By Daniel Lanyon on Tuesday 10 January 2017
The Business Development Company rounded off 2016 with a small uptick in funding committents to middle market firms.
Golub Capital originated $113.6m in new middle-market investment commitments during the three months ended December 31 2016, according to documents filed to the U.S. Securities and Exchange Commission.
Business development companies, or ‘BDCs’ are part of the rapidly expanding alternative credit spectrum that provides capital to small and middle market companies of whom many find traditional bank financing to be unavailable or unattractively priced.
With ongoing bank retrenchment from the lending market, particularly to mid market firms in the US, they are now an integral part of the funding mix.
In tandem, investors have also found favour with BDCs with investment managers and private or 'retail' investors searching for yeild and access to illiquid private debt strategies.
The Golub Capital BDC invested approximately 75 per cent of the new middle-market investment commitments were unitranche, 24 per cent were senior secured loans and approximately 1 per cent were subordinated debt loans and equity securities.
The firm also invested $9.m in the Senior Loan Fund LLC, an unconsolidated Delaware limited investing in senior secured loans. It is co-managed by Golub Capital and RGA Reinsurance Company.
This represents a small increase in total investments by approximately 2.1%, or $35.5 million, during the three months ended December 31, 2016 after factoring in debt repayments, sales of securities, net fundings on revolvers and net change in losses.
The Golub Capital BDC is an externally-managed, non-diversified closed-end management investment company. It invests primarily in senior secured and loans of U.S. middle-market companies that are often sponsored by private equity investors.
Golub Capital a firm has over $20bn of assets under management, founded over 20 years ago.