New Mountain Guardian IV BDC LLC
03/04/2026 | Press release | Distributed by Public on 03/04/2026 13:33
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The information in management's discussion and analysis of financial condition and results of operations relates to New Mountain Guardian IV BDC, L.L.C., including its wholly-owned direct subsidiaries (collectively, "we", "us", "our", "GIV" or the "Company").
Forward-Looking Statements
The information contained in this section should be read in conjunction with the financial data and consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. Some of the statements in this Annual Report on Form 10-K (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or our financial condition. The forward-looking statements contained in this section involve a number of risks and uncertainties, including:
•statements concerning the impact of a protracted decline in the liquidity of credit markets;
•the general economy, including fluctuating interest and inflation rates on the industries in which we invest;
•the uncertainty associated with the imposition of tariffs and/or trade barriers and changes in trade policy and its impact on our portfolio companies and the global economy;
•the impact of interest rate volatility on our business and our portfolio companies;
•our future operating results, our business prospects and the adequacy of our cash resources and working capital;
•the ability of our portfolio companies to achieve their objectives;
•our ability to make investments consistent with our investment objectives, including with respect to the size, nature and terms of our investments;
•the ability of New Mountain Finance Advisers, L.L.C. (the "Investment Adviser"), formerly known as New Mountain Finance Advisers BDC, L.L.C., or its affiliates to attract and retain highly talented professionals;
•actual and potential conflicts of interest with the Investment Adviser and New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates, "New Mountain Capital") whose ultimate owners include Steven B. Klinsky, other current and former New Mountain Capital professionals and related vehicles, and a minority investor; and
•the risk factors set forth in Item 1A.-Risk Factors,contained in this Annual Report on Form 10-K.
Forward-looking statements are identified by their use of such terms and phrases such as "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "may", "plan", "potential", "project", "seek", "should", "target", "will", "would" or similar expressions. Actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth in Item 1A.-Risk Factorscontained in this Annual Report on Form 10-K.
We have based the forward-looking statements included in this Annual Report on Form 10-K on information available to us on the date of this Annual Report on Form 10-K. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the U.S. Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, registration statements on Form 10, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview
We are a Delaware limited liability company formed on March 18, 2022. We are a closed end, non-diversified management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). We have elected to be treated for U.S. federal income tax purposes, and intend to comply with the requirements to continue to qualify annually as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital. New Mountain Capital is a global investment firm with approximately $60 billion of assets under management and a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, credit and net lease investment strategies. The Investment Adviser manages our day-to-day operations and provides us with investment advisory and management services. The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to ours. New Mountain Finance Administration, L.L.C. (the "Administrator"), a wholly-owned
subsidiary of New Mountain Capital, provides the administrative services necessary to conduct our day-to-day operations. The Administrator has hired a third party sub-administrator to assist with the provision of administrative services.
We conducted a private offering (the "Private Offering") of units of our limited liability company interests (the "Units") to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). Units were offered for subscription continuously throughout the Closing Period (as defined below). Each investor in the Private Offering made a capital commitment (each, a "Capital Commitment") to purchase Units pursuant to a subscription agreement entered into with us (each a "Subscription Agreement"). Closings of the Private Offering occurred, from time to time, in the Investment Adviser's sole discretion, during the 24-month period following the initial closing of Capital Commitments, which occurred on May 4, 2022 (the "Closing Period"). On April 15, 2024, pursuant to the Limited Liability Company Agreement, as amended and restated on December 6, 2023 (the "Third A&R LLC Agreement"), the Investment Adviser elected to extend the Closing Period from 24 months to 30 months after the initial closing of the Private Offering. As a result of the foregoing, we extended the end of the period during which we held subsequent closings from May 4, 2024 to November 4, 2024. At the end of the Closing Period, we had aggregate Capital Commitments from investors of $1.2 billion. We accepted and drew down on Capital Commitments from investors throughout and after the Closing Period. The final drawdown on Capital Commitments closed on December 30, 2025. We commenced our loan origination and investment activities contemporaneously with the initial drawdown from investors in the Private Offering, which occurred on May 9, 2022 (the "Initial Drawdown"). The investment period began on May 4, 2022 and will continue until November 4, 2028, the four-year anniversary of the end of the Closing Period (the "Investment Period"). Our term is until November 4, 2030, six years from the end of the Closing Period, subject to (i) a one year extension as determined by the Investment Adviser in its sole discretion and (ii) an additional one year extension as determined by our board of directors.
