Q2 2021 SLR Senior Investment Corp Earnings Call
[music].
Good day and thank you for standing by welcome to the Q2.2021as a lot of senior investment Corp earnings call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Ask the question during the session you will need the press star 1 on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Michael gross Chairman and co CEO. Please go ahead.
Thank you very much and good morning, welcome to the SLR Senior investment Corp. 's earnings call for the second quarter ended June 30 of 2021, and I'm joined today by Bruce <unk>, Our co Chief Executive Officer, and Richard <unk>, Our Chief Financial Officer Rich could you. Please start off by covenant the webcast and forward looking statements.
Of course, thanks, Michael.
I'd like to remind everyone that today's call and webcast are being reported.
Please note that they are of the property of <unk> Senior investment Corp, and that.
Any unauthorized broadcast in any form are strictly prohibited.
This conference call is being webcast from the investors tab on our website at Www Dot <unk> Senior investment Corp Dot com.
Replays of this call will be made available later today as disclosed in our press release.
I would also like the call your attention to the customary disclosures in our press release regarding forward looking information.
Statements made in today's conference call and webcast may constitute forward looking statements, which relate to future future events for our future performance of financial condition. The statements are not guarantees of our future performance financial condition or results and involve a number of risks and uncertainties, including impacts from <unk>.
The <unk> 19.
Past performance is not indicative of future results actual results may differ materially as the result of the number of factors, including those described from time to time in our filings with the SEC as.
As far as senior investment Corp undertakes no duty to update any forward looking statements unless required to do so by law.
To obtain copies of our latest SEC filings. Please visit our website or call us at 2.1 to 90.931670.
At this time I would like to turn the call back to our chairman and co CEO.
Gross thank you very much rich.
SLR Senior investment Corp, second quarter results benefited from both portfolio expansion and strong overall fundamentals.
Net asset value per share for the quarter ended June 30 was $815.87, and net investment income per share of <unk> 25.
Represented a 25% increase over the prior quarter.
Against the backdrop of the continued economic rebound the use of middle market have reflected a more favorable economic climate punctuated by a resurgence in sponsor activity and a robust pick up in M&A transactions.
Support of financing markets and record amounts of private equity dry powder has the combined to result in record levels of deal activity in the second quarter.
We expect robust transaction volume to continue for the remainder of the year at the firm book to execute deal ahead of potential changes to the U S tax code.
During the second quarter SUNS originated $127 million of investments consisting of $96 million of newer of new originations and $31 million of incremental financings for existing portfolio companies.
New cash flow investment in large upper middle market companies are made possible by the scale of the large platform.
This allows us to participate in transactions that available only to managers, who can hold up the $200 million and position sizes of <unk>.
Number of these transactions were a combination of funded loans and delayed draw term loan commitment.
The certainty of debt capital to facilitate future acquisitions and future growth of portfolio companies.
Of note our second quarter burst of activity included the SLR business credit strategic acquisition of fast pay partners of fat.
The <unk> platform to provide working capital solutions to media firms across the United States.
Based in California, fast pay enabled clients to accelerated receivable collections and active liquidity.
The acquisition, which Bruce will discuss in more detail further diversifies, our solar business credit financing capabilities into a new niche market with attractive risk adjusted returns.
At June 30 over 99, 9% of our comprehensive investment portfolio at fair value with investment in first lien loans and approximately 57% of consisted of loans and our specialty finance verticals, including SLR business credit acquisition of the prospect.
At June 30 of.
Our net debt to equity was 5.1 times up from 4 times at March 31, and approximately 62% of vessel. Our senior funded debt was comprised of unsecured term note.
We have over 320 per million of available capital to support future earnings growth and importantly, the economic climate has improved considerably and our pipeline across all 4 business verticals is very attractive.
We expect portfolio growth to continue in the coming quarters from first lien cash flow as well as asset base investment opportunity.
Our priority in 2021, let's take advantage of the strong economic rebound and attractive opportunities debt to.
