AINV - Earnings call transcript Q1 2023 | MidCap Financial Investment Corporation

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Operator

Good morning, and welcome to the Earnings Conference Call for the period ended June 30, 2022, for Apollo Investment Corporation. [Operator Instructions] I will now turn the call over to Elizabeth Besen, Investor Relations Manager for Apollo Investment Corporation.

Elizabeth Besen

Thank you, operator, and thank you, everyone, for joining us today.

Speaking on today's call are Howard Widra, Executive Chairman, Tanner Powell, Chief Executive Officer, and Greg Hunt, Chief Financial Officer. Few members of the management team are on the call and available for the Q&A portion of today's call. everyone call advise being webcast to recorded. like that and today's are I'd they of is the and note are Please that property unauthorized in that broadcast Apollo any prohibited. form strictly any Corporation Investment earnings audio the call in of Information press about replay release. is this available our in I'd disclosure call safe to regarding release like attention to press also customary forward-looking the your harbor our information. may Today's conference statements. call include forward-looking and webcast

www.apolloic.com. adversely SEC a to business quarterly our connection for unless www.midcapfinancialic.com. most presentations The package undertake financial with any our be to may to next risks and filings, be announcement, obtain which week, To In will I'd apply over time, refer recent standard will two and turn not our by of at Widra. Executive should announcement. required we second the with You which forward-looking statements our today's like the Howard our able please our that supplemental we to that do find at projections call make. SEC affect website, Chairman, details new forward-looking website our filings visit law. copies today's to presentation, statements We At information or update to this a our launching on you website

Howard Widra

value today, details important shareholders. several our Thanks, quarterly Elizabeth. we Earlier strategic a which for release, Good announcements, morning, releases, we greatly our press believe and issued press everyone. earnings press second which release

activity an Following on today's overview announcement market distribution these our environment, the my of our and I'll update of review and each and provide discuss portfolio. of investment results announcements, the an discuss provide review

detail. questions. review call open our the then will We'll Greg financial results in Lastly, to

the sourced among with secure structure, Apollo BDC leading best-in-class product position of in will by Financial, providing The private commitment middle a announcement, BDC's the with as democratization today's to almost investor MidCap BDCs of credit institutional finance. play, loans at being Global begin fee middle-market shareholder senior at continue alignment, management's quality the announcements access These of the to secured underscore the forefront one public exclusively a me lenders. reinforce Let invest BDCs. innovation market and senior world's to which secured

know, positions. made pursuant at the to co-investment last the June, At approximately Financial, shifted originated you loans MidCap BDCs we over value. of by portfolio going corporate XX% from corporate of and investments sourced years, first non-core several are Financial which lien order, by primarily As our lending the and loans our end have junior to - MidCap capital away primarily represented fair

a take managed me institutional Let minute about Financial to Apollo privately by was Global. and cofounded MidCap Financial XXXX. MidCap I by held everyone remind which in investors

to support have MidCap other global Financial Historically, than Apollo investors. rate the listed strategy, U.S. to through MidCap XX can assets billion commitments, between in Global. MidCap the by the the predominantly sourced of do structure security lowest and industry-leading Financial its Apollo be is offices with loans employees. BDC the MidCap an strategic quarter. experienced what behalf of approximately given to Over fee approximately in XX% globally $X.X and have management experience. as is Financial, fees years XXX structure months years in and MidCap headquartered established $XX MidCap together the June with fortunate The unique originated listed including end BDCs. advisers on we have Financial worked among manager, over reduced access new industry billion average by institutional XX Board to relationship new of Maryland, has XX senior over team the BDCs. To last that originated June, Bethesda, is our The among and position in XX by has lead new

on will calculated structure be of now a will fee the MidCap thereby previously value. were below reduces of BDC, for risen new alignment of asset capital, of loans senior BDC's origination focus that assets, the given amount yield. required Financial loans yield, instead The net greater expanding sense that first will lien fee on provides the asset which significant of originated well the its the lower MidCap BDC's cost and addition, meet which make BDCs that target capital. In now universe cost

equivalent reduced the basis of In fee assets permanently has the words, fee threshold on assets management effective points X.X% gains for fee permanently which be expressed to equivalent has approximately assets. reduced on January to will also remains catch-up been the been fee on structure to on there equity. The change been from is down X%, to has management XXXX. been return base other performance capital requirement to The approximately the terms gross Specifically, best incentive reduced and BDC's base X.X% equity, XX% from or on is reduced The income The X, to also X.X% has XX.X%. in total the XX XX.X%. fee period provision. to of the approximately changes incentive from beginning XX% no on permanently

