XML 42 R30.htm IDEA: XBRL DOCUMENT v3.24.2
INVESTMENTS (Tables)
 6 Months Ended
Jun. 30, 2024
Investments, Debt and Equity Securities [Abstract]  
Schedule of Investments
As of June 30, 2024 and December 31, 2023, investments consisted of the following:

 As of
June 30, 2024December 31, 2023
Amortized Cost(1)Fair ValueAmortized Cost(1)Fair Value
First lien senior secured loans(2)$12,732 $12,434 $10,313 $10,081 
Second lien senior secured loans3,120 3,011 3,980 3,753 
Subordinated certificates of the SDLP(3)1,271 1,241 1,316 1,288 
Senior subordinated loans1,438 1,401 1,150 1,096 
Preferred equity2,731 2,741 2,457 2,460 
Ivy Hill Asset Management, L.P.(4)1,724 1,956 1,763 1,987 
Other equity1,691 2,189 1,689 2,209 
Total$24,707 $24,973 $22,668 $22,874 
________________________________________

(1)The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.
    
(2)First lien senior secured loans include certain loans that the Company classifies as “unitranche” loans. The total amortized cost and fair value of the loans that the Company classified as “unitranche” loans were $7,313 and $7,184 respectively, as of June 30, 2024, and $5,786 and $5,667, respectively, as of December 31, 2023.

(3)The proceeds from these certificates were applied to co-investments with Varagon Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 19 and 22 different borrowers as of June 30, 2024 and December 31, 2023, respectively.

(4)Includes the Company’s subordinated loan and equity investments in IHAM (as defined below), as applicable.
  
The Company uses GICS for classifying the industry groupings of its portfolio companies. The industrial and geographic compositions of the Company’s portfolio at fair value as of June 30, 2024 and December 31, 2023 were as follows:

 As of
June 30, 2024December 31, 2023
Industry
Software and Services24.2 %23.2 %
Health Care Services12.6 12.1 
Commercial and Professional Services10.6 9.8 
Financial Services(1)10.3 11.5 
Insurance Services5.3 5.1 
Investment Funds and Vehicles(2)5.2 5.8 
Consumer Services4.8 4.3 
Power Generation3.2 4.2 
Retailing and Distribution3.2 2.5 
Media and Entertainment3.0 2.8 
Consumer Durables and Apparel2.9 3.1 
Capital Goods2.4 2.4 
Food and Beverage2.0 2.1 
Consumer Staples Distribution and Retail1.9 1.8 
Energy1.6 2.2 
Other6.8 7.1 
Total100.0 %100.0 %
________________________________________

(1)Includes the Company’s investment in IHAM.

(2)Includes the Company’s investment in the SDLP (as defined below), which had made first lien senior secured loans to 19 and 22 different borrowers as of June 30, 2024 and December 31, 2023, respectively. The portfolio companies in the SDLP are in industries similar to the companies in the Company’s portfolio.

 As of
June 30, 2024December 31, 2023
Geographic Region
West(1)24.1 %24.3 %
Midwest24.1 24.7 
Southeast17.9 18.5 
Mid-Atlantic14.4 13.3 
Northeast(2)13.1 13.2 
International6.4 6.0 
Total100.0 %100.0 %
________________________________________

(1)Includes the Company’s investment in the SDLP, which represented 5.0% and 5.6% of the total investment portfolio at fair value as of June 30, 2024 and December 31, 2023, respectively.

(2)Includes the Company’s investment in IHAM, which represented 7.8% and 8.7% of the total investment portfolio at fair value as of June 30, 2024 and December 31, 2023, respectively.
The amortized cost and fair value of the Company’s investment in IHAM as of June 30, 2024 and December 31, 2023 were as follows:
As of
June 30, 2024December 31, 2023
Amortized CostFair ValueAmortized CostFair Value
Subordinated loan(1)
$23 $23 $62 $62 
Equity
1,701 1,933 1,701 1,925 
Total investment in IHAM$1,724 $1,956 $1,763 $1,987 
_______________________________________________________________________________

(1)The Company has provided a commitment to fund up to $500 to IHAM, of which the availability is solely at the Company’s discretion.
Below is a summary of the SDLP’s portfolio.
As of
June 30, 2024December 31, 2023
Total first lien senior secured loans(1)(2)$5,050 $5,431 
Largest loan to a single borrower(1)$368 $370 
Total of five largest loans to borrowers(1)$1,709 $1,650 
Number of borrowers in the SDLP19 22 
Commitments to fund delayed draw loans(3)$231 $260 
___________________________________________________________________________

(1)At principal amount.
(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of June 30, 2024 and December 31, 2023, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $4,344 and $4,558, respectively.

