Audax Credit BDC Inc.

Overview

• Structure: Delaware corporation; externally managed, closed-end, non-diversified management investment company. Elected to be treated as a Business Development Company (BDC) under the 1940 Act and as a Regulated Investment Company (RIC) under Subchapter M of the Internal Revenue Code.
• Investment objective: Generate current income with some potential for long-term capital appreciation.
• Primary strategy: Invest primarily in senior secured debt of privately owned U.S. middle-market companies (generally companies with less than $500 million in annual revenue or EBITDA under $75 million).
• Asset use and leverage: At least 80% of net assets (plus borrowings) invested in credit instruments. Leverage may be used in limited, short-term circumstances subject to 1940 Act asset coverage requirements (200% required, or 150% with certain approvals under SBCAA).

Investment approach

• Core focus: First-lien senior secured loans, selective second-lien and unitranche debt, and cash-pay instruments with monthly or quarterly interest, typically five- to seven-year maturities.
• Pricing: Floating-rate loans (often SOFR-based) with optional interest floors (0.0%–2.0% as of 12/31/2025); upfront fees and original issue discounts (OID) may enhance returns.
• Collateral: Loans are generally secured by substantially all assets of the borrower and occupy a senior position in the capital structure.
• Portfolio construction: Emphasis on credit analysis and downside protection, with diversification by company, industry, asset type, and U.S. geography. Investment management is provided by Audax Management Company (NY), LLC (the Adviser), with sourcing and underwriting support from the Audax Group platform.

Portfolio and investments (as of 12/31/2025)

• Fair value of investments (debt and equity): approximately $407.5 million.
• Number of portfolio investments: 330 (average cost basis about $1.27 million per investment).
• Distinct portfolio companies: 268.
• Floating-rate exposure: 100% of investments.
• End-of-period unfunded commitments: $35.37 million.
• End-of-period cash: $12.82 million.

Top holdings (fair value and % of total investments):

• Ned Stevens 2022-2: $5.245 million (1.29%)
• Cherry Bekaert: $5,042,946 (1.24%)
• Vortex Companies: $5.002 million (1.23%)
• American Vision Partners: $4.798 million (1.18%)
• Cerity Partners 2022: $4.520 million (1.11%)
• Amplix: $4.337 million (1.06%)
• Augusta Sportswear 2023: $4.244 million (1.04%)
• LegalShield 2021: $4.198 million (1.03%)
• Engine & Transmission Exchange: $4.169 million (1.02%)
• InnovateMR: $4.077 million (1.00%)
• Aggregate of top ten: ~ $45.63 million (11.20% of total investments)

Industry exposure (by portfolio fair value, 12/31/2025):

• Services: Business – 22.14%
• Healthcare & Pharmaceuticals – 18.24%
• Banking, Finance, Insurance & Real Estate – 8.26%
• Capital Equipment – 7.93%
• Services: Consumer – 7.22%
• High Tech Industries – 6.33%
• Containers, Packaging & Glass – 4.18%
• Construction & Building – 4.11%
• Beverage, Food & Tobacco – 3.94%
• Transportation: Cargo – 3.44%
• Total listed sectors account for 85.79% of portfolio fair value shown.

Investment activity (year ended 12/31/2025)

• Beginning portfolio: $410.03 million
• Investments in new portfolio investments: $69.99 million
• Investments in existing portfolio investments: $29.82 million
• Principal repayments: $(93.08) million
• Proceeds from investments sold: $(3.44) million
• Change in premiums/discounts/amortization: $2.10 million
• Net change in unrealized depreciation: $(5.94) million
• Realized loss on investments: $(1.97) million
• Ending portfolio investment value: $407.51 million

Notable portfolio metrics:

• Average investment amount (cost): $1.27 million
• Percentage of investments at floating rates: 100%
• Unfunded commitments at year-end: $35.37 million

Recent developments (post-2025)

• Investment activity through 3/20/2026: $11.91 million invested at cost in 84 portfolio companies.
• December 18, 2025 offering: $15.0 million aggregate offering price via sale of 1,685,393 shares.
• January 13, 2026 tender: Tender offer to repurchase $15.0 million of Common Stock; completed February 10, 2026.
• Year-end common shares outstanding remained 47,020,468 (unchanged from 2024); capital calls and tender activity affected share count and liquidity dynamics.