the of the a performance. investment, MidCap and for forma X% this Financial MidCap Financial common Pro loans BDC's BDC approximately Financial and net we're will loans own that of the to interest significant BDC's changes, premium has Apollo MidCap current Aligning asset of Difficulty] the minimum Financial provide this create issue [Technical transaction, BDC sourced million primarily of announce trading alignment subject BDC with value, fees the which will from be strategy; first third, investing $XX reflects today's value to pleased second, Primary This connection investment change strong the MidCap on, a MiDCap at to The Equity by to with by which in to will investment approximately the connection In Financial period. name Corporation, hold Investment stock. a in Moving its elected originated X-year MidCap senior serves BDC Financial. investment Incorporation in BDC to representing made has million validate price. at strategy shares X.XX a investment

BDC. Financial of BDC today's to as or the BDC sake either call Throughout will in confusion as clarity, the the the both continue will to For Apollo to order we MFIC manage Global lender in refer and will avoid Financial on effective refer around XX. MidCap we changing the Bethesda. BDC's August and use - headquartered will will ticker be The changes be and letter to the MFIC particular to or MidCap

day-to-day to XXXX Hannan, Board, has XXXX President legacy Hester, years who been the least, that XXXX by Chairman and served since serve to and of Legal the the Chairman or promoted as who [ph] Chief a to BDCs now Ted Executive Chief joined as been I've leadership remain Financial BDC a monetization Tanner MFIC. was Head of has our over of in on brings Joe that Chief a Director Apollo McNulty, as was who a President the Executive Apollo's in as investment XXXX Institution. has who as will Powell, Apollo's in and promotions. role Direct experience legal who been Ted adviser. made expertise served not the continue been Apollo's Vice a will I Officer. Officer, has Glatt, the been has Moving Office role. Kristin been to successful Officer as Chairman. the named assets. contribution of the has partner has instrumental pleased promoted promoted senior BDC's new and several Officer role. in United in since is Legal of to the announce These Direct last my business years. our valuable team to since promotions served of for – the BDC He Origination Chief XXXX place but involved since in member I'm Tanner – John Managing of serve Last Kristin in Origination Investment management the over recognize promoted and Global as Ted States new well value

capitalize MidCap risk-adjusted the shareholders. market returns the benefit we are very allow leading about for which expect to today's will will Financial announcements, We on excited of attractive middle generate us and platform around which

to million with net $XX.X quarter per ended by share share some incentive $XX.XX, Results also of our stock prior asset quarter. below compared $X.XX or loss impact. We $X.XX fee the the interest higher investment was net the on Next, XX% reflects quarter the and lower accretive We results, quarter. or fee for portfolio period a summary during recurring XX,XXX, which down [Technical the We a at of repurchased recorded during Difficulty] the reflect a to prepayment quarter-over-quarter. X.X% income. offset partially moving of net June income,

switch distribution. focus Now to our our

from distributions XXXX. our are $X.XX XX, be the declared is the the rebuild believe to environment call We appropriate with investment over dividend Future fee at as combined forthcoming discuss shareholders the our raising appropriate. this this we quarterly we $X.XX base market our supplemental record to level dividend the in structure, share will September turn With I'll to have Powell of activity. portfolio, and that, per Tanner as Given of made the - payable time. with to combined progress reduction

Tanner Powell

relatively rates, in loan Credit as underwritten conditions. broader market to broader inflation, credit with interest M&A execution continue market and reduced of Beginning as to concerns loan environment, of to leveraged at can and Against fund however, we rates Howard. volatility about borrowers uncertain private level this irrespective solutions possible Thanks, geopolitical during fundamentals, chain weigh to issues Negative the flows This the rising a default agreed uncertainty market. liquid continue volatility a remained type lows. have market activity. on fully supply environment the stable with upon elevated backdrop, historical the recession, near contributed pricing sentiment. providers benefit experience market quarter, heavily hover markets public terms offer saw certain credit who macro of the

