Q2 2021 Pennantpark Investment Corp Earnings Call
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Good afternoon, and welcome to the pennant Park investment Corporation's second fiscal quarter 2021 earnings Conference call.
Today's conference is being recorded.
At this time of participants have been placed in a listen only mode. The call will be opened for a question and answer session. Following the Speakers' remarks.
I'd like to ask the question at the time simply press Star one on your telephone keypad if.
Maybe like the withdraw your question Chris start to on your telephone keypad.
It's now my pleasure to turn the call over to Mr Art, Penn Chairman and Chief Executive Officer of opinion part of investment Corp. Mr. Penn You May begin your conference.
Good morning, everyone I'd like to welcome you to the pennant Park investment Corporation's second fiscal quarter 2021 earnings Conference call.
I'm joined today by Veeva for out of our Chief Financial Officer.
Of these please start off by disclosing some general conference call information and included discussion about forward looking statements.
Thank you Arthur I'd like to remind everyone that today's call is being recorded. Please note that this call is the property of kind of park investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited.
Oh, the replay of the call will be available by using the telephone numbers and pin.
Provided in our earnings press release as well as on our website.
I'd also like the call your attention to the customary safe Harbor disclosure in our press release regarding forward looking information.
Today's conference call May also include forward looking statements and projections and we ask the team.
You refer to our most recent filings with the efficacy for important factors that could cause actual results to differ materially from these projections.
We do not undertake to update our forward looking statements unless required by law.
Well thank copies of our latest SEC filings. Please visit our website at the park Dot com or call us at 212 ninth year of five 1000.
The time I'd like to turn the call back to our chairman and Chief Executive Officer of Art Penn.
Thanks, Louise I'm going to spend a few minutes discussing how we fared in the quarter ended March 31.
How the portfolio is positioned for the upcoming quarters, our capital structure and liquidity of the financials, then open it up for Q&A.
We are pleased with our performance this past quarter, we achieved a five 8% increase in adjusted NAV.
Adjusted NAV went up 51 person with <unk> 51 per share from $8 69 to.
The $9 20 per share.
We are particularly pleased that or any of it today is up over 5% from what it was pre COVID-19 December 31 2019.
We have several portfolio companies in which our equity co investments have materially appreciated in value as they are benefiting from the recovery. This is solidifying and bolstering our NAV.
And we will highlight these companies in a few minutes.
As part of our business model alongside the debt investments, we make we selectively choose to co invest in the equity side by side with the financial sponsor.
Returns on these equity co investments had been excellent overtime.
Overall for our platform from inception through March 31.
Our $226 million of equity co investments have generated an IRR of 28% and a multiple on invested capital of two nine times.
In the World, where investors may want to understand differentiation among middle market lenders, our long term returns on our equity co investment program on a clear differentiator.
With regard to income generation, we have the opportunity to rotate out of our out of our equity investments over time and it's the yield instruments.
In addition, we have the ability to grow the P&L balance sheet and net of our PSL JV with pantheon, which should also generate additional income for the company.
We are also pleased that in April we diversified our financing sources with the issuance of $150 million of four 5% five year senior notes to institutional investors.
Although we never predicted the global pandemic as you know we have been preparing for an eventual recession for some time.
Prior to the COVID-19 crisis, we proactively positioned the portfolio as defensively as possible the.
The overall portfolio is constructed to withstand market and economic volatility.
As of March 31 average debt to EBITDA on the portfolio was four six times and the average interest coverage ratio of the amount by which cash income exceeds cash interest expense was three one times.
We have no non accruals on our book out of 93 different names in PMT and PSL F.
We have largely avoided some of the sectors that have been hurt the most by the pandemic such as retail restaurants health clubs apparel on airlines, although <unk> does have exposure to oil and gas, which we'll discuss later.
The portfolio is highly diversified with 83 companies in 29 different industries.
Since inception, <unk> has invested $6 billion.
On an average yield of 12%. This compares to a loss ratio of about 19 basis points of annually.
The strong track record includes our any of our energy investments are primarily subordinated debt investments made prior to the financial crisis and now the pandemic.
