Audax Credit business development company grew its mid-market senior debt portfolio and net asset value in 2016, according to a report filed with the US Securities and Exchange Commission.
By the end of its second year in business, the New York-based business development company held investments in 83 portfolio companies – including pharmaceutical, chemical, automotive, high tech, construction, media and consumer services firms – nearly double the 43 companies Audax had at the end of 2015.
The firm bumped up its NAV per share, moving to $9.55 last year as of 31 December from $9.45 the same time last year, the filing shows.
The company showed $6.7 million in net investment income for last year, up from $1 million in 2015, with results dating from 29 January of that year, the BDC’s inception date.
The BDC accrued gross base management fees of $1.2 million last year.
The firm invests primarily in senior debt to US mid-market companies generating less than $75 million of EBITDA, the document showed. The company’s portfolio totalled $170.3 million at 31 December, compared with $101 million the year prior.
Audax BDC’s senior debt products typically have five- to seven-year terms and a floating interest rate. As of 31 December, the LIBOR floors in the BDC’s new loan agreements ranged from 1 percent to 1.25 percent. The average investment amount for last year was $1.7 million.
The firm’s total return was 4.8 percent last year, slightly down from 5.2 percent in 2015.
Audax was not immediately available to comment further.
In the annual report, the firm cited the consolidation of banks and their general shift away from mid-market lending as a continuing boon to alternative lenders.
“In our view, the consolidation of available lenders and the period of dislocation in the credit markets following the 2008 downturn have resulted in higher yields and more conservative capital structures for middle-market companies, resulting in attractive lending opportunities for investors in middle-market loans,” the filing states.
The BDC suggested that the firm may decide to lever its balance sheet, though currently they have no plans to do so.
“If we do incur leverage, however, we anticipate that it will be used in limited circumstances and on a short-term basis for purposes such as funding distributions,” the company said.
The BDC’s parent company, Audax Group, also manages a senior debt and mezzanine debt platform with offices in Boston, New York, and Menlo Park, California.