Barings Participation Investors Reports Preliminary First Quarter 2024 Results and Announces Increased Quarterly Cash Dividend Of $0.36 Per Share

Rhea-AI Summary

Barings Participation Investors (NYSE: MPV) reported preliminary financial results for Q1 2024, showing an increase in net investment income to $0.36 per share from $0.33 in Q4 2023. Net realized gains were $0.11 per share, up from $0.02 per share. The net increase in net assets from operations was $0.47 per share, compared to $0.42 per share in the prior quarter.

The Board announced a quarterly cash dividend of $0.36 per share, a 2.9% increase over the previous dividend. Total investment income for the quarter was $4.9 million, with a net increase in NAV per share to $15.88 from $15.41.

Recent activities include eight new investments totaling $6.1 million and 28 add-on investments totaling $4.0 million. The Trust had $4.0 million in cash and $18 million of borrowings as of March 31, 2024.

Positive

• Net investment income increased to $0.36 per share from $0.33 per share in Q4 2023.
• Net realized gains rose to $0.11 per share from $0.02 per share.
• Net increase in net assets from operations was $0.47 per share, up from $0.42.
• Quarterly cash dividend increased to $0.36 per share, a 2.9% rise.
• Total investment income for the quarter was $4.9 million.
• NAV per share increased to $15.88 from $15.41 in the prior quarter.
• Made eight new investments totaling $6.1 million.
• Conducted 28 add-on investments totaling $4.0 million.

Negative

• Net unrealized appreciation decreased to $0.03 per share from $0.06.
• The Trust had $18 million of borrowings outstanding.
• Unfunded commitments stood at $9.5 million.

Insights

Financial Analyst

The latest financial results from Barings Participation Investors indicate a positive trajectory for the Trust. Net investment income has increased to $0.36 per share from $0.33 per share in the previous quarter, driven by higher base rates. This uptick signifies a robust income stream and effective portfolio management. Investors should also note the increase in net asset value (NAV) per share from $15.41 to $15.88, reflecting the Trust's strong asset appreciation and gains.

Additionally, the announcement of a quarterly dividend increase to $0.36 per share—marking the seventh consecutive quarterly increase—enhances the Trust's attractiveness to income-focused investors. Dividend increases often signal management's confidence in the sustainability of earnings and the underlying strength of the portfolio.

However, investors should be mindful of the Trust’s borrowings, currently at $18 million, which could impact future cash flows and risk profile. Overall, the Trust's performance and strategic investments in high-quality, defensively positioned businesses provide a positive outlook for stakeholders.

Market Research Analyst

From a market perspective, the Trust’s strategy of focusing on 1st lien senior secured middle-market investments is particularly noteworthy. This approach involves lending to mid-sized companies with significant collateral, ensuring a higher degree of security and priority in case of defaults. It is a defensive strategy that can weather economic fluctuations, which is beneficial for risk-averse investors.

The Trust's ability to originate new investments totaling $6.1 million and add-on investments of $4.0 million demonstrates a solid pipeline and effective capital deployment. In contrast, the repayment of five loans at par and realization of two equity investments show a balanced approach to managing liquidity and recycling capital.

The overall market might see this as a sign of effective investment management and operational strength, making Barings Participation Investors a potentially attractive choice for investors looking for stable returns combined with a prudent investment strategy.

Dividend Analyst

The increase in quarterly cash dividend to $0.36 per share, up by 2.9% from the previous dividend, is significant for income investors. Consistent and increasing dividends are often indicative of a company's strong financial health and its management's commitment to returning value to shareholders. For retail investors, this can be especially appealing as it provides a reliable income stream.

Moreover, the Trust's history of seven consecutive quarterly dividend increases enhances its reputation as a dependable dividend payer. This track record can bolster investor confidence and potentially attract more income-seeking investors. However, it is important for investors to keep an eye on the Trust's earnings and cash flow to ensure that the dividend increases are sustainable in the long run.

CHARLOTTE, N.C.CHARLOTTE, N.C.--(BUSINESS WIRE)-- The Board of Trustees of Barings Participation Investors (NYSE: MPV) (the "Trust") met on May 16, 2024 and would like to report its preliminary financial results for the first quarter of 2024.

Financial Highlights(1)	Three Months Ended March 31, 2024				Three Months Ended December 31, 2023
	Total Amount		Per Share(5)		Total Amount		Per Share(4)
Net investment income(2)	$	3,803,027	$	0.36	$	3,529,750	$	0.33
Net realized (losses) / gains(3)	$	1,215,599	$	.11	$	198,004	$	0.02
Net unrealized appreciation	$	369,810	$	0.03	$	631,658	$	0.06
Net increase in net assets resulting from operations	$	5,018,627	$	0.47	$	4,449,487	$	0.42
Total net assets (equity)	$	168,705,696	$	15.88	$	163,366,715	$	15.41

(1) All figures for 2024 are unaudited

(2) December 31, 2023 figures net of approximately $0.04 per share of excise tax.

