WhiteHorse Finance, Inc. (WHF): Business Model Canvas [11-2024 Updated]
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WhiteHorse Finance, Inc. (WHF) Bundle
WhiteHorse Finance, Inc. (WHF) operates a compelling business model focused on delivering attractive risk-adjusted returns through strategic debt investments in the lower middle market. This blog post delves into the intricacies of WHF's business model canvas, highlighting key aspects such as their partnerships with financial institutions, value propositions centered around senior secured loans, and the diverse revenue streams that drive their success. Discover how WHF navigates the financial landscape to create value for both their portfolio companies and investors.
WhiteHorse Finance, Inc. (WHF) - Business Model: Key Partnerships
WhiteHorse Advisers manages investment activities
WhiteHorse Advisers serves as the investment adviser for WhiteHorse Finance, overseeing the management of the company's investment activities. As of September 30, 2024, WhiteHorse Finance's investment portfolio included 129 positions across 73 companies, amounting to an aggregate fair value of $654.3 million. The management fees payable to WhiteHorse Advisers as of September 30, 2024, were approximately $3.0 million.
Collaborations with portfolio companies
WhiteHorse Finance collaborates closely with its portfolio companies to enhance operational efficiencies and drive growth. The average investment size in the portfolio was $4.3 million as of September 30, 2024. The weighted average effective yield on income-producing debt investments was reported at 13.1%. The total cost basis of non-accrual loans was $57.0 million, with a fair value of $34.2 million as of September 30, 2024. The following table summarizes the performance of select portfolio companies as of the same date:
| Company Name | Investment Type | Principal Amount | Fair Value | Interest Rate |
|---|---|---|---|---|
| ABB/Con-cise Optical Group LLC | First Lien Secured Term Loan | $20.4 million | $19.5 million | 12.31% |
| Power Service Group CR Acquisition Inc. | First Lien Secured Term Loan | $8.7 million | $8.8 million | 11.50% |
| Hollander Intermediate LLC | First Lien Secured Term Loan | $21.1 million | $23.5 million | 11.04% |
Financial institutions for loan syndication
WhiteHorse Finance collaborates with various financial institutions for loan syndication to enhance its lending capabilities. As of September 30, 2024, the outstanding borrowings under the Credit Facility were approximately $161.6 million, with an available draw of about $173.4 million. The Credit Facility is secured by all assets of WhiteHorse Credit, which included loans valued at $523.2 million. The interest rates on the Credit Facility are based on SOFR plus a spread of 2.50%. Additionally, WhiteHorse Finance has utilized various note purchase agreements, including:
| Note Type | Principal Amount | Interest Rate | Maturity Date |
|---|---|---|---|
| 5.375% 2025 Notes | $40 million | 5.375% | October 20, 2025 |
| 5.375% 2026 Notes | $10 million | 5.375% | December 4, 2026 |
| 7.875% 2028 Notes | $34.5 million | 7.875% | September 15, 2028 |
WhiteHorse Finance, Inc. (WHF) - Business Model: Key Activities
Originating and managing debt investments
As of September 30, 2024, WhiteHorse Finance, Inc. had an investment portfolio with an aggregate fair value of $654.3 million. This portfolio primarily consisted of senior secured loans across 129 positions in 73 companies. The average investment size was approximately $4.3 million, with a debt investment size averaging $5.6 million. Investment sizes ranged from $0 to $20.7 million, and the weighted average effective yield on the portfolio was 10.6%, with income-producing debt investments yielding 13.1% .
Conducting due diligence on potential borrowers
WhiteHorse Finance performs extensive due diligence on potential borrowers to assess creditworthiness and investment viability. The company has a structured process that includes analyzing financial statements, assessing market conditions, and reviewing borrower management teams. As of September 30, 2024, the company had $161.6 million in outstanding borrowings under its Credit Facility, with approximately $173.4 million available for drawdown based on collateral and portfolio quality requirements .
