uploads///Portfolio total

Prospect Could See Higher Originations in Fiscal 1Q17

Robert Karr - Author

Oct. 28 2016, Updated 5:04 p.m. ET

More exits than deployments

In fiscal 4Q16, Prospect Capital (PSEC) made $294 million in investments, a substantial rise compared to its investments of $23 million in fiscal 3Q16. The company deployed these funds in multiple follow-on investments.

Closed-end funds have witnessed lower originations in recent quarters due to lower credit growth and high competition for quality credit. Prospect’s investments are expected to rise at a slower pace in the upcoming quarters, which could result in subdued growth with high yields.

In fiscal 4Q16, the company invested a total of $294 million. These investments were made through the following mediums:

  • third-party-sponsored deals: 50%
  • online lending: 25%
  • syndicated debt: 24%
  • real estate: 1%

Prospect’s exits in the quarter stood at $383.5 million in the form of repayments, sales, and scheduled amortization payments. Its net investment exits totaled $89.5 million, representing continued net withdrawals from the market.

Prospect Capital’s control investments made up 29.7% of its total portfolio in fiscal 4Q16, compared to 33.3% in the previous quarter. Its sale of Harbortouch Payments for $328 million contributed to this fall.

The year-over-year revenue rises of the company’s peers are as follows:

  • BlackRock Capital Investment (BKCC): 2%
  • Ares Capital (ARCC): 12%
  • American Capital (ACAS): 28%

Together, these companies make up 4.2% of the PowerShares Global Listed Private Equity ETF (PSP).

Article continues below advertisement

New avenues for originations

Prospect Capital is working on new origination strategies in a bid to boost its loan book. It mainly lends through control investments, structured credit investments, non-controlled, agented, and syndicated lending in sponsored and non-sponsored transactions, real estate investments, and online lending.

The company targets multiple sectors and new equity investments. Prospect is leveraging its large-scale balance sheet in order to provide multiple financing options to corporates.

In the next part of this series, we’ll study Prospect Capital’s focus on real estate and online lending.


Latest Prospect Capital Corporation News and Updates

    © Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.