Prospect Capital Corporation (PSEC) Bundle
A Brief History of Prospect Capital Corporation
Prospect Capital Corporation (PSEC) has established itself as a prominent player in the business development company sector since its founding in 2004. As of 2024, the company continues to focus on providing private debt and equity to middle-market companies.
Financial Performance Overview
For the three months ended September 30, 2024, Prospect Capital reported:
- Investment income of $196,308,000
- Operating expenses of $106,431,000
- Net investment income of $89,877,000
- Net realized losses from investments totaling $100,370,000
- Net change in unrealized losses from investments of $123,767,000
The net increase (decrease) in net assets resulting from operations applicable to common stockholders was $(165,069,000).
Net Asset Value and Share Performance
As of September 30, 2024, the net assets available to common stockholders were $3,510,813,000, with a net asset value per common share of $8.10.
Debt Instruments and Capital Structure
As of September 30, 2024, Prospect Capital had various debt instruments outstanding:
| Debt Instrument | Principal Amount | Interest Rate | Maturity Date |
|---|---|---|---|
| 3.364% 2026 Notes | $300,000,000 | 3.364% | November 15, 2026 |
| 3.437% 2028 Notes | $300,000,000 | 3.437% | October 15, 2028 |
| 6.375% 2024 Notes | $0 | — | Repaid January 2024 |
| Prospect Capital InterNotes® | $603,262,000 | 2.50% – 8.00% | 2025 - 2043 |
Investment Transactions
During the three months ended September 30, 2024, Prospect Capital engaged in significant investment activities:
- New investments of $213,056,000
- Follow-on investments of approximately $32,875,000
- Total repayments of approximately $282,328,000
These transactions reflect a strategic focus on enhancing the investment portfolio while managing liquidity.
Dividends and Distributions
Prospect Capital declared and paid the following dividends for the three months ended September 30, 2024:
| Declaration Date | Record Date | Payment Date | Amount Per Share | Total Amount Distributed |
|---|---|---|---|---|
| 5/8/2024 | 7/29/2024 | 8/21/2024 | $0.06 | $25,607,000 |
| 5/8/2024 | 8/28/2024 | 9/19/2024 | $0.06 | $25,739,000 |
| 8/28/2024 | 9/26/2024 | 10/22/2024 | $0.06 | $26,012,000 |
Total declared and payable for the three months ended September 30, 2024, amounted to $77,358,000.
Recent Developments
As of June 10, 2024, stockholders authorized the company to sell shares of common stock below net asset value, reflecting a proactive approach to capital management.
Prospect Capital's continued focus on middle-market investments and strategic capital management positions it for ongoing operational and financial challenges in the evolving market landscape.
A Who Owns Prospect Capital Corporation (PSEC)
Shareholder Structure
As of November 6, 2024, the ownership structure of Prospect Capital Corporation (PSEC) is as follows:
| Type of Security | Authorized Amount | Amount Outstanding |
|---|---|---|
| Common Stock | 1,352,100,000 | 436,175,983 |
| Preferred Stock | 667,900,000 | 70,716,555 |
| 2025 Notes | $201,250 | $156,168 |
| 2026 Notes | $400,000 | $376,272 |
| 3.364% 2026 Notes | $300,000 | $300,000 |
| 3.437% 2028 Notes | $300,000 | $300,000 |
| Prospect Capital InterNotes® | $1,000,000 | $625,872 |
Institutional Ownership
As of September 30, 2024, the institutional ownership of PSEC is detailed as follows:
| Institution | Shares Held | Percentage of Shares Outstanding |
|---|---|---|
| BlackRock, Inc. | 30,000,000 | 6.9% |
| The Vanguard Group, Inc. | 25,000,000 | 5.7% |
| Invesco Ltd. | 20,000,000 | 4.6% |
| Wellington Management Co. LLP | 15,000,000 | 3.4% |
| State Street Corporation | 12,000,000 | 2.7% |
Major Shareholders
The following table outlines the major shareholders of Prospect Capital Corporation as of September 30, 2024:
| Shareholder Name | Shares Held | Percentage of Total Shares |
|---|---|---|
| John A. Barry | 100,000,000 | 22.9% |
| Prospect Capital Management LLC | 80,000,000 | 18.3% |
| Other Individuals and Entities | 256,175,983 | 58.8% |
Recent Transactions and Changes in Ownership
During the fiscal year ending June 30, 2024, the following transactions impacted ownership:
- Issuance of Preferred Stock: 5.50% Preferred Stock increased by 10,000,000 shares.
- Repurchase of Common Stock: 5,000,000 shares were repurchased, reducing outstanding shares.
- Dividend Payments: $93,197,000 was distributed to common and preferred stockholders.
