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Item 7. Management’s Discussion and Analysis

2025-03-03 compared with 2024-02-29 · 375 added, 296 removed, 218 unchanged (75% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should

be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere

in this Annual Report on Form 10-K.

Except as otherwise specified, references to “we,” “us,” “our,”

or the “Company” refer to Kayne Anderson BDC, Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be

read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in

this Annual Report on Form 10-K.

Except as otherwise specified, references to “we,” “us,” “our,” or

the “Company” refer to Kayne Anderson BDC, Inc.

Investment Objective, Principal Strategy

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Kayne Anderson BDC, Inc.

was formed as a Delaware

corporation that commenced operations on February 5, 2021.

We are an externally managed, closed-end, non-diversified management investment

company that has elected to be regulated as a BDC under the 1940 Act, as amended.

is a Delaware corporation

that commenced operations on February 5, 2021.

We are an externally managed, closed-end, non-diversified management investment company

that has elected to be regulated as a BDC under the 1940 Act, as amended.

In addition, for U.S.

federal income tax purposes, we

intend to qualify, annually, as a RIC under Subchapter M of the Code.

federal income tax purposes, we intend

to qualify, annually, as a RIC under Subchapter M of the Code.

On May 24, 2024, we completed our initial public

offering (“IPO”), issuing 6,000,000 shares of our common stock at a public offering price of $16.63 per share.

of underwriting fees and offering expenses, we received net cash proceeds, before offering expenses, of $92.4 million.

The Company’s

common stock began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “KBDC” on May 22, 2024.

Our investment activities are managed by KA Credit Advisors, LLC (the

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The Advisor is an investment advisor registered with the United States Securities and Exchange Commission (the

“SEC”) under the Investment Advisory Act of 1940, as amended.

In accordance with the Advisers Act, our Advisor is responsible

for originating prospective investments, conducting research and due diligence investigations on potential investments, analyzing investment

opportunities, negotiating and structuring investments, and monitoring our investments and portfolio companies on an ongoing basis.

Advisor benefits from the scale and resources of Kayne Anderson and specifically KAPC.

The Board consists of seven directors, four of

whom are independent.

“SEC”) under the Investment Advisers Act of 1940, as amended.

In accordance with the Investment Advisers Act of 1940, as amended,

our Advisor is responsible for originating prospective investments, conducting research and due diligence investigations on potential

investments, analyzing investment opportunities, negotiating and structuring investments, and monitoring our investments and portfolio

companies on an ongoing basis.

The Advisor benefits from the scale and resources of Kayne Anderson and specifically KAPC.

Our investment objective is to generate current

income and, to a lesser extent, capital appreciation.

Nearly all of our debt investments are in middle market companies.

We define “middle

market companies” as companies that, in general, generate between $10 million and $150 million of annual earnings before interest,

taxes, depreciation and amortization, or EBITDA.

Further, we refer to companies that generate between $10 million and $50 million of annual

EBITDA as “core middle market companies” and companies that generate between $50 million and $150 million of annual EBITDA

as “upper middle market companies.” We typically adjust EBITDA for non-recurring and/or normalizing items to assess the financial

performance of our borrowers over time.

We intend to have nearly all of our debt investments in private middle market companies.

We use “private” to refer to companies that are not traded on a securities exchange and define “middle market companies”

as companies that, in general, generate between $10 million and $150 million of annual earnings before interest, taxes, depreciation and

amortization, or EBITDA.

Further, we refer to companies that generate between $10 million and $50 million of annual EBITDA as “core

middle market companies” and companies that generate between $50 million and $150 million of annual EBITDA as “upper middle

market companies.” We typically adjust EBITDA for non-recurring and/or normalizing items to assess the financial performance of

our borrowers over time.

We intend to achieve our investment objective

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Under normal market conditions, we expect at least 90% of our portfolio (including investments purchased with proceeds from

borrowings under credit facilities and issuance of senior unsecured notes) to be invested in first lien senior secured, unitranche and

borrowings under credit facilities and issuances of senior unsecured notes) to be invested in first lien senior secured, unitranche and

split-lien loans.

