Q2 2024 Kayne Anderson BDC Inc Earnings Call

As a reminder, this conference is being recorded it is now my pleasure to turn the conference over to Frank Carl scene.

Frank Carlscene: Senior Vice President of K B D C.

Speaker Change: Good morning, and welcome to Kayne Anderson, BDC Inc's second quarter 2024 earnings call.

Today, I'm joined by Doug Goodwill and Ken Leonard Co Ceos of K, BDC as well as Terry Hart, CFO and treasurer of <unk>.

Speaker Change: Following our prepared remarks will be available to take your questions.

Speaker Change: Today's call May include forward looking statements that involve known and unknown risks uncertainties and other factors and undue reliance should not be placed on them.

Speaker Change: These forward looking statements are not historical facts, but rather are based on current expectations estimates and projections about the company, our current and prospective portfolio investments our industry, our beliefs and opinions in our assumptions.

These statements are not guarantees of future performance and are subject to risks uncertainties and other factors some of which are beyond our control and difficult to predict.

Speaker Change: Actual results may differ materially from those expressed or forecasted in these forward looking statements.

Speaker Change: We ask that you refer to the company's most recent filings with the SEC for important risk factors.

Speaker Change: Any forward looking statements made today do not guarantee future performance and undue reliance should not be placed on them.

Speaker Change: The company does not have an obligation to update any forward looking statements. Our earnings release 10-Q, and supplemental earnings presentation are available on the Investor Relations section of our website now I'd like to turn the call over to Ken Leonard.

Operator: [inaudible] I don't know what you're talking about, I don't know what you're talking about, I don't know what you're talking about. Hello, and welcome to Kane Anderson BDC's second quarter 2024 earnings call. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to Frank Carl.

Speaker Change: i

Frank Carl: Hello and welcome to Kane Anderson BDC second quarter 2024 earnings call. A question and answer session will follow the formal presentation. As a reminder this conference is being recorded. It is now my pleasure to turn the conference over to Frank Carl, senior vice president of KBDC.

Thank you Frank and thank you to everyone for joining us on our call today, our first as a publicly traded company.

Frank Carl: Senior Vice President of KBDC. Good morning, and welcome to Kane Anderson BDC Inc's second quarter 2024 earnings call. Today I'm joined by Doug Goodwillie and Ken Leonard, co-CEOs of KBDC, as well as Terry Hart, CFO and Treasurer of KBDC. Following our prepared remarks, we will be available to take your questions.

Speaker Change: For those of you who are new to the platform.

Beginning today's call with a brief overview of our company and investment strategy before we discuss our second quarter 2024 results.

Frank Carl: Good morning and welcome to Kane Anderson BDC Inc.'s second quarter 2024 earnings call. Today I'm joined by Doug Goodwillie and Ken Leonard, co-CEOs of KBDC, as well as Terry Hart, CFO and Treasurer of KBDC.

Speaker Change: To start we managed pools of capital inclusive K BDC, making up the Kayne Anderson private credit platform.

Frank Carl: Following our prepared remarks, we will be available to take your questions.

Frank Carl: Today's call may include forward-looking statements that involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed on them. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict. Therefore, actual results may differ materially from those expressed or forecasted in these forward-looking statements.

Speaker Change: APC and approximately $6 billion.

Speaker Change: Today's call may include forward-looking statements that involve known and unknown risks, uncertainties, and other factors, and undue reliance should not be placed on them.

Speaker Change: Middle market direct lending business Kayne Anderson is in turn the private credit investing arm with Kayne Anderson capital advisors at approximately $35 billion employee owned alternatives manager funding of 1984 with investing strategies in real estate energy and infrastructure and our business Kayne Anderson private credit.

Speaker Change: These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, and projections about the company, our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions.

Speaker Change: Which my partners and I founded in 2011.

Speaker Change: These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict.

Speaker Change: Institutionally Kayne Anderson is focused on niche markets, where specializes in identifying experienced investment teams with strong origination capabilities to generate differentiated attractive risk return profiles for its investors.

Speaker Change: Actual results may differ materially from those expressed or forecasted in these forward-looking statements.

Frank Carl: We ask that you refer to the company's most recent filings with the SEC for important risk factors. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. The company does not have an obligation to update any forward-looking statements. Our earnings release, Ken Q, and supplemental earnings presentation are available on the investor relations section of our website. Now, I'd like to turn the call over to Ken Leonard.

Speaker Change: We ask you to refer to the company's most recent filings with the SEC for important risk factors.

Speaker Change: Our private credit strategy has remained consistent making investments in senior secured loans to middle market businesses through our 13 years at Kayne Anderson and prior two plus decades at other platforms, making us one of the longest tenured partnerships in middle market direct lending.

Speaker Change: Any forward-looking statements made today do not guarantee future performance and undue reliance should not be placed on them.

Speaker Change: The company does not have an obligation to update any forward-looking statements. Our earnings release, Ken Q, and supplemental earnings presentation are available on the investor relations section of our website. Now, I'd like to turn the call over to Ken Leonard.

Speaker Change: During our time at <unk> alone, we have invested over $11 billion and nearly 200 businesses through nearly 400 discrete transactions.

Ken Leonard: Thank you, Frank, and thank you to everyone for joining us on the call today. Our first company is a publicly traded company. For those of you who are new to the platform, I'll begin today's call with a brief overview of our company and investment strategy before we discuss our second quarter 2024 results. To start, we manage pools of capital, inclusive of KBDC, making up the Kane Anderson Private Credit Platform, or KAPC, an approximately $6 billion middle market direct lending business.

Ken Leonard: Thank You Frank and thank you to everyone for joining us on the call today. Our first is a publicly traded company.

Speaker Change: We believe ATC is a leading player in the North America core middle market, which we define as consisting of businesses with $10 million to $50 million of EBITDA.

Ken Leonard: For those of you who are new to the platform, I'll begin today's call with a brief overview of our company and investment strategy before we discuss our second quarter 2024 results.

Speaker Change: We skewed towards the higher end of that range with median EBITDA of investments in K BDC of $34 million <unk>.

<unk> is one of the largest BDC focused on this market, which we believe exhibit less volatility and more stable returns than larger markets.

Ken Leonard: To start, we manage pools of capital, inclusive of KBDC, making up the Kane Anderson Private Credit Platform, or KAPC, an approximately $6 billion middle-market direct-lending business.

Speaker Change: Additionally, <unk> has an exceptionally diverse set of private investors across institutional and high net worth segments and have now brought our strategy to the public market investors via K Bdcs may IPO.

Ken Leonard: Kane Anderson is, in turn, the private credit investing arm of Kane Anderson Capital Advisors, an approximately $35 billion employee-owned alternative manager founded in 1984 with investing strategies in real estate, energy, and infrastructure, and our business, Kane Anderson Private Credit, which my partners and I founded in 2011.

Ken Leonard: Kane Anderson is, in turn, the private credit investing arm of Kane Anderson Capital Advisors.

Speaker Change: and approximately $35 billion in employee-owned alternatives manager found in 1984 with investing strategies in real estate, energy and infrastructure, and our business Kayne Anderson Private Credit, which my partners and I fathered in 2011.

Speaker Change: We invest and manage our portfolio with a group of 38 talented long tenured professionals across Chicago, which is our group headquarters, New York and Los Angeles, along with additional shared resources professionals at Kayne Anderson.

Ken Leonard: Institutionally, Kane Anderson is focused on niche markets where it specializes in identifying experienced investment teams with strong origination capabilities to generate differentiated, attractive risk-return profiles for its investors. Our private credit strategy has remained consistent, making investments in senior secured loans to middle market businesses through our 13 years at Kane Anderson and prior two plus decades at other platforms, making us one of the longest tenured partnerships in middle market direct lending. During our time at KAPC alone, we've invested over $11 billion in nearly 200 businesses through nearly 400 discrete transactions.

Speaker Change: Institutionally, Kane Anderson is focused on niche markets where it specializes in identifying experienced investment teams with strong origination capabilities to generate differentiated, attractive risk-return profiles for its investors.

Speaker Change: As detailed throughout this earnings presentation, we have built our direct lending business with a focus on capital preservation and risk mitigation in our strategy, we refer to as value lending.

Speaker Change: Our private credit strategy has remained consistent, making investments in senior secured loans to middle market businesses through our 13 years at Kane Anderson and prior two-plus decades at other platforms, making us one of the longest tenured partnerships in middle market direct lending.

Speaker Change: We believe that the core middle market represents the most attractive risk reward area in which to invest.

Speaker Change: As a market segment that generally includes more lender friendly documentation and the ability to lend at lower leverage levels, while still maintaining strong yields in most of the vessels.

Speaker Change: During our time at KAPC alone, we've invested over $11 billion in nearly 200 businesses through nearly 400 discrete transactions.

Speaker Change: Within this segment of the middle market, we focus on stable lower growing industries, where the winners and losers and generally been decided.

Ken Leonard: We believe KAPC is a leading player in the North America core middle market, which we define as consisting of businesses with 10 to 50 million in EBITDA; we skew towards the higher end of that range with median EBITDA of investments in KBDC of $34 million. KBDC is one of the largest BDCs focused on this market, which we believe exhibits less volatility and more stable returns than larger markets. Additionally, KAPC has an exceptionally diverse set of private investors across institutional and high net worth segments and has now brought our strategy to public market investors via KBDC's May IPO. We invest and manage our portfolio with a group of 38 talented, long-tenured professionals across Chicago, which is our group headquarters, New York, and Los Angeles, along with additional shared resource professionals at Kane Anderson.

Speaker Change: We believe KAPC is a leading player in the North America core middle market which we define as consisting of businesses with 10 to 50 million of EBITDA. We skew towards the higher end of that range with median EBITDA of investments in KBDC of 34 million.

Within these industries, we identify and companies that have very specific attributes that have been shown to be present and companies that have successfully survived cycles are there performance related issues and it's an investment does not exhibit these attributes we will not pursue it.

Speaker Change: And then from a structure perspective, our portfolio has had lower average leverage of around four times below other publicly traded bdcs. Consequently that leads to industry high weighted average interest coverage of three times with modest average loan to value below 45%.

Speaker Change: KBDC is one of the largest BDCs focused on this market, which we believe exhibits less volatility and more stable returns than larger markets.

Speaker Change: Additionally, KAPC has an exceptionally diverse set of private investors across institutional and high net worth segments, and have now brought our strategy to the public market investors via KBDC's May IPO.

Speaker Change: Combination of these factors results in a credit selection process that creates attractive risk adjusted investment portfolios across all the vehicles within our credit platform.

