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BCPL BC Partners Lending

Company profile

Ticker
BCPL
Employees
Incorporated
Location
SEC CIK

Investment data

Data from SEC filings
Securities sold
Number of investors

Calendar

4 Aug 21
16 Oct 21
Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
22 Apr 21 Forethought Life Insurance Common Stock Buy Acquire P Yes No 26.24 11,432.927 300K 413,949.314
22 Apr 21 KKR Group Partnership Common Stock Buy Acquire P Yes No 26.24 11,432.927 300K 413,949.314

Financial report summary

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Risks
  • We are a relatively new company and have a limited operating history.
  • Our Board may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse to our results of operations and financial condition.
  • Price declines in the medium- and large-sized U.S. corporate debt market may adversely affect the fair value of our portfolio, reducing our net asset value through increased net unrealized depreciation.
  • Capital markets may experience periods of disruption and instability. These market conditions could materially adversely affect the Company’s business, financial condition and results of operations.
  • Our ability to achieve our investment objective depends on the ability of the Adviser to manage and support our investment process. If the Adviser were to lose any members of their respective senior management teams, our ability to achieve our investment objective could be significantly harmed.
  • Because our business model depends to a significant extent upon relationships with private equity sponsors, investment banks and commercial banks, the inability of the Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.
  • We may face increasing competition for investment opportunities, which could delay deployment of our capital, reduce returns and result in losses.
  • We may have difficulty sourcing investment opportunities.
  • As required by the 1940 Act, a significant portion of our investment portfolio is and will be recorded at fair value as determined in good faith by our Board and, as a result, there is and will be uncertainty as to the value of our portfolio investments.
  • There is a risk that investors in our common stock may not receive distributions or that our distributions may not grow over time.
  • The amount of any distributions we may make is uncertain. Our distributions may exceed our earnings. Therefore, portions of the distributions that we make may represent a return of capital to you that will lower your tax basis in your common stock and reduce the amount of funds we have for investment in targeted assets.
  • Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.
  • Changes to U.S. tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us.
  • As a public reporting company, we are subject to regulations not applicable to private companies, such as provisions of the Sarbanes-Oxley Act. Efforts to comply with such regulations will involve significant expenditures, and non-compliance with such regulations may adversely affect us.
  • If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock (if an exchange listing occurs) may be negatively affected.
  • The impact of financial reform legislation on us is uncertain.
  • We may experience fluctuations in our quarterly results.
  • We are an “emerging growth company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
  • Any unrealized depreciation we experience on our portfolio may be an indication of future realized losses, which could reduce our income available for distribution.
  • Recent legislation permits the Company to incur additional leverage.
  • We are dependent on information systems, and systems failures, as well as operating failures, could significantly disrupt our business, which may, in turn, negatively affect our liquidity, financial condition or results of operations.
  • Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and/or damage to our business relationships, all of which could negatively impact our business, financial condition and operating results.
  • The Adviser has limited prior experience managing a BDC or a RIC.
  • The Adviser and its affiliates, including our officers and some of our directors, face conflicts of interest caused by compensation arrangements with us and our affiliates, which could result in actions that are not in the best interests of our stockholders.
  • We may be obligated to pay the Adviser incentive compensation even if we incur a net loss due to a decline in the value of our portfolio.
  • There may be conflicts of interest related to obligations that the Adviser’s senior management and Investment Team has to other clients.
  • The time and resources that individuals employed by the Adviser devote to us may be diverted and we may face additional competition due to the fact that individuals employed by the Adviser are not prohibited from raising money for or managing other entities that make the same types of investments that we target.
  • Our base management and incentive fees may induce the Adviser to make speculative investments or to incur leverage.
  • Shares of our common stock may be purchased by the Adviser or its affiliates.
  • The Adviser relies on key personnel, the loss of any of whom could impair its ability to successfully manage us.
  • The Adviser may retain additional consultants, advisers and/or operating partners to provide services to the Company, and such additional personnel will perform similar functions and duties for other organizations which may give rise to conflicts of interest.
  • The compensation we pay to the Adviser was determined without independent assessment on our behalf, and these terms may be less advantageous to us than if such terms had been the subject of arm’s-length negotiations.
  • The Adviser’s influence on conducting our operations gives it the ability to increase its fees, which may reduce the amount of cash flow available for distribution to our stockholders.
  • The requirement that we invest a sufficient portion of our assets in qualifying assets could preclude us from investing in accordance with our current business strategy; conversely, the failure to invest a sufficient portion of our assets in qualifying assets could result in our failure to maintain our status as a BDC.
  • Failure to maintain our status as a BDC would reduce our operating flexibility.
  • Regulations governing our operation as a BDC and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth.
  • Our ability to enter into transactions with our affiliates is restricted.
  • We are uncertain of our sources for funding our future capital needs; if we cannot obtain debt or equity financing on acceptable terms, our ability to acquire investments and to expand our operations will be adversely affected.
  • We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.