To deploy our considerable available capital both through new investment and drawdowns of previously committed delayed draw term loans, which should drive continued growth in our net investment income.
So the unique position to allocate capital across the diversified lending strategies for the most favorable risk adjusted return investments we are confident in the ability to grow the portfolio, while remaining disciplined in our underwriting at this time I'll turn the call over to our CFO rich for Tika take you through the second quarter highlights.
Thank you Michael.
At solar senior investment Corp's net asset value at June 30.
For $254.8 million for.
For $15.87 per share.
This compares to a net asset value of $255.3 million for $15.91 per share at March 31, 2021.
As far as senior with balance sheet investment portfolio at June 30 of 2021 had a fair market value of $382.9 million in 47 portfolio companies operating in 18 industries compared to a fair market value of $367.5 million in 47 portfolio companies.
<unk> operating in 18 industries at March 31, 2021.
In addition, as of June 32021, the company had unfunded loan commitments, excluding revolvers of $27 million.
Turning to SUNS funding profile and leverage.
During the second quarter of 2021, we amended SUNS revolving credit facility and extending its maturity until June 2026.
That said at June 30 of 2021, SUNS had only $136.3 million of debt outstanding with the net debt to equity ratio of the Euro 5.1 times up.
Up from zero of 4 times at March 31, 2021.
At June 30 of approximately 62% of Sun's debt is in the form of unsecured 3.9% fixed rate notes.
When including the non recourse credit facilities had SLR healthcare ABL and Thats for business credit as far as senior has over $325 million to fund the earnings growth as of June 32021, subject to borrowing base limitations.
As a reminder, as horse and seniors target leverage ratio is 125 times to 1.5 times net debt to equity under the reduced asset coverage requirement.
From a P&L perspective.
Gross investment income for the 3 months ended June 32021 totaled $7.5 million compared to $6.6 million for the 3 months ended March 31.2021.
Expenses for the 3 months ended June 32021, with $3.6 million compared to $3.5 million for the 3 months ended March 31.
Net investment income for the quarter ended June 32021 was for <unk> zero million with 25 per average share as compared to $3.2 million for 'twenty per average share for the 3 months ended March 31.2021.
Below the line.
Solar senior had net realized and unrealized gains for the second fiscal quarter of 2021 total.
<unk> 0.3 million.
The net realized and unrealized gains of $1.6 million for the 3 months ended March 31.2021.
Accordingly.
As far as senior had a net increase of net assets, resulting from operations of $4.2 million or <unk> 26 per average share for the 3 months ended June 32021.
This compares to a net increase in net assets, resulting from operations of $4.8 million for 30 per average share for the 3 months ended March 31, 2020 'twenty 1.
And lastly, our board of directors declared of monthly distribution for August 2021 of <unk> 10 per share payable on September 32021 to stockholders of record on August 19.2021.
And at this time I'd like to turn the call over to our co Chief Executive Officer, Bruce Polar.
Thank you rich.
We continue to focus on expanding both our asset base and cash flow lending businesses. The combination of these strategies enabled SUNS to act as a solutions provider to middle market companies and offers multiple avenues for portfolio growth.
SUNS comprehensive portfolio of totaled $570 million at June 30, and was highly diversified encompassing 230 borrowers across a 110 industries.
Approximately 57% of our portfolio was invested in <unk>.
Asset based and life science lending strategies and the remaining 43% was in the senior secured cash flow loans.
Our largest industry exposures were digital media.
Healthcare services and insurance.
The average investment per issuers, $2.5 million or less than 1 half of 1%.
At June 30 of approximately 100% of our portfolio consisted of first lien loans with no second lien.
Loan exposure and a de minimis amount of equity.
At June 30 of our weighted average asset level yield on the portfolio was 9.8%.
By having 57% of the portfolio of allocated to our commercial finance verticals, we've been able to maintain asset level yields approximately approximating, 10%, despite the low LIBOR rate and spread compression in the marketplace.
