Pennantpark Investment Corporation · NYSE:PNNT
Pennantpark Investment — Q2 2021 Earnings Presentation
22 slides from Pennantpark Investment's earnings presentation, May 6, 2021
Slide 1: NEW YORK CHICAGO HOUSTON
03/31/2021 NEW YORK • CHICAGO • HOUSTON • LOS ANGELES
Slide 2: Forward-looking Statements and Risk Factors
Forward-looking Statements and Risk Factors This presentation may include forward-looking statements. These forward-looking statements include comments with respect to our objectives and strategies and results of our operations. However, by their nature, these forward-looking statements involve nume
Slide 3: Established Credit Platform
Established Credit Platform $4.7 billion total Investable Capital Under Management Established Investment Platform • PennantPark Investment Advisers founded 14 years ago before the Global Financial Crisis (“GFC”) – NASDAQ: “PNNT” – NASDAQ: “PFLT” • Leading independent middle market – IPO Date: April
Slide 4: Established Credit Platform
Established Credit Platform Founded in 2007 Funded $12.2B in 556 companies Disciplined Investor Relationship & Solution Driven Consistent Performance & Conservative Portfolio Track Record Construction • Team approach • Value oriented with • Low volatility of • 83 companies in 29 different goal of ca
Slide 5: Second Quarter 2021 Highlights
Second Quarter 2021 Highlights Joint venture with leading private NetExperienced Asset Value Adjusted NAV (excluding MTM of liabilities) PSLF markets investor, Pantheon, increased 6% to $9.20 from $8.69 prior increases bite size and ROE Team quarter • Several equity positions are benefiting from the
Slide 6: Why is PNNT Well Positioned?
Why is PNNT Well Positioned? • Decades of experience in middle market credit Experienced Experienced Team • Stable, consistent investment team • Headquarters in New York with offices in Chicago, Houston, and Los Angeles Team • Independent Expansive Relationship • Established institutionalized relati
Slide 7: Strong Performance Through COVID-19
Strong Performance Through COVID-191 PNNT’s performance during COVID-19 is driven by: – Proactive approach to portfolio management – Ability to navigate through uncertain market conditions – Avoidance of industries most impacted by COVID-19 – Deep expertise in five sectors: government services, heal
Slide 8: Middle Market Direct Lending Is A Vintage Business
Middle Market Direct Lending Is A Vintage Business 2021 and beyond are likely to be attractive vintages in our view, similar to the excellent vintages produced during the 2009-12 period Middle Market vs. BSL: Average Debt to EBITDA & Loan Spreads1,2 L+1,400 8.50 L+1,20 L+902 L+817 L+745 L+765 L+688
Slide 9: Comparison: Average Debt to EBITDA & YTM
PNNTComparison: Average Debt to EBITDA & YTM PennantPark has consistently delivered excess return across its capital structure strategy Since 2017, PNNT has pivoted to focusing primarily on first lien, less levered investments – This intentional focus on lower risk investments positioned the portfol
Slide 10: Expected Investment Opportunity in Excellent Vintage - 2021
Expected Investment Opportunity in Excellent Vintage - 2021 Certain current market observations of first lien, second lien and mezzanine loan terms for middle market companies: Core Middle Market First Lien Second Lien & Mezzanine Pre - COVID-19 Current Pre - COVID-19 Current (January – February 202
Slide 11: PennantPark's Highly Selective Investing
PennantPark’s Highly Selective Investing Depth and breadth of investment team results in strong deal flow and allows for greater selectivity – Since inception, over 8,600 potential opportunities reviewed; only 588 selected for investment – Last 3 year average selectivity rate: 4.4% – 2020 selectivit
Slide 12: PennantPark's Incumbency Advantage Creates Opportunity
PennantPark’s Incumbency Advantage Creates Opportunity1 PennantPark is an existing lender to over 130+ portfolio companies across its platform, which: – Results in incumbency positions that create repeat deal flow and efficient deployment of capital – Due diligence edge in known credits – Often limi
Slide 13: PennantPark's Equity Coinvestment Program Adds Meaningful Returns
PennantPark’s Equity Coinvestment Program Adds Meaningful Returns PennantPark takes an opportunistic approach to equity coinvestments and selectively invests in equity in coordination with debt investments in what we believe to be the most compelling core middle market companies – PennantPark evalua
Slide 14: PennantPark's Extensive Sourcing Network & Deep Industry Expertise
PennantPark’s Extensive Sourcing Network & Deep Industry Expertise Robust origination platform built on one of the most senior, experienced investment teams 1 – Actively cover approximately 400 of over 2,000 middle market private equity sponsors in the U.S. – Approximately 97% of loans are sponsor-b
Slide 15: Underwriting Philosophy & Process
Underwriting Philosophy & Process Investment Philosophy Capital preservation is paramount Companies with positive cash flow (in order to de-risk) Companies owned by reputable financial sponsors with track records supporting portfolio companies Run by experienced management teams with capability to p
Slide 16: PennantPark Senior Loan Fund, LLC ("PSLF")
PennantPark Senior Loan Fund, LLC (“PSLF”) Invests in primarily middle market, directly originated first lien loans $445 million of total capacity $170 million in notes and equity from PNNT and Pantheon Ventures $275 million of third party debt financing Expands ability to serve sponsor and borrower
Slide 17: Overall Portfolio as of 3/31/21
Overall Portfolio as of 3/31/21 Highly Diversified Industry Mix Portfolio Overview 83 different companies Fair Value % of Average investment size: $14.2 million Industry1 ($ millions) Portfolio Healthcare, Education and Childcare $245 22.9% Yield at Cost on Debt Portfolio: 9.3% Energy and Utilities
Slide 18: PSLF Portfolio as of 3/31/21
PSLF Portfolio as of 3/31/21 Highly Diversified Industry Mix Portfolio Overview 40 different companies Fair Value %of Average investment size: $9.5 million Industry ($ millions) Portfolio Aerospace and Defense $52 13.5% Yield at Cost on Debt Portfolio: 7.3% Healthcare, Education and Childcare 44 11.
Slide 19: Diversified Funding Sources
Diversified Funding Sources 3/31/2021* Commitment Amount ($mm) Interest Rate Maturity Date Truist Revolving Credit Facility $475 2.5% 9/4/24 SBIC II 109 3.21 3/1/26 - 3/1/281 2024 Notes 86 5.5 10/15/24 Total $670 3.5% ⃰ In April 2021, PennantPark Investment Corporation priced an underwritten public
Slide 20: Selected Financial Highlights
Selected Financial Highlights June September December March ($mm, except per share data) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Investment Portfolio (at fair value) $1,333 $1,082 $1,127 $1,175 Debt (Regulatory) $745 $472 $441 $462 Debt (GAAP) $848 $568 $549 $563 GAAP Net Assets $524 $526 $589 $619 Adjusted
Slide 21: Strategy Targeted to Deliver Returns
Strategy Targeted to Deliver Returns Extensive and diverse sourcing network Focused on companies with strong free cash flow and de-leveraging capabilities Value oriented with a goal of capital preservation Privately negotiated middle market loans provide attractive risk/return Returns driven by inte
Slide 22: PNNT Selected Investments
PNNT Selected Investments Revolver Revolver Second Lien Secured Debt Revolver First Lien Secured Debt First Lien Term Loan Equity First Lien Term Loan Equity Odyssey Investment Partners Francisco Partners Francisco Partners Yellow Wood Partners Revolver Revolver Second Lien Secured Debt Revolver Fir
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