  • Our investments in prospective portfolio companies may be risky, and we could lose all or part of our investment.
  • To the extent original issue discount constitutes a portion of our income, we will be exposed to risks associated with the deferred receipt of cash representing such income.
  • Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.
  • Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.
  • Investment in private and middle market companies involves a number of significant risks including:
  • There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.
  • We generally will not control our portfolio companies.
  • We may invest through joint ventures, partnerships or other special purpose vehicles and investments through these vehicles may entail greater risks, or risks that we otherwise would not incur, if we otherwise made such investments directly.
  • We will be exposed to risks associated with changes in interest rates.
  • The interest rates of some of our term loans to our portfolio companies may be priced using a spread over LIBOR, which may be phased out in the future.
  • International investments create additional risks.
  • We may acquire various structured financial instruments for purposes of “hedging” or reducing our risks, which may be costly and ineffective and could reduce the cash available to service our debt or for distribution to our stockholders.
  • Second priority liens on collateral securing debt investments that we make to our portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.
  • Economic recessions or downturns could impair our portfolio companies and adversely affect our operating results.
  • A covenant breach or other defaults by our portfolio companies may adversely affect our operating results.
  • We may not realize gains from our equity investments.
  • An investment strategy focused primarily on privately-held companies presents certain challenges, including, but not limited to, the lack of available information about these companies.
  • A lack of liquidity in certain of our investments may adversely affect our business.
  • We may not have the funds or ability to make additional investments in our portfolio companies or to fund our unfunded debt commitments.
  • Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.
  • We borrow money, which magnifies the potential for loss on amounts invested in us and may increase the risk of investing in us. Borrowed money may also adversely affect the return on our assets, reduce cash available for distribution to our stockholders, and result in losses.
  • We may default under our credit facilities.
  • Provisions in a credit facility may limit our investment discretion.
  • Changes in interest rates may affect our cost of capital and net investment income.
  • We will be subject to corporate-level income tax if we are unable to qualify as a RIC under Subchapter M of the Code or to satisfy RIC distribution requirements.
  • We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income.
  • If we do not qualify as a “publicly offered regulated investment company,” as defined in the Code, a non-corporate stockholder will be taxed as though it received a distribution of some of our expenses.
  • Our stockholders may receive shares of our common stock as dividends, which could result in adverse tax consequences to them.
  • Non-U.S. stockholders may be subject to withholding of U.S. federal income tax on dividends we pay.
  • We may be unable to invest a significant portion of the net proceeds from an offering of our securities on acceptable terms in an acceptable timeframe.
  • A stockholder’s interest in us will be diluted if we issue additional shares of common stock, which could reduce the overall value of an investment in us.
  • Our Board is authorized to reclassify any unissued shares of common stock into one or more classes of preferred stock, which could convey special rights and privileges to its owners.
  • Provisions of the MGCL and our organizational documents could deter takeover attempts and have an adverse impact on the prices of our common stock.
  • Investing in our common stock involves a high degree of risk.
  • The net asset value of our common stock may fluctuate significantly.
  • Certain large stockholders could influence, and may continue to exert influence, over our management and affairs and over most influence votes requiring stockholder approval.
Management Discussion
  • We generate revenue in the form of interest income on the debt securities that we own, dividend income on any common or preferred stock that we own, and fees generated from the structuring of new deals. Our investments in debt securities will typically have loan maturities of three to ten years and bear interest at a fixed or floating rate.
  • As of June 30, 2021, our portfolio, based on fair value, consisted of 89.8% first-lien debt investments and 10.2% other investments. As of December 31, 2020, our portfolio, based on fair value, consisted of 89.2% first-lien debt investments and 10.8% other investments. As of June 30, 2021, we had investments in 33 portfolio companies, with an average investment size of approximately $2.6 million based on fair value. As of December 31, 2020, we had investments in 38 portfolio companies, with an average investment size of approximately $2.1 million based on fair value. As of June 30, 2021 and December 31, 2020, the largest single investment based on fair value represented 5.1% and 5.2%, respectively, of our total investment portfolio. As of June 30, 2021 and December 31, 2020, 88.0% and 87.9%, respectively, of the debt investments based on fair value in our portfolio were at floating rates indexed to LIBOR or Prime.
  • On July 27, 2017, the Financial Conduct Authority (“FCA”) announced that it would phase out the LIBOR as a benchmark by the end of 2021 and the FCA has indicated that market participants should not rely on LIBOR being available after 2021. As an alternative to LIBOR, for example, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S.-dollar LIBOR with the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements, backed by Treasury securities. Abandonment of or modifications to LIBOR could have adverse impacts on newly issued financial instruments and our existing financial instruments which reference LIBOR. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR, or any changes announced with respect to such reforms, may result in a sudden or prolonged increase or decrease in the reported LIBOR rates and the value of LIBOR-based loans and securities, including those of other issuers we or our funds currently own or may in the future own. It remains uncertain how such changes would be implemented and the effects such changes would have on us, issuers of instruments in which we invest and financial markets generally.
Content analysis
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