Barings

Participation Investors

Report for the   

Three Months Ended March 31, 2022   

   



       

 

Adviser

Barings LLC

300 S Tryon St., Suite 2500

Charlotte, NC 28202

Independent Registered Public Accounting Firm

KPMG LLP

Boston, Massachusetts 02110

Counsel to the Trust

Ropes & Gray LLP

Boston, Massachusetts 02111

Custodian

State Street Bank and Trust Company

Boston, Massachusetts 02110

Transfer Agent & Registrar

DST Systems, Inc.

P.O. Box 219086

Kansas City, Missouri 64121-9086

1-800-647-7374

Internet Website

https://www.barings.com/en-us/guest/funds/closed-end-
funds/barings-participation-investors

   Barings Participation Investors c/o Barings LLC 300 S Tryon St., Suite 2500 Charlotte, NC 28202 1-866-399-1516  

Investment Objective and Policy

Barings Participation Investors (the “Trust”) is a closed-end management investment company, first offered to the public in 1988, whose shares are traded on the New York Stock Exchange under the trading symbol “MPV”. The Trust’s share price can be found in the financial section of most newspapers under either the New York Stock Exchange listings or Closed-End Fund Listings.

The Trust’s investment objective is to maintain a portfolio of securities providing a current yield and, when available, an opportunity for capital gains. The Trust’s principal investments are privately placed, below investment grade, long-term debt obligations including bank loans and mezzanine debt instruments. Such private placement securities may, in some cases, be accompanied by equity features such as common stock, preferred stock, warrants, conversion rights, or other equity features. The Trust typically purchases these investments, which are not publicly tradable, directly from their issuers in private placement transactions. These investments are typically made to small or middle market companies. In addition, the Trust may invest, subject to certain limitations, in marketable debt securities (including high yield and/or investment grade securities) and marketable common stock. Below investment grade or high yield securities have predominantly speculative characteristics with respect to the capacity of the issuer to pay interest and repay capital.

The Trust distributes substantially all of its net income to shareholders each year. Accordingly, the Trust pays dividends to shareholders four times per year. All registered shareholders are automatically enrolled in the Dividend Reinvestment and Cash Purchase Plan unless cash distributions are requested.

Form N-PORT

The Trust files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on part F of Form N-PORT. This information is available (i) on the SEC’s website at http://www.sec.gov; and (ii) at the SEC’s Public Reference Room in Washington, DC (which information on their operation may be obtained by calling 1-800-SEC-0330). A complete schedule of portfolio holdings as of each quarter-end is available upon request by calling, toll-free, 866-399-1516.

Proxy Voting Policies & Procedures; Proxy Voting Record

The Trustees of the Trust have delegated proxy voting responsibilities relating to the voting of securities held by the Trust to Barings LLC (“Barings”). A description of Barings’ proxy voting policies and procedures is available (1) without charge, upon request, by calling, toll-free 866-399-1516; (2) on the Trust’s website at https://www.barings.com/en-us/guest/funds/closed-end-funds/barings-participation-investors; and (3) on the SEC’s website at http://www.sec.gov. Information regarding how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (1) on the Trust’s website at https://www.barings.com/en-us/guest/funds/closed-end-funds/barings-participation-investors; and (2) on the SEC’s website at http://www.sec.gov.

Legal Matters

The Trust has entered into contractual arrangements with an investment adviser, transfer agent and custodian (collectively “service providers”) who each provide services to the Trust. Shareholders are not parties to, or intended beneficiaries of, these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the Trust.

Under the Trust’s Bylaws, any claims asserted against or on behalf of the Trust, including claims against Trustees and officers must be brought in courts located within the Commonwealth of Massachusetts.

The Trust’s registration statement and this shareholder report are not contracts between the Trust and its shareholders and do not give rise to any contractual rights or obligations or any shareholder rights other than any rights conferred explicitly by federal or state securities laws that may not be waived.

Barings Participation Investors

TO OUR SHAREHOLDERS

April 30, 2022

We are pleased to present the March 31, 2022 Quarterly Report of Barings Participation Investors (the “Trust”).

PORTFOLIO PERFORMANCE

The Board of Trustees declared a quarterly dividend of $0.20 per share, payable on June 10, 2022 to shareholders of record on May 31, 2022. The Trust paid a $0.20 per share dividend for the preceding quarter. The Trust earned $0.20 per share of net investment income for the first quarter of 2022, compared to $0.28 per share in the previous quarter.

During the first quarter, the net assets of the Trust increased to $162,516,736.44 or $15.33 per share compared to $161,080,475 or $15.19 per share on December 31, 2021. This translates to a 0.92% total return for the quarter, based on the change in the Trust’s net assets assuming the reinvestment of all dividends. Longer term, the Trust returned 14.1%, 11.0%, 9.9%, 10.6% and 11.5% for the 1, 3, 5, 10, and 25-year periods, respectively, based on the change in the Trust’s net assets assuming the reinvestment of all dividends.

The Trust’s market price decreased 9.5% during the quarter, from $14.80 per share as of December 31, 2021 to $13.39 per share as of March 31, 2022. The Trust’s market price of $13.39 per share equates to a 12.7% discount to the March 31, 2022 net asset value per share of $15.33. The Trust’s average quarter-end discount/premium for the 3, 5 and 10-year periods was -2.0%, 1.3% and 3.0%, respectively. U.S. fixed income markets, as approximated by the Bloomberg Barclays U.S. Corporate High Yield Index and the Credit Suisse Leverage Loan Index, decreased 4.8% and 0.1% for the quarter, respectively.

