Carlyle Secured Lending, Inc. (CGBD): Business Model Canvas [11-2024 Updated]

Understanding the business model of Carlyle Secured Lending, Inc. (CGBD) reveals how this company effectively navigates the complex world of middle market finance. With a strong emphasis on secured debt investments and a robust partnership with the Carlyle Group, CGBD has crafted a unique approach that caters to both borrowers and investors. Dive deeper below to explore the intricacies of their operations, value propositions, and revenue streams.

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Key Partnerships

Carlyle Group as investment adviser

Carlyle Secured Lending, Inc. (CGBD) is externally managed by Carlyle Group, which serves as its investment adviser. The investment team comprises over 200 professionals who possess extensive expertise across various asset classes. As of September 30, 2024, CGBD reported net investment income of $24.0 million, equating to $0.47 per common share.

Financial sponsors for middle market companies

CGBD primarily focuses on lending to U.S. middle market companies, defined as those with approximately $25 million to $100 million in EBITDA, often supported by financial sponsors such as private equity firms. As of September 30, 2024, CGBD held 175 investments across 128 portfolio companies, with a total fair value of $1.7 billion.

Banks and other financial institutions for capital sourcing

CGBD collaborates with banks and financial institutions to source capital. A significant component of its capital structure includes a senior secured revolving credit facility, which has a first lien security interest in most of its portfolio investments. The weighted average interest rate on its debt tranches was reported at 7.25% as of September 30, 2024.

Partnership Type	Entities Involved	Key Metrics
Investment Adviser	Carlyle Group	Net Investment Income: $24.0 million (Q3 2024)
Financial Sponsors	Private Equity Firms	Portfolio Value: $1.7 billion (Sept 2024)
Capital Sourcing	Banks and Financial Institutions	Weighted Average Interest Rate: 7.25% (Sept 2024)

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Key Activities

Originate secured debt investments

Carlyle Secured Lending, Inc. (CGBD) focuses on originating secured debt investments primarily in U.S. middle market companies. The company defines middle market companies as those with approximately $25 million to $100 million of EBITDA. As of September 30, 2024, CGBD held a total of 175 investments across 128 portfolio companies, with a fair value of $1.7 billion.

Investment Type	Count of Investments	Amortized Cost ($ thousands)	Fair Value ($ thousands)	Percentage of Total Investments
First Lien Debt	135	1,256,120	1,234,093	72.2%
Second Lien Debt	8	123,675	121,838	7.1%
Equity Investments	29	106,729	109,634	6.4%
Investment Funds	3	271,097	243,972	14.3%

Manage investment portfolio

CGBD actively manages its investment portfolio to optimize returns and minimize risks. As of September 30, 2024, the company reported total net assets of $906.6 million, reflecting a decrease from $912.8 million at the beginning of the period. The investment portfolio's performance is evaluated using metrics such as net investment income, which for the nine months ended September 30, 2024, was approximately $80.2 million.

Metric	Value ($ thousands)
Net Investment Income	80,206
Net Realized Gain (Loss)	(26,375)
Net Change in Unrealized Appreciation (Depreciation)	13,790
Net Assets at End of Period	906,604

Conduct financial analysis and due diligence

Financial analysis and due diligence are critical components of CGBD’s investment strategy. The company performs thorough evaluations of potential investments to assess their risk and return profiles. This includes analyzing financial statements, market conditions, and the competitive landscape. As of September 30, 2024, the company reported interest income from non-controlled/non-affiliated investments of $40.1 million.

Income Source	Value ($ thousands)
Interest Income (Non-Controlled/Non-Affiliated)	40,116
PIK Income	5,033
Other Income	1,037

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Key Resources

Experienced investment management team

The investment management team at Carlyle Secured Lending, Inc. consists of over 200 investment professionals with deep expertise across multiple asset classes. This team is supported by a robust operational and administrative framework provided by Carlyle Employee Co., a wholly owned subsidiary of Carlyle.

