NYSE-listed business development corporation, Saratoga Investment Corp., is seeking a license for a second small business investment company (SBIC) from the Small Business Administration (SBA), according to a statement from the firm.
Saratoga already manages an SBIC-licensed subsidiary and a $300 million collateralised loan obligation. The SBA, which licenses SBIC vehicles, has issued Saratoga with a ‘green light’ or ‘go forth’ letter which allows the firm to continue its application. There is no guarantee that a license will be granted.
The firm’s first SBIC strengthened the firm, said chairman and chief executive of the listed BDC, Christian Oberbeck. Saratoga hopes to use the two-to-one leverage and lower cost of capital offered by the SBIC programme to build its asset base, he said in the statement.
The firm is seeking a license for a $112.5 million investment vehicle.
Licensed SBIC managers can issue SBA-guaranteed debt to leverage their SBIC investment. A second license would enable Saratoga to issue up to $75 million in additional covered debt, on top of the $150 million approved under the firm’s first SBIC license, the statement continued.
“A new SBIC license would add to the financial strength and liquidity of Saratoga Investment. The second SBIC license would be accretive in all aspects and augment an already healthy financial picture. We closed 14 investments in 2014 that supported new and existing portfolio companies, and this year we will continue to support private equity sponsors and companies with a variety of value added financing solutions,” said Mike Grisius, president and chief investment officer.
Focused on financing mid-market borrowers, Saratoga provides subordinated, first and second lien loans, as well as unitranche deals and equity co-investments.
The BDC reported net asset value of $122.3 million as of the end of November 2014, an increase of $7.4 million from six months earlier. Net investment income for the three months ending November 2014 totalled $2.7 million.