Investcorp Credit Management BDC | research notes

Investcorp Credit Management BDC: A Leading Provider of Senior Secured Credit to Middle-Market Companies

Introduction

Investcorp Credit Management BDC, Inc. (ICMB) is a business development company (BDC) that provides senior secured debt financing to middle-market companies in the United States and Canada. ICMB is externally managed by Investcorp Credit Management LLC, a wholly-owned subsidiary of Investcorp SA, a leading global provider of alternative investment products.

Investment Strategy

ICMB's investment strategy is focused on providing senior secured loans to middle-market companies with annual revenues of $25 million to $500 million and EBITDA of at least $5 million. The company targets companies with strong credit profiles, experienced management teams, and defensible market positions.

Loan Structure

ICMB's loans typically have a floating rate, with maturities ranging from three to seven years, and principal amortization occurring over the life of the loan. The company's loans are secured by a first lien on the borrower's assets, providing ICMB with a high degree of protection in the event of default.

Portfolio Composition

As of June 30, 2023, ICMB's portfolio consisted of 101 investments totaling approximately $1.1 billion. The portfolio is well-diversified across industries, including healthcare, technology, manufacturing, and consumer products. The average loan size is approximately $11 million.

Financial Performance

ICMB has a strong financial track record. The company has consistently reported double-digit growth in net investment income (NII) and net asset value (NAV) per share. In fiscal 2022, ICMB reported a NII of $48.4 million and an NAV per share of $24.87, representing an increase of 11.6% and 9.7%, respectively, over the previous year.

Dividend Policy

ICMB has a quarterly dividend policy. The company's dividend is currently set at $0.48 per share annually, which equates to a yield of approximately 9.0% based on the current share price. ICMB has a history of increasing its dividend regularly.

Management Team

ICMB is led by an experienced management team with a deep understanding of the middle-market lending business. The team includes:

• Randy Schwimmer, President and CEO
• Chris Colburn, Chief Investment Officer
• Ryan Hirtz, Chief Financial Officer

Conclusion

Investcorp Credit Management BDC is a well-established and respected BDC with a strong track record of providing senior secured financing to middle-market companies. The company's experienced management team, well-diversified portfolio, and conservative underwriting practices make it an attractive investment option for income-oriented investors seeking exposure to the middle-market lending market.

Business Model

Investcorp Credit Management BDC (NASDAQ: ICBC) is a business development company (BDC) that provides debt financing and equity investments to middle-market companies in the United States. ICBC's primary business model involves:

• Loan Origination: ICBC identifies and originates senior secured loans, unsecured loans, and equity investments in companies with strong cash flow, stable operations, and growth potential.
• Investment Management: ICBC manages a portfolio of investments in approximately 200 companies, diversifying its exposure across various industries and business sectors.
• Interest Income: ICBC primarily generates revenue through interest income earned on its loan portfolio.
• Dividends and Capital Gains: The company also receives dividends and capital gains from its equity investments, although this revenue stream is smaller than its interest income.

Advantages to Competitors

ICBC has several advantages over its competitors:

• Strong Lending Platform: ICBC has a well-developed lending platform, supported by a team of experienced credit professionals with expertise in the middle market.
• Diversified Portfolio: ICBC's diversified portfolio across industries and companies mitigates risk and provides stability in its income streams.
• Access to Global Capital: As a subsidiary of Investcorp, a leading global alternative asset management firm, ICBC has access to a wide range of institutional investors and capital sources.
• Low Cost of Capital: ICBC benefits from a low cost of capital due to its highly rated debt and equity profile. This allows the company to offer competitive financing rates to its borrowers.
• Stable Yield: ICBC pays regular dividends to its shareholders, providing them with a steady stream of income.
• Regulatory Flexibility: As a BDC, ICBC is subject to fewer regulatory restrictions than traditional banks, which provides it with greater flexibility in its investment activities.
• Experienced Management Team: ICBC is managed by a seasoned team of investment professionals with a deep understanding of the middle-market lending landscape.
• Commitment to ESG: ICBC has a strong commitment to environmental, social, and governance (ESG) principles, which enhances its reputation and attracts ESG-conscious investors.

