AGREEMENTS AND RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2024

Related Party Transactions [Abstract]

AGREEMENTS AND RELATED PARTY TRANSACTIONS

AGREEMENTS AND RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

On June 24, 2020, the Company entered into an investment advisory agreement (the “Advisory Agreement”)

with the Adviser. Pursuant to the Advisory Agreement, the Adviser manages the Company’s day-to-day operations and provides the Company with investment advisory services. Among other things, the Adviser (i) determines the composition of the portfolio of the Company, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identifies, evaluates and negotiates the structure of the investments made by the Company; (iii) executes, closes, services and monitors the investments that the Company makes; (iv) determines the securities and other assets that the Company will purchase, retain or sell; (v) performs due diligence on prospective portfolio companies and (vi) provides the Company with such other investment advisory, research and related services as the Company may, from time to time, reasonably require for the investment of its funds.

The Advisory Agreement provides that, absent fraud, willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, the Adviser, and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser (collectively, the “IA Indemnified Parties”), are entitled to indemnification from the Company for any damages, liabilities, costs, demands, charges, claims and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the IA Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Company or its security holders) arising out of any actions or omissions or otherwise based upon the performance of any of the Adviser’s duties or obligations under the Advisory Agreement or otherwise as an investment adviser of the Company. The Adviser’s services under the Advisory Agreement are not exclusive, and the Adviser is generally free to furnish similar services to other entities so long as its performance under the Advisory Agreement is not adversely affected.

The Adviser has retained its indirect, wholly-owned subsidiary, Baring International Investment Limited (“BIIL”), as a sub-adviser to manage European investments for the Company. BIIL is an investment adviser registered with the SEC in the United States and the Financial Conduct Authority in the United Kingdom with its principal office located in London, England. As of March 31, 2024, BIIL had approximately £17.0 billion in assets under management.

Under the Advisory Agreement, the Company pays the Adviser (i) a base management fee (the “Base Management Fee”) and (ii) an incentive fee (the “Incentive Fee”) as compensation for the investment advisory and management services it provides the Company thereunder.

Base Management Fee

The Base Management Fee is calculated at an annual rate of 0.15% of the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage but excluding (i) cash and cash equivalents (as defined below) and (ii) net unsettled purchases and sales of investments. For services rendered under the Advisory Agreement, the Base Management Fee is payable quarterly in arrears. The Base Management Fee is calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters (including the quarter for which such fees are being calculated) and appropriately adjusted for any share issuances or repurchases during the quarter. For the Company’s first quarter, the Base Management Fee was calculated based on the value of the Company’s gross assets as of such quarter-end. The Base Management Fee for any partial quarter is appropriately pro-rated. For purposes of the Advisory Agreement, “cash equivalents” means U.S. government securities, money market fund investments, commercial paper instruments and other similar cash equivalent investments maturing within one year of purchase.

For both the three months ended March 31, 2024 and 2023, the Base Management Fees determined in accordance with the terms of the Advisory Agreement were approximately $0.5 million. As of March 31, 2024, the Base Management Fee of $0.5 million for the three months ended March 31, 2024 was unpaid and included in “Base management fees payable” in the accompanying Unaudited Consolidated Balance Sheet. As of December 31, 2023, the Base Management Fee of $0.5 million for the three months ended December 31, 2023 was unpaid and included in “Base management fees payable” in the accompanying Consolidated Balance Sheet.

The Incentive Fee

The Incentive Fee consists of two parts: (i) an incentive fee based on pre-incentive fee net investment income (the “Income-Based Fee”) and (ii) an incentive fee based on capital gains (the “Capital Gains Fee”), which are described in more detail below.

Income-Based Fee

The Income-Based Fee is payable quarterly in arrears to the extent the Company’s Pre-Incentive Fee Net Investment Income (as defined below) for the most recently completed calendar quarter divided by the Company’s net assets as of the end of such calendar quarter (defined as total assets less indebtedness and before taking into account any Income-Based Fees and Capital Gains Fees payable during the calendar quarter, and appropriately adjusted for any share issuances or repurchases during the calendar quarter) (the “PIFNII Return”) exceeds the Hurdle Rate (as defined below) and is an amount less than or equal to the Incentive Fee Cap (as defined below). The Income-Based Fee is calculated as follows:

(a) No Income-Based Fee in any calendar quarter in which the PIFNII Return does not exceed the Hurdle Rate;

