Bain Capital Specialty Finance(US:BCSF)2024-11-05 21:12Investment Activity - As of September 30, 2024, the company has invested approximately $8,132.9 million in aggregate principal amount of debt and equity investments since operations began [329]. - For the three months ended September 30, 2024, the company invested $413.1 million in 83 portfolio companies, resulting in a net increase in investments of $165.1 million for the period [350]. - For the nine months ended September 30, 2024, the company invested $1,122.9 million in 134 portfolio companies, leading to a net increase in investments of $105.2 million [352]. - During the three months ended September 30, 2023, the company invested $114.2 million in 59 portfolio companies, resulting in a net increase in investments of $11.4 million for the period [351]. - The company invested $630.8 million in 91 portfolio companies during the nine months ended September 30, 2023, resulting in a net increase of $14.6 million [353]. Portfolio Composition - As of September 30, 2024, the investment portfolio comprised 159 portfolio companies, with 90.8% of the debt bearing a floating rate [358]. - The total amortized cost of performing investments as of September 30, 2024, was $2,367.96 million, with a fair value of $2,380.57 million [360]. - The total amortized cost of the investment portfolio as of December 31, 2023, was $2,301.83 million, with a fair value of $2,298.34 million [361]. - As of December 31, 2023, the company had 137 portfolio companies, with 93.8% of the debt bearing a floating rate [359]. Financial Performance - The company's asset coverage was 187.8% as of September 30, 2024, exceeding the regulatory requirement of 150% [342]. - The weighted average yield of the investment portfolio as of September 30, 2024, was 12.1% [354]. - The company reported a weighted average yield of 13.0% for the investment portfolio as of December 31, 2023 [356]. - The total fair value of the investment portfolio as of September 30, 2024, was $2,407,950, with 95.5% rated 2 [370]. Income and Expenses - For the three months ended September 30, 2024, total investment income was $72,540, compared to $72,390 for the same period in 2023, reflecting a slight increase [372]. - Net investment income for the three months ended September 30, 2024, was $33,984, down from $35,648 in the same period of 2023 [372]. - The composition of investment income for the three months ended September 30, 2024, included interest income of $55,420, down from $57,233 in 2023 [375]. - For the nine months ended September 30, 2024, total investment income was $219,310, a decrease from $222,842 in 2023 [376]. - The total expenses for the three months ended September 30, 2024, were $37,531, compared to $36,102 in the same period of 2023 [372]. - Operating expenses for the three months ended September 30, 2024, totaled $37.5 million, an increase of 3.9% from $36.1 million in the same period of 2023 [378]. Gains and Losses - Net realized gain for the three months ended September 30, 2024, was $2,808, contrasting with a loss of $51,767 in the same period of 2023 [372]. - Net realized gains on investments for the three months ended September 30, 2024, were $4.6 million, compared to a loss of $51.8 million in the same period of 2023 [388]. - For the nine months ended September 30, 2024, net realized gains on investments were $13.9 million, compared to $2.6 million in 2023 [394]. - The net change in unrealized appreciation on investments for the three months ended September 30, 2024, was $999,000, a decrease from $43.1 million in 2023 [391]. Cash and Liquidity - As of September 30, 2024, the company had $59.8 million in cash and cash equivalents, down from $112.5 million as of December 31, 2023 [404]. - Cash used in operating activities for the nine months ended September 30, 2024, was ($7.1) million, primarily due to investments totaling $1,097.8 million [405]. - The company had approximately $501.3 million of availability on its Sumitomo Credit Facility as of September 30, 2024, compared to $343.3 million at the end of 2023 [404]. Debt and Financing - The company has total debt obligations of $1,306,199,000, with significant maturities including $352,500,000 due in more than 5 years [437]. - The base management fee under the Amended Advisory Agreement is set at 1.5% of the average value of gross assets, decreasing to 1.0% if asset coverage falls below 200% [434]. - The weighted average interest rate on borrowings for the nine months ended September 30, 2024, was 5.1%, down from 5.2% for the year ended December 31, 2023 [381]. Risk Management - The company is subject to financial market risks, particularly changes in interest rates, and expects to value many investments at fair value due to lack of readily available market [438]. - The company may engage in foreign currency-denominated investments, which are subject to exchange rate fluctuations, potentially impacting financial results [439]. - Hedging techniques may be employed to mitigate foreign exchange risks, although effectiveness cannot be guaranteed [439]. - The company may utilize instruments such as forward contracts to hedge against currency exchange rate fluctuations affecting portfolio positions [439]. Regulatory and Compliance - The company intends to operate as a RIC and must distribute at least 90% of its net ordinary income and net short-term capital gains to maintain this status [414]. - The company plans to distribute net capital gains at least annually, but may retain some for investment purposes, incurring corporate-level tax [415]. - A dividend reinvestment plan allows stockholders to automatically reinvest cash dividends into additional shares of common stock [416]. Related Party Transactions - The company has entered into related party transactions, including an Amended Advisory Agreement and an Administration Agreement [419]. - The company has adopted a documented valuation policy for investments without readily available market quotations, which includes oversight by the Board [429].