BDC, to new mentioned, the with as was for quarter Financial, Moving $X.X of very billion activity, during MidCap June sources it the investment originations. which investments Howard active

million For corporate totaled new XX commitments $XXX BDC, companies new million. for commitment the average across $XX.X an of lending

new lien by to million and a product lender new rate commitments commitments finance. loans life with first lending, our X.X XXX co-investment and were in $XX pursuant in weighted the All weighted made $XX order. of of leverage million remaining basis leveraged floating XX% of $XXX were commitments points spread times. net a average average approximately New were the million made in science lending quarter

from and the Excluding totaled million, the million. given for net net the We quarter leverage revolvers, ended $XXX for range our In totaled were end repayments investment was fundings the Net the paydown $XX $XXX. the post our million. X.XX the a totaled Financial, and and leverage repayments times. is paydowns including high quarter end Net with revolver close of target $XX in of end, fundings the gross approximately quarter the post visibility week, quarter $X aggregate, sales $XX quarter Adjusting X.XX at at million including net in million paydowns next of June Merck's currently net leverage MidCap times. end. cash for from which to expected impact is

As discussed business. by conference we on last to deemphasizing and of our the accelerate our servicing reduction selling investment aircraft in its Merck's intend call,

is Merck AINV's Finance aircraft know, company and representing value established fair and you the of global Gary Head a had of XX% $XXX for of led June, Apollo. Merck's XXXX of by portfolio. At million, As total Aviation successful management investment in in Rothschild, a leasing finance end the

reducing from XX. June sold aircraft, in the number During the the fleet Merck's planes of three to XX quarter,

constructive June, forward. investment At we received in sold to a global was were plans Merck's signs macroeconomic the under uncertain additional to purchase including income our in the environment, We the by the sell about expect two freighter flight planes Merck's, as activity, no are agreement, going the slowdown early daily Despite of which each in decline well owned and from fleet, of end a our feel quarter as we July. Merck's. in the there aircraft

fair our basis billion XXX the lending portfolio. and first investment portfolio XX% corporate a on lien. as value loan end The end of XXX $X.XX other spread of Turning the was to at represent weighted the XX portfolio Corporate of across and overall portfolio. industries. the of of XX% the the points Merck's had June corporate average companies lending of in June. XX% of was portfolio represented

impact the generally Our generally all believe higher although input from inflation, companies they to our portfolio are strong of continued through while we seeing. are not most, costs companies to experience performance, fundamental able pass of

weighted is impacted by supply less towards that Our issues. generally are and portfolio inflation chain industries

Moving to credit quality.

times, - the non-accrual June, of oil At on and results portfolio the No the to or X.X and investments non-accrual generate strong our delayed slight the status of At status the our fair funding interest the favorable. and the Our BDC our were credit term Greg the coverage small over placed also to June, repaid corporate of point quarter. flow the remain attachment average metrics assets end restored portfolio quarter weighted very times. leverage status during - investment value. X.X% weighted $X.X I end discuss balance during of draw weighted $X was lending million cash now and loan The total increase at accrual repayment that, $X investments weighted X.XX totaled average gas average was was which impact With of times, of quarter-over-quarter, lower net loans. financial to will the on turn call was to is leverage in detail. support to million average ratio and million. continues Glacier at to net X.X in a

Greg Hunt

good operations. to interest million impact down quarter. for down from lower due X.X% along was and Dividend status. Beginning down base The income Correspondingly, of income $XXX,XXX, was quarter, million everyone. you, of oil higher $X.X statement the from primarily lending the to investment which in as base prepayments. floating million quarter fee rate primarily rose million, due returning end at XXX facility for Prepayment last was up $X.X X.X% with $X.X interest quarterly $XX.X was quarter-over-quarter. Recurring Glacier quarter. flat Thank Tanner, basis accrual AINV rates, at end million the $XX.X income yield for on last to portfolio weighted weighted - the at was the interest income morning, up expenses on rate. portfolio of to Total approximately income with bears totaled higher interest quarter-over-quarter, Net of The higher March. $X.X was expense average related at increase remained to points. June, average our million, floating due due a our credit yield rates, the cost spread X% from the corporate the to quarter

fee As income hurdle AINV's look rolling incentive a back. a reminder, XX-month return total a includes on with

for Given income the quarter. quarter, net slightly investment $XX.X last fees from was the million totaled of $X.XX. loss incentive up million, $X.X Net

