MidCap Financial Investment Corporation · NASDAQ:MFIC
MidCap Financial Investment — Investor Presentation (March 2023)
38 slides from MidCap Financial Investment's investor presentation, March 2023
Slide 1: MidCap Financial Investment Corporation Investor Presentation March 2023
MidCap Financial Investment Corporation Investor Presentation March 2023 Unless otherwise noted, information as of December 31, 2022. 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 assum
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: MFIC Positioned to be a Pure Play Senior Secured Middle Market BDC
MidCap Financial Investment Corporation (“MFIC”) Positioned to be a Pure Play Senior Secured Middle Market BDC MFIC is a publicly traded (NASDAQ: Apollo is a high growth MidCap Financial1 is a MFIC) business development company alternative asset manager leading lender to middle (“BDC”) treated as a
Slide 5: Apollo is a High-Growth Alternative Asset Manager with 30+ Years of Expertise
Apollo is a High-Growth Alternative Asset Manager with 30+ Years of Investing Expertise Yield Hybrid Equity $392B AUM $56 AUM $99B AUM 300+ investment professionals 100+ investment professionals 280+ investment professionals Select Offerings High Grade Alpha Accord/Accord+ European Principal Finance
Slide 6: MidCap Financial is a Leading Middle Market Lender
MidCap Financial1 is a Leading Middle Market Lender Avg. Years of Senior Full-Service Finance Company Scaled Platform with Strong Credit Track Leadership Experience • • Founded in 2008 Focused on senior debt solutions to middle Record • Well-established provider of senior debt 27+ Years market compa
Slide 7: MidCap Financial Strong Strategic Partnership with Apollo
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 finance company focused on senior debt needs of the middle market
Slide 8: MidCap Financial Offers a Broad Suite of Products
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 Technology Lending Lending Lending Product Capabilities Senior
Slide 9: A Closer Look at MidCap Financial Investment Corporation
A Closer Look at MidCap Financial Investment Corporation (“MFIC”) 9
Slide 10: MFIC's Investment Strategy
MFIC’s 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 by MidCap Financial1 Primarily focused on senior secured middle market l
Slide 11: MFIC New Industry-Leading Fee Structure, Among Listed BDCs
MFIC New Industry-Leading Fee Structure, Among Listed BDCs New Fee Structure Supports Senior Secured Investment Strategy1,2 Expands universe of MidCap Financial-sourced3 loans suitable for MFIC that would have otherwise gone to institutional investors Reduced management fees by approximately 50% to
Slide 12: MFIC Has the Lowest Fee Structure, Among Listed BDCs
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% 1.90% 1.75% 32.0% 1.70% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1
Slide 13: Our Opportunities are Generating Greater Yields At Tighter Terms
Our Opportunities are Generating Greater Yields At Tighter Terms MFIC Has Benefitted From Enhanced Deal Economics and Higher Interest Rates Over the Last 12 Months Whilst Maintaining Strong Structural Protections 14.00% 13.00% 12.00% 11.00% 10.00% 9.00% 8.00% 7.00% 6.00% 03/31/22 06/30/22 09/30/22 1
Slide 14: MFIC Portfolio at a Glance
MFIC Portfolio at a Glance $ 2.40B 135 26 86% Portfolio # of Portfolio # of Sponsor-backed1 Size Companies Industries 94% 100% 610bps 10.3% First Lien1 Floating Rate1 Weighted Average Weighted Average Spread1,2 Yield1,3 Note: As of December 31, 2022. On a fair value basis unless noted otherwise. 1.
