The following is a summary of the Fidus Investment (FDUS) Q3 2024 Earnings Call Transcript:
Financial Performance:
Fidus Investment reported record interest income of $33.7 million, driven by growth in its debt portfolio which increased by 20%.
Adjusted net investment income (NII) for the quarter grew 12.3% to $20.4 million. NII per share was $0.61, covering the base dividend of $0.43 per share.
Net asset value increased to $658.8 million from $589.5 million at the end of the previous year, reflecting an 11.8% increase. Per share net asset value was $19.42.Total investment income for the quarter was $38.4 million, a $2.7 million increase compared to the second quarter.
Total expenses decreased to $17 million, driven by lower capital gains fee accrual.
The portfolio's fair value stood at $1.1 billion, equating to 101.5% of cost.
Business Progress:
Fidus Investment received a new SBIC license, enhancing future funding capabilities.
Originations totaled $65.9 million for the quarter, including investments in three new portfolio companies and follow-ons in existing investments.
Debt investments dominated the portfolio with $62.7 million invested mostly in first lien securities, consistent with the company's focus on securing investments with equity cushions.
Exiting activity included $50.8 million from repayments and realization, accentuating active portfolio management.
Equity investments in portfolio companies remain a strategic focus, contributing to enhanced returns with $10.6 million in net gains from equity investments realized during the first nine months of the year.
Opportunities:
Continued growth in the debt portfolio and access to new funding under the SBIC license may enable Fidus to leverage investment opportunities in high-quality, cash-generating businesses within the lower middle market.
Risks:
The lower middle market's fluctuating investment and repayment activity could impact portfolio stability, necessitating diligent risk management and credit assessment.
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