The [Technical lending we portfolio. market earnings investments in of quarter, valuation quarterly valued &X.XX into per addition recorded million of that primarily supplement, share gain in loss five [Technical July. over a vast the or corporate net factors. fee decrease past decrease the per by On the were from $X.XX yield of or Changes is Difficulty] to pleased loss quarter-over-quarter. in outlook end quarters. spreads $XX.X During loss our was to the in using NAV partially income portfolio a [Technical by majority the incorporated approach. we net at XX, disclosed the the a share of Difficulty] our are attributable other offset on net June Page The We relative was portfolio, Difficulty]

to quarter capacity, reference positioned revolver with we from on the unfunded well rates, our expect facility third that Our basis $X.XX our approximately quarter are with amend and XXX well benefit of Consistent estimate incremental interest remains rising to cadence, in respectfully. borrowers. historical liquidity credit annual to result We rates, point end in to [ph] commitments undrawn rate points position $X.XX excess of in increase earnings we XXX a basis [ph] in revolving based

of million Go with for our Kenneth million leaves up concludes quarter, open the And during buybacks, Instructions] first stock operator. repurchased $X.X repurchases. $XX.X This available [Operator the stock, Our questions. from which RBC ahead. of stock future call authorization our Capital. please AINV approximately question Lee to Regarding under remarks,

is line Your open.

Kenneth Lee

you for my Hi, question. Thank good taking morning.

strategic your based for the expectations or returns ROE investment shifting targeted as for announcement what seek strategy. initiatives as expected [ph] are Thanks. well on In you loan future What potentially secured the on terms of investments?

Tanner Powell

Yeah.

and demarcation really So away of investment, going first, the moving sort it's non-core - out a the I'd point not investment say really a think is exit strategy where shifted as of forward like, it's the we sort from we of Merck's. really story

just you same. ROE an you'd fees if criteria. say, that mean X%. like of the ROE, our increase said broader a stays in an that’s took The It's would just may and - I is approach set else and everything of apples-to-apples just meet the I neutral, So loans there's have

ROE, including every the yield increase ROE. but leverage now, which a sort So reduction were in rates, some assume XX% an interest of as case. raise reduction increase where should there's talking of the as the now, right in moving in parts some Obviously, around low like low we from increase and should Xs, XX% you about post-apple-to-apple the just from basis, thing- in you're ROE Xs base be to a it rising

Kenneth Lee

Got And one follow-up, there. helpful you. Very may. you. if Got I

having talked paydowns. in visibility some in You your about terms –

just you little Just wondering that? Thanks. behind if give could a detail

Tanner Powell

Yeah.

give I approximately Kenneth, - the thanks think to point the XXX would in guidance leverage. of know, for question. I terms we you [ph]

things number a the a of higher guidance equity XXX the of bit being as to, alluded strategic at also, there. were aligning of quarter. knowledge investment the little that as have made And We we investment, used slipped. then million But end

Kenneth Lee

helpful. Great. Thanks, again. Very

Operator

And our go from Joseph Jefferies. is question next with Kyle ahead. Please

open. line Your is

Kyle Joseph

Hey, give you those kind a guys I questions. repayments remainder expect kind good Just fee backdrop on, my to the be forward? given hand - near-term recognizing going macro really go you And is function but of hand? activity repayment year, there, the of muted about in anything the came just Obviously, that lot us down, of the for so of that taking talked volatility, that would apologies focusing A activity. on said a I'm if it income. and for repayment morning. you asked sense Can [ph] you I going impacted Thanks know

Tanner Powell

Yes.

volume of affects in and level Kyle, end at activity - think that said of it, us is I is terms there, repayments. down M&A you objectively the certainly

equal, things activity half of the back would all we of year, in absent prepared prepayments our remarks. the more expect so being And in muted that some I the alluded

Kyle Joseph

right What's inflation? what broadly ’XX? And down these of the expectations How adapting obviously, to remainder remains terms are outlook then what Got now. rising credit kind into for it. - with And of rates? are and more some here in of credit

Greg Hunt

Sure.

sorry, the have kind quarter, take that As and revenue portfolio XX our us we look at digit in and we roughly it our when sorry, showing and indicating a as both well, all book, leveraged last to in there's of never Difficulty] a mid-single-digit every know, costs broadly cost MFIC quarter, And labor was do in - [Technical - at high and going low change EBITDA growth, MidCap to saw companies. most growth quarter in resin then a in lot recent more cases, we of data, and companies to we more quarter. March loan the relates we also as you We know would the what lag challenges the affected up our have Kyle, supply recover.

