
	As of
	March 31, 2023				December 31, 2022
	Amortized Cost(1)		Fair Value		Amortized Cost(1)		Fair Value
First lien senior secured loans(2)	$	9,020	$	8,689	$	9,684	$	9,373
Second lien senior secured loans	4,230		3,887		4,218		3,934
Subordinated certificates of the SDLP(3)	1,282		1,231		1,274		1,249
Senior subordinated loans	1,136		1,048		1,163		1,079

Preferred equity	2,045		2,069		2,095		2,027
Ivy Hill Asset Management, L.P.(4)	2,139		2,295		2,048		2,201
Other equity	1,578		1,929		1,561		1,917
Total	$	21,430	$	21,148	$	22,043	$	21,780

(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 $4,721 and $4,575 respectively, as of March 31, 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 and its clients to fund first lien senior secured loans to 22 and 22 different borrowers as of March 31, 2023 and December 31, 2022, respectively.

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 March 31, 2023 and December 31, 2022 were as follows:


	As of
	March 31, 2023		December 31, 2022
Industry
Software and Services	21.6	%	21.9	%
Financial Services(1)	13.8		13.3
Health Care Services	11.3		10.8
Commercial and Professional Services	9.8		9.5
Investment Funds and Vehicles(2)	6.1		6.0
Insurance Services	4.9		5.2
Power Generation	4.7		4.5
Consumer Durables and Apparel	3.8		3.7
Consumer Services	3.3		4.2
Capital Goods	2.9		3.6
Media and Entertainment	2.2		2.1
Retailing and Distribution	2.2		2.2
Automobiles and Components	2.2		2.1
Food and Beverage	2.1		2.0
Energy	2.0		2.0
Other	7.1		6.9
Total	100.0	%	100.0	%

(2)Includes the Company’s investment in the SDLP, which had made first lien senior secured loans to 22 and 22 different borrowers as of March 31, 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 March 31, 2023 and December 31, 2022, loans on non-accrual status represented 2.3% of the total investments at amortized cost (or 1.3% at fair value) and 1.7% at amortized cost (or 1.1% at fair value), respectively.

The Company has established a joint venture with Varagon to make certain first lien senior secured loans, including certain stretch senior and unitranche loans, primarily to U.S. middle-market companies. Varagon was formed in 2013 as a lending platform by American International Group, Inc. and other partners. The joint venture is called the SDLP. In July 2016, the Company and Varagon and its clients completed the initial funding of the SDLP. The SDLP may generally commit and hold individual loans of up to $450. The Company and other accounts managed by the Company’s investment adviser and its affiliates may directly co-invest with the SDLP to accommodate larger transactions. The SDLP is capitalized as transactions are completed and all portfolio decisions and generally all other decisions in respect of the SDLP must be approved by an investment committee of the SDLP consisting of representatives of the Company and Varagon (with approval from a representative of each required).

The Company provides capital to the SDLP in the form of subordinated certificates (the “SDLP Certificates”), and Varagon and its clients provide capital to the SDLP in the form of senior notes, intermediate funding notes and SDLP Certificates. As of March 31, 2023 and December 31, 2022, the Company and a client of Varagon owned 87.5% and 12.5%, respectively, of the outstanding SDLP Certificates.

As of March 31, 2023 and December 31, 2022, the Company and Varagon and its clients had agreed to make capital available to the SDLP of $6,150 and $6,150, respectively, in the aggregate, of which $1,444 and $1,444, respectively, is to be made available from the Company. The Company will continue to provide capital to the SDLP in the form of SDLP Certificates, and Varagon and its clients will provide capital to the SDLP in the form of senior notes, intermediate funding notes and SDLP Certificates. This capital will only be committed to the SDLP upon approval of transactions by the investment committee of the SDLP as discussed above. Below is a summary of the funded capital and unfunded capital commitments of the SDLP.