We established New Mountain Guardian IV SPV, L.L.C. ("GIV SPV") on July 26, 2022 as a wholly-owned direct subsidiary, whose assets are used to secure GIV SPV's credit facility. We established New Mountain Guardian IV Holdings, L.L.C. ("GIV Holdings"), formerly known as New Mountain Guardian IV Issuer SPV, L.L.C., on October 28, 2022 as a wholly-owned direct subsidiary, whose assets are used to secure GIV Holdings' credit facility. We established New Mountain Guardian IV Panzura, Inc. ("GIV Panzura") and New Mountain Guardian IV PPP, Inc. ("GIV PPP") as wholly-owned direct subsidiaries, which are treated as corporations for U.S. federal income tax purposes and are intended to facilitate our compliance with the requirements to be treated as a RIC under the Code by holding equity or equity-like investments in certain of our portfolio companies that are organized as a limited liability company or other form of pass-through entity; we consolidate these corporations for accounting purposes but the corporations are not consolidated for U.S. federal income tax purposes and may incur U.S. federal income tax expense as a result of their ownership of the portfolio companies.
We focus on providing direct lending solutions to U.S. upper middle market companies backed by top private equity sponsors. Our investment objective is to generate current income and capital appreciation through the sourcing and origination of senior secured loans and select junior capital positions to growing businesses in defensive industries that offer attractive risk-adjusted returns. Our differentiated investment approach leverages the deep sector knowledge and operating resources of New Mountain Capital.
We primarily invest in senior secured debt of U.S. sponsor-backed, middle market companies. We define middle-market companies as those with annual earnings before interest, taxes, depreciation and amortization ("EBITDA") of $10.0 million to $200.0 million. Our focus is on defensive growth businesses that generally exhibit the following characteristics: (i) acyclicality, (ii) sustainable secular growth drivers, (iii) niche market dominance and high barriers to competitive entry, (iv) recurring revenue and strong free cash flow, (v) flexible cost structures and (vi) seasoned management teams.
Senior secured loans may include traditional first lien loans or unitranche loans. We invest a significant portion of our portfolio in unitranche loans, which are loans that combine both senior and subordinated debt, generally in a first-lien position. Because unitranche loans combine characteristics of senior and subordinated debt, they have risks similar to the risks associated with secured debt and subordinated debt. Certain unitranche loan investments may include "last-out" positions, which generally heighten the risk of loss. In some cases, our investments may also include equity interests.
As of December 31, 2025, our top five industry concentrations were business services, software, financial services & technology, healthcare and consumer services.
As of December 31, 2025, our members' capital was approximately $1,206.8 million and our portfolio had a fair value of approximately $2,006.9 million in 131 portfolio companies.
Recent Developments
On January 13, 2026, we entered into the Third Amendment to the Wells Loan and Security Agreement (the "Third Amendment") by and among GIV Holdings, as borrower, the Company, as seller, as equityholder and as collateral manager, Wells Fargo Bank, National Association, as the administrative agent, a lender, and swingline lender, and Western Alliance Trust Company, N.A. as the collateral custodian. The Third Amendment amended the Wells Credit Facility to, among other
things: (i) extend the Facility Maturity Date (as defined in the Third Amendment) from March 2030 to November 2030; (ii) increase the maximum facility amount from $500.0 million to $750.0 million; and (iii) modify the applicable spread used to determine the per annum interest rate payable under the Wells Credit Facility from 2.05% to 1.85%.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting estimates.
Valuation and Leveling of Portfolio Investments
At all times, consistent with GAAP and the 1940 Act, we conduct a valuation of our assets, which impacts our members' capital.
We value our assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, our board of directors is ultimately and solely responsible for determining the fair value of our portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where our portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. Our quarterly valuation procedures are set forth in more detail below:
(1)Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.
(2)Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.
a. Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and
b. For investments other than bonds, we look at the number of quotes readily available and perform the following procedures:
i. Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. We will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, we will use one or more of the methodologies outlined below to determine fair value; and
ii. Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)Investments for which quotations are not readily available through exchanges, pricing services, brokers or dealers are valued through a multi-step valuation process:
a. Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
b. Preliminary valuation conclusions will then be documented and discussed with our senior management;
c. If an investment falls into (3) above for four consecutive quarters and if the investment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors; and
d. When deemed appropriate by our management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.