Our investment decisions are made on a case-by-case basis.

We expect that a majority of these debt investments will

be made in core middle market companies and will generally have stated maturities of three to six years.

We expect that the loans in which

we principally invest will be to companies that have principal business activities in the United States.

The Advisor executes on our investment objective

by (1) accessing the established loan sourcing channels developed by KAPC, which includes an extensive network of private equity firms,

other middle market lenders, financial advisors, intermediaries and management teams, (2) selecting investments within our middle market

company focus, (3) implementing KAPC’s underwriting process and (4) drawing upon its experience and resources and the broader Kayne

Anderson network.

KAPC was established in 2011 and manages (directly and through affiliates) assets under management (“AUM”)

of approximately $6.5 billion related to middle market private credit as of December 31, 2023.

We expect the remainder of our portfolio to be invested in

second-lien loans, subordinated debt or equity securities (including those purchased in conjunction with other credit investments).

expect that a majority of these debt investments will be made in core middle market companies and will generally have stated maturities

of three to six years.

We expect that the loans in which we principally invest will be to companies that are located in the United States.

We determine the location of a company as being in the United States by (i) such company being organized under the laws

of one of the states in the United States;

or (ii) during its most recent fiscal year, such company derived at least 50%

of its revenues or profits from goods produced or sold, investments made, or services performed in the United States or has at least

50% of its assets in the United States.

Advisor executes on our investment objective by (1) accessing the established loan sourcing channels developed by KAPC, which includes

an extensive network of private equity firms, other middle market lenders, financial advisors, intermediaries and management teams, (2)

selecting investments within our middle market company focus, (3) implementing KAPC’s underwriting process and (4) drawing upon

its experience and resources and the broader Kayne Anderson network.

KAPC was established in 2011 and manages (directly and through affiliates)

assets under management (“AUM”) of approximately $7.1 billion related to middle market private credit as of December 31,

Recent Developments

On February 14, 2024, we sold

7,089,771 shares of common stock for a total aggregate offering price of $118.7 million.

As of the same date, we have subscription agreements

with investors for an aggregate capital commitment of $1,046.9 million to purchase shares of common stock ($269.9 million is undrawn).

On January 15, 2025, we paid a regular dividend

of $0.40 per share to each common stockholder of record as of December 31, 2024.

The total dividend was $28.4 million and, of this amount,

$3.9 million was DRIP.

On February 5, 2025, we and KABDCF II entered

into an amendment of our Revolving Funding Facility II (as defined below).

Under the terms of the amendment, the lender increased its

commitment from $150 million to $250 million and decreased the interest rate on borrowings outstanding from 3-month term SOFR plus 2.70%

to 3-month term SOFR plus 2.25%.

Additionally, the maturity date of the facility was extended one year to December 22, 2029.

terms of the Revolving Funding Facility II remain substantially the same.

On February 13, 2025, we and KABDCF entered into

an amendment of our Revolving Funding Facility (as defined below).

Under the terms of the amendment, the lenders increased their commitments

from $600 million to $675 million and decreased the interest rate on borrowings outstanding from daily SOFR plus 2.375% - 2.50%, depending

upon the mix of loans, to daily SOFR plus 2.15%.

Additionally, the maturity date of the facility was extended to February 13, 2030.

other terms of the Revolving Funding Facility remain substantially the same.

On February 14, 2025, we reduced the size of our

Corporate Credit Facility from $475 million to $400 million.

This commitment reduction was done in conjunction with the $75 million increase

to our Revolving Funding Facility from $600 million to $675 million.

On February 19, 2025, our Board of Directors declared

a regular dividend to common stockholders in the amount of $0.40 per share.

The regular dividend of $0.40 per share will be paid on April

15, 2025 to stockholders of record as of the close of business on March 31, 2025, payable in cash or shares of our common stock pursuant

to our Dividend Reinvestment Plan, as amended.

Portfolio and Investment Activity

Our portfolio is currently comprised of a broad mix of loans, with

diversity among investment size and industry focus.

The Advisor’s team of professionals conducts due diligence on prospective investments

during the underwriting process and is involved in structuring the credit terms of substantially all of our investments.