	As of
	March 31, 2023		December 31, 2022
Total capital funded to the SDLP(1)	$	5,160	$	5,127
Total capital funded to the SDLP by the Company(1)	$	1,282	$	1,274
Total unfunded capital commitments to the SDLP(2)	$	217	$	294
Total unfunded capital commitments to the SDLP by the Company(2)	$	50	$	68

The SDLP Certificates pay a coupon equal to LIBOR plus 8.0% and also entitle the holders thereof to receive a portion of the excess cash flow from the loan portfolio, after expenses, which may result in a return to the holders of the SDLP Certificates that is greater than the stated coupon. The SDLP Certificates are junior in right of payment to the senior notes and intermediate funding notes.

As of March 31, 2023 and December 31, 2022, the SDLP’s portfolio was comprised entirely of first lien senior secured loans to U.S. middle-market companies and were in industries similar to the companies in the Company’s portfolio. As of March 31, 2023 and December 31, 2022, one of the loans was on non-accrual status. Below is a summary of the SDLP’s portfolio.


	As of
	March 31, 2023		December 31, 2022
Total first lien senior secured loans(1)(2)	$	5,222	$	5,174
Largest loan to a single borrower(1)	$	374	$	377
Total of five largest loans to borrowers(1)	$	1,644	$	1,631
Number of borrowers in the SDLP	22		22
Commitments to fund delayed draw loans(3)	$	217	$	294

(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of March 31, 2023 and December 31, 2022, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $4,154 and $4,108, respectively.

Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of the SDLP, in conformity with GAAP, as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and 2022 are presented below:


	As of
	March 31, 2023		December 31, 2022
Selected Balance Sheet Information:
Investments at fair value (amortized cost of $5,210 and $5,166, respectively)	$	4,932	$	4,958
Other assets	176		150
Total assets	$	5,108	$	5,108

Senior notes	$	3,562	$	3,538
Intermediate funding notes	133		132
Other liabilities	130		110
Total liabilities	3,825		3,780
Subordinated certificates and members’ capital	1,283		1,328
Total liabilities and members’ capital	$	5,108	$	5,108


	For the Three Months Ended March 31,
	2023		2022
Selected Statement of Operations Information:
Total investment income	$	136	$	72
Interest expense	69		24
Other expenses	6		5
Total expenses	75		29
Net investment income	61		43
Net realized and unrealized losses on investments	(68)		(3)
Net (decrease) increase in members’ capital resulting from operations	$	(7)	$	40

Ivy Hill Asset Management, L.P. (“IHAM”), a wholly owned portfolio company of the Company, is an asset management services company and an SEC-registered investment adviser. As of March 31, 2023, IHAM had assets under management of approximately $13.5 billion. As of March 31, 2023, IHAM managed 22 vehicles and served as the sub-manager/sub-servicer for one other vehicle (these vehicles managed or sub-managed/sub-serviced by IHAM are referred to as the “IHAM Vehicles”). IHAM earns fee income from managing the IHAM Vehicles and has also invested in certain of these vehicles as part of its business strategy. The amortized cost of IHAM’s total investments as of March 31, 2023 and December 31, 2022 was $2,444 and $2,370, respectively. For the three months ended March 31, 2023 and 2022, IHAM had management and incentive fee income of $14 and $10, respectively. For the three months ended March 31, 2023 and 2022, IHAM also had other investment-related income of $61 and $34, respectively, which included net realized gains or losses on investments and other transactions.


	As of
	March 31, 2023				December 31, 2022
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Subordinated loan	$	438	$	438	$	500	$	500
Equity	1,701		1,857		1,548		1,701
Total Company’s investment in IHAM	$	2,139	$	2,295	$	2,048	$	2,201

From time to time, IHAM or certain IHAM Vehicles may purchase investments from, or sell investments to, the Company. For any such sales or purchases by the IHAM Vehicles to or from the Company, the IHAM Vehicle must obtain approval from third parties unaffiliated with the Company or IHAM, as applicable. During the three months ended March 31, 2023 and 2022, IHAM or certain of the IHAM Vehicles purchased $652 and $1,176, respectively, of loans from the Company. For the three months ended March 31, 2023 and 2022, the Company recognized $10 and $6, respectively, of net realized losses from these sales. During the three months ended March 31, 2023, the Company did not purchase investments from IHAM or the IHAM Vehicles. During the three months ended March 31, 2022, the Company purchased $27 of investments from certain IHAM Vehicles.

(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.