Our performance through the global financial crisis on recession was excellent during that recession of the weighted average average EBITDA of the underlying portfolio companies declined by seven 2% at the bottom of the recession. This compares to the average EBITDA decline of the Bloomberg North American high yield index of <unk>.
42% we.
We are proud of this downside case track record in the prior recession.
Based on tracking EBITDA of our underlying companies through COVID-19. So far we believe that our EBITDA decline will be substantially less than it was during the global financial crisis.
Many of our portfolio of companies are in industries, such as government services Defense Health care technology software business services on select consumer consumer companies that are less impacted by COVID-19, and where we have meaningful domain expertise.
We believe that we are experiencing a strong recovery with some companies and industries being beneficiaries of the environment.
We are pleased that we have significant equity investments of five of these companies, which can substantially move the needle of our NAV.
I would like to highlight those five companies.
$5 million and $73 million respectively.
We believe that there is a massive market opportunity for cat out of grow in the years ahead with the Medicare advantage program.
The merger with jaws acquisition is scheduled the clothes in June.
At that time, we will receive an though the six $7 million in cash in on $6 million 629953 shares of <unk> Health and limited partnership controlled by of financial sponsor, where the sponsor will earn 20% of the ex of proceeds.
The shares will be locked up for six months from.
From evaluation perspective, due to the lockup the independent valuation from value of the position with the 6% illiquidity discount to the traded value on March 31.
Well froze as the largest national distributor of aftermarket custom wheels.
Our equity position as the cost of 500000 and of fair market value of 26.4 million as of March 31.
At the end of of March the company announced a strategic transaction with the new sponsor of investment vehicle, which will result in the full exit of our investment in wheel price.
The transaction is expected the clothes in the next couple of weeks.
This will result in our equity investment and we'll prose generating and IRR of of 104% and of multiple on invested capital of seven times.
Walker Edison is the leading e-commerce platform focused on selling furniture exclusively online through top e-commerce companies.
Our equity position as the cost of $1.9 million and of fair market value of of $16 7 million as of March 31.
Shortly after quarter and the company executed of refinancing and dividend recap, which resulted in shareholders receiving two times there costs, while maintaining the same ownership in the company.
This resulted in PNT of receiving a three $8 million cash payment on its equity position.
P T network as the leading physical and occupational therapy provider in the mid Atlantic States.
Our equity investment and Petey came through of restructuring, which came about after the company made several of operational mistakes.
We've always had of positive view of of the industry and the outlook due to the industry tailwind and demographics, which results, which result in comparable companies trading it EBITDA multiples of 12 to 15 times.
Under our ownership we brought in an excellent management team the corrected those operational mistakes and of shepherded the company well through COVID-19.
Our equity position as the cost of $23 million and of fair market value of 48 million as of March 31.
Mid Ocean, JF holdings or JF petroleum.
As a leader in the distribution installation and servicing of vehicle fueling and related equipment to retail fueling stations retail feeling locations in the United States.
As a result of of restart hearing several years ago PNT owns approximately 30% of the excuse me 36% of the company's equity.
After the restructuring a new management team was recruited to stabilize the business and returned it the growth.
Additionally, several accretive acquisitions have been completed and of stable long term senior financing package was put into place in 2019.
The company performed well through COVID-19 is key and is continuing to grow organically and through acquisitions as.
As of March 31, PNT owned equity securities with the cost and fair market value of 40 and $43 million respectively.
These companies are gaining financial momentum in this environment and are any of you should be solidified of bolstered from the substantial equity investments as their momentum continues.
Additionally, we are pleased with the liquidity events of wheel pros and Walker Edison, which are a solid start to our equity rotation program.
PNT has among its the lowest percentage of energy investment since 2013.
Energy investments represent only six 7% of the overall portfolio.
Ram completed it's the last two wells in January the results were strong and among the best in the Austin Chalk Ram.
Ram is now on stable operational and financial footing and has benefited from higher prices and production the.
The company is free cash flow of positive after that service and plans to use any cash flow to repay debt.
