v3.25.4
Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

Note 5. Fair Value of Financial Instruments

Investments

The following tables present fair value measurements of investments as of December 31, 2025 (in thousands):

 

Fair Value Hierarchy

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Unitranche First Lien

$

-

 

 

$

-

 

 

$

434,909

 

 

$

434,909

 

Equity

 

-

 

 

 

-

 

 

 

23,232

 

 

 

23,232

 

Total Investments

$

-

 

 

$

-

 

 

$

458,141

 

 

$

458,141

 

Cash Equivalents

 

543,791

 

 

 

-

 

 

 

-

 

 

 

543,791

 

Total Investments including Cash Equivalents

$

543,791

 

 

$

-

 

 

$

458,141

 

 

$

1,001,932

 

 

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the year ended December 31, 2025 (in thousands):

 

 

 

Unitranche
First Lien

 

Equity

 

Total

 

Balance as of December 31, 2024

 

$

-

 

$

-

 

$

-

 

Amortized discounts/premiums

 

 

260

 

 

-

 

 

260

 

Paid in-kind interest

 

 

2,855

 

 

-

 

 

2,855

 

Net change in unrealized appreciation (depreciation)

 

 

6,353

 

 

(1,383

)

 

4,970

 

Purchases

 

 

429,192

 

 

24,615

 

 

453,807

 

Sales/principal repayments/paydowns

 

 

(3,751

)

 

-

 

 

(3,751

)

Balance as of December 31, 2025

 

$

434,909

 

$

23,232

 

$

458,141

 

Net change in unrealized appreciation (depreciation) from investments still held as of December 31, 2025

 

$

6,353

 

$

(1,383

)

$

4,970

 

The following tables present the fair value of Level 3 investments and the ranges of significant unobservable inputs used to value the Company’s Level 3 investments as of December 31, 2025. These ranges represent the significant unobservable inputs that were used in the valuation of each type of investment. These inputs are not representative of the inputs that could have been used in the valuation of any one investment. For example, the highest market yield presented in the table for senior secured first lien investments is appropriate for valuing a specific investment but may not be appropriate for valuing any other investment. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 investments.

Security Type

 

Fair Value as of
December 31, 2025
(in thousands)

 

 

Valuation Technique

 

Unobservable Input

 

Range (Weighted Avg)

Unitranche First Lien

 

$

364,013

 

 

Discounted Cash Flow

 

Discount Rate

 

 

8.6

%

-

 

9.1

%

(8.8%)

 

 

70,896

 

 

Broker Quoted

 

Broker Quote

 

 

 

 

N/A

 

 

 

$

434,909

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

$

23,232

 

 

Enterprise Value

 

Comparable EBITDA Multiple

 

 

12.5

x

-

 

19.4

x

(17.3x)

 

$

23,232

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

458,141

 

 

 

 

 

 

 

 

 

 

 

 

 

The significant unobservable inputs used in the fair value measurement of the Company’s debt and equity securities are primarily earnings before interest, taxes, depreciation and amortization (“EBITDA”) comparable multiples and market discount rates. The Company typically uses comparable EBITDA multiples on its equity securities to determine the fair value of investments. The Company uses discount rates for debt securities to determine if the effective yield on a debt security is commensurate with the market yields for that type of debt security. Weighted average is calculated based upon fair value.

•
The significant unobservable inputs used in the discounted cash flow approach is the discount rate used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Increases and decreases in the discount rate would result in a decrease and increase in the fair value, respectively. Included in the consideration and selection of discount rates is risk of default, rating of the investment, call provisions and comparable company investments.
•
The significant unobservable inputs used in the market multiple approach are the multiples of similar companies’ EBITDA, revenue and comparable market transactions. Increases and decreases in market EBITDA multiples and revenue would result in an increase or decrease in the fair value, respectively.