Carlyle Credit Income Fund A · NYSE:CCIF
Carlyle Credit Income Fund A — Vertical Capital Income Fund — Merger or Acquisition (May 2023)
21 slides from Carlyle Credit Income Fund A's merger presentation, May 23, 2023
Slide 1: Vertical Capital Income Fund Presentation May 2023
1 Vertical Capital Income Fund Presentation May 2023
Slide 2: Important Information
2 Important Information This presentation (“Presentation”) prepared by Carlyle Global Credit Investment Management L . L . C . (together with its affiliates, “Carlyle”), is provided for information purposes only and is not an offer to sell or solicitation of an offer to buy interests in any fund or
Slide 3: Important Information (Cont'd)
3 Important Information (Cont’d) Additional Information and Where to Find It . This communication relates to a proposed transaction involving Carlyle and VCIF , along with the related proposals for which VCIF shareholder approval will be sought (the “Proposals”) . In connection with the proposed tra
Slide 4: Transaction Overview
4 Transaction Overview SECTION 01
Slide 5: Transaction Highlights
5 Transaction Highlights Carlyle Global Credit Investment Management L.L.C. will become the investment adviser to VCIF New strategy will invest in the debt and equity tranches of collateralized loan obligations Shareholders will receive a $10 million cash payment representing approximately $0.96 per
Slide 6: Transaction Summary
6 Transaction Summary • $50 million commitment by Carlyle to VCIF and its shareholders: • Shareholders will receive a $10 million cash payment representing approximately $0.96 per share • Tender offer to purchase up to $25 million of existing VCIF shares at net asset value following closing • The te
Slide 7: Transaction Summary (Cont'd)
7 Transaction Summary (Cont’d) • The new strategy will invest in the debt and equity tranches of collateralized loan obligations (“CLOs”) • VCIF will liquidate a minimum of 95% of the existing portfolio, subject to certain exclusions, prior to closing • Carlyle expects it will take up to 6 months to
Slide 8: Benefits of New Strategy
8 Benefits of New Strategy • Closed - end funds (“CEFs”) investing in CLOs have historically provided shareholders a double - digit dividend yield • Once the portfolio is fully transitioned, VCIF intends to ultimately increase the dividend to 12% annualized, subject to market conditions • This would
Slide 9: Go-Forward Strategy
9 Go - Forward Strategy • Issue baby bonds and preferred securities to leverage VCIF • Target debt plus preferred to total assets of 0.25x – 0.40x • Peer funds have historically traded at a premium to net asset value • If VCIF trades at a premium to net asset value, complete accretive issuances of c
Slide 10: Carlyle Overview
10 Carlyle Overview SECTION 02
Slide 11: Carlyle Firm Overview
11 1 . Firm data as of March 31 , 2023 . 2 . Total includes 9 Investment Professionals in the Executive Group . 3 . Carlyle Global Credit AUM includes $ 55 . 1 billion of insurance related assets . 4 . Includes 11 professionals in the Carlyle Global Capital Markets group . Note : AUM numbers may not
Slide 12: Carlyle Global Credit Platform
12 Carlyle Global Credit Platform Source: The Carlyle Group. As of March 31, 2023 unless otherwise stated. 1. Carlyle Global Credit AUM includes $55.1 billion of insurance related assets. Past performance is not indicative of future results and there can be no assurance that any trends will continue
Slide 13: Carlyle Global Credit's Expertise in Regulated Funds
13 UNLISTED RETAIL Carlyle Global Credit’s Expertise in Regulated Funds LISTED RETAIL Registered, continuously - offered 40 - Act closed - end interval fund seeks to produce current income and provide access to a range of Carlyle’s credit strategies $2.4 billion Registered business development compa
Slide 14: Carlyle's Value to VCIF
14 Carlyle’s Value to VCIF • Carlyle’s Global Credit Platform is one of the largest integrated credit platforms globally with approximately $150 billion in AUM and +200 investment professionals • One of the largest global manager of CLOs • Deep expertise in CLOs, including ~$50 billion in managed CL
Slide 15: Carlyle's Value to VCIF (Cont'd)
15 Carlyle’s Value to VCIF (Cont’d) • Carlyle’s established brand and extensive experience managing 40 Act Funds make it an ideal candidate to take over management of VCIF and convert the investment mandate to CLO equity • Experience includes three business development companies and one interval fun
Slide 16: CLO Overview
CARLYLE SECTION 03 CLO Overview
Slide 17: CLO Mechanics
17 CLO Mechanics Senior Secured Loans ILLUSTRATIVE CLO COLLATERAL POOL 1 Diverse Portfolio of Senior Secured Loans CLO Senior & Mezzanine CLO Equity CLO BALANCE SHEET Liabilities Assets • 150 – 250 issuers • Actively managed • Typically floating rate, senior secured loans • Principal value of collat
Slide 18: Strong Underlying Collateral
18 Strong Underlying Collateral • Loans are senior to bonds and equity with first priority to underlying collateral pledged by the borrower. As a result, loans have a historical high recovery rate of 66% 1 • Since inception in 1997, the S&P LSTA Leveraged Loan Index has only had 2 years of negative
Slide 19: High Cash-on-Cash Returns in a Cycle-Tested Strategy
19 High Cash - on - Cash Returns in a Cycle - Tested Strategy CLO EQUITY IRR BY VINTAGE (REDEEMED DEALS) 1 • All CLO vintages have on an aggregate basis achieved a positive return with an average return of 13% for redeemed deals 1 • The average annual CLO equity distribution is ~ 17% 1 CLO EQUITY QU
Slide 20: Compelling Relative Value and Low Correlation
20 Compelling Relative Value and Low Correlation • According to Citi Global Markets Research, the average annualized CLO equity returns is 12.72% 1 • The net 12.72% return for CLO equity is higher than the 12.62% return for the S&P 500, and substantially higher than the 3.79% for high yield bonds an
Slide 21: Sizable CLO Equity Market
21 For illustrative purposes only. There is no guarantee these trends will continue. I. Source: LCD and as of November 11, 2022. II. Source: Citi as of September 30, 2022. Sizable CLO Equity Market ANNUAL US CLO NEW ISSUANCE I ANNUAL EUROPEAN CLO NEW ISSUANCE I EUROPEAN CLO EQUITY BWIC VOLUMES 2 US
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