PORTFOLIO ACTIVITY

The Trust closed eight new private placement investments and ten add-on investments to existing portfolio companies during the first quarter. The total amount invested by the Trust in these transactions was $7,539,084. Of note, the new platform investments included one fixed rate Sr. Subordinated Note and seven floating rate term loans, five of which included equity co-investments, and the add-on investments included eight floating rate term loans and one fixed rate Sr. Subordinated Note that included an equity co-investment.

The investment activity in the first quarter of 2022 was lower than the first quarter of 2021, however, it was in line with historical first quarter investment activity. As the investment landscape remains stable, some key trends have continued. First, investment activity is now back to (and even beyond) pre-pandemic levels. Secondly, in the current market, financial sponsors and other ownership groups are motivated to divest portfolio companies due to the high valuations for strong businesses. With the significant dry powder they have available, financial sponsors are also motivated to acquire high-quality businesses which have outperformed through both good times and the more recent uncertainty. Lastly, private equity clients continue to work with a smaller group of trusted lenders with whom they have long-standing relationships and who can offer certainty of execution and creative solutions.

With demand for products and services continuing to increase, one key question is whether supply chains can keep up with the renewed demand and whether we will see material increases in prices as a result of supply-chain bottlenecks, rising raw material and energy costs and labor shortages. Across the world, and particularly in regions with large manufacturing sectors which depend on international trade, these risks may be key. However, it is important to note that such issues do not affect every geography and sector the same. When constructing portfolios, we focus on investing in high-quality businesses which are leaders in their space and offer defensive characteristics which will allow them to perform through the cycle. Therefore, while segments of the broader economy may be affected by potential supply chain issues, increasing raw material and energy costs and labor shortages, we remain confident in the current diverse portfolio to perform through the potential cycle.

We continue to be selective in our investment choices and maintain our underwriting discipline throughout multiple cycles. First, the Trust continues to invest in first lien senior secured loans in high-quality companies in defensive sectors and remains well diversified by industry. This was a strategy put in place more than five years ago and has provided strong risk adjusted returns for the Trust given their senior position in the capital stack. As of March 31, 2022, 66.0% of the Trust’s investment portfolio is in first lien senior secured loans compared to 2.7% as of December 31, 2017. These

(Continued)

1 

investments have proven resilient to date and their management teams now have the benefit of having a wealth of knowledge to draw upon from working in such unique and challenging circumstances. Second, we hold meaningful investment liquidity based on the Trust’s combined available cash balance and short-term investments of $5,182,564 or 2.8% of total assets, and low leverage profile at 0.14x as of March 31, 2022. We have strengthened our liquidity position with a $15.0 million committed revolving credit facility with MassMutual (See Note 4). This facility coupled with the current cash balance provides ample liquidity to support our current portfolio as well as invest in new portfolio companies. Third, we continue to be selective in pruning our equity investments and reinvesting the proceeds into first lien senior secured investments further driving investment income. As always, the Trust continues to benefit from strong relationships with our financial sponsor partners which provides clear benefits including potential access to additional capital if needed, strategic thinking alongside their management teams and high-quality and timely information which is only available in a private market setting. This allows us to work constructively together and maximize the portfolio companies’ long-term health and value.

In closing, we believe it is always appropriate to provide views on the Trust’s long-term dividend policy which is to say, ‘we believe that long-term dividends should be a reflection of long-term core earnings power, even when core earnings power is lower as a result of a higher quality asset mix’. The Trust’s recently announced dividend of $0.20 per share is in line with our most recently reported net investment income of $0.20 per share. That said, as we continue to both (1) deploy the Trust’s excess liquidity and (2) seek opportunities to shift the Trust’s non-yielding equity investments to senior secured loans, we expect long-term earnings power to meet the dividend distribution.

Thank you for your continued interest in and support of Barings Participation Investors.

Sincerely,

Christina Emery

President

Portfolio Composition as of 03/31/22*

 

* Based on market value of total investments (including cash)

Cautionary Notice: Certain statements contained in this report may be “forward looking” statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made and which reflect management’s current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. These statements are subject to change at any time based upon economic, market or other conditions and may not be relied upon as investment advice or an indication of the Trust’s trading intent. References to specific securities are not recommendations of such securities, and may not be representative of the Trust’s current or future investments. We undertake no obligation to publicly update forward looking statements, whether as a result of new information, future events, or otherwise.

2 

Barings Participation Investors

Average Annual Returns March 31, 2022	1 Year	5 Year	10 Year
Barings Participation Investors	9.85%	6.08%	6.73%
Bloomberg Barclays U.S. Corporate High Yield Index	-0.66%	4.69%	5.75%

Data for Barings Participation Investors (the “Trust”) represents returns based on the change in the Trust’s market price assuming the reinvestment of all dividends and distributions. Past performance is no guarantee of future results.

The graph and table do not reflect the deduction of taxes that a shareholder would pay on distributions from the Trust or the sale of shares.

