Investcorp Credit Management BDC(ICMB) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the quarter ending December 31, the net investment income was $2.3 million or $0.16 per share, relatively unchanged from the prior quarter [36] - The fair value of the portfolio decreased to $228.6 million from $239.2 million as of September 30 [36] - The weighted average yield of the debt portfolio was 10.7%, a decrease of 12 basis points from September 30 [37] Business Line Data and Key Metrics Changes - The company invested in one new portfolio company and fully realized its position in another during the quarter [34] - The average yield of debt investments during the quarter was 10.6% [32] - 91.2% of investments were in first lien loans, with the remaining 8.8% in equity, warrants, and other positions [37] Market Data and Key Metrics Changes - The company noted a slowdown in new issuance activity, particularly in LBO issuances, but observed a gradual increase in early 2023 [9] - Deal flow remained modest during the quarter, with the company being extremely selective in new investments [9] Company Strategy and Development Direction - The company aims to preserve capital and maintain a stable dividend, focusing on high-quality senior secured structures in middle market companies [41] - The addition of Suhail Shaikh as co-CIO is expected to enhance underwriting and sourcing capabilities [41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macro factors influencing private markets and expressed optimism about deploying capital in 2023 [41] - The company expects to see a robust pipeline and significant deal flow, especially in new LBOs [41] Other Important Information - The Board of Directors declared a distribution of $0.13 per share and a supplemental distribution of $0.02 per share, payable on March 30, 2023 [18] - The company closed on a separately managed account and had an initial close on an institutional fund, doubling its platform AUM since the last quarter [18] Q&A Session Summary Question: What are the reasons behind the slowdown in deal flow this quarter? - Management indicated that the slowdown was due to reassessing the portfolio and a general decrease in deal flow, but expected a return to normal levels [43] Question: Can you provide insights on the NAV decline and its future outlook? - Management noted that the NAV decline was influenced by credit risk and portfolio performance, but did not foresee significant further declines at this time [52] Question: How will the recent changes in the platform affect G&A expenses? - Management stated that expenses are expected to decrease as AUM increases, but specific figures were not provided [56][58] Question: Will the company provide assessments of portfolio performance in light of potential recession risks? - Management confirmed that they will continue to evaluate credit risk and portfolio performance but do not plan to introduce additional metrics [60]