Originations higher than repayments
For a business development company such as Prospect Capital (PSEC), the total number of originations plays a vital role in determining its investment objectives. Prospect Capital focuses on guarding its capital and makes plans to minimize the risk rather than to chase yields.
Additionally, the company has significant investment opportunities, and it isn’t planning on deploying capital into assets with high risk and low returns.
In fiscal 3Q18, Prospect Capital’s total originations were higher than its total repayments. The company saw total originations amounting to $429.9 million in fiscal 3Q18, while its total repayments amounted to $118 million.
Breakdown of Prospect’s total originations
Prospect Capital’s total originations in fiscal 3Q18 are in the following proportions:
- non-agented debt: 43%
- agented sponsor debt: 40%
- operating buyouts: 6%
- structured credit: 7%
- real estate: 3%
- online lending: 1%
However, the total originations in fiscal 3Q18 represent a fall compared to fiscal 2Q18. The company’s originations with respect to structured credit were 0% in fiscal 2Q18. Moving forward, the company’s performance will be substantially affected by the Federal Reserve’s decision regarding interest rates.
Prospect’s enterprise value stands at $4.6 billion, while its peers (XLF) FS Investment (FSIC), Apollo Investment (AINV), and Ares Capital (ARCC) have enterprise values of $3.4 billion, $2 billion, and $11.8 billion, respectively. These enterprise values represent the closing prices of the respective stocks as of May 11.