Midcap Financial Investment Corporation · NASDAQ:MFIC
Midcap Financial Investment — Investor Presentation (May 2023)
44 slides from Midcap Financial Investment's investor presentation, May 2023
Slide 1: MidCap Financial Investment Corporation Investor Presentation May 2023
MidCap Financial Investment Corporation Investor Presentation May 2023 Unless otherwise noted, information as of March 31, 2023. Confidential and Proprietary - Not for distribution, in whole or in part, without the express written consent of Apollo Global Management, Inc. It should not be assumed th
Slide 2: Disclaimers, Definitions and Important Notes
Disclaimers, Definitions and Important Notes Forward-Looking Statements Past Performance We make forward-looking statements in this presentation and other filings we make with the Securities and Past performance is not indicative nor a guarantee of future returns, the realization of which is depende
Slide 3: Disclaimers, Definitions and Important Notes
Disclaimers, Definitions and Important Notes “Assets Under Management”, or “AUM”, refers to the assets of the funds, partnerships and accounts to which Apollo provides investment management, advisory, or certain other investment-related services, including, without limitation, capital that such fund
Slide 4: Introduction
APOLLO Introduction
Slide 5: MFIC Positioned to be a Pure Play Senior Secured Middle Market BDC
INTRODUCTION MidCap Financial Investment Corporation (“MFIC”) Positioned to be a Pure Play Senior Secured Middle Market BDC MFIC is a publicly traded (NASDAQ: MFIC) business development company Apollo is a high growth MidCap Financial1 is a alternative asset manager (“BDC”) treated as a regulated in
Slide 6: MFIC Snapshot
INTRODUCTION MFIC Snapshot General Corporate Information Corporate Lending2 Portfolio Statistics Ticker MFIC Weighted Average Yield 3 11.3% NASDAQ Global Weighted Average Spread 613 bps Exchange Select First Lien 94% Net Assets $993 million Floating Rate 100% Kroll Bond Rating Agency 1 BBB- / Stable
Slide 7: Apollo Today: Integrated Asset Management and Insurance Capabilities
Apollo Today: Integrated Asset Management and Insurance Capabilities GL OBA L M A NA GEMENT $36bn 4,000+ ASSET Market Employees RETIREMENT M A N AG E M E N T Capitalization Globally SERVICES A SSET MA N A GEM ENT $598bn $85bn ~$20bn A+ / A+/ A1/ A Assets Under Asset Originations Regulatory Rated by
Slide 8: MidCap Financial is a Leading Middle Market Lender
MidCap Financial1 is a Leading Middle Market Lender Key Members of Management Team Working Together 25+ Years Full-Service Finance Company Scaled Platform with Strong Credit Track Record • Founded in 2008 • Focused on senior debt solutions to middle • Well-established provider of senior debt market
Slide 9: MFIC Investment Highlights
MFIC Investment Highlights 9
Slide 10: MFIC Investment Highlights
MFIC Investment Highlights 1 Secular Tailwinds Bank retrenchment from lending expands opportunity set for non-bank lenders resulting in attractive environment for private credit origination Primarily focused on senior secured middle market loans sourced from Midcap Financial’s1 portfolio and inv
Slide 11: Banks Continue to Retrench from Middle Market Lending
MFIC INVESTMENT HIGHLIGHTS: SECULAR TAILWINDS 1 Banks Continue to Retrench from Middle Market Lending Expanding the Opportunity for Non-Bank Lenders Total Number of U.S. Banks Continues to Decline 1 Banks’ Reduced Participation in Loan Market 2, 3 12,000 100% 50%+ decline since 2000 ~ 65%+ reduction
Slide 12: Current Environment for Private Credit Origination is Attractive