As of March 31 to equity represented approximately 36% of the portfolio.
Over 60% of this 36% has come from appreciation over the last 12 months.
Driven by many of the companies.
Previously mentioned on.
Our long term goal continues to target that percentage down to about 10% of the portfolio.
As we monetize the equity portfolio, we're looking forward to investing the cash into yielding debt investments to increase net investment income.
The outlook for new loans as attractive we are focused on the core middle market, which we generally defined as companies with between $10 million and $50 million of EBITDA.
We liked the core middle market because it is below the threshold and does not compete with the broadly syndicated loan or high yield markets as such we do not compete with markets, where leverages higher equity cushion lower covenants are light white or nonexistent information reiser fewer EBITDA adjustments or higher.
And less diligence and the timeframe for making an investment decision is compressed.
On the other hand, where we focus on the core middle market, because we are not competing with the broadly syndicated loan or high yield markets.
Generally our capital is more important to the borrower.
As such Leverages lower equity cushion higher.
We have quarterly maintenance covenants, which are real we received monthly financial statements to be on top of these companies.
If there are EBITDA adjustments there more diligence then achievable and we typically a six day weeks to make thoughtful and careful investment decisions.
According to S&P loans, the companies with less than $50 million of EBITDA have of lower default rate and higher recovery rate than those loans the companies with higher EBITDA.
We also believe the middle market lending as of vintage business. This upcoming vintage of loans is likely to be the most attractive we've seen since the 2090 of 2012 time period, which was the time period of after the global financial crisis.
This vintage is characterized by leveraged levels that are lower equity cushion is higher yields are higher than the package of protections, including covenants are tighter.
After enduring about five years of late cycle market for middle market lending, it's refreshing to have attractive risk reward available to us and.
Let me now turn the call over two of each of our CFO to take us through the financial results.
Thank you Lord.
For the quarter ended March 31st net investment income total 13 cents per share.
Looking at the top of the expense categories.
Fees totaled four $3 million taxes general and administrative expenses totaled $1.3 million and interest expense totaled $5 million.
Net unrealized gain on our investments $33 million or 50 cents per share.
Net unrealized the appreciation on our credit facilities was six cents per share.
Net realized gains on investment was one.
For sure.
Our net investment income exceeded our of dividend by one.
For sure.
Consequently, niv per share wind from $8 78 two.
Two $9.24 per share.
Adjusted and Navy, excluding the mark to market of our liabilities. It was $9.20 per share up five 8% from $8.69 per share.
As a reminder.
Our entire portfolio of quite a facility and senior notes or mark to market by our board of directors each quarter using the exit price provided by independent affiliation firms security and exchanges or independent broker dealer quotes when active markets are available under.
Eight 2008 25.
In cases, where broken the law quote are Enoch, David we use independent of all your friends to value the investment.
Our spillover as of September 30th was 33 cents per share.
Our gap debt to equity ratio net of of cash was zero point of nine times.
Regulatory debt to equity ratio of narrow cash, which excludes FDIC debt was 0.7 times.
With regards to the Navy.
I'll recap Niv was $9.24 as of March 31 up approximately 5% from the far quarter, which reflects both the markup of assets offset by the mark up of certain liabilities.
Assuming like liabilities or not mark to market adjusted and Navy is $9.20 up approximately five 8% from the prior quarter.
We have ample liquidity too fond revolver drawers and we're in compliance with all of our facilities as of March 31.
We have readily available boring capacity in cash liquidity to support our commitments.
We have a strong capital structure with a diversified funding source and no near term maturities.
We have $435 million revolving credit facility maturing in 2024 with the syndicate of banks.
$119 million of SBA debenture of maturing in 2026.
$86 million of unsecured notes maturing in 2024.
And then yearly issue of $150 million of unsecured notes maturing in 2026.
Our overall debt portfolio has a weighted average yield of 9.3%.
On March 31st of all parts of all the consisted of 83 companies across 29 different industries.
The portfolio was invested 38% in firstly senior secured debt sixth.
16% in second lien secured debt.
10% of subordinated it including 6% empty Sof.