Capital from public offerings and debt issuance

As of September 30, 2024, Carlyle Secured Lending, Inc. reported total net assets of $906.6 million. The company has utilized various capital sources, including:

• Proceeds from common stock offerings
• Debt issuances, including the 2015-1N Debt issuance of $380 million
• Borrowings on its credit facility, totaling $226.6 million in the third quarter of 2024.

The weighted average yield on investments was 11.9% at amortized cost and 12.3% at fair value.

Access to Carlyle Group’s global credit platform

Carlyle Secured Lending, Inc. benefits from the extensive resources and relationships available through Carlyle Group’s global credit platform, which enhances its ability to source and manage investments. This access allows CGBD to tap into a diverse range of investment opportunities across various sectors, including:

Sector	Investment (Fair Value)	% of Total Investments
Healthcare & Pharmaceuticals	$225.99 million	13.2%
High Tech Industries	$124.62 million	7.3%
Consumer Services	$105.16 million	6.2%
Business Services	$104.58 million	6.1%
Investment Funds	$243.97 million	14.3%

As of September 30, 2024, the company held a total of 175 investments across 128 portfolio companies.

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Value Propositions

Focus on generating current income and capital appreciation

Carlyle Secured Lending, Inc. (CGBD) aims to generate current income while also pursuing capital appreciation. As of September 30, 2024, the company reported a net investment income of $24.0 million, translating to $0.47 per common share. The adjusted net investment income per share was $0.49, which accounts for one-time expenses related to the reset of the 2015-1R Notes. In the nine months ended September 30, 2024, the net investment income totaled $80.206 million. The company's total net assets as of the same date stood at $906.604 million. This financial performance underscores CGBD's commitment to delivering shareholder returns through a blend of income generation and potential asset value growth.

Expertise in middle market lending

CGBD specializes in lending to U.S. middle market companies, defined as those with EBITDA between $25 million and $100 million. As of September 30, 2024, the firm held a diverse portfolio comprising 175 investments across 128 portfolio companies and 26 different industries, with a total fair value of $1.7 billion. The investment strategy focuses primarily on secured debt instruments, particularly first lien and second lien loans, which constitute a significant portion of the portfolio. The weighted average yield at amortized cost for first lien debt was reported at 11.7%, while second lien debt yielded 13.9%. This expertise in middle market lending enables CGBD to capitalize on opportunities that often elude larger financial institutions, thereby enhancing its value proposition to investors.

Diversified investment strategy to manage risk

CGBD employs a diversified investment strategy to mitigate risks associated with its lending activities. As of September 30, 2024, the breakdown of investments by type was as follows:

Type	Amortized Cost	Fair Value	% of Fair Value
First Lien Debt	$1,256,120	$1,234,093	72.2%
Second Lien Debt	$123,675	$121,838	7.1%
Equity Investments	$106,729	$109,634	6.4%
Investment Funds	$271,097	$243,972	14.3%
Total	$1,757,621	$1,709,537	100.0%

This diversified approach helps CGBD navigate market fluctuations and reduces reliance on any single investment type. Additionally, the firm maintains significant liquidity, with total liquidity reported at $354.8 million as of September 30, 2024, which includes cash and undrawn debt capacity. This liquidity position further enhances CGBD's ability to respond to investment opportunities and manage risk effectively.

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Customer Relationships

Strong ties with private equity firms

Carlyle Secured Lending, Inc. (CGBD) has established strong relationships with private equity firms, which serve as a key source of deal flow and investment opportunities. As of September 30, 2024, a significant portion of CGBD's portfolio consists of investments in companies controlled by private equity sponsors. This strategy allows CGBD to leverage the expertise and resources of these firms to identify high-potential investments.

