New Mountain Finance Corporation | research notes

Introducing New Mountain Finance Corporation: A Leading Asset Management and Investment Firm

New Mountain Finance Corporation (NMFC) is a leading asset management and investment firm specializing in middle-market credit investments. With over $25 billion in assets under management, NMFC provides a wide range of investment solutions to institutional and individual investors globally.

History and Overview

Founded in 2009, NMFC is an affiliate of New Mountain Capital, a private equity firm established in 2000. NMFC leverages the expertise and relationships of New Mountain Capital to identify and invest in attractive credit opportunities across various sectors.

The firm's investment strategy is focused on providing capital to middle-market companies that are experiencing growth, transitions, or distress. NMFC offers a variety of financing options, including senior secured loans, unitranche loans, second lien loans, and mezzanine debt.

Investment Approach

NMFC employs a rigorous and disciplined investment process that combines fundamental analysis with industry expertise. The firm's team of seasoned investment professionals focuses on understanding the underlying business dynamics, financial performance, and management teams of each potential investment.

NMFC targets companies with strong cash flow, a defensible competitive position, and experienced management. The firm also considers industry trends, regulatory environment, and macroeconomic factors in its investment decisions.

Investment Products and Solutions

NMFC offers a range of investment products and solutions tailored to the specific needs of investors. These include:

• Traditional Credit Funds: Closed-end funds that invest in a diversified portfolio of middle-market credit opportunities.
• CLOs (Collateralized Loan Obligations): Structured financial products that provide investors with exposure to a pool of middle-market loans.
• SBIC (Small Business Investment Company): Federally licensed funds that invest in small businesses and provide tax benefits to investors.
• Private Credit Strategies: Customized investment solutions that meet the unique requirements of institutional investors.

Commitment to ESG

NMFC recognizes the importance of environmental, social, and governance (ESG) factors in investment decision-making. The firm integrates ESG considerations into its investment process to identify potential risks and opportunities.

NMFC promotes responsible investing and encourages its portfolio companies to adopt best practices in sustainability and corporate governance.

Financial Performance

NMFC has a strong track record of delivering consistent returns to investors. The firm's credit funds have generated attractive returns since inception, outperforming industry benchmarks. NMFC's CLOs have also performed well, with high recovery rates and low default rates.

Conclusion

New Mountain Finance Corporation is a highly respected and experienced asset management and investment firm that provides investors with access to attractive credit opportunities. With its disciplined investment approach, diversified product offerings, and commitment to ESG, NMFC is well-positioned to continue delivering value to investors for years to come.

Business Model of New Mountain Finance Corporation

New Mountain Finance Corporation (NMFC) is a business development company (BDC) that provides debt, equity, and other financing solutions to middle-market companies. Its business model consists of:

• Origination: Identifying and underwriting financing opportunities for target companies.
• Investment: Providing loans, mezzanine debt, and equity investments to borrowers.
• Asset Management: Actively managing its portfolio of investments to optimize returns and mitigate risk.
• Distribution: Paying dividends to shareholders from investment income and realized capital gains.

Advantages to Competitors

NMFC has several advantages over its competitors:

• Specialized Focus: NMFC focuses exclusively on middle-market companies, which gives it deep expertise and industry knowledge.
• Experienced Management Team: The company is led by a seasoned management team with extensive experience in the BDC industry.
• Strong Credit Assessment: NMFC has a strong track record of credit underwriting, which reduces its risk exposure.
• Access to Capital: NMFC has access to various sources of capital, including borrowings from banks, issuance of debt securities, and private equity funds.
• Diversified Portfolio: The company maintains a diversified portfolio across industries, maturity dates, and collateral types, which spreads its risk.
• High Yield: NMFC typically offers a higher yield to investors compared to traditional fixed income investments.
• Regulatory Framework: BDCs are regulated by the U.S. Securities and Exchange Commission (SEC), which provides oversight and transparency.
• Tax Benefits: BDCs receive pass-through tax treatment for investment income, which can make them attractive investments for certain types of investors.

These advantages allow NMFC to compete effectively in the BDC industry and attract a loyal customer base.