And 36% of preferred in common equity, including 3% in PSL it.
92% of the portfolio has a floating rate all of which has of LIBOR floor. The average like where floor is 1%.
We have concluded in consultation with our board to extend the incentive fee waiver through June 30th of 2021 now.
Now, let me call the turn the call back to art.
Thanks for the.
To conclude we want to reiterate our mission our goal to generate attractive risk adjusted returns through income coupled with long term preservation capital everything we do as a line to that goal, we try to find less risky middle market companies that of high free cash flow conversion, we capture the free cash flow of primarily in debt instruments, and we pay all of those contracts.
Cash flows in the form of dividends to our shareholders in closing I'd like to thank our extremely talented team of professionals for their commitment and dedication. Thank you all for your time today and for your continued investment and confidence.
And us.
That concludes our remarks at this time I would like to open up the call the questions.
Thank you if you would like to ask the question. Please signal by pressing star one on your telephone keypad, if you're using the speakerphone. Please make sure your mute function as turned off to Larson will treat our equipment again price star one to ask the question.
And we'll take our first question from Casey Alexander with come to the point.
Hi, good afternoon.
Can you.
First wanted to just make sure that I heard correctly.
Correctly of of the 36% that's equity.
The only 3% of.
Of that is represented by the JV and the other 33% is the straight equity is that the right number.
Just take a look here the BB may have a range from you that that is the right number of all 3.4% is b S. I left that is correct.
Okay. So is there I mean PSL up at 3% of the entire portfolio is there room to grow that.
Many bdcs have J.
Jv's did or twice that size in terms of their relative position in the portfolio and could.
And is there any room to increase the dividends that come from the JV, yes.
So that's a good question and and.
Just referred to the equity we also have subordinated debt.
And PSL ask too so.
I'm going to say, they're on our sub debt pieces of roughly twice as big as our equity be so call at the beach.
Percentage.
Okay. So yeah, so 9% of total, but yes, I mean, our goal is a.
Fully extend the existing JV and we have a lot of the room to go there.
And then subject to pantheon.
Prove of course and partnership we we'd be.
Totally open to expanding that JV optimizing it if you look on what's going on over the PFT, Our sister company was Kemper.
We've grown that JV growing of more we've optimize the financing by doing a CLO transaction to to get a higher row.
So.
We're not there quite yet panting on the newer to the to the business, but and that would be an aspirational at least from Penn of parks standpoint is to is to grow and optimizing.
Okay, and then secondly.
If you could just give us the flavor of for how the outlook looks for originations over the next quarter too high your pipeline looks how you would compare that pipeline to what you're expected repayments are and potential.
Ability to grow the interest earning side of the portfolio.
We're busy.
Busy is is is good and also busy also sometimes means repayments so.
It's an active market again, the market as solid out and it's kind of very very active now we are getting some repayments and we're also putting new money out we.
We've never had a real challenge ramping our portfolio subject to our quality control constraints. We obviously only wanted to do deals that were very comfortable. So if you look at our history of over 14 years, we've never had a problem originating assets to fit our box.
The deals because they are more bespoke they take time.
They take a couple of months to work and you're negotiating covenants and things like that it's not like you're flipping a switch but that said we are active we do hope and expect to grow both of the JV.
PSL F as well as the piano on balance sheet, and importantly, and we're starting to see the the the degree shoots was wheel pros and Walker Edison taken those equity proceeds and converting them to yield is obviously key key part of the strategy and we're looking forward to doing that all.
Alright, great Alright. Thank you I appreciate you taking my questions. Thanks Casey.
Our second question will come from Robert died with Raymond James.
Hi, guys.
Some semi housekeeping lessons on on what can Edison I mean, you you mentioned the $3.8 million cash payment what should we expect say half of that to be back to you guys is difficult then the maybe the other half to be the turn of the capital of take your cost basis dances, yeah that'll with the whole thing the the dividend income.
It will be based on what we could tell it'll be the FERC. Obviously, the first part of its return the capital and the second part of it looks like it's going to be counted as of capital gain capital gains. So it will not be in good it'll be a cabinet.