Once an investment

has been made, our Advisor closely monitors portfolio investments and takes a proactive approach identifying and addressing sector or

company specific risks.

The Advisor seeks to maintain a regular dialogue with portfolio company management teams (as well as their owners,

the majority of whom are private equity firms, where applicable), reviews detailed operating and financial results on a regular basis

(typically monthly or quarterly) and monitors current and projected liquidity needs, in addition to other portfolio management activities.

Our portfolio is currently comprised of a broad

mix of loans, with diversity among investment size and industry focus.

The Advisor’s team of professionals conducts due diligence

on prospective investments during the underwriting process and is involved in structuring the credit terms of our private middle market

Once an investment has been made, our Advisor closely monitors that portfolio investment and takes a proactive approach

to identify and address sector or company specific risks.

The Advisor seeks to maintain a regular dialogue with portfolio company management

teams (as well as their owners, the majority of whom are private equity firms, where applicable), reviews detailed operating and financial

results on a regular basis (typically monthly or quarterly) and monitors current and projected liquidity needs, in addition to other

portfolio management activities.

There are no assurances that we will achieve our investment objectives.

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110 portfolio companies with an aggregate fair value of approximately $1,995 million, and unfunded commitments to these portfolio companies

of $148 million, and our portfolio consisted of 97.1% first lien senior secured loans, 1.6% junior debt and 1.3% equity investments.

As of December 31, 2023, our weighted average

yield of debt and income producing securities at fair value, and amortized cost was 12.5% and 12.7%, respectively, and 100% of our debt

investments were at floating rates.

As of December 31, 2023, our portfolio was invested

across 26 different industries (Global Industry Classification “GICS”, Level 3 – Industry).

The largest industries in

our portfolio as of December 31, 2023 were Trading Companies & Distributors, Food Products and Commercial Services & Supplies,

which represented, as a percentage of our portfolio of long-term investments, 15.3%, 11.5% and 9.4%, respectively, based on fair value.

We are generalist investors and the industries in which our portfolio companies operate may change over time.

of $186 million, and our portfolio consisted of 98.0% first lien senior secured loans, 0.9% subordinated debt and 1.1% equity investments.

As of December 31, 2024, we held investments

in broadly syndicated loans in 21 portfolio companies with an aggregate principal amount of $253 million.

Our investments in broadly

syndicated loans were made in anticipation of the receipt of proceeds from our final capital call and our IPO which closed during the

second quarter of 2024.

Prior to these investments, we had not held broadly syndicated loans since 2022.

Consistent with our strategy

at that time, we expect to rotate out of these investments over coming quarters to invest in private middle market loans consistent with

our principal strategy.

We have presented certain portfolio-related information below for our private middle market loans and broadly

syndicated loans separately and on a combined basis for ease of reference.

As of December 31, 2024, 100% of our debt investments

had floating interest rates.

Our weighted average yields for debt investments were as follows:

private middle market loans at fair value and amortized cost weighted

average yields were 11.1% and 11.3%, respectively

broadly syndicated loans at fair value and amortized cost weighted

average yields were 7.1% and 7.1%, respectively;

total debt investments at fair value and amortized cost weighted average yields were 10.6% and 10.7%, respectively

As of December 31, 2024, our portfolio was invested across 30 different

industries (Global Industry Classification “GICS”, Level 3 – Industry).

The largest industries in our portfolio as of

December 31, 2024 were Trading Companies & Distributors, Commercial Services & Supplies, Food Products and Health Care Providers

& Services, which represented, as a percentage of our portfolio of long-term investments, 15.1%, 11.7%, 10.0% and 8.4%, respectively,

based on fair value.

We are generalist investors and the mix of industries represented by our portfolio companies will vary over time.

As of December 31, 2024, our average position

sized based on commitment (at the portfolio company level) was $20.1 million, and the weighted average and median last twelve months

(“LTM”) EBITDA of our portfolio companies was $51.3 million and $39.5 million, respectively, based on fair value.

size based on commitment of private credit investments (at the portfolio company level) was $20.0 million.