New Mountain Finance Corporation (NMFC)

Overview:

New Mountain Finance Corporation is a publicly traded business development company (BDC). BDCs are specialized investment vehicles that provide debt and equity financing to small and medium-sized businesses (SMBs).

Key Statistics:

• Ticker Symbol: NMFC
• Market Capitalization: $2.1 billion (as of March 8, 2023)
• Share Price: $10.34 (as of March 8, 2023)
• Dividend Yield: 10.5% (as of March 8, 2023)

Investment Strategy:

• NMFC invests primarily in senior secured loans, second lien loans, and unitranche loans to SMBs.
• Focuses on companies with strong cash flows and growth potential.
• Average investment size is approximately $10 million to $30 million.

Portfolio:

• As of December 31, 2022, NMFC's portfolio consisted of:
  • 133 portfolio companies
  • $1.9 billion in debt investments
  • $373 million in equity investments

Financial Performance:

• Net Investment Income (NII): $118.3 million in 2022
• Distributable Net Income (DNI): $97.8 million in 2022
• Coverage Ratio (NII/Interest Expense): 1.23x
• Book Value per Share: $10.10 (as of December 31, 2022)

Outlook:

• Positive Economic Environment: Strong demand for loans from SMBs due to economic recovery.
• Increased Competition: Growing competition among BDCs for investment opportunities.
• Credit Quality: Stable credit quality of NMFC's portfolio companies.
• Distribution Sustainability: NMFC has a history of consistent dividend payments.
• Regulatory and Legislative Changes: Potential changes to BDC regulations and the overall regulatory environment.

Risks:

• Credit Risk: Default risk associated with NMFC's portfolio companies.
• Interest Rate Risk: Fluctuations in interest rates can impact the value of NMFC's investments.
• Liquidity Risk: BDCs may face liquidity challenges in periods of market stress.
• Regulatory Risk: Changes to BDC regulations could adversely affect NMFC's operations.

Analyst Consensus:

Analysts generally have a positive outlook on NMFC. They view the company's strong investment strategy, stable credit quality, and attractive dividend yield as favorable. However, they also acknowledge the risks associated with BDC investing.

Conclusion:

New Mountain Finance Corporation is a solid BDC with a history of consistent performance. Its focus on senior secured loans, strong credit quality, and attractive dividend yield make it a suitable investment for income-oriented investors seeking exposure to SMBs. However, it is important to understand the risks associated with BDC investing before making an investment decision.

Similar Companies to New Mountain Finance Corporation

Blackstone Credit:

• Homepage: https://www.blackstone.com/real-estate/credit
• Reason customers may also like: Large and experienced alternative asset manager with a strong track record in credit investing. Provides a range of credit-related investment solutions, including direct lending, distressed assets, and mezzanine financing.

Ares Management:

• Homepage: https://www.aresmgmt.com/
• Reason customers may also like: Another leading alternative asset manager with a significant presence in the credit market. Offers a diverse range of credit-related investment strategies, such as corporate lending, high yield bonds, and special situations.

Apollo Global Management:

• Homepage: https://www.apolloglobal.com/
• Reason customers may also like: A global alternative investment management firm with a strong focus on credit. Provides a comprehensive suite of credit-oriented investment products, including CLOs, private credit, and credit funds.

CVC Credit Partners:

• Homepage: https://www.cvc.com/
• Reason customers may also like: A leading private credit investment firm with a focus on providing flexible and customized financing solutions to middle-market companies. Offers a range of products, including first lien and second lien loans, mezzanine financing, and equity investments.

Oaktree Capital Management:

• Homepage: https://www.oaktreecapital.com/
• Reason customers may also like: A global alternative asset manager known for its expertise in distressed assets. Provides a variety of credit-related investment funds, including distressed debt funds, mezzanine funds, and high yield bond funds.

History of New Mountain Finance Corporation

2008:

• Founded by Steven Kumble and Brian Sterler.
• Initially focused on investing in distressed assets during the financial crisis.

2010:

• Became a publicly traded BDC (business development company).

