FIDUS INVESTMENT Corp

Previous wording

the impact of interest rate volatility, including the replacement of LIBOR with alternate rates and high interest rates, and the elevated level of inflation on our business and portfolio companies;

Current wording

the impact of interest rate volatility and the elevated level of inflation on our business and portfolio companies;

Previous wording

FIC was formed as a Maryland corporation on February 14, 2011. We completed our initial public offering, or IPO, in June 2011. On June 20, 2011, FIC acquired all of the limited partnership interests of Fund I and membership interests of Fidus Mezzanine Capital GP, LLC, its general partner, resulting in Fund I becoming our wholly-owned SBIC subsidiary. Immediately following the acquisition, we and Fund I elected to be treated as business development companies, or BDCs, under the 1940 Act and our investment activities have been managed by Fidus Investment Advisors, LLC, our investment advisor, and supervised by our board of directors, a majority of whom are independent of us. On March 29, 2013, we commenced operations of a second wholly-owned subsidiary, Fund II. On April 18, 2018, we commenced operations of a third wholly-owned subsidiary, Fund III.

Current wording

FIC was formed as a Maryland corporation on February 14, 2011. We completed our initial public offering, or IPO, in June 2011. On June 20, 2011, FIC acquired all of the limited partnership interests of Fidus Mezzanine Capital, L.P. ("Fund I") and membership interests of Fidus Mezzanine Capital GP, LLC, its general partner, resulting in Fund I becoming our wholly-owned SBIC subsidiary. Immediately following the acquisition, we and Fund I elected to be treated as business development companies, or BDCs, under the 1940 Act and our investment activities have been managed by Fidus Investment Advisors, LLC, our investment advisor, and supervised by our board of directors, a majority of whom are independent of us. On March 29, 2013, we commenced operations of a second wholly-owned subsidiary, Fund II. On April 18, 2018, we commenced operations of a third wholly-owned subsidiary, Fund III.

Previous wording

During the three months ended March 31, 2024 and 2023, we invested $145.9 million and $51.5 million, respectively, in debt and equity investments including seven and three new portfolio companies, respectively. During the three months ended March 31, 2024 and 2023, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of $60.2 million and $15.9 million, respectively, including an exit of one and one portfolio companies, respectively. The following table summarizes purchases of investments and sales and repayments of investments by type for the three months ended March 31, 2024 and 2023 (dollars in millions).

Current wording

During the six months ended June 30, 2024 and 2023, we invested $208.3 million and $147.3 million, respectively, in debt and equity investments including eight and eight new portfolio companies, respectively. During the six months ended June 30, 2024 and 2023, we received proceeds from sales or repayments, including principal, return of capital dividends and net realized gains (losses), of $103.3 million and $76.5 million, respectively, including an exit of two and five portfolio companies, respectively. The following table summarizes purchases of investments and sales and repayments of investments by type for the six months ended June 30, 2024 and 2023 (dollars in millions).

Previous wording

(1) For the three months ended March 31, 2024 and 2023, first lien debt includes unitranche securities, which account for 36.5% and 40.3% of purchases, respectively. For the three months ended March 31, 2024 and 2023, first lien debt includes unitranche securities, which account for 3.0% and 5.9% of repayments, respectively.

Current wording

(1) For the six months ended June 30, 2024 and 2023, first lien debt includes unitranche securities, which account for 29.9% and 32.5% of purchases, respectively. For the six months ended June 30, 2024 and 2023, first lien debt includes unitranche securities, which account for 5.0% and 3.9% of repayments, respectively.

Previous wording

As of March 31, 2024, the fair value of our investment portfolio totaled $1,048.1 million and consisted of 87 active portfolio companies and four portfolio companies that have sold their underlying operations. As of March 31, 2024, 48 portfolio companies’ debt investments bore interest at a variable rate, which represented $664.6 million, or 72.5%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed-rate investments. Overall, the portfolio had net unrealized appreciation of $22.5 million as of March 31, 2024. As of March 31, 2024, our average active portfolio company investment at amortized cost was $11.8 million, which excludes investments in four portfolio companies that have sold their underlying operations.

