Investments and Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Investments and Fair Value Measurements [Abstract]

Note 4. Investments and Fair Value Measurements

The composition of the Company’s investment portfolio at cost and fair value as of September 30, 2024 and December 31, 2023 were as follows:


	September 30, 2024							December 31, 2023
	Amortized Cost		Fair Value		% of Total Investments at Fair Value			Amortized Cost		Fair Value		% of Total Investments at Fair Value
First lien debt	$	579,073,274	$	580,555,853		93.94	%	$	313,932,958	$	317,768,488		90.18	%
Second lien debt		18,967,659		21,386,331		3.46	%		16,498,048		19,050,076		5.41	%
Equity		14,792,309		16,061,069		2.60	%		14,792,309		15,559,956		4.41	%
Total investments	$	612,833,242	$	618,003,253		100.00	%	$	345,223,315	$	352,378,520		100.00	%

The industry composition of investments based on fair value as of September 30, 2024 and December 31, 2023 were as follows:


	September 30, 2024			December 31, 2023
Construction & Engineering		8.95	%		4.17	%
Electric Utilities		7.68			7.20
Automobile Components		7.33			1.62
Household Durables		7.17			—
Commercial Services & Supplies		7.08			15.33
Health Care Providers & Services		6.51			7.37
Trading Companies & Distributors		5.85			9.52
Electrical Equipment		5.45			—
Oil, Gas & Consumable Fuels		5.28			—
Energy Equipment & Services		4.74			1.41
Independent Power and Renewable Electricity Producers		4.08			0.80
Automobiles		3.95			1.20
Hotels, Restaurants & Leisure		3.46			5.69
Aerospace & Defense		3.47			—
Machinery		3.29			3.69
Textiles, Apparel & Luxury Goods		1.80			3.21
IT Services		1.32			3.63
Household Products		1.25			4.20
Professional Services		1.18			6.33
Distributors		1.15			2.80
Software		1.08			3.48
Building Products		0.95			1.06
Chemicals		0.92			2.55
Personal Care Products		0.87			1.12
Containers & Packaging		0.87			1.98
Air Freight & Logistics		0.82			1.36
Specialty Retail		0.61			—
Construction Materials		0.54			—
Metals & Mining		0.48			0.85
Leisure Products		0.32			0.56
Diversified Consumer Services		0.33			1.87
Ground Transportation		0.32			0.69
Biotechnology		0.31			1.40
Insurance		0.30			3.16
Technology Hardware, Storage & Peripherals		0.29			0.00
Health Care Equipment & Supplies		—			0.88
Electronic Equipment, Instruments & Components		—			0.32
Health Care Technology		—			0.28
Gas Utilities		—			0.27
Total		100.00	%		100.00	%

The geographic composition of investments at cost and fair value as of September 30, 2024 and December 31, 2023 were as follows:


	September 30, 2024										December 31, 2023
	Amortized Cost		Fair Value		% of Total Investments at Fair Value			Fair Value as % of Net Assets			Amortized Cost		Fair Value		% of Total Investments at Fair Value			Fair Value as % of Net Assets
United States	$	547,549,437	$	551,839,761		89.30	%		139.55	%	$	340,353,603	$	347,440,385		98.60	%		156.78	%
Canada		47,899,113		48,094,990		7.78	%		12.16	%		3,885,951		3,954,000		1.12	%		1.78	%
Germany		17,384,692		18,068,502		2.92	%		4.57	%		—		—		—			—
Luxembourg		—		—		—			—			983,761		984,135		0.28	%		0.44	%
Total	$	612,833,242	$	618,003,253		100.00	%		156.28	%	$	345,223,315	$	352,378,520		100.00	%		159.00	%

The following tables present the fair value hierarchy of the Company’s investment portfolio as of September 30, 2024 and December 31, 2023:


	September 30, 2024
Assets	Level 1		Level 2		Level 3		Total
First Lien Debt	$	—	$	193,663,965	$	386,891,888	$	580,555,853
Second Lien Debt		—		—		21,386,331		21,386,331
Subtotal	$	—	$	193,663,965	$	408,278,219	$	601,942,184
Investment measured at net asset value(1)								16,061,069
Total investments							$	618,003,253


	December 31, 2023
Assets	Level 1		Level 2		Level 3		Total
First Lien Debt	$	—	$	179,350,279	$	138,418,209	$	317,768,488
Second Lien Debt	—		—			19,050,076		19,050,076
Subtotal	$	—	$	179,350,279	$	157,468,285	$	336,818,564
Investment measured at net asset value(1)								15,559,956
Total investments							$	352,378,520

(1) The Company, as a practical expedient, estimates the fair value of its investment in KKR Tinder TFC Aggregator L.P. using the net asset value of the Company’s members’ interest in the entity. As such, the fair value has not been classified within the fair value hierarchy.

