BlackRock TCP Sells 40% of Its Portfolio To A "Continuation Vehicle," Considers "Strategic Options."
August 6, 2026
NEWS
On August 4, the Company entered into a definitive agreement to sell 95% of the equity interests in a vehicle (the “Continuation Vehicle”) holding approximately $523 million of investments across 78 portfolio companies to funds and accounts sponsored by Pantheon, a global leader in private credit secondaries.
The Continuation Vehicle assets have sector, lien and credit characteristics broadly similar to those of the Company’s pre-transaction debt portfolio.
The Continuation Vehicle assets represent approximately 48% of the fair market value of the Company’s debt portfolio immediately prior to the transaction and include all collateral underlying our recently issued BlackRock DLF 2026-C CLO, as well as additional contributed investments.
We retained a direct investment in substantially all of the portfolio companies and transferred, on average, approximately two-thirds of each investment position to the Continuation Vehicle. We will retain a 5% interest in the vehicle, and our advisor will manage the assets on the vehicle’s behalf without compensation.
The base purchase price for the investments sold was 95% of the gross fair value as of December 31, 2025, subject to customary pre-closing adjustments, allowing TCPC to realize a substantial premium relative to the value implied by its current share price. The Board obtained a fairness opinion from Lincoln International regarding the fairness, from a financial point of view, of the consideration to be received by the Company in the transaction.
The transaction is expected to result in a NAV decline of approximately 10.4%, or $0.68 per share, based on June 30, 2026 NAV.
The transaction materially reduces our leverage and unfunded commitments, significantly enhancing our investment capacity. Inclusive of the transaction and already completed post-quarter-end repayment activity, we expect our pro forma net leverage ratio to be approximately 0.4x (with a further reduction to less than 0.3x following an announced portfolio company paydown) and unfunded commitments to be below $40 million.
The Company and the Board believe these outcomes provide substantially greater financial, investment and operational flexibility, creating a stronger foundation from which to evaluate and pursue strategic alternatives that can deliver greater long-term shareholder value.
The Board has engaged Keefe, Bruyette & Woods, a Stifel company (“KBW”), to support a strategic review process as it evaluates how best to use TCPC’s enhanced financial flexibility and increased investment capacity to create long-term shareholder value.
Moelis & Company LLC acted as financial advisor to the Company in connection with the portfolio sale transaction.
VIEWS
Wow!
This is a major example of financial engineering and breaks new ground in the BDC sector.
In one stroke, TCPC has disposed of nearly half of the loans on its books and upended the just-completed $535mn CLO that financed them.
Using a "continuation vehicle" for this purpose is ground-breaking. Historically, these have been used to provide liquidity for finite-life private funds, not permanent public BDCs.
Price Is Right-ish
On paper, the (5%) discount on the most recent fair market value of the debt that TCPC had to agree to seems relatively modest given the circumstances.
However, the BDC has just published its IIQ 2026 results, which saw its net asset value per share drop again by (2.1%), after a (5.3%) fall the quarter before and a (25%) decline in the past 12 months.
As the press release reveals, NAV will drop another (10%) as a result of selling these assets at a discount.
TCPC's NAVPS will be dropping to $5.90 from $6.72 in June 2026 and $14.21 5 years ago.
Management has just announced Net Investment Income Per Share (NIIPS) of $0.22 for the IIQ 2026 and a dividend of $0.17.
Both metrics will likely drop substantially again, given that almost half of the income-yielding assets are going away as of two days ago.
Many, Many
There is a great deal we don't know, notwithstanding TCPC's revelations.
It's unclear which loans were chosen to leave and which remain.
Is TCPC keeping its $114mn on non-performing loans, as valued at cost, or selling 48% of them or something else?
How will the 5% interest TCPC owns in the continuation vehicle work? Will there be quarterly distributions?
Has TCPC provided any sort of guarantees to the buyer?
What will the BDC do next after this relatively clean break with half its portfolio, and why not sell the whole kit and kaboodle?
When BDCs engage KBW and their ilk and talk about a "strategic review" - typically the purview of the external manager itself and not a third party, a sale of the remaining portfolio seems the most likely upshot.
However, the success of that endeavor will depend largely on the answers to the earlier questions about what assets remain on the books and what shape they're in.
Pro-Forma
With the help of Gemini, here is what TCPC might look like when the dust settles:
While the exact granular cost-basis figures for the standalone investment portfolio were not isolated in the headline pro forma release, the total asset metrics serve as a direct proxy for the portfolio's fair market value (FMV) plus cash and receivables.
TCPC Balance Sheet Impact (As of June 30, 2026)
| Metric | Pre-Transaction (Reported) | Post-Transaction (Pro Forma) |
| Total Assets | $1.48 billion | $823.6 million |
| Total Liabilities (Debt) | $924.5 million | $328.8 million |
| Net Assets | $552.0 million | $494.9 million |
| NAV Per Share (NAVPS) | $6.58 | $5.90 |
| Net Leverage Ratio | 1.38x | ~0.40x |
Key Calculation Mechanics
- Portfolio FMV & The 48% Metric: The $523 million of investments transferred to the continuation vehicle represented approximately 48% of the FMV of TCPC’s debt portfolio immediately prior to the transaction. This implies the standalone pre-transaction debt portfolio had an FMV of approximately $1.09 billion. Given that normal investment repayments are underway at the BDC, expect that total assets number to dip below $800mn by the time the next quarterly numbers come out.
- The Debt Wipeout: The gross proceeds generated from selling the 95% equity interest, combined with the transfer of the underlying assets (including the collateral from the BlackRock DLF 2026-C CLO), resulted in total liabilities dropping by nearly $600 million.
- NAVPS and Net Assets: The transaction resulted in a recognized NAV decline of $0.68 per share (a 10.4% drop from the June 30 base of $6.58), which corresponds to a $57.1 million reduction in total net assets (from $552.0 million down to $494.9 million).
- Further Deleveraging: The 0.40x pro forma net leverage ratio is not the floor; the company noted that with an already announced portfolio company paydown post-quarter-end, that ratio is expected to compress further to below 0.30x.
BOTTOM LINE