As of December 31, 2024, the weighted average

loan-to-enterprise-value (“LTEV”) of our debt investments at the time of our initial investment was 44.0%, based on par.

represents the total par value of our debt investment relative to our estimate of the enterprise value of the underlying borrower.

As of December 31, 2023, we had one debt investment

on non-accrual status, which represented 0.4% and 0.4% of total debt investments at cost and fair value, respectively.

and median last twelve months (“LTM”) EBITDA of our portfolio companies were as follows:

private middle market loans were $58.1 million and $34.3 million, respectively, based on fair value 1

broadly syndicated loans were $2,138.3 million and $1,306.7 million, respectively, based on fair value;

total investments were $335.0 million and $39.6 million, respectively, based on fair value 1

As of December 31, 2024, the weighted average loan-to-enterprise-value

(“LTEV”) of our debt investments at the time of our initial investment was as follows:

private middle market loans was 43.0%, based on par 1

broadly syndicated loans was 34.0%, based on par

total investments was 41.8%, based on par 1 ;

LTEV represents the total par value of our debt investment relative to our estimate of the enterprise value of the underlying borrower

As of December 31, 2024, we had three debt investments on non-accrual

status, which represented 1.3% and 1.6% of total debt investments at fair value and cost, respectively.

As of December 31, 2024, our portfolio companies’

had an average leverage of 4.3x and average interest leverage of 2.7x, the calculations for which are based on the most recent quarter

end or latest available information from the portfolio companies.

As of December 31, 2023, 100% of our debt investments

included at least one financial maintenance covenant.

Listed below are our top ten portfolio companies

and industries represented as a percentage of total long-term investments as of December 31, 2023:

weighted average leverage ratios and weighted average interest coverage ratios (the calculations of which are based on the most recent

quarter end or latest available information from the portfolio companies) were as follows:

private middle market loans were 4.3x and 3.0x, respectively, based on fair value 1

broadly syndicated loans were 3.2x and 4.2x, respectively, based on fair value;

total investments were 4.2x and 3.1x, respectively, based on fair value 1

As of December 31, 2024, the percentage of our

debt investments including at least one financial maintenance covenant was as follows:

private middle market loans was 100.0% based on fair value 2

broadly syndicated loans was 0%, based on fair value;

total investments was 86.9%, based on fair value 2

Excludes investments on watch list, which represent 3.5% of the total fair value of debt investments as of December 31, 2024.

Excludes opportunistic deals, which represent 1.9% of the total fair value of debt investments as of December 31, 2024.

Listed below are our top ten portfolio companies and industries represented

as a percentage of total long-term investments as of December 31, 2024:

Portfolio Company

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Percentage of

AIDC Intermediate Co 2, LLC (Peak Technologies)

Genuine Cable Group, LLC

Silk Holdings III Corp.

Personal care products

Dusk Acquisition II Corporation (Motors & Armatures, Inc.

Trading companies & distributors

American Equipment Holdings LLC

Commercial services & supplies

IF&P Foods, LLC (FreshEdge)

Food products

BR PJK Produce, LLC (Keany)

Food products

American Soccer Company, Incorporated (SCORE)

Textiles, apparel & luxury goods

Improving Acquisition LLC

M2S Group Intermediate Holdings, Inc.

Containers & packaging

American Equipment Holdings LLC

Commercial services & supplies

Vitesse Systems Parent, LLC

Aerospace & defense

CGI Automated Manufacturing, LLC

IF&P Foods, LLC (FreshEdge)

Food products

AIDC Intermediate Co 2, LLC (Peak Technologies)

Trading companies & distributors

Fastener Distribution Holdings, LLC

Aerospace & defense

Our investment activity for the years ended

December 31, 2023 and 2022 is presented below (information presented herein is at par value unless otherwise indicated).

Genuine Cable Group, LLC

Trading companies & distributors

Improving Acquisition LLC

Our investment activity for the years ended December 31, 2024 and 2023

is presented below (information presented herein is at par value unless otherwise indicated).