2012-2014:

• Expanded its portfolio to include performing loans and other non-distressed assets.
• Increased its focus on providing capital to middle-market companies.

2015-2017:

• Completed a series of acquisitions to grow its assets.
• Became one of the largest BDCs in the U.S.

2018:

• Launched New Mountain Capital, a private equity fund focused on investing in lower middle-market companies.

2019:

• Acquired Main Street Capital, another large BDC.
• Became the largest BDC in the U.S. with over $20 billion in assets.

2020:

• Navigated the COVID-19 pandemic and provided liquidity to portfolio companies.
• Announced its intention to convert to a closed-end fund.

2021:

• Completed its conversion to a closed-end fund.
• Announced a new joint venture with KKR to provide capital to private equity-backed companies.

2022:

• Continued to invest in middle-market companies and expand its portfolio.
• Announced a partnership with Ares Management to launch a new BDC.

Present:

• New Mountain Finance Corporation remains one of the leading BDCs in the U.S., providing capital to growth-oriented middle-market companies.

2020

• January 2020: New Mountain Finance Corporation (NMFC) announces a $1.2 billion follow-on offering of senior notes.
• April 2020: NMFC launches a $1 billion senior secured revolving credit facility.
• July 2020: NMFC announces a $750 million senior secured term loan.

2021

• January 2021: NMFC issues a $1.5 billion senior unsecured term loan.
• April 2021: NMFC announces a $1 billion senior secured revolving credit facility.
• July 2021: NMFC launches a $500 million senior secured term loan.

2022

• January 2022: NMFC announces a $1.75 billion senior unsecured term loan.
• April 2022: NMFC launches a $1 billion senior secured revolving credit facility.
• July 2022: NMFC announces a $500 million senior secured term loan.

Recent Timelines

• August 2022: NMFC reports second quarter 2022 financial results.
• September 2022: NMFC announces the acquisition of a portfolio of loans from a financial institution.
• October 2022: NMFC announces the closing of a $1.5 billion senior secured term loan.

5-Star Excellence: A Triumphant Customer Experience with New Mountain Finance Corporation

As a seasoned investor seeking unparalleled financial solutions, I was elated to discover New Mountain Finance Corporation. Their unwavering commitment to customer satisfaction has left an indelible mark on my investment journey.

Exceptional Expertise and Personalized Guidance

From the moment I engaged with their team, I was met with exceptional expertise and personalized guidance. Their advisors took the time to understand my investment goals and meticulously tailored solutions that aligned perfectly with my objectives. Their profound understanding of the financial landscape and keen attention to detail instilled confidence in my decisions.

Diversified Portfolio and Consistent Returns

New Mountain Finance Corporation's diversified portfolio offers an impressive array of investment options designed to mitigate risk and maximize returns. Their track record of consistent performance and meticulous risk management has consistently surpassed my expectations. The stability and growth of my investments have been remarkable.

Outstanding Customer Service

Beyond their financial prowess, New Mountain Finance Corporation excels in customer service. Their team is always responsive, courteous, and goes above and beyond to ensure my satisfaction. They are proactive in providing updates, answering questions promptly, and resolving any inquiries with efficiency. Their unwavering commitment to exceeding expectations is truly commendable.

Seamless Online Platform

The company's online platform is an invaluable asset. It provides real-time access to my account information, portfolio performance, and market data. The intuitive interface and user-friendly navigation make managing my investments a breeze.

Highly Recommended

Without hesitation, I highly recommend New Mountain Finance Corporation to any investor seeking exceptional financial solutions and an unparalleled customer experience. Their expertise, unwavering commitment to satisfaction, and proven track record have made them a trusted partner on my investment journey.

Exceptional Value and Peace of Mind

Investing with New Mountain Finance Corporation has been an exceptional value. The quality of their services, consistent returns, and outstanding customer support have provided me with peace of mind and a solid foundation for my financial future.

In conclusion, New Mountain Finance Corporation is a shining beacon in the financial industry. Their unwavering dedication to excellence, customer-centric approach, and commitment to delivering exceptional solutions make them an indispensable partner for any investor.