3 

In July 2017, the head of the U.K. Financial Conduct Authority (the “FCA”), announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. In March 2021, the FCA confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative: (a) immediately after December 31, 2021, in the case of sterling, euro, Swiss franc, and Japanese yen, and the one week and two month U.S. dollar settings; and (b) immediately after June 30, 2023, in the case of the remaining U.S. dollar settings. In addition, as a result of supervisory guidance from U.S. regulators, some U.S. regulated entities will cease to enter into new LIBOR contracts after January 1, 2022. At this time, no consensus exists as to what rate or rates will become accepted alternatives to LIBOR, although the Alternative Reference Rates Committee, a steering committee convened by the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York and comprised of large U.S. financial institutions, has recommended the use of the Secured Overnight Financing Rate, SOFR. There are many uncertainties regarding a transition from LIBOR to SOFR or any other alternative benchmark rate that may be established, including, but not limited to, the timing of any such transition, the need to amend all contracts with LIBOR as the referenced rate and, given the inherent differences between LIBOR and SOFR or any other alternative benchmark rate, how any transition may impact the cost and performance of impacted securities, variable rate debt and derivative financial instruments. In addition, SOFR or another alternative benchmark rate may fail to gain market acceptance, which could adversely affect the return on, value of and market for securities, variable rate debt and derivative financial instruments linked to such rates. The effects of a transition from LIBOR to SOFR or any other alternative benchmark rate on our cost of capital and net investment income cannot yet be determined definitively. All of our loan agreements with our portfolio companies include fallback language in the event that LIBOR becomes unavailable. This language generally either includes a clearly defined alternative reference rate after LIBOR’s discontinuation or provides that the administrative agent may identify a replacement reference rate, typically with the consent of (or prior consultation with) the borrower. In certain cases, the administrative agent will be required to obtain the consent of either a majority of the lenders under the facility, or the consent of each lender, prior to identifying a replacement reference rate. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market value for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us and could have a material adverse effect on our business, financial condition and results of operations.

4 

Barings Participation Investors

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

March 31, 2022

(Unaudited)

Assets:
Investments (See Consolidated Schedule of Investments)
Corporate restricted securities - private placement investments at fair value (Cost - $160,751,267)	$	166,824,571
Corporate restricted securities - rule 144A securities at fair value (Cost - $7,596,992)		8,006,113
Corporate public securities at fair value (Cost - $4,571,044)		4,612,581
Total investments (Cost - $172,919,303)		179,443,265
Cash		5,175,650
Foreign currencies (Cost - $6,831)		6,914
Dividend and interest receivable		1,896,405
Receivable for investments sold		91,288
Deferred financing fees		63,708
Other assets		142,392
Total assets		186,819,622
Liabilities:
Note payable		15,000,000
Credit facility		8,200,000
Deferred tax liability		365,141
Investment advisory fee payable		355,543
Payable for investments purchased		290,250
Interest payable		33,935
Accrued expenses		58,017
Total liabilities		24,302,886
Commitments and Contingencies (See Note 7)
Total net assets	$	162,516,736
Net Assets:
Common shares, par value $.01 per share	$	106,017
Additional paid-in capital		145,010,902
Total distributable earnings		17,399,817
Total net assets	$	162,516,736
Common shares issued and outstanding (14,787,750 authorized)		10,601,700
Net asset value per share	$	15.33

See Notes to Consolidated Financial Statements

5 

CONSOLIDATED STATEMENT OF OPERATIONS

For the three months ended March 31, 2022

(Unaudited)

Investment Income:
Interest	$	2,935,120
Other		34,933
Total investment income		2,970,053
Expenses:
Investment advisory fees		355,543
Interest		200,689
Professional fees		73,565
Trustees’ fees and expenses		69,000
Reports to shareholders		22,500
Custodian fees		6,000
Other		28,342
Total expenses		755,639
Investment income - net		2,214,414
Income tax, including excise tax expense		52,650
Net investment income after taxes		2,161,764
Net realized and unrealized loss on investments and foreign currency:
Net realized gain on investments before taxes		118,901
Income tax expenses		(21,004	)
Net realized gain on investments after taxes		97,897
Net increase in unrealized depreciation of investments before taxes		(682,652	)
Net increase in unrealized appreciation of foreign currency translation before taxes		77
Net increase in deferred income tax expense		(140,825	)
Net increase in unrealized depreciation of investments and foreign currency transactions after taxes		(823,400	)
Net loss on investments and foreign currency		(725,503	)
Net increase in net assets resulting from operations	$	1,436,261

See Notes to Consolidated Financial Statements

6 

Barings Participation Investors

CONSOLIDATED STATEMENT OF CASH FLOWS

For the three months ended March 31, 2022

(Unaudited)

Net decrease in cash & foreign currencies:
Cash flows from operating activities:
Purchases of portfolio securities	$	(9,467,410	)
Proceeds from disposition of portfolio securities		2,579,827
Interest, dividends and other income received		2,410,643
Interest expense paid		(198,536	)
Operating expenses paid		(589,937	)
Income taxes paid		(1,236,229	)
Net cash used for operating activities		(6,501,642	)
Cash flows from financing activities:
Borrowings under credit facility		2,200,000
Cash dividends paid from net investment income		(2,120,340	)
Financing fees paid		(14,279	)
Net cash provided by financing activities		65,381
Net decrease in cash & foreign currencies		(6,436,261	)
Cash & foreign currencies - beginning of period		11,618,748
Effects of foreign currency exchange rate changes on cash and cash equivalents		77
Cash & foreign currencies - end of period	$	5,182,564
Reconciliation of net increase in net assets to net cash used for operating activities:
Net increase in net assets resulting from operations	$	1,436,261
Increase in investments		(6,344,157	)
Increase in interest receivable		(378,596	)
Decrease in receivable for investments sold		349,380
Decrease in other assets		108,330
Increase in deferred tax liability		140,825
Decrease in investment advisory fee payable		(17,430	)
Decrease in payable for investments purchased		(618,199	)
Decrease in accrued expenses		(17,557	)
Increase in interest payable		2,153
Decrease in tax payable		(1,162,575	)
Total adjustments to net assets from operations		(7,937,826	)
Effects of foreign currency exchange rate changes on cash and cash equivalents		(77	)
Net cash used for operating activities		(6,501,642	)