Monitoring portfolio performance
To ensure optimal returns, WhiteHorse Finance actively monitors its portfolio performance. As of September 30, 2024, the company had $57 million in non-accrual loans, with a fair value of $34.2 million. The weighted average remaining term of the debt investments was approximately 3.1 years, with the company maintaining an asset coverage ratio of 183.4% for borrowed amounts .
| Key Metrics | Value |
|---|---|
| Investment Portfolio Fair Value | $654.3 million |
| Number of Positions | 129 |
| Average Investment Size | $4.3 million |
| Average Debt Investment Size | $5.6 million |
| Weighted Average Effective Yield | 10.6% |
| Income-Producing Debt Investments Yield | 13.1% |
| Outstanding Borrowings under Credit Facility | $161.6 million |
| Available for Drawdown | $173.4 million |
| Non-accrual Loans | $57 million |
| Fair Value of Non-accrual Loans | $34.2 million |
| Weighted Average Remaining Term of Debt Investments | 3.1 years |
| Asset Coverage Ratio | 183.4% |
WhiteHorse Finance, Inc. (WHF) - Business Model: Key Resources
Experienced management team at WhiteHorse Advisers
The management team at WhiteHorse Advisers is integral to the operational success of WhiteHorse Finance, Inc. This team possesses extensive experience in finance and investment management, with a focus on lower middle-market companies. Their expertise enables effective sourcing, structuring, and managing of investments.
Capital raised through public offerings
WhiteHorse Finance has successfully raised significant capital through various public offerings. Key financial data includes:
| Offering Date | Type | Principal Amount (in millions) | Net Proceeds (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|---|---|
| August 24, 2023 | 7.875% 2028 Notes | 34.5 | 30.0 | 7.875% | September 15, 2028 |
| October 20, 2020 | 5.375% 2025 Notes | 40.0 | N/A | 5.375% | October 20, 2025 |
| December 4, 2020 | 5.375% 2026 Notes | 10.0 | N/A | 5.375% | December 4, 2026 |
| December 6, 2021 | 4.250% 2028 Notes | 25.0 | N/A | 4.250% | December 6, 2028 |
Established relationships with lower middle market companies
WhiteHorse Finance has built robust relationships with numerous lower middle-market companies, enhancing its ability to identify and capitalize on investment opportunities. As of September 30, 2024, the investment portfolio consisted of:
| Investment Type | Number of Positions | Aggregate Fair Value (in millions) | Average Investment Size (in millions) | Weighted Average Effective Yield |
|---|---|---|---|---|
| Senior Secured Loans | 129 | 654.3 | 4.3 | 10.6% |
| Debt Investments | N/A | 640.6 | N/A | 13.1% |
WhiteHorse Finance, Inc. (WHF) - Business Model: Value Propositions
Targeting attractive risk-adjusted returns
As of September 30, 2024, WhiteHorse Finance, Inc. (WHF) reported a net asset value (NAV) of $12.77 per share, down from $13.63 at the end of December 2023. The company aims to provide attractive risk-adjusted returns through its investment strategies, which focus on senior secured loans. In the nine months ended September 30, 2024, WHF generated net investment income after excise tax of $29.261 million.
Focus on senior secured loans in lower middle market
WhiteHorse Finance primarily invests in senior secured loans, specifically targeting the lower middle market. As of September 30, 2024, the company's investment portfolio consisted of 129 positions across 73 companies, with an aggregate fair value of $654.3 million. The majority of these loans are variable-rate investments indexed to SOFR, with a weighted average effective yield of 10.6%.
| Investment Type | Number of Positions | Aggregate Fair Value (in millions) | Average Investment Size (in millions) | Weighted Average Yield |
|---|---|---|---|---|
| Senior Secured Loans | 129 | $654.3 | $4.3 | 10.6% |
Flexibility to invest in various capital structures
WhiteHorse Finance's investment strategy allows for flexibility across different capital structures, including first lien, second lien, and unsecured loans. As of September 30, 2024, the fair value breakdown of the portfolio was as follows:
| Loan Type | Fair Value (in millions) | Percentage of Total Portfolio |
|---|---|---|
| First Lien Secured Loans | $426.756 | 65.1% |
| Second Lien Secured Loans | $5.000 | 0.8% |
| Unsecured Loans | $1.149 | 0.2% |
| Subordinated Notes to STRS JV | $84.416 | 12.9% |
| Common Equity | $0.095 | 0.01% |
This diverse approach not only enhances potential returns but also mitigates risks associated with market fluctuations and borrower defaults, positioning WhiteHorse Finance to capitalize on various market opportunities.
WhiteHorse Finance, Inc. (WHF) - Business Model: Customer Relationships
Direct engagement with portfolio companies
WhiteHorse Finance, Inc. actively engages with its portfolio companies to ensure alignment and performance monitoring. As of September 30, 2024, the investment portfolio primarily consisted of senior secured loans across 129 positions in 73 companies, with an aggregate fair value of $654.3 million. The average investment size was approximately $4.3 million, with a weighted average effective yield of 10.6%.