Discover the Financial Freedom You Deserve with New Mountain Finance Corporation

At New Mountain Finance Corporation (NMFC), we believe everyone deserves access to financial solutions that empower them to achieve their goals. Whether you're seeking a loan to expand your business or a flexible financing option for personal needs, we've got you covered.

Why Choose New Mountain Finance Corporation?

• Competitive Rates and Flexible Terms: We offer a wide range of loan products tailored to your specific financial situation, ensuring that you get the most value for your money.
• Expert Financial Guidance: Our experienced professionals will guide you through the financing process and provide personalized advice to help you make informed decisions.
• Fast and Convenient Service: Apply online or through our mobile app for quick and seamless processing. We value your time and strive to provide prompt approvals.
• Exceptional Customer Service: Our dedicated customer support team is always available to assist you with any questions or concerns you may have.
• Commitment to Your Success: Your financial well-being is our priority. We partner with you every step of the way to ensure your financial aspirations become a reality.

Our Loan Products:

• Business Loans: Expand your business, invest in new equipment, or finance working capital with our tailored business loan solutions.
• Personal Loans: Consolidate debt, renovate your home, or cover unexpected expenses with our low-interest personal loan options.
• Equipment Leasing: Get the equipment you need to grow your business without the burden of large upfront costs.
• Asset-Based Lending: Use your business assets as collateral to access financing and expand your operations.

Testimonials:

"NMFC's loan helped us secure the equipment we needed to increase our production capacity. Their competitive rates and personalized service made the entire process smooth and straightforward." - John, Business Owner

"I consolidated my credit card debt with NMFC and saved thousands of dollars in interest. The loan process was quick and I appreciate their guidance throughout." - Marie, Consumer

Visit Our Website Today:

Visit our website at NewMountainFinance.com to learn more about our loan products, apply online, or get in touch with our experts.

Let New Mountain Finance Corporation be your trusted financial partner and unlock the financial freedom you deserve. Contact us now to explore your options and take the next step towards your financial goals.

Main Supplier of New Mountain Finance Corporation

New Mountain Finance Corporation is a publicly traded business development company that provides financing to middle-market companies. The company's main supplier is Ares Capital Corporation, a global alternative investment manager specializing in direct lending and private credit.

About Ares Capital Corporation

Ares Capital Corporation (NYSE: ARCC) is a leading non-bank lender providing capital to U.S. middle-market companies. The company has been in operation since 1998 and has a long history of providing flexible and customized lending solutions to its borrowers.

Website: https://www.arescapital.com/

Services Provided to New Mountain Finance Corporation

Ares Capital Corporation provides New Mountain Finance Corporation with the following services:

• Senior secured loans: Long-term loans secured by collateral, such as real estate or equipment.
• Unitranche loans: First-lien loans that combine senior and junior debt into a single, fully amortizing loan.
• Subordinated debt: Loans that rank behind senior debt in the event of a borrower default.
• Equity and mezzanine investments: Investments in companies that provide equity or subordinated debt financing.

Benefits of the Partnership

The partnership between New Mountain Finance Corporation and Ares Capital Corporation has several benefits, including:

• Access to a large pool of capital: Ares Capital Corporation has over $20 billion in capital available to lend to middle-market companies.
• Expertise in middle-market lending: Ares Capital Corporation has a team of experienced professionals with a deep understanding of the middle-market lending market.
• Flexible and customized lending solutions: Ares Capital Corporation can provide customized lending solutions to meet the specific needs of New Mountain Finance Corporation's borrowers.
• Strong track record: Ares Capital Corporation has a long and successful track record of providing financing to middle-market companies.

Overall, the partnership between New Mountain Finance Corporation and Ares Capital Corporation is mutually beneficial and enables New Mountain Finance Corporation to provide financing to middle-market companies that may not have access to traditional bank financing.

Main Customer (Downstream Company) of New Mountain Finance Corporation

New Mountain Finance Corporation (NMFC) is a publicly traded business development company (BDC) that provides debt and equity financing to middle-market businesses and real estate ventures. NMFC does not have a single main customer or downstream company, as its portfolio includes a diverse range of borrowers and investments across various industries.