Current wording

As of June 30, 2024, the fair value of our investment portfolio totaled $1,078.4 million and consisted of 86 active portfolio companies and five portfolio companies that have sold their underlying operations. As of June 30, 2024, 48 portfolio companies’ debt investments bore interest at a variable rate, which represented $688.4 million, or 72.8%, of our debt investment portfolio on a fair value basis, and the remainder of our debt investment portfolio was comprised of fixed-rate investments. Overall, the portfolio had net unrealized appreciation of $20.4 million as of June 30, 2024. As of June 30, 2024, our average active portfolio company investment at amortized cost was $12.3 million, which excludes investments in five portfolio companies that have sold their underlying operations.

Previous wording

The weighted average yield on debt investments as of March 31, 2024 and December 31, 2023 was 14.0% and 14.2%, respectively. The weighted average yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yields were computed using the effective interest rates for debt investments at cost including the accretion of OID and debt investment origination fees, but excluding investments on non-accrual status, if any.

Current wording

The weighted average yield on debt investments as of June 30, 2024 and December 31, 2023 was 14.0% and 14.2%, respectively. The weighted average yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yields were computed using the effective interest rates for debt investments at cost including the accretion of OID and debt investment origination fees, but excluding investments on non-accrual status.

Previous wording

(1) Includes unitranche investments, which account for 37.3% and 38.0% of our portfolio on a fair value and cost basis as of March 31, 2024, respectively. Includes unitranche investments, which account for 37.6% and 38.5% of our portfolio on a fair value and cost basis as of December 31, 2023, respectively.

Current wording

(1) Includes unitranche investments, which account for 36.8% and 37.4% of our portfolio on a fair value and cost basis as of June 30, 2024, respectively. Includes unitranche investments, which account for 37.6% and 38.5% of our portfolio on a fair value and cost basis as of December 31, 2023, respectively.

Previous wording

Based on our investment rating system, the weighted average rating of our portfolio as of March 31, 2024 and December 31, 2023 was 2.0 and 2.0, respectively, on a fair value basis and 2.2 and 2.2, respectively, on a cost basis.

Current wording

Based on our investment rating system, the weighted average rating of our portfolio as of June 30, 2024 and December 31, 2023 was 2.0 and 2.0, respectively, on a fair value basis and 2.1 and 2.2, respectively, on a cost basis.

Previous wording

Comparison of three months ended March 31, 2024 and 2023

Current wording

Comparison of three and six months ended June 30, 2024 and 2023

Previous wording

For the three months ended March 31, 2024, total investment income was $34.7 million, an increase of $5.6 million or 19.3%, from the $29.1 million of total investment income for the three months ended March 31, 2023. As reflected in the table above, the increase is primarily attributable to the following:

Current wording

For the three months ended June 30, 2024, total investment income was $35.7 million, an increase of $5.1 million or 16.7%, from the $30.6 million of total investment income for the three months ended June 30, 2023. As reflected in the table above, the increase is primarily attributable to the following:

Previous wording

$3.5 million increase in total interest income (which includes payment-in-kind ("PIK") interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding, during 2024 as compared to 2023.

Current wording

$5.9 million increase in total interest income (which includes payment-in-kind ("PIK") interest income) resulting from an increase in average debt investment balances, partially offset by a decrease in weighted average yield on debt investment balances outstanding during 2024 as compared to 2023.

Previous wording

$1.0 million increase in fee income resulting from an increase in amendment and origination fees, partially offset by a decrease in prepayment fees during 2024 as compared to 2023.

Current wording

$0.2 million increase in fee income resulting from an increase in amendment and origination fees, partially offset by a decrease in prepayment fees during 2024 as compared to 2023.

Previous wording

$1.1 million increase in interest on idle funds due to an increase in cash balances and the weighted average interest on cash balances outstanding.

Current wording

$0.9 million increase in interest on idle funds due to an increase in average cash balances outstanding during 2024 as compared to 2023.

Previous wording

For the three months ended March 31, 2024, total expenses, including income tax provision, were $17.0 million, an increase of $2.7 million or 18.8%, from the $14.3 million of total expenses for the three months ended March 31, 2023. As reflected in the table above, changes across the periods were primarily attributable to the following:

Current wording

For the three months ended June 30, 2024, total expenses, including income tax provision, were $18.7 million, an increase of $4.9 million or 35.9%, from the $13.8 million of total expenses for the three months ended June 30, 2023. As reflected in the table above, changes across the periods were primarily attributable to the following:

Previous wording

$0.8 million increase in interest and financing expenses due to an increase in debt outstanding and an increase in weighted average interest rate on borrowings, during 2024 as compared to 2023.