(b) 25% of Pre-Incentive Fee Net Investment Income with respect to that portion of the PIFNII Return that exceeds the Hurdle Rate but is less than or equal to the Catch-Up Hurdle Rate (as defined below) for such calendar quarter, which is referred to as the “Catch-Up”. The Catch-Up is intended to provide the Adviser with an Income-Based Fee equal to 12.5% of all of our Pre-Incentive Fee Net Investment Income if the Company’s PIFNII Return equals or exceeds the quarterly Catch-Up Hurdle Rate in any calendar quarter; plus

(c) 12.5% of all Pre-Incentive Fee Net Investment Income with respect to that portion of the PIFNII Return that exceeds the Catch-Up Hurdle Rate.

The Income-Based Fee paid to the Adviser is subject to the Incentive Fee Cap.

(a) In any quarter that the Incentive Fee Cap is zero or a negative value, the Company pays no Income-Based Fee to the Adviser for such quarter.

(b) In any quarter that the Incentive Fee Cap for such quarter is a positive value but is less than the Income-Based Fee that is payable to the Adviser for such quarter (before giving effect to the Incentive Fee Cap), the Company pays an Income-Based Fee to the Adviser equal to the Incentive Fee Cap for such quarter.

(c) In any quarter that the Incentive Fee Cap for such quarter is equal to or greater than the Income-Based Fee that is payable to the Adviser for such quarter (before giving effect to the Incentive Fee Cap), the Company pays an Income-Based Fee to the Adviser equal to the Income-Based Fee calculated as described above for such quarter without regard to the Incentive Fee Cap.

For purposes of the calculation of the Income-Based Fee, the following terms have the following meaning:

• “Hurdle Rate” for any calendar quarter means one fourth of the average daily Floating Rate over the applicable quarter.

• “Floating Rate” means, initially, the three-month London Interbank Offered Rate (“LIBOR”); provided that if a Floating Rate Transition Event and its related Floating Rate Replacement Date have occurred with respect to LIBOR, then “Floating Rate” means the Replacement Rate. In the event that the Floating Rate is a negative value, then the Floating Rate shall be zero. Beginning with the quarter ended June 30, 2023, the Floating Rate means the Replacement Rate following the occurrence of a Floating Rate Transition Event and its related Floating Rate Replacement Date.

• “Floating Rate Transition Event” means the occurrence of one or more of the following events with respect to the Floating Rate:

1. a public statement or publication of information by or on behalf of the administrator of the Floating Rate announcing that the administrator has ceased or will cease to provide the Floating Rate permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Floating Rate;

2. a public statement or publication of information by the regulatory supervisor for the administrator of the Floating Rate, the central bank for the currency of the Floating Rate, an insolvency official with jurisdiction over the administrator for the Floating Rate, a resolution authority with jurisdiction over the administrator for the Floating Rate or a court or an entity with similar insolvency or resolution authority over the administrator for the Floating Rate, which states that the administrator of the Floating Rate has ceased or will cease to provide the Floating Rate permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Floating Rate; or

3. a public statement or publication of information by the regulatory supervisor for the administrator of the Floating Rate announcing that the Floating Rate is no longer representative.

• “Floating Rate Replacement Date” means:

1. in the case of clause (1) or (2) of the definition of “Floating Rate Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the relevant Floating Rate permanently or indefinitely ceases to provide such Floating Rate; or

2. in the case of clause (3) of the definition of “Floating Rate Transition Event,” the date of the public statement or publication of information.

• “Replacement Rate” means the first alternative set forth in the order below that can be determined as of the Floating Rate Replacement Date.

1. the sum of: (a) Term SOFR and (b) the Benchmark Replacement Adjustment; and

2. the sum of: (a) Compounded SOFR and (b) the applicable Benchmark Replacement Adjustment.

If a Replacement Rate is selected pursuant to clause (2) above, then each calendar quarter following such selection, if a redetermination of the Replacement Rate on such date would result in the selection of a Replacement Rate under clause (1) above, then (x) the Replacement Rate shall be redetermined on such date utilizing Term SOFR and (y) such redetermined Replacement Rate shall become the Floating Rate on or after such date. If redetermination of the Replacement Rate on such date as described in the preceding sentence would not result in the selection of a Replacement Rate under clause (1), then the Floating Rate shall remain the Replacement Rate as previously determined pursuant to clause (2) above.