Then just on the the debt.
Side I mean, obviously.
The the.
The the.
The liability settlements in good shape would you.
Is it color on the anticipated that you'd call the 86 million when when that becomes call of balloon October or are you going to let that the.
Stay.
The show the $86 million from the baby born on the baby bonds.
Okay. That's a good question.
I think we'll have to see what our cost of capital is then and do the math and the fees.
Obviously, we just do the deal that was much less expensive. So yeah haven't made the haven't made any pre decisions, but that is certainly an opportunity.
Great. Thank you and then last kind of forget the long term goal to get equity obviously.
Non non ex.
Equity down to 10%.
Once a realistic time same.
To achieve that goal on me is that three years out is it going to take longer than on the certainly not going on in the 12 months I would think so I mean <unk> <unk> <unk>.
Maybe I made it.
Sure right.
The great question of to an Imponderable question right. It's yeah.
Guessing.
Certainly not a year and and hopefully not three years you are right I mean I found the first of tighten up from the band for you.
Some of these we control some of these we don't control we control Ram to some extent, but we don't control, where the where the oil and gas M&A market is when the oil and gas M&A market starts to heat up.
We will hopefully more action Ram we do control Pt's pivot.
Here's just as a general.
If you really want to say, let's run the table get it down the 10% I think that's probably right.
Okay Fair enough. Thank you that's all my questions and really appreciate all the detail on on the portfolio of companies of the.
The target market, but thank you for that.
Thank you.
Our next question will come from Ryan Lynch with <unk>.
Hey, good afternoon, guys. Thanks for taking my questions.
First off congrats on a really nice quarter I just had one today.
Can you talk about.
Has there been at each and so on.
Obviously, you guys historically, making the equity co investments has been a very successful.
Part of.
Your success story tend to generate from some nice snaps through this COVID-19 downturn of its been a part of your your long term of investment thesis of.
Making some of these investments start to offset some of the losses in your credit book and hopefully generate some gains on longer term I'm. Just wondering now with such a large equity exposure and your desire to reduce.
That that debt position in your portfolio of somewhat.
Does that change the way you guys are looking when you guys are looking at new investments that.
Im making you more hesitant to make equity co investment.
Adding more equity to your books or is that just as.
As you know keeping that investment philosophy on changed since it's worked so well for you in the past.
It's a good question most of these equity co investments are $1 million to $3 million bites every once in a while we'll do one thats of $4 million by so individually, they're not that big of unusually there, maybe 5% or maybe 10% of the amount of debt that we're lending so as the individual bikes they're relatively.
Small they can have on.
As we're getting.
As we're exiting these these bigger positions that of grown.
Okay type of that that makes sense.
That's all for me today I appreciate the time.
Thank you.
We'll take our next question from Mickish line with Ladenburg.
Yes, good morning art and of the art.
Alright, I wanted to follow up on the lines question about portfolio strategy give.
Given how strong the economy is and how much support the federal government is.
Providing to the economy are you more interested in investing in the second lien and subordinated debt in this environment you know considering that you know the the administration one of them for awhile and I imagine we can expect more support if needed.
And and if so are you.
Are the terms that you can get on those markets acceptable to you Wanna risk adjusted basis.
Yeah. So yeah, great question, Mickey and we think about a lot so of P. N N T utilize isn't it [laughter].
Most of the capital structure strategy, so what's our cross the capital structure strategy, it's exactly what it means it means first lien some select secondly, imagine an equity converse so.
So we have done been doing a little secondly in the mess, we will continue to do some of it the bars high.
We the you're right the economy and the tail ones of the economy do are are helpful fact of.
And where we can see quick deleveraging of Derisking, whether it be first leaner secondly, mess that certainly helps us get comfortable with the debt security and also making that equity equity co investment So we'll pros.
The second link deal.
That was that was the secondly deal we did a handful of years ago, and we did get healthy call investing that's worked out well Walker edits on the other hand was kind of of first lean more of a stretch senior Canada was the first line. So it's been a mixture.
So but the point is yes, we are open for business on the second lien mess side.