See Notes to Consolidated Financial Statements

7 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

For the three months ended March 31, 2022

	For the three months ended 3/31/2021 (Unaudited)			For the year ended 12/31/2021
Increase in net assets:
Operations:
Investment income - net	$	2,161,764		$	9,188,642
Net realized gain on investments and foreign currency after taxes		97,897			4,867,781
Net change in unrealized appreciation (depreciation) of investments and foreign currency after taxes		(823,400	)		11,328,033
Net increase in net assets resulting from operations		1,436,261			25,384,456
Dividends to shareholders from:
Distributable earnings to Common Stock Shareholders (2022 - $0.00 per share; 2021 - $0.80 per share)		—			(8,481,360	)
Total increase in net assets		1,436,261			16,903,096
Net assets, beginning of period/year		161,080,475			144,177,379
Net assets, end of period/year	$	162,516,736		$	161,080,475

See Notes to Consolidated Financial Statements

8 

Barings Participation Investors

CONSOLIDATED SELECTED FINANCIAL HIGHLIGHTS

Selected data for each share of beneficial interest outstanding:

	For the three months ended 3/31/2022		For the years ended December 31,
	(Unaudited)		2021		2020		2019		2018		2017
Net asset value:
Beginning of period / year	$	15.19	$	13.60	$	13.80	$	13.18	$	13.91	$	13.15
Net investment income (a)		0.20		0.86		1.00		1.00		1.03		1.09
Net realized and unrealized gain (loss) on investments		(0.06)		1.53		(0.40)		0.69		(0.68)		0.75
Total from investment operations		0.14		2.39		0.60		1.69		0.35		1.84
Dividends from net investment income to common shareholders		—		(0.80)		(0.80)		(1.08)		(1.08)		(1.08)
Increase / (Decrease) from dividends reinvested		—		0.00		0.00 (b)		0.01 (b)		(0.00) (b)		(0.00) (b)
Total dividends		—		(0.80)		(0.80)		(1.07)		(1.08)		(1.08)
Net asset value: End of period / year	$	15.33	$	15.19	$	13.60	$	13.80	$	13.18	$	13.91
Per share market value:
End of period / year	$	13.39	$	14.80	$	11.88	$	16.13	$	15.05	$	14.10
Total investment return
Net asset value (c)		0.92%		17.84%		4.66%		13.21%		2.53%		14.29%
Market value (c)		(9.52%)		32.09%		(21.11%)		14.72%		15.02%		7.21%
Net assets (in millions):
End of period / year	$	162.52	$	161.08	$	144.18	$	146.08	$	138.75	$	145.48
Ratio of total expenses to average net assets (d)		2.07%(e)		2.66%		1.47%		2.26%		2.76%		3.23%
Ratio of operating expenses to average net assets		1.39%(e)		1.46%		1.38%		1.45%		1.56%		1.49%
Ratio of interest expense to average net assets		0.50%(e)		0.41%		0.43%		0.42%		0.42%		0.43%
Ratio of income tax expense to average net assets		0.18%(e)		0.79%		(0.34%)		0.39%		0.78%		1.31%
Ratio of net investment income to average net assets		5.40%(e)		5.99%		7.52%		7.30%		7.47%		7.92%
Portfolio turnover		1%		43%		34%		22%		48%		24%

(a) Calculated using average shares.

(b) Rounds to less than $0.01 per share. distributions which differs from the total investment return based on the Trust’s market value due to the difference between the Trust’s net asset

(c) Net asset value return represents portfolio returns based on change in the Trust’s net asset value assuming the reinvestment of all dividends and distributions which differs from the total investment return based on the Trust’s market value due to the difference between the Trust’s net asset value and the market value of its shares outstanding; past performance is no guarantee of future results.

(d) Total expenses include income tax expense.

(e) Annualized

Senior borrowings:
Total principal amount (in millions)	$	23.2	$	21	$	15	$	15	$	15	$	15
Asset coverage per $1,000 of indebtedness	$	8,005	$	8,670	$	10,612	$	10,739	$	10,250	$	10,699

See Notes to Consolidated Financial Statements

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CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2022

(Unaudited)

