TCG BDC wants predictable dividend

Over 80% of the firm’s investments in the third quarter backed LBOs and acquisitions.

TCG BDC said on Wednesday it plans to keep its dividend levels steady after posting a healthy investment income during the third quarter – its first full quarter after debuting on the NASDAQ in June.

Over that period, the firm significantly out-earned its 37-cents-a-share dividend, posting net investment income of 41 cents per share. Executives from the New York-based business development company, advised by The Carlyle Group, said on earnings call they prefer to set the dividend at a level where core earnings can comfortably cover it. If TCG continues to out-earn its dividend, however, it would consider paying a special dividend or raising it, if growth allows.

TCG committed approximately $325 million across 15 different investments, each one a company backed by a private equity sponsor, chief executive Mike Hart said. Over 80 percent of the transactions were LBOs or acquisitions, said Grishma Parekh, TCG’s head of origination.

Product Quest was placed on nonaccrual status this quarter, the firm’s only such investment. TCG provided the packaging company with an incremental credit facility, Hart said, adding that the company, its lenders and Kainos Capital, its private equity owner, are in talks to resolve the firm’s financial difficulties.

The firm’s net asset value per share stood at $18.18 as of 30 September, up from $18.14 at the end of the second quarter.

The firm’s portfolio comprised 64.15 percent first lien debt; 13.69 percent second lien debt; 11.74 percent first lien last-out unitranche loan, 9.6 percent in the Middle Market Credit Fund joint venture with Credit Partners USA; 0.62 percent equity investments; and 0.13 percent structured credit obligations.

Carlyle merged TCG with its other private BDC, NF Investment Corporation, prior to its early June IPO, which debuted at $18.50 a share. TCG was the surviving entity of the merger.