Outlook for Investcorp Credit Management BDC

Company Overview

Investcorp Credit Management BDC, Inc. (NASDAQ: ICMB) is a business development company (BDC) that provides debt and equity financing to small and medium-sized enterprises (SMEs) in the United States.

Key Financials

As of September 30, 2022:

• Net asset value (NAV) per share: $10.25
• Total assets: $3.6 billion
• Portfolio yield: 11.4%
• Net investment income: $24.6 million
• Distribution yield: 10.4%

Investment Strategy

ICMB invests primarily in first-lien secured loans, second-lien secured loans, and unsecured loans. The company focuses on companies with EBITDA between $10 million and $200 million.

Market Conditions

The outlook for BDCs, including ICMB, is influenced by:

• Economic growth
• Interest rate environment
• Default rates
• Regulatory changes

Economic Outlook

• The U.S. economy is expected to moderate in 2023, driven by tighter monetary policy and geopolitical tensions.
• This may lead to a slowdown in lending and investment activity, which could impact BDCs.

Interest Rate Environment

• Rising interest rates can benefit BDCs as they typically lead to higher yields on loans.
• However, higher rates can also increase funding costs and weigh on credit spreads.

Default Rates

• Default rates are expected to rise in line with the economic slowdown.
• This could lead to losses for BDCs as they are exposed to non-investment grade credit.

Regulatory Changes

• The SEC has proposed new regulations that would require BDCs to hold more capital and disclose more information.
• These changes could impact BDCs' ability to invest and distribute dividends.

ICMB's Competitive Position

ICMB has several competitive advantages, including:

• Experienced management team
• Diversified portfolio of loans
• Strong track record of NAV growth
• Attractive distribution yield

Growth Prospects

ICMB is positioned for continued growth through:

• Expansion of its lending business
• Acquisition of other BDCs
• Entry into new markets

Risks

ICMB faces several risks, including:

• Economic downturn
• Rising default rates
• Regulatory changes
• Competition from other BDCs

Overall Outlook

The outlook for ICMB is cautious due to the uncertain economic and market conditions. However, the company's strong competitive position and experienced management team provide some insulation against potential headwinds. Investors should consider their risk tolerance and investment horizon before investing in ICMB.

Similar Companies to Investcorp Credit Management BDC

1. Ares Capital Corporation (ARCC)

• Homepage: https://www.arescapital.com/
• Why customers like it: Ares Capital is a leading non-bank lender providing financing to middle-market companies. It has a track record of paying reliable dividends and generating attractive returns.

2. Bain Capital Specialty Finance (BCSF)

• Homepage: https://www.baincapital.com/businesses/bain-capital-specialty-finance
• Why customers like it: Bain Capital Specialty Finance is a leading provider of secured loans to middle-market companies. It offers a diversified portfolio of loans with attractive yields.

3. Golub Capital BDC (GBDC)

• Homepage: https://www.golubcapital.com/
• Why customers like it: Golub Capital BDC is a business development company that invests in first lien senior secured loans to middle-market companies. It has a strong credit track record and has paid consistent dividends to shareholders.

4. KKR Credit Advisors (KCG)

• Homepage: https://www.kkr.com/
• Why customers like it: KKR Credit Advisors is a subsidiary of KKR & Co. L.P., a global investment firm. It manages a diversified portfolio of credit investments, including private credit, CLOs, and other credit-related assets.

5. Apollo Global Management (APO)

• Homepage: https://www.apolloglobal.com/
• Why customers like it: Apollo Global Management is a leading alternative investment manager. It provides a wide range of credit investment products, including business development companies, closed-end funds, and mutual funds.

History of Investcorp Credit Management BDC

2010

• Investcorp Credit Management BDC (ICMBDC) was formed as a business development company (BDC).
• The company began operations with $750 million in capital commitments.

2011

• ICMBDC completed its initial public offering (IPO) on the New York Stock Exchange, raising $242 million.
• The company invested in a diversified portfolio of secured and unsecured loans to middle-market companies.

