Goldman Sachs BDC, Inc. (GSBD): Business Model Canvas [11-2024 Updated]

Goldman Sachs BDC, Inc. (GSBD) operates in a unique niche of the financial landscape, offering capital solutions to middle-market companies often overlooked by traditional banks. With a robust business model that emphasizes high-yield debt investments and personalized service, GSBD leverages its deep industry expertise and strong partnerships to drive growth and deliver value. Explore the intricacies of GSBD's business model canvas below to understand how it navigates the complexities of the investment landscape.

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Key Partnerships

Goldman Sachs Asset Management as investment adviser

Goldman Sachs BDC, Inc. (GSBD) relies heavily on its partnership with Goldman Sachs Asset Management (GSAM), which acts as its investment adviser. As of September 30, 2024, GSBD had originated approximately $8.51 billion in aggregate principal amount of debt and equity investments since its inception. The management fees paid to GSAM for the nine months ending September 30, 2024, totaled $26.452 million.

Financial institutions for loan syndication

GSBD collaborates with various financial institutions for loan syndication, allowing it to distribute risk and enhance liquidity. The company's debt as of September 30, 2024, was reported at $1.878 billion, net of debt issuance costs. Additionally, GSBD's total liabilities were approximately $1.959 billion, indicating the scale of its financial partnerships.

Portfolio companies for investment opportunities

GSBD maintains a diverse portfolio, with investments in 167 portfolio companies as of September 30, 2024. The company has a weighted average yield on debt and income-producing investments of 11.8% at amortized cost. The total investments at fair value were approximately $3.442 billion, reflecting the company's active engagement with these portfolio companies.

Regulatory bodies for compliance

As a business development company (BDC), GSBD is required to comply with regulations set forth by the Investment Company Act of 1940. As of September 30, 2024, GSBD maintained an asset coverage ratio of 183%, which is above the required minimum of 150%. This compliance ensures that GSBD can continue its operations and manage investor assets effectively.

Partnership Type	Description	Key Metrics
Investment Adviser	Goldman Sachs Asset Management	Fees paid: $26.452 million (9 months)
Loan Syndication	Collaboration with financial institutions	Debt: $1.878 billion
Portfolio Companies	Investment opportunities across sectors	Number of companies: 167; Total investments: $3.442 billion
Regulatory Compliance	Compliance with the Investment Company Act	Asset coverage ratio: 183%

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Key Activities

Origination and structuring of debt investments

The origination strategy of Goldman Sachs BDC, Inc. focuses on leading negotiations and structuring loans or securities in which they invest. Since inception in 2012 through September 30, 2024, GSBD has originated approximately $8.51 billion in aggregate principal amount of debt and equity investments. The firm typically targets investments with maturities between three and ten years, with individual investments ranging from $10 million to $75 million, although larger or smaller amounts may occur.

Monitoring portfolio performance

Goldman Sachs BDC actively monitors the performance of its portfolio companies to ensure compliance with financial covenants and performance benchmarks. As of September 30, 2024, the total investments at fair value amounted to $3.44 billion, with $3.33 billion in non-controlled/non-affiliated investments and $105 million in non-controlled affiliated investments. This rigorous monitoring is integral to assessing the credit risk associated with their portfolio.

Risk assessment and management

Risk assessment is a critical activity for GSBD, utilizing GSAM’s proprietary risk management framework. The company's asset coverage ratio, as of September 30, 2024, was 183%, indicating a strong buffer against potential asset declines. The firm is also committed to maintaining compliance with the Investment Company Act, which mandates that at least 70% of total assets be qualifying assets. This regulatory compliance is essential to mitigate risks associated with their investments.

Financial reporting and compliance

GSBD adheres to strict financial reporting and compliance standards, preparing its financial statements in accordance with GAAP. For the three months ended September 30, 2024, the net investment income was $69.67 million, while total expenses amounted to $40.74 million, resulting in a net investment income before taxes of $69.67 million. The company maintained total net assets of $1.59 billion as of the same date.