(3) December 31, 2023 figures net of approximately $0.01 per share of capital gains tax

(4) Based on shares outstanding at the end of the period of 10,601,700

(5) Based on shares outstanding at the end of the period of 10,622,421

Key Highlights:

Commenting on the quarter, Christina Emery, President, stated, "The Trust earned $0.36 per share of net investment income, net of taxes, for the first quarter of 2024, compared to $0.33 per share in the previous quarter. The increase in net investment income was predominantly due to higher base rates. During the quarter, Barings continued to drive origination flow into quality, 1st lien senior secured middle-market investments. When constructing portfolios, we focus on investing in high-quality businesses that are leaders in their space and offer defensive characteristics that will allow them to perform through economic cycles.”

The Board of Trustees declared a quarterly dividend of $0.36 per share, payable on June 14, 2024, to shareholders of record on May 31, 2024. This represents an increase of $0.01 per share or 2.9% over the previous dividend of $0.35 per share and the seventh consecutive quarterly increase.

During the three months ended March 31, 2024, the Trust reported total investment income of $4.9 million, net investment income of $3.8 million, or $0.36 per share, and a net increase in net assets resulting from operations of $5.3 million, or $0.50 per share.

Net asset value ("NAV") per share as of March 31, 2024, was $15.88, as compared to $15.41 as of December 31, 2023. The increase in NAV per share was primarily attributable to net investment income, net of taxes, of $0.36 per share, net unrealized appreciation on the Trust’s investment portfolio of approximately $0.03 per share and net realized gain on investments, net of taxes, of $.08 per share.

The next scheduled meeting of the Board of Trustees will be held on August 15, 2024.

Recent Portfolio Activity

During the three months ended March 31, 2024, the Trust made eight new investments totaling $6.1 million and 28 add-on investments in existing portfolio companies totaling $4.0 million. During the three months ended March 31, 2024, the Trust had five loans repaid at par totaling $9.5 million and two equity investments were realized totaling $1.0 million.

Liquidity and Capitalization

As of March 31, 2024, the Trust had cash of $4.0 million and $18 million of borrowings outstanding. The Trust had unfunded commitments of $9.5 million as of March 31, 2024.

Net Capital Gains

The Trust realized net capital gains of $897,805 or $0.08 per share during the quarter ended March 31, 2024. By comparison, for the quarter ended December 31, 2023, the Trust realized net capital gains of $198,004 or $0.02 per share.

Annual Meeting

At the Annual Meeting, which was held on Thursday, May 16, 2024, shareholders elected Clifford M. Noreen as an Interested Trustee and Edward P. Grace III as an Independent Trustee, each for three-year terms.

About Barings Participation Investors

Barings Participation Investors is a closed-end management investment company advised by Barings LLC. Its shares are traded on the New York Stock Exchange under the trading symbol ("MPV").

About Barings LLC

Barings is a $406+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment. Learn more at www.barings.com.

*Assets under management as of March 31, 2024

Per share amounts are rounded to the nearest cent.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

Cautionary Notice: Certain statements contained in this press release may be "forward-looking" statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made and which reflect management’s current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. These statements are subject to change at any time based upon economic, market or other conditions and may not be relied upon as investment advice or an indication of the fund's trading intent. References to specific securities are not recommendations of such securities, and may not be representative of the fund's current or future investments. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240516111988/en/

MediaRelations@barings.com

Source: Barings Participation Investors

FAQ

What were the net investment income per share for MPV in Q1 2024?

The net investment income per share for MPV in Q1 2024 was $0.36.

How much was the quarterly cash dividend declared by MPV in Q1 2024?

The quarterly cash dividend declared by MPV in Q1 2024 was $0.36 per share.

What was the increase in NAV per share for MPV in Q1 2024?

The NAV per share for MPV increased to $15.88 in Q1 2024 from $15.41 in Q4 2023.

How many new investments did MPV make in Q1 2024?

MPV made eight new investments totaling $6.1 million in Q1 2024.

What were MPV's borrowings as of March 31, 2024?

MPV had borrowings totaling $18 million as of March 31, 2024.

How did net realized gains per share change for MPV in Q1 2024?

Net realized gains per share for MPV increased to $0.11 in Q1 2024 from $0.02 in Q4 2023.

What was MPV's total investment income in Q1 2024?

MPV's total investment income was $4.9 million in Q1 2024.

What was the net increase in net assets from operations per share for MPV in Q1 2024?

The net increase in net assets from operations per share for MPV in Q1 2024 was $0.47.