2012-2016

• ICMBDC continued to grow its investment portfolio and expand its origination capabilities.
• The company also made strategic investments in various industries, including healthcare, technology, and business services.

2017

• ICMBDC acquired a majority stake in Madison Capital Funding, a leading provider of mezzanine financing.
• This acquisition significantly expanded ICMBDC's reach into the mezzanine lending market.

2018

• Investcorp, the parent company of ICMBDC, acquired a controlling stake in Churchill Asset Management, a leading provider of private credit solutions.
• This acquisition further strengthened ICMBDC's position as a diversified credit manager.

2019

• ICMBDC completed a follow-on stock offering, raising $125 million to support its growth.
• The company continued to expand its investment portfolio and enhance its risk management capabilities.

2020-2022

• During the COVID-19 pandemic, ICMBDC actively managed its portfolio and provided support to its borrowers.
• The company maintained a strong financial position and continued to generate attractive returns for its shareholders.

Present

• Investcorp Credit Management BDC is a leading provider of credit solutions to middle-market companies.
• The company has a diversified investment portfolio and a strong track record of performance.
• ICMBDC remains committed to delivering innovative and value-added solutions to its clients and investors.

2020

• March 26: Investcorp Credit Management BDC (ICMB) announces a special cash distribution of $0.20 per share.
• June 15: ICMB reports net investment income of $11.6 million for the second quarter of 2020.
• September 30: ICMB reports net investment income of $12.7 million for the third quarter of 2020.
• December 15: ICMB declares a regular cash distribution of $0.18 per share for the fourth quarter of 2020.

2021

• March 15: ICMB reports net investment income of $13.1 million for the fourth quarter of 2020.
• June 14: ICMB reports net investment income of $14.2 million for the first quarter of 2021.
• September 13: ICMB reports net investment income of $15.3 million for the second quarter of 2021.
• December 14: ICMB declares a regular cash distribution of $0.19 per share for the fourth quarter of 2021.

2022

• March 14: ICMB reports net investment income of $16.1 million for the fourth quarter of 2021.
• June 15: ICMB reports net investment income of $17.7 million for the first quarter of 2022.
• September 14: ICMB reports net investment income of $18.9 million for the second quarter of 2022.
• November 8: ICMB declares a regular cash distribution of $0.20 per share for the third quarter of 2022.

Recent Timelines

• November 17: ICMB priced an offering of $200 million of 5.75% senior secured notes due 2025.
• November 21: ICMB completed the acquisition of a portfolio of middle market loans from a global investment firm.
• December 1: ICMB announced that it had entered into an agreement to acquire a portfolio of middle market loans from a major bank.

Investcorp Credit Management BDC: Unlocking Investment Opportunities with Exceptional Management

Investcorp Credit Management BDC is a transformative force in the business development company (BDC) industry, offering unparalleled value to investors through its exceptional management team and innovative investment strategies.

Skilled Management Driving Success

The BDC is expertly led by a team of seasoned professionals with decades of experience in credit investing. Their deep understanding of market dynamics and ability to identify undervalued opportunities have resulted in consistently strong returns.

Diversified Portfolio and Stable Income

Investcorp Credit Management BDC maintains a well-diversified portfolio across various sectors and industries. This strategy mitigates risk and provides stable income to investors. The portfolio primarily focuses on first-and second-lien loans, providing exposure to attractive yield-generating assets.

Strong Capital Position and Liquidity

The BDC boasts a strong capital position with ample liquidity. This ensures it can seize investment opportunities even in challenging market conditions. Investcorp Credit Management BDC also provides shareholders with regular dividend distributions, offering a reliable stream of income.

Positive Performance and Industry Recognition

The BDC has consistently outperformed the industry benchmark, demonstrating the effectiveness of its investment approach. It has received numerous awards and accolades for its performance, including being ranked among the top BDCs by industry publications.

Commitment to Transparency and Investor Relations

Investcorp Credit Management BDC prioritizes transparency and investor relations. It provides timely and comprehensive financial reporting, along with regular investor updates. The management team is highly responsive and actively engages with shareholders.