(3)As discussed above, these commitments have been approved by the investment committee of the SDLP.

Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of the SDLP, in conformity with GAAP, as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and 2023 are presented below:

As of
June 30, 2024December 31, 2023
Selected Balance Sheet Information:
Investments at fair value (amortized cost of $4,879 and $5,267, respectively)
$4,667 $5,129 
Other assets180 192 
Total assets$4,847 $5,321 
Senior notes$3,352 $3,705 
Intermediate funding notes128 139 
Other liabilities130 136 
Total liabilities3,610 3,980 
Subordinated certificates and members’ capital1,237 1,341 
Total liabilities and members’ capital$4,847 $5,321 

For the Three Months Ended June 30,For the Six Months Ended June 30,
2024202320242023
Selected Statement of Operations Information:
Total investment income$133 $140 $283 $276 
Interest expense76 72 154 141 
Other expenses4 6 8 11 
Total expenses80 78 162 152 
Net investment income53 62 121 124 
Net realized and unrealized losses on investments (71)(17)(72)(86)
Net (decrease) increase in members’ capital resulting from operations$(18)$45 $49 $38 
Schedule of Dividend and Interest Income
The interest income and dividend income that the Company earned from IHAM for the three and six months ended June 30, 2024 and 2023 were as follows:

For the Three Months Ended June 30,For the Six Months Ended June 30,
2024202320242023
Interest income
$— $10 $1 $23 
Dividend income
$69 $60 $135 $117 
The interest income from the Company’s investment in the SDLP Certificates and capital structuring service and other fees earned for the three and six months ended June 30, 2024 and 2023 were as follows:

For the Three Months Ended June 30,For the Six Months Ended June 30,
2024202320242023
Interest income
$45 $43 $88 $86 
Capital structuring service and other fees
$2 $6 $5 $7 
Schedule of Funded Capital and Unfunded Capital Commitments of the SDLP
The yields at amortized cost and fair value of the Company’s investments in IHAM as of June 30, 2024 and December 31, 2023 were as follows:
 As of
June 30, 2024December 31, 2023
 Amortized CostFair ValueAmortized CostFair Value
Subordinated loan
12.0 %12.0 %12.0 %12.0 %
Equity(1)
16.2 %14.3 %15.1 %13.3 %
_______________________________________________________________________________

(1)Represents the yield on the Company’s equity investment in IHAM, which is computed as (a) the annualized amount of the dividend received by the Company related to the Company’s equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of the Company’s equity investment in IHAM, as applicable.
Below is a summary of the funded capital and unfunded capital commitments of the SDLP.
 As of
June 30, 2024December 31, 2023
Total capital funded to the SDLP(1)$4,966 $5,361 
Total capital funded to the SDLP by the Company(1)$1,300 $1,328 
Total unfunded capital commitments to the SDLP(2)$231 $260 
Total unfunded capital commitments to the SDLP by the Company(2)$56 $60 
___________________________________________________________________________
(1)At principal amount.

(2)These commitments to fund delayed draw loans have been approved by the investment committee of the SDLP and will be funded if and when conditions to funding such delayed draw loans are met.
The amortized cost and fair value of the SDLP Certificates held by the Company and the Company’s yield on its investment in the SDLP Certificates at amortized cost and fair value as of June 30, 2024 and December 31, 2023 were as follows:

As of
June 30, 2024December 31, 2023
Amortized CostFair ValueAmortized CostFair Value
Investment in the SDLP Certificates$1,271 $1,241 $1,316 $1,288 
Yield on the investment in the SDLP Certificates13.3 %13.6 %13.6 %13.9 %
Schedule of Selected Financial Information
Selected Financial Information

Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of IHAM, in conformity with GAAP, as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and 2023 are presented below.