Speaker Change: We invest and manage our portfolio with a group of 38 talented, long-tenured professionals across Chicago, which is our group headquarters, New York, and Los Angeles, along with additional shared resource professionals at Kane Anderson.

Speaker Change: Finally, we are the lead or co lead agent and approximately 75% of our private middle market investments with the vast remainder as part of small club lending groups, putting us in a position to structure and manage these investments proactively avoid large bank group consensus risk and obtained the highest economics with rich.

Ken Leonard: As detailed throughout this earnings presentation, we have built our direct lining business with a focus on capital preservation and risk mitigation in a strategy we refer to as value lending. First, we believe that the core middle market represents the most attractive risk-reward area in which to invest. It is a market segment that generally includes more lender-friendly documentation and the ability to lend at lower leverage levels while still maintaining strong yields in those investments.

Speaker Change: As detailed throughout this earnings presentation, we have built our direct lending business with a focus on capital preservation and risk mitigation in a strategy we refer to as value lending.

Speaker Change: Spec to our portfolio monitoring processes, we're laser focused on staying in front of potential issues inside our portfolio.

Speaker Change: First, we believe that the core middle market represents the most attractive risk-reward area in which to invest. As a market segment, it generally includes more lender-friendly documentation and the ability to lend at lower leverage levels while still maintaining strong yields in those investments.

Speaker Change: Meeting multiple times per week to discuss our watch list investments over communicating performance of the portfolio via monthly portfolio review calls and including our most senior professionals in all our restructuring situations.

Ken Leonard: Within this segment of the middle market, we focus on stable, lower-growing industries where the winners and losers have generally been decided. Within these industries, we identify companies that have very specific attributes that have been shown to be present in companies that have successfully survived cycles or other performance-related issues. And if an investment does not exhibit these attributes, we will not pursue it.

Speaker Change: Within this segment of the middle market, we focus on stable, lower growing industries where the winners and losers have generally been decided.

Speaker Change: This is all part of our broader culture of accountability credibility and quick action and stressed scenarios, which is supported by our structuring of investments with financial maintenance covenants, giving us a seat at the table early in our restructuring.

Speaker Change: Within these industries, we identify companies that have very specific attributes that have been shown to be present in companies that have successfully survived cycles or other performance related issues. And if an investment does not exhibit these attributes, we will not pursue it.

Speaker Change: <unk> started its investment activity in 2021 and successfully completed its IPO in the New York Stock Exchange on May 21, 2024, as part of that IPO, we raised approximately $100 million at a price per share of $16 63.

Ken Leonard: Then from a structure perspective, our portfolios have lower average leverage of around four times below other publicly traded BDCs. Consequently, that leads to an industry-high weighted average interest coverage of three times with modest average loan-to-value below 45%. The combination of these factors results in a credit selection process that creates attractive risk-adjusted investment portfolios across all the vehicles within our credit platform.

Speaker Change: Then, from a structure perspective, our portfolios have lower average leverage around four times below other publicly traded BDCs.

Speaker Change: Consequently, that leads to industry-high weighted average interest coverage of three times with modest average loan-to-value below 45 percent.

Speaker Change: We were and will continue to be committed to delivering leading shareholder friendly investment structure with a best in class fee structure at 75 basis points on AUM for the first year post IPO and with no incentive fee for the first three quarters post IPO.

Speaker Change: The combination of these factors results in a credit selection process that creates attractive risk-adjusted investment portfolios across all the vehicles within our credit platform.

Ken Leonard: Finally, we are the lead or co-lead agent in approximately 75% of our private middle market investments, with the vast remainder as part of small club lending groups, putting us in a position to structure and manage these investments proactively, avoid large bank group consensus risk, and obtain the highest economic returns. With respect to our portfolio monitoring processes, we're laser focused on staying in front of potential issues inside our portfolio, meeting multiple times per week to discuss watchlist investments, communicating the performance of the portfolio via monthly portfolio review calls, and including our most senior professionals in all our restructuring situations.

Speaker Change: Following these periods, our investment fee will increase to 1% and our incentive fees will commence at 15%.

Speaker Change: Finally, we are the lead or co-lead agent in approximately 75% of our private middle market investments with the vast remainder as part of small club lending groups.

We believe that both of those are among the lowest for publicly traded bdcs.

Speaker Change: Additionally, and based on feedback from the Investor community.

Speaker Change: putting us in a position to structure and manage these investments proactively, avoid large bank group consensus risk, and obtain the highest economics.

Speaker Change: We instituted a 12 quarter look back.

On our income based incentive fees with a total return hurdle of 6%.

Speaker Change: With respect to our portfolio monitoring processes, we're laser focused on staying in front of potential issues inside our portfolio.

Speaker Change: We have a staggered lockup for pre IPO shareholders at 180, 270, and 365 days following the IPO with affiliated shareholders and directors and officers being locked up for 365 days.

Speaker Change: meeting multiple times per week to discuss watchlist investments over communicating performance of the portfolio via monthly portfolio review calls and including our most senior professionals in all our restructuring situations.

Ken Leonard: This is all part of our broader culture of accountability, credibility, and quick action in stressed scenarios, which is supported by our structuring of investments with financial maintenance covenants, giving us a seat at the table early in our restructure. KBDC started its investment activity in 2021 and successfully completed its IPO on the New York Stock Exchange on May 21st, 2024.

Speaker Change: We have declared three special dividends of 10, each around most lockup dates as previously communicated.

Speaker Change: This is all part of our broader culture of accountability, credibility, and quick action in stressed scenarios, which is supported by our structuring of investments with financial maintenance, governance, giving us a seat at the table early in a restructuring.

Speaker Change: Lastly, we implemented a $100 million share repurchase program that commenced 60 days post IPO on July 20, <unk> this year.

Speaker Change: To make one last point K BDC and the largest single pool of capital in our direct lending platform, representing 25 plus percent of our total assets managed as such K BDC is an incredibly important part of our business and our success is crucial to the success of our broader platform. We don't believe there are any other.

Speaker Change: KBDC started its investment activity in 2021 and successfully completed its IPO in the New York Stock Exchange on May 21st, 2024.

Ken Leonard: As part of that IPO, we raised approximately $100 million at a price per share of $16.63. We were and will continue to be committed to delivering a leading, shareholder-friendly investment structure with a best-in-class fee structure at 75 basis points IAUM for the first year post-IPO and with no incentive fee for the first three quarters post-IPO. Following these periods, our investment fee will increase to 1%, and our incentive fees will come in at 15%.

Speaker Change: As part of that IPO, we raised approximately $100 million at a price per share of $16.63. We were and will continue to be committed to delivering a leading shareholder-friendly investment structure.

Speaker Change: Managers of scale public bdcs in a similar relative situation.

Speaker Change: with a best-in-class fee structure at 75 basis points at AUM for the first year post IPO and with no incentive fee for the first three quarters post IPO.

Speaker Change: We thank you all for your support to date, and we commit to being transparent in all our communications and unwavering in our commitment to our credit and underwriting standards.

Doug Goodwillie: I will now turn it over to Doug Goodwillie My co CEO of <unk> to discuss our existing portfolio and recent investment activity per K BDC.

Speaker Change: Following these periods, our investment fee will increase to 1% and our incentive fees will commence at 15%.

Ken Leonard: We believe that both of those are among the lowest for publicly traded BDCs. Additionally, and based on feedback from the investor community, we instituted a 12-quarter look-back on our income-based incentives, with a total return hurdle of 6%. We have a staggered lock-up for pre-IPO shareholders at 180, 270, and 365 days following the IPO, with affiliated shareholders and directors and officers being locked up for 365 days

Speaker Change: We believe that both of those are among the lowest for publicly traded BDCs.

Ken Leonard: Thank you Ken I.

Doug Goodwillie: I am pleased to provide an overview of our portfolio recent investment activity and what we're seeing in the market before we discuss <unk> financial results for the second quarter of 2024.

Speaker Change: Additionally, and based on feedback from the investor community, we instituted a 12-quarter look-back on our income-based incentives with a total return-hole of 6%.

Speaker Change: As of June 30th K Bdc's portfolio includes 106 individual portfolio companies, representing $1 85 billion at fair value funded investments you have another $179 million of unfunded commitments comprised of a mix of unfunded revolvers and delayed draw term loans for total commitments in excess of $2 billion.

Speaker Change: We have a staggered lockup for pre-IPO shareholders at 180, 270, and 365 days following the IPO with affiliated shareholders and directors and officers being locked up for 365 days.

Ken Leonard: We have declared three special dividends of $0.10 each around those lock-up dates, as previously communicated. Lastly, we implemented a $100 million share repurchase program that Commend 60 days post IPO on July 23rd of this year. To make one last point, KBDC is the largest single pool of capital in our direct lending platform, representing 25 percent or more of our total assets managed. As such, KBDC is an incredibly important part of our business, and its success is crucial to the success of our broader platform. We don't believe there are any other managers of large public BDCs in a similar relative situation.

Speaker Change: We have declared three special dividends of 10 cents each around those lock-up dates as previously communicated.

Speaker Change: Since June 32020 for a BDC has closed or is in the final closing process on an additional $136 million of commitment with another approximately six weeks left in the quarter evidenced continued strong origination volumes in 2020 for.

Speaker Change: Lastly, we implemented a $100 million dollar share repurchase program that commenced 60 days post IPO on July 23rd of this year.

Speaker Change: The K BDC portfolio was purposely constructed in a defensive manner in order to outperform and high interest rate environment and through periods of economic instability or uncertainty.

Speaker Change: To make one last point, KBDC is the largest single pool of capital in our direct landing platform.

Speaker Change: representing 25 plus percent of our total assets managed. As such, KBDC is an incredibly important part of our business and its success is crucial to the success of our broader platform. We don't believe there are any other managers of scale public BDCs in a similar relative situation.

Investments in our portfolio, excluding the handful of investments on our watch list.

Speaker Change: Have a weighted average leverage of four one times to the borrower and interest coverage of three two times and a loan to value of approximately 42% evidencing our conservatism in loan structuring.

Doug Goodwillie: We thank you all for your support to date, and we commit to being transparent in all our communications and unwavering in our commitment to our credit and underwriting standards. I will now turn it over to Doug Goodwillie, my co-CEO of KBDC, to discuss our existing portfolio and recent investment activity for KBDC. Thank you, Ken.

Speaker Change: We thank you all for your support to date, and we commit to being transparent in all our communications and unwavering in our commitment to our credit and underwriting standards.

Speaker Change: We think these credit statistics are material positive factor for our portfolio outlook, particularly in an elevated rate environment and that these statistics compare favorably to virtually all other public bdcs have a scale similar to us.