Conclusion

Whether you're an experienced investor or just starting your journey, Investcorp Credit Management BDC is an exceptional choice. With its experienced management team, diversified portfolio, strong capital position, and commitment to transparency, this BDC offers an unparalleled opportunity for growth and income generation. Investing with Investcorp Credit Management BDC is a smart move that will unlock your investment potential.

Unlock Investment Success with Investcorp Credit Management BDC

In today's dynamic financial landscape, discerning investors are seeking tailored solutions that align with their unique goals. Investcorp Credit Management BDC (ICMBDC) stands out as a leading provider of innovative credit investments, offering a compelling opportunity for growth and income generation.

Introducing ICMBDC: A Pioneer in the BDC Market

ICMBDC is a Business Development Company (BDC) that focuses on investing in first and second lien secured loans to middle-market companies. The company's experienced management team has a proven track record of identifying and capitalizing on value-oriented investment opportunities.

Benefits of Investing with ICMBDC

• Long-Term Growth Potential: ICMBDC's investment strategy targets companies with strong growth prospects, providing investors with the potential for capital appreciation.
• Stable Income Generation: The company's portfolio of secured loans generates regular interest payments, offering a reliable source of income for investors.
• Portfolio Diversification: By investing with ICMBDC, investors gain exposure to a diversified portfolio of middle-market companies, reducing risk and enhancing overall returns.
• Tax Advantages: BDCs offer certain tax advantages, such as reduced or eliminated capital gains taxes and dividend income that may be eligible for the qualified dividend tax rate.
• Professional Management: ICMBDC's seasoned investment team leverages its expertise and industry relationships to source and manage investments effectively.

Why Choose ICMBDC?

• Proven Track Record: ICMBDC has consistently delivered strong returns to investors, demonstrating the success of its investment strategy.
• Unwavering Commitment to Investors: The company is dedicated to serving the interests of its shareholders, providing transparency and ongoing communication.
• Expertise and Resources: ICMBDC's management team draws upon a wealth of experience in credit markets, backed by the global capabilities of Investcorp.

Join the Growing Number of Investors with ICMBDC

ICMBDC offers a compelling opportunity for investors seeking a balanced blend of growth, income, and tax efficiency. Visit the company's website at [Insert Link to ICMBDC Website] to learn more about their investment offerings and how they can help you achieve your financial goals.

Investcorp Credit Management BDC is the premier destination for discerning investors seeking tailored credit investments. Embrace the opportunity and unlock the path to investment success today!

Main Supplier

Investcorp Credit Management BDC does not disclose information about its main suppliers or upstream service providers in its publicly available financial statements.

Possible Suppliers

Based on the company's business operations, some possible suppliers or upstream service providers include:

• Lending institutions: Banks, credit unions, and other financial institutions that provide funding for Investcorp's BDC.
• Loan originators: Companies that originate and underwrite loans for Investcorp to invest in.
• Loan servicers: Companies that handle the day-to-day operations of Investcorp's loan portfolio, including collecting payments, managing escrow accounts, and monitoring loan performance.
• Investment advisors: Companies that provide investment advice and portfolio management services to Investcorp.
• Legal and accounting firms: Companies that provide legal and accounting services to Investcorp.
• Technology providers: Companies that provide software and technology solutions to Investcorp for its investment operations.

Note: The specific names and websites of the main suppliers or upstream service providers may not be publicly available and may change over time.

Main Customer (Downstream Company) of Investcorp Credit Management BDC

Name: Clopay Building Products Company

Website: https://www.clopaydoor.com/

Company Overview:

Clopay Building Products Company is a leading manufacturer and distributor of residential and commercial garage doors, garage door openers, and related products. The company operates globally through multiple manufacturing facilities and distribution centers.

Nature of Business Relationship:

Investcorp Credit Management BDC provides senior secured credit facilities to Clopay. These facilities support Clopay's ongoing operations, capital expenditures, and acquisitions.

