THE
COMPANY
Overview
We
are a Maryland corporation that was formed in April 2016. We operate as a closed-end, externally managed, non-diversified management investment
company that has elected to be regulated as a BDC under the Investment Company Act. In addition, for tax purposes, we elected to be treated
as a RIC under the Code, beginning with our tax year starting October 1, 2016.
We
seek to generate both income and capital appreciation through debt and income-generating equity investments, including investments in
specialty finance businesses.
To
achieve our investment objective, we invest in secured and senior secured debt instruments of middle market companies, as well as income-generating
equity investments in specialty finance companies, that we believe offer sufficient downside protection and have the potential to generate
attractive returns. We generally define middle market companies as companies with enterprise values between $100 million and $2 billion.
We
also make investments throughout other portions of a company’s capital structure, including subordinated debt, mezzanine debt, and
equity or equity-linked securities. We source these transactions directly with issuers and in the secondary markets through relationships
with industry professionals.
Our
Portfolio at June 30, 2023
A
list of the industries in which we have invested as of June 30, 2023 may be found in “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.” Set forth below is a brief description of each company representing greater than
5% of the fair market value of our portfolio, excluding short-term investments, at June 30, 2023.
American
Coastal Insurance Corporation (f/k/a United Insurance Holdings Corp.)
ACIC
is the holding company for American Coastal Insurance Company, Interboro Insurance Company and affiliated companies. ACIC is
primarily engaged in sourcing, writing and servicing personal and commercial residential property and casualty insurance policies in
the United States, primarily in Florida and New York. ACIC’s most significant line of business is in providing commercial
multi-peril property insurance for residential condominium associations and apartments in Florida. American Coastal Insurance
Company has the #1 market share of commercial residential property insurance for condominium associations in Florida (commercial
lines). All of the commercial lines business is administered through an exclusive agreement with an outside managing general
underwriter, AmRisc, LLC, a Truist Financial Corporation (NYSE: TFC) subsidiary. Given ACIC’s concentration to the Florida
property and casualty market, it is subject to various risks including fluctuations in inflation impacting loss estimates, judicial
decisions, legislative changes, regulatory oversight, and changes in claims handling procedures.
First
Brands, Inc.
First
Brands, Inc. (“First Brands”) is a global automotive parts company that develops, markets and sells premium products through
a portfolio of market-leading brands, offering best-in-class technology, industry-leading engineering capabilities and superior customer
service. First Brands manufactures automotive and industrial components for the automotive aftermarket, original equipment and industrial
markets and has built long standing relationships with key aftermarket customers including multiple national retail chains and automotive
and industrial equipment makers. First Brands stands as a market leader in the expansive and stable automotive aftermarket industry, consistently
securing either the #1 or #2 position across its core product categories. First Brands’ Brake Component segment leads the market
with its Centric, Raybestos, Specialty and private label offerings, capturing around 26% of the aftermarket brake components market.
First Brands’ Filter Products segment also holds a leading market position, thanks to its FRAM and Champion Laboratory and private label
brands, which together hold a 30% market share. First Brands’ Wiper Segment is the top supplier of aftermarket wiper blades, boasting
a commanding 37% market share through its Trico, ANCO, Michelin and private label products.
Prestige
Capital Finance, LLC
Prestige
is a commercial finance company specializing in providing invoice financing services. Prestige provides clients with an opportunity
to sell individual accounts receivable for an upfront payment. Prestige serves clients across a wide range of industries with between
$100 thousand and $10 million of accounts receivable. Prestige has been in business for over 30 years and factored over $6 billion in
transactions during that time.
Sterling
Commercial Credit, LLC
Sterling
is a specialty finance company providing asset based loans between $2 and $30 million. Sterling is an industry-leading commercial lending
partner for growth-minded entrepreneurs, private equity firms and M&A professionals. Sterling focuses on providing capital for growth,
acquisitions and corporate repositioning strategies.
Universal
Fiber Systems
Universal
Fiber Systems (“Universal Fiber”) is a global leader in the production of uniquely colored and high-quality,
solution-dyed synthetic filament-based fibers. Universal Fiber serves customers in the flooring, automotive, transportation, medical
and industrial fiber industries. Universal Fiber’s product offering consists of synthetic fibers extruded from a variety
of polymers in a wide range of color combinations, sizes and chemical formulations. Universal Fiber’s ability to produce
a broad range of fiber types including Nylon 6,6, Nylon 6, polyethylene terephthalate and polytrimethylene terephthalate, among
others, allows it to shift production based on customer or market demand. However, Universal Fiber focuses the majority of its
production capabilities on Nylon 6,6, which is produced by only a few other manufacturers in the market due to the complexity
involved in working with the raw material. UFI is Universal Fiber’s largest division representing 65-70% of total sales
and this segment supplies the commercial carpet, automotive carpet and residential carpet markets with a 50% and 40% market share
within the North American independent fiber producer market for commercial and automotive carpets, respectively. Universal
Fiber sells to a diverse set of customers across the world with no single customer responsible for greater than 17% of its
sales. Universal Fiber generates about 70% of its sales in North America with 15% coming from both Europe and Asia,
respectively.