In conformity with GAAP, IHAM is required to consolidate entities in which IHAM has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model, which include certain of the IHAM Vehicles (the “Consolidated IHAM Vehicles”). As such, for GAAP purposes only, IHAM consolidates (a) entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity and (b) entities that it concludes are variable interest entities in which IHAM has more than insignificant economic interest and power to direct the activities that most significantly impact the entities, and for which IHAM is deemed to be the primary beneficiary.

When IHAM consolidates an IHAM Vehicle for GAAP purposes only, IHAM reflects the assets, liabilities, revenues and expenses of the Consolidated IHAM Vehicles on a gross basis, including the economic interests held by third-party investors in the Consolidated IHAM Vehicles as debt obligations, subordinated notes or non-controlling interests, in the consolidated IHAM financials below. All of the revenues earned by IHAM as the investment manager of the Consolidated IHAM Vehicles are eliminated in GAAP consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the GAAP consolidation of an IHAM Vehicle does not impact the net income or loss attributable to IHAM. As a result, the Company believes an assessment of IHAM's business and the impact to the Company’s investment in IHAM is best viewed on a stand-alone basis as reflected in the first column in the tables below.
As of June 30, 2024
IHAMConsolidated IHAM Vehicles(1)EliminationsConsolidated
Selected Balance Sheet Information:
Assets
Investments at fair value(2)$2,266 $8,553 $(2,208)$8,611 
Cash and cash equivalents7 968 — 975 
Other assets68 79 (64)83 
Total assets$2,341 $9,600 $(2,272)$9,669 
Liabilities
Debt$462 $6,872 $— $7,334 
Subordinated note from ARCC23 — — 23 
Subordinated notes(3)— 1,213 (906)307 
Other liabilities20 228 (15)233 
Total liabilities505 8,313 (921)7,897 
Equity
Contributed capital1,701 — — 1,701 
Accumulated earnings183 — — 183 
Net unrealized losses on investments and foreign currency transactions(4)(48)— — (48)
Non-controlling interests in Consolidated IHAM Vehicles(5)
— 1,287 (1,351)(64)
Total equity1,836 1,287 (1,351)1,772 
Total liabilities and equity$2,341 $9,600 $(2,272)$9,669 

As of December 31, 2023
IHAMConsolidated IHAM Vehicles(1)EliminationsConsolidated
Selected Balance Sheet Information:
Assets
Investments at fair value(2)$2,274 $9,392 $(2,265)$9,401 
Cash and cash equivalents9 707 — 716 
Other assets70 100 (68)102 
Total assets$2,353 $10,199 $(2,333)$10,219 
Liabilities
Debt$462 $7,459 $— $7,921 
Subordinated note from ARCC62 — — 62 
Subordinated notes(3)— 1,280 (992)288 
Other liabilities17 189 (16)190 
Total liabilities541 8,928 (1,008)8,461 
Equity
Contributed capital1,701 — — 1,701 
Accumulated earnings126 — — 126 
Net unrealized losses on investments and foreign currency transactions(4)(15)— — (15)
Non-controlling interests in Consolidated IHAM Vehicles(5)
— 1,271 (1,325)(54)
Total equity1,812 1,271 (1,325)1,758 
Total liabilities and equity$2,353 $10,199 $(2,333)$10,219 
________________________________________
(1)Consolidated for GAAP purposes only.

(2)The determination of such fair value is determined in accordance with IHAM’s valuation process (separate and apart from the Company’s valuation process described elsewhere herein). The amortized cost of IHAM’s total investments as of June 30, 2024 and December 31, 2023 was $2,311 and $2,288, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of June 30, 2024 and December 31, 2023 was $8,792 and $9,619, respectively.

(3)Subordinated notes generally represent the most junior capital in certain of the Consolidated IHAM Vehicles and effectively represent equity in such vehicles.

(4)As of June 30, 2024 and December 31, 2023, net unrealized losses of $43 and $13, respectively, have been eliminated upon consolidation and the elimination is included in “non-controlling interests in Consolidated IHAM Vehicles” in the selected balance sheet information.