Current wording

$0.5 million increase in interest and financing expenses due to an increase in the weighted average interest rate of our debt outstanding and an increase in average borrowings outstanding during 2024 as compared to 2023.

Previous wording

$0.5 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2024 as compared to 2023.

Current wording

$0.6 million net increase in base management fee, including the base management fee waiver, due to higher average total assets during 2024 as compared to 2023.

Previous wording

$0.9 million increase in the income incentive fee due to an increase in pre-incentive fee net investment income during 2024 as compared to 2023.

Current wording

$0.7 million increase in the income incentive fee due to an increase in pre-incentive fee net investment income during 2024 as compared to 2023.

Previous wording

$0.3 million increase in the accrued capital gains incentive fee due to an $1.7 million increase in net gain on investments (net change in unrealized appreciation (depreciation) on investments and realized losses on extinguishment of debt, as well as an increase in net realized gains (losses)) during 2024 as compared to the same period in 2023.

Current wording

$2.6 million increase in the accrued capital gains incentive fee due to a net $13.0 million increase in net gain on investments and realized losses on extinguishment of debt during 2024 as compared to the same period in 2023.

Previous wording

$0.1 million increase in professional fees during 2024 as compared to 2023.

Current wording

$0.4 million increase in professional fees due to increased legal, audit and tax compliance costs during 2024 as compared to 2023.

Previous wording

Net investment income increased by $2.9 million, or 19.7%, to $17.6 million during the three months ended March 31, 2024 as compared to the same period in 2023, as a result of the $5.6 million increase in total investment income, partially offset by the $2.7 million increase in total expenses, including base management fee waiver and income tax provision.

Current wording

Net investment income increased by $0.2 million, or 1.0%, to $17.0 million during the three months ended June 30, 2024 as compared to the same period in 2023, as a result of the $5.1 million increase in total investment income, partially offset by the $4.9 million increase in total expenses, including base management fee waiver and income tax provision.

Previous wording

For the three months ended March 31, 2023, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $0.1 million. Income tax (provision) benefit from realized gains on investments was zero for the three months ended March 31, 2023, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three months ended March 31, 2023 are summarized below (dollars in millions):

Current wording

For the three and six months ended June 30, 2024, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $10.8 million and $12.5 million, respectively. Income tax (provision) benefit from realized gains on investments was $(1.6) million and $(1.5) million for the three and six months ended June 30, 2024, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and six months ended June 30, 2024 are summarized below (dollars in millions):

Previous wording

For the three months ended March 31, 2024, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $1.7 million. Income tax (provision) benefit from realized gains on investments was $0.1 million for the three months ended March 31, 2024. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three months ended March 31, 2024 are summarized below (dollars in millions):

Current wording

For the three and six months ended June 30, 2023, the total net realized gain/(loss) on investments, before income tax (provision)/benefit, was $(5.6) and $(5.5) million, respectively. Income tax (provision) benefit from realized gains on investments was $(1.5) million and $(1.5) million for the three and six months ended June 30, 2023, respectively. We realize a gain/(loss) on our equity investments primarily when we either sell our equity investment or the underlying portfolio company is sold. Significant realized gains (losses) for the three and six months ended June 30, 2023 are summarized below (dollars in millions):

Previous wording

During the three months ended March 31, 2024 and 2023, we recorded a net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):

Current wording

During the three and six months ended June 30, 2024 and 2023, we recorded a net change in unrealized appreciation (depreciation) on investments attributable to the following (dollars in millions):

Previous wording

Net increase (decrease) in net assets resulting from operations during the three months ended March 31, 2024 and 2023 was $20.1 million and $15.5 million, respectively, as a result of the events described above.

Current wording

Net increase (decrease) in net assets resulting from operations during the three months ended June 30, 2024 and 2023 was $24.1 million and $10.9 million, respectively, as a result of the events described above.

