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INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Investments

As of December 31, 2022 and 2021, investments consisted of the following:

			As of December 31,
			2022												2021
			Amortized Cost(1)						Fair Value						Amortized Cost(1)						Fair Value
First lien senior secured loans(2)			$	9,684					$	9,373					$	9,583					$	9,459
Second lien senior secured loans			4,218						3,934						4,614						4,524
Subordinated certificates of the SDLP(3)			1,274						1,249						987						987
Senior subordinated loans			1,163						1,079						896						890
Preferred equity			2,095						2,027						1,547						1,561
Ivy Hill Asset Management, L.P.(4)			2,048						2,201						781						936
Other equity			1,561						1,917						1,402						1,652
Total			$	22,043					$	21,780					$	19,810					$	20,009

________________________________________

(1)The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

(2)First lien senior secured loans include certain loans that the Company classifies as “unitranche” loans. The total amortized cost and fair value of the loans that the Company classified as “unitranche” loans were $4,983 and $4,841 respectively, as of December 31, 2022, and $5,210 and $5,163, respectively, as of December 31, 2021.

(3)The proceeds from these certificates were applied to co-investments with Varagon and its clients to fund first lien senior secured loans to 22 and 19 different borrowers as of December 31, 2022 and 2021, respectively.

(4)Includes the Company’s equity and subordinated loan investments in IHAM, as applicable.

The Company uses Global Industry Classification Standards for classifying the industry groupings of its portfolio companies. The industrial and geographic compositions of the Company’s portfolio at fair value as of December 31, 2022 and 2021 were as follows:

			As of December 31,
			2022						2021
Industry
Software & Services			21.9		%				21.9		%
Diversified Financials(1)			13.3						7.5
Health Care Services			10.8						10.8
Commercial & Professional Services			9.5						9.2
Investment Funds and Vehicles(2)			6.0						5.2
Insurance Services			5.2						5.8
Power Generation			4.5						4.5
Consumer Services			4.2						3.9
Consumer Durables & Apparel			3.7						4.4
Capital Goods			3.6						4.8
Automobiles & Components			2.6						4.6
Media & Entertainment			2.1						2.2
Food & Beverage			2.0						2.2
Energy			2.0						1.9
Pharmaceuticals, Biotechnology & Life Sciences			1.7						1.9
Other			6.9						9.2
Total			100.0		%				100.0		%

________________________________________

(1)Includes the Company’s investment in IHAM.

(2)Includes the Company’s investment in the SDLP, which had made first lien senior secured loans to 22 and 19 different borrowers as of December 31, 2022 and 2021, respectively. The portfolio companies in the SDLP are in industries similar to the companies in the Company’s portfolio.

			As of December 31,
			2022						2021
Geographic Region
West(1)			24.5		%				26.6		%
Midwest			23.9						27.9
Southeast			17.1						17.2
Mid-Atlantic			14.9						14.5
Northeast(2)			14.0						9.4
International			5.6						4.4
Total			100.0		%				100.0		%

________________________________________

(1)Includes the Company’s investment in the SDLP, which represented 5.7% and 4.9% of the total investment portfolio at fair value as of December 31, 2022 and 2021, respectively.

(2)Includes the Company’s investment in IHAM, which represented 10.1% and 4.7% of the total investment portfolio at fair value as of December 31, 2022 and 2021, respectively.

Below is a summary of the SDLP’s portfolio.

			As of December 31,
			2022						2021
Total first lien senior secured loans(1)(2)			$	5,174					$	4,194
Largest loan to a single borrower(1)			$	377					$	342
Total of five largest loans to borrowers(1)			$	1,631					$	1,540
Number of borrowers in the SDLP			22						19
Commitments to fund delayed draw loans(3)			$	294					$	262

___________________________________________________________________________

(1)At principal amount.

(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of December 31, 2022 and 2021, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $4,108 and $2,908, respectively.

(3)As discussed above, these commitments have been approved by the investment committee of the SDLP.

Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of the SDLP, in conformity with GAAP, as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 are presented below:

			As of December 31,
			2022						2021
Selected Balance Sheet Information:
Investments at fair value (amortized cost of $5,166 and $4,193, respectively)			$	4,958					$	4,127
Other assets			150						84
Total assets			$	5,108					$	4,211
Senior notes			$	3,538					$	2,939
Intermediate funding notes			132						101
Other liabilities			110						51
Total liabilities			3,780						3,091
Subordinated certificates and members’ capital			1,328						1,120
Total liabilities and members’ capital			$	5,108					$	4,211

			For the Years Ended December 31,
			2022						2021						2020
Selected Statement of Operations Information:
Total investment income			$	365					$	282					$	302
Interest expense			155						91						113
Other expenses			20						18						16
Total expenses			175						109						129
Net investment income			190						173						173
Net realized and unrealized gains (losses) on investments			(147)						70						(64)
Net increase in members’ capital resulting from operations			$	43					$	243					$	109

The amortized cost and fair value of the Company’s investment in IHAM as of December 31, 2022 and 2021 were as follows:

			As of December 31,
			2022												2021
			Amortized Cost						Fair Value						Amortized Cost						Fair Value
Subordinated debt			$	500					$	500					$	16					$	16
Equity investment			1,548						1,701						765						920
Total Company’s investment in IHAM			$	2,048					$	2,201					$	781					$	936

Summary of Funded Capital and Unfunded Capital Commitments of the SDLP

Below is a summary of the funded capital and unfunded capital commitments of the SDLP.

			As of December 31,
			2022						2021
Total capital funded to the SDLP(1)			$	5,127					$	4,168
Total capital funded to the SDLP by the Company(1)			$	1,274					$	987
Total unfunded capital commitments to the SDLP(2)			$	294					$	262
Total unfunded capital commitments to the SDLP by the Company(2)			$	68					$	62

___________________________________________________________________________

(1)At principal amount.

(2)These commitments to fund delayed draw loans have been approved by the investment committee of the SDLP and will be funded if and when conditions to funding such delayed draw loans are met.

Summary of Dividend and Interest Income

The interest income from the Company’s investment in the SDLP Certificates and capital structuring service and other fees earned for the years ended December 31, 2022, 2021 and 2020 were as follows:

									For the Years Ended December 31,
															2022						2021						2020
Interest income															$	146					$	138					$	127
Capital structuring service and other fees															$	22					$	22					$	23

The interest income and dividend income that the Company earned from IHAM for the years ended December 31, 2022, 2021 and 2020 were as follows:

									For the Years Ended December 31,
															2022						2021						2020
Interest income															$	23					$	3					$	6
Dividend income															$	205					$	93					$	74

Summary of Selected Financial Information

Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of IHAM, in conformity with GAAP, as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 are presented below.

In conformity with GAAP, IHAM is required to consolidate entities in which IHAM has a direct or indirect controlling financial interest based on either a variable interest model or voting interest model, which include certain of the IHAM Vehicles (the “Consolidated IHAM Vehicles”). As such, for GAAP purposes only, IHAM consolidates (a) entities in which it holds a

majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity and (b) entities that it concludes are variable interest entities in which IHAM has more than insignificant economic interest and power to direct the activities that most significantly impact the entities, and for which IHAM is deemed to be the primary beneficiary.

When IHAM consolidates an IHAM Vehicle for GAAP purposes only, IHAM reflects the assets, liabilities, revenues and expenses of the Consolidated IHAM Vehicles on a gross basis, including the economic interests held by third-party investors in the Consolidated IHAM Vehicles as debt obligations, subordinated notes or non-controlling interests, in the consolidated IHAM financials below. All of the revenues earned by IHAM as the investment manager of the IHAM Consolidated Vehicles are eliminated in GAAP consolidation. However, because the eliminated amounts are earned from and funded by third-party investors, the GAAP consolidation of an IHAM Vehicle does not impact the net income or loss attributable to IHAM. As a result, the Company believes an assessment of IHAM's business and the impact to the Company’s investment in IHAM is best viewed on a stand-alone basis as reflected in the first column in the tables below.

			As of December 31, 2022
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Balance Sheet Information:
Assets
Investments at fair value(2)			$	2,340					$	8,973					$	(2,315)					$	8,998
Cash and cash equivalents			5						499						—						504
Other assets			55						94						(51)						98
Total assets			$	2,400					$	9,566					$	(2,366)					$	9,600
Liabilities
Debt			$	308					$	6,968					$	—					$	7,276
Subordinated note from ARCC			500						—						—						500
Subordinated notes(3)			—						1,374						(1,093)						281
Other liabilities			17						129						(15)						131
Total liabilities			825						8,471						(1,108)						8,188
Equity
Contributed capital			1,547						—						—						1,547
Accumulated earnings			61						—						—						61
Net unrealized losses on investments and foreign currency transactions			(33)						—						—						(33)
Non-controlling interests in Consolidated IHAM Vehicles(4)			—						1,095						(1,258)						(163)
Total equity			1,575						1,095						(1,258)						1,412
Total liabilities and equity			$	2,400					$	9,566					$	(2,366)					$	9,600

