Prospect Capital Corporation Closes $764 Million of New Investments in Fiscal Year June 2024

Rhea-AI Summary

Prospect Capital (NASDAQ: PSEC) closed $764 million of new investments during its fiscal year ended June 30, 2024, investing in 38 new and existing portfolio companies. Notably, 91% of PSEC's originations were first lien, senior secured loans. Key investments included:

• $56 million in clinical trial services
• $60 million in business process outsourcing
• $26 million in healthcare services
• $30 million in direct-to-consumer marketing
• $37 million in logistics services
• $13 million in furniture provision
• $10 million in home-based infusion pharmacy services
• $20 million in branded jewelry design

As of October 14, 2024, Prospect is processing an investment pipeline of over $350 million, with transactions still under due diligence and analysis.

Positive

• Closed $764 million of new investments in fiscal year 2024
• 91% of originations were first lien, senior secured loans
• Diversified investments across multiple sectors
• Processing a pipeline of over $350 million in potential investments

Negative

• None.

Insights

Financial Analyst

Prospect Capital 's $764 million in new investments during fiscal year 2024 demonstrates strong deal flow and capital deployment. The 91% allocation to first lien, senior secured loans indicates a focus on lower-risk investments, which is prudent in the current economic environment. The diversification across 38 portfolio companies helps mitigate risk.

Key highlights include:

• Investments in high-growth sectors like healthcare, technology and business services
• Focus on add-on acquisitions and refinancing, suggesting support for portfolio company growth
• Potential for income generation through interest payments on loans

The $350 million investment pipeline indicates continued growth potential. However, investors should note that pipeline deals are not guaranteed to close. The company's ability to consistently deploy capital and generate returns will be important for maintaining its dividend and supporting the stock price.

Market Research Analyst

Prospect Capital's investment strategy aligns with current market trends, focusing on resilient sectors like healthcare and technology. The emphasis on first lien loans provides a degree of downside protection in an uncertain economic environment. The company's ability to close deals across various industries demonstrates adaptability and a broad network.

Key market implications:

• Increased competition for quality deals may pressure yields
• Rising interest rates could benefit PSEC's floating rate loans
• Economic uncertainties may increase default risks in certain sectors

Investors should monitor PSEC's ability to maintain deal flow and loan quality as market conditions evolve. The company's performance relative to peers in the BDC sector will be a important benchmark for assessing its competitive position and potential stock performance.

NEW YORK, Oct. 15, 2024 (GLOBE NEWSWIRE) -- Prospect Capital Corporation (NASDAQ: PSEC) (“Prospect”) closed $764 million of new investments during its fiscal year ended June 30, 2024, investing in 38 new and existing portfolio companies.

91% of PSEC’s originations during fiscal year 2024 were first lien, senior secured loans.

Selected investments in both new and existing portfolio companies during fiscal year 2024 include:

• $56 million of first lien loans to refinance the debt of a provider of clinical trial services. The company is a clinical development services provider that operates and conducts clinical trials for pharmaceutical and biotechnology customers.
• $60 million of primarily first lien loans to finance an acquisition of a provider of business process outsourcing solutions. The company provides customer experience services and business process outsourcing services, which includes customer call centers, online chat, text message, and general ‘contact center as a service’.
• $26 million of primarily first lien loans to finance an acquisition of a healthcare services provider. The company is a detox and rehabilitation provider that offers residential inpatient treatment, partial hospital programs, and intensive outpatient care in multiple restore facilities.
• $30 million of a first lien loan to finance a shareholder distribution for a direct-to-consumer marketing company. The company is a direct marketer and distributor of modern-era government-issued gold and silver coins.
• $37 million of primarily first lien loans to finance an add-on acquisition and shareholder distribution for a logistics service provider. The company provides turnkey inventory management and transportation services.
• $13 million of a first lien loan to finance an add-on acquisition by a furniture provider. The company provides furniture and furnishings to residential and commercial end markets, including churches, hospitality, offices, restaurants, and schools.
• $10 million of first lien loans for a healthcare services provider in a secondary transaction. The company is a home-based infusion pharmacy services provider serving patients with chronic conditions.
• $20 million of first lien loans to finance a shareholder distribution of a branded jeweler designer. The company is a designer and retailer of distinctive handcrafted gold-plated women’s jewelry decorated with semi-precious stones, including necklaces, bracelets, rings, and earrings.

In addition, as of October 14, 2024, Prospect is processing an investment pipeline of more than $350 million, which includes transactions where due diligence and analysis are still in process.

The investment pipeline includes transactions for which a formal mandate, letter of intent, or signed commitment may or may not have been issued. The consummation of any of the investments in this pipeline depends upon, among other things, one or more of the following: satisfactory completion of Prospect’s due diligence investigation of the prospective portfolio company, Prospect’s acceptance of the terms and structure of such investment, and the execution and delivery of transaction documentation satisfactory to Prospect. In addition, Prospect may sell all or a portion of these investments and certain of these investments may result in the repayment of existing investments. Prospect cannot assure you that it will make any of these investments or that Prospect will sell all or any portion of these investments.

About Prospect Capital Corporation

Prospect is a business development company that focuses on lending to and investing in private businesses. Prospect’s investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.

Prospect has elected to be treated as a business development company under the Investment Company Act of 1940 (“1940 Act”). Prospect is required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal and state rules and regulations. We have elected to be treated as a regulated investment company under the Internal Revenue Code of 1986.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, whose safe harbor for forward-looking statements does not apply to business development companies. Any such statements, other than statements of historical fact, are highly likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under our control, and that we may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from any forward-looking statements. Such statements speak only as of the time when made, and we undertake no obligation to update any such statement now or in the future.

For further information, contact:

Grier Eliasek, President and Chief Operating Officer

grier@prospectcap.com

Telephone (212) 448-0702

FAQ

What was the total value of new investments closed by PSEC in fiscal year 2024?

Prospect Capital (PSEC) closed $764 million of new investments during its fiscal year ended June 30, 2024.

How many new and existing portfolio companies did PSEC invest in during fiscal year 2024?

PSEC invested in 38 new and existing portfolio companies during fiscal year 2024.

What percentage of PSEC's originations in fiscal year 2024 were first lien, senior secured loans?

91% of PSEC's originations during fiscal year 2024 were first lien, senior secured loans.

What is the value of PSEC's current investment pipeline as of October 14, 2024?

As of October 14, 2024, Prospect Capital (PSEC) is processing an investment pipeline of more than $350 million.