Non-Listed BDC’s Reached $47.2 Billion in Q2
Non-listed business development companies grew to a combined aggregate net asset value of $47.2 billion as of the end of the second quarter of 2023, according to the latest data reported by investment bank Robert A. Stanger & Co. Inc.
The Stanger NL BDC Total Return Index, which measures the performance of non-listed business development companies on a quarterly basis, increased by 2.73% during Q2 2023, the eleventh quarterly increase during the past twelve fiscal quarters following the onset of the COVID-19 pandemic.
For the trailing 12 months ended Q2 2023, the heavily credit-focused Stanger NL BDC Index grew 7.7%.
“Unsurprisingly, with the rise in interest rates, most NL BDCs have allocated their portfolios heavily toward floating rate debt investments, and many NL BDCs have been tacking on supplemental distributions to their otherwise regular distributions during this period of enhanced yield,” said Kevin T. Gannon, chairman and chief executive officer of Stanger. “Higher interest rates have also attracted a number of new entrants to the NL BDC space, with $15 billion in new offerings going effective in Q2 2023 and several additional offerings still pending.”
Ares Strategic Income Fund, which issued shares in a private offering before its public offering went effective in April, was the top performer among non-listed business development companies in Q2 2023 based on three-month total return. Apollo Debt Solutions BDC, which broke escrow in Q1 2022, led NL BDCs in terms of one-year performance.
Looking at longer-term performance, MSC Income Fund Inc. and Blue Owl Capital Corporation II led non-listed business development companies in terms of three-year and five-year total return respectively.
According to David J. Inauen, head of research at Stanger, “Similar to what we have seen for non-listed REITs, newer NL BDCs are gravitating toward perpetual offerings – with NAVs being updated monthly – and away from the ‘lifecycle’ structure that is employed by older NL BDCs, which ultimately requires a liquidity event. Over half of the NL BDCs included in our performance rankings now use the newer, perpetual offering structure, and we expect that percentage to continue to grow as new offerings become effective.”
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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