Investcorp Credit Management BDC (NASDAQ:ICMB) reported lower net assets and a smaller investment portfolio for the first quarter ended March 31, 2026, as management said it remains focused on preserving capital, managing liquidity and evaluating strategic alternatives.
President and Chief Executive Officer Suhail Shaikh said the company’s board has formed a special committee of independent directors to evaluate strategic alternatives aimed at maximizing shareholder value. The committee has retained Fulcrum Multi-Capital Inc. as financial adviser. Because that review is ongoing, the company did not take questions on the call.
Net Assets Decline as Portfolio Depreciation Weighs on Results
For the quarter, ICMB reported net investment income before taxes of $0.3 million, or $0.02 per share. Andrew, a company representative on the call, said net assets were $52.7 million at March 31, down $8.6 million from the prior quarter. The change reflected a $0.2 million increase from net investment income, offset by an $8.8 million decrease from net depreciation of portfolio assets.
Shaikh said net assets declined approximately 14% sequentially, while net asset value per share fell to $2.65 from $4.25 at Dec. 31. He attributed the decline primarily to fair value adjustments, lower investment activity and higher dividends, resulting in “non-significant growth” in net investment income.
The fair value of the company’s portfolio was $151.4 million at quarter-end, compared with $172.7 million at Dec. 31. The weighted average yield of the debt portfolio was 11.95% of fair value, up 139 basis points from the December quarter.
Company Takes Steps to Reduce Liquidity Costs
Shaikh highlighted two measures the company took to manage liquidity. The investment adviser voluntarily agreed to waive 56% of base management fees for the quarter, which he said resulted in approximately $456,000 in savings.
ICMB also amended its revolving credit facility after quarter-end to reduce the commitment to $50 million from $100 million. Shaikh said the move better aligns the facility with current needs and reduces the company’s cost structure while maintaining adequate liquidity for its investment strategy. He said the reduction is expected to save approximately $401,000 in undrawn commitment fees annually.
As of March 31, the company had approximately $11.6 million in cash, including about $8.8 million of restricted cash. It also had $65.1 million of unused commitment under its revolving credit facility with Capital One, of which $3.6 million was available under the borrowing base. Andrew said the subsequent reduction in the facility commitment leaves borrowing base availability unchanged while lowering costs tied to unused capacity.
Portfolio Remains Diversified, Non-Accruals Stable
ICMB’s portfolio consisted of 34 borrowers at quarter-end. Approximately 83% of investments were in first-lien debt, while the remaining 17% was invested in equity, warrants and other positions. Within the debt portfolio, 97.8% was invested in floating-rate instruments and 2.2% in fixed-rate investments. The weighted average cash spread on floating-rate debt investments was 4.5%, which Andrew said was relatively unchanged from the prior quarter.
Non-accruals remained consistent with the prior quarter, with five positions on non-accrual status representing approximately 6.1% of portfolio fair value, compared with 6.9% last quarter.
The portfolio was diversified across 17 GICS industries. The largest issuer represented 7.6% of fair value, and Shaikh noted that the company’s software exposure remained relatively low at 3.1% of fair value at quarter-end.
Andrew said the largest portfolio company investment by fair market value was ArborWorks, at $11.6 million, or approximately 7.6% of total fair market value. The largest industry concentrations by fair market value were:
- Professional services: 15.7%
- Commercial services and supplies: 11.2%
- Diversified consumer services: 9.7%
- IT services: 9.2%
- Specialty retail: 7.6%
Gross leverage was 2.05 times and net leverage was 1.83 times at March 31, compared with 2.02 times and 1.78 times, respectively, in the prior quarter.
Investment Activity Remains Muted
Shaikh said new investment activity remained muted during the quarter, consistent with the company’s emphasis on capital preservation and liquidity management.
During the quarter, ICMB funded an incremental $79,000 under the first term loan C of American Nuts, an existing portfolio company, to support working capital needs as it executes near-term growth initiatives. Shaikh said American Nuts provides processing, packaging, sourcing and procurement services for nuts, seeds and dried fruits. The yield on the position at cost is approximately 12.6%.
On the realization side, the company fully exited three portfolio company investments during the quarter, generating total proceeds of approximately $12.7 million with a blended internal rate of return of approximately 10.7%. Shaikh said the exits included the full repayment of the company’s term loan investment in high-end luxury manufacturing company BBI Holdings and its position with Insurance Term Loan B debt.
“Our priority remains clear: preserving capital and actively managing the portfolio,” Shaikh said, adding that the company expects to update investors on the strategic review process next quarter.
About Investcorp Credit Management BDC (NASDAQ:ICMB)
Investcorp Credit Management BDC Inc (NASDAQ: ICMB) is a closed-end, non-diversified management investment company that provides investors exposure to private credit markets through direct lending strategies. As a business development company, ICMB focuses on originating, structuring and managing tailored financing solutions for U.S. middle-market corporations. The company’s portfolio includes senior secured loans, second-lien debt, subordinated debt and equity co-investments, with an emphasis on risk-adjusted returns and capital preservation.
The company is externally managed by Investcorp Credit Management US LLC, part of the Investcorp group, a global alternative investment firm founded in 1982.