(5)Non-controlling interests in Consolidated IHAM Vehicles includes net unrealized depreciation in the Consolidated IHAM Vehicles of $180 and $221 as of June 30, 2024 and December 31, 2023, respectively.

For the Three Months Ended June 30, 2024
IHAMConsolidated IHAM Vehicles(1)EliminationsConsolidated
Selected Statement of Operations Information:
Revenues
Investment income$92 $259 $(90)$261 
Management fees and other income14 3 (13)4 
Total revenues106 262 (103)265 
Expenses
Interest expense10 143 — 153 
Distributions to subordinated notes— 52 (40)12 
Management fees and other expenses3 15 (13)5 
Total expenses13 210 (53)170 
Net operating income93 52 (50)95 
Net realized gains (losses) on investments and foreign currency— (16)— (16)
Net unrealized losses on investments, foreign currency and other transactions (16)(14)10 (20)
Total net realized and unrealized losses on investments, foreign currency and other transactions (16)(30)10 (36)
Net income77 22 (40)59 
Less: Net income (loss) attributable to non-controlling interests in Consolidated IHAM Vehicles— 22 (40)(18)
Net income attributable to Ivy Hill Asset Management, L.P.$77 $— $— $77 
For the Six Months Ended June 30, 2024
IHAMConsolidated IHAM Vehicles(1)EliminationsConsolidated
Selected Statement of Operations Information:
Revenues
Investment income$186 $533 $(182)$537 
Management fees and other income28 6 (26)8 
Total revenues214 539 (208)545 
Expenses
Interest expense20 293 — 313 
Distributions to subordinated notes— 105 (77)28 
Management fees and other expenses7 33 (26)14 
Total expenses27 431 (103)355 
Net operating income187 108 (105)190 
Net realized gains (losses) on investments and foreign currency5 (74)(9)(78)
Net realized loss on extinguishment of debt— (1)— (1)
Net unrealized (losses) gains on investments, foreign currency and other transactions(33)47 30 44 
Total net realized and unrealized losses on investments, foreign currency and other transactions (28)(28)21 (35)
Net income159 80 (84)155 
Less: Net income (loss) attributable to non-controlling interests in Consolidated IHAM Vehicles— 80 (84)(4)
Net income attributable to Ivy Hill Asset Management, L.P.$159 $— $— $159 

For the Three Months Ended June 30, 2023
IHAMConsolidated IHAM Vehicles(1)EliminationsConsolidated
Selected Statement of Operations Information:
Revenues
Investment income$95 $273 $(94)$274 
Management fees and other income13 2 (13)2 
Total revenues108 275 (107)276 
Expenses
Interest expense16 143 — 159 
Distributions to subordinated notes— 57 (46)11 
Management fees and other expenses4 18 (13)9 
Total expenses20 218 (59)179 
Net operating income88 57 (48)97 
Net realized gains on investments and other transactions— 7 — 7 
Net unrealized gains on investments and other transactions3 8 (6)5 
Total net realized and unrealized gains on investments and
other transactions		3 15 (6)12 
Net income91 72 (54)109 
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles— 72 (54)18 
Net income attributable to Ivy Hill Asset Management, L.P.$91 $— $— $91 
For the Six Months Ended June 30, 2023
IHAMConsolidated IHAM Vehicles(1)EliminationsConsolidated
Selected Statement of Operations Information:
Revenues
Investment income$166 $528 $(164)$530 
Management fees and other income27 3 (26)4 
Total revenues193 531 (190)534 
Expenses
Interest expense35 272 — 307 
Distributions to subordinated notes— 89 (70)19 
Management fees and other expenses8 36 (26)18 
Total expenses43 397 (96)344 
Net operating income150 134 (94)190 
Net realized losses on investments and other transactions(10)(10)— (20)
Net unrealized gains on investments and other transactions17 30 (19)28 
Total net realized and unrealized gains on investments and other transactions7 20 (19)8 
Net income157 154 (113)198 
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles— 154 (113)41 
Net income attributable to Ivy Hill Asset Management, L.P.$157 $— $— $157 
____________________________________

(1)Consolidated for GAAP purposes only.