At quarter end, the weighted average investment risk rating remained at 1.9 based on our 1 to 4 risk rating scale with 1 representing the least amount of risk.
Including activity across our 4 business lines originations totaled $127 million for the quarter and repayments were $52 million, resulting in 75 million of net portfolio growth.
Now, let me provide an update on each of our verticals.
Cash flow.
At quarter end, our cash flow portfolio was $245 million for approximately 43% of the total portfolio was invested across 33 borrowers with an average investment of approximately $7.5 million.
100% of this portfolio is in the first liens loans.
<unk> cash flow portfolio had a weighted average EBITDA of over $100 million.
Representing our reflecting our preference to finance larger companies.
The weighted average yield in this portfolio was 6.7%.
In particular, our healthcare cash flow loans are performing well we attribute this both for the recession resilient and essential service nature of this sector as well as our underwriting.
Expertise.
We have an experienced healthcare cash flow team and access to health care industry insights to our life science and healthcare ABL verticals.
During the second quarter, we originated over $35 million of first lien cash flow loans and had repayments of <unk>.
$31 million.
At quarter end, we also had unfunded for.
First lien cash flow commitments of $25 million, which we expect to be drawn down in future quarters to fund future growth.
We believe these delayed draw of acquisition lines offer of prudent opportunity for SUNS to grow its investment and established credits with existing financial covenants.
In addition by stepping into an existing loan facility with shorter duration.
The yield to maturity is enhanced.
We encourage we encourage the sponsor activity has picked up this year with significantly higher M&A volumes.
We expect this momentum to continue through the remainder of the year, which we believe will provide opportunities to invest in attractive resilient upper mid market companies.
Now, let me turn to our asset based strategies.
As a reminder, <unk> to commercial finance portfolio of companies that specialize in making asset bank low backed loans.
Collateralized by accounts receivable these companies lend to small and mid sized U S businesses, we typically have limited access to traditional bank financing.
Now, let me provide an update on each of them business credit as Michael mentioned late in the quarter.
Some of our business credit acquired fast pay the factoring platform that provides working capital solutions to digital media firms across the U S.
Led by an experienced team with a strong track record fast pay operates in a high growth industry and offers US an expanded product suite and geographic coverage, which should continue to fuel our growth.
In conjunction with the acquisition of SaaS PE and.
So our business credit amended its credit facility increased its size.
<unk> pricing and created additional flexibility.
This transaction is expected to be accretive to business credit income.
At quarter end fast pay had a $72 million portfolio, consisting of 34 of the growers.
In the second quarter business credit funded approximately $80 million of new investments.
And had repayments of $10 million.
At quarter end of the portfolio totaled approximately $227 million.
For nearly 40% of our total portfolio, which consisted of 147 borrowers with an average investment of 1 million of 5 <unk>.
Utilization rates under business credits loans have been lowered during COVID-19 due to many of the borrowers benefiting from government stimulus programs and using debt liquidity to pay down our revolvers as economic.
Amick conditions continue to normalize we expect these borrowers to redraw on our existing credit lines.
Pipeline remains strong heading into the second half of the year driven both by increased utilization rates of our facilities as well as new investment opportunities.
The weighted average portfolio yield for business credit was approximately 12, 5%.
We're very pleased with the credit quality, which is 100% performing for.
For the quarter, they paid of 1.2 dollars $6 million dividend to Sun's consistent with the prior quarter.
Now, let me turn to our health care ABL segment.
The portfolio was $73 million, representing nearly 13% of our total portfolio.
It was comprised of loans to 38 borrowers with an average investment of approximately $2 million.
The 100% performing and had no defaults since the start of Covid.
The weighted average yield was just under 12%.
In the second quarter, they funded $10 million of new investments had repayments of just over $2 million.
Similar to the business credit health.
The healthcare ABL was impacted by stimulus programs that enable borrowers to significantly reduce the funded balances on the outstanding revolving credit facilities.