And we're That we have aggregate, will and in these credit the or that so hold rated to continue. pronounced we companies our financing up the forward. place any the at equity feel said, where cushion continued to that of we going our more that and from a us those expect detachment weather underwriting, in do the volatility on challenges sponsor behind good risk credit terms

Kyle Joseph

Thanks my answering very much for questions. Got it.

Operator

And ahead. from we'll next Melissa JPMorgan. our take with Please Wedel question go

is line open. Your

Melissa Wedel

on the have if of been sounds around in two, a have lien on in wondering the today. you thinking the thinking run environment, questions asked, there you guess, one not to environment you my that already you'd and in about range in more shift, And first It shift your I is like through strategy? more that I them you're - But have is like do lower the might where I we current how any a was I'm increasing with few Thank that A target case. alignment yield. then bit within current think leverage. range of know, you. strategy an you leverage perhaps Appreciate the walk hoping but taking MidCap

Howard Widra

our last I mean of sort I - about, talked it was lien Look, our as the things. years, a we we Like Yeah. focus so like sort like - few of of, repeatedly particularly first think, felt couple not as over the then aggressive on the - proceeds, as leverage, from of not the I that book further obviously, and not in constituencies to given you of the all agreement direction, and a is point attachment said, even think our go sort complete cost with that, of that that. gone That know, is expect feedback capital. we is we've

so some we opposed And it you range XX we’re whether would to range moving moving not, is at XX or or to articulated know, expecting to you in as I to our either the can like say, as I operate what before down look our think XX. range XXX

so is that said around Tanner expectation is And our before. which X.XX to operate X.X, range,

a I leaning of So a goal the though lot conservative. our book say to unique changes investments And lower, get constituencies for investment would all are that profile among more is the being obviously, - feel made of will that, keys towards available a of even to hopefully, about. towards really look, structure that this the strongly we And we've here the a with individual relatively have a one BDCs.

parts that. in be lot And able a do to to of all we're focused so gives that of the fees and room the on reduction us

Tanner Powell

and with other also constituencies to on we the our on that that But be there then equity, leverage new enhances And emphasis would is approach go going as about also the point are we Yeah. structure, taking thinking our think our well Howard's forward. management the in understood from alignment. which fees all cost feedback

Melissa Wedel

little engage with that. could appreciate would team to guess you. that Thank And I any helpful there's follow-up, or the be if understand in will real change MidCap, your as the I interact a way Okay. team it terms some inside sort additionally Or like deeper things baseball and the we opportunities of dig platform? that Is leveraging there selection this just from that? in changes or of there. vetting, bit a are

Howard Widra

[indiscernible] MidCap manager how is I way is manager MFIC? the the the And it MidCap primary am Tanner of since things to sort operates. continue manager inception will portfolio of a Bethesda manager broad but and and move the Obviously, baseball no And is pretty is a the broader there of Tanner larger of since changes already XX to No, for about understand to XX the months only to Ted operate. before. and will will he's months primary and inside sort And sort months happen, for AINV be. inside important really as of like take and Apollo ago. just portfolio effectively role, baseball XX ago, ago, had role

is more at you so do And know, MidCap to that nothing these day-to-day connection has to do has with everything we changes. but then, been since

Melissa Wedel

Thanks, Howard.

Operator

Ryan to ahead. next KBW. go with go We'll Please Lynch

is Your line open.

Ryan Lynch

Hey, good morning.

past. with The rough were in you would just new closely from there into percentage first I you kind to had the to deals deals in ballpark participate MidCap kind AINV of historically AINV. with And guys because question was, could participate from the flow know deal hear sort knew to I What of structure, percentage MidCap MidCap? want deal necessarily historically what ballpark flow some I of from the fit with of would work what of just then change expect more I at access lower that hear loans MidCap. of sort in like could I because

Howard Widra

estate. Well, variety anyway to BDC assets, so fit generally, MidCap of which real like like some are overall, mandate originates still a of

the on lending. products say which So But a said, in originated. related the percentage percentage And of you of deals Difficulty] to just That deals. and have [Technical bit MidCap so the that and is there's sort the categories. of had let product of XXX little me deals narrow asset-based of ballpark lot those that overall effectively, closed or XXX year a in a if a

deals of can amount available. of about now a of so those are And available the in categories slice we bunch it in sort double that

that asset-based so sort And cheap, some of out in the really, its they balance kept end almost that make of what categories the part valuation sort relative those ones vast the in categories. on doesn't the on relevant that of being that majority they're loans don't smaller could from deals but the size up too sheet what everything because once divided smaller allocations But or are just small ones kept of down those of based is out the sense cost it perspective. there's