Doug Goodwillie: I will now turn it over to Doug Goodwillie, my co-CEO of KBDC, to discuss our existing portfolio and recent investment activity for KBDC.

Doug Goodwillie: I'm pleased to provide an overview of our portfolio, recent investment activity, and what we're seeing in the market before we discuss KBDC's financial results for the second quarter of 2020. As of June 30th, KBDC's portfolio included 106 individual portfolio companies, representing $1.85 billion of fair value funded investment. We have another $179 million of unfunded commitments comprised of a mix of unfunded revolvers and delayed draw term loans for total commitments in excess of $2 billion.

Speaker Change: We have also built a diversified portfolio with average position size of approximately 9% of fair value for our top 10 investments represented only 19% of the overall portfolio outs.

Doug Goodwillie: Thank you, Ken. I'm pleased to provide an overview of our portfolio, recent investment activity, and what we're seeing in the market before we discuss KBDC's financial results for the second quarter of 2024.

Speaker Change: Outside of the specific credit statistics associated with our portfolio. The investments are also well structured because 98% of our portfolio is invested in first lien securities and 99% of our private middle market investments are backed by private equity sponsors. Additionally, all of our private middle market investments have financial covenants.

Doug Goodwillie: As of June 30th, KBDC's portfolio includes 106 individual portfolio companies, representing $1.85 billion of fair value-funded investments.

Doug Goodwillie: We have another 179 million of unfunded commitments comprised of the mix of unfunded revolvers and delayed raw term loans for total commitments in excess of 2 billion.

Doug Goodwillie: Since June 30th, 2024, ABDC has closed or is in the final closing process on an additional 136 million in commitments with another approximately six weeks left in the quarter, evidencing continued strong origination volumes in 2024. The KBDC portfolio was purposefully constructed in a defensive manner in order to outperform in high interest rate environments and through periods of economic instability or uncertainty. Investments in our portfolio, excluding the handful of investments on our watchlist, have a weighted average leverage of 4.1 times to the borrower, an interest coverage of 3.2 times, and a loan devalue of approximately 42 percent, evidencing our conservatism in loans.

Speaker Change: And we think that this combination of being the lowest risk portion of the capital structure and businesses that are supported by committed private equity capital, where we still have maintenance covenants represent the most attractive way to invest in our market.

Doug Goodwillie: Since June 30th, 2024, ABDC has closed or is in the final closing process on an additional 136 million of commitments with another approximately six weeks left in the quarter, evidencing continued strong origination volumes in 2024.

Speaker Change: We also believe that the portfolio is positioned appropriately for potential changes in the interest rate environment with a 100% of our debt investments being floated rate. This mirrors, our liabilities, where the vast majority of our debt funding utilizing floating rate borrowings as well.

Doug Goodwillie: The KBDC portfolio was purposely constructed in a defensive manner in order to outperform in high interest rate environments and through periods of economic instability or uncertainty.

Speaker Change: Our portfolio has performed very well to date with only 1% of total debt investments at fair value on non accrual, which is represented by only two positions. Lastly, we built this conservative portfolio with healthy yields with an approximate 11, 7% weighted average yield on fair value of investments. This.

Doug Goodwillie: Investments in our portfolio, excluding the handful of investments on our watchlist,

Doug Goodwillie: have a weighted average leverage of 4.1 times to the borrower and interest coverage of 3.2 times and a loan devalue of approximately 42% evidencing our conservatism and loan structuring.

Doug Goodwillie: We think these credit statistics are a material positive factor for our portfolio outcome, particularly in an elevated rate environment, and that these statistics compare favorably with virtually all other public BDCs of a scale similar to us. We have also built a diversified portfolio with an average position size of approximately 0.9% of fair value, where our top 10 investments represent only 19% of the overall portfolio.

Doug Goodwillie: We think these credit statistics are a material positive factor for our portfolio outlook, particularly in an elevated rate environment, and that these statistics compare favorably to virtually all other public BDCs of a scale similar to us.

Speaker Change: This field has been achieved with approximately 15% of our portfolio still invested in broadly syndicated securities.

Speaker Change: We believe we have some upside in spreads relative to our competitors over the next few quarters as we rotate out of these lower spread investments.

Doug Goodwillie: We have also built a diversified portfolio with average position size of approximately 0.9% of fair value, where our top 10 investments represent only 19% of the overall portfolio.

Speaker Change: As Ken previously discussed our portfolio is diversified by end market and industries with a focus on stable slower growing segments in the U S economy.

Doug Goodwillie: Outside of the specific credit statistics associated with our portfolio, the investments are also well structured because 98% of our portfolio is invested in first lien securities, and 99% of our private middle market investments are backed by private equity. Additionally, all of our private middle market investments have financial, We think that this combination of being in the lowest risk portion of the capital structure and businesses that are supported by committed private equity capital, where we still have maintenance covenants, represents the most attractive way to invest in our market.

Ken Leonard: As you can see in our earnings presentation, our largest industries, our distribution food products business Slash industrial services and health care with the largest representing only 12, 9% of the portfolio at the risk of Overemphasis. We believe that these types of industries are extremely attractive debt financing targets because sustainability of cash.

Doug Goodwillie: Outside of the specific credit statistics associated with our portfolio, the investments are also well structured because 98% of our portfolio is invested in first-learn securities and 99% of our private middle-market investments are backed by private equity

Doug Goodwillie: Additionally, all of our private middle market investments have financial covenants.

Ken Leonard: Flows are more straightforward to underwrite for businesses that operate in stable steady segments of the market with virtually no new entrants.

Doug Goodwillie: We think that this combination of being in the lowest risk portion of the capital structure and businesses that are supported by committed private equity capital where we still have maintenance covenants represents the most attractive way to invest in our market.

Ken Leonard: Financing businesses and the stable lower growth industries with typical enterprise values in the 8% to 10 times range allows us to build portfolios with lower leverage and better interest coverages as well.

Doug Goodwillie: We also believe that the portfolio is positioned appropriately for potential changes in the interest rate environment with 100% of our debt investments being floating rate. This mirrors our liabilities, where the vast majority of our debt funding utilizes floating rate borrowings as well. Our portfolios perform very well to date with only 1% of total debt investments at fair value on non-accrual, which is represented by only two positions. Lastly, we've built this conservative portfolio with healthy yields within an approximate 11.7% weighted average yield on fair value of the investments.

Doug Goodwillie: We also believe that the portfolio is positioned appropriately for potential changes in the interest rate environment, with 100% of our debt investments being floated rate. This mirrors our liabilities where the vast majority of our debt funding utilizes floating rate borrowings as well.

Ken Leonard: Turning to our private middle market investment activity for Q2 2024.

Ken Leonard: We made $141 million of total commitments across 18 different businesses during the period of which $119 million was funded in addition, $17 million of our existing unfunded commitments were funded are partially funded during the quarter, representing a combined gross fundings of $136 million.

Doug Goodwillie: Our portfolio has performed very well to date with only 1% of total debt investments at fair value on non-accrual, which is represented by only two positions.

Doug Goodwillie: Lastly, we've built this conservative portfolio with healthy yields, where then a approximate 11.7% weighted average yield on their value as investments.

This was a meaningful uptick in activity relative to the second quarter of 2023 for gross fundings were $73 million, we did see a small amount of private middle market repayment activity totaling $41 million of grocery payments during the period, which is approximately two 2% of funded investments.

Doug Goodwillie: This yield has been achieved with approximately 15% of our portfolio still invested in broadly syndicated securities, so we believe we have some upside in spreads relative to our competitors over the next few quarters as we rotate out of these lower spread investments. As Kent previously discussed, our portfolio is diversified by end market and industries with a focus on stable, lower-growing segments of the U.S. As you can see in our earnings presentation, our largest industries are distribution, food products, business financial services, industrial services, and health, with the largest representing only 12.9% of the portfolio.

Doug Goodwillie: This yield has been achieved with approximately 15% of our portfolio still invested in broadly syndicated securities, such that we believe we have some upside in spreads relative to our competitors over the next few quarters as we rotate out of these lower spread investments.

Ken Leonard: During the second quarter, our broadly syndicated loan portfolio experienced $30 million in new fundings and $58 million of sales and repayments. We currently hold $273 million in broadly syndicated loans across 22 borrowers and investments that are slightly accretive to the portfolio by year end 2020 for the first quarter 2025, we expect to.

Doug Goodwillie: As Ken previously discussed, our portfolio is diversified by end market and industries with a focus on stable, lower growing segments of the U.S. economy.

Ken Leonard: As you can see in our earnings presentation, our largest industries are distribution, food products, business-industrial services, and healthcare.

Ken Leonard: With the largest representing only 12.9% of the portfolio. At the risk of over-emphasis, we believe that these types of industries are extremely attractive death financing targets.

Doug Goodwillie: At the risk of overemphasizing, we believe that these types of industries are extremely attractive debt financing targets because sustainability of cash flows is more straightforward to underwrite for businesses that operate in stable, steady segments of the market with virtually no new interest. Financing businesses in stable, lower growth industries with typical enterprise values in the eight to ten times range allows us to build portfolios with lower leverage and better interest coverage as well.

Ken Leonard: Have generated enough privately originated middle market loan volume to rotate out of these broadly syndicated investments, while still maintaining leverage inside our target ratio of one to one in the quarter.

Ken Leonard: because sustainability of cash flows are more straightforward to underwrite for businesses that operate in stable, steady segments of the market with virtually no new entrants.

Investments during the quarter.

Ken Leonard: Consistent with our overall strategy and that all of the credit investments were first lien senior secured such that our portfolio mix at quarter end was over 98% first lien.

Ken Leonard: Financing businesses in the stable, lower growth industries with typical enterprise values in the 8 to 10 times range allows us to build portfolios with lower leverage and better interest coverages as well.

Ken Leonard: Now turning to the market since the second half of 2022, I think it's fair to say, we've been operating in a lender friendly environment.

Doug Goodwillie: Turning to our private middle market investment activity for Q2 2024, we made $141 million of total commitments across 18 different businesses during the period, of which $119 million was funded. In addition, $17 million of our existing unfunded commitments were funded or partially funded during the quarter, representing a combined gross funding of $136 million.

Ken Leonard: Turning to our private, middle market investment activity for Q2 2024.

Ken Leonard: When it comes to pricing and terms for middle market financings.

Ken Leonard: Said, there were substantial declines in M&A activity over that period, leading to somewhat depressed financing volumes.

Ken Leonard: We made $141 million of total commitments across 18 different businesses during the period, of which $119 million was funded.

