Brian McKenna: Okay, that’s great. Very helpful. And then, Ken, just the bigger picture industry question. You’ve been on the road a bunch, you’ve been at a number of events and conferences. So, what are some of the recurring themes or questions you’ve been receiving? Is there anything in particular that stands out within that? And then just based on some of the dynamics and views in the market, how is NCDL positioned to perform and ultimately take market share within the industry over time?
Ken Kencel: Yeah, no, that’s a great question. Thank you. I’d say a couple of themes that I’ve seen. I was just out at Milken and obviously lots of other credit managers there, and then we had a chance to dialogue with many large scale institutional investors and questions regarding some of the types of things we’re seeing. I’d say a couple of themes overall, and I think they all point very positively for us. One is, scale has become a very big issue now. I get lots of questions about new managers and I think actually most of the institutions I talk to kind of know the answer. The reality is that today, if you’re not a scaled platform with the ability to commit to and invest $250 million, $500 million per transaction in the traditional middle market, very difficult to be able to provide full solution and to be at the top of the queue, if you will, for new transaction opportunities.
And frankly, there are only a handful of firms today that can really do that. So I would say scale is an increasing theme. So raising new capital is very important to that. And obviously in order to do that, you need to demonstrate a strong track record, right. So track record begets capital raising begets new deal opportunities. So scale is a big deal. And obviously we continue to have great success from a capital raising standpoint, we’re on track to have yet another very solid year in terms of raising capital from both institutional and retail investors feel very good about that. Second thing I would say thematically is differentiated sourcing. If you’re just out trying to find deals on a one-off basis and you don’t really have a built-in advantage from a sourcing perspective, very difficult to compete.
I would say, if anything, our 300 plus LP investments are 250 advisory board seats. Huge advantage for us right now, not just in terms of the ongoing relationship, but the fact that we can be very selective. And if we turn down three or four deals in a row for various reasons, industry, leverage, whatever, the [FEIs] [ph] are very high, that we will see that fifth deal, that sixth deal, because of the connectivity in the LP relationship. So, it gives us the ability to be very selective. I mean, as an example, if you were a firm that didn’t have that kind of relationship, you might turn four deals down and they might conclude there’s really not a good fit, and you may not get the call on the fifth deal. Whereas in our case, that deal flow continues to be very consistent.
So, differentiated sourcing is a theme, and how do you find deals and what drives that deals? And then, lastly, I would say a pronounced dispersion regarding credit quality. Now, you see that in some of the research reports that have come out on Moody’s and Fitch, and we’re seeing it across the BDCs, which are really a mirror for credit quality across the portfolio, as you’re seeing a range of certain managers that are showing zero non-accruals, and other managers that are showing 5% or even 6% non-accruals. So there’s a broad range. And I would say there’s a great research report that Moody’s came out with last week that talks about that dispersion among managers. And so I think from our perspective, that’s a good thing, right, because investors are really getting a look at who has been very focused and very selective and very diversified.
And that’s something that we’re very proud of. And I would say that that is leading to increased fundraising, which is driving obviously the scale and the ability to deliver for our clients.
Brian McKenna: That’s great. Thanks, Ken. I’ll leave it there. And congrats on another great quarter.
Ken Kencel: Thank you.
Shai Vichness: Thanks a lot.
Operator: Thank you. [Operator Instructions] Our next question is coming from Mark Hughes from Truist Securities. Your line is now live.
Mark Hughes: Yeah. Thank you. Good morning. Related to the comment you just made about the credit quality and the dispersion, how much of that has to do with industry selection? Perhaps you had mentioned earlier that the quality of the opportunities was more mixed in the first quarter. I think you said you expected that to continue. Is that mix having to do with end market or quality of the company? So tying a couple thoughts together there, but any comments would be helpful.
Ken Kencel: Yeah, so I think one of the things that’s driving that is that, with the resurgence of the BSL market and even the upper middle market, obviously CLO formation has returned in earnest, and as well as funds flows into the various funds that invest in BSL. So the BSL market has really come back full force. And I think what that’s done is, it’s brought companies to the market that may be more repair financing or that refinancing that is really designed to address issues in the portfolio. So you’ve got more liquidity, right, because now companies have two options really. They have private credit and they have and certainly for the more larger businesses, BSL. So I think what that’s done is, it’s brought issuers to market, particularly on the refinancing side that may have had a tough time going lender, given our posture regarding what we’re willing to live with from a leverage and an industry standpoint.
So I think that trend has led to more of a mixed deal flow. Now, that being said, I certainly don’t think that our deal flow and the deals we’ve chosen to do is mixed at all. In fact, I would say, we’ve stayed in the core middle market where we’ve been largely insulated from those dynamics. So as you get larger and larger, I think you start to see more of that pushing it in terms of leverage levels, pushing it in terms of new deals, for example, that are being done, but only work because there’s a [PEC] [ph] component to the deal and deals that are being done that are really more refinancing of problems. I would say from our perspective, by staying in the core middle market, by sticking to our knitting in terms of the quality deals that are being done with significant equity contributions, that’s our sweet spot and we’ve stayed there.