Investcorp Credit Management BDC(ICMB) - 2025 Q1 - Quarterly Report

Investment Objectives and Strategy - Investcorp Credit Management BDC, Inc. has a primary investment objective to maximize total return to stockholders through investments in debt and equity of privately held middle-market companies [148]. - The company has a strong track record of consistent performance and growth, positioning it well to manage current market challenges [156]. - Revenue is primarily generated from interest on debt, with additional income from royalties, dividends, and capital gains [172]. Financial Position and Assets - As of September 30, 2024, Investcorp manages assets totaling $21.8 billion, indicating a strong position in the credit investment market [149]. - As of September 30, 2024, the investment portfolio represented 93.7$1.7 million, $8.3 million in restricted cash, and$52.5 million of capacity under the Capital One Revolving Financing [193]. Debt and Financing - The Base Management Fee for the Adviser is set at 1.75% of gross assets, with an Incentive Fee of 20% on pre-incentive fee net investment income above an 8% hurdle rate [152]. - The company is permitted to issue multiple classes of indebtedness if asset coverage is at least 150% immediately after issuance [155]. - Borrowings under the Capital One Revolving Financing amounted to $47.5 million as of September 30, 2024, compared to$43.0 million as of June 30, 2024 [166]. - The company amended the Capital One Revolving Financing to extend the maturity date to January 17, 2029, and increased applicable interest spreads [166]. Investment Performance - Investment income for the three months ended September 30, 2024, increased to $6.8 million from$5.9 million for the same period in 2023, primarily due to an increase in PIK interest income [186]. - Net investment income rose to $2.3 million for the three months ended September 30, 2024, compared to$1.6 million for the same period in 2023, driven by increased PIK interest income and lower interest expenses [188]. - Net realized loss from investments was $4.1 million for the three months ended September 30, 2024, primarily due to losses from the restructuring of the investment in Klein Hersh, LLC [189]. Regulatory Compliance and Risk Management - The company has no Taxable Subsidiaries as of September 30, 2024, maintaining compliance with RIC requirements [154]. - The company is required to comply with regulatory requirements, including maintaining at least 70$5.0 million, with cash from operating activities contributing $0.5 million, primarily due to$14.3 million from sales and repayments of portfolio companies [192]. - The company intends to distribute between 90% and 100% of its annual taxable income to stockholders, but may face limitations due to covenants in financing arrangements [199]. - The board of directors declared a distribution of $0.12 per share for the quarter ended December 31, 2024, payable on January 8, 2025 [203]. Interest Rate Exposure - Approximately 96.9% of debt investments bore interest based on floating rates as of September 30, 2024, exposing net interest income to interest rate fluctuations [205]. - A 1.00% increase in interest rates would increase the company's net interest income by approximately 7.42%, while a 2.00% increase would raise it by approximately 18.38% [207]. - The company had no hedging transactions in place as of September 30, 2024, as management deemed the interest rate risk acceptable [209].