However, here are some of the notable companies and sectors that NMFC has provided financing to in the past:

Borrowers:

• Middle-market businesses: NMFC primarily targets businesses with annual revenue between $25 million and $500 million. These businesses operate in various industries, including manufacturing, distribution, healthcare, technology, and business services.
• Real estate ventures: NMFC provides financing for real estate projects, such as multifamily housing, commercial properties, and industrial developments.

Industries:

• Healthcare: NMFC has a focus on providing financing to healthcare companies, including providers, distributors, and manufacturers.
• Manufacturing: NMFC finances manufacturers of a wide range of products, including industrial machinery, consumer goods, and auto parts.
• Technology: NMFC provides financing to technology companies, such as software developers, hardware manufacturers, and telecommunications providers.
• Business services: NMFC finances businesses that provide services to other companies, such as staffing agencies, marketing firms, and engineering consulting companies.

It's important to note that the specific companies and industries that NMFC finances may vary over time based on market conditions and investment opportunities. For the most up-to-date information, please refer to the company's website and SEC filings.

Key Revenue Streams of New Mountain Finance Corporation

New Mountain Finance Corporation (NMFC) operates as a closed-end, non-diversified management investment company that invests primarily in middle-market debt instruments. Its revenue streams are derived from the following sources:

1. Interest Income (Estimated Annual Revenue: $1.73 billion)

• NMFC's primary source of revenue is interest income earned on its portfolio of debt investments.
• It invests in various forms of debt, including senior secured loans, second lien loans, unsecured loans, and mezzanine debt.
• As borrowers make interest payments on their loans, NMFC earns interest income, which constitutes the bulk of its revenue.

2. Dividend Income (Estimated Annual Revenue: $185.7 million)

• NMFC also earns dividend income from its investments in equity securities, such as preferred stock.
• When these companies pay dividends, NMFC receives a portion of their earnings as dividend income.

3. Realized Gains on Sale of Investments (Estimated Annual Revenue: $125.6 million)

• When NMFC sells its debt investments or equity securities, it may realize a gain or loss.
• If the sale price is higher than the cost basis, NMFC records a realized gain, which contributes to its revenue.

4. Other Income (Estimated Annual Revenue: $12.2 million)

• NMFC may generate additional income from other sources, such as fees and commissions received for managing its portfolio and other services.
• These fees and commissions can supplement its core revenue streams.

Breakdown of Revenue Streams for Fiscal Year 2023

For the fiscal year ended September 30, 2023, NMFC reported the following revenue breakdown:

• Interest Income: $1.73 billion (85.7%)
• Dividend Income: $185.7 million (9.2%)
• Realized Gains on Sale of Investments: $125.6 million (6.2%)
• Other Income: $12.2 million (0.6%)

Estimated Annual Revenue

Based on the historical revenue trends and the current portfolio size, it is estimated that NMFC's annual revenue is approximately $2.06 billion. However, this may vary depending on economic conditions, market fluctuations, and investment decisions made by the company.

Key Partners of New Mountain Finance Corporation

• Ares Management Corporation (Website: https://www.aresmgmt.com/)

  • Global alternative investment manager
  • Provides a wide range of investment products and services, including private equity, credit, real estate, and infrastructure
  • Strategic partner with New Mountain Finance, providing access to its global distribution network and investment expertise

• Carlyle Group (Website: https://www.carlyle.com/)

  • Global investment firm
  • Focuses on private equity, credit, and real estate
  • Partnered with New Mountain Finance to launch a $1.5 billion credit fund

• KKR & Co. (Website: https://www.kkr.com/)

  • Global investment firm
  • Provides a wide range of investment strategies, including private equity, credit, real estate, and infrastructure
  • Co-investor with New Mountain Finance in various investments

• Goldman Sachs Asset Management (Website: https://www.gs.com/asset-management/)

  • Investment management division of Goldman Sachs
  • Offers a range of investment products and services, including hedge funds, mutual funds, and private equity
  • Joint venture partner with New Mountain Finance in a private credit fund

• Fortress Investment Group (Website: https://www.fortress.com/)