Previous wording

As of March 31, 2024, we had $27.1 million in cash and cash equivalents and our net assets totaled $608.3 million. We believe that our current cash and cash equivalents on hand, our Credit Facility, our anticipated access to SBA-guaranteed debentures, and our anticipated cash flows from investments will provide adequate capital resources with which to operate and finance our investment business and make distributions to our stockholders for at least the next 12 months. We intend to generate additional cash primarily from the future offerings of securities (including the ATM Program) and future borrowings, as well as cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions to our stockholders. During the three months ended March 31, 2024, we repaid $35.0 million of SBA debentures relating to Fund II that would have matured during the period March 1, 2026 through September 1, 2027. Our remaining outstanding SBA debentures begin to mature in 2029 and subsequent years through 2034, which will require repayment on or before the respective maturity dates. In light of current market conditions, we will continually evaluate our overall liquidity position and take proactive steps to maintain that position based on the current circumstances. This “Financial Liquidity and Capital Resources” section should be read in conjunction with the notes of our consolidated financial statements.

Current wording

As of June 30, 2024, we had $48.3 million in cash and cash equivalents and our net assets totaled $646.8 million. We believe that our current cash and cash equivalents on hand, our Credit Facility, our anticipated access to SBA-guaranteed debentures, and our anticipated cash flows from investments will provide adequate capital resources with which to operate and finance our investment business and make distributions to our stockholders for at least the next 12 months. We intend to generate additional cash primarily from the future offerings of securities (including the ATM Program) and future borrowings, as well as cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions to our stockholders. During the six months ended June 30, 2024, we repaid $35.0 million of SBA debentures relating to Fund II that would have matured during the period March 1, 2026 through September 1, 2027. Our remaining outstanding SBA debentures begin to mature in 2029 and subsequent years through 2034, which will require repayment on or before the respective maturity dates. In light of current market conditions, we will continually evaluate our overall liquidity position and take proactive steps to maintain that position based on the current circumstances. This “Financial Liquidity and Capital Resources” section should be read in conjunction with the notes of our consolidated financial statements.

Previous wording

For the three months ended March 31, 2024, we experienced a net decrease in cash and cash equivalents in the amount of $92.0 million. During that period, we made payments of $77.8 million of cash for operating activities, which included the funding of $145.9 million of investments that was partially offset by proceeds received from sales and repayments of investments of $60.2 million. During the same period, we repaid SBA debentures of $35.0 million relating to Fund II, borrowed $22.5 million on our line of credit, received net proceeds from the ATM Program of approximately $19.2 million, received repayments of $0.3 million on our secured borrowings, paid cash dividends to stockholders of $20.4 million, and made payment of deferred financing costs related to our debt financings of $0.2 million.

Current wording

For the six months ended June 30, 2024, we experienced a net decrease in cash and cash equivalents in the amount of $70.8 million. During that period, we made payments of $80.5 million of cash for operating activities, which included the funding of $208.3 million of investments that was partially offset by proceeds received from sales and repayments of investments of $103.3 million. During the same period, we repaid SBA debentures of $35.0 million relating to Fund II, borrowed $32.5 million under our Credit Facility, received net proceeds from the ATM Program of approximately $52.2 million, received repayments of $0.6 million on our secured borrowings, paid cash dividends to stockholders of $39.1 million, and made payment of deferred financing costs related to our debt financings of $0.3 million.

Previous wording

We have made customary representations and warranties and we are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. As of March 31, 2024, we were in compliance in all material respects with the terms of the Credit Agreement and we had $22.5 million in borrowings outstanding under the Credit Facility.

Current wording

We have made customary representations and warranties and we are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. These covenants are subject to important limitations and exceptions that are described in the documents governing the Credit Facility. As of June 30, 2024, we were in compliance in all material respects with the terms of the Credit Agreement and we had $32.5 million in borrowings outstanding under the Credit Facility.

Previous wording

As of March 31, 2024, the carrying value of secured borrowings totaled $15.6 million and the fair value of the associated loans included in investments was $15.6 million. As of December 31, 2023, carrying value of secured borrowings totaled $15.9 million and the fair value of the associated loans included in investments was $15.8 million. These secured borrowings were created as a result of our completion of partial loan sales of certain unitranche loan assets that did not meet the definition of a “participating interest” as defined in ASC 860 (see Note 2. Significant Accounting Policies - Partial loan and equity sales” for more information). As a result, sale treatment was not permitted and these partial loan sales were treated as secured borrowings. The weighted average interest rate on our secured borrowings was approximately 9.363% and 9.407% as of March 31, 2024 and December 31, 2023, respectively.