The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period and the fluctuations could be material.
GAAP fair value measurement guidance classifies the inputs used in measuring fair value into three levels as follows:
Level I-Quoted prices (unadjusted) are available in active markets for identical investments and we have the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures("ASC 820"), we, to the extent that we hold such investments, do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.
Level II-Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:
•Quoted prices for similar assets or liabilities in active markets;
•Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
•Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); and
•Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.
Level III-Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.
The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period.
See Item8.-Financial Statements and Supplementary Data-Note 4. Fair Valuein this Annual Report on Form 10-K for additional information on fair value hierarchy for the year ended December 31, 2025.
We generally use the following framework when determining the fair value of investments where there is little, if any, market activity or observable pricing inputs. We typically determine the fair value of our performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company's performance and associated financial risks. The following outlines additional details on the approaches considered:
Company Performance, Financial Review, and Analysis: Prior to investment, as part of our due diligence process, we evaluate the overall performance and financial stability of the portfolio company. Post-investment, we analyze each portfolio company's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and EBITDA growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. We also attempt to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of our original investment thesis. This analysis is specific to each portfolio company. We leverage the knowledge gained from our original due diligence process, augmented by this subsequent monitoring, to continually refine our outlook for each of our portfolio companies and ultimately form the valuation of our investment in each
portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, we will consider the pricing indicated by the external event to corroborate the private valuation.
For debt investments, we may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of our debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, we may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value.
After enterprise value coverage is demonstrated for our debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.
Market Based Approach:We may estimate the total enterprise value of each portfolio company by utilizing EBITDA or revenue multiples of publicly traded comparable companies and comparable transactions. We consider numerous factors when selecting the appropriate companies whose trading multiples are used to value our portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. We may apply an average of various relevant comparable company EBITDA or revenue multiples to the portfolio company's latest twelve month ("LTM") EBITDA or revenue or projected EBITDA or revenue to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA or revenue multiples will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment.
Income Based Approach:We also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security's contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment's expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to-maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement.
See Item 8.-Financial Statements and Supplementary Data-Note 4. Fair Valuein this Annual Report on Form 10-K for additional information on unobservable inputs used in the fair value measurement of our Level III investments as of December 31, 2025.
Revenue Recognition
Sales and paydowns of investments:Realized gains and losses on investments are determined on the specific identification method.
Interest and dividend income:Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind ("PIK") interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal balance on the capitalization date and are generally due at maturity or when redeemed by the issuer. For the years ended December 31, 2025 and December 31, 2024, we recognized PIK interest from investments of approximately $4.3 million and $4.8 million, respectively, and PIK dividends from investments of $0.8 million and $0.7 million, respectively.
Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.
Non-accrual income:Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate collectability. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.
Fee income:Fee income represents delayed compensation, revolver fees, upfront fees, amendment fees, consent fees, ticking fees and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is
income earned from counterparties on trades that do not settle within a set number of business days after the trade date. Fee income may also include fees from bridge loans. We may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received by us for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Monitoring of Portfolio Investments
We monitor the performance and financial trends of our portfolio companies on at least a quarterly basis. We attempt to identify any developments within the portfolio company, the industry or the macroeconomic environment that may alter any material element of our original investment strategy. Our portfolio monitoring procedures are designed to provide a simple yet comprehensive analysis of our portfolio companies based on their operating performance and underlying business characteristics, which in turn forms the basis of its Risk Rating (as defined below).
We use an investment risk rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio. As such, we assign each investment a composite score ("Risk Rating") based on two metrics - 1) Operating Performance and 2) Business Characteristics:
•Operating Performance assesses the health of the investment in context of its financial performance and the market environment it faces. The metric is expressed in Tiers of "4" to "1", with "4" being the best and "1" being the worst:
◦Tier 4 - Business performance is in-line with or above expectations
◦Tier 3 - Moderate business underperformance and/or moderate market headwinds
◦Tier 2 - Significant business underperformance and/or significant market headwinds
◦Tier 1 - Severe business underperformance and/or severe market headwinds
•Business Characteristics assesses the health of the investment in context of the underlying portfolio company's business and credit quality, the underlying portfolio company's current balance sheet, and the level of support from the equity sponsor. The metric is expressed as on a qualitative scale of "A" to "C", with "A" being the best and "C" being the worst.