  • Global investment manager
  • Focuses on private equity, credit, real estate, and infrastructure
  • Strategic partner with New Mountain Finance, providing access to its investment expertise and global network

• Fortress Transportation & Infrastructure Investors (Website: https://www.fortresstii.com/)

  • Investment affiliate of Fortress Investment Group
  • Focuses on transportation and infrastructure investments
  • Joint venture partner with New Mountain Finance in a private credit fund

• Fortress Credit (Website: https://www.fortresscredit.com/)

  • Investment affiliate of Fortress Investment Group
  • Focuses on credit investments
  • Joint venture partner with New Mountain Finance in a private credit fund

• Barclays Capital (Website: https://www.barclayscorporate.com/en-us/institutional-banking/investment-banking/)

  • Investment banking division of Barclays
  • Provides a range of financial services, including advisory, capital raising, and risk management
  • Strategic partner with New Mountain Finance, providing access to its global network and expertise in capital markets

Key Cost Structure and Estimated Annual Cost of New Mountain Finance Corporation

1. Interest Expense

• Interest expense is the largest cost for New Mountain Finance Corporation, accounting for approximately 55% of total expenses.
• The estimated annual interest expense is approximately $425 million.

2. Salaries and Compensation

• Salaries and compensation for employees account for approximately 15% of total expenses.
• The estimated annual cost for salaries and compensation is approximately $115 million.

3. General and Administrative Expenses (G&A)

• G&A expenses include costs associated with the company's operations, such as rent, utilities, marketing, and legal fees.
• G&A expenses account for approximately 10% of total expenses.
• The estimated annual cost for G&A expenses is approximately $75 million.

4. Impairment Charges

• Impairment charges are expenses recognized when the value of a loan or investment is determined to be less than its carrying value.
• Impairment charges can be significant for New Mountain Finance Corporation, as the company invests in high-yield and stressed debt.
• The estimated annual cost for impairment charges is approximately $100 million.

5. Other Expenses

• Other expenses include costs not directly related to the company's core lending business, such as professional fees, insurance, and regulatory fees.
• Other expenses account for approximately 10% of total expenses.
• The estimated annual cost for other expenses is approximately $75 million.

Total Estimated Annual Cost

The total estimated annual cost for New Mountain Finance Corporation is approximately $790 million.

Notes:

• The above cost structure and estimated costs are based on the company's historical financial statements and estimates from analysts.
• Actual costs may vary depending on market conditions and other factors.
• New Mountain Finance Corporation is a publicly traded business development company (BDC). BDCs are investment companies that provide financing to small and medium-sized businesses.

Sales Channels

New Mountain Finance Corporation primarily employs the following sales channels to distribute its products and services:

• Direct Lending: New Mountain Finance Corporation originates and provides senior secured loans, unitranche loans, second lien loans, and mezzanine loans directly to middle-market companies.

• Loan Syndications: New Mountain Finance Corporation participates in loan syndications with other lenders to provide larger loans to borrowers.

• Loan Sales: New Mountain Finance Corporation may sell certain loans or participations in loans to other financial institutions or investors.

• Private Placements: New Mountain Finance Corporation raises capital through private placements of its debt securities to institutional investors.

Estimated Annual Sales

New Mountain Finance Corporation does not disclose specific sales figures for its individual sales channels. However, the company's total originations and portfolio value can provide an indication of its sales performance.

For the fiscal year ended December 31, 2022:

• Total originations: $4.7 billion
• Portfolio value: $5.5 billion

These figures suggest that New Mountain Finance Corporation has a substantial sales volume across its distribution channels.

Customer Segments of New Mountain Finance Corporation

New Mountain Finance Corporation is a publicly traded business development company (BDC) that provides financing solutions to middle-market businesses in the United States. The company's primary customer segments include:

1. Private Equity-Backed Businesses:

• Estimated annual sales: $500 million - $5 billion
• New Mountain Finance focuses on providing financing to middle-market businesses that are backed by private equity firms. These businesses are typically in a growth stage or undergoing a change in ownership.

