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INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

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


	As of December 31,

	2023				2022
	Amortized Cost(1)		Fair Value		Amortized Cost(1)		Fair Value
First lien senior secured loans(2)	$	10,313	$	10,081	$	9,684	$	9,373
Second lien senior secured loans	3,980		3,753		4,218		3,934
Subordinated certificates of the SDLP(3)	1,316		1,288		1,274		1,249
Senior subordinated loans	1,150		1,096		1,163		1,079

Preferred equity	2,457		2,460		2,095		2,027
Ivy Hill Asset Management, L.P.(4)	1,763		1,987		2,048		2,201
Other equity	1,689		2,209		1,561		1,917
Total	$	22,668	$	22,874	$	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 $5,786 and $5,667 respectively, as of December 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 Capital Partners (“Varagon”) and its clients to fund first lien senior secured loans to 22 and 22 different borrowers as of December 31, 2023 and 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 December 31, 2023 and 2022 were as follows:


	As of December 31,

	2023		2022
Industry
Software and Services	23.2	%	21.9	%
Health Care Services	12.1		10.8
Financial Services(1)	11.5		13.3
Commercial and Professional Services	9.8		9.5
Investment Funds and Vehicles(2)	5.8		6.0
Insurance Services	5.1		5.2
Consumer Services	4.3		4.2
Power Generation	4.2		4.5
Consumer Durables and Apparel	3.1		3.7
Media and Entertainment	2.8		2.1
Retailing and Distribution	2.5		2.2
Capital Goods	2.4		3.6
Energy	2.2		2.0
Food and Beverage	2.1		2.0
Consumer Staples Distribution and Retail	1.8		1.6
Other	7.1		7.4
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 22 and 22 different borrowers as of December 31, 2023 and 2022, respectively. The portfolio companies in the SDLP are in industries similar to the companies in the Company’s portfolio.


	As of December 31,

	2023		2022
Geographic Region
Midwest	24.7	%	23.9	%
West(1)	24.3		24.5
Southeast	18.5		17.1
Mid-Atlantic	13.3		14.9
Northeast(2)	13.2		14.0
International	6.0		5.6
Total	100.0	%	100.0	%

________________________________________

(1)Includes the Company’s investment in the SDLP, which represented 5.6% and 5.7% of the total investment portfolio at fair value as of December 31, 2023 and 2022, respectively.

(2)Includes the Company’s investment in IHAM, which represented 8.7% and 10.1% of the total investment portfolio at fair value as of December 31, 2023 and 2022, respectively.

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


	As of December 31,

	2023				2022
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Subordinated loan	$	62	$	62	$	500	$	500
Equity	1,701		1,925		1,548		1,701
Total investment in IHAM	$	1,763	$	1,987	$	2,048	$	2,201

Below is a summary of the SDLP’s portfolio.


	As of December 31,

	2023		2022
Total first lien senior secured loans(1)(2)	$	5,431	$	5,174
Largest loan to a single borrower(1)	$	370	$	377
Total of five largest loans to borrowers(1)	$	1,650	$	1,631
Number of borrowers in the SDLP	22		22
Commitments to fund delayed draw loans(3)	$	260	$	294

___________________________________________________________________________

(1)At principal amount.

(2)First lien senior secured loans include certain loans that the SDLP classifies as “unitranche” loans. As of December 31, 2023 and 2022, the total principal amount of loans in the SDLP portfolio that the SDLP classified as “unitranche” loans was $4,558 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 December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 are presented below:


	As of December 31,

	2023		2022
Selected Balance Sheet Information:
Investments at fair value (amortized cost of $5,267 and $5,166, respectively)	$	5,129	$	4,958
Other assets	192		150
Total assets	$	5,321	$	5,108

Senior notes	$	3,705	$	3,538
Intermediate funding notes	139		132
Other liabilities	136		110
Total liabilities	3,980		3,780
Subordinated certificates and members’ capital	1,341		1,328
Total liabilities and members’ capital	$	5,321	$	5,108


	For the Years Ended December 31,
		2023		2022		2021
Selected Statement of Operations Information:
Total investment income		$	570	$	365	$	282
Interest expense		296		155		91
Other expenses		23		20		18
Total expenses		319		175		109
Net investment income		251		190		173
Net realized and unrealized (losses) gains on investments		(73)		(147)		70
Net increase in members’ capital resulting from operations		$	178	$	43	$	243

