Earnings season: Q3 results for private debt's biggest players

Golub BDC focuses on one-stop senior loans

The Golub Capital BDC continued to grow its investment portfolio with a focus on one-stop loans in the mid-market, despite lower M&A activity and “geopolitical surprises” of 2016, chief executive David Golub said in the firm’s latest earnings call.

The BDC invested $179.4 million in new investments in the quarter ending 30 September 2016, of which approximately 85 percent was in one-stop deals with the vast majority in traditional first-lien senior secured loans. These new investments brought the total investment portfolio (including equity and debt) to $1.56 billion by 30 September 2016, compared with $1.43 billion in the same period a year earlier. The BDC’s net asset value per share landed at $15.96 by the end of the third quarter, compared with $15.80 at the end of September 2015. Net investment income was $17.2 million in the quarter.

Ares boosts balance sheet with American Capital merger 

Ares Management spent the last part of 2016 preparing for the official merger with American Capital, set for the beginning of 2017, Kipp de Veer, director and chief executive, said on the Q3 earnings call. The firm projects that this merger will bring its total assets under management to $12 billion.

The weighted average yield on the company’s debt was 9.7 percent, compared with 10.3 percent in the same quarter the year prior. The net asset value per share of the firm was $16.59 by the end of September, slightly down from $16.79 at the end of September 2015. Net investment income per share remained roughly the same as the third quarter of the previous year, $0.44 in Q3 2016 versus $0.42 in Q3 2015.

TSLX retail investments pay off

TPG Specialty Lending showed strong returns on its investments in retail, especially its $70 million committed facility in clothing retailer Aeropostale, which the BDC exited upon sale of that company in September, executives said on the earnings call.

TPG Specialty Lending’s net asset value per share hit $15.78 in the third quarter, up slightly from $15.62 the end of the same quarter in the previous year. The firm’s net investment income per share was $0.51 in the quarter versus $0.48 the same time in the previous year. The weighted average yield on its debt was 10.3 percent over Q3 2016.

The BDC ended the third quarter with approximately $245 million of “undrawn commitments on our revolver”, Ian Simmonds, CFO at the BDC, said on the call. The BDC’s total balance sheet debt at the end of that period was $688.75 million.

FSIC/GSO focused on capitalising existing portfolio  

FS Investment BDC remained focused on senior secured debt in the third quarter of last year, Michael Forman, chairman and chief executive, said on the latest earnings call. The primary focus of the firm’s new investments that period, which totalled $217.3 million, was providing additional capital for its existing portfolio companies.

The firm’s net investment income dipped slightly year-on-year to $49 million in the third quarter versus $63.7 million at the end of 30 September 2015. On the call, executives attributed this to reduced fee income due to lower direct origination volume and prepayments that were pushed into the fourth quarter. The firm’s portfolio ended the quarter with a gross yield of 9.2 percent. The net asset value per share ended that period at $9.42, a bit down from $9.64 the year prior.

Oaktree stays cautiously optimistic

Oaktree Capital Management ended the third-quarter earnings period with a “near record high” amount of dry powder, Jay Wintrob, chief executive, said on the third-quarter earnings call. With nearly $22.7 billion in uncalled capital commitments, the company will be “maintaining its ‘move forward, but with caution’ investing posture”, he added.

The firm’s portfolio value has slightly dipped, from $100.2 billion at 30 September 2015 to $99.8 billion at the end of the third quarter of 2016. The firm’s net investment income was $19.7 million at the end of the quarter.

The retiring chief financial officer David Kirchheimer bid adieu on the call, saying he was proud “to have led an employee team that is second to none”.

KKR capitalises on retail exits

Exit activity drove KKR’s cashflow in the third quarter, especially exits from the firm’s co-investments and fund exposure in Walgreen’s and Zimmer, executives said on the latest earnings call.

The firm boosted its assets under management to $131 billion, up from $112 billion at 30 September 2015. The company raised $28 billion in organic new capital in the 12-month period immediately preceding 30 September. The firm’s economic net income for the quarter was $669 million.

It deployed $3.7 billion of capital over this quarter. Of that, the firm deployed $1.5 billion in the public market, most of which came from investments made from KKR’s direct lending and special situations credit vehicles.

CPPIB raises net assets and advises Chinese policy

The Canada Pension Plan Investment Board ended the fiscal quarter ending 30 September 2016 with C$300.5 billion ($228.9 billion; €215 billion) in total assets, up from C$287.3 billion the previous quarter.

The fund now holds C$72.9 billion in fixed income vehicles including bonds, securities and other debt instruments, C$38.4 billion in real estate and C$22.5 billion in infrastructure. The pension fund portfolio delivered a gross investment return of 4.83 percent and C$13.6 billion in net investment income.

Mark Machin, president and chief executive, said the returns on several longer-term investments this quarter prove the “prudence of our disciplined investment strategy”.

During the quarter, the CPPIB signed a memorandum of understanding with the Chinese government to assist the country’s policymakers with pension reform and to promote international investment in its domestic senior care industry, the company said.