Ryan Lynch

I what are been put a thinking of way or accelerating on fee spread point goes spread helpful. has then new of effect historically. is what higher. change you But into meaningful that what obviously about think Okay. it That's your or going in there know - to don't because the from done And are to is guys terms or best if willing rate you new books you [Technical expecting loans the this structure done you've have forward Difficulty] historically when versus yield

changes So if love hear from there expect is of to - I’d just should what standpoint? sort that we

Howard Widra

like spread go about started is is this got meaning and first having we overall between to as So difference have down afterwards the sense. what this seems caveat basis that you XX like shareholders the or I make lower basically that know, [indiscernible] is out, penciling guess the I would what spread say and points, split that from something would - the and I'll

That that's don't we to average that said, And a widening lot. right happen are now because on portfolio. the spreads spend expect so

that a higher, grow go loans be continue So forget issue. continue opportunity going - the And separate up, because to to even we'll to with an and yields expect like worse rate into contraction, have base rates would especially That's there'll asset-based more higher widening. if we that's a category. a be or we recession to

the like XX of stay would thinking about expect we but offset book now, say basis in what that to we So be XX, points. meaning will down with reduction, spreads we our the average right think originally is pretty increase spreads been stable, I in – market would comfortable sort the

Ryan Lynch

year? it down the are going, XX, where probably could happen points, is So spreads which wind that in basis XX won't have

Howard Widra

Right.

Ryan Lynch

your logical lastly, area that And solutions, then much base change doesn't in would co-invest solutions? decrease [indiscernible] marketplace. broader market actually that to it this Or to really that Obviously, which something market grow to or metal the interested participating upper we maybe as like MidCap’s is position participate of change. something participated this willingness Does a then in that power and in change in? that middle with not debt don't just space like that is be sound MidCap Is expect lot. that has or really

Howard Widra

sponsored think a call I overlap don't million cash to think rest in flow. the focus is with see sponsors sort between the I million of synergy, largest origination $XX sponsors. Apollo's of big there of No, very want channel of deals mean the The something, sort $XXX track change, you I combined team all and the whatever almost is and on between on you'll

And of on middle underwriting. for depending We to in certainly sponsors. PDC execution others the know be the the that There's option do. shared the there can deal those in participate so ranges might the each

example, those and if times, so got ADS I if of million and and with at X deal, managed don't if very ADS, - and are part good loans profitable that's came have to the it's not AINV it's refi, the of million, $XXX will know strategy. $XXX bunch especially done that they for deal not $XX By million there million generally, a to of could and any and many strong There's that is with deal in six is there EBITDA will sort company of are a to that grow relationship well more for say bigger than other on credit. it that. portion you capping a the core do then that say, being potentially as ADS very reason grow, grow company we there the AINV channel, is as always can always $XXX same well. sort core times, token, of are chance tend not be know, Actually, we I'll is because with, our So our of sort this But to strategy, a AINV a we MidCap by that's accounts. a of

totally part is be of brands I nothing will But this know you'll the - So that [ph], overlap. of overlap assets. I'm you think overlap, sort communication but and XX% changed, that see And up scope making separate. from

Ryan Lynch

track. also shareholders much just line and reduction very you to appreciate appreciate I with in federal right. the and All this execute questions my fees Okay. the taking overall

Howard Widra

Thanks.

Operator

James. next of The Dodd ahead. go Robert question Raymond with Please

is line open. Your

Robert Dodd

And of my Hi. most asked morning. good Thanks question. and Ryan just

do program, have The quarter. one. dividend dividend I obviously did base So you another this

supplemental the Obviously, going Looking covering is at dividend, Can this have you're you program, appropriate give on earnings at XX-ish with that new I to structure any this to reinstituted you think January. be ROE certainly. or us color any would are the be prepared likely the there? dividend of color? back already stock previously excess said you the But color any fee is until under kind you fee had plan hope the of it what quarter, expanding sub base no any

Howard Widra

Yes.

