Barings BDC debuts with almost $160m of commitments to mid-market companies

Barings’ latest investment vehicle made $87m in mid-market commitments in the third quarter and $72m from quarter-end through early November.

In its first earnings call, Barings BDC (BBDC) debuted with an investment portfolio consisting of $951 million in broadly-syndicated loans and $87 million in mid-market companies, according to earnings materials from the Charlotte-based business development company.

The firm, which came about as a result of Barings purchasing Triangle Capital Corporation’s (TCAP) management contract, plans to build out its investment portfolio with privately-originated transactions over time. In the interim though, BBDC will have a book consisting largely of broadly-syndicated loans.

In addition to the mid-market loans closed for the three months ending 30 September, BBDC has closed $72 million of mid-market debt and equity commitments with an additional $7.9 million set to close, figures from 1 October to 7 November show. Net new broadly-syndicated loan investments were $60.4 million.

At the end of the second quarter – when the vehicle still operated under the TCAP name – the BDC had a net asset value per share of $13.70. However, following transaction costs and losses, that fell to a post-sale NAV per share of $11.72.

Most of the decrease came from a realised loss of $1.27 per share when TCAP sold its portfolio in an all-cash sale to Benefit Street Partners. Barings began with an entirely cash balance sheet, consisting of the net proceeds from the portfolio sale and an initial $100 million investment from Barings and post-transaction closing $50 million tender offer.

The BDC posted a $0.60-a-share loss for the third quarter, though without TCAP’s legacy assets, BBDC reported a net investment income of $0.06 a share, chief financial officer Jonathan Bock said on the earnings call.

The firm will target companies worth between $10 million and $50 million initially, though BBDC will look to grow with their portfolio companies, as many private equity sponsors are now using a buy-and-build approach to scaling a platform business, BBDC president Ian Fowler said.