The following tables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value for the three and nine months ended September 30, 2024 and September 30, 2023, respectively:


	First Lien Debt			Second Lien Debt			Total
Balance as of June 30, 2024	$	335,836,232		$	20,571,894		$	356,408,126
Purchases of investments		75,754,856			—			75,754,856
Proceeds from principal pre-payments and sales of investments		(18,478,153	)		—			(18,478,153	)
Payment-in-kind		486,197			734,049			1,220,246
Net accretion of discount on investments		967,422			128,531			1,095,953
Net realized gain (loss)		100,216			—			100,216
Net change in unrealized appreciation/(depreciation)		(37,448	)		(48,143	)		(85,591	)
Transfers into Level 3		1,272,164			—			1,272,164
Transfers out of Level 3		(9,009,598	)		—			(9,009,598	)
Balance as of September 30, 2024	$	386,891,888		$	21,386,331		$	408,278,219

Net change in unrealized appreciation (depreciation) on Level 3 investments still held at the end of the period	$	(37,448	)	$	(48,143	)	$	(85,591	)


	First Lien Debt			Second Lien Debt			Total
Balance as of December 31, 2023	$	138,418,209		$	19,050,076		$	157,468,285
Purchases of investments		303,415,019			—			303,415,019
Proceeds from principal pre-payments and sales of investments		(55,759,531	)		—			(55,759,531	)
Payment-in-kind		1,252,323			2,107,582			3,359,905
Net accretion of discount on investments		2,322,444			362,027			2,684,471
Net realized gain (loss)		486,321			—			486,321
Net change in unrealized appreciation/(depreciation)		204,149			(133,354	)		70,795
Transfers into Level 3		4,533,215			—			4,533,215
Transfers out of Level 3		(7,980,261	)		—			(7,980,261	)
Balance as of September 30, 2024	$	386,891,888		$	21,386,331		$	408,278,219

Net change in unrealized appreciation (depreciation) on Level 3 investments still held at the end of the period	$	204,149		$	(133,354	)	$	70,795

Level 2 investments are valued using prices obtained from pricing services. The Company had $7,737,434 and $3,447,046 transfers between levels on a net basis during the three and nine months ended September 30, 2024, respectively.


	First Lien Debt			Second Lien Debt			Total
Balance as of June 30, 2023	$	58,960,066		$	17,655,000		$	76,615,066
Purchases of investments		13,152,473			—			13,152,473
Proceeds from principal pre-payments and sales of investments		(444,715	)		—			(444,715	)
Payment-in-kind		—			619,340			619,340
Net accretion of discount on investments		75,220			161,304			236,524
Net change in unrealized appreciation/(depreciation)		360,484			(117,950	)		242,534
Transfers into Level 3		—			—			—
Transfers out of Level 3		—			—			—
Balance as of September 30, 2023	$	72,103,528		$	18,317,694		$	90,421,222

Net change in unrealized appreciation (depreciation) on Level 3 investments still held at the end of the period	$	360,484		$	(117,950	)	$	242,534


	First Lien Debt			Second Lien Debt		Total
Balance as of February 1, 2023 (commencement of operations)	$	—		$	—	$	—
Purchases of investments		72,432,072			13,500,000		85,932,072
Proceeds from principal pre-payments and sales of investments		(770,643	)		—		(770,643	)
Payment-in-kind		—			2,119,340		2,119,340
Net accretion of discount on investments		90,586			165,627		256,213
Net change in unrealized appreciation/(depreciation)		351,513			2,532,727		2,884,240
Transfers into Level 3		—			—		—
Transfers out of Level 3		—			—		—
Balance as of September 30, 2023	$	72,103,528		$	18,317,694	$	90,421,222

Net change in unrealized appreciation (depreciation) on Level 3 investments still held at the end of the period	$	351,513		$	2,532,727	$	2,884,240

The Company had no transfers between levels during the three months ended September 30, 2023 and the period from February 1, 2023 (commencement of operations) to September 30, 2023.

The valuation techniques and significant unobservable inputs used in the valuation of Level 3 investments as of September 30, 2024 and December 31, 2023 were as follows:


Investment Type	Fair Value as of September 30, 2024		Valuation Technique	Unobservable Input	Range	Weighted Average (2)
Second Lien Debt	$	21,386,331	Discounted cash flow	Discount rate	15.50%	15.50%
First Lien Debt		332,531,006	Discounted cash flow	Discount rate	9.21% - 16.50%	11.42%
		19,717,893	Market quotations	Broker quoted price	94.00 - 100.38		98.32
		34,642,989	Transactional Value (1)	N/A	N/A	N/A
	$	408,278,219

(1)

Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio companies since the transaction date.

(2)

Unobservable inputs were weighted by the relative fair value of investments.


Investment Type	Fair Value as of December 31, 2023		Valuation Technique	Unobservable Input	Range	Weighted Average (2)
Second Lien Debt	$	19,050,076	Discounted cash flow	Discount rate	15.50%	15.50%
First Lien Debt		79,221,269	Discounted cash flow	Discount rate	9.86% - 13.44%	10.95%
		18,288,599	Market quotations	Broker quoted price	95.75 - 100.50		98.35
		40,908,341	Transactional Value(1)	N/A	N/A	N/A
	$	157,468,285

(1)

(2)

Unobservable inputs were weighted by the relative fair value of investments.