Non-Listed BDCs Extend Streak to Nine Consecutive Quarters of Growth
Investment banking firm Robert A. Stanger & Company Inc. has published its third-quarter, 2024 edition of The Stanger Report, complete with individual performance data, in-depth company profiles, and comprehensive insights on non-traded net asset value and traditional business development companies.
The Stanger NL BDC Total Return Index posted a 2.4% increase in Q3 2024, marking its ninth consecutive quarter of steady growth. Despite this consistent performance, traded BDCs have still outperformed non-listed BDCs on a one-year, three-year and five-year basis. Non-listed BDCs now have a combined aggregate NAV of $87.2 billion, reflecting a year-over-year increase of over 60% and over 10% from June 30, 2024, demonstrating strong investor demand and significant capital inflows.
“Fundraising has surged in recent quarters,” said Kevin T. Gannon, chairman and chief executive officer of Stanger, “with a remarkable 107% year-over-year and 7.5% quarter-over-quarter increase in fundraising for the trailing 12 months. At this point, we are on track to see a record-breaking $35 billion of capital formation in 2024. While the top five sponsors capture roughly 80% of the market share, this rising tide is benefiting all players in the industry, underscoring the resilience and appeal of non-traded BDCs in today’s market.”
The Stanger NL BDC Total Return Index measures the performance of non-listed BDCs on a quarterly basis. According to Stanger, it began calculating the index on Dec. 31, 2015, with a base level of 100. Perpetually offered, non-listed BDCs that update their NAVs no less frequently than monthly and that have a minimum of one calendar quarter of performance are included in the index.
All other non-listed BDCs are generally added to the index in the quarter that their first NAV is announced. Stanger said non-listed BDCs are removed from the index upon listing, merger, or in the case of a liquidation by disposition of investments, upon conversion to a liquidation basis of accounting or announcement of the effectiveness of a plan of liquidation. Non-listed BDCs may also be removed from the index for other special circumstances.
NexPoint Capital Inc. topped the three-month return rankings for non-listed BDCs in Q3 2024 with a 7.4% total return. HPS Corporate Lending Fund once again led one-year total return with 13.3%, narrowly edging out the 13.2% of both PGIM Private Credit Fund and NexPoint Capital Inc. Looking at longer-term performance, Blue Owl Credit Income Corp. took over as the three-year performance leader, while MSC Income Fund Inc. narrowly surpassed Blue Owl Capital Corporation II to top five-year total returns.
“This quarter saw significant activity in the private lending space. Nuveen Churchill Private Capital Income Fund announced plans to acquire its private BDC, Nuveen Churchill Private Credit Fund, which invests in a diversified pool of first-lien term loans. Additionally, AB Private Lending Fund was declared effective and AMG Comvest Senior Lending Fund filed a new registration statement for a $2 billion offering,” stated Michael S. Covello, executive managing director at Stanger.
As of Q3 2024, the index currently includes 21 BDCs with a total of 44 separate share classes.
Robert A. Stanger & Co., Inc., founded in 1978, is an investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, real estate investment trusts, and real estate advisory and management companies in support of strategic planning and execution, capital formation and financings, mergers, acquisitions, reorganizations, and consolidations.
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