Alcentra BDC seeks AUM boost

In the first quarter, Alcentra Capital Corporation saw AUM drop lower than planned. It aims to address this in the second quarter.

Alcentra Capital Corporation, the Nasdaq-listed business development company, announced that “a series of pre-payments in the fourth quarter of 2016 left the portfolio at a lower level of AUM than planned” as it revealed its first-quarter earnings.

The firm added: “Based on our pipeline, we are on target to achieve the targeted level of AUM by the end of the second quarter of 2017; with steady portfolio growth expected thereafter.”

The BDC achieved its expected net investment income for the first quarter of $4.6 million, or $0.34 per share. Ten of the firm’s 31 portfolio companies were written up during the quarter, twice the number that were written down.

It said it was seeing strong performance from portfolio companies in the semiconductor services, environmental and recycling services, and technology services sectors – and expected this strong performance to continue for the rest of the year.

In the first three months, total investment income was $9.2 million, a decrease of $0.7 million (7.5 percent) compared with the three months ended March 2016. Alcentra said the decrease was “primarily attributable to the shift in timing of the closing of new deals relative to repayments”.

Among its quarterly financial highlights, the BDC announced it had: invested $31.9 million in debt and equity securities, including two new investments (Pharmalogics Recruiting and Champion ONE) and five add-on acquisitions; received repayment proceeds of $22.2 million; and posted a net asset value of $13.43 per share, down from $13.72 in the fourth quarter.

Weighted average portfolio leverage stood at 3.65x at the end of the quarter, down from the prior quarter’s figure of 3.93x. Weighted average portfolio yield was 11.7 percent.

At the end of the period, the fair value of the investment portfolio was $283.3 million. The average portfolio investment on a cost basis was $9.5 million and equity constituted 7.7 percent of the portfolio, down from 29 percent at the time of the IPO.

The BDC had $4.7 million in cash and cash equivalents on March 31, with $46.9 million of borrowings outstanding on its $135 million senior secured revolving credit facility and $55 million outstanding of Alcentra Capital InterNotes.

Alcentra Capital Corporation provides debt and equity financing to lower mid-market companies based in the US with revenues between $10 million and $250 million.