Financial performance (years ended 2025 and 2024)

Income and earnings:

• Total investment income: $39.60 million (2025) vs $42.70 million (2024)
  • Interest income from non-controlled/non-affiliated investments: $39.183 million (2025) vs $42.066 million (2024)
  • Other interest income: $0.171 million (2025) vs $0.401 million (2024)
  • Other income: $0.242 million (2025) vs $0.234 million (2024)
• Net investment income (GAAP): $33.68 million (2025) vs $36.18 million (2024)
• Net realized loss on investments: $(1.97) million (2025) vs $(0.91) million (2024)
• Net change in unrealized depreciation on investments: $(5.94) million (2025) vs $(3.67) million (2024)
• Net increase in net assets resulting from operations: $25.77 million (2025) vs $31.61 million (2024)

Per-share metrics (basic/diluted, weighted-average shares):

• Net investment income per common share: $0.72 (2025) vs $0.78 (2024) vs $0.81 (2023)
• Net increase in net assets from operations per common share: $0.55 (2025) vs $0.68 (2024) vs $0.77 (2023)
• Distributions declared per common share: $0.72 (2025) vs $0.80 (2024) vs $0.82 (2023)

Balance sheet highlights (year-end):

• Total assets: $422.87 million (2025) vs $433.16 million (2024)
• Total liabilities: $4.32 million (2025) vs $6.52 million (2024)
• Net assets: $418.56 million (2025) vs $426.64 million (2024)
• NAV per common share: $8.90 (2025) vs $9.07 (2024)
• Common shares outstanding: 47,020,468 (2025) vs 47,020,454 (2024)

Distributions and taxes

• As a RIC, the company distributes substantially all of its investment company taxable income to stockholders to avoid corporate-level taxes, subject to applicable distribution and diversification rules.
• In 2025, four distributions totaling approximately $33.85 million were paid, equivalent to $0.72 per share.
• The company expects to continue distributing a substantial portion of net investment income; distributions may be paid in cash or shares, subject to stockholder election and regulatory requirements.

Operations and governance

• Employees: The company has no employees. Day-to-day investment operations are managed by the Adviser; the Administrator provides office space, services, and related support.
• Adviser and platform: Audax Management Company (NY), LLC, an affiliate of Audax Group, provides sourcing, underwriting, and portfolio management. Senior professionals on the platform have long track records in middle-market debt investing.
• Governance: An Investment Committee oversees investment decisions. Fair value determinations for investments without readily available market quotes are performed by a Valuation Designee (an affiliate of the Adviser) under Board oversight. Proxy voting policies are delegated to the Adviser. The company maintains a code of ethics and a cybersecurity program overseen by the Board and the Chief Compliance Officer.

Leverage and regulatory framework

• Leverage: The company may employ leverage, subject to 1940 Act asset coverage requirements. The SBCAA permits asset coverage reduction from 200% to 150% under certain conditions, subject to approvals.
• Tax status: Qualified as both a BDC and a RIC, with distribution requirements intended to minimize corporate-level taxation. The company must comply with 1940 Act restrictions on affiliate transactions and with RIC qualification rules, including income and diversification tests.

Business summary

Audax Credit BDC Inc. is an externally managed BDC focused on lending to privately held U.S. middle-market companies, primarily through first-lien senior secured loans and select middle-market debt instruments. As of 12/31/2025 the portfolio included roughly 330 investments across about 268 portfolio companies, with full exposure to floating-rate debt and emphasis on senior secured structures for downside protection. The Adviser provides sourcing, underwriting, and portfolio management, and the company pays base and incentive management fees to the Adviser, subject to applicable caps and waivers. Ongoing capital activity in 2025–2026 included offerings, tender activity, new investments, and repayments.