			As of December 31, 2021
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Balance Sheet Information:
Assets
Investments at fair value(2)			$	966					$	5,510					$	(927)					$	5,549
Cash and cash equivalents			8						416						—						424
Other assets			12						79						(8)						83
Total assets			$	986					$	6,005					$	(935)					$	6,056
Liabilities
Debt			$	125					$	4,656					$	—					$	4,781
Subordinated note from ARCC			16						—						—						16
Subordinated notes(3)			—						983						(700)						283
Other liabilities			2						98						(9)						91
Total liabilities			143						5,737						(709)						5,171
Equity
Contributed capital			765						—						—						765
Accumulated earnings			78						—						—						78
Net unrealized gains on investments and foreign currency transactions			—						—						—						—
Non-controlling interests in Consolidated IHAM Vehicles(4)			—						268						(226)						42
Total equity			843						268						(226)						885
Total liabilities and equity			$	986					$	6,005					$	(935)					$	6,056

________________________________________

(1)Consolidated for GAAP purposes only.

(2)The determination of such fair value is determined in accordance with IHAM’s valuation procedures (separate and apart from the Company’s valuation process described elsewhere herein). The amortized cost of IHAM’s total investments as of December 31, 2022 and 2021 was $2,370 and $966, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of December 31, 2022 and 2021 was $9,306 and $5,588, respectively.

(3)Subordinated notes generally represent the most junior capital in certain of the Consolidated IHAM Vehicles and effectively represent equity in such vehicles.

(4)Non-controlling interests in Consolidated IHAM Vehicles includes net unrealized depreciation in the Consolidated IHAM Vehicles of $309 and $30 as of December 31, 2022 and 2021, respectively.

			For the Year Ended December 31, 2022
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Statement of Operations Information:
Revenues
Investment income			$	188					$	594					$	(185)					$	597
Management fees and other income			49						7						(46)						10
Total revenues			237						601						(231)						607
Expenses
Interest expense			35						261						—						296
Distributions to subordinated notes			—						130						(95)						35
Management fees and other expenses			14						56						(46)						24
Total expenses			49						447						(141)						355
Net operating income			188						154						(90)						252
Net realized losses on investments and other transactions			—						(12)						—						(12)
Net unrealized losses on investments and other transactions			(33)						(279)						31						(281)
Total net realized and unrealized losses on investments and other transactions			(33)						(291)						31						(293)
Net income (loss)			155						(137)						(59)						(41)
Less: Net income (loss) attributable to non-controlling interests in Consolidated IHAM Vehicles			—						(137)						(59)						(196)
Net income attributable to Ivy Hill Asset Management, L.P.			$	155					$	—					$	—					$	155

			For the Year Ended December 31, 2021
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Statement of Operations Information:
Revenues
Investment income			$	97					$	285					$	(93)					$	289
Management fees and other income			31						7						(27)						11
Total revenues			128						292						(120)						300
Expenses
Interest expense			5						99						—						104
Distributions to subordinated notes			—						135						(101)						34
Management fees and other expenses			12						38						(27)						23
Total expenses			17						272						(128)						161
Net operating income			111						20						8						139
Net realized gains (losses) on investments and other transactions			(6)						80						(28)						46
Net unrealized gains on investments and other transactions			18						91						(15)						94
Total net realized and unrealized gains on investments and other transactions			12						171						(43)						140
Net income			123						191						(35)						279
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles			—						191						(35)						156
Net income attributable to Ivy Hill Asset Management, L.P.			$	123					$	—					$	—					$	123

			For the Year Ended December 31, 2020
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Statement of Operations Information:
Revenues
Investment income			$	79					$	288					$	(78)					$	289
Management fees and other income			28						7						(26)						9
Total revenues			107						295						(104)						298
Expenses
Interest expense			8						119						—						127
Distributions to subordinated notes			—						113						(79)						34
Management fees and other expenses			12						33						(26)						19
Total expenses			20						265						(105)						180
Net operating income			87						30						1						118
Net realized gains (losses) on investments and other transactions			(4)						50						—						46
Net unrealized losses on investments and other transactions			(7)						(26)						6						(27)
Total net realized and unrealized gains (losses) on investments and other transactions			(11)						24						6						19
Net income			76						54						7						137
Less: Net income attributable to non-controlling interests in Consolidated Funds			—						54						7						61
Net income attributable to Ivy Hill Asset Management, L.P.			$	76					$	—					$	—					$	76

________________________________________

(1)Consolidated for GAAP purposes only.

X

- Definition

Tabular disclosure of condensed financial statements, including, but not limited to, the balance sheet, income statement, and statement of cash flows.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 12
-Paragraph (a)
-Subsection 04

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 3
-Subparagraph (SX 210.12-04(a))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e24072-122690

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