Investcorp Credit Management BDC(US:ICMB)2025-11-12 22:14Company Overview - Investcorp Credit Management BDC, Inc. has a total assets under management of $21.2 billion as of September 30, 2025[189]. - The company primarily invests in middle-market companies through standalone first and second lien loans, unitranche loans, and mezzanine loans[188]. - The company has undergone significant ownership changes, with Investcorp acquiring approximately 76% ownership in the Adviser in 2019 and an additional 7% in 2023[189]. - The company is regulated as a Business Development Company (BDC) under the 1940 Act and intends to qualify as a Regulated Investment Company (RIC) under Subchapter M of the Internal Revenue Code[187]. Financial Management - The Base Management Fee for the Adviser is set at 1.75% of gross assets, payable quarterly[192]. - The Income-Based Fee for the Adviser is equal to 20.0% of pre-incentive fee net investment income, subject to an annualized hurdle rate of 8.0%[192]. - The company has no Taxable Subsidiaries as of September 30, 2025, and December 31, 2024[194]. - The company is required to comply with regulatory requirements, ensuring at least 70% of total assets are qualifying assets[217]. Portfolio and Investments - As of September 30, 2025, the investment portfolio was valued at $196.1 million, representing 93.1% of total assets, up from 92.6% as of December 31, 2024[206]. - The investment portfolio consisted of 41 portfolio companies, with 78.32% in first lien investments and 21.68% in equities, warrants, and other positions[222]. - The average investment per portfolio company was $4.8 million, while the largest investment was $13.4 million[222]. - During the nine months ended September 30, 2025, investments in new and existing portfolio companies totaled approximately $24.1 million, with 97.10% in first lien investments[226]. - The investment rating system indicated that 77.1% of the portfolio was rated 2 (performing within expectations) as of September 30, 2025, compared to 74.6% as of December 31, 2024[231]. Borrowings and Financing - As of September 30, 2025, outstanding borrowings under the Capital One Revolving Financing were $63.5 million, compared to $58.5 million as of December 31, 2024[210]. - The company closed a public offering of $65.0 million in aggregate principal amount of 4.875% notes due 2026, with net proceeds of approximately $63.1 million after expenses[211]. - The 2026 Notes will mature on April 1, 2026, and bear interest at a rate of 4.875%[212]. - The Capital One Revolving Financing was amended to decrease the applicable interest spread from SOFR plus 3.10% to SOFR plus 2.50% as of November 19, 2024[210]. Revenue and Expenses - Revenue generation primarily comes from interest on debt, royalty income, dividends, and capital gains from investments[219]. - The company’s primary operating expenses include management fees and reimbursable expenses related to investment activities[220]. - As of September 30, 2025, the average total yield of debt and income-producing securities was 9.97%, down from 10.60% as of December 31, 2024[225]. - Total expenses for the nine months ended September 30, 2025, decreased to $11.2 million from $12.6 million for the same period in 2024[239]. Investment Performance - Net investment income before taxes decreased to $0.6 million for the three months ended September 30, 2025, down from $2.5 million for the same period in 2024[234]. - There was a net realized gain on investments of $0.6 million for the nine months ended September 30, 2025, compared to a net realized loss of $12.2 million for the same period in 2024[241][242]. - A net change in unrealized depreciation of $1.8 million was recorded for the three months ended September 30, 2025, compared to a net change in unrealized appreciation of $8.3 million for the same period in 2024[236][237]. - For the nine months ended September 30, 2025, the company recorded a net change in unrealized depreciation of $1.8 million, primarily due to various investment adjustments and realizations[243]. Cash and Commitments - The cash balance decreased by $0.5 million for the nine months ended September 30, 2025, with $0.4 million used in operating activities and $0.1 million used in financing activities[247]. - As of September 30, 2025, the company had $3.9 million in cash, $7.8 million in restricted cash, and $36.5 million of capacity under the Capital One Revolving Financing[248]. - The company had ten investments with aggregate unfunded commitments of $5.6 million as of September 30, 2025, up from eight investments with $4.6 million as of December 31, 2024[229]. - The company has $5.6 million in unfunded commitments to six portfolio companies as of September 30, 2025, compared to $4.6 million as of December 31, 2024[258]. Interest Rate Sensitivity - As of September 30, 2025, 98.5% of the company's debt investments bore interest based on floating rates, exposing net interest income to interest rate fluctuations[264]. - A 1.00% increase in interest rates would increase net interest income by approximately 10.64%, while a 2.00% increase would increase it by approximately 21.27%[266]. Distributions - The company intends to distribute between 90% and 100% of its annual taxable income to stockholders, but may face limitations due to covenants in financing arrangements[254]. - On November 10, 2025, the company declared a distribution of $0.12 per share for the quarter ending December 31, 2025, along with a supplemental distribution of $0.02 per share[261].