The company employs rigorous monitoring processes which include:
- Frequent discussions with management and sponsors, including board observation rights where feasible.
- Comparative analysis of financial performance against business plans and internal projections.
- Monitoring compliance with covenants and other key performance metrics established at the initial investment stage.
- Quarterly reviews by the investment committee for each asset, focusing on those in a 'watch list' status.
Regular communication with investors
WhiteHorse Finance maintains consistent and transparent communication with its investors. For the nine months ended September 30, 2024, the company reported a net investment income after excise tax of $29.261 million. Additionally, the total net assets as of September 30, 2024, amounted to $296.875 million, reflecting a decrease from $316.772 million as of December 31, 2023. Regular updates and reports are essential to keep investors informed about performance metrics and strategic directions.
Key metrics related to investor communication include:
| Metric | Value |
|---|---|
| Net Asset Value (NAV) per share (as of September 30, 2024) | $12.77 |
| Dividends declared per share (for the nine months ended September 30, 2024) | $1.16 |
| Basic and diluted earnings per share (for the nine months ended September 30, 2024) | $0.30 |
| Total annualized return based on net asset value (for the nine months ended September 30, 2024) | 2.94% |
Transparent reporting on investment performance
Transparency in reporting is a cornerstone of WhiteHorse Finance's relationship with its investors. The company provides detailed reports on investment performance, including unrealized gains and losses. As of September 30, 2024, the net change in unrealized appreciation on investments was $(16,051) million. The company also actively manages its debt levels and borrowing costs, with total borrowings outstanding reported at $161.594 million.
The financial highlights for the nine months ended September 30, 2024, include:
| Financial Metric | Value |
|---|---|
| Total investment income | $71.808 million |
| Total expenses | $41.694 million |
| Net investment income before excise tax | $30.114 million |
| Net increase in net assets resulting from operations | $9.062 million |
WhiteHorse Finance, Inc. (WHF) - Business Model: Channels
Nasdaq Global Select Market for equity trading
WhiteHorse Finance, Inc. trades on the Nasdaq Global Select Market under the ticker symbol WHF. As of September 30, 2024, the total number of shares outstanding was 23,243,088, with a net asset value per share reported at $12.77. The company's equity is subject to fluctuations based on market conditions, investor sentiment, and overall financial performance.
Investor presentations and conferences
WhiteHorse Finance actively engages with investors through various presentations and conferences. The company has made significant efforts to maintain transparency and provide updates on its financial performance and strategic direction. For instance, in 2023, WhiteHorse Finance participated in multiple investor conferences, showcasing its investment strategy and financial health. The company’s presentations often highlight key financial metrics, including:
| Metric | Value (as of September 30, 2024) |
|---|---|
| Total Assets | $683.6 million |
| Total Liabilities | $386.7 million |
| Total Net Assets | $296.9 million |
| Net Investment Income (after excise tax) | $9.2 million |
| Investment Income | $22.9 million |
Financial news platforms for updates
WhiteHorse Finance utilizes various financial news platforms to disseminate information regarding its operations and financial performance. These platforms provide real-time updates on stock performance and market trends. As of September 30, 2024, the weighted average interest rate on outstanding borrowings was reported at 7.44%, reflecting changes in market conditions and the company's financing strategies. Additionally, WhiteHorse Finance has leveraged social media and financial news networks to enhance its visibility and reach among investors.
WhiteHorse Finance, Inc. (WHF) - Business Model: Customer Segments
Lower middle market companies in the U.S.
WhiteHorse Finance, Inc. primarily targets lower middle market companies in the United States. As of September 30, 2024, the investment portfolio consisted of senior secured loans across 129 positions in 73 companies, with an aggregate fair value of $654.3 million. The average investment size was approximately $4.3 million, with debt investment sizes ranging from zero to $20.7 million. The majority of these loans are variable-rate investments, primarily indexed to SOFR, and the weighted average effective yield on income-producing debt investments was 13.1%.
Individual and institutional investors seeking income
WhiteHorse Finance serves individual and institutional investors looking for income-generating investment opportunities. The company reported a net investment income after excise tax of $9.154 million for the three months ended September 30, 2024. Additionally, the dividends and distributions declared per common share were $0.39 for the quarter, reflecting the company's commitment to returning value to its investors. The net asset value per share as of September 30, 2024, was $12.77.