These programs have begun to roll off which should result in our borrowers draw more of their facilities and moving our portfolio of closer to its pre COVID-19 sides.
For the quarter, they paid a cash dividend to SUNS of 900000, consistent with the prior quarter.
Finally, let me give an update on our life science business overall of the portfolio is largely insulated from short term short term market and economic dislocations, given the long dated venture equity investment periods and product life cycles.
100% of this portfolio is performing and we remain confident in the quality of the underwriting.
Currently of 100% of the portfolio has more than 12 months of cash runway of critical metric.
At quarter end of our portfolio totaled $25 million across 8 borrowers with an average investment of approximately $3 million through.
During the quarter, we had repayments amounting to just over 8 million, including the full repayment for $7.5 million, which generated over 13% asset level IRR.
The weighted average yield of this portfolio is 10%, which excludes any success fees and warrants.
Overall, we believe SUNS is well positioned to take advantage of an improving economy and a more robust opportunity set across each of its verticals.
Solar capital partners.
Diversified commercial finance platform of significant dry powder enables us to provide structured solutions, including both cash flow and asset based loans.
Given what we know about our third quarter pipeline, we expect to experience similar growth this quarter as we did in the second now let me turn the call back to Michael.
Yes.
Thank you Bruce.
Since inception, our priority has always been to construct the portfolio that generate steady income for our shareholders and protects our capital with.
With the economic rebound in full swing, we remain disciplined in the face of of tighter pricing environment higher leverage and loose structures, all of which of elevated the risks in middle market cash flow lending over an extended period.
As a result, we are positioned Sun's defensively diversify the portfolio across cash flow and specialty finance first lien senior secured loans to manage downside risk and preserve liquidity.
While multiple the leverage in middle market direct lending remains near all time high the economy is in the midst of a strong recovery and we are seeing a broader set of attractive investment opportunities.
With over $325 million of available capital and the strong foundation, given our defense of the portfolio and low fund leverage we believe the company's positioned to capitalize on the significant increase of attractive opportunities across our business verticals.
We believe that the improved investment opportunity set expanded through SLR business credit access to the fast pay will continue to increase as companies require financing solutions for working capital and growth initiatives spas.
Sponsor activity is on the upswing in the <unk> industry is armed with significant dry powder.
Other than a great position to capitalize on this opportunity.
In July our advisor announced that of completed the initial closing of over $480 million of equity commitment for it.
Private health care lending fund capitalizing on our strength and deep experience in the healthcare lending industry across the cash flow ABL and life science investment strategies.
With anticipated leverage this fund adds over $1 billion of vessel capital to our platform our pipeline of healthcare investments of strong.
Due to the industry diversification targets our platform has originated more health care opportunity and funds and its affiliated funds can hold on their own respective balance sheets. The.
The addition of the private health care fund enabled the SLR platform to continue to provide full capital solutions of over $200 million $200 million of its benefit funds through increased diversification within the healthcare portfolio and a steady stream of new investments into which we can invest.
Finally, our investment advisor the alignment of interest with the Companys shareholders continues to be 1 of our guiding principles.
Through significant funds share purchases since inception, the SLR team of approximately 6% both debt and common stock the.
Additionally, the investment team has a significant percentage of the annual compensation invested in some stock.
Management's incentive investment alongside fell upon several of the demonstrates our confidence in the company's defense of the portfolio are stable funding our strong liquidity in favor of position to make new investments. We hope that all of you are in good health and we'd like to thank you for your time today and the support of our company operator could you. Please open the line for questions.
Thank you as a reminder to ask a question you will need the press star 1 on your telephone to withdraw your question.
Question for the turnkey please standby, while we compile the Q&A last day.
I'm not showing any questions at this time I would now like to turn the call back over to Michael gross Chairman and co CEO for closing remarks.
We thank you for your time today and again, if you have any quick follow up questions. Please feel free to reach out and contact to us contact us take care.
Yes.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yes.
Okay.
Okay.
[music].
[music].
