100% allocated to first and second lien loans only, history has proven that intelligently managed equity sleeves are potentially beneficial for BDCs long-term.
Main Street Capital (MAIN) is the most obvious example of transforming equity exposure into net asset value (“NAV”) per share growth over time but it’s not alone (e.g. Newtek Business Services (NEWT).
In aggregate, 87% of the portfolio is senior secured debt investments and it is spread across 138 portfolio companies with an average median debt portfolio company EBITDA of $106 million. Total investments are $2.6 billion as of the end of Q3.
To make sense of those statistics, the percentage of senior secured debt is about average for the sector while portfolio company diversification and portfolio company EBTIDA are moderately above average (better). As an interesting side note, the portfolio’s median debt portfolio company EBTIDA was $50 million as of or less than half the current figure.
The portfolio size of $2.6 billion is large enough to qualify for an investment grade credit rating (typically a $1.0-$1.5 billion portfolio is needed), which is arguably most important, but is much smaller than the likes of Ares Capital Corporation (ARCC), Owl Rock Capital Corp, and FS KKR Capital Corp (FSK).
As we note in every BDC analysis, industry exposures are paramount and are usually the determining factor when it comes to resiliency during a crisis.