will had each said base dividend we we of much a quarter. pretty to declare supplement, our amount previously, So equal the

we to declared we have raise changes, substantial time, rate and and over these spillover think the they're will once well in - ability amount sort which Merck’s right and Difficulty] changes, goal substantial And is that’s the as each now paid as these and where over do through X over think to our - earnings changes real With or over interest and as on a I where we our dividend that. our overall we whether continually of we over the until dividend [Technical time quarters evidence, also have quarter year time, a and plays were. declared depend there will both

covering to expect we're going - paid taxes. we're stay So there pay the to in excise compliance. meaningful is, not because We're supplemental answer be really to - distribute going yes, dividends we there's to the

distribute there's least promise that sort quarter. our dividend base we got at our chances these we you're of once did will of power, just - $X.XX and if but the what each of that supplemental room, rid a So bit But we raised quite at where in. more is we standing than effectively, you we we kick have substantially look earnings that right,

Robert Dodd

Got it. Thank you. Thank you.

Operator

go Please ahead. Derek go with of to Instructions] [Operator And next we'll Hewett America. Bank

open. line Your is

Derek Hewett

Congratulations question the credit. enhanced and the alignment. promotions on My you. around revolves Thank shareholder

the times rate debt overall to and trend think would benchmark had and the closer interest based service would interest - on growth. X.X where rise today? how I comments you before coverage portfolio high and comment coverage of on kind forward I need So on one the EBITDA given versus to curve, coverage, Could you guess, MidCap the mentioned time

Greg Hunt

seen, with need cash rising using follow they're know, rising we're the up know, our kind of actual in we at then might in portfolio the advance we've particular to remarks, environment, that X.X as contracts in interest Sure. of said when you period. Yes. the companies, But expense like you specifics. historically. And we probably - rate environment And prepared our as a times. LIBOR especially I through run actually we're

a average, X.X right But on or side math of good that deal on our and cushion sub-X the enterprises the one better to excess has the there, opposed of to do that we XX that lot aspects so interest we're to basis today, in reflects XXX can senior with X was the in MidCap it And of we probably, but that is the more strategy which see is increase times, XXX, lower-levered mid-Xs. we thus And of average, and kind news. points, revert. of on into ago LIBOR, months stretched rates. something kind equipped and like are which now, the be at in as And deploying of more

Derek Hewett

excluding And just the But portion portfolio that. - MidCap? BDC I with this of in portfolio, might missed for you co-invested BDC of Thank of Okay. have terms of the kind then overlap, was Merck’s, also what the earlier. terms portfolio in

Greg Hunt

XX%, XX%.

Derek Hewett

Okay…

Howard Widra

Darn near XXX.

Derek Hewett

great. Thank Okay, you.

Operator

from question our Please O'Shea And go with next Finian Wells we'll take Fargo. ahead.

Finian O'Shea

everyone. Hi,

investing they the I on the So third-party you by MidCap But us look said to First, inside. a how changes there's of I that right? you earlier can material concession there? do has no think investors it? NAV, bridge are follow-on there at think color there, made the sort provide you Any question, could to at

Howard Widra

MidCap relationship Sure. as Apollo economic manager. with mean, has I its an

that sort economic with the all Apollo, as of part take is we of relationship into so adjusted – its aligning time. account And investment, which part

been all example, we been way manager. despite gets BDCs as the have that's origination, anywhere AINV that that is As an those you before up other kept has fact would have Apollo full that effectively right? taken be shareholders It's origination trued some great have that that the something The MidCap, has paid done of to deals, full that Apollo, and as manager. MFIC there that pains getting for the to AINV economics. paid they're economics profits like including irrelevant a MidCap now other than know, on ensure

and and market. of with to of implicated Apollo economic sort growth so growing investment and strategic across the footprint of really MidCap’s the footprint the Apollo’s as strategic what and - for sort whole middle because we relationship AINV And an broaden MidCap is are this important MidCap important is

AINV And so for to really grow. our goal is

of this it's the lots economics like so of there's investment between sort that two but sense And also unrelated strategically, makes parties. it are to

Finian O'Shea

Great. a your or on to is sort secondaries, talk of just what initial formation on That's there - to you really and shareholder there event - some potential the drive raising would helpful. and asset I public private are fall look on ask capital then of or growth spectrum, their you out was would yes, private about sorry public future expanding to about just like? lot sort There net any of you And might - keep performance where base very periodic thoughts? on better the some models above in and Can going plans this value. future