Corporate Restricted Securities - 107.58%: (A)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
Private Placement Investments - 102.65%: (C)
1WorldSync, Inc.
A product information sharing platform that connects manufacturers/suppliers and key retailers via the Global Data Synchronization Network.
6.75% Term Loan due 06/24/2025 (LIBOR + 5.750%)	$	2,434,019	*	$	2,404,969	$	2,429,647
* 07/01/19 and 12/09/20.
Accelerate Learning
A provider of standards-based, digital science education content of K-12 schools.
6.01% Term Loan due 12/31/2024 (LIBOR + 5.000%)	$	974,753	12/19/18		965,913		958,507
6.00% Term Loan due 12/20/2024 (LIBOR + 5.000%)	$	746,495	09/30/21		733,876		734,053
					1,699,789		1,692,560
Advanced Manufacturing Enterprises LLC
A designer and manufacturer of large, custom gearing products for a number of critical customer applications.
Limited Liability Company Unit (B)		1,945 uts.	*		207,911		—
* 12/07/12, 07/11/13 and 06/30/15.
Advantage Software
A provider of enterprise resource planning (ERP) software built for advertising and marketing agencies.
Limited Liability Company Unit Class A (F)		766 uts.	10/01/21		24,353		79,188
Limited Liability Company Unit Class A (F)		197 uts.	10/01/21		6,320		20,424
Limited Liability Company Unit Class B (F)		766 uts.	10/01/21		784		513
Limited Liability Company Unit Class B (F)		197 uts.	10/01/21		202		132
					31,659		100,257
Aftermath, Inc.
A provider of crime scene cleanup and biohazard remediation services.
6.00% Term Loan due 04/10/2025 (LIBOR + 5.000%)	$	963,473	04/09/19		952,545		943,240
6.00% Term Loan due 04/10/2025 (LIBOR + 5.000%)	$	757,719	04/23/21		747,239		741,807
					1,699,784		1,685,047
AIT Worldwide Logistics, Inc.
A provider of domestic and international third-party logistics services.
8.75% Second Lien Term Loan due 03/31/2029 (LIBOR + 7.750%)	$	1,669,355	04/06/21		1,636,431		1,633,180
Limited Liability Company Unit (B)		56 uts.	04/06/21		55,645		109,548
					1,692,076		1,742,728
AMS Holding LLC
A leading multi-channel direct marketer of high-value collectible coins and proprietary-branded jewelry and watches.
Limited Liability Company Unit Class A Preferred (B)(F)		114 uts.	10/04/12		113,636		244,986

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Barings Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
Amtech Software
A provider of enterprise resource planning software and technology solutions for packaging manufacturers.
6.25% First Lien Term Loan due 11/02/2027 (LIBOR + 5.500%) (G)	$	1,000,000	11/02/21	$	526,824	$	528,214
ASC Holdings, Inc.
A manufacturer of capital equipment used by corrugated box manufacturers.
13% Senior Subordinated Note due 12/31/2024	$	805,872	11/19/15		805,858		718,838
Limited Liability Company Unit (B)		111,100 uts.	11/18/15		111,100		18,576
					916,958		737,414
ASPEQ Holdings
A manufacturer of highly-engineered electric heating parts and equipment for a range of industrial, commercial, transportation and marine applications.
6.26% Term Loan due 10/31/2025 (LIBOR + 5.250%)	$	1,131,056	11/08/19		1,120,862		1,131,056
Audio Precision
A provider of high-end audio test and measurement sensing instrumentation software and accessories.
7.00% Term Loan due 07/27/2024 (LIBOR + 6.000%)	$	1,746,000	10/30/18		1,730,961		1,746,000
Aurora Parts & Accessories LLC
A distributor of aftermarket over-the-road semi-trailer parts and accessories sold to customers across North America.
Preferred Stock (B)		210 shs.	08/17/15		209,390		209,390
Common Stock (B)		210 shs.	08/17/15		210		145,107
					209,600		354,497
BDP International, Inc.
A provider of transportation and related services to the chemical and life sciences industries.
6.25% Term Loan due 12/14/2024 (LIBOR + 5.250%)	$	2,384,888	12/18/18		2,363,340		2,384,888
6.25% Incremental Term Loan due 12/19/2024 (LIBOR + 5.250%)	$	42,598	12/07/20		42,024		42,598
6.25% Incremental Term Loan due 12/21/2024 (LIBOR + 5.250%)	$	40,854	03/30/21		40,256		40,854
					2,445,620		2,468,340
Best Lawyers (Azalea Investment Holdings, LLC)
A global digital media company that provides ranking and marketing services to the legal community.
12.00% HoldCo PIK Note due 05/19/2028	$	289,712	11/30/21		284,217		284,561
6.25% First Lien Term Loan due 11/19/2027 (LIBOR + 5.250%) (G)	$	1,391,058	11/30/21		1,033,063		1,034,597
Limited Liability Company Unit		44,231 uts.	11/30/21		44,231		44,231
					1,361,511		1,363,389

11 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage	Acquisition Date	Cost		Fair Value
Blue Wave Products, Inc.
A distributor of pool supplies.
Common Stock (B)		51,064 shs.	10/12/12	$	51,064	$	138,521
Warrant, exercisable until 2022, to purchase common stock at $.01 per share (B)		20,216 shs.	10/12/12		20,216		54,638
					71,280		193,159
BrightSign
A provider of digital signage hardware and software solutions, serving a variety of end markets, including retail, restaurants, government, sports, and entertainment.
6.75% Term Loan due 10/14/2027 (LIBOR + 5.750%) (G)	$	1,424,643	10/14/21		1,277,263		1,266,221
Limited Liability Company Unit (F)		111,835 uts.	10/14/21		111,835		111,835
					1,389,098		1,378,056
Brown Machine LLC
A designer and manufacturer of thermoforming equipment used in the production of plastic packaging containers within the food and beverage industry.
6.25% Term Loan due 10/04/2024 (LIBOR + 5.250%)	$	808,993	10/03/18		804,158		808,993
Cadence, Inc.
A full-service contract manufacturer (“CMO”) and supplier of advanced products, technologies, and services to medical device, life science, and industrial companies.
6.00% First Lien Term Loan due 04/30/2025 (LIBOR + 5.000%)	$	879,427	05/14/18		871,513		844,250
Cadent, LLC
A provider of advertising solutions driven by data and technology.
6.00% Term Loan due 09/07/2023 (LIBOR + 5.000%)	$	890,428	09/04/18		887,844		890,428
CAi Software
A vendor of mission-critical, production-oriented software to niche manufacturing and distribution sectors.
7.25% Term Loan due 12/10/2028 (LIBOR + 6.250%) (G)	$	2,500,000	12/13/21		2,216,388		2,219,254
Cash Flow Management
A software provider that integrates core banking systems with branch technology and creates modern retail banking experiences for financial institutions.
6.25% Term Loan due 12/27/2027 (LIBOR + 5.250%) (G)	$	986,967	12/28/21		893,448		894,300
Claritas Holdings, Inc.
A market research company that provides market segmentation insights to customers engaged in direct-to-consumer and business-to-business marketing activities.
6.76% Term Loan due 12/31/2023 (LIBOR + 5.750%)	$	1,533,322	12/20/18		1,520,117		1,533,322

