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INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Investments

As of June 30, 2023 and December 31, 2022, investments consisted of the following:

			As of
			June 30, 2023												December 31, 2022
			Amortized Cost(1)						Fair Value						Amortized Cost(1)						Fair Value
First lien senior secured loans(2)			$	9,304					$	8,972					$	9,684					$	9,373
Second lien senior secured loans			4,160						3,879						4,218						3,934
Subordinated certificates of the SDLP(3)			1,289						1,237						1,274						1,249
Senior subordinated loans			1,147						1,054						1,163						1,079
Preferred equity			2,161						2,140						2,095						2,027
Ivy Hill Asset Management, L.P.(4)			1,968						2,151						2,048						2,201
Other equity			1,657						2,063						1,561						1,917
Total			$	21,686					$	21,496					$	22,043					$	21,780

________________________________________

(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 $4,875 and $4,746 respectively, as of June 30, 2023, and $4,983 and $4,841, respectively, as of December 31, 2022.

(3)The proceeds from these certificates were applied to co-investments with Varagon Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 21 and 22 different borrowers as of June 30, 2023 and December 31, 2022, respectively.

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

The Company uses GICS for classifying the industry groupings of its portfolio companies. The industrial and geographic compositions of the Company’s portfolio at fair value as of June 30, 2023 and December 31, 2022 were as follows:

			As of
			June 30, 2023						December 31, 2022
Industry
Software and Services			22.0		%				21.9		%
Financial Services(1)			13.0						13.3
Health Care Services			11.3						10.8
Commercial and Professional Services			9.7						9.5
Investment Funds and Vehicles(2)			5.9						6.0
Power Generation			4.8						4.5
Insurance Services			4.8						5.2
Consumer Services			3.7						4.2
Consumer Durables and Apparel			3.7						3.7
Capital Goods			2.9						3.6
Media and Entertainment			2.4						2.1
Food and Beverage			2.1						2.0
Retailing and Distribution			2.1						2.2
Energy			2.0						2.0
Automobiles and Components			2.0						2.1
Other			7.6						6.9
Total			100.0		%				100.0		%

________________________________________

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

(2)Includes the Company’s investment in the SDLP (as defined below), which had made first lien senior secured loans to 21 and 22 different borrowers as of June 30, 2023 and December 31, 2022, respectively. The portfolio companies in the SDLP are in industries similar to the companies in the Company’s portfolio.

			As of
			June 30, 2023						December 31, 2022
Geographic Region
West(1)			24.9		%				24.5		%
Midwest			23.9						23.9
Southeast			18.3						17.1
Northeast(2)			14.3						14.0
Mid-Atlantic			13.8						14.9
International			4.8						5.6
Total			100.0		%				100.0		%

________________________________________

(1)Includes the Company’s investment in the SDLP, which represented 5.8% and 5.7% of the total investment portfolio at fair value as of June 30, 2023 and December 31, 2022, respectively.

(2)Includes the Company’s investment in IHAM, which represented 10.0% and 10.1% of the total investment portfolio at fair value as of June 30, 2023 and December 31, 2022, respectively.Below is a summary of the SDLP’s portfolio.

			As of
			June 30, 2023						December 31, 2022
Total first lien senior secured loans(1)(2)			$	5,113					$	5,174
Largest loan to a single borrower(1)			$	373					$	377
Total of five largest loans to borrowers(1)			$	1,654					$	1,631
Number of borrowers in the SDLP			21						22
Commitments to fund delayed draw loans(3)			$	280					$	294

___________________________________________________________________________

(1)At principal amount.

(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of June 30, 2023 and December 31, 2022, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $4,065 and $4,108, 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 June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 are presented below:

			As of
			June 30, 2023						December 31, 2022
Selected Balance Sheet Information:
Investments at fair value (amortized cost of $5,096 and $5,166, respectively)			$	4,799					$	4,958
Other assets			329						150
Total assets			$	5,128					$	5,108
Senior notes			$	3,584					$	3,538
Intermediate funding notes			134						132
Other liabilities			129						110
Total liabilities			3,847						3,780
Subordinated certificates and members’ capital			1,281						1,328
Total liabilities and members’ capital			$	5,128					$	5,108