Slide 15: MFIC Senior Secured Diversified Investment Portfolio
MFIC Senior Secured Diversified Investment Portfolio Portfolio Snapshot Portfolio by Strategy Portfolio by Industry Portfolio $2.40 bn # of Portfolio Companies 135 2% 11% 13.2% # of Industries 26 19.5% 1% 2.0% Corporate Lending1 % Total Portfolio 87% 2% 3% 2.3% Non-Accrual % Total Portfolio 0.4% 2.5
Slide 16: Significantly Increased Exposure to First Lien Corporate Lending Assets
Significantly Increased Exposure to First Lien Corporate Lending Assets Investment Portfolio by Strategy ($ in bn) 1 130% 120% 110% $2.53 $2.35 $2.31 $2.97 $2.48 $2.59 $2.40 $2.40 100% 2% 2% 12% 8% 7% 8% 90% 20% 11% 26% 13% 12% 5% 5% 80% 34% 12% 5% 11% 70% 20% 13% 17% Target portfolio to consist of
Slide 17: Credit Quality Remains Stable
Credit Quality Remains Stable Median LTM EBITDA 1 Net Leverage and Attachment Point 1 $50 Net Leverage Attachment Point $46 $42 5.29 x 5.45 x 5.52 x 5.49 x $37 5.15 x $36 0.2 x 0.2 x 0.2 x 0.2 x 0.2 x Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Cash Interest Coverage 1 Inve
Slide 18: We Believe MFIC is Well Positioned for Rising Interest Rates
We Believe MFIC is Well Positioned for Rising Interest Rates ~ Annual Net Investment Income Per Share Impact Ability to Benefit from Rising Interest Rates 50 bps and 100 bps Increase in Base Rates + $0.129 Significant Exposure to Sources of Leverage Floating Rate Assets Other 15% Fixed Rate Debt 32%
Slide 19: Reasons to Own MFIC
Reasons to Own MFIC Public Shareholder Access Industry Leading Apollo to Institutional Quality Fee Structure Affiliation Private Credit Pure play senior secured middle Industry leading fee structure Affiliation with Apollo provides market BDC provides public among listed BDCs significant benefits; A
Slide 20: Appendix
APOLLO Appendix
Slide 21: 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 22: 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 23: Investment Portfolio as of December 31, 2022
Investment Portfolio as of December 31, 2022 $199 million or 8.3% post quarter end due to Corporate Lending and Other 3 Merx Aviation repayment10 $2.1 billion1 or 89.1% of portfolio $261 million1 or 10.9% of portfolio Weighted Average Yield 2 10.3% 57 aircraft (55 narrowbody, 2 widebody) First Lien
Slide 24: MFIC Top Corporate Lending Issuers as of December 31, 2022
MFIC Top Corporate Lending Issuers1 as of December 31, 2022 Fair Value % of Total ($ in millions) Portfolio 1 ChyronHego Corporation 2 $ 122 5.1% 2 Lending Point $ 45 1.9% 3 LashCo $ 43 1.8% Average Corporate Lending Position as of 12/31/22, at fair value 4 NFA Group $ 36 1.5% Top 10 5 Relation Insu
Slide 25: Financial Highlights
Financial Highlights ($ in thousands, except per share data) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Financial Highlights Net investment income per share $0.43 $0.35 $0.37 $0.42 $0.35 Net realized and change in unrealized gains (losses) from investments and ($0.41) ($0.10) ($0.28) ($0.36) ($0.03) foreign
Slide 26: Portfolio Highlights
Portfolio Highlights ($ in thousands) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Portfolio by Strategy, at fair value ($) Leveraged lending $1,733,659 $1,759,078 $1,748,935 $1,746,603 $1,748,898 Life sciences 213,278 195,816 219,669 171,244 173,656 Asset based, franchise finance and lender finance 137,776 1
Slide 27: Corporate Lending Portfolio Detail
Corporate Lending Portfolio Detail1 ($ in thousands) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Portfolio by Asset Class, measured at fair value ($) First lien $1,965,800 $1,976,115 $2,009,467 $1,957,161 $1,965,052 Second lien 70,919 85,410 89,951 91,640 98,898 Other 47,994 50,111 41,454 41,212 39,540 Total