Current wording

As of June 30, 2024, the carrying value of secured borrowings totaled $15.3 million and the fair value of the associated loans included in investments was $15.3 million. As of December 31, 2023, carrying value of secured borrowings totaled $15.9 million and the fair value of the associated loans included in investments was $15.8 million. These secured borrowings were created as a result of our completion of partial loan sales of certain unitranche loan assets that did not meet the definition of a “participating interest” as defined in ASC 860 (see Note 2. Significant Accounting Policies - Partial loan and equity sales” for more information). As a result, sale treatment was not permitted and these partial loan sales were treated as secured borrowings. The weighted average interest rate on our secured borrowings was approximately 9.375% and 9.407% as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

As of March 31, 2024, the weighted average stated interest rates for our SBA debentures and the Notes were 4.316% and 4.125%, respectively. As of March 31, 2024, we had $77.5 million of unutilized commitment under our Credit Facility, and we were subject to a 0.851% fee on such amount. As of March 31, 2024, the weighted average stated interest rate on total debt outstanding was 4.568%.

Current wording

As of June 30, 2024, the weighted average stated interest rates for our SBA debentures and the Notes were 4.316% and 4.125%, respectively. As of June 30, 2024, we had $67.5 million of unutilized commitment under our Credit Facility, and we were subject to a 0.581% fee on such amount. As of June 30, 2024, the weighted average stated interest rate on total debt outstanding was 4.641%.

Previous wording

On November 10, 2022, the Company established the at-the-market program (the “ATM Program”), pursuant to which the Company may offer and sell, from time to time through Raymond James & Associates, Inc. and B. Riley Securities, Inc., each as sales agents, shares of the Company's common stock having an aggregate offering price of up to $50.0 million. On August 11, 2023, the Company increased the maximum amount of shares to be sold through the ATM Program to $150.0 million from $50.0 million. On February 29, 2024, the Company increased the maximum amount of shares to be sold through the ATM Program to $300.0 million from $150.0 million. Cumulative to date, the Company has sold 6,957,913 shares of common stock under the ATM Program at a weighted-average price of $19.72, raising $137.2 million of gross proceeds. Net proceeds were $135.4 million after commissions to the sales agents on sales sold. As of March 31, 2024, the Company has $162.8 million available under the ATM Program.

Current wording

On November 10, 2022, the Company established the at-the-market program (the “ATM Program”), pursuant to which the Company may offer and sell, from time to time through Raymond James & Associates, Inc. and B. Riley Securities, Inc., each as sales agents, shares of the Company's common stock having an aggregate offering price of up to $50.0 million. On August 11, 2023, the Company increased the maximum amount of shares to be sold through the ATM Program to $150.0 million from $50.0 million. On February 29, 2024, the Company increased the maximum amount of shares to be sold through the ATM Program to $300.0 million from $150.0 million. Cumulative to date, the Company has sold 8,649,249 shares of common stock under the ATM Program at a weighted-average price of $19.73, raising $170.7 million of gross proceeds. Net proceeds were $168.4 million after commissions to the sales agents on sales sold. As of June 30, 2024, the Company has $129.3 million available under the ATM Program.

Previous wording

We have an open market stock repurchase program (the “Stock Repurchase Program”) under which we may acquire up to $5.0 million of our outstanding common stock. Under the Stock Repurchase Program, we may, but are not obligated to, repurchase outstanding common stock in the open market from time to time provided that we comply with the prohibitions under our insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market value and timing constraints. The timing, manner, price and amount of any share repurchases will be determined by our management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability, applicable legal and regulatory requirements and other corporate considerations. Most recently, on October 30, 2023, the Board extended the Stock Repurchase Program through December 31, 2024, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not require us to repurchase any specific number of shares and we cannot assure that any shares will be repurchased under the Stock Repurchase Program. The Stock Repurchase Program may be suspended, extended, modified or discontinued at any time. We did not make any repurchases of common stock during the three months ended March 31, 2024 and 2023. Refer to Note 8 to our consolidated financial statements for additional information concerning stock repurchases.