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2023						2022						2023						2022
Selected Statement of Operations Information:
Total investment income			$	140					$	77					$	276					$	149
Interest expense			72						30						141						54
Other expenses			6						4						12						9
Total expenses			78						34						153						63
Net investment income			62						43						123						86
Net realized and unrealized losses on investments			(17)						(12)						(85)						(15)
Net increase in members’ capital resulting from operations			$	45					$	31					$	38					$	71

The amortized cost and fair value of the Company’s investment in IHAM as of June 30, 2023 and December 31, 2022 were as follows:

			As of
			June 30, 2023												December 31, 2022
			Amortized Cost						Fair Value						Amortized Cost						Fair Value
Subordinated loan			$	267					$	267					$	500					$	500
Equity			1,701						1,884						1,548						1,701
Total investment in IHAM			$	1,968					$	2,151					$	2,048					$	2,201

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
			June 30, 2023						December 31, 2022
Total capital funded to the SDLP(1)			$	5,191					$	5,127
Total capital funded to the SDLP by the Company(1)			$	1,289					$	1,274
Total unfunded capital commitments to the SDLP(2)			$	280					$	294
Total unfunded capital commitments to the SDLP by the Company(2)			$	65					$	68

___________________________________________________________________________

(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.

The amortized cost and fair value of the SDLP Certificates held by the Company as of June 30, 2023 and December 31, 2022 were as follows:

			As of
			June 30, 2023												December 31, 2022
			Amortized Cost						Fair Value						Amortized Cost						Fair Value
SDLP Certificates			$	1,289					$	1,237					$	1,274					$	1,249

The Company’s yield on its investment in the SDLP Certificates at amortized cost and fair value as of June 30, 2023 and December 31, 2022 were as follows:

						As of
						June 30, 2023												December 31, 2022
						Amortized Cost						Fair Value						Amortized Cost						Fair Value
Yield on the SDLP Certificates						13.5		%				14.1		%				13.5		%				13.8		%

The yields at amortized cost and fair value of the Company’s investments in IHAM as of June 30, 2023 and December 31, 2022 were as follows:

						As of
						June 30, 2023												December 31, 2022
						Amortized Cost						Fair Value						Amortized Cost						Fair Value
Subordinated loan						11.6		%				11.6		%				11.0		%				11.0		%
Equity(1)						14.1		%				12.7		%				14.2		%				12.9		%

_______________________________________________________________________________

(1)Represents the yield on the Company’s equity investment in IHAM, which is computed as (a) the annualized amount of the dividend received by the Company related to the Company’s equity investment in IHAM during the most recent quarter end, divided by (b) the amortized cost or fair value of the Company’s equity investment in IHAM, as applicable.

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 three and six months ended June 30, 2023 and 2022 were as follows:

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2023						2022						2023						2022
Interest income			$	43					$	34					$	86					$	67
Capital structuring service and other fees			$	6					$	3					$	7					$	8

The interest income and dividend income that the Company earned from IHAM for the three and six months ended June 30, 2023 and 2022 were as follows:

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2023						2022						2023						2022
Interest income			$	10					$	3					$	23					$	3
Dividend income			$	60					$	52					$	117					$	95

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 June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 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 June 30, 2023
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Balance Sheet Information:
Assets
Investments at fair value(2)			$	2,427					$	9,452					$	(2,403)					$	9,476
Cash and cash equivalents			6						560						—						566
Other assets			70						94						(66)						98
Total assets			$	2,503					$	10,106					$	(2,469)					$	10,140
Liabilities
Debt			$	452					$	7,160					$	—					$	7,612
Subordinated note from ARCC			267						—						—						267
Subordinated notes(3)			—						1,295						(1,014)						281
Other liabilities			16						334						(15)						335
Total liabilities			735						8,789						(1,029)						8,495
Equity
Contributed capital			1,700						—						—						1,700
Accumulated earnings			84						—						—						84
Net unrealized losses on investments and foreign currency transactions			(16)						—						—						(16)
Non-controlling interests in Consolidated IHAM Vehicles(4)			—						1,317						(1,440)						(123)
Total equity			1,768						1,317						(1,440)						1,645
Total liabilities and equity			$	2,503					$	10,106					$	(2,469)					$	10,140

			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			56						94						(51)						99
Total assets			$	2,401					$	9,566					$	(2,366)					$	9,601
Liabilities
Debt			$	308					$	6,968					$	—					$	7,276
Subordinated note from ARCC			500						—						—						500
Subordinated notes(3)			—						1,374						(1,093)						281
Other liabilities			18						129						(15)						132
Total liabilities			826						8,471						(1,108)						8,189
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			$	2,401					$	9,566					$	(2,366)					$	9,601

________________________________________

(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 June 30, 2023 and December 31, 2022 was $2,436 and $2,370, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of June 30, 2023 and December 31, 2022 was $9,730 and $9,306, 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 $278 and $309 as of June 30, 2023 and December 31, 2022, respectively.

