January 8, 2025: Blue Owl Capital Corporation and Blue Owl Capital Corporation III Announce Shareholder Approvals of Merger

BDC Reporter Adds: As we expected, there was no controversy involved in the merger of Blue Owl Capital (OBDC) and Blue Owl Capital III (OBDE). The votes in favor of the combination out the voting records of dictators everywhere to shame: OBDC at “over 97%” and OBDE at 100%. OBDC is now materially bigger given the $4bn plus of new assets under management. With total AUM of $17.8bn OBDC now jumps into second place in the public BDC size table from third. The BDC used to be behind FS-KKR Capital (FSK), which it has just passed. However, Ares Capital (ARCC) remains top dog with $25bn in AUM. Blue Owl will have to find more non-traded BDCs to meld into into OBDC to become numero uno.

By the way, for those of you who like lists, Advantage Data tells us that the single largest BDC – a non-traded one – is Blackstone Private Credit Fund, with AUM of $63bn. That BDC has been around since 2020 and seems to be performing well. Will Blackstone take this BDC public one day? We don’t know but we will add them to our coverage if they do. By the way, we don’t write about non-traded BDCs because their shareholders do not seem concerned about how their investments are performing. We think that’s a mistake because, when we’ve looked, we’ve noticed wide variations in performance where earnings, book value and distributions are concerned. If we ever get a demand for coverage we’ll expand to the non-traded BDCs as well. That would involve $387bn of AUM!. The little BDC acorn that we began writing about twenty years ago has grown into a mighty oak, probably representing a quarter of all “private credit” investments. “Private credit” is more and more of a misnomer as both public and non-traded BDCs are available to retail investors of all stripes.

January 8, 2025: Horizon Technology Finance Provides Fourth Quarter 2024 Portfolio Update

BDC ReporterAdds: The most important data in this Horizon Technology Finance (HRZN) press release is that the BDC funded $59mn in new loans and was repaid $13mn unscheduled principal repayments and $12mn scheduled, or $25mn in toto. The rest of the numbers are too conditional to be very useful. The $25mn in net loan growth should aid HRZN’s investment income but it’s impossible to tell from this how much of an impact that will have on results given we don’t know terms about what was added or repaid; any loss from non-accruals or recoveries from previously non-performing loans, etc. We shall have to wait and see – as always.

January 9, 2025: Stellus Capital Announces IQ 2025 Dividends

BDC Reporter Adds: The Stellus Capital Investment (SCM) monthly dividend for the IQ of 2025 remains unchanged through the end of the IQ 2025, annualizing at $1.60. That’s the same pace as in the last two calendar years. The analyst consensus is for recurring earnings to drop from $1.71 in 2024 to $1.49.

January 9, 2025: Runway Growth Capital and BC Partners Credit Announce $131 Million Financing Commitment to VertexOne to Accelerate Growth and Execute a Strategic Acquisition

BDC Reporter Adds: This is a very interesting news item. As you’ll have heard Runway Growth’s (RWAY) external management contract is being acquired by BC Partners, a $40bn asset manager. The current personnel is remaining in place at the BDC and the name is unchanged but – presumably – RWAY will have access to the resources of a far larger parent. This seems to be the first such attempt to leverage – literally – the new owners financial capacity. What we don’t know is how much of the $131mn of the financing commitment discussed here will be provided by RWAY and how much by other BDC Partners credit group. We don’t know the terms and much about the acquisition involved.

We’re a little worried that exposure – already high as of the IIIQ 2024 – will grow higher. Going by recent valuations, VertexOne has been deteriorating in value modestly in recent quarters. Also cloud-based SAAS solutions companies can sell for very high multiples, making any potential stumble that might occur worrisome. In a way, this is the crux of the issue relating the acquisition of RWAY: will the BDC go on to bigger and bigger things, increasing its earnings and value or will there be a weakening of credit performance in one of the riskier segments in private credit? Since the end of 2022, RWAY’s record has been mixed – nos as good as Hercules Capital’s (HTGC) but not descending to the depths of a TriplePoint Venture Growth (TPVG) or Horizon Technology (HRZN). Still, net asset value per share has fallen (6%) in the last 7 quarters on the back of significant losses in 2023, but has been doing better in 2024, albeit still in the red. How VertexOne plays out may tell us volumes.

January 9, 2025: Main Street Announces Fourth Quarter 2024 Private Loan Portfolio Activity

BDC Reporter Adds: We don’t want to be a sourpuss but we don’t get much value from Main Street Capital’s (MAIN) periodic updates on “private loan” portfolio activity, just one of several business segments at the BDC. More power to readers who can parse this data and turn it into something actionable but with so much left unsaid – including the names of new borrowers, or pricing details, info on credit losses, etc. – this press release just sits there. We are adding it to the BDC Publication News Feed for the sake of comprehensiveness but not much more.