The Risk Rating for each investment is a composite of these two metrics. The Risk Rating is expressed in categories of Green, Yellow, Orange and Red, with Green reflecting an investment that is in-line with or above expectations and Red reflecting an investment performing materially below expectations. The mapping of the composite scores to these categories are below:
•Green - 4C, 3B, 2A, 4B, 3A, and 4A (e.g., Tier 4 for Operating Performance and C for Business Characteristics)
•Yellow - 3C, 2B, and 1A
•Orange - 2C and 1B
•Red - 1C
The following table shows the Risk Ratings of our portfolio companies as of December 31, 2025:
| (in millions) | As of December 31, 2025 | |||||||||||||||||||||||||
| Risk Rating | Cost | Percent | Fair Value | Percent | ||||||||||||||||||||||
| Green | $ | 1,998.4 | 99.6 | % | $ | 1,999.3 | 99.6 | % | ||||||||||||||||||
| Yellow | 8.0 | 0.4 | % | 7.6 | 0.4 | % | ||||||||||||||||||||
| Orange | - | - | % | - | - | % | ||||||||||||||||||||
| Red | - | - | % | - | - | % | ||||||||||||||||||||
| $ | 2,006.4 | 100.0 | % | $ | 2,006.9 | 100.0 | % | |||||||||||||||||||
As of December 31, 2025, all investments in our portfolio had a Green Risk Rating, with the exception of three portfolio companies that had a Yellow Risk Rating.
Portfolio and Investment Activity
The fair value of our investments, as determined in good faith by our board of directors, was approximately $2,006.9 million in 131 portfolio companies at December 31, 2025 and approximately $1,516.6 million in 112 portfolio companies at December 31, 2024.
The following table shows our portfolio and investment activity for the years ended December 31, 2025 and December 31, 2024:
| Year Ended | ||||||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | ||||||||||||
| New investments in 99 and 98 portfolio companies, respectively | $ | 891.8 | $ | 1,148.9 | ||||||||||
| Debt repayments in existing portfolio companies | (380.5) | (186.8) | ||||||||||||
| Sales of securities in 5 and 5 portfolio companies, respectively | (25.7) | (43.0) | ||||||||||||
| Change in unrealized appreciation on 55 and 63 portfolio companies, respectively | 4.8 | 5.9 | ||||||||||||
| Change in unrealized depreciation on 93 and 55 portfolio companies, respectively | (17.2) | (4.2) | ||||||||||||
Recent Accounting Standards Updates
See Item 8.-Financial Statements and Supplementary Data-Note 13. Recent Accounting Standards Updates in this Annual Report on Form 10-K for details on recent accounting standards updates.
Results of Operations for the Years Ended December 31, 2025 and December 31, 2024
Results of Operations for the year ended December 31, 2023 can be found in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operationsin the Annual Report on Form 10-K filed on March 6, 2025, which is incorporated by reference herein.
Revenue
| Year Ended | ||||||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Interest income | $ | 165.8 | $ | 110.9 | ||||||||||
| Dividend income | 3.4 | 0.7 | ||||||||||||
| Fee income | 5.6 | 8.5 | ||||||||||||
| Total investment income | $ | 174.8 | $ | 120.1 | ||||||||||
Our total investment income increased by approximately $54.7 million or 46%, for the year ended December 31, 2025 as compared to the same period in the prior year. For the year ended December 31, 2025, total investment income of approximately $174.8 million consisted of approximately $150.9 million in cash interest from investments, approximately $4.3 million in PIK and non-cash interest from investments, net amortization of purchase premiums and discounts of approximately $10.6 million, approximately $3.4 million in dividends from investments and approximately $5.6 million in fee income.
The increase in interest income of approximately $54.9 million during the year ended December 31, 2025 was primarily attributable to our increasing invested balances due to our full deployment of capital over the year ended December 31, 2025 as compared to the same period in the prior year. Fee income during the year ended December 31, 2025, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront and ticking fees received from 56 different portfolio companies.