• “Term SOFR” means the forward-looking term rate for the applicable Corresponding Tenor based on SOFR that has been selected or recommended by the Relevant Governmental Body.

• “Compounded SOFR” means the compounded average of SOFR for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which, for example, may be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable for the applicable calendar quarter or compounded in advance) being established in accordance with the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR.

• “SOFR” means with respect to any day means the Secured Overnight Financing Rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.

• “Corresponding Tenor” with respect to a Replacement Rate means a tenor (or observation period) having approximately the same length (disregarding business day adjustment) as the applicable tenor (or observation period) for the then-current Floating Rate.

• “Benchmark Replacement Adjustment” means the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the transition to the applicable Floating Rate.

• “Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

• “Catch-Up Hurdle Rate” for any calendar quarter means a rate that is equal to 200% of the Hurdle Rate.

• “Incentive Fee Cap” means for any calendar quarter an amount equal to (a) 12.5% of the Cumulative Net Return (as defined below) minus (b) the aggregate Income-Based Fee that was paid in respect of the period ending with the calendar quarter immediately preceding the most recently completed calendar quarter (or the portion thereof) included in the period for calculation of the Cumulative Net Return.

• “Cumulative Net Return” means (x) the aggregate Pre-Incentive Fee Net Investment Income in respect of either (i) the trailing twelve calendar quarters ending with the calendar quarter in which the Income-Based Fee is

calculated or (ii) prior to the end of the twelfth calendar quarter after the effective date of the Advisory Agreement, the period from the effective date of the Advisory Agreement through the last day of the calendar quarter for which the Income-Based Fee is calculated minus (y) any Net Capital Loss (as defined below), if any, in respect of the relevant period.

• “Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period.

• “Pre-Incentive Fee Net Investment Income” in respect of a period means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus operating expenses for the quarter (including the Base Management Fee, any expenses payable under the administration agreement between the Company and the Adviser (the “Administration Agreement”), and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature such as market discount, original issue discount (“OID”), debt instruments with payment-in-kind (“PIK”) interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash.

For the three months ended March 31, 2024 and 2023, the Income-Based Fees determined in accordance with the terms of the Advisory Agreement were $2.8 million and $2.7 million, respectively. As of March 31, 2024, the Income-Based Fee of $2.8 million for the three months ended March 31, 2024 was unpaid and included in “Incentive management fees payable” in the accompanying Unaudited Consolidated Balance Sheet. As of December 31, 2023, the Income-Based Fee of $3.1 million for the three months ended December 31, 2023 was unpaid and included in “Incentive management fees payable” in the accompanying Consolidated Balance Sheet.

Capital Gains Fee

The Capital Gains Fee is determined and payable in arrears as of the end of each calendar year (or upon a liquidity event or a termination of the Advisory Agreement), and will equal 12.5% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of the calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid Capital Gains Fees. If such amount is zero or negative, then no Capital Gains Fee is payable for such year.

While the Advisory Agreement neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, as required by U.S. GAAP, the Company accrues capital gains incentive fees on unrealized gains. This accrual reflects the incentive fees that would be payable to the Adviser if the Company’s entire investment portfolio was liquidated at its fair value as of the balance sheet date even though the Adviser is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized. There can be no assurance that such unrealized capital appreciation will be realized in the future.

For the three months ended March 31, 2024 and 2023, the Company accrued $0.4 million and nil, respectively, of Capital Gains Fees. As of March 31, 2024, the Capital Gains Fee of $0.4 million for the three months ended March 31, 2024 was unpaid and included in “Incentive management fees payable” in the accompanying Unaudited Consolidated Balance Sheet. For the year ended December 31, 2023, the Company did not accrue any Capital Gains Fees.

The Advisory Agreement had an initial term of two years. The Advisory Agreement was most recently re-approved on May 7, 2024 by our Board, including a majority of the directors who are not “interested persons” as defined in Section 2(a)(19) of the 1940 Act (the “Independent Directors”), and will continue automatically for successive one-year periods, provided that such continuance is specifically approved at least annually by (i) the vote of the Board, or by the vote of a majority of the outstanding voting securities of the Company and (ii) the vote of a majority of the Independent Directors. The Advisory Agreement may be terminated at any time, without the payment of any penalty, upon 60 days’ written notice, (i) by the vote of a majority of the outstanding voting securities of the Company or (ii) by the vote of the Board, or (iii) by the Adviser upon 90 days’ written notice. The Advisory Agreement will automatically terminate in the event of its “assignment” (as such term is defined for purposes of Section 15(a)(4) of the 1940 Act).