12 

Barings Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
CloudWave
A provider of managed cloud hosting and IT services for hospitals.
7.00% Term Loan due 01/04/2027 (LIBOR + 6.000%)	$	1,652,661	01/29/21	$	1,622,807	$	1,563,418
Limited Liability Company Unit (B) (F)		55,645 uts.	01/29/21		55,645		34,305
					1,678,452		1,597,723
Cogency Global
A provider of statutory representation and compliance services for corporate and professional services clients.
6.25% Term Loan due 12/28/2027 (LIBOR + 5.500%)	$	972,449	02/14/22		892,807		892,389
Preferred Stock		28 shs.	02/14/22		27,551		27,550
					920,358		919,939
Command Alkon
A vertical-market software and technology provider to the heavy building materials industry delivering purpose-built, mission critical products that serve as the core operating & production systems for ready-mix concrete producers, asphalt producers, and aggregate suppliers.
8.00% Term Loan due 04/17/2027 (LIBOR + 7.000%) (G)	$	2,489,559	*		2,000,152		2,045,868
Limited Liability Company Unit (B)(F)		18 uts.	04/23/20		18,006		20,113
Limited Liability Company Unit Class B		6,629 uts.	04/23/20		—		39,486
* 04/23/20, 10/30/20 and 11/18/20.					2,018,158		2,105,467
Concept Machine Tool Sales, LLC
A full-service distributor of high-end machine tools and metrology equipment, exclusively representing a variety of global manufacturers in the Upper Midwest.
6.00% Term Loan due 01/31/2025 (LIBOR + 5.000%)	$	584,016	01/30/20		577,393		548,683
Limited Liability Company Unit (F)		1,237 shs.	*		49,559		10,210
* 01/30/20 and 03/05/21					626,952		558,893
CTS Engines
A provider of maintenance, repair and overhaul services within the aerospace & defense market.
6.26% Term Loan due 12/22/2026 (LIBOR + 5.250%)	$	1,388,868	12/22/20		1,366,976		1,329,147
Dart Buyer, Inc.
A manufacturer of helicopter aftermarket equipment and OEM Replacement parts for rotorcraft operators, providers and OEMs.
6.25% Term Loan due 04/01/2025 (LIBOR + 5.250%) (G)	$	1,689,077	04/01/19		1,537,636		1,554,527
Decks Direct
An eCommerce direct-to-consumer seller of specialty residential decking products in the United States.
7.00% Term Loan due 12/28/2026 (LIBOR + 6.000%) (G)	$	1,630,909	12/29/21		1,499,589		1,500,736
Limited Liability Company Unit		2,209 uts.	12/29/21		94,091		94,097
					1,593,680		1,594,833

13 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
Del Real LLC
A manufacturer and distributor of fully-prepared fresh refrigerated Hispanic entrees as well as side dishes that are typically sold on a heat-and-serve basis at retail grocers.
11% Senior Subordinated Note due 04/06/2023 (D)	$	1,420,588	10/07/16	$	1,403,759	$	1,275,688
Limited Liability Company Unit (B)(F)		368,799 uts.	*		368,928		29,467
* 10/07/16, 07/25/18, 03/13/19 and 06/17/19.					1,772,687		1,305,155
DistroKid (IVP XII DK Co-Invest, LP)
A subscription-based music distribution platform that allows artists to easily distribute, promote, and monetize their music across digital service providers, such as Spotify and Apple Music.
6.75% Term Loan due 09/30/2027 (LIBOR + 5.750%)	$	1,647,467	10/01/21		1,617,256		1,620,008
Limited Liability Company Unit (F)		73,333 uts.	10/01/21		73,404		73,333
					1,690,660		1,693,341
Dunn Paper
A provider of specialty paper for niche product applications.
10.26% Second Lien Term Loan due 08/31/2023 (LIBOR + 9.250%)	$	1,725,000	09/28/16		1,714,183		1,223,025
Dwyer Instruments, Inc.
A designer and manufacturer of precision measurement and control products for use with solids, liquids and gases.
6.51% Term Loan due 07/01/2027 (LIBOR + 5.500%)	$	1,000,000	07/20/21		850,739		853,051
Echo Logistics
A provider of tech-enabled freight brokerage across various modes including Truckload, Less-than-Truckload, Parcel, and Intermodal, as well as managed (contracted) transportation services.
7.75% Second Lien Term Loan due 11/05/2029 (LIBOR + 7.250%)	$	1,679,204	11/22/21		1,651,133		1,653,300
Limited Liability Company Unit		46 uts.	11/22/21		45,796		45,800
					1,696,929		1,699,100
EFI Productivity Software
A provider of ERP software solutions purpose-built for the print and packaging industry.
6.76% Term Loan due 12/30/2027 (LIBOR + 5.75%) (G)	$	1,000,000	12/30/21		907,828		908,655
Electric Power Systems International, Inc.
A provider of electrical testing services for apparatus equipment and protection & controls infrastructure.
6.75% Term Loan due 04/19/2028 (LIBOR + 5.750%) (G)	$	1,247,434	04/19/21		1,111,950		1,116,464