Ken Leonard: That has changed over the last six to nine months as the macroeconomic picture continues to exhibit resiliency and M&A activity has significantly increased in the first half of 2024 total lending volumes have picked up substantially nearly doubling versus the same period in 2023, we believe a substantial driver in this uptick has been private equity commute.

Ken Leonard: In addition, 17 million of our existing unfunded commitments were funded or partially funded during the quarter, representing a combined gross fundings of $136 million. This was a meaningful uptick in activity relative to the second quarter of 2023, where gross fundings were $73 million.

Doug Goodwillie: This was a meaningful uptick in activity relative to the second quarter of 2023, where gross fundings were $73 million. We did see a small amount of private mental market repayment activity totaling 41 million grocery payments during the period, which is approximately 2.2% of funded investments. During the second quarter, a broadly syndicated loan portfolio experienced $30 million of new funding and $58 million of sales and repayments. We currently hold $273 million in broadly syndicated loans across 22 borrowers in investments that are slightly accreted to the portfolio.

Ken Leonard: Moving to transact after a period of lower M&A volumes over the last almost two years.

Ken Leonard: We did see a small amount of private middle market repayment activity, totaling 41 million of gross repayments during the period, which is approximately 2.2 percent of funded investments.

Ken Leonard: Additionally, we see substantial transaction flow from our existing portfolio investments, both as supporting acquisition activity and in certain instances financing the same company through a change of control with different private equity sponsors our portfolio of over 100 investments help support new investment flow during periods of slower M&A activity like <unk>.

Ken Leonard: During the second quarter, a broadly syndicated loan portfolio experience 30,000,000 of new findings in 58,000 of sales and repayments.

Ken Leonard: We currently hold $273 million in broadly syndicated loans across 22 borrowers in investments that are slightly accretive to the portfolio.

Doug Goodwillie: By year-end 2024, or first quarter 2025, we expect to have generated enough privately-originated middle-market loan volume to rotate out of these broadly syndicated investments while still maintaining leverage inside our target ratio of one to one and a quarter. Investments during the quarter were consistent with our overall strategy, and all of the credit investments were first-line senior secured, such that our portfolio mix at quarter end was over 98% first-line. Now, turning to the market, since the second half of 2022, I think it's fair to say we've been operating in a lender-friendly environment when it comes to pricing and terms for middle market finance. That said, there were substantial declines in M&A activity over that period, leading to somewhat depressed financing volumes.

Speaker Change: 'twenty three.

Ken Leonard: By year end 2024, or first quarter 2025, we expect to have generated enough privately originated middle market loan volume to rotate out of these broadly syndicated investments while still maintaining leverage inside our target ratio of one to one and a quarter.

Even with the increase in volume we've seen this year there has been some downward pressure on spreads.

Speaker Change: Even in the core mid market K bdc's existing portfolio.

Speaker Change: Middle market investments has an average spread over sofa of approximately six 2% most of the new transactions. We are reviewing today had a spread over so for $2000 to 75 basis points below that though the amount of opportunities relative to a year ago as I mentioned has increased substantially.

Ken Leonard: Investments during the quarter were consistent with our overall strategy and that all of the credit investments were first lane senior secured such that our portfolio mix at quarter end was over 98% first lane.

Ken Leonard: Now, turning to the market. Since the second half of 2022, I think it's fair to say we've been operating in a lender-friendly environment when it comes to pricing and terms for middle market financings. That said, there were substantial declines in M&A activity over that period, leading to somewhat depressed financing volumes.

Speaker Change: It goes without saying that the downward pressure on spreads in our market has been felt much less acutely than in the largest segments of the direct lending market to compete with broadly syndicated financing solutions, where spreads compression has been more like 150 basis points or more.

Doug Goodwillie: That has changed over the last six to nine months as the macroeconomic picture continues to exhibit resiliency and M&A activity has significantly increased. In the first half of 2024, total lending volumes picked up substantially, nearly doubling versus the same period in 2023. We believe a substantial driver in this uptick has been the private equity community moving to transact after a period of lower M&A volumes over the last almost two years.

Speaker Change: Regardless, we still see expected yields on our new investments of approximately 12%, which remains incredibly healthy, particularly as compared to our longer term historical view, we've always believed that our market represents an all weather investment product, particularly for season private credit platforms and lower risk portions of the capital struck.

Ken Leonard: That has changed over the last six to nine months as the macroeconomic picture continues to exhibit resiliency and M&A activity has significantly increased.

Ken Leonard: In the first half of 2024, total lending volumes have picked up substantially, nearly doubling versus the same period in 2023. We believe a substantial driver in this uptick has been the private equity community moving to transact after a period of lower M&A volumes over the last almost two years.

Terry Hart: And we believe that remains the case today with that I'll turn it over to Terry Hart to discuss <unk> second quarter 2024 financial results.

Doug Goodwillie: Additionally, we see substantial transaction flow from our existing portfolio investors, both as supporting acquisition activity and, in certain instances, financing the same company through a change of control with different private equity. Our portfolio of over 100 investments helps support new investment flow during periods of slower M&A activity like 2023. Even with the increase in volume we've seen this year, there has been some downward pressure on spreads, even in the core mid market.

Ken Leonard: Additionally, we see substantial transaction flow from our existing portfolio investments, both as supporting acquisition activity and in certain instances, financing the same company through a change of control with different private equity sponsors.

Terry Hart: Thanks, Doug during the second quarter <unk> total investment income was $52 $5 million as compared to $46 5 billion in the prior quarter.

Ken Leonard: Our portfolio of over 100 investments helps support new investment flow during periods of slower M&A activity like 2023.

Terry Hart: The increase was driven by the additions to the portfolio during the second quarter and the full quarter impacts of purchases made late in the first quarter.

Ken Leonard: Even with the increase in volume we've seen this year, there has been some downward pressure on spreads.

Doug Goodwillie: KBDC's existing portfolio of private middle market investments has an average spread over SOFR of approximately 6.2 percent. Most of the new transactions we are reviewing today have a spread over SOFR 20 to 75 basis points below that, though the amount of opportunities relative to a year ago, as I mentioned, has increased substantially. We think it goes without saying that the downward pressure on spreads in our market has been felt much less acutely than in the largest segments of the direct lending market to compete with broadly syndicated financing solutions, where spread compression has been more like 150 basis points.

Terry Hart: Pik income as a percentage of total investment income continues to remain low at only <unk>, 7%.

Ken Leonard: even in the core mid-market. KBDC's existing portfolio of private middle market investments has an average spread over SOFR of approximately 6.2%. Most of the new transactions we are reviewing today have a spread over SOFR 20 to 75 basis points below that.

Terry Hart: Net investment income for the second quarter of 2024 was $34 4 million or 51 per share compared to $23 8 million or 52 cents.

Ken Leonard: Though the amount of opportunities relative to a year ago, as I mentioned, has increased substantially.

Terry Hart: Per share for the first quarter.

Terry Hart: Total expenses for the second quarter were $18 one.

Ken Leonard: We think it goes without saying that the downward pressure on spreads in our market has been felt much less acutely than in the largest segment of the direct-line market to compete with broadly syndicated financial solutions, where spread of compression has been more like 150 basis points or more.

Terry Hart: $1 million compared to $22 7 million for the prior quarter.

Terry Hart: The decrease was due to lower interest expense, resulting from using a portion of the proceeds from our IPO to repay revolver borrowings during the quarter.

Terry Hart: Regardless, we still see expected yields on our new investments of approximately 12%, which remains incredibly healthy, particularly as compared to a longer-term historical view. We have always believed that our market represents an all-weather investment product, particularly for seasoned private credit platforms and lower-risk portions of the capital structure, and we believe that remains the case today. With that, I'll turn it over to Terry Hart to discuss KBDC's second quarter 2024 financial results. Thanks, Doug.

Ken Leonard: Regardless, we still see expected yields on our new investments of approximately 12 percent, which remains incredibly healthy, particularly as compared to a longer-term historical view.

Terry Hart: The decrease was also a result of a full waiver of our income base incentive fees during the quarter.

Terry Hart: As a reminder, in connection with our IPO Kayne Anderson provided a 25 basis point fee waiver of our management fee through May 23 of 2025.

Ken Leonard: We have always believed that our market represents an all-weather investment product, particularly for seasoned private credit platforms and lower-risk portions of the capital structure, and we believe that remains the case today.

Terry Hart: A full waiver of income based incentive fees for three quarters, starting with the second quarter of 2024.

Terry Hart: During the second quarter, KBDC's total investment income was $52.5 million as compared to $46.5 million in the prior quarter. The increase was driven by additions to the portfolio during the second quarter and the full quarter impacts of purchases made late in the first quarter. Pick income as a percentage of total investment income continues to remain low at only 0.7%. Net investment income for the second quarter of 2024 was $34.4 million or $0.51 per share compared to $23.8 million or $0.52 per share for the first quarter. Total expenses for the second quarter were $18.1 million, compared to $22.7 million for the prior quarter.

Terry Hart: With that, I'll turn it over to Terry Hart to discuss KBDC's second quarter 2024 financial results.

Terry Hart: During the second quarter, our net change in unrealized losses were $3 1 million.

Terry Hart: Thanks, Doug. During the second quarter, KBDC's total investment income was $52.5 million as compared to $46.5 million in the prior quarter.

Terry Hart: The unrealized losses were primarily driven by changes in the fair value of some of our investments, particularly the investments and trademark global and seek a leg.

Terry Hart: The increase was driven by the additions to the portfolio during the second quarter and the full quarter impacts of purchases made late in the first quarter.

Terry Hart: As of June 30th trademark global was moved to nonaccrual status.

Terry Hart: Additionally, during the quarter, we had a small realized loss of $138000 related to the disposition of a liquid loan.

Terry Hart: PIC income, as a percentage of total investment income, continues to remain low at only 0.7%.

Speaker Change: Net investment income for the second quarter of 2024 was $34.4 million or $0.51 per share compared to $23.8 million or $0.52 per share for the first quarter.

Terry Hart: As of June 30, total assets were 1.85 billion and net assets were $1 2 billion.

Terry Hart: As of that date, our NAV per share was $16 57.

Terry Hart: A decrease compared to $16 63 at the end of the first quarter, but an increase of five per share after considering the 11th of dilutive offering costs related to our IPO.

Speaker Change: Total expenses for the second quarter were $18.1 million compared to $22.7 million for the prior quarter.

Terry Hart: The decrease was due to lower interest expense resulting from using a portion of the proceeds from our IPO to repay revolver borrowings during the quarter. Additionally, the decrease was also a result of a full waiver of our income-based incentive fees during the quarter. As a reminder, in connection with our IPO, Kane Anderson provided a 25 basis point fee waiver of our management fee through May 23rd, 2025 and a full waiver of income-based incentive fees for three quarters starting with the second quarter of 2024.

