Business Development Company (BDC) Funds Overview
What is a BDC?
A business development company, or BDC, is a closed-end investment company that was created by Congress in 1980 in order to assist middle market companies to meet their capital needs and grow. Many BDCs are publicly traded companies and are popular among income-seeking investors because of their institutional quality investments and high current dividend yields.
Monroe Capital BDC: Monroe Capital Corporation (NASDAQ: MRCC)
Monroe Capital Corporation is publicly traded on the NASDAQ under the ticker symbol “MRCC.” We are a specialty finance company focused on providing financing primarily to lower middle market companies with EBITDA between $3-35 million, in the U.S. and Canada. We provide customized financing solutions focused primarily on senior, unitranche and junior secured debt and, to a lesser extent, unsecured subordinated debt and equity, including equity co-investments in preferred and common stock and warrants.
MRCC is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the 1940 Act and as a regulated investment company (RIC) for tax purposes.
Our investment activities are managed by our investment advisor, Monroe Capital BDC Advisors, LLC (“MC Advisors”). MC Advisors is affiliated with Monroe Capital.
Monroe Capital Corporation Investment Objective
Our investment objective is to maximize the total return to our shareholders in the form of current income and capital appreciation through investment in senior, unitranche and junior secured debt and, to a lesser extent, unsecured debt and equity investments. Unitranche debt is an instrument that combines both senior and junior secured debt into one facility. We believe that our primary focus on lending to lower middle-market companies offers several advantages as compared to lending to larger sized companies, including more attractive economics, lower leverage, meaningful loan covenants, custom tailored loan documentation, direct access to borrower management and improved information flow.
Why Invest in Monroe Capital Corporation?
- Attractive current distributions
- MRCC has paid a regularly scheduled quarterly dividend in every quarter since its IPO in October 2012
- Focus on downside protection
- Over 90% of the investment portfolio is comprised of senior secured loans
- Favorable market conditions
- There is an attractive opportunity in the U.S. middle market driven by a combination of bank consolidation and increased regulatory burden on traditional banks
- Experienced management team
- Senior management averages over 25 years of experience
- Proven track record
- Monroe has a 16 year track record of successfully delivering attractive returns to its limited partners and shareholders. Monroe has funded over 1,275 investments involving over $10.5 billion of investment loans since its inception in 2004
- Permanent capital base / long term investment horizon
- Delivers a predictable dividend stream
- Efficient tax structure (RIC election)
- No entity-level taxation
- Pass through capital gains to investors
- Statutory asset diversification requirement and leverage limitation reduces risk, while allowing for enhanced returns
Monroe Capital Platform
- Award-winning lower middle market franchise
- Nationwide orgination focus
- Proven management / track record
- Senior secured approach
- Focus on direct originations
- Strategic partnerships with banks
- Credit first underwriting
- Strong investment pipeline
Attractive Investment Opportunity
- Target portfolio return of 10% +
- Lower risk profile – 93% secured loans
- Attractive risk-adjusted returns
- Strong dividend profile
- Approximate 11.3% annualized yield
- Dividend fully covered by NII