Schedule of Dividend and Interest Income

The interest income and dividend income that the Company earned from IHAM for the years ended December 31, 2023, 2022 and 2021 were as follows:


	For the Years Ended December 31,
		2023		2022		2021
Interest income		$	29	$	23	$	3
Dividend income		$	243	$	205	$	93

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, 2023, 2022 and 2021 were as follows:


	For the Years Ended December 31,
		2023		2022		2021
Interest income		$	174	$	146	$	138
Capital structuring service and other fees		$	13	$	22	$	22

Schedule of Funded Capital and Unfunded Capital Commitments of the SDLP

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


	As of December 31,

	2023				2022
	Amortized Cost		Fair Value		Amortized Cost		Fair Value






Subordinated loan	12.0	%	12.0	%	11.0	%	11.0	%
Equity(1)	15.1	%	13.3	%	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.

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


	As of December 31,

	2023		2022
Total capital funded to the SDLP(1)	$	5,361	$	5,127
Total capital funded to the SDLP by the Company(1)	$	1,328	$	1,274
Total unfunded capital commitments to the SDLP(2)	$	260	$	294
Total unfunded capital commitments to the SDLP by the Company(2)	$	60	$	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 and the Company’s yield on its investment in the SDLP Certificates at amortized cost and fair value as of December 31, 2023 and 2022 were as follows:


	As of December 31,

	2023						2022
	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Investment in the SDLP Certificates	$	1,316		$	1,288		$	1,274		$	1,249
Yield on the investment in the SDLP Certificates	13.6		%	13.9		%	13.5		%	13.8		%

Schedule of Selected Financial Information

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, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 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 Consolidated IHAM 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, 2023
	IHAM		Consolidated IHAM Vehicles(1)		Eliminations		Consolidated
Selected Balance Sheet Information:
Assets

Investments at fair value(2)	$	2,274	$	9,392	$	(2,265)	$	9,401
Cash and cash equivalents	9		707		—		716
Other assets	70		100		(68)		102




Total assets	$	2,353	$	10,199	$	(2,333)	$	10,219

Liabilities
Debt	$	462	$	7,459	$	—	$	7,921
Subordinated note from ARCC	62		—		—		62
Subordinated notes(3)	—		1,280		(992)		288
Other liabilities	17		189		(16)		190




Total liabilities	541		8,928		(1,008)		8,461
Equity
Contributed capital	1,701		—		—		1,701
Accumulated earnings	126		—		—		126
Net unrealized losses on investments and foreign currency transactions	(15)		—		—		(15)
Non-controlling interests in Consolidated IHAM Vehicles(4)	—		1,271		(1,325)		(54)


Total equity	1,812		1,271		(1,325)		1,758
Total liabilities and equity	$	2,353	$	10,199	$	(2,333)	$	10,219


	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 December 31, 2023 and 2022 was $2,288 and $2,370, respectively. The amortized cost of the total investments of IHAM on a consolidated basis as of December 31, 2023 and 2022 was $9,619 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 $221 and $309 as of December 31, 2023 and 2022, respectively.


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

Investment income	$	347	$	1,097	$	(343)	$	1,101
Management fees and other income	56		8		(54)		10



Total revenues	403		1,105		(397)		1,111
Expenses

Interest expense	61		580		—		641
Distributions to subordinated notes	—		193		(150)		43
Management fees and other expenses	15		75		(54)		36




Total expenses	76		848		(204)		720
Net operating income	327		257		(193)		391


Net realized (losses) gains on investments and other transactions	(19)		2		(29)		(46)
Net unrealized gains on investments and other transactions	18		93		(18)		93



Total net realized and unrealized (losses) gains on investments and other transactions	(1)		95		(47)		47
Net income	326		352		(240)		438

Less: Net income attributable to non-controlling interests in Consolidated IHAM Vehicles	—		352		(240)		112
Net income attributable to Ivy Hill Asset Management, L.P.	$	326	$	—	$	—	$	326


	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		264		—		299
Distributions to subordinated notes	—		127		(95)		32
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 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 (losses) gains 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

____________________________________

(1)Consolidated for GAAP purposes only.