Activity	Key Metrics	Financial Data
Origination of Debt Investments	Total Originated Debt and Equity Investments	$8.51 billion
Portfolio Monitoring	Total Investments at Fair Value	$3.44 billion
Risk Management	Asset Coverage Ratio	183%
Financial Reporting	Net Investment Income (Q3 2024)	$69.67 million
Financial Reporting	Total Expenses (Q3 2024)	$40.74 million
Financial Reporting	Total Net Assets (Q3 2024)	$1.59 billion

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Key Resources

Experienced management team

The management team at Goldman Sachs BDC, Inc. is composed of experienced professionals with significant expertise in investment banking and asset management. The team is led by individuals with extensive backgrounds in finance, including roles at Goldman Sachs. This experience is crucial in navigating complex financial markets and managing diverse investment portfolios.

Capital from investors and debt markets

As of September 30, 2024, Goldman Sachs BDC reported total net assets of approximately $1.586 billion. The company has engaged in various capital-raising activities, including issuing common stock, which generated net proceeds of $109.19 million from a follow-on offering in March 2023. Additionally, GSBD has access to debt markets, allowing it to leverage its capital structure effectively. The total debt outstanding as of September 30, 2024, was approximately $1.878 billion.

Proprietary risk management frameworks

Goldman Sachs BDC utilizes proprietary risk management frameworks developed by Goldman Sachs Asset Management (GSAM). These frameworks are integral in evaluating investments and managing portfolio risks. GSBD has originated approximately $8.51 billion in debt and equity investments since its formation. The company employs rigorous assessments of unfunded commitments to ensure ongoing liquidity and financial health.

Established reputation in investment banking

Goldman Sachs BDC benefits from the established reputation of its parent company, Goldman Sachs Group, Inc. This reputation provides GSBD with credibility and trust among investors and portfolio companies. The firm’s investment income for the nine months ended September 30, 2024, amounted to approximately $330.57 million, showcasing its ability to generate substantial returns through its investment strategies.

Key Resource	Description	Financial Impact
Management Team	Experienced professionals from Goldman Sachs leading investment strategies.	Enhanced decision-making and portfolio management.
Capital Access	Total net assets of $1.586 billion; $1.878 billion in debt.	Leverage for investment opportunities.
Risk Management	Proprietary frameworks for assessing investment risks.	Informed investment decisions, risk mitigation.
Reputation	Strong brand recognition and trust in investment banking.	Attracts investors and portfolio companies.

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Value Propositions

Focus on middle-market companies underserved by banks

Goldman Sachs BDC, Inc. (GSBD) primarily targets middle-market companies, which often experience difficulty accessing traditional bank financing. As of September 30, 2024, GSBD had investments in 167 portfolio companies, reflecting a strategic focus on this underserved segment.

High yield from secured and unsecured debt investments

GSBD has achieved a weighted average yield on debt and income-producing investments at amortized cost of 11.8% and at fair value of 13.9% as of September 30, 2024. This high yield is driven by a diversified portfolio that includes first lien/senior secured debt, unsecured debt, and preferred stock investments.

Expertise in negotiation and structuring of financial products

The company's expertise is exemplified by its ability to negotiate and structure complex financial products tailored to the specific needs of its portfolio companies. This capability enables GSBD to provide both secured and unsecured debt, with significant portions of its investments being senior secured debt, totaling $3,117 million at fair value.

Potential for capital appreciation alongside income generation

In addition to income generation through interest and dividend payments, GSBD's investments also have the potential for capital appreciation. The company reported a net change in unrealized appreciation from non-controlled/non-affiliated investments of $56.4 million for the quarter ended September 30, 2024. This dual focus on income and capital growth is a key value proposition for investors seeking attractive total returns.

Investment Type	Cost (in millions)	Fair Value (in millions)	Yield (%)
1st Lien/Senior Secured Debt	$3,273.04	$3,153.30	11.8
1st Lien/Last-Out Unitranche	$166.12	$163.30	11.8
2nd Lien/Senior Secured Debt	$55.66	$42.89	11.8
Unsecured Debt	$38.77	$16.31	11.8
Preferred Stock	$35.41	$30.15	11.8
Common Stock	$69.48	$35.79	11.8
Total	$3,640.33	$3,442.13	11.8

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Customer Relationships

Personalized service for portfolio companies

Goldman Sachs BDC, Inc. (GSBD) focuses on providing tailored financial solutions to its portfolio companies. The company has made approximately $8.51 billion in aggregate principal amount of debt and equity investments since its inception in 2012, indicating a strong commitment to supporting its portfolio through customized financial strategies.