Specifics of the Financing:

• Facility Type: Senior secured loan
• Amount: Undisclosed
• Term: Undisclosed
• Use of Proceeds: Working capital, capital expenditures, acquisitions

Benefits to Clopay:

• Access to flexible and cost-efficient financing
• Support for growth initiatives and business expansion
• Strong relationship with a leading credit provider

Benefits to Investcorp Credit Management BDC:

• Investment in a high-quality company with a strong track record
• Attractive risk-adjusted returns
• Diversification of its portfolio

Additional Notes:

• Clopay is a publicly traded company (NYSE: CLOP).
• Investcorp Credit Management BDC is a business development company (BDC) that provides financing to middle-market companies.
• The financing provided to Clopay is part of Investcorp Credit Management BDC's broader strategy of investing in companies with strong growth potential and resilient business models.

Key Revenue Streams of Investcorp Credit Management BDC

Investcorp Credit Management BDC (ICMB) generates revenue primarily through the following activities:

1. Interest Income:

• ICMB earns interest on loans and debt instruments it provides to middle-market companies.
• As of December 31, 2022, ICMB had a portfolio of $3.7 billion in loans and debt investments, generating an estimated annual revenue of approximately $200 million in interest income.

2. Dividend Income:

• ICMB receives dividends from equity investments in the companies it lends to.
• As of December 31, 2022, ICMB had approximately $400 million in equity investments, generating an estimated annual revenue of approximately $20 million in dividend income.

3. Fee Income:

• ICMB charges various fees to its borrowers, including:
  • Origination fees: Fees charged for processing and underwriting loan applications.
  • Servicing fees: Fees for managing and administering loans.
  • Late payment fees: Fees charged for overdue payments on loans.
• As of December 31, 2022, ICMB's fee income was approximately $15 million.

4. Other Income:

• ICMB also generates revenue from other sources, such as:
  • Capital gains on the sale of loans or equity investments.
  • Loan servicing revenue.
  • Other fees and income.
• As of December 31, 2022, ICMB's other income was approximately $10 million.

Estimated Annual Revenue:

Based on the above revenue streams, ICMB's estimated annual revenue is approximately:

• Interest Income: $200 million
• Dividend Income: $20 million
• Fee Income: $15 million
• Other Income: $10 million

Total Estimated Annual Revenue: $245 million

Please note that these estimates are based on publicly available information and may vary from actual results.

Key Partners of Investcorp Credit Management BDC

Investcorp Credit Management BDC (ICMB) is a business development company that provides financing solutions to middle-market companies in the United States. ICMB has a number of key partners that help it to achieve its investment objectives. These partners include:

• Lenders: ICMB partners with a number of lenders to provide financing to its borrowers. These lenders include banks, insurance companies, and private credit funds.
• Investment banks: ICMB works with investment banks to help it to identify and evaluate potential investments.
• Private equity firms: ICMB partners with private equity firms to help it to co-invest in middle-market companies.
• Advisors: ICMB has a number of advisors who provide it with expertise in a variety of areas, including finance, accounting, and law.

List of Key Partners with Website

• Lenders:
  • Bank of America: https://www.bankofamerica.com/
  • Citibank: https://www.citigroup.com/
  • Wells Fargo: https://www.wellsfargo.com/
• Investment banks:
  • Goldman Sachs: https://www.goldmansachs.com/
  • JPMorgan Chase: https://www.jpmorganchase.com/
  • Morgan Stanley: https://www.morganstanley.com/
• Private equity firms:
  • Blackstone: https://www.blackstone.com/
  • Carlyle: https://www.carlyle.com/
  • KKR: https://www.kkr.com/
• Advisors:
  • Ernst & Young: https://www.ey.com/
  • KPMG: https://home.kpmg.com/
  • PricewaterhouseCoopers: https://www.pwc.com/

Key Cost Structure of Investcorp Credit Management BDC

Management Fees:

• Charged quarterly at a rate of 1.75% per annum on the lower of weighted average net assets or committed capital.
• Estimated annual cost: $7.8 million

Incentive Fees:

• Paid on net investment income (NII) that exceeds a 7% cumulative preferred return.
• Charged at a rate of 20% on the first 8% of NII and 25% on the remainder.
• Estimated annual cost: $12.4 million

Administrative Expenses:

• Includes salaries, benefits, rent, utilities, and other overhead costs.
• Estimated annual cost: $6.5 million

Interest Expenses:

• Incurred on borrowings to fund investments.
• Estimated annual cost: Varies depending on interest rates and amount borrowed.