Good day and thank you for standing by welcome to the Q2.2021as all of our senior investment Corp earnings call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
The question during the session you will need the press star 1 on your telephone. Please be advised that today's conference is being recorded if you acquire any further assistance. Please press star zero I would now like to hand, the conference over to your speaker of today, Michael gross Chairman and co CEO. Please go ahead.
Thank you very much and good morning, welcome to the SLR Senior investment Corp, 's earnings call for the second quarter ended June 32021 of the.
Joining today by Bruce <unk>, our co Chief Executive Officer, and Richard <unk>, Our Chief Financial Officer.
Rich could you please start off by Covenant webcast and forward looking statements.
Of course.
Thanks, Michael.
I'd like to remind everyone that today's call and webcast are being reported.
Please note that they are the property of SLR Senior investment Corp.
Any unauthorized broadcast in any form are strictly prohibited.
This conference call is being webcast from the investors tab on our website at Www Dot <unk> Senior investment Corp Dot com.
Audio replays of this call will be made available later today as disclosed in our press release.
I would also like to call your attention to the customary disclosures in our press release regarding forward looking information.
Statements made in today's conference call and webcast may constitute forward looking statements, which relate to future future events or our future performance of our financial condition. The statements are not guarantees of our future performance financial condition or results and involve a number of risks and uncertainties, including impacts from <unk>.
COVID-19.
Past performance is not indicative of future results actual results may differ materially as a result of the number of factors, including those described from time to time in our filings with the SEC as.
As far as senior investment Corp undertakes no duty to update any forward looking statements unless required to do so by law to obtain copies of our latest SEC filings. Please visit our website all costs of 2.1 to 99.3.
1670.
At this time I would like to turn the call back to our chairman and co CEO.
Michael gross.
Thanks, very much rich.
SLR Senior investment Corp, second quarter results benefited from both portfolio expansion and strong overall fundamentals net asset value per share for the quarter ended June 30 was $815.87, and net investment income per share of <unk> 25.
Represented a 25% increase over the prior quarter.
Against the backdrop of the continued economic rebound the U S middle market have reflected a more favorable economic climate punctuated by a resurgence in sponsor activity and a robust pick up in M&A transactions.
Support of financing markets and record amounts of private equity dry powder have combined to result in the record levels of deal activity in the second quarter.
We expect robust transaction volume to continue for the remainder of the year at the firm book to execute deal ahead of potential changes to the U S tax code.
During the second quarter SUNS originated 127 million of Ars investments consisting of $96 million of newer direct of new originations and $31 million of incremental financings for existing portfolio companies.
New cash flow investment in large upper middle market companies are made possible by the scale of the large platform.
This allows us to participate in transactions of available only to managers, who can hold up the $200 million and position sizes of <unk>.
Number of the transactions were a combination of funded loans and delayed draw term loan commitments to provide certainty of debt capital to facilitate future acquisitions and future growth of portfolio companies.
Of note our second quarter burst of activity included the SLR business credit strategic acquisition of fast pay partners of factoring platform. The provides working capital solution to media firms across the United States.
Based in California, fast pay enabled clients to accelerated receivable collections and the excess liquidity.
The acquisition, which Bruce will discuss in more detail further diversifies, our solar business credits finance the capabilities into a new niche market with attractive risk adjusted returns.
At June 30 over 99, 9% of our comprehensive investment portfolio at fair value with investment in the first lien loans and approximately 57% of consisted of loans and our specialty finance verticals, including SLR business credit acquisition and the prospects.
At June 30.
Our net debt to equity was 5.1 times up from 4 times at March 31, and approximately 62% of vessel. Our senior funded debt was comprised of unsecured term notes.
We have over 320 per million of available capital to support future earnings growth and importantly, the economic climate has improved considerably and our pipeline across all 4 business verticals is very attractive.
We expect portfolio growth to continue in the coming quarters from first lien cash flow as well as asset base investment opportunity.
