Goldman Sachs BDC(GSBD) - 2018 Q4 - Annual Report

Investment Portfolio - As of December 31, 2018, the investment portfolio included 72 portfolio companies, with a median EBITDA of $26.87 million[21] - The Senior Credit Fund had total investments in senior secured debt at fair value of $451.80 million, with a median EBITDA of $52.70 million[27] - As of December 31, 2018, the Senior Credit Fund had ten portfolio companies with unfunded commitments totaling $17.12 million[26] - The largest industry in the Senior Credit Fund's portfolio was Commercial Services & Supplies, representing 18.0% of the portfolio at fair value[33] - The company has invested in various sectors, including Health Care Providers & Services, Aerospace & Defense, and Construction & Engineering, diversifying its portfolio[545] Financial Performance - Total investment income for the year ended December 31, 2018, was $146.731 million, an increase of 7.1% from $136.781 million in 2017[525] - Net investment income after taxes for the year ended December 31, 2018, was $82.836 million, up from $79.993 million in 2017, reflecting a growth of 3.6%[525] - The company reported a net increase in net assets resulting from operations of $53.678 million for the year ended December 31, 2018, compared to $49.548 million in 2017, an increase of 4.3%[528] - Distributions to stockholders totaled $72.339 million in 2018, slightly higher than $70.504 million in 2017[528] - The company reported net assets of $709,892,000 as of December 31, 2018, down from $725,830,000 in 2017, indicating a decrease of about 2.5%[522] Debt and Leverage - The weighted average yield on debt and income-producing investments at amortized cost was 10.9%, while at fair value it was 11.3%[21] - The weighted average leverage (net debt/EBITDA) for the Senior Credit Fund was 4.8x, and the weighted average interest coverage was 2.4x[27] - 96.6% of performing debt in the investment portfolio bore a floating rate, while 3.4% bore a fixed rate[21] - The company’s debt increased from $542,526,000 in 2017 to $659,101,000 in 2018, marking an increase of about 21.4%[522] Investment Strategy - GSAM aims to create a portfolio primarily consisting of secured debt, including first lien and mezzanine debt, as well as select equity investments[59] - The company seeks to invest in companies with strong competitive market positions and viable exit strategies, focusing on cash flow generation[72] - The company may invest up to 30% of total assets in opportunistic investments, including large U.S. companies and distressed debt[63] - The company may invest up to 100% of its assets in privately negotiated transactions[147] Fees and Expenses - Management Fees for the year ended December 31, 2018, amounted to $15.97 million, down from $17.83 million in 2017[106] - The company paid a total of $34.35 million in fees for the year ended December 31, 2018, which included $17.18 million in Management Fees and $17.17 million in Incentive Fees[131] - The Incentive Fee is based on income if Ordinary Income exceeds a quarterly hurdle rate of 1.75%[108] Regulatory Compliance - The company is subject to compliance with the Sarbanes-Oxley Act, requiring certification of the accuracy of financial statements by its principal executive and financial officers[170] - The company believes it is in compliance with the NYSE listing standards, including corporate governance requirements[172] - The company has adopted a Code of Ethics to establish procedures for personal investments and restrict certain personal securities transactions[154] Risk Management - The portfolio is regularly reviewed and stressed under various scenarios by senior risk management personnel to minimize capital loss risk[61] - The company has developed allocation policies to address potential conflicts of interest and ensure equitable investment opportunities among accounts[46] Market Environment - The U.S. middle market consists of approximately 200,000 companies, representing about 33% of the private sector GDP, generating over $6 trillion in annual revenue[56] - The consolidation of regional banks into money center banks has reduced the focus on middle-market lending, leading to fewer bank lenders available for these companies[56] - There is a significant amount of un-invested private equity capital for North America buyout funds, creating additional capacity for GSAM to provide debt capital[56] Investment Valuation - The net asset value per share decreased from $18.09 in 2017 to $17.65 in 2018, reflecting a decline of approximately 2.4%[522] - The company holds a significant investment in CB-HDT Holdings, Inc., with 1,108,333 shares of preferred stock valued at $15,794[545] - The fair value of restricted securities is $78,879, accounting for 11.11% of the company's net assets[550]