Payment of Expenses

All investment professionals of Barings and its staff, when and to the extent engaged in providing investment advisory and management services under the Advisory Agreement, and the compensation and routine overhead expenses of such personnel

allocable to such services, are provided and paid for by Barings and not by the Company. The Company bears all other costs and expenses of its operations and transactions, including, without limitation, those relating to:

•organizational and offering expenses;

•investment advisory and management fees payable under the Advisory Agreement;

•all other non-investment advisory expenses incurred by the Company or Barings in connection with administering the Company’s business (including payments under the Administration Agreement based upon the Company’s allocable portion of Barings’ overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs); and

•all other expenses of the Company’s operations and transactions, including those listed in the Advisory Agreement.

Administration Agreement

On June 24, 2020, the Company entered into the Administration Agreement with the Adviser. Under the terms of the Administration Agreement, the Adviser also provides the administrative services necessary for the Company to operate (in such capacity, the “Administrator”), including, but not limited to, office facilities, equipment, clerical, bookkeeping and record-keeping services at such office facilities and such other services as the Administrator, subject to review by the Board, from time to time, determines to be necessary or useful to perform its obligations under the Administration Agreement. The Administrator also, on behalf of the Company and subject to oversight by the Board, arranges for the services of, and oversees, custodians, depositories, transfer agents, dividend disbursing agents, other stockholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable.

The Company reimburses Barings for the costs and expenses incurred by it in performing its obligations and providing personnel and facilities under the Administration Agreement in an amount negotiated and mutually agreed to by the Company and Barings quarterly in arrears. In no event will the agreed-upon quarterly expense amount exceed the amount of expenses that would otherwise be reimbursable by the Company under the Administration Agreement for the applicable quarterly period, and Barings will not be entitled to the recoupment of any amounts in excess of the agreed-upon quarterly expense amount.

The costs and expenses incurred by the Administrator on behalf of the Company under the Administration Agreement include, but are not limited to:

• the allocable portion of the Administrator’s rent for the Company’s Chief Financial Officer and the Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the usage thereof by such personnel in connection with their performance of administrative services under the Administration Agreement;

• the allocable portion of the salaries, bonuses, benefits and expenses of the Company’s Chief Financial Officer and Chief Compliance Officer and their respective staffs, which is based upon the allocable portion of the time spent by such personnel in connection with performing administrative services for the Company under the Administration Agreement;

• the actual cost of goods and services used for the Company and obtained by the Administrator from entities not affiliated with the Company, which is reasonably allocated to the Company on the basis of assets, revenues, time records or other methods conforming with U.S. GAAP;

• all fees, costs and expenses associated with the engagement of a sub-administrator, if any; and

• costs associated with (a) the monitoring and preparation of regulatory reporting, including filings with the SEC and tax reporting, (b) the coordination and oversight of service provider activities and the direct cost of such contractual matters related thereto and (c) the preparation of all financial statements and the coordination and oversight of audits, regulatory inquiries, certifications and sub-certifications.

For the three months ended March 31, 2024 and 2023, the Company incurred and was invoiced by the Administrator expenses of approximately $0.2 million and $0.3 million, respectively. As of March 31, 2024, the administrative expenses of $0.2 million incurred during the three months ended March 31, 2024 were unpaid and included in “Administrative fees payable” in the accompanying Unaudited Consolidated Balance Sheet. As of December 31, 2023, the administrative expenses of $0.2 million incurred during the three months ended December 31, 2023 were unpaid and included in “Administrative fees payable” in the accompanying Consolidated Balance Sheet.

The Administration Agreement had an initial term of two years. The Administration Agreement was most recently re-approved on May 7, 2024 by our Board, including a majority of the Independent Directors, and will continue automatically for successive one-year periods so long as such continuance is specifically approved at least annually by the Board, including a majority of the Independent Directors. The Administration Agreement may be terminated at any time, without the payment of any penalty, by vote of the Board, or by the Adviser, upon 90 days’ written notice to the other party. The Administration Agreement may not be assigned by a party without the consent of the other party.