Active engagement with investors through updates and reports

GSBD actively engages with its investors by providing comprehensive updates and regular reports. For the nine months ended September 30, 2024, GSBD reported a net investment income of $196 million, equating to a net investment income per share of $1.72. Additionally, the company declared a quarterly distribution of $0.45 per share on November 7, 2024, payable on January 27, 2025.

Long-term partnerships based on trust and performance

GSBD emphasizes building long-term partnerships with its portfolio companies and investors grounded in trust and performance. The company's net assets at the end of September 2024 were $1.586 billion, with a net asset value per share of $13.54. This reflects the company's commitment to maintaining a healthy balance sheet while fostering relationships that benefit all parties involved.

Advisory services for portfolio companies

GSBD provides advisory services to its portfolio companies, helping them navigate financial challenges and growth opportunities. The company reported a weighted average yield on debt and income-producing investments at amortized cost of 11.8% as of September 30, 2024. This yield is indicative of the company's ability to offer valuable financial guidance to enhance the operational performance of its investments.

Metric	Value
Aggregate Principal Amount of Debt and Equity Investments	$8.51 billion
Net Investment Income (9 months ended September 30, 2024)	$196 million
Net Investment Income per Share	$1.72
Quarterly Distribution per Share (declared November 7, 2024)	$0.45
Net Assets (as of September 30, 2024)	$1.586 billion
Net Asset Value per Share	$13.54
Weighted Average Yield on Debt and Income-Producing Investments	11.8%

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Channels

Direct investments in portfolio companies

As of September 30, 2024, Goldman Sachs BDC, Inc. has total investments at fair value of $3,442,129,000, with a cost basis of $3,640,329,000. The portfolio comprises primarily non-controlled/non-affiliated investments which account for a significant portion of the total investments.

Public offerings for raising capital

Goldman Sachs BDC raised capital through public offerings, including a follow-on offering completed on March 9, 2023, which involved issuing 6,500,000 shares at a price of $15.09 per share, generating net proceeds of approximately $97.58 million. Additionally, the company issued $400 million in aggregate principal amount of 6.375% unsecured notes due March 2027, with interest payable semi-annually.

Financial reports and investor presentations

Goldman Sachs BDC regularly provides financial reports to its investors. For the three months ended September 30, 2024, the net investment income was reported at $68,182,000, while the net realized loss was $(83,736,000). The company also maintains a high level of transparency with a ratio of total expenses to average net assets of 11.22% for the same period.

Online platforms for investor communications

The company utilizes online platforms for investor communications, providing access to financial data, performance metrics, and updates on investment strategies. As of September 30, 2024, Goldman Sachs BDC had a net asset value per share of $13.54. The company also announced a quarterly distribution of $0.45 per share payable on January 27, 2025.

Key Metrics	As of September 30, 2024
Total Investments (Fair Value)	$3,442,129,000
Cost of Investments	$3,640,329,000
Net Investment Income	$68,182,000
Net Realized Gain (Loss)	$(83,736,000)
Net Asset Value per Share	$13.54
Quarterly Distribution per Share	$0.45

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Customer Segments

Middle-market companies seeking capital

Goldman Sachs BDC, Inc. primarily targets middle-market companies, which are defined as companies with annual revenues typically between $10 million and $1 billion. As of September 30, 2024, the total investments at fair value in non-controlled/non-affiliated companies amounted to approximately $3.34 billion. This investment strategy is aimed at providing these companies with various forms of financing, including secured debt, unsecured debt, and equity investments. In the nine months ending September 30, 2024, GSBD originated approximately $756.66 million in investments.

Institutional and retail investors

Goldman Sachs BDC, Inc. serves both institutional and retail investors, providing them access to investment opportunities in the middle-market sector. The net assets attributable to common stockholders were approximately $1.59 billion as of September 30, 2024. The company has issued common stock that has attracted a broad base of retail investors, with a total of 117,161,940 shares outstanding as of the same date. The company aims to generate current income and capital appreciation for its investors through its diverse investment portfolio.

Financial advisors and consultants

Financial advisors and consultants play a significant role in connecting investors with Goldman Sachs BDC, Inc. They utilize the company's investment offerings to build diversified portfolios for their clients. The management fees incurred by GSBD for the nine months ended September 30, 2024, amounted to approximately $26.45 million. This reflects the importance of financial advisors in promoting the company's investment products to their clientele.