Howard Widra

we is I Yes. assets think of invest right capital now. much mean in base than the - quality to I larger think opportunity AINVs this there

current our well. to there of of are that drag in interesting because thing a well our for that talked also generating that conflict drive in And them opportunity to still above and cover of invest of meaning supplemental as think old conscious and good dividend on Obviously, we at don't to returns as well things to capital bit us, some we've upside now. sort NAV, being interest is, shareholder we're little we're those before. a and have that's not confident though of people drive NAV or income. it of for assets The sort would able our So for we for a about is the earnings sort ability right still grow

spreads And or a that out so raising it's money the base, and - above to existing over shareholders. itself at even NAV broader NAV,

of think our - is NAV to the traded would the expect support sort because answer there's So just to if capital, that we enough opportunities above we grow we there.

the and MidCap amount can of… see of now you As amount from the coming origination through

Finian O'Shea

progressive made. all for helpful. you taking moves all very And questions. Sure, the Thanks the appreciate

Operator

the [ph] Steve come will And next with ahead. Rider Please question go from Investments

Unidentified Analyst

overall question. on the for the thanks Hi, resets. congrats And positioning

questions. two So

both a argue to and errors MidCap kind of even leverage of that goals. could to X.XX broad X.X loan the be where as is closer ecosystem at very and is trade yield something own that at leverage second, at NAV sort growth around AA months given First and its how plotting loan I - and Apollo? portfolio how align X on non-traded vehicle heading? level limitation maybe with NAV given versus dependency book X.X, then the -- X.XX X.X one investors, comfortable raise the given billion within [ph] trading would X up following and ADS, on to at $X really on Apollo of within [indiscernible] the to think in channel around to always to to though grow REIT just is second, mentioned you have third-party the best given And through to capital, equity

Howard Widra

with loaded with in if CLOs risk of is based So see regard AAA question of, lever of discussion X.X MidCap that the the to AA levers pool or our the all we a is on first loans hairs. X.X, right related bridge X.X, higher. this within and to splitting regard on it that to times, It's

we like markets to have move get BDC enough lever under of the rules. that's a times headroom things very from marked. have more than perspective, so you two sort can't and how because And safe. control fact, you is in The felt risk always issue And can't we

and the And so are the talking investors rating analyst, like outside that room. we're constituencies about comfortable what with more agencies

marks. taken also agree, we've a So headroom. like pace from less have perspective, fine. type is great of to there our we in very be that diversified and volatile assets, to We We concentration discussion - portfolio, because those believe has splitting get the have risk of we

be with are BDCs. people we that the comfortable at end So can pain of high for

we to we're - the is point that think, So I be everybody moving meaningful, is that range want it down, shows at like where comfortable.

vehicle, in to the every and with are have money that's liquidity the fees. NAV structures, - as different better at raise each cons Private and some than quarter With vehicle. best pros are better first being the there's others. answer. which regard BDCs They ways less. have They at So fee of mark not but

this this for I the finance broadly assets as the probable would individual changes of a I assets. making of these is, say, of want And possible. And make access investment, as think, investors these democratization an overall, and [indiscernible] it's so theme who to type

the gives daily you you individual pros is because the fees, and but liquidity, option, period. and it invest actually good MidCap people Given another in if to MidCap investing compare fairly cons, it in compare which to

either of rest those the co-mingle to sort then can actually visuals assets. You take

ability these that The at in is traditional. different be not fees terribly institutions to need these those assets and to need structures. paying get You the are fees is to

on if and XX look said, think Apollo a overall over really allows obviously, to think. that it's it way next want years, to but we the good And grow assets, this of always and actually a a is at meaningful. think what's And I people to assets you them. sort access X of grow to grow assets, is grow pretty so assets focus way set Apollo's assets And in I

answers that your question. hopefully, So

Unidentified Analyst

Thank good so the much. And perfect. Yes, for thanks you work.

Operator

any at to And the there for remarks. I’ll management turn time. further no are this it questions over closing

Howard Widra

any day. listening the thank Feel out you Have of time And today. questions. thank behalf On call. for free have reach Thanks. for good a you if everybody, to your today's to you team,

Operator

today's conclude does this And for call. participation. Thank your you you. Thank

disconnect time. at any may You

MidCap Financial Investment (MFIC) 2 Aug 222023 Q1 Earnings call transcript