I'm not saying it's.
It's a massive part of what we're doing because it's something we've learned the hard way you need to be really really careful but the risk adjusted returns when you find the right ones like wheel Pro where you can see a quick deleveraging and derisking.
Can be very very <unk>.
Profitable. So we will keep it will continue to be part of the mix.
I appreciate that and thanks for that are.
You mentioned Ram a little bit in your comments and I don't Wanna be the dead horse, but the price of oil has remained and that sort of $60 plus level of which I think in the past you've mentioned is where he expected Emma.
<unk> in the oil patch to start to develop are are you seeing any green shoots at all piece of the you know that segment and I would look for ramp eventually be acquired by strategic fire.
So.
On a couple a couple of responses to make the first is $60 of the companies generating good cash flow and paying off debt.
Always helpful creates equity you create equity value on your pay off debt and that's that's certainly of what's going on here. So that's nice.
With regard MAA look I don't I I have we seen green shoots or green shoot.
I think we're in the more green shoot as opposed to greet shoots.
Area, but.
Inevitably and hopefully as.
On the market continues to be stable.
We will see more shoots and.
And therefore.
More M&A activity will come in at some point there'll be a robust market hopefully for Ram in the meantime.
You know.
Hunker down generating cash flow of paying off debt.
The the acreage the Ram has now been proven out very nicely. It's all from the matter of public information. It's on the <unk> website. So anybody who is looking for acreage and productive acreage and that Austin chalk area can see the numbers and they're very attractive some of the best wells in that area. So.
We're doing we're doing everything we can we can't control of that environment. The Ministry loan. We got really extends that option out nicely again, we want we want to sell and find the right buyer at the right price of the right time, but we do have a long tail option at this point, we in the last 12 months of done a really good job extending that option.
That said I do also want to say that and I'll highlight of this we're at the lowest percentage of oil and gas on our portfolio in the last eight years of.
And we hope Ram does well and we hope.
We can get great value for Ram overtime, but in the meantime, we have some companies and industries that are kind of more of our four day, where we of domain expertise on healthcare.
And consumer et cetera, where we see real secular growth and real real nice tailwind so.
Where the Ram a year from now is out of our portfolio still six 7% of our portfolio or a smaller percentage of our portfolio because the portfolios grown in some of these other companies of growing.
Time will tell but we feel like we've got.
We've got it managed as best we can at this point.
Art as of follow up.
Given the uncertainty as a as the timing of of potential exit on Ram is there any room in their financials, given the cash flow profile for them to eventually pay you a dividend.
As part of its good question and we have thought about that you might imagine.
As part of the alone with the Fed main Street program, which is of great loan we are prohibited from paying dividends. So.
So at this point, so let's see what happens, let's see the company's results.
Certainly when we pay down debt, we by definition increase equity value.
And let's keep that option alive and.
At this point, we think keeping the option alive as long as possible is probably the best thing to do.
Of any option we have here.
I understand.
Just a couple of housekeeping.
Housekeeping questions, maybe four of these.
I apologize, but we're just swamp with the earnings could you give me the main drivers of the unrealized gains this quarter and also the.
On distributed taxable income per share figure.
Have you of you want to go on to the man.
The drivers yeah okay.
Have you.
I know, it's the certainly the same names that Arthur had mentioned before P. T like poverty of nine cents unrealized gain quarter over quarter Ram energy, we just discuss about all the good seven.
Jonathan Thrang about poverty of 12 cents quarter of quarter of.
A bunch of the wheel true positive.
Uhm, the larger moving quarter.
Quarter over quarter.
And U T I for sure.
It was I think we said it was 22.
22 cents those are 30, 30 30, okay, sorry for that.
Create your taking my questions aren't that that's it for me this morning.
Okay, great. Thanks Mickey.
Okay.
We'll take our next question from Kyle Joseph with Jeffries.
A good morning here afternoon. Thanks.
Thanks for taking my questions must of been asked and answered better just wanted to follow up for kind of a.
Your sense of way of thinking about portfolio yields as we think of that the the market recovering rotation of the equity assets and then the potential for higher repayments give us the sensor how you see yields churning throughout the remainder of the year.