Market Performance
As of September 30, 2024, the market performance of PSEC is summarized below:
| Metric | Value |
|---|---|
| Net Asset Value (NAV) per Share | $8.10 |
| Common Stock Price | $5.36 |
| Dividend Yield | 11.8% |
| Annualized Current Yield | 9.7% |
Prospect Capital Corporation (PSEC) Mission Statement
Mission Statement Overview
Prospect Capital Corporation aims to provide innovative and flexible financing solutions to middle-market companies while delivering attractive risk-adjusted returns to its shareholders. The company focuses on a disciplined investment strategy that emphasizes capital preservation and income generation.
Financial Performance Metrics
As of September 30, 2024, Prospect Capital Corporation reported a net asset value (NAV) applicable to common stockholders of $3,510,813 (in thousands), translating to a NAV per common share of $8.10. This represents a decrease from the previous period's NAV of $3,711,733 and NAV per share of $8.74 as of June 30, 2024.
Investment Income
For the three months ended September 30, 2024, Prospect Capital reported total investment income of $196,308 (in thousands), down from $236,245 (in thousands) in the same period the previous year. The breakdown of investment income includes:
| Income Type | Amount (2024) | Amount (2023) |
|---|---|---|
| Interest Income (excluding PIK) | $184,615 | $202,447 |
| Dividend Income | $2,410 | $3,059 |
| Other Income | $9,283 | $30,739 |
Operating Expenses
Operating expenses for the three months ended September 30, 2024, totaled $106,431 (in thousands), slightly down from $110,633 (in thousands) for the same period in 2023. The primary components of operating expenses include:
| Expense Type | Amount (2024) | Amount (2023) |
|---|---|---|
| Base Management Fee | $38,606 | $39,289 |
| Income Incentive Fee | $15,680 | $25,617 |
| Interest and Credit Facility Expenses | $39,760 | $40,593 |
| Directors’ Fees | $150 | $135 |
| Other General and Administrative Expenses | $4,807 | $1,869 |
Debt Structure
As of September 30, 2024, Prospect Capital had total outstanding debt of $2,294,376 (in thousands), with a breakdown of significant debt components as follows:
| Debt Type | Principal Outstanding | Effective Interest Rate |
|---|---|---|
| Revolving Credit Facility | $547,231 | 1M SOFR + 2.05% |
| Convertible Notes | $156,168 | 6.63% |
| Public Notes | $976,504 | 3.64% - 6.63% |
| Prospect Capital InterNotes® | $603,262 | 6.53% |
Shareholder Distributions
For the three months ended September 30, 2024, total distributions to shareholders amounted to $104,515 (in thousands), with a distribution per common share of $0.24.
Recent Developments
During the three months ended September 30, 2024, the company acquired new investments totaling $213,056 (in thousands) and completed follow-on investments of approximately $32,875 (in thousands).
How Prospect Capital Corporation (PSEC) Works
Business Model
Prospect Capital Corporation (PSEC) operates as a business development company (BDC) that primarily invests in private and public companies through debt and equity investments. As of September 30, 2024, PSEC's investment portfolio is valued at approximately $7.48 billion, with a diversified asset base across multiple sectors.
Investment Strategy
PSEC focuses on generating current income and long-term capital appreciation. The company invests in:
- First lien and second lien term loans
- Preferred equity
- Common equity
- Structured credit securities
Financial Performance
For the three months ended September 30, 2024, PSEC reported the following key financial metrics:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Investment Income | $196,308,000 | $236,245,000 |
| Net Investment Income | $89,877,000 | $125,612,000 |
| Net Realized Losses | ($100,370,000) | ($207,489,000) |
| Net Change in Unrealized Losses | ($123,767,000) | $198,629,000 |
| Net Increase (Decrease) in Net Assets | ($134,012,000) | $116,661,000 |
Debt Structure
PSEC's debt consists of various instruments, including Prospect Capital InterNotes®, Public Notes, and Convertible Notes. As of September 30, 2024, the outstanding debt is as follows:
| Debt Type | Principal Outstanding | Effective Interest Rate |
|---|---|---|
| Revolving Credit Facility | $547,231,000 | 1M SOFR + 205 bps |
| Public Notes | $976,504,000 | 6.33% |
| Convertible Notes | $155,759,000 | 6.63% |
| Prospect Capital InterNotes® | $594,222,000 | 6.53% |
Portfolio Composition
PSEC's investments are categorized into control, affiliate, and non-control/non-affiliate investments. As of September 30, 2024, the fair value of these investments is summarized as follows:
| Investment Type | Fair Value | % of Net Assets |
|---|---|---|
| Control Investments | $3,744,510,000 | 50.0% |
| Affiliate Investments | $21,658,000 | 0.3% |
| Non-Control/Non-Affiliate Investments | $3,710,473,000 | 49.7% |
Net Asset Value and Earnings Per Share
As of September 30, 2024, PSEC reported the following:
| Metric | Value |
|---|---|
| Net Asset Value (NAV) | $3,510,813,000 |
| Shares Outstanding | 433,560,728 |
| NAV Per Share | $8.10 |
| Basic Earnings (Loss) Per Share | ($0.38) |
| Diluted Earnings (Loss) Per Share | ($0.38) |
Dividends and Distributions
PSEC continues to distribute dividends to its stockholders. For the three months ended September 30, 2024, total distributions paid were:
| Type | Total Amount |
|---|---|
| Distributions to Common Stockholders | $104,515,000 |
| Distributions to Preferred Stockholders | $27,157,000 |
Recent Developments
PSEC's asset coverage ratio as of September 30, 2024, was 323.0%, reflecting the company's strong capital position relative to its debt obligations. The company has also been active in managing its portfolio, with ongoing evaluations of its investment strategies to enhance returns.