MFIC INVESTMENT HIGHLIGHTS: SECULAR TAILWINDS 1 We Believe the Current Environment for Private Credit Origination is Attractive* Healthy and Increasing Yields… …at Attractive Entry Points in Capital Structures Yield 14% Senior Secured S+675 bps 12% 4.0x-5.0x Entry Coupon Financial Covenants, 40-
Slide 13: MidCap Financial Strong Strategic Partnership with Apollo
MFIC INVESTMENT HIGHLIGHTS: ROBUST ORIGINATION CAPABILITIES 2 MidCap Financial Strong Strategic Partnership with Apollo Apollo Platforms Yield Origination MidCap Financial is Apollo’s primary direct origination Assets + Capabilities platform in private middle market credit Demand Full-service fina
Slide 14: MidCap Financial Offers a Broad Suite of Products
MFIC INVESTMENT HIGHLIGHTS: ROBUST ORIGINATION CAPABILITIES 2 MidCap Financial1 Offers a Broad Suite of Products, Providing Solutions to Nearly All Financing Needs of Middle Market Clients Business Segments Asset Based Real Estate Lender Life Sciences and Franchise Leveraged Lending Lending Finance
Slide 15: MFIC Investment Strategy
MFC INVESTMENT HIGHLIGHTS: PRUDENT PORTFOLIO CONSTRUCTION 3 MFIC Investment Strategy Focused on First Lien Loans to Middle Market Companies Focused on true first lien assets, top of the capital structure, with flexibility to invest across the capital structure Assets Primarily Sourced from MidCap Fi
Slide 16: MFIC Compares Favorably to the BDC Averages on Select Key Metrics
MFIC INVESTMENT HIGHLIGHTS: PRUDENT PORTFOLIO CONSTRUCTION 3 MFIC Compares Favorably to the BDC Averages on Select Key Metrics We believe MFIC’s portfolio is We believe MFIC’s relatively We believe MFIC’s revenue more senior when compared to high exposure to floating rate quality is higher compared
Slide 17: MFIC Has the Lowest Fee Structure, Among Listed BDCs
MFIC INVESTMENT HIGHLIGHTS: SHAREHOLDER-FRIENDLY FEE STRUCTURE 4 MFIC Has the Lowest Fee Structure, Among Listed BDCs MFIC charges a management fee of 1.75% on equity (equates to ~0.75% on gross assets) while all other listed BDCs shown below charge on gross assets at a higher comparable rate. 2.0%
Slide 18: MFIC Portfolio Review
APOLLO MFIC Portfolio Review
Slide 19: MFIC Senior Secured Diversified Investment Portfolio
MFIC PORTFOLIO REVIEW MFIC Senior Secured Diversified Investment Portfolio Portfolio Snapshot Portfolio by Strategy Portfolio by Industry Portfolio $2.39 bn # of Portfolio Companies 141 2% # of Industries 25 8% 12% 1% 19.0% Corporate Lending and Other1 % Total Portfolio 92% 2% 2.0% 3% 2.0% Non-Accru
Slide 20: Significantly Increased Exposure to First Lien Corporate Lending Assets
MFIC PORTFOLIO REVIEW Significantly Increased Exposure to First Lien Corporate Lending Assets Investment Portfolio by Strategy ($ in bn) 1 $2.53 $2.35 $2.31 $2.97 $2.48 $2.59 $2.40 $2.39 100% 7% 2% 2% 12% 8% 8% 90% 20% 11% 26% 13% 12% 5% 34% 5% 80% 12% 5% 11% 70% 20% 13% 17% 60% 19% 50% 23% 82% 85%
Slide 21: Credit Quality Generally Remains Stable
MFIC PORTFOLIO REVIEW Credit Quality Generally Remains Stable Median LTM EBITDA 1 Net Leverage and Attachment Point 1 $50 Net Leverage Attachment Point $46 $48 $42 5.29 x 5.45 x 5.52 x 5.49 x 5.45 x $37 0.2 x 0.2 x 0.2 x 0.2 x 0.1 x Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Mar-22 Jun-22 Sep-22 Dec-22 Mar-
Slide 22: Conclusion
APOLLO Conclusion
Slide 23: Reasons to Own MFIC
CONCLUSION Reasons to Own MFIC 1 SECULAR TAILWINDS AND RECENT VOLATILITY CREATE ATTRACTIVE ENVIRONMENT FOR PRIVATE CREDIT 2 ROBUST ORIGINATION CAPABILITIES OF MIDCAP FINANCIAL 1 / APOLLO PROVIDE ATTRACTIVE AND SIGNIFICANT DEAL FLOW 3 PRUDENT PORTFOLIO CONSTRUCTION WITH FOCUS ON FIRST LIEN, CASH PAY,