Regulatory and compliance agencies

Regulatory and compliance agencies are essential stakeholders for Goldman Sachs BDC, Inc. As a business development company (BDC), GSBD is subject to regulations under the Investment Company Act of 1940. As of September 30, 2024, the company maintained an asset coverage ratio of 183%, which is above the required minimum of 150%. This compliance ensures that GSBD operates within legal frameworks while providing transparency to regulatory bodies regarding its financial practices and investment strategies.

Customer Segment	Investment Amount (as of 09/30/2024)	Net Assets (as of 09/30/2024)	Management Fees (for 9 months ended 09/30/2024)	Asset Coverage Ratio
Middle-market companies	$3.34 billion	N/A	N/A	N/A
Institutional and retail investors	N/A	$1.59 billion	N/A	N/A
Financial advisors and consultants	N/A	N/A	$26.45 million	N/A
Regulatory and compliance agencies	N/A	N/A	N/A	183%

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Cost Structure

Interest expenses on borrowed funds

For the three months ended September 30, 2024, interest and other debt expenses amounted to $29.30 million, compared to $28.17 million for the same period in 2023. For the nine months ended September 30, 2024, these expenses totaled $86.02 million, an increase from $83.21 million in the prior year.

Management fees to Goldman Sachs Asset Management

The management fees paid to Goldman Sachs Asset Management for the three months ended September 30, 2024, were $8.85 million, slightly down from $8.87 million in 2023. For the nine months, the management fees totaled $26.45 million, compared to $26.76 million in the prior year.

Operational costs for portfolio management

Operational costs associated with portfolio management include professional fees, directors’ fees, and general administrative expenses. For the three months ended September 30, 2024:

Expense Type	Amount ($ millions)
Professional fees	1.33
Directors’ fees	0.21
Other general and administrative expenses	1.05

In total, these operational costs contributed to an overall expense of $40.74 million for the three months ended September 30, 2024.

Compliance and regulatory costs

Compliance and regulatory costs are a critical aspect of operational expenses. While specific figures for compliance costs are typically not itemized, they are included within the general and administrative expenses. The total expenses for the nine months ended September 30, 2024, were $130.76 million, which incorporates costs associated with compliance and regulatory requirements.

Goldman Sachs BDC, Inc. (GSBD) - Business Model: Revenue Streams

Interest income from debt investments

The primary source of revenue for Goldman Sachs BDC, Inc. (GSBD) comes from interest income generated from its debt investments. For the three months ended September 30, 2024, the total interest income reported was $99.14 million, a decrease from $109.71 million in the same period of 2023. For the nine months ended September 30, 2024, interest income totaled $291.89 million, down from $310.83 million year-over-year. This decline is attributed to certain investments being placed on non-accrual status due to underperformance and a general decrease in base interest rates.

Capital gains from equity investments

Capital gains from equity investments have also contributed to GSBD's revenue streams. The net realized gain (loss) from investments for the three months ended September 30, 2024, was $(83.74 million), compared to $(5.19 million) in the same quarter of 2023. For the nine-month period, net realized losses totaled $(128.96 million), compared to $(44.21 million) in 2023. These fluctuations reflect the volatility and performance of the underlying investments in the portfolio.

Origination and structuring fees

Goldman Sachs BDC generates additional revenue through origination and structuring fees associated with its lending activities. The company focuses on negotiating and structuring loans or securities in which it invests. While specific figures for origination and structuring fees were not detailed in the latest financial statements, these fees are integral to the overall revenue model of GSBD, especially in the context of its investment strategy.

Consulting and advisory fees from portfolio companies

Consulting and advisory fees from portfolio companies represent another revenue stream for GSBD. These fees may include directors' fees, consulting fees, administrative fees, and tax advisory fees. For the nine months ended September 30, 2024, GSBD reported $1.65 million in dividend income from affiliated investments, which includes various advisory fees. This is an increase from $0.50 million in the previous year. The company expects to continue generating income through these channels as it engages with its portfolio companies.

Revenue Stream	Q3 2024 ($ million)	Q3 2023 ($ million)	9M 2024 ($ million)	9M 2023 ($ million)
Interest Income	99.14	109.71	291.89	310.83
Net Realized Gain (Loss)	(83.74)	(5.19)	(128.96)	(44.21)
Dividend Income (from affiliated investments)	1.65	0.50	1.65	0.50

Updated on 16 Nov 2024

Resources:

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