70  $18,346,908,601  

 

Michael Kramer

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   35   $14,362,496,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  35  $14,362,496,574  70  $18,346,908,601  

 

John H. Massey

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   35   $14,362,496,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		   Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  35  $14,362,496,574  70   $18,346,908,601  

 

 

  

 

David Morse

             

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   35   $14,362,496,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  35  $14,362,496,574  70  $18,346,908,601  

 

Joana P. Rocha Scaff

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   36   $14,550,146,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  36  $14,550,146,574  70  $18,346,908,601  

 

Jonathan D. Shofet

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   35   $14,362,496,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  35  $14,362,496,574  70  $18,346,908,601  

 

 

  

 

Brien P. Smith

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   35   $14,362,496,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  35  $14,362,496,574  70  $18,346,908,601  

 

David S. Stonberg

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   41   $21,924,786,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  41  $21,924,786,574  70  $18,346,908,601  

 

Anthony D. Tutrone

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   41   $21,924,786,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  41  $21,924,786,574  70  $18,346,908,601  

 

 

  

 

Peter J. Von Lehe

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   35   $14,362,496,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  35  $14,362,496,574  70  $18,346,908,601  

 

Patricia Miller Zollar

 

Registered Investment Companies
Managed		   Pooled Vehicles Managed   Other Accounts Managed  
 
Number   Total Assets   Number   Total Assets   Number   Total Assets  
6  

$1,083,254,293

   35   $14,362,496,574   70   $18,346,908,601  

 

Registered Investment Companies
Managed		  Pooled Vehicles Managed  Other Accounts Managed  
Number with
Performance-
Based Fees		  Total Assets with
Performance- Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-Based
Fees		  Number with
Performance-
Based Fees		  Total Assets with
Performance-
Based Fees		  
6 

$1,083,254,293

  35  $14,362,496,574  70  $18,346,908,601  

  

Potential Conflicts of Interests

 

Real, potential or apparent conflicts of interest may arise should members of the Portfolio Management Team have day-to-day portfolio management responsibilities with respect to more than one fund. Portfolio Management Team members may manage other accounts with investment strategies similar to the Registrant, including other investment companies, pooled investment vehicles and separately managed accounts. Fees earned by the Investment Adviser may vary among these accounts and Portfolio Management Team members may personally invest in these accounts. These factors could create conflicts of interest because the Portfolio Management Team members may have incentives to favor certain accounts over others, that could result in other accounts outperforming the Registrant. A conflict may also exist if a Portfolio Management Team member identifies a limited investment opportunity that may be appropriate for more than one account, but the Registrant is not able to take full advantage of that opportunity due to the need to allocate that opportunity among multiple accounts. In addition, a Portfolio Management Team member may execute transactions for another account that may adversely impact the value of securities held by the Registrant. However, the Investment Adviser believes that these risks are mitigated by the fact that accounts with like investment strategies managed by the Portfolio Management Team members are generally managed in a similar fashion and the Investment Adviser has a policy that seeks to allocate opportunities on a fair and equitable basis.

 

 

  

 

(a)(3) Compensation Structure of Portfolio Manager(s) or Management Team Members - As of March 31, 2019:

 

Our compensation philosophy is one that focuses on rewarding performance and incentivizing our employees. We are also focused on creating a compensation process that we believe is fair, transparent, and competitive with the market.

 

Compensation for the Fund’s Portfolio Management Team consists of fixed (salary) and variable (bonus) compensation but is more heavily weighted on the variable portion of total compensation and is paid from a team compensation pool made available to the portfolio management team with which the portfolio manager is associated. The size of the team compensation pool is determined based on a formula that takes into consideration a number of factors including the pre-tax revenue that is generated by that particular portfolio management team, less certain adjustments. The bonus portion of the compensation for a portfolio manager is discretionary and is determined on the basis of a variety of criteria, including investment performance (including the aggregate multi-year track record), utilization of central resources (including research, sales and operations/support), business building to further the longer term sustainable success of the investment team, effective team/people management, and overall contribution to the success of Neuberger Berman.

 

The terms of our long-term retention incentives are as follows:

 

·Employee-Owned Equity.  Certain employees (i.e., senior leadership and investment professionals) participate in Neuberger Berman’s equity ownership structure, which was designed to incentivize and retain key personnel.

 

In addition, in prior years certain employees may have elected to have a portion of their compensation delivered in the form of equity.

 

For confidentiality and privacy reasons, Neuberger Berman cannot disclose individual equity holdings or program participation.

 

·Contingent Compensation. Certain employees may participate in the Neuberger Berman Group Contingent Compensation Plan (the “CCP”) to serve as a means to further align the interests of our employees with the success of the firm and the interests of our clients, and to reward continued employment. Under the CCP, up to 20% of a participant’s annual total compensation in excess of $500,000 is contingent and subject to vesting. The contingent amounts are maintained in a notional account that is tied to the performance of a portfolio of Neuberger Berman investment strategies as specified by the firm on an employee-by-employee basis. By having a participant’s contingent compensation tied to Neuberger Berman investment strategies, each employee is given further incentive to operate as a prudent risk manager and to collaborate with colleagues to maximize performance across all business areas. In the case of members of investment teams, including Portfolio Managers, the CCP is currently structured so that such employees have exposure to the investment strategies of their respective teams as well as the broader Neuberger Berman portfolio.

 

·Restrictive Covenants. Most investment professionals, including Portfolio Fund Managers, are subject to notice periods and restrictive covenants which include employee and client non-solicit restrictions as well as restrictions on the use of confidential information. In addition, depending on participation levels, certain senior professionals who have received equity grants have also agreed to additional notice and transition periods and, in some cases, non-compete restrictions.

 

 

  

 

(a)(4) As of March 31, 2019, no Portfolio Management Team member owned any Interests in the Registrant.

 

(b) Not applicable.

 

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 members 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 fiscal half-year 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 fiscal year ended March 31, 2019.

 

(b) The Fund did not engage in any securities lending activity and did not engage a securities lending agent during the fiscal year ended March 31, 2019.

 

Item 13. Exhibits.

 

(a)(1)Code of Ethics – see Item 2.

 

(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.

 

(a)(3)Not applicable

 

(b)Certification pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are 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.

 

Excelsior Private Markets Fund II (TI), LLC

 

By: /s/ James Bowden  
  James Bowden  
  Chief Executive Officer and President  

 

Date: June 7, 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: June 7, 2019

 

By: /s/ John M. McGovern  
  John M. McGovern  
  Treasurer  
  (Principal Financial Officer)  

 

Date: June 7, 2019