14 

Barings Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
Elite Sportswear Holding, LLC
A designer and manufacturer of gymnastics, competitive cheerleading and swimwear apparel in the U.S. and internationally.
Limited Liability Company Unit (B)(F)		1,218,266 uts.	10/14/16	$	159,722	$	—
Ellkay
A provider of data interoperability solutions for labs, hospitals and healthcare providers.
6.85% Term Loan due 09/14/2027 (LIBOR + 5.750%)	$	703,900	09/14/21		691,048		692,389
English Color & Supply LLC
A distributor of aftermarket automotive paint and related products to collision repair shops, auto dealerships and fleet customers through a network of stores in the Southern U.S.
11.5% (0.5% PIK) Senior Subordinated Note due 12/31/2023	$	1,359,186	06/30/17		1,350,803		1,359,186
Limited Liability Company Unit (B)(F)		397,695 uts.	06/30/17		397,695		783,936
					1,748,498		2,143,122
ENTACT Environmental Services, Inc.
A provider of environmental remediation and geotechnical services for blue-chip companies with regulatory-driven liability enforcement needs.
7.76% Term Loan due 12/15/2025 (LIBOR + 6.750%)	$	1,012,672	02/09/21		1,004,925		988,368
eShipping
An asset-life third party logistics Company that serves a broad variety of end markets and offers service across all major transportation modes.
6.75% Term Loan due 11/05/2027 (LIBOR + 5.750%) (G)	$	1,721,847	11/05/21		1,301,938		1,304,283
E.S.P. Associates, P.A.
A professional services firm providing engineering, surveying and planning services to infrastructure projects.
Limited Liability Company Unit (B)		273 uts.	*		295,518		247,797
* 06/29/18 and 12/29/20.
F G I Equity LLC
A manufacturer of a broad range of filters and related products that are used in commercial, light industrial, healthcare, gas turbine, nuclear, laboratory, clean room, hotel, educational system, and food processing settings.
Limited Liability Company Unit Class B-1 (B)		49,342 uts.	12/15/10		42,343		736,278

15 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)		Principal Amount, Shares, Units or Ownership Percentage	Acquisition Date	Cost		Fair Value
Follett School Solutions
A provider of software for K-12 school libraries.
6.50% First Lien Term Loan due 07/09/2028 (LIBOR + 5.750%)	$	1,705,621	08/31/21	$	1,672,446	$	1,678,142
LP Units (B)(F)		881 uts.	08/30/21		8,805		8,805
LP Interest (B)(F)		200 shs.	08/30/21		2,003		2,003
					1,683,254		1,688,950
FragilePAK
A provider of third-party logistics services focused on the full delivery life-cycle for big and bulky products.
5.96% Term Loan due 05/24/2027 (LIBOR + 5.750%) (G)	$	1,611,797	05/21/21		1,034,652		984,085
Limited Liability Company Unit (B)(F)		108 shs.	05/21/21		107,813		92,948
					1,142,465		1,077,033
GD Dental Services LLC
A provider of convenient “onestop” general, specialty, and cosmetic dental services with 21 offices located throughout South and Central Florida.
Limited Liability Company Unit Preferred (B)		76 uts.	10/05/12		75,920		28,399
Limited Liability Company Unit Common (B)		767 uts.	10/05/12		767		—
					76,687		28,399
gloProfessional Holdings, Inc.
A marketer and distributor of premium mineral-based cosmetics, cosmeceuticals and professional hair care products to the professional spa and physician’s office channels.
Preferred Stock (B)		650 shs.	03/29/19		649,606		814,392
Common Stock (B)		1,181 shs.	03/27/13		118,110		22,023
					767,716		836,415
GraphPad Software, Inc.
A provider of data analysis, statistics and graphing software solution for scientific research applications, with a focus on the life sciences and academic end-markets.
7.01% Term Loan due 12/15/2023 (LIBOR + 6.000%)	$	2,390,711	*		2,376,990		2,402,665
6.50% Term Loan due 04/27/2027 (LIBOR + 5.500%)	$	84,102	04/27/21		82,681		84,523
Preferred Stock (B)(F)		3,737 shs.	04/27/21		103,147		121,966
* 12/19/17 and 04/16/19.					2,562,818		2,609,154
Handi Quilter Holding Company (Premier Needle Arts)
A designer and manufacturer of long-arm quilting machines and related components for the consumer quilting market.
Limited Liability Company Unit Preferred (B)		372 uts.	*		371,644		530,231
Limited Liability Company Unit Common Class A (B)		3,594 uts.	12/19/14		—		—
*12/19/14 and 04/29/16.					371,644		530,231

