Carlyle Secured Lending, Inc. · NASDAQ:CGBD
Carlyle Secured Lending — TCG BDC — Investor Presentation (September 2021)
30 slides from Carlyle Secured Lending's investor presentation, Sep 30, 2021
Slide 1: TCG BDC, Inc. Investor Presentation
TCG BDC, Inc. Investor Presentation September 30, 2021 1
Slide 2: Disclaimer and Forward-Looking Statements
Disclaimer and Forward-Looking Statements This presentation (the “Presentation”) has been prepared by TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”) (NASDAQ: CGBD) and may only be used for informational purposes only. This Presentation shou
Slide 3: Introduction to Carlyle and CGBD
Introduction to Carlyle and CGBD 3
Slide 4: Carlyle Firm Overview
Carlyle Firm Overview1 FIRM OVERVIEW Private Equity $161BN AUM 400+ investment professionals Founded: 1987 AUM: $293BN Global Credit $66BN AUM3 190+ investment professionals(4) Employees: 1,800+ Investment Professionals: 700+2 Offices / Countries: 26 / 5 Investment Solutions $66BN AUM 80+ investment
Slide 5: CGBD Sits Within Carlyle's Broad Global Credit Platform
TCG BDC, Inc. (“CGBD”), Sits Within Carlyle’s Broad Global Credit Platform CGBD is the flagship vehicle for Carlyle Direct Lending, and derives significant investment benefits from its relationship with Carlyle Carlyle Global Credit $66BN AUM1 LIQUID CREDIT ILLIQUID CREDIT REAL ASSETS CREDIT AUM: $3
Slide 6: Why CGBD?
Why CGBD? CARLYLE’S TENURED & 21+ years $66BN SCALED CREDIT PLATFORM CARLYLE LEVERAGED FINANCE CARLYLE GLOBAL CREDIT MARKET LEADERSHIP AUM DEEP PRIVATE CREDIT 65+ ~1,850 CAPABILITIES ILLIQUID CREDIT INVESTMENT PRIVATE CREDIT TRANSACTIONS PROFESSIONALS ORIGINATED PER YEAR1 SAFE & DEFENSIVE ~80% 1-2%
Slide 7: CGBD Strategy and Investment Process
CGBD Strategy and Investment Process 7
Slide 8: CGBD Overview
CGBD Overview OPPORTUNITY OBJECTIVE Direct lending has exhibited enhanced yield potential Seek to deliver sustainable current cash income from compared to traditional fixed income asset classes primarily senior secured, floating rate instruments With loan-to-values (LTVs) of generally less than 50%
Slide 9: Large, Established Direct Origination Footprint
Large, Established Direct Origination Footprint Broad sourcing capabilities across markets, private equity sponsors, management teams, and other channels SCALED PLATFORM PROVIDES ORIGINATION ADVANTAGES 65+ 250+ ~1,850 ILLIQUID CREDIT INVESTMENT ILLIQUID CREDIT DEALS REVIEWED PER SPONSOR PARTNERS PRO
Slide 10: Rigorous Investment Process Designed to Access Carlyle's Deep Expertise
Rigorous Investment Process Designed to Access Carlyle’s Deep Expertise Underwriting consists of four “gates,” which seek to apply the full expertise of the Carlyle platform along all stages of the process 1. POINT OF ORIGINATION 2. UNDERWRITING TEAM 3. SCREENING COMMITTEE 4. INVESTMENT COMMITTEE •
Slide 11: Safe and Defensive Portfolio Construction
Safe and Defensive Portfolio Construction Carlyle’s approach to portfolio construction focuses on risk mitigation to ensure sustainability of income CONSIDERATION PORTFOLIO STATISTICS • Appropriate borrower, industry and risk-factor diversification 1-2% ~80% PLATFORM BREADTH AVERAGE POSITION FIRST L
Slide 12: Differentiated Capabilities Drive Results
Differentiated Capabilities Drive Results Our investment edge is derived from deploying clearly differentiated capabilities into fundamentally attractive private credit markets Differentiated Capabilities, Credit-Led Culture, and Defensive Portfolio Construction Drive Outcomes UTILIZE CARLYLE PLATFO
Slide 13: Deep Integration of ESG into Our Investment Process
Deep Integration of ESG into Our Investment Process Carlyle has deep ESG capabilities embedded in our investment process which provide an additional lens to mitigate risk and identify opportunities PRIMARY FOCUS DEDICATED ESG TEAM In credit, ESG factors are most relevant for Our in-house ESG team wo
Slide 14: CGBD Background & Positioning
CGBD Background & Positioning 14
Slide 15: CGBD Snapshot
CGBD Snapshot FLAGSHIP FUND FOR A STRONG DIRECT LENDING PLATFORM AT A COMPELLING VALUATION $755 MILLION CGBD NASDAQ Market Cap Ticker Exchange $16.65 $14.00 10.6% Net Asset Value Per Share Current Price LTM Dividend Yield COMPANY TIMELINE & IMPORTANT MILESTONES 3Q14: 3Q15: 2Q19: 2Q20: 2Q13: Fund Rea
Slide 16: Consistent History of Generating Sustainable Dividend Income
Consistent History of Generating Sustainable Dividend Income Our dividend policy, implemented in 2020, provides a quarterly base dividend of $0.32 plus an ongoing supplemental derived from earnings in excess of the base dividend CGBD DIVIDEND HISTORY $0.90 11.0% 10.4% $0.80 10.0% 9.9% 10.0% 9.6% 9.4
Slide 17: CGBD Management Team
CGBD Management Team Seasoned and tenured team with significant experience in private credit CGBD SENIOR LEADERSHIP Linda Pace Tom Hennigan Taylor Boswell L. Allison Rudary President & CEO of the BDCs, Vice CFO of the BDCs, CIO of Direct Lending Shareholder Relations Chair of Global Credit COO & CRO
Slide 18: Strong Relative Performance Since Management Change
Strong Relative Performance Since Management Change CGBD’s total returns lagged the industry from late 2018 into mid-2019, driven principally by CUP program losses. Under our new leadership team and through the COVID crisis, CGBD’s performance has consistently exceeded the BDC industry CGBD TOTAL RE
Slide 19: Legacy CUP Program: What Was It?
