TCP Capital Q4 NAV Drops 19% to $7.07 Driven by Six Markdowns
TCP Capital's net asset value fell 19% to $7.07 in Q4, led by markdowns in six firms accounting for 67% of the decline ($1.11). Full-year adjusted net investment income dropped to $1.22 from $1.52 as management added first-lien loans, repurchased shares and trimmed leverage to ~1.34x.
1. NAV Decline Drivers
Net asset value fell 19% to $7.07 per share in Q4, driven by markdowns in six portfolio companies—Edmentum, Razor (written to zero), SellerX, Renovo, Hylan and InMobi—that accounted for 67% of the decline ($1.11 per share). Razor and SellerX contributed $0.24 and $0.22 per share respectively to the NAV drop.
2. Investment Income Performance
Full-year adjusted net investment income declined to $1.22 per share from $1.52, while Q4 adjusted NII fell to $0.25 per share from $0.30 in Q3 and $0.36 in the fourth quarter of 2024. The quarter benefited by $0.02 per share from a waived advisor fee but was pressured by portfolio markdowns, non-accruals, lower base rates and tighter spreads.
3. Portfolio and Capital Actions
Management increased first-lien senior secured loan exposure to 87.4% of the portfolio, reduced average new deal size to $5.8 million, and held $570 million in liquidity at year-end. The company repurchased 749,410 shares at an average price near $5.70, paid down $325 million of 2026 notes, trimmed net regulatory leverage to ~1.34x and declared a $0.17 quarterly dividend.