Investcorp Credit Management BDC(US:ICMB)2023-09-19 21:43Financial Data and Key Metrics Changes - For the year ended June 30, 2023, the company's net investment income was $9.4 million or $0.66 per share, with a fair value of the portfolio at $220.1 million, a slight decrease from $221.3 million on March 31 [18] - The weighted average yield on the debt portfolio decreased by 90 basis points to 12.5% from March 31 [19] - The company's net assets decreased by 60 basis points from the prior quarter to $87.7 million [18] Business Line Data and Key Metrics Changes - The company invested in two new portfolio companies and two existing portfolio companies during the quarter, with total fundings for commitments and new investments amounting to approximately $15.1 million at a weighted average yield of approximately 15.5% [10] - The average yield of debt investments during the quarter decreased by 12.5% from 13.4% at the end of the previous quarter [3] Market Data and Key Metrics Changes - Direct lending volume in the quarter was down almost 50% year-over-year, indicating a challenging market environment [9] - The company noted that high interest rates have discouraged sponsors from engaging in new dividend recaps or acquisitions, leading to lower investment activity [2] Company Strategy and Development Direction - The company plans to continue focusing on risk management and diversification, expecting repayments in the current quarter and redeploying them across new borrowers [5] - The company aims to invest in high cash flow generating businesses with enhanced structural protections and experienced sponsors [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the pipeline of investment opportunities, despite the slowdown in primary deal activity [68] - The company remains focused on capital preservation and maintaining a stable dividend while rotating and diversifying the portfolio [32] Other Important Information - The company had 6 investments on nonaccrual as of June 30, which included two investments related to American Nuts, indicating challenges in certain portfolio companies [27] - The company expects to cover its dividend for the next quarter, with a base distribution of $0.12 per share and a supplemental distribution of $0.03 per share [31][59] Q&A Session Summary Question: Clarification on repayments for next quarter - Management clarified that the repayments mentioned are those they have visibility on and will be redeployed [33] Question: Thoughts on portfolio performance compared to peers - Management acknowledged the need for a broader platform to enhance origination and mentioned ongoing efforts to grow the platform [36][40] Question: Sustainability of recent investment income - Management indicated that certain dividends received were one-off events and not expected to recur on a quarterly basis [46] Question: Credit facility amendment and future plans - Management confirmed that the credit facility amendment was made for financial flexibility and emphasized a selective approach to secondary investments [50] Question: Coverage of the distribution - Management confirmed that the expected coverage is for the base distribution of $0.12, with any supplemental distribution being additional [59]