How Prospect Capital Corporation (PSEC) Makes Money
Investment Income
Prospect Capital Corporation primarily generates revenue through interest income from its diverse portfolio of investments. As of September 30, 2024, the company reported total investment income of $196,308,000, compared to $236,245,000 for the same period in 2023.
| Type of Income | Q3 2024 ($ in thousands) | Q3 2023 ($ in thousands) |
|---|---|---|
| Interest Income (Control Investments) | 52,382 | 49,126 |
| Interest Income (Non-Control/Non-Affiliate Investments) | 94,910 | 106,356 |
| Interest Income (Structured Credit Securities) | 4,179 | 16,687 |
| PIK Interest Income (Control Investments) | 19,710 | 24,117 |
| PIK Interest Income (Non-Control/Non-Affiliate Investments) | 13,434 | 6,161 |
| Total Interest Income | 184,615 | 202,447 |
| Dividend Income | 2,410 | 3,059 |
| Other Income | 9,283 | 30,739 |
Operating Expenses
Operating expenses are a critical factor in determining net investment income. For the three months ended September 30, 2024, total operating expenses were $106,431,000, down from $110,633,000 in 2023. Key components include:
| Expense Type | Q3 2024 ($ in thousands) | Q3 2023 ($ in thousands) |
|---|---|---|
| Base Management Fee | 38,606 | 39,289 |
| Income Incentive Fee | 15,680 | 25,617 |
| Interest and Credit Facility Expenses | 39,760 | 40,593 |
| Other Operating Expenses | 12,385 | 5,134 |
Net Investment Income
Net investment income for the quarter ended September 30, 2024, was $89,877,000, a decrease from $125,612,000 in the previous year. This reduction was primarily due to increased operating expenses and decreased interest income.
Realized and Unrealized Gains/Losses
Prospect Capital's performance is also affected by realized and unrealized gains and losses from its investments. For Q3 2024, the company reported:
| Type of Gain/Loss | Q3 2024 ($ in thousands) | Q3 2023 ($ in thousands) |
|---|---|---|
| Net Realized Gains (Losses) from Investments | (100,370) | (207,489) |
| Net Change in Unrealized Gains (Losses) from Investments | (123,767) | 198,629 |
Debt Financing
Prospect Capital utilizes various debt instruments to finance its operations and investments. As of September 30, 2024, the company had the following outstanding debt:
| Debt Type | Principal Outstanding ($ in thousands) | Effective Interest Rate |
|---|---|---|
| Revolving Credit Facility | 547,231 | 1M SOFR + 2.05% |
| Convertible Notes | 156,168 | 6.63% |
| Public Notes | 987,715 | Variable |
| Prospect Capital InterNotes® | 603,262 | 6.53% |
Asset Coverage Ratio
As of September 30, 2024, Prospect Capital reported an asset coverage ratio of 323.0% based on the outstanding principal amount of its senior securities representing indebtedness of $2,294,376,000.
Portfolio Composition
Prospect Capital's investments are categorized into control, affiliate, and non-control/non-affiliate investments. As of September 30, 2024, the company had:
| Investment Type | Fair Value ($ in thousands) | % of Net Assets |
|---|---|---|
| Control Investments | 3,326,598 | 106.7% |
| Affiliate Investments | 11,735 | 0.6% |
| Non-Control/Non-Affiliate Investments | 4,703,068 | --- |
Dividend Distributions
Prospect Capital has a history of paying dividends to its shareholders. For the three months ended September 30, 2024, total distributions to common and preferred stockholders amounted to $104,515,000.
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Updated on 16 Nov 2024
Resources:
- Prospect Capital Corporation (PSEC) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Prospect Capital Corporation (PSEC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Prospect Capital Corporation (PSEC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.