Oxford Square Capital Corp. · NASDAQ:OXSQ
Oxford Square Capital — TICC Capital — JMP Securities Financial Services and Real Estate Conference 2013
29 slides from Oxford Square Capital's conference presentation, Oct 1, 2013
Slide 1: TICC Capital Corp. JMP Securities Financial Services and Real Estate Conference
TICC Capital Corp. JMP Securities Financial Services and Real Estate Conference October 1, 2013
Slide 2: Disclaimer
Disclaimer These materials and any presentation of which they form a part are neither an offer to sell, nor a solicitation of an offer to purchase, any securities of TICC Capital Corp . (“TICC” or the “Company”) . These materials and the presentations of which they are a part, and the summaries cont
Slide 3: Forward-Looking Statements
Forward - Looking Statements This presentation contains forward - looking statements that involve substantial risks and uncertainties . These forward - looking statements are not historical facts, but rather are based on current expectations, estimates and projections about TICC Capital Corp . (“TIC
Slide 4: TICC Snapshot
TICC Snapshot TICC Capital Corp . is an externally managed business development company (“BDC”) that has elected to be treated as a regulated investment company (“RIC”) for federal income tax purposes Ticker ▪ NasdaqGS: TICC Formation ▪ IPO in November 2003 ▪ First publicly - traded externally manag
Slide 5: TICC Investment Highlights
TICC Investment Highlights Barbell approach with exposure to syndicated loans and CLOs 5 Attractive Credit Track Record ▪ Annualized loss rate since inception of - 0.3% versus BDC average of - 0.7% 1 ▪ Single loan currently on non - accrual 2 Diversified Portfolio ▪ One of the more diversified BDCs
Slide 6: Experienced Management & Advisory Team
Experienced Management & Advisory Team 6 Name / Position Years of Experience Prior Positions Charles Royce 1 Chairman and Director 48 Royce & Associates, LLC – President, Chief Investment Officer and Member of the Board of Managers Jonathan H. Cohen 1 CEO and Director 1 25 Wit SoundView – Direct
Slide 7: TICC is Part of a Larger Asset Management Platform
TICC is Part of a Larger Asset Management Platform 7 Total Platform – ~$1.5 billion AUM ▪ Portfolio management team at TICC manages two publicly traded investment companies and three CLOs ▪ Manages portfolios of syndicated corporate loans, CLO debt and equity tranches and self - originated bilateral
Slide 8: TICC Timeline
TICC Timeline 8 2003 – 2006 2006 – 2008 2008 – 2010 2010 – 2013 ▪ $150 million IPO in November 2003 ▪ Company named Technology Investment Capital Corp. ▪ Initially focused on directly originated bilateral loans in the technology sector ▪ Expanded investment focus to include syndicated loans ▪ Change
Slide 9: Strong Performance Over Last Five Years
Strong Performance Over Last Five Years 9 Five - Year Total Return vs. Market 1 (6/30/08 – 06/28/13) Five - Year Total Return vs. Peers 1 (6/30/08 – 06/28/13) 1 . Source: Bloomberg. Total return on security or index with dividends; assumes dividends are reinvested at the closing price of the securit
Slide 10: TICC has Grown Significantly Since 2010
$24 $30 $37 $27 $54 1 $0 $10 $20 $30 $40 $50 $60 2010 2011 2012 1H2013 TICC has Grown Significantly Since 2010 10 Total Assets Net Investment Income Distributions per Share 2 $225 $318 $424 $756 $1,025 $0 $150 $300 $450 $600 $750 $900 $1,050 2009 2010 2011 2012 6/30/13 ($ in millions) $0.10 $0.15 $0
Slide 11: Proven Ability to Adapt over Time
Proven Ability to Adapt over Time 11 Syndicated Loans ▪ Move actively between primary and secondary markets depending on market opportunity ▪ Opportunistically purchased cash paying distressed loans at meaningful discounts to par CLO Equity and Debt ▪ Starting in 2009 , purchased CLO equity and debt
Slide 12: Current Investment Approach
Current Investment Approach TICC’s investment approach provides an attractive risk - adjusted return 12 Debt Investments ~8.5% weighted average yield at cost CLO Equity ~32.4% w eighted average yield at cost 1 ~12.4% weighted average yield of income producing securities at cost 1 ~84% of income prod
Slide 13: Diversified Portfolio
Diversified Portfolio ▪ $ 906 million portfolio 1 composed of 129 portfolio company and CLO investments ▪ Average investment by fair value represents 0 . 8 % of total portfolio 1 ▪ Top 10 investments by fair value represent 18 . 7 % of total portfolio 1 13 Investment Portfolio by Asset Type 1 Invest
Slide 14: Quality Portfolio
Quality Portfolio TICC’s portfolio has a weighted - average internal credit grade of 2 . 2 1 14 Grade 2 87% Grade 3 12% Grade 5 1% Full repayment of principal and interest is expected. Closer monitoring is required. Full repayment of principal and interest is expected. A reduction of interest income