Our priority in 2021 to take advantage of the strong economic rebound in attractive opportunities to.
To deploy our considerable available capital both through new investment and drawdowns of previously committed delayed draw term loans, which should drive continued growth in our net investment income.
So for us in a unique position to allocate capital across the diversified lending strategies for the most favorable risk adjusted return investments we are confident in the ability to grow the portfolio, while remaining disciplined in our underwriting at this time I'll turn the call over to our CFO rich for Tika take you through the second quarter highlights.
Thank you Michael.
As far as senior investment Corp's net asset value at June 30.
$254.8 million for.
The $15.87 per share.
This compares to a net asset value of $255.3 million for $15.91 per share at March 31, 2021.
As far as Senior's balance sheet investment portfolio at June 30 of 2021 had a fair market value of $382.9 million in 47 portfolio companies operating in 18 industries compared to a fair market value of $367.5 million in 47 portfolio companies.
<unk> operating in 18 industries at March 31, 2021.
In addition, as of June 32021, the company had unfunded loan commitments, excluding revolvers of $27 million.
Hi.
Turning to SUNS funding profile and leverage during the second quarter of 2021, we amended SUNS revolving credit facility and extending its maturity until June 2026.
That said at June 32021, SUNS had only $136.3 million of debt outstanding with the net debt to equity ratio of Euro 5.1 times.
Up from zero of <unk> 4 times at March 31, 2021.
At June 30 of approximately 62% of Sun's debt is in the form of unsecured 3.9% fixed rate notes.
When including the non recourse credit facilities had SLR healthcare ABL and therefore, our business credit as far as senior has over 325 million to fund the earnings growth as of June 32021, subject to borrowing base limitations.
As a reminder, as for us and seniors target leverage ratio is 125 times to 1.5 times net debt to equity under the reduced asset coverage requirement.
From a P&L perspective.
Gross investment income for the 3 months ended June 32021 totaled $7.5 million compared to $6.6 million for the 3 months ended March 31.2021.
Expenses for the 3 months ended June 32021, with $3.6 million compared to the $3.5 million for the 3 months ended March 31.
Net investment income for the quarter ended June 32021 was for <unk> zero million with 25 per average share as compared to the $3.2 million for 'twenty per average share for the 3 months ended March 31.2021.
Below the line.
Solar senior had net realized and unrealized gains for the second fiscal quarter of 2021.
<unk> 0.3 million.
The net realized and unrealized gains of $1.6 million for the 3 months ended March 31.2021.
Accordingly.
As far as senior had a net increase of net assets, resulting from operations of $4.2 million or <unk> 26 per average share for the 3 months ended June 32021.
This compares to a net increase in net assets, resulting from operations of $4.8 million or <unk> 30 per average share for the 3 months ended March 31.2021.
And lastly, our board of directors declared a monthly distribution for August 2021 of <unk> 10 per share payable on September 3.2021 to stockholders of record on August 19.2021.
At this time I would like to turn the call over to our co Chief Executive Officer, Bruce polar thank.
Thank you rich.
We continue to focus on expanding both our asset base and cash flow lending businesses. The combination of these strategies enabled SUNS to act as a solutions provider to middle market companies and offers multiple avenues for portfolio growth.
SUNS comprehensive portfolio totaled $570 million at June 30, and was highly diversified encompassing 230 borrowers across 110 industries.
Proximately, 57% of our portfolio was invested in ASP.
Asset based and life science lending strategies and the remaining 43% was in the senior secured cash flow loans.
Of our largest industry exposures were digital media.
Healthcare services and insurance.
The average investment per issuers, $2.5 million or less than 1 half of 1%.
At June 30 of approximately 100% of our portfolio consisted of first lien loans with no second lien.
The loan exposure and a de minimis amount of equity.
At June 30 of our weighted average asset level yield on the portfolio was 9.8%.
By having 57% of the portfolio of allocated to our commercial finance verticals, we've been able to maintain asset level yields approximately approximating, 10%, despite the low LIBOR rate and spread compression in the marketplace.