Regular communication with investors on performance

CGBD maintains a robust communication strategy with its investors. In the third quarter of 2024, CGBD reported a net investment income of $24.0 million, or $0.47 per common share . The company declared dividends totaling $23.9 million during the same period, reflecting a commitment to returning value to shareholders. Regular updates on performance metrics, including net asset value (NAV) per share of $16.85 as of September 30, 2024 , are shared with investors to enhance transparency and trust.

Tailored solutions for middle market companies

CGBD focuses on providing tailored financial solutions to middle market companies, defined as those with approximately $25 million to $100 million in EBITDA. This targeted approach allows CGBD to meet the unique financing needs of these businesses, which often require customized lending options such as senior secured loans. As of September 30, 2024, CGBD's total investments amounted to $1.7 billion, with a substantial portion allocated to first lien senior secured loans .

Key Metrics	Q3 2024	Q3 2023
Net Investment Income	$24.0 million	$25.0 million
Dividends Declared	$23.9 million	$23.5 million
NAV per Share	$16.85	$16.95
Total Investments	$1.7 billion	$1.9 billion

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Channels

Nasdaq for public equity transactions

The Carlyle Secured Lending, Inc. (CGBD) is publicly traded on the Nasdaq under the ticker symbol CGBD. As of September 30, 2024, CGBD had a total of 50,848,458 shares outstanding. The net asset value (NAV) per common share was $16.85, a slight decrease from $16.99 as of June 30, 2024. The company’s market capitalization is approximately $855 million, calculated based on the outstanding shares and the NAV.

Direct outreach to potential borrowers

CGBD employs a proactive strategy to identify and reach out to potential borrowers, primarily targeting U.S. middle market companies. As of September 30, 2024, the company held 175 investments across 128 portfolio companies, with a total fair value of $1.7 billion. The company focuses on lending to firms with approximately $25 million to $100 million of EBITDA. This outreach is supported by a dedicated team of investment professionals who leverage Carlyle's extensive network and resources.

Investor relations efforts to attract capital

CGBD's investor relations strategy is designed to engage current and potential investors effectively. In the third quarter of 2024, the company declared dividends totaling $23.9 million, or $0.47 per share. The company’s investor relations efforts also highlight its performance metrics, such as the net investment income of $24.0 million for the quarter, which reflects the company's commitment to generating sustainable returns.

Metric	Value as of September 30, 2024
Total Shares Outstanding	50,848,458
Net Asset Value per Share	$16.85
Market Capitalization	~$855 million
Total Investments Fair Value	$1.7 billion
Dividends Declared (Q3 2024)	$23.9 million
Net Investment Income (Q3 2024)	$24.0 million

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Customer Segments

U.S. middle market companies (EBITDA of $25M-$100M)

Carlyle Secured Lending, Inc. primarily targets U.S. middle market companies, defined as those with earnings before interest, taxes, depreciation, and amortization (EBITDA) ranging from $25 million to $100 million. This segment represents a substantial opportunity for investment, as these companies often require financing to support growth initiatives and operational stability. As of September 30, 2024, Carlyle Secured Lending had a portfolio that included 175 investments across 128 portfolio companies, with a total fair value of approximately $1.7 billion.

Private equity firms seeking debt financing

The company also serves private equity firms that seek debt financing for their portfolio companies. These firms often require flexible financing solutions for acquisitions, recapitalizations, or growth capital. Carlyle Secured Lending's strategy includes originating secured debt instruments, such as first lien senior secured loans and second lien senior secured loans, which are particularly attractive to private equity firms looking to leverage their investments. As of September 30, 2024, the company's investment income from non-controlled/non-affiliated investments included $40.1 million in interest income.

Institutional and retail investors looking for income

Carlyle Secured Lending also targets institutional and retail investors who are looking for steady income through dividends. The company declared dividends totaling $23.9 million, or $0.47 per common share, for the third quarter of 2024. The company's net assets as of September 30, 2024, were reported at $906.6 million, with a net asset value (NAV) per common share of $16.85. This financial stability and consistent income generation are appealing to investors seeking reliable returns in a volatile market.

