Crescent Capital BDC, Inc. (NASDAQ:CCAP) Q3 2023 Earnings Call Transcript

Ryan Lynch: The other question I had was, I think you said 26% of the FCRD portfolio has been realized at this point. I’m just curious, from an aggregate level of those investments exited, do you know what sort of value you guys got versus what you guys purchased those investments for? And then separately, on that point, it sounds like some of them were kind of exited in a normal course and maybe sounds like you’re proactive in some of those exits. If the M&A environment does pick up over the next — going into 2024, which it seems to be — do you think that, that would result in a higher correlation or some correlation of you being able to and actually exiting the FCRD portfolio at a faster clip or do you think a more active M&A environment doesn’t really have a high correlation with your ability to — and speed of exiting those investments?

Henry Chung: Thanks for the question, Ryan. This is Henry. I’ll take that one. The first question that you had on the fair value or the realized value relative to onboard cost basis. So we exited all the investments that we’ve realized either at or above cost — the respective cost basis that, that applies to the 20 investments that Jason referenced in an earlier question, with respect to where were those shook out at. On the second point, I think it’s an interesting 1 because we did see a similar dynamic with Alcentra. We closed Alcentra right before the onset of COVID-19. So we closed that portfolio over that acquisition into an environment where there is no deal activity. And then obviously, as we all recall, in 2021 and in the early part of 2022, M&A activity picked up quite dramatically.

And we saw a very, I’d say, fast acceleration in the rotation of that portfolio during that time frame as well. It’s a little analogous to what we’re seeing with First Eagle, where we closed First Eagle right before Silicon Valley Bank got taken over by the FDIC and I think we all know that the deal environment was quite anemic shortly thereafter. And we are starting to see activity pick up, albeit modestly and I think my expectation would be that as we see just M&A volumes pick up, given that almost all of these businesses that we have in the portfolio are sponsor backed. And if there’s an attractive opportunity for sponsors to be able to monetize assets, they’re certainly not going to be shy about doing so. I can certainly see that potentially happening again here.

Operator: [Operator Instructions] There are no further questions at this time. Please continue.

Jason Breaux: Thank you, operator. Well, once again, I’d like to thank you all for joining our earnings call today and appreciate the questions, and we look forward to speaking with you again soon.