Operating Expenses
| Year Ended | ||||||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Management fee | $ | 10.7 | $ | 7.4 | ||||||||||
| Less: management fee waiver | (0.5) | (0.8) | ||||||||||||
| Net management fee | 10.2 | 6.6 | ||||||||||||
| Interest and other financing expenses | 54.7 | 42.0 | ||||||||||||
| Income based incentive fees | 15.7 | 10.2 | ||||||||||||
| Administrative expenses | 2.7 | 1.9 | ||||||||||||
| Professional fees | 1.7 | 1.2 | ||||||||||||
| Capital gains incentive fee | (1.9) | 0.6 | ||||||||||||
| Organizational and offering expenses | - | 0.2 | ||||||||||||
| Other general and administrative expenses | 0.4 | 0.2 | ||||||||||||
| Total expenses | 83.5 | 62.9 | ||||||||||||
| Less: expenses waived | - | - | ||||||||||||
| Net expenses before income taxes | 83.5 | 62.9 | ||||||||||||
| Income tax (benefit) expense | 0.2 | - | ||||||||||||
| Net expenses after income taxes | $ | 83.7 | $ | 62.9 | ||||||||||
Our total net operating expenses increased by approximately $20.8 millionfor theyear ended December 31, 2025as compared to the same period in the prior year. Our net management fee increased by approximately $3.6 million for theyear ended December 31, 2025as compared tothe same period in the prior year.Our income based incentive fee increased byapproximately $5.5 million and our capital gains incentive fee decreased by approximately $2.5 million for the year ended December 31, 2025 as compared to the same period in the prior year. The increase in management fees and income based incentive fees were attributable to larger managed and invested capital balances due to our full deployment of capital over the year ended December 31, 2025 as compared to the same period in the prior year. The decrease in capital gains incentive fees was due to a decrease in the accrual for hypothetical gains recognized as if the portfolio was sold at fair value in accordance with GAAP. The accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than the cumulative amount in the prior period or a reduction of previously recorded expense if such cumulative amount is less than the amount in the prior period. If such cumulative amount is negative, then there is no accrual. Amounts accrued are not payable unless gains are realized and distributions are greater than contributions. See Item 8-Financial Statements and Supplementary Data-Note 5. Agreements and Related Partiesfor details.
Interest and other financing expenses increased by approximately $12.7 million during the year ended December 31, 2025 as compared to the same period in the prior year, primarily due to higher drawn balances on our UBS Credit Facility and Wells Credit Facility during the period.
Our net administrative expenses, professional fees and other general and administrative expenses increased by approximately $1.5 million during the year ended December 31, 2025 as compared to the same period in the prior year due to the continued ramp of investment operations and full deployment of capital.
Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)
| Year Ended | ||||||||||||||
| (in millions) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Net realized gains (losses) on investments | $ | (0.6) | $ | 2.2 | ||||||||||
| Net realized gains (losses) of foreign currency | (0.1) | - | ||||||||||||
| Net change in unrealized appreciation (depreciation) of investments | (12.4) | 1.7 | ||||||||||||
| (Provision) benefit for taxes | (0.4) | (0.1) | ||||||||||||
| Net realized and unrealized gains (losses) | $ | (13.5) | $ | 3.8 | ||||||||||
Our net realized losses and unrealized depreciation resulted in a net loss of approximately $13.5 million for the year ended December 31, 2025 as compared to net realized gains and unrealized appreciation resulting in a net gain of approximately $3.8 million for the same period in the prior year. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the year ended December 31, 2025 was primarily driven by unrealized depreciation in Houghton Mifflin Harcourt Company and RLG Holdings, LLC and material accelerated amortization realized on our investment in Sierra Enterprises, LLC due to early repayments received during the period. The provision for income taxes was primarily attributable to our equity investments that are held as of December 31, 2025 in our corporate subsidiaries. The net gain for the year ended December 31, 2024 was primarily driven by the overall increase in market prices of our investments during the period as well as by a realized gain upon sale of our investment in Virtusa Corporation. The provision for income taxes was primarily attributable to our equity investments that were held as of December 31, 2024 in our corporate subsidiaries.
Liquidity, Capital Resources, Off-Balance Sheet Arrangements, Borrowings and Contractual Obligations
Liquidity and Capital Resources
The primary use of existing funds and any funds raised in the future is expected to be for investments in portfolio companies, repayment of indebtedness, cash distributions to our unitholders or for other general corporate purposes.
