PennantPark Floating Rate Capital Ltd.’s (NASDAQ: PFLT) investment
objective is to seek current income and capital appreciation by
investing primarily in Floating Rate Loans and other investments
made to middle-market private companies.
We are committed to a value oriented philosophy used by the investment professionals who manage our portfolio and will seek to minimize the risk of capital loss without foregoing potential for capital appreciation.
PennantPark seeks to use our experience and access to market information to identify investment candidates and to structure investments quickly and effectively.
Target Characteristics: Floating Rate Loans are typically made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities which operate in various industries and geographical regions. Portfolio Companies may obtain Floating Rate Loans to refinance existing debt and for acquisitions, dividends and leveraged buyouts as well as for general corporate purposes.
Investment Size: Investments will generally range between $2 million and $20 million on average, although we expect that this investment size will vary proportionately with the size of our capital base. In addition, we may invest a portion of our portfolio in other types of investments, which we refer to as opportunistic investments, which are not our primary focus but are intended to enhance our overall returns.
Investment Structure: We expect our Floating Rate Loans to have terms of three to ten years. We may obtain security interests in the assets of our portfolio companies that will serve as collateral in support of the repayment of these loans. This collateral may take the form of first or second priority liens on the assets of a portfolio company.
In the case of our Floating Rate Loans, we will seek to tailor the terms of the investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its profitability.
We are committed to a value oriented philosophy used by the investment professionals who manage our portfolio and seek to minimize the risk of capital loss without foregoing potential for capital appreciation. PFLT seeks to create a diversified portfolio primarily of Floating Rate Loans by initially targeting an investment size of $2 to $20 million, on average, in Floating Rate Loans of middle-market companies. We expect this investment size to vary proportionately with the size of our capital base.
Our selection process is focused on:
Our rigorous due diligence process draws from our Investment Adviser’s experience, industry expertise and network of contacts, and typically includes:
Upon the completion of due diligence and a decision to proceed with an investment in a company, the team leading the investment presents the investment opportunity to our Investment Adviser’s investment committee, which determines whether to pursue the potential investment.
Over time, we expect that our PFLT portfolio will consist primarily of Floating Rate Loans in qualifying assets such as private or thinly traded or small market-cap, public middle-market U.S. companies. We may also invest up to 30% of our portfolio in non-qualifying assets. These may include investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million, securities of middle-market companies located outside of the United States and investment companies as defined in the 1940 Act. Moreover, we may acquire investments in the secondary market.
The Investment Adviser monitors our portfolio companies on an ongoing basis to determine if they are meeting their respective business plans and to assess the appropriate course of action for each company.
Evaluating and monitoring the performance and fair value of our investments may include:
As a business development company, PennantPark offers managerial assistance to certain portfolio companies upon request.