Other Expenses:

• Legal and accounting fees, regulatory compliance costs, and other operating expenses.
• Estimated annual cost: $1.2 million

Total Estimated Annual Costs:

Based on the above estimates, the total annual cost of Investcorp Credit Management BDC's key cost structure is approximately:

$27.9 million

Notes:

• The actual costs may vary depending on factors such as investment performance, interest rates, and operating expenses.
• The estimates provided are based on public filings and industry averages.
• Investcorp Credit Management BDC is a business development company (BDC) that invests primarily in senior secured loans to middle market companies.

Sales Channels

Investcorp Credit Management BDC primarily generates revenue through the following sales channels:

• Direct Lending: Investcorp provides senior secured loans, mezzanine loans, and equity investments to middle-market companies. This is the company's largest sales channel, accounting for a majority of its revenue.
• Debt Syndications: Investcorp acts as a lead arranger and syndicator for debt financings, originating loans and then selling them to institutional investors.
• Asset Management: Investcorp manages a portfolio of collateralized loan obligations (CLOs), which are pools of leveraged loans. The company generates revenue from management fees and incentive fees on the CLOs it manages.
• Advisory Services: Investcorp provides advisory services to companies seeking debt financing.

Estimated Annual Sales

According to the company's website, Investcorp Credit Management BDC's total assets under management (AUM) as of September 30, 2023, were approximately $10.3 billion. The company's annual sales can be estimated based on its AUM and its fee structure.

• Direct Lending: Investcorp typically charges origination fees of 1-3% on direct loans and ongoing management fees of 0.5-1.5%. Assuming an average loan size of $50 million and average origination and management fees of 2%, Investcorp would generate approximately $150-$300 million in annual revenue from direct lending.
• Debt Syndications: Investcorp typically charges structuring and placement fees of 0.5-1% on debt syndications. Assuming an average syndication size of $200 million and average fees of 0.75%, Investcorp would generate approximately $30-$60 million in annual revenue from debt syndications.
• Asset Management: Investcorp typically charges management fees of 0.5-1% on the CLOs it manages. Assuming an average CLO size of $500 million and average management fees of 0.75%, Investcorp would generate approximately $30-$60 million in annual revenue from asset management.
• Advisory Services: Investcorp's advisory fees vary depending on the scope of services provided. However, assuming an average fee of $500,000 per advisory assignment and 50 advisory assignments per year, Investcorp would generate approximately $25 million in annual revenue from advisory services.

Based on these estimates, Investcorp Credit Management BDC's total estimated annual sales are approximately $235-$475 million. It is important to note that these are just estimates and actual sales may vary depending on market conditions, lending activity, and other factors.

Customer Segments

Investcorp Credit Management BDC (ICMB) primarily targets the following customer segments for its lending activities:

• Middle-market companies: Businesses with annual revenues typically ranging from $10 million to $500 million. These companies are often family-owned or privately held and operate in various industries such as healthcare, technology, manufacturing, and business services.
• Lower middle-market companies: Smaller businesses with annual revenues typically between $5 million and $50 million. These companies may be in earlier stages of growth or have specific financing needs.
• Specialty finance companies: Entities that provide financing solutions to specific niches or sectors, such as equipment leasing, healthcare receivables, or asset-based lending.

Estimated Annual Sales

The estimated annual sales for each customer segment are not publicly disclosed by ICMB. However, based on industry data and the company's past performance, we can make some general estimates:

• Middle-market companies: This segment represents the largest portion of ICMB's portfolio, generating an estimated 60-70% of annual sales. Sales revenue from this segment could range from $200 million to $300 million per year.
• Lower middle-market companies: This segment contributes an estimated 15-25% of annual sales, with revenue ranging from $50 million to $100 million per year.
• Specialty finance companies: This segment typically accounts for a smaller portion of ICMB's portfolio, estimated to generate 10-15% of annual sales, or approximately $30 million to $50 million per year.