Slide 24: Appendix
APOLLO Appendix
Slide 25: MFIC Senior Leadership Team
MFIC Senior Leadership Team Howard T. Widra Executive Chairman Mr. Widra has been with Apollo and/or its affiliates since 2013 and serves as Apollo’s Head of Direct Origination. He was appointed Executive Chairman in August 2022. He served as the Company’s Chief Executive Officer from May 2018 to Au
Slide 26: MFIC Senior Leadership Team (continued)
MFIC Senior Leadership Team (continued) Kristin Hester Chief Legal Officer and Secretary Ms. Hester joined Apollo in 2015 and currently serves as Senior Counsel for Apollo. She was promoted to Chief Legal Officer for the Company in August 2022 and served as General Counsel for the Company from May 2
Slide 27: Investment Portfolio as of March 31, 2023
Investment Portfolio as of March 31, 2023 Corporate Lending and Other 3 Merx Aviation $2.2 billion or 91.7% of portfolio $197 million or 8.3% of portfolio Weighted Average Yield 2 11.3% 42 aircraft (40 narrowbody, 2 widebody) First Lien % 94% 9 aircraft types Floating Rate % 100% 22 lessees in 16 co
Slide 28: MFIC Top Corporate Lending Issuers as of March 31, 2023
MFIC Top Corporate Lending Issuers1 as of March 31, 2023 Fair Value % of Total ($ in millions) Portfolio 1 ChyronHego Corporation 2 $ 127 5.3% 2 LashCo $ 43 1.8% 3 Beacon Mobility $ 43 1.8% 4 Lending Point $ 40 1.7% Top 10 5 NFA Group $ 37 1.5% 19.3% Corporate Lending 6 Relation Insurance $ 36 1.5%
Slide 29: Financial Highlights
Financial Highlights ($ in thousands, except per share data) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Financial Highlights Net investment income per share $0.45 $0.43 $0.35 $0.37 $0.42 Net realized and change in unrealized gains (losses) from investments and $0.01 ($0.41) ($0.10) ($0.28) ($0.36) foreign c
Slide 30: Portfolio Highlights
Portfolio Highlights ($ in thousands) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Portfolio by Strategy, at fair value ($) Leveraged lending $1,803,762 $1,733,659 $1,759,078 $1,748,935 $1,746,603 Life sciences 204,036 213,278 195,816 219,669 171,244 Asset based, franchise finance and lender finance 128,119 1
Slide 31: Corporate Lending Portfolio Detail
Corporate Lending Portfolio Detail1 ($ in thousands) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Portfolio by Asset Class, measured at fair value ($) First lien $2,015,709 $1,965,800 $1,976,115 $2,009,467 $1,957,161 Second lien 69,357 70,919 85,410 89,951 91,640 Other 50,852 47,994 50,111 41,454 41,212 Total
Slide 32: Corporate Lending Commitments
Corporate Lending Commitments1 ($ in thousands) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Gross Commitments Made by Asset Class First lien $110,020 $73,178 $20,486 $194,611 $115,886 Second lien and Other 311 90 367 30 0 Gross commitments made $110,331 $73,269 $20,853 $194,641 $115,887 Gross Commitments Mad
Slide 33: Funded Investment Activity
Funded Investment Activity ($ in thousands) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Fundings, excluding Merx Aviation and Revolvers Gross fundings 1 $105,792 $104,551 $66,719 $165,471 $114,978 Sales and syndications 1 0 (27,500) 0 0 (9,748) Repayments 1 (54,151) (113,460) (139,652) (121,199) (131,678) Ne
Slide 34: Credit Quality
Credit Quality As of March 31, 2023, 1.0% of total investments at amortized cost, or 0.4% of total investments at fair value, were on non-accrual status ($ in thousands) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Investments on Non-Accrual Status Non-accrual investments at amortized cost $25,822 $49,443 $49