Slide 28: Corporate Lending Commitments
Corporate Lending Commitments1 ($ in thousands) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Gross Commitments Made by Asset Class First lien $73,178 $20,486 $194,611 $115,886 $271,375 Second lien and Other 90 367 30 0 95 Gross commitments made $73,269 $20,853 $194,641 $115,887 $271,469 Gross Commitments Made
Slide 29: Funded Investment Activity
Funded Investment Activity ($ in thousands) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Fundings, excluding Merx Aviation and Revolvers Gross fundings 1 $104,551 $66,719 $165,471 $114,978 $234,402 Sales and syndications 1 (27,500) 0 0 (9,748) (7,377) Repayments 1 (113,460) (139,652) (121,199) (131,678) (279,
Slide 30: Credit Quality
Credit Quality As of December 31, 2022, 1.9% of total investments at amortized cost, or 0.4% of total investments at fair value, were on non-accrual status ($ in thousands) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Investments on Non-Accrual Status Non-accrual investments at amortized cost $49,443 $49,858
Slide 31: Net Asset Value Rollforward
Net Asset Value Rollforward ($ in thousands, except per share data) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Per Share NAV, beginning of period $15.45 $15.52 $15.79 $16.08 $16.07 Net investment income 0.43 0.35 0.37 0.42 0.35 Net realized and change in unrealized gains (losses) (0.41) (0.10) (0.28) (0.36)
Slide 32: Quarterly Operating Results
Quarterly Operating Results ($ in thousands, except per share data) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Total investment income Interest income (excluding PIK) $61,543 $56,318 $51,597 $52,480 $51,945 Dividend income 191 252 336 333 471 PIK interest income 851 855 956 625 982 Other income 735 1,460 51
Slide 33: Quarterly Balance Sheet
Quarterly Balance Sheet ($ in thousands, except share and per share data) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Assets Investments at fair value $2,398,120 $2,463,545 $2,549,503 $2,523,173 $2,594,843 Cash and cash equivalents (including foreign currencies) 87,091 61,736 35,462 30,598 34,467 Interest re
Slide 34: Funding Sources as of December 31, 2022
Funding Sources as of December 31, 2022 Debt Facilities ($ in thousands) Principal Amount Debt Issued/ Final Maturity Interest Outstanding Amended Date Rate Senior Secured Facility ($1.705 billion)1 12/22/2020 12/22/2025 L + 200 bps $1,012,503 2025 Notes 3/3/2015 3/3/2025 5.25% 350,000 2026 Notes 7/
Slide 35: Interest Rate Exposure as of December 31, 2022
Interest Rate Exposure as of December 31, 2022 Investment Portfolio by Interest Rate Type Funding Sources by Interest Rate Type Variable rate assets Fixed rate debt 0% Fixed rate assets 19% 7% Non yielding and non-accrual assets 8% Common equity 40% Floating rate Floating rate debt assets 41% 85% Fl
Slide 36: Realized and Change in Unrealized Gains (Losses) by Strategy
Realized and Change in Unrealized Gains (Losses) by Strategy ($ in millions) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Leveraged lending ($13.6) ($3.7) ($9.4) $5.1 $2.2 Life sciences $1.3 ($0.7) ($0.6) ($1.7) $0.3 Franchise Finance ($0.1) $0.0 ($0.1) $0.0 ($0.0) Asset based and Lender finance ($0.4) $0.6 (
Slide 37: Outstanding Commitments
Outstanding Commitments ($ in thousands) Dec-22 Sep-22 Jun-22 Mar-22 Dec-21 Revolver Obligations and Bridge Loans Funded 1 $106,919 $117,490 $108,368 $110,386 $139,642 Unfunded 1, 2 196,408 192,653 211,667 213,655 239,418 Par $303,327 $310,143 $320,035 $324,041 $379,060 Unfunded Revolver and Bridge
Slide 38: 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 38
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