Current wording

We have an open market stock repurchase program (the “Stock Repurchase Program”) under which we may acquire up to $5.0 million of our outstanding common stock. Under the Stock Repurchase Program, we may, but are not obligated to, repurchase outstanding common stock in the open market from time to time provided that we comply with the prohibitions under our insider trading policies and the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market value and timing constraints. The timing, manner, price and amount of any share repurchases will be determined by our management, in its discretion, based upon the evaluation of economic and market conditions, stock price, capital availability, applicable legal and regulatory requirements and other corporate considerations. Most recently, on October 30, 2023, the Board extended the Stock Repurchase Program through December 31, 2024, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not require us to repurchase any specific number of shares and we cannot assure that any shares will be repurchased under the Stock Repurchase Program. The Stock Repurchase Program may be suspended, extended, modified or discontinued at any time. We did not make any repurchases of common stock during the three and six months ended June 30, 2024 and 2023. Refer to Note 8 to our consolidated financial statements for additional information concerning stock repurchases.

Previous wording

Our Board consulted with the independent third-party valuation firm(s) in arriving at our determination of fair value for 17 and 18 of our portfolio company investments representing 26.9% and 29.9% of the total portfolio investments at fair value (exclusive of new portfolio company investments made during the three months ended March 31, 2024 and December 31, 2023, respectively) as of March 31, 2024 and December 31, 2023, respectively.

Current wording

Our Board consulted with the independent third-party valuation firm(s) in arriving at our determination of fair value for 16 and 18 of our portfolio company investments representing 22.8% and 29.9% of the total portfolio investments at fair value (exclusive of new portfolio company investments made during the three months ended June 30, 2024 and December 31, 2023, respectively) as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

We have entered into the Investment Advisory Agreement with Fidus Investment Advisors as our investment advisor. Pursuant to the agreement, the Investment Advisor manages our day-to-day operating and investing activities. We pay the Investment Advisor a fee for its services under the Investment Advisory Agreement consisting of two components — a base management fee and an incentive fee. See Note 5 to our consolidated financial statements. The Investment Advisor, in consultation with the Board, agreed to voluntarily waive $0.1 million and $0.1 million of the base management fees on any assets accounted for as secured borrowings as defined under GAAP for the three months ended March 31, 2024, and 2023, respectively.

Current wording

We have entered into the Investment Advisory Agreement with Fidus Investment Advisors as our investment advisor. Pursuant to the agreement, the Investment Advisor manages our day-to-day operating and investing activities. We pay the Investment Advisor a fee for its services under the Investment Advisory Agreement consisting of two components — a base management fee and an incentive fee. See Note 5 to our consolidated financial statements. The Investment Advisor, in consultation with the Board, agreed to voluntarily waive $0.1 million and $0.1 million of the base management fees on any assets accounted for as secured borrowings as defined under GAAP for the three and six months ended June 30, 2024, respectively, and $0.1 million and $0.1 million for the three and six months ended June 30, 2023, respectively.

Previous wording

While we may co-invest with investment entities managed by the Investment Advisor or its affiliates, to the extent permitted by the 1940 Act and the rules and regulations thereunder, the 1940 Act imposes significant limits on co-investment. On January 4, 2017, the SEC staff has granted us relief sought in an exemptive order that expands our ability to co-invest in portfolio companies with other funds managed by the Investment Advisor or its affiliates ("Affiliated Funds") in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) or the Independent Directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching by us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies. However, neither we nor our affiliates are obligated to invest or co-invest when investment opportunities are referred to us or them.

Current wording

While we may co-invest with investment entities managed by the Investment Advisor or its affiliates, to the extent permitted by the 1940 Act and the rules and regulations thereunder, the 1940 Act imposes significant limits on co-investment. On January 4, 2017, the SEC staff has granted us relief sought in an exemptive order that expands our ability to co-invest in portfolio companies with other funds managed by the Investment Advisor or its affiliates ("Affiliated Funds") in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Independent Directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching by us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies. However, neither we nor our affiliates are obligated to invest or co-invest when investment opportunities are referred to us or them.

Previous wording

On April 29, 2024, our Board declared a regular quarterly dividend of $0.43 per share and a supplemental dividend of $0.16 per share payable June 26, 2024, to stockholders of record as of June 19, 2024.

Current wording

On July 29, 2024, our Board declared a regular quarterly dividend of $0.43 per share and a supplemental dividend of $0.14 per share payable on September 26, 2024, to stockholders of record as of September 19, 2024.