Speaker Change: The decrease was due to lower interest expense resulting from using a portion of the proceeds from our IPO to repay revolver borrowings during the quarter.

Terry Hart: At the end of the second quarter, we had debt outstanding of $622 million and our debt to equity ratio was <unk> five.

Terry Hart: <unk> three times this.

Speaker Change: The decrease was also a result of a full waiver of our income-based incentive fees during the quarter.

Terry Hart: This is clearly below our target range of one to one and a quarter times, but we expect to grow the portfolio over the coming quarters to achieve our target leverage.

Speaker Change: As a reminder, in connection with our IPO, Kane Anderson provided a 25 basis point fee waiver of our management fee through May 23rd of 2025 and a full waiver of income-based incentive fees for three quarters, starting with the second quarter of 2024.

Terry Hart: As a relevant data point and as mentioned by the third quarter is off to a good start and as of August eight we were operating at a debt to equity ratio of approximately.

Six one times.

Terry Hart: During the second quarter, we extended the maturity date of our senior secured revolving funding facility from February of 2027 through April 2029, we increased the commitment from $455 million to.

Terry Hart: During the second quarter, our net change and unrealized losses were $3.1 million. The unrealized losses were primarily driven by changes in the fair value of some of our investors, particularly the investments in Trademark, Global, and Segal Ag. As of June 30th, Trademark's level was moved to the non-accrual status.

Speaker Change: During the second quarter, our net change and unrealized losses were $3.1 million. The unrealized losses were primarily driven by changes in the fair value of some of our investments.

Terry Hart: So $600 million.

Terry Hart: And we reduced the interest rate from daily Sofa, plus 275% to daily so for plus to $3 75 to two 5% depending on the mix of loans securing the facility looking.

Speaker Change: particularly the investments in Trademark Global and Segal Ag.

Speaker Change: As of June 30th, Trademark Level was moved to the non-accrual status.

Terry Hart: Additionally, during the quarter, we had a small realized loss of $138,000 related to the disposition of a liquid loan. As of June 30th, total assets were 1.85 billion, and net assets were 1.2 billion. As of that date, our NAV per share was $16.57, a decrease compared to $16.63 at the end of the first quarter but an increase of 5 cents per share after considering the 11 cents of dilutive offering costs related to our IPO.

Speaker Change: Additionally, during the quarter we had a small realized loss of $138,000 related to the disposition of a liquid loan.

Terry Hart: Looking forward as we increased leverage on our credit facilities over the balance of 2024, we will be strategically reviewing other opportunities to enhance our debt stack.

Speaker Change: As of June 30th, total assets were 1.85 billion and net assets were 1.2 billion.

Terry Hart: I will conclude with a few items related to our declared dividends and dividend policy on.

Speaker Change: As of that date, our NAV per share was $16.57, a decrease compared to $16.63 at the end of the first quarter, but an increase of $0.05 per share after considering the $0.11 of dilutive offering costs related to our IPO.

Terry Hart: On August 7th our board of directors declared a regular dividend for the third quarter of <unk> 40 per share to shareholders of record on September 32024, which is consistent with our second quarter dividend.

The regular dividend represents a nine 7% yield based on ending NAV per share.

Terry Hart: At the end of the second quarter, we had debt outstanding of $622 million, and our debt to equity ratio was.53 times. This is clearly below our target range of one to one and a quarter times, but we expect to grow the portfolio over the coming quarters to achieve our target leverage. As a relevant data point, and as mentioned by Doug, the third quarter is off to a good start, and as of August 8th, we were operating at a debt-to-equity ratio of approximately 0.61 times. Additionally, during the second quarter, we extended the maturity date of our Senior Secured Revolving Funding Facility from February of 2027 to April of 2029.

Speaker Change: At the end of the second quarter, we had debt outstanding of $622 million, and our debt-to-equity ratio was 0.53 times.

Terry Hart: Clearly were over earning our dividend with a net investment income yield for the quarter of 12, 3%.

Speaker Change: This is clearly below our target range of one to one and a quarter times, but we expect to grow the portfolio over the coming quarters to achieve our target leverage.

As of June 30, our estimated spillover of net investment income is 20 per share.

Speaker Change: In addition to the regular dividend just prior to our IPO. Our board of directors declared three special dividends of <unk> 10 per share to be paid on December 22024 March 18th 2025, and June 24 2025.

Speaker Change: As a relevant data point, and as mentioned by Doug, the third quarter is off to a good start, and as of August the 8th, we were operating at a debt-to-equity ratio of approximately 0.61 times.

Doug Goodwillie: During the second quarter, we extended the maturity date of our Senior Secured Revolving Funding Facility from February of 2027 to April of 2029.

Terry Hart: Following the payment of the special dividends.

Terry Hart: Our intention to have a dividend policy to distribute a portion of excess earnings over and above our regular dividend on a quarterly basis, and we plan to distribute excess earnings through an annual special dividend.

Terry Hart: We increased the commitment from $455 million to $600 million, and we reduced the interest rate from daily SOFR plus 2.75 percent to daily SOFR plus 2.375 to 2.5 percent, depending on the mix of loans securing the facility. Moving forward, as we increase leverage on our credit facilities over the balance of 2024, we will be strategically reviewing other opportunities to enhance our debt stack. I'll conclude with a few items related to our declared dividends and dividend policy.

Speaker Change: We increased the commitment from $455 million to $600 million and we reduced the interest rate from daily SOFR plus 2.75%.

Speaker Change: With that operator, please open the line for questions.

Speaker Change: to daily SOFR plus 2.375 to 2.5% depending on the mix of loans securing the facility.

Speaker Change: Thank you and at this time, if you would like to ask a question. Please press the star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star and <unk> and we will pause for a moment to allow questions to queue.

Speaker Change: Looking forward as we increase leverage on our credit facilities over the balance of 2024 we will be strategically reviewing other opportunities to enhance our debt stack.

Speaker Change: I'll conclude with a few items related to our declared dividends and dividend policy.

Terry Hart: On August 7th, our Board of Directors declared a regular dividend for the third quarter of 40 cents per share to shareholders of record on September 30th, 2024, which is consistent with our second quarter dividend. The regular dividend represents a 9.7% yield based on ending NAV per share.

Speaker Change: And we will take our first question from Finian O'shea with Wells Fargo.

Speaker Change: On August 7th, our Board of Directors declared a regular dividend for the third quarter of 40 cents per share to shareholders of record on September 30th, 2024, which is consistent with our second quarter dividend.

Speaker Change: Hey, everyone. Good morning, congratulations on the IPO.

Speaker Change: Doug I wanted to go to your some of your commentary on the margin portfolio.

Speaker Change: The regular dividend represents a 9.7% yield based on ending NAV per share. Clearly, we're over earning our dividend with a net investment income yield for the quarter of 12.3%.

Speaker Change: Sorry.

Speaker Change: It sounds like.

Speaker Change: A bit more.

Speaker Change: Expedited.

Speaker Change: <unk> rotation.

Speaker Change: And to privates.

Speaker Change: As of June 30th, our estimated spillover of net investment income is $0.20 per share.

Speaker Change: And perhaps lower new.

Speaker Change: New money spreads versus what you've historically deployed at.

Speaker Change: In addition to the regular dividend, just prior to our IPO, our Board of Directors declared three special dividends of $0.10 per share to be paid on December 20, 2024, March 18, 2025, and June 24, 2025.

Speaker Change: Seeing if there is any.

Speaker Change: Sort of meat on the bone you can provide there on how how much this has changed versus your your expectations say at the time of the IPO. Thank you.

Speaker Change: Sure Thanks, very much Vin.

Terry Hart: It's our intention to have a dividend policy to distribute a portion of excess earnings over and above our regular dividend on a quarterly basis, and we plan to distribute excess earnings through an annual special dividend. With that said, operator, please open the line for questions. Thank you. And at this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing star and two, and we will pause for a moment to allow questions to queue.

Speaker Change: following the payment of these special dividends. It's our intention to have a dividend policy to distribute a portion of excess earnings over and above our regular dividend on a quarterly basis and we plan to distribute excess earnings through an annual special dividend.

Speaker Change: To address the.

Speaker Change: <unk> part of the question, we've got 22 positions a little under $300 million of commitments.

Speaker Change: Our goal is to.

Fund close to $303 50 fin.

Speaker Change: With that, Operator, please open the line for questions.

Speaker Change: New commitments through August.

Speaker Change: Thank you. And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star and 2. And we will pause for a moment to allow questions to queue.

Speaker Change: 15th or so today.

Speaker Change: Through the balance of the year, we've done roughly 300 of new commitments for the BDC and the first half of the year of $136 million as I mentioned are in closing or closed in the last 45 days. So it has been for us to get up to the one to one leverage number it's roughly 350 of new volumes, which we believe is very achieve.

Speaker Change: Thank you.

Operator: And we will take our first question from Sunny and O'Shae with Wells Fargo. Hey, everyone. Good morning.

Speaker Change: And we will take our first question from Finian O'Shea with Wells Fargo.

Sunny O'Shae: Congratulations on the IPO. Doug, I wanted to go to some of your commentary on the market and portfolio. Sorry, it sounds like a bit more expedited.

Speaker Change: Well for.

Finian O'shea: Hey everyone, good morning, congratulations on the IPO.

Speaker Change: The balance of the year, especially Q4 is typically the largest volume quarter for us on a seasonal basis.

Finian O'shea: Doug, I wanted to go to some of your commentary on the market and portfolio. Sorry, it sounds like a bit more expedited.

Speaker Change: And as we achieve that kind of Q4 Q1, we would expect.

Doug Goodwillie: PSL rotation into privates and perhaps lower new money spreads versus what you've historically deployed at, seeing if there's any sort of meat on the bone you could provide there on how much this has changed versus your expectations, say, at the time of the IPO. Thank you. Sure, thanks very much, Finn.

Speaker Change: Two also trade out of our BSL exposure into our core mid market deals.

Speaker Change: BSL rotation into privates and perhaps lower new money spreads versus what you've historically deployed at.

Speaker Change: In terms of spreads.

Since inception as a platform we've been roughly $6 15 to $6 20 over the last 12 years very consistent as you know I think over the first half of this year as a platform spreads had been right around 600.

Speaker Change: Seeing if there's any, you know, sort of meat on the bone, you could provide there on how much this has changed versus your expectations, say, at the time of the IPO. Thank you.