Financial sponsors looking for debt solutions
Financial sponsors, including private equity firms, are another key customer segment for WhiteHorse Finance. The company engages in various debt solutions tailored to the needs of these sponsors. As of September 30, 2024, WhiteHorse had $161.594 million in outstanding borrowings under its credit facility, with an interest rate of 7.44%. The company had $173.406 million undrawn under the credit facility, indicating its ability to provide flexible financing options. Furthermore, the total unfunded commitments to extend credit were reported at $28.208 million as of September 30, 2024.
| Customer Segment | Key Metrics | Value Proposition |
|---|---|---|
| Lower Middle Market Companies | 73 companies, $654.3 million portfolio | Senior secured loans, average size $4.3 million |
| Individual and Institutional Investors | Net investment income: $9.154 million | Dividends per share: $0.39, NAV per share: $12.77 |
| Financial Sponsors | Outstanding borrowings: $161.594 million | Flexible debt solutions, undrawn credit: $173.406 million |
WhiteHorse Finance, Inc. (WHF) - Business Model: Cost Structure
Management fees paid to WhiteHorse Advisers
The management fees incurred by WhiteHorse Finance to WhiteHorse Advisers for the fiscal year 2024 were approximately $3.014 million as of September 30, 2024. This reflects a decrease from $3.595 million as of December 31, 2023.
Interest expenses on outstanding debt
WhiteHorse Finance's total interest expenses on its outstanding debt included:
- Interest expense on the credit facility: $3.753 million for the three months ended September 30, 2024.
- Interest expense on notes to members: $3.785 million for the same period.
The weighted average interest rate on outstanding borrowings was 7.44% as of September 30, 2024. Total borrowings outstanding as of September 30, 2024, amounted to $161.594 million.
Operating costs including due diligence and compliance
Operating costs for WhiteHorse Finance also encompass due diligence and compliance expenses. Total operational expenses for the three months ended September 30, 2024, were approximately $7.922 million. This includes administrative fees of $166, other expenses of $218, and total expenses for the nine months ended September 30, 2024, were $23.645 million.
| Cost Category | Q3 2024 Amount (in millions) | Notes |
|---|---|---|
| Management Fees | $3.014 | Paid to WhiteHorse Advisers |
| Interest on Credit Facility | $3.753 | Three months ended September 30, 2024 |
| Interest on Notes to Members | $3.785 | Three months ended September 30, 2024 |
| Total Operating Costs | $7.922 | Total operational expenses |
As of September 30, 2024, the company had total liabilities of approximately $386.709 million, which includes distributions payable of $8.949 million and interest payable of $3.652 million. These figures reflect the ongoing financial responsibilities associated with its operational and investment activities.
WhiteHorse Finance, Inc. (WHF) - Business Model: Revenue Streams
Interest income from debt investments
As of September 30, 2024, WhiteHorse Finance, Inc. reported interest income of $16,352,000 from non-controlled/non-affiliate company investments, and $2,488,000 from controlled affiliate company investments. Over the nine months ended September 30, 2024, total investment income was $71,808,000, with a significant portion derived from interest income across various investment types.
Origination and other fees from loans
In the nine months ended September 30, 2024, WhiteHorse Finance earned $1,337,000 in fee income from non-controlled/non-affiliate company investments and $520,000 from non-controlled affiliate company investments. The total fee income for the period was $1,857,000, reflecting the company's active role in originating and managing loans.
Potential capital appreciation from equity interests in portfolio companies
As of September 30, 2024, the total investments, at fair value, amounted to $654,338,000, with potential capital appreciation primarily from equity interests in portfolio companies. The capital appreciation is reflected in the unrealized gains and losses on investments, with net change in unrealized appreciation reported as $(16,051,000) for the three months ended September 30, 2024. Equity investments contribute to the overall performance of the portfolio, highlighting the potential for future returns.
| Revenue Stream | Amount (in thousands) | Details |
|---|---|---|
| Interest Income from Debt Investments | $16,352 | From non-controlled/non-affiliate company investments |
| Interest Income from Controlled Affiliate Investments | $2,488 | From controlled affiliate company investments |
| Total Investment Income (Nine Months) | $71,808 | Includes interest income and other fees |
| Origination and Other Fees | $1,337 | From non-controlled/non-affiliate company investments |
| Potential Capital Appreciation | $654,338 | Total investments at fair value |
| Net Change in Unrealized Appreciation | $(16,051) | For the three months ended September 30, 2024 |
Updated on 16 Nov 2024
Resources:
- WhiteHorse Finance, Inc. (WHF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of WhiteHorse Finance, Inc. (WHF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View WhiteHorse Finance, Inc. (WHF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.