			For the Three Months Ended June 30, 2023
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Statement of Operations Information:
Revenues
Investment income			$	95					$	273					$	(94)					$	274
Management fees and other income			13						2						(13)						2
Total revenues			108						275						(107)						276
Expenses
Interest expense			16						143						—						159
Distributions to subordinated notes			—						57						(46)						11
Management fees and other expenses			4						18						(13)						9
Total expenses			20						218						(59)						179
Net operating income			88						57						(48)						97
Net realized gains on investments and other transactions			—						7						—						7
Net unrealized gains on investments and other transactions			3						8						(6)						5
Total net realized and unrealized gains on investments and other transactions			3						15						(6)						12
Net income			91						72						(54)						109
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles			—						72						(54)						18
Net income attributable to Ivy Hill Asset Management, L.P.			$	91					$	—					$	—					$	91

			For the Six Months Ended June 30, 2023
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Statement of Operations Information:
Revenues
Investment income			$	166					$	528					$	(164)					$	530
Management fees and other income			27						3						(26)						4
Total revenues			193						531						(190)						534
Expenses
Interest expense			$	35					$	272					$	—					307
Distributions to subordinated notes			—						89						(70)						19
Management fees and other expenses			8						36						(26)						18
Total expenses			43						397						(96)						344
Net operating income			150						134						(94)						190
Net realized losses on investments and other transactions			(10)						(10)						—						(20)
Net unrealized gains on investments and other transactions			17						30						(19)						28
Total net realized and unrealized gains on investments and other transactions			7						20						(19)						8
Net income			157						154						(113)						198
Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles			—						154						(113)						41
Net income attributable to Ivy Hill Asset Management, L.P.			$	157					$	—					$	—					$	157

			For the Three Months Ended June 30, 2022
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Statement of Operations Information:
Revenues
Investment income			$	44					$	120					$	(43)					$	121
Management fees and other income			12						1						(11)						2
Total revenues			56						121						(54)						123
Expenses
Interest expense			5						46						—						51
Distributions to subordinated notes			—						45						(27)						18
Management fees and other expenses			3						13						(11)						5
Total expenses			8						104						(38)						74
Net operating income			48						17						(16)						49
Net realized gains on investments and other transactions			—						1						—						1
Net unrealized losses on investments and other transactions			(13)						(118)						13						(118)
Total net realized and unrealized losses on investments and other transactions			(13)						(117)						13						(117)
Net income (loss)			35						(100)						(3)						(68)
Less: Net loss attributable to non-controlling interests in Consolidated IHAM Vehicles			—						(100)						(3)						(103)
Net income attributable to Ivy Hill Asset Management, L.P.			$	35					$	—					$	—					$	35

			For the Six Months Ended June 30, 2022
			IHAM						Consolidated IHAM Vehicles(1)						Eliminations						Consolidated
Selected Statement of Operations Information:
Revenues
Investment income			$	78					$	217					$	(75)					$	220
Management fees and other income			21						2						(20)						3
Total revenues			99						219						(95)						223
Expenses
Interest expense			6						78						—						84
Distributions to subordinated notes			—						74						(50)						24
Management fees and other expenses			7						25						(20)						12
Total expenses			13						177						(70)						120
Net operating income			86						42						(25)						103
Net realized gains on investments and other transactions			1						1						—						2
Net unrealized losses on investments and other transactions			(24)						(152)						23						(153)
Total net realized and unrealized losses on investments and other transactions			(23)						(151)						23						(151)
Net income (losses)			63						(109)						(2)						(48)
Less: Net loss attributable to non-controlling interests in Consolidated IHAM Vehicles			—						(109)						(2)						(111)
Net income attributable to Ivy Hill Asset Management, L.P.			$	63					$	—					$	—					$	63

____________________________________

(1)Consolidated for GAAP purposes only.

X

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

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