Speaker Change: That said a lot of that was negotiated Q4 Q1 of this year as volumes have come back I think the slight offset to that is there has been some spread compression.

Doug Goodwillie: And to address the BSL part of the question, you know, we've got 22 positions, a little under $300 million in commitments. Our goal is to fund close to 300, 350, Finn, in new commitments through August 15th or so today, through the balance of the year. We've done roughly 300 of new commitments for the BDC in the first half of the year. 136 million, as I mentioned, are in closing or closed in the last 45 days.

Speaker Change: Sure. Thanks very much, Finn. And to address the BSL part of the question, you know, we've got 22 positions, a little under 300 million of commitments. Our goal is to...

Speaker Change: Typically.

Speaker Change: 25% to 75 is the range I would say 10.

Speaker Change: But we would expect.

Speaker Change: Fun close to 350 in new commitment through

Speaker Change: The spreads in the balance of the year to likely be more in the $5 50 to $5 75 range.

Speaker Change: Given some of that compression I think that that's largely muted versus the broadly syndicated market, where you've seen more like 150 to 200 basis points of spread compression.

Speaker Change: August

Speaker Change: 15th or so today through the balance of the year we've done roughly 300 of new commitments for the BDC in the first half of the year 136 million as I mentioned are in closing or closed in the last 45 days.

Speaker Change: Okay.

Doug Goodwillie: So Finn, for us to get up to the one-to-one leverage number, it's roughly 350 million new volumes, which we believe is very achievable for the balance of the year, especially Q4 is typically the largest volume quarter for us on a seasonal basis.

Speaker Change: Okay. Thanks, that's helpful and.

Speaker Change: So, Finn, for us to get up to the one-to-one leverage number, it's roughly 350 of new volumes, which we believe is very achievable for...

Speaker Change: Another one on the.

Speaker Change: Maybe I think Ken's remarks on just the style of investing in the core lower middle market.

Speaker Change: That.

Speaker Change: the balance of the year, especially Q4 is typically the largest volume quarter for us on a seasonal basis.

Speaker Change: Okay.

Speaker Change: That profile sort of checks out of your immediate EBITDA.

Doug Goodwillie: And as we achieve that kind of Q4, Q1, we would expect to also trade out of our BSL exposure into our core mid-market deals. In terms of spreads, since inception as a platform, we've been roughly 615 to 620 over the last 12 years, very consistent. As you know, I think over the first half of this year as a platform, spreads have been right around 600. That said, a lot of that was negotiated in Q4, Q1 of this year, as volumes have come back.

Speaker Change: 34.

Speaker Change: Weighted average is 59.

Speaker Change: And as we achieve that, kind of Q4, Q1, we would expect to also trade out of our BSL exposure into our core mid-market deals. In terms of spreads...

Does that mean, there is a like a stripe of larger.

Speaker Change: Credits in here that are part of your strategy your strategy or what's sort of behind that and what is that.

Speaker Change: That part of the portfolio look like.

Speaker Change: Since inception as a platform, we've been roughly 615 to 620 over the last 12 years, very consistent. As you know, I think over the first half of this year as a platform, spreads have been right around 600.

Speaker Change: I think there's.

Ken Leonard: Two parts to that but I'll, let Ken.

Ken Leonard: Can address that yeah. Thanks Vin.

Ken Leonard: Our strategy is in the core middle market, but we're more than happy to go up market as long as the Doj for covenant good pricing and.

Speaker Change: That said, a lot of that was negotiated Q4, Q1 of this year, as volumes have come back. I think the slight offset to that is there has been some spread compression.

Ken Leonard: Don't have large bank groups, which are the three things. We're looking for so we don't have a bias against larger.

Doug Goodwillie: I think the slight offset to that is there has been some spread compression. Typically, 25 to 75 is the range I would say it's in, but we would expect the spreads for the balance of the year to likely be more in the 550 to 575 range, given some of that compression.

Speaker Change: Situations, we just don't want it.

Speaker Change: You get into these larger deals that we think are priced deepened.

Speaker Change: 25 to 75 is the range I would say it's in, but we would expect the spreads in the balance of the year to likely be more in the 550 to 575 range, given some of that compression. I think that

Speaker Change: Deepen cheap at large bankers that have consensus risk in doing that.

So when those factors lineup for us we're more than happy to go up market and we do that aggressively we'd note that when the market comes down to us and so I think what youre seeing is.

Speaker Change: that's largely muted versus the broadly syndicated market where you see more like 150 to 200 basis points of spread compression.

Had a lot of great opportunities with very good sponsor relationships too.

Unnamed Speaker: I think that that's largely muted versus the broadly syndicated market, where you see more like 150 to 200 basis points of spread. Okay, thanks. It's helpful.

Speaker Change: Go up market and have solid pricing and competence and India more club like deals and we will continue to take advantage of those opportunities when they come to us.

Unnamed Speaker: And another one in the, Maybe I think they were Ken's remarks on just the style of investing in the core lower middle market. [inaudible] That profile sort of checks out on your media and EBITDA. 34 weighted averages 59.

Speaker Change: Okay. Thanks. It's helpful. And just another one in the...

Speaker Change: Maybe I think there were Ken's remarks on just the style of investing in the core lower middle market.

Speaker Change: And do you lead those deals as well or are they they clubbed.

Speaker Change: It's a mix.

Speaker Change: We're lead there is somewhere in the Croatian there's somewhere were club member.

Speaker Change: that that

Speaker Change: That profile sort of checks out on your median EBITDA, 34, weighted average is 59.

Awesome.

Speaker Change: Thanks, so much.

Ken Leonard: Does that mean there's a like a stripe of larger credits here that are part of your strategy or not? What's sort of behind that, and what is that? What does that part of the portfolio look like? I think there's two parts to that, but I'll let Ken address that. Yeah. Thanks, Vince. You know, our strategy is in the core middle market, but we're more than happy to go up market as long as the deals have covenants, good pricing, and, you know, don't have large bank groups, which are the three things we're looking for.

Speaker Change: Sure. Thank you.

Speaker Change: Does that mean there's like a stripe of larger credits in here that are part of your strategy? What's sort of behind that and what is that?

Speaker Change: Thank you and once again, if you would like to ask a question. Please press the star and one on your telephone keypad now.

Speaker Change: And we will take our next question from Kenneth Lee with RBC capital markets.

Speaker Change: that part of the portfolio look like.

Hey, good morning, Thanks for taking my question.

Speaker Change: Yeah, I think there's

Speaker Change: Two parts to that, but I'll let Ken address that. Yeah.

Kenneth Lee: One in terms of the core middle market direct lending focus there. Some other bdcs peers have talked about seamless segment as being more relatively attractive as well wondering if you could talk about.

Ken Leonard: Thanks, Finn. You know, our strategy is in the core metal market, but we're more than happy to go upmarket as long as the deals have covenants.

Ken Leonard: good pricing and You know don't have large bank groups, which are the three things we're looking for so we don't have a bias against larger Situations we just don't want to you know get into these larger deals that we take our you know price deep, you know deep and cheap

Ken Leonard: So we don't have a bias against larger situations; we just don't want to, you know, get into these larger deals that we think are, you know, priced, you know, deep and cheap and have large bank groups that have consensus risks and don't have covenants.

Kenneth Lee: Any.

Speaker Change: This level of competition or new numbers of entrants entering the segment, there and any kind of potential impacts on that thanks.

Speaker Change: Thanks, Ken and this is Doug.

Doug Goodwillie: From our perspective, the core mid market as Ken defined at roughly 10% to 50 of EBITDA. It's the largest addressable universe, there's 200 plus companies.

Ken Leonard: So when those factors line up for us, we're more than happy to go up market, and we do that aggressively when the market comes down to us. And so I think what you're seeing is we've had a lot of great opportunities with very good sponsor relationships to, you know, go up market and have solid pricing and confidence and be in more club-like deals, and we'll continue to take advantage of those opportunities with each other. And do you lead those deals as well, or are they done by the club? It's a mix.

Ken Leonard: and have large bank groups that have consensus risks and don't have a public.

Ken Leonard: So when those factors line up for us, we're more than happy to go up market and we do that aggressively when the market comes down to us.

Once you start to get above a 100 of EBITDA youre talking in probably 10 to 15000 companies.

Ken Leonard: And so I think what you're seeing is we've had a lot of great opportunities with very good sponsor relationships to, you know, go up market and have solid pricing and covenants and be in more club like deals and we'll continue to take advantage of those opportunities when they come to us.

Speaker Change: Theres less efficiency, we believe in terms of <unk>.

Speaker Change: Structuring the deals in the core mid market.

Speaker Change: And ultimately the majority of the capital raised.

It goes into the upper mid market.

Speaker Change: And do you lead those deals as well, or are they clubbed?

Speaker Change: As by some of the bigger larger call. It alternative asset manager platforms. So we think that theres less competition in the core mid market. So.

Unnamed Speaker: There's some where we're leading, there's some where they're co-agent, and there's some where we're a club member. Thanks so much, here. Thank you. Thank you. And once again, if you would like to ask a question, please press the star and one on your telephone keypad now. And we will take our next question from Kenneth Lee with RBC Capital Markets. Hey, good morning.

Speaker Change: It's a mix. There's some where we're lead, there's some where they're co-agent, and there's some where we're a club member.

Speaker Change: From our standpoint.

Speaker Change: aw

Speaker Change: <unk>.

Speaker Change: Thanks so much. Sure, thank you.

There's always an ebb and flow on players due to.

Speaker Change: A bit of M&A activity in the financial space, but we really havent been impacted by new entrants over the past few years.

Speaker Change: Thank you and once again if you would like to ask a question please press the star and 1 on your telephone keypad now and we will take our next question from Kenneth Lee with RBC Capital Markets

Speaker Change: It takes a fair amount of capital to compete as well as a first class organization from structuring origination and portfolio. So we.

Kenneth Lee: Thanks for taking my question. Just one in terms of the core middle markets direct lending focus there. Some other BDC peers have talked about, you know, seeing this segment as being more relatively attractive as well. One of you just talked about seeing any increased level of competition or new numbers of entrants entering the segment there and any kind of potential impacts around that. Thanks. Thanks, Ken, and this is Doug. From our perspective, the Core Mid Market can be defined as roughly 10 to 50 of EBITDA. It's the largest addressable universe.

Kenneth Lee: Hey, good morning. Thanks for taking my question

Speaker Change: We haven't seen a whole lot of new platforms have a meaningful impact in the core mid market recently.