Slide 15: Positioned for Rising Rates
Positioned for Rising Rates 95 % of debt investments in TICC’s portfolio are floating rate 1 15 Debt Investment Portfolio 1 TICC Funding Sources 2 1. Debt investment portfolio represents 78% of the total investment portfolio as of 6/30/13 on a fair value basis. 2. As of 6/30/13. Fixed 5% Floating 95
Slide 16: Capital Structure Overview
Capital Structure Overview ▪ Lower - cost leverage with a weighted average interest rate of 3 . 93 % 1 ▪ Weighted average maturity of 8 . 25 years 1 16 1. Based on principal amount outstanding and stated interest rates as of 6/30/13 . 2. As of 6/30/13. Track record as a CLO manager enables TICC to b
Slide 17: Financial Summary
Financial Summary 17 Summary Income Statement Summary Balance Sheet 2012 1H-12 1H-13 Investment Income $ 71.2 $ 35.2 $ 47.2 Operating Expenses 34.0 12.0 20.5 Net Investment Income 37.2 23.2 26.6 Net Increase in Net Assets Resulting from Operations 68.3 26.3 22.3 Per Share Data: NII / Share $ 0.98 $
Slide 18: Investment Philosophy, Sourcing and Portfolio Management
INVESTMENT PHILOSOPHY, SOURCING AND PORTFOLIO MANAGEMENT
Slide 19: Syndicated Loan Investment Philosophy
Syndicated Loan Investment Philosophy 1 19 Expectation for Attractive Risk - Adjusted Returns Target Portfolio Company Characteristics ▪ Stable, Positive Cash Flows ▪ Experienced Management ▪ Strong Competitive Position in Industry ▪ Potential for Growth ▪ Significant Financial and/or Strategic Spon
Slide 20: Syndicated Loan Sourcing and Investment Process
Syndicated Loan Sourcing and Investment Process 20 Sourcing Brokers Banks Reverse inquiry Internal pipeline reviews Preliminary screening with Investment Committee Initial Screening Diligence Internal Discussion Internal Presentation Investment Committee Vote Formal presentation to Inves
Slide 21: CLO Investment Philosophy
CLO Investment Philosophy 21 Investment Overview TICC Competitive Advantages ▪ Make both majority and minority investments in the equity and/or mezzanine debt tranches of third party managed CLOs in both the primary and secondary markets ▪ CLO investments modeled and stressed to simulate a variety o
Slide 22: CLO Sourcing and Investment Process
CLO Sourcing and Investment Process 22 Deal Sourcing ▪ S trong relationships with CLO collateral managers due to track record and history of investing in the space ▪ Being one of the most active investors in the primary and secondary CLO markets has facilitated deep relationships with all of the maj
Slide 23: Comprehensive Portfolio Management
Comprehensive Portfolio Management 23 Ongoing Credit Review ▪ Attend company meeting and/or telephonic presentations ▪ Analyze monthly and/or quarterly financials, and other financial information as provided ▪ Evaluate adherence to business plan and covenants ▪ Investment team provides immediate wri
Slide 24: Appendix
APPENDIX
Slide 25: BDC Overview and Structural Benefits
BDC Overview and Structural Benefits BDCs typically invest in loans and debt securities of U . S . - based businesses 25 Overview Structural Benefits ▪ Created in 1980 by Congress to enable flow of public capital into small and mid - sized businesses ▪ BDCs are tax advantaged closed - end funds that
Slide 26: CLO Overview
CLO Overview ▪ CLOs are special purpose vehicles which are established to originate and manage portfolios of primary secured loans which meet certain pre - determined criteria ▪ The notes issued by the CLO pay floating rate interest ▪ Loans held at par value unless : – In default – Loans purchased a
Slide 27: CLO Structure – Payment Waterfall
CLO Structure – Payment Waterfall The CLO is funded through the issuance of multiple classes of debt and equity . Each class of debt receives a quarterly contractual periodic distribution of interest ; principal is repaid to each based on seniority (waterfall) . The equity tranches receive excess pa
Slide 28: CLO Market / Structural Merits
CLO Market / Structural Merits ▪ U . S . CLO market estimated to be over $ 269 billion in over 719 CLO vehicles 1 ▪ Investment in the debt tranches may provide equity - like returns ▪ Equity tranches may provide more predictable returns than provided in the equity market ▪ The underlying loans in th
Slide 29: Corporate Information
Corporate Information 29 Board of Directors Fiscal Year End Executive Corporate Officers Independent December 31 Jonathan H. Cohen Board Member and Chief Executive Officer Steven P. Novak Saul B. Rosenthal President and Chief Operating Officer G. Peter O'Brien Independent Audit Firm Patrick F. Conro
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