BlackRock TCP Capital (TCPC) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The net asset value (NAV) increased by 4.8% in Q2 2021, with a year-over-year increase of 16.4% [10] - Net investment income for the quarter was $17.8 million, or $0.31 per share, exceeding the dividend of $0.30 per share [12][38] - The overall effective yield on the debt portfolio was 9.3% as of June 30, 2021 [34] - The net increase in net assets for the quarter was $55 million, or $0.95 per share, including net unrealized gains of $37 million [42] Business Line Data and Key Metrics Changes - The portfolio had a fair-market value exceeding $1.8 billion, an increase of nearly $100 million from the prior quarter [23] - The number of investments increased by 10% to 108 [12] - 88% of investments are in senior secured debt, providing portfolio diversity [23] Market Data and Key Metrics Changes - The company experienced significant gross deployment activity, investing $236 million primarily in 19 investments [29] - The competitive market dynamics have resurfaced, with many middle-market companies seeking private credit solutions [26] Company Strategy and Development Direction - The company aims to leverage the strength and scale of the BlackRock platform to enhance performance [15] - The focus remains on maintaining a strong balance sheet and liquidity positioning, with an amendment to the SVCP credit facility extending maturity and lowering rates [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the market environment remains competitive, but the company benefits from long-standing relationships and extensive resources [13] - The company is committed to a disciplined approach to investing, focusing on companies with established business models [36] Other Important Information - The CEO announced plans to retire, with Raj Vig succeeding as CEO and Chairman [16][17] - The company declared a third-quarter dividend of $0.30 per share [38] Q&A Session Summary Question: Competitive dynamics in the market - Management acknowledged that competition has increased but emphasized their diverse origination platform and ability to generate deal flow in various environments [56][58] Question: Fundraising and retail channels - Management indicated that while other managers are stepping up fundraising, TCPC focuses on providing opportunities for all investors, both institutional and individual [72][75] Question: Edmentum investment details - The exit from Edmentum was related to equity, with management highlighting the importance of managing position size while remaining invested in the business [78][84] Question: New portfolio companies vs. existing ones - Management clarified that the focus on new portfolio companies in the quarter does not indicate a trend, as existing relationships continue to be a significant source of deal flow [90][92] Question: Asset mix and equity positions - Management stated that the primary focus remains on credit instruments, with equity positions being a function of protecting capital rather than a primary strategy [124]