Kenneth Lee: Just one in terms of the core middle market's direct lending focus there. Some other BDC peers have talked about seeing this segment as being more relatively attractive as well. I wanted you to talk about seeing any increased level of competition or new numbers of entrants entering the segment there and any kind of potential impacts around that. Thanks.

Speaker Change: Great very helpful. There and just one follow up if I may wondering if you could.

Speaker Change: Further expand upon the comments you touched upon in terms of looking for opportunities to optimize the debt stack what sort of opportunities.

Speaker Change: Could be looking at over the near term. Thanks.

Doug Goodwillie: Thanks Ken and this is Doug.

Doug Goodwillie: From our perspective, the core mid-market, as Ken defined it, you know, roughly 10 to 50 of EBITDA, it's the largest addressable universe. There's 200,000 plus companies.

Speaker Change: Yes, Terry do you want to handle that in terms of.

Terry Hart: The liabilities in our outlook there.

Terry Hart: Yes, sure be happy to thanks, Ken.

Terry Hart: I think the first thing that we would look to do here.

Doug Goodwillie: Once you start to get above 100 Aviva Dai, you're talking probably 10,000 to 15,000 companies. There's less efficiency, we believe, in terms of structuring the deals in the core mid-market.

Terry Hart: In the fall is to extend the maturity of our corporate.

Terry Hart: Facility that we have in place and I think that we do anticipate some price improvement on that facility when we renew it and then secondly, as we continue to.

Doug Goodwillie: and

Doug Goodwillie: Ultimately, the majority of the capital raised goes into the upper mid-market, it's raised by some of the bigger, larger, call it alternative asset manager platforms.

Terry Hart: Increased borrowings on our credit facilities over the balance of the year.

Doug Goodwillie: So, we think that there's less competition in the core mid-market. So, from our standpoint,

Terry Hart: Look to supplement our debt stack with either additional bank debt or we could also look to the unsecured notes market. So we're just in the process right now of.

Doug Goodwillie: You know, there's always an ebb and flow on players due to...

Doug Goodwillie: You know a bit of M&A activity in the financial space, but we really haven't been impacted by you know new entrants over the past Few years and it takes a fair amount of capital to compete as well as the first-class organization from

Terry Hart: Determining what that looks like for us.

Terry Hart: Clearly trade offs.

Unsecured notes may not be the the lease cost financing for us, but there are other benefits and flexibility around that but we do think that we.

Doug Goodwillie: structuring, origination, and portfolio. So we haven't seen a whole lot of new platforms have a meaningful impact in the core mid-market recently.

We can price a unsecured notes deal much cheaper than our original our original issuance.

Terry Hart: Back in 2023, but those are the things that we are looking at as we go into the balance of the year.

Speaker Change: Great, very helpful there. And just one follow-up if I may. I wonder if you could further expand upon comments you touched upon in terms of looking for opportunities to optimize the debt stack. What sort of opportunities you could be looking at over the near term? Thanks.

Speaker Change: Great very helpful. There, thanks, again and congrats.

Ken Leonard: Thanks, Ken.

Ken Leonard: Yes.

Unnamed Speaker: Yeah, Terry, do you want to handle that in terms of the liabilities and, you know, our outlook there? Yeah, sure. I'll be happy to.

Speaker Change: Thank you and our next question comes from Cory Johnson with UBS.

Speaker Change: Yeah, Terry, do you want to handle that in terms of the liabilities and our outlook there?

Terry Hart: Thanks, Ken. I think the first thing that we should look to do here in the fall is to extend the maturity of our corporate facility that we have in place. And I think that we do anticipate some price improvement on that facility when we renew it. And then, secondly, as we continue to, you know, increase borrowings on our credit facilities over the balance of the year, we'll look to supplement our debt stack with either additional bank debt, or we could also look to the unsecured notes market. So we're just in the process right now of determining what that looks like for us. You know, there are clearly trade-offs.

Cory Johnson: Hi, Thanks for taking my question.

Cory Johnson: Wondering if you can maybe provide a little more details in terms of like how you're thinking about the annual special dividend that you mentioned.

Terry Hart: Yeah, sure, I'd be happy to. Thanks, Ken.

Terry Hart: I think the first thing that we would look to do here in the fall is to extend the maturity of our corporate facility that we have in place.

Speaker Change: Most closely.

Speaker Change: Special dividends.

Terry Hart: And, I think that we do anticipate some price improvement on that facility when we renew it. And then, secondly, as we continue to, you know,

Even the supplemental or for that matter.

Cory Johnson: Sure. Thanks Cory.

Cory Johnson: Terry you want to handle that one as well sure I'll be happy to so we do plan to like I mentioned adopt a model of paying out a portion of our.

Terry Hart: increase borrowings on our credit facilities over the balance of the year. You know we'll look to supplement our debt stack with either additional bank debt or we could also look to the unsecured notes market. So we're just in the process right now of

Terry Hart: Earnings over and above our regular distribution and so we expect that to be 50% of any excess.

Speaker Change: Net investment income on a quarterly basis and as I mentioned I think you mentioned Korea.

Terry Hart: determining what that looks like for us.

Unnamed Speaker: Unsecured notes may not be the least cost financing for us, but there are other benefits and flexibility around that. But we do think that we can price an unsecured notes deal much cheaper than our original issuance back in 2023. So those are the things that we are looking at as we go into the ballots of the year.

Terry Hart: there's clearly trade-offs, unsecured notes may not be the...

Speaker Change: We expect to start that.

Speaker Change: After.

Terry Hart: the least cost financing for us, but there are other benefits and flexibility around that. But we do think that we can price an unsecured notes deal much cheaper than our original issuance.

Speaker Change: <unk>.

Speaker Change: At the end of our lockup period and after the payment of the final 10 special that's going to be in the second quarter of 2025, and so youll see us.

Speaker Change: Operate.

Speaker Change: With that kind of payout strategy, but then in addition to that as we have excess income.

Terry Hart: back in 2023 but so those are the things that we are looking at as we go into the balance of the year

Speaker Change: We do plan to have additionally, a annual special dividend to pay out any clean up income.

Speaker Change: Great, very helpful there. Thanks again and congrats.

Corey Johnson: Thanks, Kim. Thank you. And our next question comes from Corey Johnson with UBS.

Speaker Change: Thanks, Cam.

Speaker Change: Stated publicly that it's our intention to pay out.

Speaker Change: Thank you and our next question comes from Cory Johnson with UBS

Speaker Change: Roughly 90% to 100% of any income.

Corey Johnson: Hi, thanks for taking my question. I was wondering if you could maybe provide a little more details in terms of like how you're thinking about the annual special different that you mentioned, you know, on post, post via the Tencent Special Divents and even the supplemental for that. Sure. Thanks, Corey. Terry, you want to handle that one as well? Sure, I'd be happy to.

Cory Johnson: Hi, thanks for taking my question. I was wondering if you can maybe provide a little more details in terms of like how you're thinking about the annual special dividend that you mentioned, you know, post the 10-10 special dividends and, you know, even the supplemental for that matter.

Speaker Change: Great. Thank you and then my final question.

Speaker Change: Do you have any line of sight.

Speaker Change: And in terms of repayments over the coming quarters that you'd be able to share with us.

Speaker Change: Yeah, Hey, this is Frank.

Frank Carlscene: Payments and refinancings clearly.

Cory Johnson: Sure, thanks, Cory. Terry, you want to handle that one as well? Sure, I'd be happy to. So we do plan to, like I mentioned, adopt a model of paying out a portion of our...

Terry Hart: So, we do plan to, like I mentioned, adopt a model of paying out a portion of our, earnings over and above our regular distribution and so we expect that to be 50% of any excess net investment income on a quarterly basis and as I mentioned I think you you mentioned Corey we expect to start that after you know the end of our lockup period and after the payment of the final ten cent special that's going to be in the second quarter of 2025 and so you'll see us operate with that kind of payout strategy, but in addition to that, you know, as we have excess income, we do plan to have additionally an annual special dividend to pay out any cleanup income, and we've stated publicly that it's our intention to pay out roughly 90 to 100% of any income. Great.

Frank Carlscene: Always difficult to.

Frank Carlscene: To really get a line of sight on.

Frank Carlscene: We are aware of a small handful call it less than five names in the portfolio that are currently in market for sell side or.

Terry Hart: earnings over and above our regular distribution. And so we expect that to be 50% of any excess net investment income on a quarterly basis.

Refinancing processes.

Frank Carlscene: So not not a huge portion of the portfolio overall and then as you think about just the vintage of this book we were doing most of our launching an initial ramping and building diversity.

Terry Hart: And as I mentioned, and I think you mentioned, Corey, we expect to start that.

Cory Johnson: after, you know, the end of our lock-up period and after the payment of the final 10-cent special that's going to be in the second quarter of 2025. And so you'll see us operate...

Frank Carlscene: In 2021, such that those older vintages tend to be smaller hole sizes. So most of our book is less than three years old. So as we look at the portfolio. We're not looking at second half of 'twenty, four or first half of 'twenty five as being a large number of exits even.

Corey: with that kind of payout strategy. But in addition to that, you know, as we have excess income.

Corey: We do plan to have additionally a annual special dividend to pay out any cleanup income and we've stated publicly that it's our intention to pay out roughly 90 to 100% of any income.

Frank Carlscene: And if M&A volume picks up substantially throughout the rest of the year.

Speaker Change: Great. Thank you.

Speaker Change: Thank you and our next question comes from Paul Johnson with K B W.

Terry Hart: And then for my final question, do you have any line of sight in terms of repayment over the common quarter that you'd be able to show? Yeah, this is Frank, you know, repayments and refinancings, clearly, always difficult to really get a line of sight on.

Speaker Change: Great, thank you. And then my final question, do you have any line of sight in terms of repayment over the coming quarter that you'd be able to share with us?

Paul Johnson: Yes. Good morning, Thanks for taking my questions can you provide just kind of some.

Paul Johnson: High level relevant stats on just.

Paul Johnson: The BSL portfolio that you hold.

Speaker Change: You

Speaker Change: In terms of just I think you said, 22%.

Speaker Change: Yeah, hey, this is Frank. You know, repayments and refinancings clearly...

Speaker Change: Turning to borrowers in there, but just kind of average <unk>.

Frank Carl: You know, we are aware of a small handful called less than five names in the portfolio that are currently in the market for cell side or refinancing processes. So not a huge portion of the portfolio overall. And then as you think about just the vintage of this book, you know, we were doing most of our initial ramping and building diversity in 2021, such that those older ventages tend to be smaller hold sizes, so most of our book is less than three years old.

Speaker Change: Average duration and whether these were.

Frank Carl: always difficult to

New issue deals or investments purchased on the secondary.