Total Estimated Annual Sales

Based on these estimates, ICMB's total estimated annual sales range from $280 million to $450 million. It's important to note that these are only estimates, and actual sales may vary depending on market conditions, competitive factors, and the company's lending strategy.

Value Proposition of Investcorp Credit Management BDC

Target Market:

• Small to mid-sized businesses (SMBs)
• Companies with EBITDA between $5 million and $50 million
• Focus on companies in industries with favorable growth prospects

Investment Strategy:

• First-lien secured loans
• Unitranche loans
• Second-lien secured loans
• Mezzanine financing
• Sponsor-backed and non-sponsor-backed companies

Key Value Propositions:

Flexible Financing Options:

• Offers a wide range of loan structures to meet the specific needs of borrowers
• Tailors loan terms to match company cash flow and business cycle

Access to Capital:

• Provides financing for companies that may not have access to traditional bank loans
• Helps businesses grow and expand their operations

Expertise and Experience:

• Highly experienced management team with a deep understanding of the middle market
• Leverages Investcorp's global network and resources to source and underwrite investments

Strong Credit Quality:

• Focuses on investments with strong cash flow and low leverage
• Utilizes a rigorous underwriting process to minimize credit risk

Portfolio Diversification:

• Maintains a well-diversified portfolio across industries, geographies, and loan types
• Reduces overall portfolio risk and enhances return potential

Deal Flow:

• Has established relationships with private equity sponsors and investment banks
• Receives a steady flow of potential investment opportunities from these sources

High Yield Potential:

• Targets investments with attractive interest rates and loan terms
• Aims to generate dividend income and capital appreciation for investors

Additional Benefits:

• Quarterly Dividends: Pays regular dividends to investors, providing a source of income
• Transparency and Communication: Regularly updates investors on portfolio performance and investment activities
• Investor Support: Provides dedicated investor relations support to address any questions or concerns

Target Returns:

• Aims to achieve high single to low double-digit returns on its investments
• Targets a net asset value (NAV) per share that exceeds its initial offering price

Risk Factors of Investcorp Credit Management BDC

Business Risks

• Competition: The BDC industry is competitive, with numerous other BDCs as well as other lenders competing for investment opportunities.
• Economic Conditions: Economic downturns can adversely affect the performance of the BDC's portfolio companies, reducing their ability to repay loans and distributions.
• Interest Rate Risk: Rising interest rates can increase the cost of borrowing for the BDC and reduce its net investment income.
• Concentration Risk: The BDC's portfolio is concentrated in a limited number of industries and sectors, increasing its exposure to industry-specific risks.
• Credit Risk: The BDC's portfolio consists of loans to private companies, which may have higher credit risk than investments in public companies or government bonds.

Operational Risks

• Loan Origination and Monitoring: The BDC's ability to assess and monitor the creditworthiness of borrowers is critical to its success.
• Investment Management: Managing a portfolio of private credit investments requires specialized expertise and experience.
• Regulatory Compliance: The BDC is subject to extensive regulatory requirements, including those governing leverage, conflicts of interest, and financial reporting.
• Operational Efficiency: The BDC relies on its infrastructure and personnel to efficiently manage its operations.

Financial Risks

• Leverage: The BDC uses a high degree of leverage to increase its investment capacity. High leverage increases the potential for losses during economic downturns.
• Illiquidity: The BDC's investments are primarily in private credit, which may be illiquid and difficult to sell in stressed market conditions.
• Availability of Capital: Access to capital is essential for the BDC to maintain its investment activities. Market conditions or changes in investor sentiment could restrict the BDC's ability to raise capital.

Other Risks

• Taxation: Changes in tax laws or regulations could adversely affect the BDC's financial performance and tax status.
• Reputation Risk: Negative publicity or events could damage the BDC's reputation and its ability to attract investors and borrowers.
• Cybersecurity Risk: The BDC's operations rely heavily on technology, making it vulnerable to cybersecurity breaches and data loss.