At quarter end, the weighted average investment risk rating remained at 1.9 based on our 1 to 4 risk rating scale with 1 representing the least amount of risk.
Including activity across our 4 business lines originations totaled $127 million for the quarter and repayments were $52 million, resulting in 75 million of net portfolio growth.
Now, let me provide an update on each of our verticals.
Cash flow.
At quarter end, our cash flow portfolio was 245 million for approximately 43% of the total portfolio was invested across 33 borrowers with an average investment of approximately $7.5 million.
100% of this portfolio is in the first liens loans.
<unk> cash flow portfolio had a weighted average EBITDA of over $100 million.
Representing our reflecting our preference to finance larger companies the.
The weighted average yield in this portfolio was 6.7%.
In particular, our healthcare cash flow loans are performing well we attribute this both to the recession resilient and essential service nature of this sector as well as our underwriting.
Expertise.
We have an experienced healthcare cash flow team and access to health care industry insights through our life science and health care ABL verticals.
During the second quarter, we originated over $35 million of first lien cash flow loans and had repayments of $31 million.
At quarter end, we also had unfunded.
The first lien cash flow commitments of $25 million, which we expect to be drawn down in future quarters to fund future growth.
We believe these delayed draw acquisition lines offer of prudent opportunity for SUNS to grow its investment and established credits with existing financial covenants.
In addition by stepping into an existing loan facility with shorter duration.
The yield to maturity is enhanced.
We incurred we're encouraged that sponsor activity has picked up this year with significantly higher M&A volumes.
We expect this momentum to continue through the remainder of the year, which we believe will provide opportunities to invest in attractive resilient upper mid market companies.
Now, let me turn to our asset based strategies.
As a reminder, <unk> to commercial finance portfolio of companies that specialize in making asset bank low backed loans.
Collateralized by accounts receivable these companies lend to small and mid sized U S businesses, we typically have limited access to traditional bank financing.
Now, let me provide an update on each of them business credit as Michael mentioned late in the in the quarter.
Some of our business credit acquired SaaS pay the factoring platform that provides working capital solutions to digital media firms across the U S.
Led by an experienced team with a strong track record fast pay operates in a high growth industry and offers US an expanded product suite and geographic coverage, which should continue to fuel our growth.
In conjunction with the acquisition of fast pace.
So our business credit amended its credit facility increased its size reduced its pricing and created additional flexibility.
This transaction is expected to be accretive to business credit to income.
At quarter end fast pay had a $72 million portfolio consisting of 30 for pulp.
Of course.
In the second quarter business credit funded approximately $80 million of new investments.
And had repayments of $10 million.
At quarter end of the portfolio totaled approximately $227 million for.
The nearly 40% of our total portfolio.
<unk> of 147 borrowers with an average investment of 1 billion of half the.
Utilization rates under business credits loans have been lowered during COVID-19 due to many of the borrowers benefiting from government stimulus programs and using debt liquidity to pay down our revolvers as economic.
Amid conditions continue to normalize we expect these borrowers to redraw on our existing credit lines.
Pipeline remains strong heading into the second half of the year driven both by increased utilization rates of our facilities as well as new investment opportunities.
The weighted average portfolio yield for business credit was approximately 12, 5%.
We are very pleased with the credit quality, which is 100% performing for.
For the quarter, they paid of 1.2 dollars $6 million dividend to Sun's consistent with the prior quarter.
Now, let me turn to our health care ABL segment.
The portfolio was $73 million, representing nearly 13% of our total portfolio.
It was comprised of loans to 38 borrowers with an average investment of approximately $2 million.
It was 100% performing and had no defaults since the start of Covid.
The weighted average yield is just under 12%.
In the second quarter, they funded $10 million of new investments had repayments of just over $2 million.
Similar to business credit health.
Healthcare ABL was impacted by stimulus programs that enable borrowers to significant reduce the funded balances on the outstanding revolving credit facilities.