We expect to generate cash from (1) cash flows from investments and operations and (2) borrowings from banks or other lenders. We will seek to enter into any bank debt, credit facility or other financing arrangements on at least customary market terms; however, we cannot assure you we will be able to do so. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. Upon organization, we adopted the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, as amended by the Small Business Credit Availability Act, which resulted in the reduction of the minimum asset coverage ratio applicable to us from 200.0% to 150.0%. In connection with their subscriptions for our Units, our unitholders were required to acknowledge our ability to operate with an asset coverage ratio that may be as low as 150.0%. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150.0% after such borrowing (which means we can borrow $2 for every $1 of our equity). As of December 31, 2025, our asset coverage ratio was 247.9%.
Since our inception on March 18, 2022, we have entered into Subscription Agreements with several investors on various dates. Closings of the Private Offering occurred, from time to time, in the Investment Adviser's sole discretion, during the Closing Period. At December 31, 2025 and December 31, 2024, we had aggregate capital commitments accepted and undrawn capital commitments from investors as follows:
| (in millions) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Capital Commitments | $ | 1,207.9 | $ | 1,207.9 | ||||||||||
| Unfunded Capital Commitments | - | 398.6 | ||||||||||||
| % of Capital Commitments funded | 100.00 | % |
67.00%
|
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As of December 31, 2025, our borrowings consisted of the UBS Credit Facility and Wells Credit Facility. As of December 31, 2024, our borrowings consisted of the BMO Subscription Line, UBS Credit Facility and Wells Credit Facility. See Item 8-Financial Statements and Supplementary Data-Note 6. Borrowingsin this Annual Report on Form 10-K for additional information.
At December 31, 2025 and December 31, 2024, we had cash and cash equivalents of approximately $33.9 million and $19.9 million, respectively. Our cash used in operating activities for the year ended December 31, 2025 and December 31, 2024 was approximately $431.9 million and $853.6 million, respectively. We expect that all current liquidity needs will be met with cash flows received from prior drawdowns on Capital Commitments, investments and operations and borrowings from banks or other lenders.
Off-Balance Sheet Arrangements
We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of December 31, 2025 and December 31, 2024, we had outstanding commitments to third parties to fund investments totaling $409.0 million which included €4.5 million denominated in EUR, that has been converted to U.S. dollars and $285.8 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.
We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of December 31, 2025 and December 31, 2024, we had commitment letters to purchase investments in the aggregate par amount of $50.9 million and $55.6 million, respectively, which could require funding in the future. As of December 31, 2025 and December 31, 2024, we had not entered into any bridge financing commitments which could require funding in the future.
Contractual Obligations
A summary of our significant contractual payment obligations as of December 31, 2025 is as follows:
| Contractual Obligations Payments Due by Period | |||||||||||||||||||||||||||||
| (in millions) | Total |
Less than 1 Year |
1 - 3 Years | 3 - 5 Years |
More than 5 Years |
||||||||||||||||||||||||
| UBS Credit Facility (1) | $ | 394.0 | $ | - | $ | - | $ | 394.0 | $ | - | |||||||||||||||||||
| Wells Credit Facility (2) | 422.2 | - | - | 422.2 | - | ||||||||||||||||||||||||
| Total Contractual Obligations | $ | 816.2 | $ | - | $ | - | $ | 816.2 | $ | - | |||||||||||||||||||
(1)Under the terms of the $400.0 million UBS Credit Facility, all outstanding borrowings under that facility ($394.0 million as of December 31, 2025) must be repaid on or before November 4, 2030. As of December 31, 2025, there was approximately $6.0 million of possible capacity remaining under the UBS Credit Facility. SeeItem 8-Financial Statements and Supplementary Data-Note 6. Borrowings, for material details on the UBS Credit Facility.
(2)Under the terms of the $500.0 million Wells Credit Facility, all outstanding borrowings under that facility ($422.2 million, which included £0.5 million denominated in GBP that has been converted to U.S. dollars as of December 31, 2025) must be repaid on or before March 31, 2030. As of December 31, 2025, there was approximately $$77.8 million of possible capacity remaining under the Wells Credit Facility. SeeItem 8-Financial Statements and Supplementary Data-Note 6. Borrowings, for material details on the Wells Credit Facility.
We have entered into an investment advisory and management agreement (the "Investment Management Agreement") with the Investment Adviser in accordance with the 1940 Act. Under the Investment Management Agreement, the Investment Adviser has agreed to provide us with investment advisory and management services. We have agreed to pay for these services (1) a management fee and (2) an incentive fee based on our performance.