Slide 35: Net Asset Value Rollforward
Net Asset Value Rollforward ($ in thousands, except per share data) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Per Share NAV, beginning of period $15.10 $15.45 $15.52 $15.79 $16.08 Net investment income 0.45 0.43 0.35 0.37 0.42 Net realized and change in unrealized gains (losses) 0.01 (0.41) (0.10) (0.28) (
Slide 36: Quarterly Operating Results
Quarterly Operating Results ($ in thousands, except per share data) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Total investment income Interest income (excluding PIK) $64,787 $61,543 $56,318 $51,597 $52,480 Dividend income 23 191 252 336 333 PIK interest income 784 851 855 956 625 Other income 2,184 735 1,4
Slide 37: Quarterly Balance Sheet
Quarterly Balance Sheet ($ in thousands, except share and per share data) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Assets Investments at fair value $2,385,211 $2,398,120 $2,463,545 $2,549,503 $2,523,173 Cash and cash equivalents (including foreign currencies) 70,063 87,091 61,736 35,462 30,598 Interest re
Slide 38: Funding Sources as of March 31, 2023
Funding Sources as of March 31, 2023 Debt Facilities ($ in thousands) Principal Amount Debt Issued/ Final Maturity Interest Outstanding Amended Date Rate 1, 2 Senior Secured Facility ($1.705 billion) 12/22/2020 12/22/2025 L + 200 bps $999,713 2025 Notes 3/3/2015 3/3/2025 5.25% 350,000 2026 Notes 7/1
Slide 39: Interest Rate Exposure as of March 31, 2023
Interest Rate Exposure as of March 31, 2023 Investment Portfolio by Interest Rate Type Funding Sources by Interest Rate Type Variable rate Fixed rate debt assets 19% 1% Fixed rate assets 4% Non yielding and non-accrual assets 8% Common equity 40% Floating rate debt Floating rate 41% assets 87% Float
Slide 40: Realized and Change in Unrealized Gains (Losses) by Strategy
Realized and Change in Unrealized Gains (Losses) by Strategy ($ in millions) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Leveraged lending $1.0 ($13.6) ($3.7) ($9.4) $5.1 Life sciences $0.1 $1.3 ($0.7) ($0.6) ($1.7) Franchise Finance ($0.1) ($0.1) $0.0 ($0.1) $0.0 Asset based and Lender finance $0.2 ($0.4) $
Slide 41: Portfolio by Industry
Portfolio by Industry1 Portfolio Diversification Healthcare & Pharmaceuticals 19.0% High Tech Industries 18.7% Business Services 11.6% Aviation and Consumer Transport 8.8% Consumer Services 7.2% Beverage, Food & Tobacco 4.3% Insurance 3.5% Transportation – Cargo, Distribution 3.2% Consumer Goods – N
Slide 42: Outstanding Commitments
Outstanding Commitments ($ in thousands) Mar-23 Dec-22 Sep-22 Jun-22 Mar-22 Revolver Obligations and Bridge Loans Funded 1 $100,566 $106,919 $117,490 $108,368 $110,386 Unfunded 1, 2 182,462 196,408 192,653 211,667 213,655 Par $283,029 $303,327 $310,143 $320,035 $324,041 Unfunded Revolver and Bridge
Slide 43: Portfolio by Strategy and Lien Type
Portfolio by Strategy and Lien Type $ in 000's First Lien Second Lien Other Total Corporate lending $ 2,015,709 $ 69,357 $ 50,852 $ 2,135,917 Merx Aviation 84,575 - 112,639 197,214 Other 14,511 - 37,569 52,080 Total Potfolio $ 2,114,795 $ 69,357 $ 201,059 $ 2,385,211 % Total Portfolio First Lien Sec
Slide 44: Contact Information
Contact Information Elizabeth Besen Gregory W. Hunt Investor Relations Manager Chief Financial Officer and Treasurer Phone: (212) 822-0625 Phone: (212) 822-0655 Email: ebesen@apollo.com Email: ghunt@apollo.com 44
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