Legacy CUP Program: What Was It? CGBD’s credit losses in 2018 and 2019 were driven principally by the CUP program losses REALIZED AND UNREALIZED LOSSES AS % OF ASSETS Carlyle Unitranche Program (“CUP”) was a partnership where IPO (JUNE 2017) TO DEC 20191 Carlyle held last out exposure and a partner
Slide 20: CGBD: Strong Fundamentals & Attractive Valuation
CGBD: Strong Fundamentals & Attractive Valuation TTM DIVIDEND YIELD ON NAV NAV CHANGE THROUGH COVID1 LEVERAGE 0.6% 1.20x 9.0% 8.8% 0.5% 8.4% 1.10x 1.07x 8.5% 1.05x -0.5% 8.0% 1.00x -1.5% 7.5% 0.90x 7.0% -2.5% 0.80x -2.8% 6.5% -3.5% 0.70x 2 CGBD BDC Universe CGBD BDC Universe CGBD BDC Universe DIVIDE
Slide 21: 3Q21 Financial Highlights
3Q21 Financial Highlights 21
Slide 22: Portfolio Highlights
Portfolio Highlights Total Investments And Commitments ($MM) $2,131 Unfunded Commitments (1) ($MM) $183 Total Investments At Fair Value ($MM) $1,948 Yield Of Debt Investments At Cost (2) (%) 7.69% Yield Of Debt Investments At Fair Value (2) (%) 7.92% Number Of Investments 163 Number Of Portfolio Com
Slide 23: Financial Performance Summary
Financial Performance Summary (Dollar amounts in thousands, except per share data) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Key Metrics per Common Share Net Investment Income (1) $ 0.36 $ 0.38 $ 0.36 $ 0.38 $ 0.39 Net Realized & Unrealized Gains (Losses) 0.22 0.28 0.29 0.39 0.48 Net Income (Loss) 0.5
Slide 24: Origination Activity Detail
Origination Activity Detail (Dollar amounts in thousands and based on par/principal) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Originations and Net Investment Activity Investment Fundings $ 60,826 $ 256,675 $ 151,422 $ 215,426 $ 276,955 Unfunded Commitments, Net Change 7,706 24,184 (356) 27,255 6,582
Slide 25: Quarterly Operating Results Detail
Quarterly Operating Results Detail (Dollar amounts in thousands, except per share data) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Investment Income Interest income $ 33,114 $ 32,242 $ 29,725 $ 30,443 $ 33,039 Payment-In-Kind interest income 1,810 1,821 2,125 2,318 2,441 Income from Credit Funds 5,750
Slide 26: Quarterly Balance Sheet Detail
Quarterly Balance Sheet Detail (Dollar amounts in thousands, except per share data) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Assets Investments—non-controlled/non-affiliated, at fair value $ 1,737,044 $ 1,509,271 $ 1,528,400 $ 1,579,256 $ 1,643,584 Investments—non-controlled/affiliated, at fair value
Slide 27: Net Asset Value Per Share Bridge
Net Asset Value Per Share Bridge Q3 2021 YTD Q3 2021 Note: The net asset value per share and dividends declared per share are based on the shares outstanding at each respective quarter-end. Net investment income per share and net change in realized and unrealized appreciation (depreciation) per shar
Slide 28: Risk Rating Distribution
Risk Rating Distribution • As of September 30, 2021, four borrowers were on non-accrual status, representing 3.5% of total investments at fair value and 5.1% at amortized cost. PORTFOLIO RISK RATINGS (Dollar amounts in millions) March 31, 2021 June 30, 2021 September 30, 2021 Internal Risk Rating Fa
Slide 29: Investment Funds Update (14% of TCG BDC Portfolio)
Investment Funds Update (14% of TCG BDC Portfolio) KEY STATISTICS - CREDIT FUND PORTFOLIO COMPOSITION - CREDIT FUND Total Investments And Commitments ($MM) $1,202 Diversification by Borrower Industry Unfunded Commitments ($MM) $124 Total Investments At Fair Value ($MM) $1,078 Yield Of Debt Investmen
Slide 30: Funding and Capital Management Overview
Funding and Capital Management Overview OVERVIEW OF FINANCING FACILITIES (1) % OF COMMITTED BALANCE Original Tenor / SHEET LEVERAGE UTILIZED Size Pricing Maturity Date 5 years (4 year revolving); L+2.25% / Credit Facility (2) $688 million maturity date 10/28/25 37.5 bps unused fee 2015-1R Notes (2)