Investcorp Credit Management BDC(ICMB) - 2025 Q3 - Quarterly Report

Investment Objectives and Portfolio - 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 [182]. - As of March 31, 2025, the investment portfolio was valued at $192.4 million, representing 92.7% of total assets, compared to 92.6% as of December 31, 2024 [200]. - The investment portfolio consisted of 43 portfolio companies, with 77.04% in first lien investments and 22.96% in equities, warrants, and other positions [216]. - The average investment per portfolio company was$ 4.5 million, while the largest investment was $13.6 million as of March 31, 2025 [216]. - The primary revenue source is interest on debt investments, supplemented by royalty income, dividends, and capital gains [213]. - The investment portfolio's industry composition showed an increase in Professional Services to 15.47% from 14.37% and a decrease in Containers & Packaging to 9.15% from 10.52% [220]. - During the three months ended March 31, 2025, the company made investments totaling approximately$ 5.1 million, with 86.71% in first lien investments [220]. - The company invested a total of $2.0 million in two existing portfolio companies between March 31, 2025, and May 13, 2025 [246]. Financial Performance - Investment income for the three months ended March 31, 2025, decreased to$ 4.4 million from $6.6 million for the same period in 2024 [226]. - Expenses decreased to$ 3.7 million for the three months ended March 31, 2025, compared to $4.4 million for the same period in 2024 [227]. - Net investment income before taxes decreased to$ 0.7 million for the three months ended March 31, 2025, from $2.2 million for the same period in 2024 [228]. - The company recorded a net realized loss on investments of$ 1.6 million for the three months ended March 31, 2025 [229]. - As of March 31, 2025, the average total yield of debt and income-producing securities was 11.02%, up from 10.60% as of December 31, 2024 [219]. Debt and Financing - As of March 31, 2025, there were $56.0 million in borrowings outstanding under the Capital One Revolving Financing, down from$ 58.5 million as of December 31, 2024 [204]. - The Capital One Revolving Financing was amended to decrease the applicable interest spread from SOFR plus 3.10% to SOFR plus 2.50% [204]. - The company closed a public offering of $65.0 million in aggregate principal amount of 4.875% notes due 2026, with net proceeds of approximately$ 63.1 million after expenses [205]. - The 2026 Notes will mature on April 1, 2026, and bear interest at a rate of 4.875% [206]. - As of March 31, 2025, the company's floating rate borrowings totaled $56.0 million, representing 46.3% of its outstanding debt [250]. - A 1.00% increase in interest rates would increase the company's net interest income by approximately 5.30%, while a 2.00% increase would increase it by approximately 15.82% [251]. - The company had no hedging transactions in place as of March 31, 2025, as it deemed the interest rate risk acceptable [253]. Regulatory and Compliance - The Company has no Taxable Subsidiaries as of March 31, 2025, and December 31, 2024 [188]. - The company did not hold any non-qualifying assets in its portfolio as of March 31, 2025, complying with regulatory requirements [211]. - The Adviser has been granted exemptive relief by the SEC to co-invest in certain private placement transactions, subject to conditions [190]. - The company intends to distribute between 90% and 100% of its annual taxable income to stockholders, which includes taxable interest and fee income [241]. - As of March 31, 2025, the company had off-balance sheet arrangements consisting of$ 5.7 million in unfunded commitments to five portfolio companies, up from $4.6 million to six companies as of December 31, 2024 [245]. Market Conditions and Risks - The current inflationary environment and potential global recession may impact the portfolio companies, necessitating adjustments to operational plans [191]. - The company is subject to financial market risks, including changes in interest rates, which could materially affect its net investment income [248]. - As of March 31, 2025, 98.2% of debt investments bore interest based on floating rates, an increase from 96.4% as of December 31, 2024 [222]. - The asset coverage ratio based on par value was 164.5% as of March 31, 2025 [235]. Ownership and Management Changes - The Company has undergone significant ownership changes, with Investcorp acquiring approximately 83% of the Adviser as of August 31, 2023 [183]. - The Company’s fiscal year end was changed from June 30 to December 31, effective September 18, 2024 [181]. - The board of directors declared a distribution of$ 0.12 per share for the quarter ended June 30, 2025, payable on June 14, 2025 [247].