These programs have begun to roll off which should result in our borrowers draw more of their facilities and moving our portfolio of closer to its pre COVID-19 sides.
For the quarter, they paid a cash dividend to SUNS of 900000, consistent with the prior quarter.
Finally, let me give an update on our life science business overall, the portfolio is largely insulated from short term short term market and economic dislocations, given the long dated venture equity investment periods and product life cycles.
100% of this portfolio is performing and we remain confident in the quality of the underwriting.
Currently of 100% of the portfolio has more than 12 months of cash runway the critical metric.
At quarter end of our portfolio totaled $25 million across 8 borrowers with an average investment of approximately $3 million.
During the quarter, we had repayments amounting to just over 8 million, including the full repayment for $7.5 million, which generated over 13% asset level of IRR.
The weighted average yield of this portfolio is 10%, which excludes any success fees and warrants.
Overall, we believe SUNS is well positioned to take advantage of an improving economy at a more robust opportunity set across each of its verticals.
Solar capital partners.
Diversified commercial finance platform of significant dry powder enables us to provide structured solutions, including both cash flow and asset based loans.
What we know about our third quarter pipeline, we expect to experience similar growth this quarter as we did in the second now let me turn the call back to Michael.
Yes.
Thank you Bruce.
Since inception, our priority has always been to construct the portfolio that generate steady income for our shareholders and protect our capital.
With the economic rebound in full swing, we remain disciplined in the face of of tighter pricing environment higher leverage and loose structures, all of which of elevated the risks of middle market cash flow lending over an extended period.
As a result, we are positioned Sun's defensively diversify the portfolio across cash flow and specialty finance first lien senior secured loans to manage downside risk and preserve liquidity.
While multiple the leverage in middle market direct lending remains near all time high the economy is in the midst of a strong recovery and we are seeing a broader set of attractive investment opportunities.
With over $325 million of available capital and a strong foundation, given our defense the portfolio and low fund leverage we believe the company's positioned to capitalize on the significant increase of attractive opportunities across our business verticals.
We believe that the improved investment opportunity set of expanded through our solar business credits axles for the fast pay will continue to increase as companies require financing solutions for working capital and growth initiatives spas.
Sponsor activity is on the upswing in the <unk> industry is armed with significant dry powder.
Other than a great position to capitalize on this opportunity.
In July our advisor announced that of completed the initial closing of over $480 million of equity commitment for its private healthcare lending fund capitalizing on our strength and deep experience in the health care lending industry across the cash flow ABL and life science investment strategies.
With anticipated leverage this fund adds over $1 billion of investment capital to our platform our pipeline of health care investment the strong.
Due to the industry diversification targets our platform has originated more health care opportunity funds and its affiliated funds can hold on their own respect the balance sheets.
In addition of the private health care for and enable the SLR platform to continue to provide full capital solutions of over $200 million $200 million its benefit funds through increased diversification within the healthcare portfolio and a steady stream of new investments into which we can invest.
Finally, our investment advisors the alignment of interest with the Companys shareholders continues to be 1 of our guiding principles to.
The significant funds share purchases since inception, the SLR team of approximately 6% for our debt and common stock. Additionally, the investment team has a significant percentage of the annual compensation invested in some stock.
Management set of investment alongside pellets upon sale of the demonstrates our confidence in the company's defense of the portfolio are stable funding our strong liquidity in favor of position to make new investments. We hope that all of you are in good health and we'd like to thank you for your time today and the support of our company operator could you. Please open the line for questions.
Thank you as a reminder to ask a question you will need the pits.
1 of your telephone to withdraw your question parts of the turnkey. Please standby, while we compile the Q&A last day.
Im not showing any questions at this time I would now like to turn the call back over to Michael gross Chairman and co CEO for closing remarks.
We thank you for your time today and again, if you have any follow up questions. Please feel free to reach out and contact to us contact us take care.
This concludes today's conference call. Thank you for participating you may now disconnect.