Yeah. That's a great question kind of on the kind of relates to the earlier question about medicine, the second lean right. So.
Prototypical first lien deals today or.
Oh 525 to Al 650.
Prototypical secondly, the meds are al 800 to L. 900, all of these I'm assuming of 1% floor. So it's really of mixed question.
On how much secondly, mess that we're going to see that we like we're stringent standards fit I think last quarter, our yields on our new new loans were a little higher because we had a low sleigh of higher mix of second liter mess.
This quarter, we didn't have quite as much.
<unk>.
So that's kind of where we see the market today.
It's still probably going to be mostly first lien probably still going to be most of what we're doing in terms of the new but we will opportunistically and when when the credits meet our thresholds do some secondly to miss.
Got it very helpful. Thanks for answering my questions. Thank.
Thank you.
We'll take our next question is from lists of Adele with J P. Morgan.
Good morning, Thank you for one of the questions.
Really appreciate all of the detail on the equity from the home.
Alright, <unk> around timing and the ones that you control of our system on.
Specifically I just want to make sure I heard you guys right.
On Cornell that's the only one I heard you guys talk about a lot that line and kind of of real proud of him walking out of form those are the things that are two of them.
That will be complete over one net.
Yes, so we'll probably will be out of entirely here on the next couple of weeks Walker Edison. We've we've got two times are cost back already and we still own the same percentage of the company that we owned prior.
So we'll Walker Edison have an event in the next year or two we hope. So we think so again, we're not in control of that but companies doing amazingly well on by a sponsor so.
The gravity should take hold on at some point the sponsor should should find the full exit.
Kanno is the.
Is getting merged in with the spak. So that's the one where you can look at it publicly traded stock price every day, it's jaws acquisition Jws is the ticker.
And.
We will we are in a limited partnership controlled by a sponsor that will end up owning a bunch of jaw stock. After the dispatch. So that's the one you can look at every day and the the independent valuation firm.
Took of 6% of liquidity discounts.
From the publicly traded price and then also because we're locked up with the sponsors of 20% exit the <unk>.
Lots of getting 20% of the exit proceeds so that kind of works its way down with the 6% discount with the 20% exit.
Payment to the sponsor to the value you see.
At 331, and the value of you could ascertain today, if you want to.
The little bit less than what it was 331 so.
And then once that the spec happens.
There is a six month lock up now.
Because the the sponsor lp's, including US will on the majority of the company. It's not like you wave the magic wand, and you're totally liquid and.
Six months of one day, it's something that like any sponsor deal that goes public is something that needs to happen over time, the liquidity events. It's gotta be done judiciously certainly the company itself will probably want to raise equity for growth. So it's kind of you probably think about it over a couple of year time period.
Alright, that's really helpful. Thanks, so much.
Thank you.
And our final question of the day will be a follow up from Casey Alexander with the <unk> at this point.
Yeah, Hi, one of the things that we always try to track is industry concentration risk and looking at the portfolio.
And looking at the 10-Q, I think 23% in health care education and childcare.
Normally that would be a number of that would bother me, but I think that's such a broad categories, probably capturing a lot of companies the.
Really aren't very comparable at the each other or does it make any sense the cut that into a couple of different baskets and better define it for investors.
Right, that's a great idea it is.
We do quite a bit of health care and health care of itself has a number of different vehicles, they're not all correlated.
We've had the benefit of the kanno.
Mark up.
And yes, we do do some education deals as well so that are not correlated to health care. So.
I think it's a good suggestion and maybe we'll start doing that or figure out some way to disclose that in a more granular basis. Good idea. Okay, alright, great. Thanks for taking my question.
Thank you.
And that will conclude today's question and answer session I will now turn the call over to Mister Art Penn Fernando closing remarks.
I just want to thank everybody for being on the call. The day I know it's of busy time in the BDC space of thank you for your attention and focus we appreciate it and we look forward to talking to you next in early August after next quarter. Thank you so much.
That will conclude today's conference. Thank you for your participation you may now disconnect.
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