Bain Capital Specialty Finance(US:BCSF)2021-05-04 16:00Investment Overview - The company has invested approximately $4.2 billion in aggregate principal amount of debt and equity investments since operations began on October 13, 2016, through March 31, 2021[419]. - The company focuses on middle-market companies with annual EBITDA between $10 million and $150 million[420]. - The company may invest up to 30% of its portfolio in non-qualifying portfolio investments, such as non-U.S. companies[424]. - The company actively oversees its portfolio companies, including frequent communication to understand the financial performance impact of COVID-19[435]. - During the three months ended March 31, 2021, the company invested $386.3 million in 30 portfolio companies, resulting in a net decrease in investments of $163.1 million for the period[446]. - As of March 31, 2021, the investment portfolio consisted of 101 portfolio companies, with 99.1% of the debt bearing a floating rate[452]. - The total amortized cost of the investment portfolio as of March 31, 2021, was $2,378.2 million, with a fair value of $2,335.7 million[455]. - The company’s first lien senior secured loans represented 82.0% of the total portfolio as of March 31, 2021[448]. - The company’s preferred equity investments had a weighted average yield of 15.0% as of March 31, 2021[448]. - The total number of companies in the investment portfolio was 101 as of March 31, 2021, with no investments rated 4 (materially below expectations)[470]. Financial Performance - Total investment income for the three months ended March 31, 2021, was $49,831,000, compared to $51,496,000 for the same period in 2020[508]. - Total expenses for the same period were $27,666,000, down from $28,996,000 year-over-year[508]. - Net investment income for Q1 2021 was $22,165,000, slightly lower than $22,500,000 in Q1 2020[508]. - Net realized gain for the three months ended March 31, 2021, was $8,858,000, compared to a loss of $9,366,000 in the prior year[508]. - The net change in unrealized appreciation for the period was $730,000, a significant improvement from a loss of $117,581,000 in Q1 2020[508]. - The company reported a net increase in members' equity resulting from operations of $3,758,000 for the three months ended March 31, 2021[506]. - The total investment income for the company was $2,096,000 for the three months ended March 31, 2021[506]. - The company had total liabilities of $285,618,000, which included $146,153,000 in debt[504]. - The total unrealized gain on foreign currency transactions was $3,344,000 for the period[506]. - Interest income from investments fell to $44.3 million, down from $48.6 million, attributed to a decrease in LIBOR and the investment portfolio[509]. Debt and Financing - The company was in compliance with all financial covenants within its credit facilities as of March 31, 2021[438]. - As of March 31, 2021, total debt amounted to $1,714.5 million, an increase from $1,354.2 million as of December 31, 2020[539]. - The company completed a rights offering that generated net proceeds of $129.6 million, issuing 12,912,453 shares at a subscription price of $10.2163 per share[538]. - The BCSF Revolving Credit Facility had a maximum commitment amount of $500 million, which was later decreased to $425 million[545]. - The 2018-1 Notes, totaling $365.7 million, are secured by a diversified portfolio primarily consisting of senior secured loans[549]. - The Company issued $150.0 million of 8.50% senior unsecured notes due 2023, generating net proceeds of approximately $146.4 million[579]. - The Company issued $300.0 million of 2.950% notes due 2026, with a carrying value of $294.408 million as of March 31, 2021[583][585]. - The Company had $139.8 million in borrowings under the JPM Credit Facility as of March 31, 2021, down from $293.3 million as of December 31, 2020[566]. - The JPM Credit Facility currently has a facility amount of $450.0 million, with borrowings accruing interest at LIBOR plus 2.375%[562][565]. Portfolio Management - The company actively monitors portfolio investments and takes corrective actions when necessary, including raising interest rates and restructuring[443]. - The company emphasizes strong ESG management as part of its investment decision-making process to align with its goal of generating attractive risk-adjusted returns[445]. - The company’s Advisor monitors portfolio companies regularly to assess financial trends and compliance with business plans[463]. - The company has a total of $7.538 million in delayed draw commitments from TA/WEG Holdings, expiring on October 2, 2025[600]. - The company has a total of $8.900 million in revolver commitments from TLC Purchaser, Inc., expiring on October 13, 2025[600]. Valuation and Accounting - Investments are valued based on market quotations from independent pricing services or principal market makers, with oversight from the Board[609]. - For unquoted securities, the company uses discounted cash flow models and peer financial ratios for valuation, which may differ significantly from market values[610]. - The quarterly valuation process involves initial valuations by investment professionals or independent firms, followed by reviews and recommendations to the Audit Committee[611]. - Dividend income on preferred equity investments is recorded on an accrual basis, while common equity investments are recorded on the record date or ex-dividend date, depending on the type of company[606]. - PIK (Payment-in-Kind) interest or dividends are recorded as income but placed on non-accrual status if realization is uncertain[607].