16 

Barings Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
Heartland Veterinary Partners
A veterinary support organization that provides a comprehensive set of general veterinary services as well as ancillary services such as boarding and grooming.
11.00% Opco PIK Note due 11/09/2028 (G)	$	1,725,000	11/17/21	$	1,570,925	$	1,573,869
HHI Group, LLC
A developer, marketer, and distributor of hobby-grade radio control products.
Limited Liability Company Unit (B)(F)		102 uts.	01/17/14		101,563		553,889
Home Care Assistance, LLC
A provider of private pay non-medical home care assistance services.
5.75% Term Loan due 03/30/2027 (LIBOR + 4.750%)	$	850,872	03/26/21		836,705		836,518
HOP Entertainment LLC
A provider of post production equipment and services to producers of television shows and motion pictures.
Limited Liability Company Unit Class F (B)(F)		47 uts.	10/14/11		—		—
Limited Liability Company Unit Class G (B)(F)		114 uts.	10/14/11		—		—
Limited Liability Company Unit Class H (B)(F)		47 uts.	10/14/11		—		—
Limited Liability Company Unit Class I (B)(F)		47 uts.	10/14/11		—		—
					—		—
IGL Holdings III Corp.
A specialty label and flexible packaging converter.
6.75% Term Loan due 10/23/2026 (LIBOR + 5.750%) (G)	$	1,708,189	11/02/20		1,499,333		1,498,852
IM Analytics Holdings, LLC
A provider of test and measurement equipment used for vibration, noise, and shock testing.
8.01% Term Loan due 11/22/2023 (LIBOR + 7.000%)	$	1,044,550	11/21/19		1,040,238		826,761
Warrant, exercisable until 2026, to purchase common stock at $.01 per share (B)		8,885 shs.	11/25/19		—		—
					1,040,238		826,761
Industrial Service Solutions
A provider of maintenance, repair and overhaul services for process equipment within the industrial, energy and power end-markets.
6.51% Term Loan due 01/31/2026 (LIBOR + 5.500%)	$	885,785	02/05/20		874,422		847,697

17 

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
JF Petroleum Group
A provider of repair, maintenance, instalation and projection management servicese to the US fueling infrastructure industry.
6.50% Term Loan due 04/20/2026 (LIBOR + 5.500%)	$	681,428	05/04/21	$	664,702	$	651,445
Jones Fish
A provider of lake management services, fish stocking and pond aeration sales and services.
6.50% First Lien Term Loan due 12/20/2027 (LIBOR + 5.500%) (G)	$	1,261,603	02/28/22		1,072,196		1,071,814
Common Stock (F)		384 shs.	02/28/22		38,397		38,397
					1,110,593		1,110,211
Kano Laboratories LLC
A producer of industrial strength penetrating oils and lubricants.
6.00% Term Loan due 09/30/2026 (LIBOR + 5.000%) (G)	$	1,245,108	11/18/20		830,858		828,365
6.00% Term Loan due 10/31/2027 (LIBOR + 5.000%) (G)	$	452,766	11/08/21		269,845		270,446
Limited Liability Company Unit		20 uts.	11/19/20		19,757		19,760
					1,120,460		1,118,571
LeadsOnline
A nationwide provider of data, technology and intelligence tools used by law enforcement agencies, investigators, and businesses.
6.00% Term Loan due 12/23/2027 (LIBOR + 5.000%) (G)	$	1,721,258	02/07/22		1,467,368		1,466,624
Limited Liability Company Unit (F)		4,528 uts.	02/07/22		4,528		4,528
					1,471,896		1,471,152
LYNX Franchising
A global franchisor of B2B services including commercial janitorial services, shared office space solutions, and textile and electronics restoration services.
7.25% Term Loan due 12/18/2026 (LIBOR + 6.250%)	$	2,483,144	*		2,442,360		2,438,356
* 12/22/20 and 09/09/21
Manhattan Beachwear Holding Company
A designer and distributor of women’s swimwear.
12.5% Senior Subordinated Note due 05/30/2022 (D)	$	419,971	01/15/10		404,121		—
15% (2.5% PIK) Senior Subordinated Note due 05/30/2022 (D)	$	115,253	10/05/10		114,604		—
Common Stock (B)		35 shs.	10/05/10		35,400		—
Common Stock Class B (B)		118 shs.	01/15/10		117,647		—
Warrant, exercisable until 2023, to purchase common stock at $.01 per share (B)		104 shs.	10/05/10		94,579		—
					766,351		—

18 

Barings Participation Investors

CONSOLIDATED SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2022

(Unaudited)

Corporate Restricted Securities: (A) (Continued)	Principal Amount, Shares, Units or Ownership Percentage		Acquisition Date	Cost		Fair Value
Marshall Excelsior Co.
A designer, manufacturer and supplier of mission critical, highly engineered flow control products used in the transportation, storage and consumption of liquified petroleum gas, liquified anhydrous ammonia, refined industrial and cryogenic gasses.
6.50% Term Loan due 02/18/2028 (SOFR + 5.500%) (G)	$	580,882	02/24/22	$	520,718	$	520,550
					520,718		520,550
Master Cutlery LLC
A designer and marketer of a wide assortment of knives and swords.
13.00% Senior Subordinated Note due 07/20/2022 (D)	$	868,102	04/17/15		867,529		58,163
Limited Liability Company Unit		5 uts.	04/17/15		678,329		—
					1,545,858		58,163
Media Recovery, Inc.
A global manufacturer and developer of shock, temperature, vibration and other condition indicators and monitors for in-transit and storage applications.
7.00% First Out Term Loan due 11/22/2025 (SOFR + 6.000%)	$	488,583	11/25/19		482,536		488,583
MES Partners, Inc.
An industrial service business offering an array of cleaning and environmental services to the Gulf Coast region of the U.S.
Preferred Stock Series A (B)		30,926 shs.	07/25/19		12,412		—
Preferred Stock Series C (B)		1,275 shs.	09/22/20		457,365		—
Common Stock Class B (B)		259,252 shs.	*		244,163		—
Warrant, exercisable until 2030, to purchase common stock at $.01 per share (B)		351,890 shs.	09/22/20		—		—
* 09/30/14 and 02/28/18.					713,940