2. Sponsorless Middle-Market Businesses:

• Estimated annual sales: $50 million - $1 billion
• The company also provides financing to sponsorless middle-market businesses that do not have private equity backing. These businesses are typically family-owned or closely held and may be seeking growth capital or debt refinancing.

Estimated Annual Sales by Customer Segment

Based on New Mountain Finance Corporation's financial statements and industry data, the estimated annual sales by customer segment are as follows:

Segment | Estimated Annual Sales ------- | ------------------------ Private Equity-Backed Businesses | $400 - $500 million Sponsorless Middle-Market Businesses | $100 - $200 million

Total Estimated Annual Sales: $500 - $700 million

It's important to note that these are just estimates based on available information and may vary depending on market conditions and the company's lending activity.

Value Proposition of New Mountain Finance Corporation

New Mountain Finance Corporation (NMFC) is a publicly traded business development company (BDC) that provides debt and equity financing to middle-market companies in the United States and Europe. NMFC's value proposition includes:

1. Access to capital for middle-market companies: NMFC provides financing to middle-market companies that often have difficulty obtaining funding from traditional banks due to their size, industry, or financial condition. NMFC's flexible lending criteria and willingness to provide both debt and equity financing make it an attractive option for these companies.

2. Expertise in middle-market lending: NMFC has a deep understanding of the middle market and has been investing in middle-market companies for over 20 years. The company's investment team has extensive experience in structuring and underwriting loans and making equity investments. This expertise helps NMFC to identify and invest in attractive opportunities while mitigating risk.

3. Strong track record of performance: NMFC has a strong track record of generating consistent returns for its investors. The company has paid regular dividends since its inception and has consistently exceeded its dividend coverage ratio. NMFC's portfolio has also performed well, with a low default rate and a high recovery rate.

4. Scalable business model: NMFC's business model is scalable, which allows it to increase its lending capacity as it grows. The company has a strong capital base and a committed investor base. NMFC can also access the capital markets to raise additional funds when needed.

5. Long-term investment horizon: NMFC is a long-term investor, which allows it to provide patient capital to its portfolio companies. This long-term approach helps to build strong relationships with borrowers and support their growth.

Overall, NMFC's value proposition offers a combination of access to capital, expertise, a strong track record, a scalable business model, and a long-term investment horizon. These factors make NMFC an attractive option for investors seeking exposure to the middle market.

Risks Associated with New Mountain Finance Corporation

Credit Risk

• The company's portfolio is heavily concentrated in leveraged loans, which carry a higher risk of default than other types of debt.
• A significant portion of the company's borrowers are in cyclical industries, which can be sensitive to economic downturns.
• The company's reliance on a small number of large borrowers increases its exposure to the risk of a single borrower defaulting.

Market Risk

• Interest rate risk: Rising interest rates can lead to a decline in the value of the company's loan portfolio.
• Prepayment risk: Borrowers may prepay their loans early, which can reduce the company's interest income.
• Market volatility risk: The value of the company's investments can fluctuate with changes in the overall market conditions.

Operational Risk

• The company's operations are complex and involve a number of third-party service providers.
• The company's internal controls and risk management systems may not be adequate to prevent or mitigate potential risks.
• The company relies heavily on its investment team, and the loss of key personnel could adversely affect its performance.

Regulatory Risk

• The company's operations are subject to a complex and evolving regulatory environment.
• Changes in regulations could adversely affect the company's business or financial condition.
• The company may be subject to enforcement actions or fines by regulatory authorities.

Liquidity Risk

• The company's investments are not readily marketable, which could make it difficult to raise cash in a timely manner.
• The company's dependence on debt financing increases its vulnerability to liquidity shortfalls.

Reputation Risk

• The company's reputation could be damaged by negative publicity or adverse market events.
• A loss of reputation could lead to a decline in investor confidence and an increase in the cost of capital.

Other Risks

• Economic downturns can adversely affect the company's borrowers and the overall market conditions.
• Competition from other lenders could put pressure on the company's margins.
• The company's use of leverage increases its exposure to financial risk.

It is important to note that these risks are not exhaustive and that other risks may arise in the future. Potential investors should carefully consider these risks before investing in New Mountain Finance Corporation.