We have also entered into an administration agreement (the "Administration Agreement") with the Administrator. Under the Administration Agreement, the Administrator has agreed to arrange office space for us and provide office equipment and clerical, bookkeeping and record keeping services and other administrative services necessary to conduct our respective day-to-day operations. The Administrator has also agreed to maintain, or oversee the maintenance of, our financial records, our reports to unitholders and reports filed with the SEC. The Administrator has hired a third-party sub-administrator to assist with the provision of administrative services.
If any of the contractual obligations discussed above are terminated, our costs under any new agreements that are entered into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under the Investment Management Agreement and the Administration Agreement.
Distributions and Dividends
Tax characteristics of all distributions paid are reported to unitholders on Form 1099 or Form 1042 after the end of the calendar year. For the years ended December 31, 2025 and December 31, 2024, total distributions declared were $89.3 million and $57.5 million, respectively, of which the distribution was comprised of approximately 94.22% and 93.94%, respectively, of ordinary income, 5.78% and 6.06%, respectively, of long-term capital gains and 0.00% and 0.00%, respectively, of a return of capital. Future quarterly distributions, if any, will be determined by our board of directors.
We intend to pay quarterly distributions to our unitholders in amounts sufficient to qualify as and maintain our status as a RIC. We intend to distribute approximately all of our net investment income on a quarterly basis and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment.
Related Parties
We have entered into a number of business relationships with affiliated or related parties, including the following:
•We have entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.
•We have entered into the Expense Limitation and Reimbursement Agreement with the Investment Adviser. The Investment Adviser has agreed to reduce and/or waive its management fee (the "Specified Expenses Cap") each year such that we will not be required to pay certain expenses in excess of a maximum aggregate amount defined in the Expense Limitation and Reimbursement Agreement.
•We have entered into the Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges our office space and provides office equipment and administrative services necessary to conduct our respective day-to-day operations pursuant to the Administration Agreement. The Administrator has hired a third-party sub-administrator to assist with the provision of administrative services. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to us under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance, and compliance functions, and the compensation of our chief financial officer and chief compliance officer and their respective staffs. Pursuant to the Administration Agreement and further restricted by us, the Administrator may, in its own discretion, submit to us for reimbursement some or all of the expenses that the Administrator has incurred on our behalf during any quarterly period. As a result, the amount of expenses for which we will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to us for reimbursement in the future. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the year ended December 31, 2025, approximately $1.1 million of indirect administrative expenses were included in administrative expenses, none of which were waived by the Administrator. As of December 31, 2025, $0.3 million of indirect administrative expenses were included in payable to affiliates on the Consolidated Statement of Assets, Liabilities and Members' Capital.
•We, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant us, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name "New Mountain Capital".
In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors. These officers and directors also remain subject to the duties imposed by the 1940 Act and the Delaware Limited Liability Company Act.
The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to our investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser's allocation procedures.
We may be prohibited under the 1940 Act from participating in certain transactions with our affiliates without prior approval of the directors who are not interested persons, and in some cases, the prior approval of the SEC. We, the Investment Adviser and certain of our affiliates were granted an order for exemptive relief that permitted co-investing with affiliates of ours
subject to various approvals of our board of directors and other conditions. On May 13, 2025, we, the Investment Adviser and certain of our affiliates were granted a new order for exemptive relief (the "Exemptive Order") by the SEC. The Exemptive Order allows us to co-invest in certain negotiated transactions with other funds managed by the Investment Adviser or certain affiliates pursuant to the conditions of the Exemptive Order. Pursuant to such Exemptive Order, we generally are permitted to co-invest with certain affiliates if such co-investments are done on the same terms and at the same time, as further detailed in the Exemptive Order.The Exemptive Order requires that a "required majority" (as defined in Section 57(o) of the 1940 Act) of our board of directors make certain findings (1) in most instances when we co-invest with our affiliates in an issuer where our affiliate has an existing investment in the issuer, and (2) if we dispose of an asset acquired in a transaction under the Exemptive Order unless the disposition is done on a pro rata basis, or is a sale of a tradeable security. Pursuant to the Exemptive Order, our board of directors oversees our participation in the co-investment program. As required by the Exemptive Order, we have adopted, and our board of directors has approved, policies and procedures reasonably designed to ensure compliance with the terms of the Exemptive Order, and the Investment Adviser and our Chief Compliance Officer will provide reporting to our board of directors.
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