Customer Segment	Characteristics	Financial Data
U.S. middle market companies	EBITDA of $25M-$100M	175 investments across 128 portfolio companies; total fair value of $1.7 billion
Private equity firms	Seeking debt financing for acquisitions and growth	Investment income of $40.1 million in interest from non-controlled/non-affiliated investments
Institutional and retail investors	Looking for income through dividends	Declared dividends of $23.9 million; NAV per share of $16.85

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Cost Structure

Management and administrative fees

The management fees incurred by Carlyle Secured Lending, Inc. (CGBD) for the three months ended September 30, 2024, amounted to $6.59 million, while the incentive fees totaled $5.10 million. For the nine months ended September 30, 2024, the base management fees were $20.16 million and the incentive fees were $16.49 million.

Period	Base Management Fees	Incentive Fees	Total Management Fees
Three months ended September 30, 2024	$6,590,000	$5,101,000	$11,691,000
Nine months ended September 30, 2024	$20,155,000	$16,492,000	$36,647,000

Interest expenses on debt financing

As of September 30, 2024, the total interest expense and credit facility fees for CGBD were approximately $16.88 million for the three months ended September 30, 2024, and $51.36 million for the nine months ended September 30, 2024. The weighted average interest rate for the debt was 6.78%.

Period	Total Interest Expense	Weighted Average Interest Rate
Three months ended September 30, 2024	$16,882,000	6.78%
Nine months ended September 30, 2024	$51,361,000	6.78%

Operational costs for investment management

The operational costs for investment management include various expenses such as professional fees, administrative service fees, and general administrative expenses. For the three months ended September 30, 2024, these costs totaled $727,000 for professional fees, $337,000 for administrative service fees, and $147,000 for directors' fees. The total operational costs for the nine months ended September 30, 2024, amounted to $2.20 million for professional fees, $1.15 million for administrative service fees, and $457,000 for directors' fees.

Expense Type	Three Months Ended September 30, 2024	Nine Months Ended September 30, 2024
Professional Fees	$727,000	$2,200,000
Administrative Service Fees	$337,000	$1,150,000
Directors' Fees	$147,000	$457,000

Carlyle Secured Lending, Inc. (CGBD) - Business Model: Revenue Streams

Interest income from secured loans

The primary revenue stream for Carlyle Secured Lending, Inc. (CGBD) comes from interest income generated through its portfolio of secured loans. For the three months ended September 30, 2024, the company reported interest income from non-controlled/non-affiliated investments totaling $40.1 million, while interest income from non-controlled/affiliated investments amounted to $1.5 million.

In total, the interest income for the nine months ended September 30, 2024, reached $125.1 million from non-controlled/non-affiliated investments and $5.9 million from non-controlled/affiliated investments.

Fees from investment management services

CGBD generates additional revenue through management fees associated with its investment services. For the three months ending September 30, 2024, base management fees were reported at $6.6 million, while incentive fees stood at $5.1 million. Over the nine months ending September 30, 2024, these fees totaled $20.2 million for base management and $16.5 million for incentive fees.

Type of Fee	Three Months Ended September 30, 2024	Nine Months Ended September 30, 2024
Base Management Fees	$6.6 million	$20.2 million
Incentive Fees	$5.1 million	$16.5 million

Dividend income from equity investments

CGBD also earns dividend income from its equity investments. For the three months ended September 30, 2024, dividend income was recorded at $8.3 million, and for the nine months ended September 30, 2024, the total was $25.3 million. This reflects the company's strategy of investing in equity positions alongside its primary focus on secured debt.

Type of Income	Three Months Ended September 30, 2024	Nine Months Ended September 30, 2024
Dividend Income	$8.3 million	$25.3 million

Updated on 16 Nov 2024

Resources:

1. Carlyle Secured Lending, Inc. (CGBD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Carlyle Secured Lending, Inc. (CGBD)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Carlyle Secured Lending, Inc. (CGBD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.