Frank Carl: To really get a line of sight on You know, we are aware of a small Handful call it less than five names in the portfolio that are currently in market for sell-aside or You know refinancing processes

Frank Carlscene: Yes, so it's <unk>. It's <unk>. This is Frank it's 22 names current F&B is right around $271 million I mean these are we.

Frank Carlscene: We built this book from some of the largest most liquid names.

Frank Carl: So, not a huge portion of the portfolio overall. And then, as you think about just the vintage of this book, we were doing most of our launching and initial ramping and building diversity.

Frank Carlscene: Out there sort of like the 100 largest liquid BSL in the market.

So.

Most of these duration is north of three years, and all but one were secondary market purchases.

Frank Carl: in 2021, such that those older vintages tend to be smaller hold sizes. So most of our book is less than three years old. So as we look at the portfolio, we're not looking at

Frank Carlscene: Average price paid at close was 99 nine.

Frank Carlscene: Relative to cost.

Frank Carl: second half of 24 or first half of 25 as being a, you know, large number of exits, even if M&A volume picks up substantially throughout the rest of the year.

Speaker Change: I appreciate it that's very helpful.

Speaker Change: And then.

Speaker Change: Just broadly in the portfolio you had the one non accrual this quarter, but in terms of amendments.

Speaker Change: What sort of trends did you see there were there any.

Speaker Change: Great, thank you.

Frank Carl: So as we look at the portfolio, we're not looking at the second half of 24 or the first half of 25 as being a large number of exits, even if M and A volume picks up substantially throughout the rest of the year. Thank you. And our next question comes from Paul Johnson with KBW. Yeah, good morning. Thanks for taking my questions. Can you provide just kind of some?

Speaker Change: i

Speaker Change: Negative other negative credit related.

Speaker Change: Thank you. And our next question comes from Paul Johnson with KBW.

Speaker Change: Mint route.

Paul Johnson: high-level relevant stats on just the BSL portfolio that you hold, say in terms of just, I think you said 22 22 borrowers in there, but just kind of average average duration and whether these were new issue deals or investments purchased on the, Yeah, so it's 20, this is Frank. It's 22 names. Current FMV is right around $271 million. I mean, we built this book from some of the largest, most liquid names out there, sort of like the 100 largest liquid BSLs in the market.

Speaker Change: Portfolio this quarter.

Speaker Change: From our perspective.

Paul Johnson: Yeah, good morning, thanks for taking my questions. Can you provide just kind of some...

Speaker Change: From our perspective, we think the portfolio is holding up really well.

Paul Johnson: high-level relevant stats on just the BSL portfolio that you hold.

Speaker Change: As we alluded to earlier there is a handful I think five names on our watch list out of over.

Paul Johnson: today in terms of just, I think you said 22 borrowers in there, but just average duration and whether these were new issue deals or investments purchased on the secondary.

100 credits, so that's kind of normal course, as we talked about too.

Non accrual I think from our perspective, it's been normal course amendment activity.

Speaker Change: Across the platform there was over the last two years.

Frank Carl: Yeah, so it's 20, this is Frank, it's 22 names, current FMV is right around 271 million dollars. I mean, these are...

Speaker Change: Amendments around extensions of maturity.

Speaker Change: Private equity was not really looking to transact and there was an extension in duration.

Frank Carl: You know, we built this book from some of the largest, most liquid names out there, sort of like the 100 largest liquid BSLs in the market.

Speaker Change: Some of the loans I think that wave and that was largely for companies that were performing that wave is really passed so I think it is kind of normal course amendment activity liquidity is very strong across the board as we've talked about with our leverage statistics and with four times of the borrower.

Paul Johnson: So most of these durations were north of three years, and all but one were secondary market purchases; average price paid at close was 99.9 cents relative to cost. Appreciate it. That's very helpful. Just broadly in the portfolio, you had the one non-accrual this quarter, but, you know, in terms of, you know, amendments, what sort of trends did you see there? Were there any other negative credit-related amendments throughout the portfolio this quarter?

Speaker Change: So, you know, most of these duration is north of three years and all but one were secondary market purchases.

Frank Carl: Average price paid at close was 99.9 cents relative to cost.

Speaker Change: Showing interest coverages.

Speaker Change: We think that our portfolio is well positioned in the higher rate environment versus those that have a lot of.

Speaker Change: Software and higher growth.

Speaker Change: Appreciate it. That's very helpful. And then,

Speaker Change: <unk> that require more leverage so again very pleased with the portfolio I think.

Speaker Change: Just broadly in the portfolio, you had the one non-accrual this quarter, but in terms of amendments, what trends did you see there? Were there any other negative credit related amendments throughout the portfolio this quarter?

Speaker Change: One trend we've seen.

Speaker Change: It's just some challenging.

Speaker Change: The challenges to the consumer.

Speaker Change: Across.

Speaker Change: The broader economy, and I think thats hit us really only on one or two businesses.

Doug Goodwillie: From our perspective, we think the portfolio is holding up really well. As we alluded to earlier, there are a handful, I think, five names on our watch list out of over 100 credits. So that's kind of normal course, as we talked about, too, on nonaccrual. I think from our perspective, it's been normal course amendment activity. I think across the platform, there have been, over the last two years, some amendments around extensions of maturity because private equity was not really looking to transact, and there was an extension in duration of some of the loans. I think that wave, which was largely for companies that were performing, that wave has really passed. So I think it's kind of a normal course amendment activity.

Speaker Change: From our perspective, uh, this is Doug.

Speaker Change: Mark being one in our portfolio. So again, a small part of our portfolio, but thats one trend that we've seen that I think others probably have as well.

Speaker Change: From our perspective, we think the portfolio is holding up really well. As we alluded to earlier, there's a handful, I think five names on our watch list out of over

Speaker Change: Got it I appreciate that that's all for me. Thank you very much.

Speaker Change: a hundred credits, so that's kind of normal course, as we talked about, too, on non-accrual. I think from our perspective, it's been normal course amendment activity. I think there, across the platform, there was

Speaker Change: Thank you and it appears that we have no further questions. At this time I will now turn the program back to Doug <unk> for closing remarks.

Doug Goodwillie: Well on behalf of the management team here at <unk>, we want to thank everybody for your time today and your support of K BDC and our platform and we look forward to talking with you again on our next quarterly earnings call.

Speaker Change: over the last two years, you know, some of them.

Speaker Change: amendments around extensions of maturity because private equity was not really looking to transact and there was an extension in duration of...

Speaker Change: some of the loans. I think that wave, and that was largely for companies that were performing, that wave has really passed. So I think it's kind of normal course amendment activity. Liquidity is very strong across the board as we've talked about, you know, with our leverage statistics.

Speaker Change: Thank you very much.

Speaker Change: Thank you. This does conclude today's Kayne Anderson BDC second quarter 2024 earnings call. Thank you for your participation you may disconnect at any time.

Doug Goodwillie: Liquidity is very strong across the board, as we've talked about. With our leverage statistics, at four times the bar, our strong interest coverage is. We think that our portfolio is well positioned in the higher rate environment versus those that have a lot of software and higher growth businesses that require more leverage, so Again, very pleased with the portfolio. I think the one trend we've seen is just some challenges for the consumer across the broader economy.

Speaker Change: You know, at four times the bar of strong interest coverages, we think that our portfolio is well-positioned in the higher rate environment versus those that have a lot of...

Speaker Change: software and higher growth businesses that require more leverage. So again, very pleased with the portfolio. I think the one trend we've seen is just some challenging.

Speaker Change: the challenges to the consumer, you know, across

Doug Goodwillie: And I think that's it. It's really only on one or two businesses, trademark being one in our portfolio. So again, a small part of our portfolio, but that's one trend that we've seen that I think others probably have as well.

Speaker Change: You know the broader economy, and I think that's it. It's really only on one or two businesses Trademark being one in our portfolio, so again a small part of our portfolio But that's one trend that we've seen that that I think others probably have as well

Paul Johnson: Got it. I appreciate that. That's all for me.

Speaker Change: Got it. Appreciate that. That's all for me. Thank you very much.

Doug Goodwillie: Thank you very much. Thank you. And it appears that we have no further questions at this time. I will now turn the program back to Doug Goodwillie for closing remarks. Well, on behalf of the management team here at KBDC, we want to thank everybody for your time today and your support of KBDC and our platform. And we look forward to talking with you again on our next quarterly earnings call. Thank you very much.

Speaker Change: Thank you and it appears that we have no further questions at this time. I will now turn the program back to Doug Goodwillie for closing remarks.

Doug Goodwillie: Well on behalf of the management team here at KBDC we want to thank everybody for your time today and your support of KBDC and our platform and we look forward to talking with you again on our next quarterly earnings call.

Doug Goodwillie: Thank you. This does conclude today's Kane Anderson BDC second quarter 2024 earnings call. Thank you for your participation. You may disconnect at any time. I don't know if it's true or not, but I don't know if it's true or not, music how how

Speaker Change: Thank you very much.

Speaker Change: Thank you. This does conclude today's Kayne Anderson BDC second quarter 2024 earnings call. Thank you for your participation. You may disconnect at any time.

Speaker Change: i hel ioh

Unnamed Speaker: [inaudible] Yeah, yeah. Yeah, yeah, yeah. Thank you so much for watching.

Terry Hart: Clearly, we're over-earning our dividend with a net investment income yield for the quarter of 12.3%. As of June 30th, our estimated spillover of net investment income is 20 cents per share. In addition to the regular dividend, just prior to our IPO, our Board of Directors declared three special dividends of $0.10 per share to be paid on December 20, 2024, March 18, 2025, and June 24, 2025, following the payment of these special dividends.

Doug Goodwillie: There are 200,000 plus companies. Once you start to get above 100 in EBITDA, you're talking probably 10 to 15,000 companies. There is less efficiency, we believe, in terms of structuring the deals in the Core Mid Market.

Doug Goodwillie: Ultimately, the majority of the capital raise goes into the upper mid-market. It's raised by some of the bigger, larger, so-called alternative asset manager platforms. We think that there's less competition in the Core Mid Market. From our standpoint, there's always an ebb and flow of players due to... a bit of M&A activity in the financial space, but we really haven't been impacted by new entrants over the past few years. And it takes a fair amount of capital to compete, as well as a first-class organization from structuring, origination, and portfolio management. So we haven't seen a whole lot of new platforms have a meaningful impact in the core mid-market region.

Unnamed Speaker: Great. Very helpful there. And just one follow-up, if I may. One if you could further expand upon comments you touched upon in terms of looking for opportunities to optimize the debt stack. What are opportunities you could be looking at over near the Trump thing?