IHAM is party to an administration agreement, referred to herein as the “IHAM administration agreement,” with Ares Operations. Pursuant to the IHAM administration agreement, Ares Operations provides IHAM with, among other things, office facilities, equipment, clerical, bookkeeping and record keeping services, services relating to the marketing and sale of interests in vehicles managed by IHAM, services of, and oversight of, custodians, depositories, accountants, attorneys, underwriters and such other persons in any other capacity deemed to be necessary. Under the IHAM administration agreement, IHAM reimburses Ares Operations for all of the actual costs associated with such services, including Ares Operations’ allocable portion of the compensation, rent and other expenses of its officers, employees and respective staff in performing its obligations under the IHAM administration agreement.

Pursuant to Rule 4-08(g) of Regulation S-X, selected financial information of IHAM, in conformity with GAAP, as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 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 March 31, 2023
	IHAM		Consolidated IHAM Vehicles(1)		Eliminations		Consolidated
Selected Balance Sheet Information:
Assets

Investments at fair value(2)	$	2,426	$	9,524	$	(2,401)	$	9,549
Cash and cash equivalents	9		579		—		588

Other assets	64		98		(59)		103




Total assets	$	2,499	$	10,201	$	(2,460)	$	10,240

Liabilities

Debt	$	313	$	7,267	$	—	$	7,580
Subordinated note from ARCC	438		—		—		438
Subordinated notes(3)	—		1,296		(1,014)		282

Other liabilities	10		347		(14)		343




Total liabilities	761		8,910		(1,028)		8,643
Equity
Contributed capital	1,701		—		—		1,701
Accumulated earnings	56		—		—		56
Net unrealized losses on investments and foreign currency transactions	(19)		—		—		(19)
Non-controlling interests in Consolidated IHAM Vehicles(4)	—		1,291		(1,432)		(141)


Total equity	1,738		1,291		(1,432)		1,597
Total liabilities and equity	$	2,499	$	10,201	$	(2,460)	$	10,240


	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

(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 March 31, 2023 and December 31, 2022 was $2,444 and $2,370, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of March 31, 2023 and December 31, 2022 was $9,839 and $9,306, respectively.


	For the Three Months Ended March 31, 2023
	IHAM		Consolidated IHAM Vehicles(1)		Eliminations		Consolidated
Selected Statement of Operations Information:
Revenues

Investment income	$	71	$	255	$	(70)	$	256
Management fees and other income	14		1		(13)		2



Total revenues	85		256		(83)		258
Expenses

Interest expense	19		129		—		148
Distributions to subordinated notes	—		32		(24)		8
Management fees and other expenses	4		18		(13)		9




Total expenses	23		179		(37)		165
Net operating income	62		77		(46)		93


Net realized losses on investments and other transactions	(10)		(17)		—		(27)
Net unrealized gains on investments and other transactions	14		22		(13)		23



Total net realized and unrealized gains (losses) on investments and other transactions	4		5		(13)		(4)
Net income	66		82		(59)		89

Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles	—		82		(59)		23
Net income attributable to Ivy Hill Asset Management, L.P.	$	66	$	—	$	—	$	66


	For the Three Months Ended March 31, 2022
	IHAM		Consolidated IHAM Vehicles(1)		Eliminations		Consolidated
Selected Statement of Operations Information:
Revenues

Investment income	$	33	$	97	$	(33)	$	97
Management fees and other income	10		1		(9)		2



Total revenues	43		98		(42)		99
Expenses

Interest expense	1		29		—		30
Distributions to subordinated notes	—		31		(23)		8
Management fees and other expenses	4		13		(9)		8




Total expenses	5		73		(32)		46
Net operating income	38		25		(10)		53


Net realized gains on investments and other transactions	1		—		—		1
Net unrealized losses on investments and other transactions	(11)		(34)		10		(35)



Total net realized and unrealized losses on investments and other transactions	(10)		(34)		10		(34)
Net income (loss)	28		(9)		—		19
Less: Net loss attributable to non-controlling interests in Consolidated IHAM Vehicles	—		(9)		—		(9)
Net income attributable to Ivy Hill Asset Management, L.P.	$	28	$	—	$	—	$	28