For the years ended

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Private credit investments

Liquid credit investments

Preferred and common equity investments

Broadly syndicated loans

Preferred equity investments

Common equity investments

Total principal amount of investments funded

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Private credit investments

Liquid credit investments

Broadly syndicated loans

Common equity investments

Total principal amount of investments sold or repaid

Number of new investment commitments

Average new investment commitment amount

Number of new private credit investment commitments

Average new private credit investment commitment amount

Number of new broadly syndicated loan commitments

Average new broadly syndicated loan commitment amount

Weighted average maturity for new investment commitments (3)

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Percentage of new debt investment commitments at fixed rates

Weighted average interest rate of new investment commitments (4)

Weighted average spread over SOFR of new floating rate investment commitments

Weighted average interest rate on investment sold or paid down (5)

Weighted average interest rate of new private credit investment commitments (4)

Weighted average interest rate of new broadly syndicated loan commitments (4)

Weighted average interest rate on investments sold or paid down (5)

Does not include repayments on revolving loans, which may be redrawn.

Does not include restructured activity.

For common equity investments, amount represents cost.

For undrawn delayed draw term loans, the maturity date used is that of the associated term loan.

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For those investments sold or paid down in full during the year, based on the rate in effect at the time of sale or paid down.

Portfolio Internal Performance Ratings

In general, we employ a strategy designed to ensure

early detection of potential issues at underlying borrowers, including monthly financial reviews internal tracking memoranda, weekly “watch

list” discussions and other like activities.

We have designed a risk rating system to aid in our portfolio management efforts where

each investment is rated level 1-9, where Level 1 is the “least risky” and Level 9 is the “most risky.” This risk-rating

system is quantitative in nature and aggregates criteria such as LTEV, leverage levels and fixed charge coverage ratios (“FCCR”)

(each measured at point-in-time and as relates to levels at the close of the investment).

The table below sets forth our fair value of debt

investments and number of portfolio companies, including percentage of each total, that are on watch list as of December 31, 2024 and

This table excludes equity investments.

As of December 31, 2024

As of December 31, 2023

($ in millions)

We use Global Industry Classification Standards

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Trading companies & distributors

Food products

Commercial services & supplies

Food products

Health care providers & services

Containers & packaging

Aerospace & defense

Professional services

Leisure products

Textiles, apparel & luxury goods

Aerospace & defense

Personal care products

Wireless telecommunication services

Automobile components

Leisure products

Building products

Household durables

Textiles, apparel & luxury goods

Specialty retail

Pharmaceuticals

Diversified telecommunication services

Wireless telecommunication services

Health care equipment & supplies

Hotels, restaurants & leisure

Household durables

Household products

Construction materials

Biotechnology

Specialty retail

Semiconductors & semiconductor equipment

Electrical equipment

Diversified consumer services

Capital markets

Pharmaceuticals

Diversified telecommunication services

Electronic equipment, instruments & components

Asset management & custody banks

Results of Operations

The comparison for the years ended December 31, 2022 and 2021 can

be found in “ Item 7:

The comparison for the years ended December 31,

2023 and 2022 can be found in “ Item 7:

Management’s Discussion and Analysis of Financial Condition and Results of Operations ”

in our Form 10-K for the fiscal year ended December 31, 2023.

For the years ended December 31, 2023 and 2022, our total investment

income was derived from our portfolio of investments.

The following table represents the operating

results for the years ended December 31, 2023 and 2022.

For the years ended December 31, 2024 and 2023,

our total investment income was derived from our portfolio of investments.

The following table represents the operating results

for the years ended December 31, 2024 and 2023.

For the years ended

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Net change in unrealized gains (losses) on investments

Deferred income tax expense

Net increase (decrease) in net assets resulting from operations

Investment Income

Investment income for the years ended December 31, 2023 and 2022 totaled

$161.0 million and $74.8 million, respectively, and consisted primarily of interest income on our debt investments.

For the years ended

December 31, 2023 and 2022, we had $1.7 million and $0.2 million, respectively, of PIK interest included in interest income.

As of December

31, 2023, we had one debt investment on non-accrual status.

As of December 31, 2022, all debt investments were income producing, and there

were no loans on non-accrual status.

Investment income for the years ended December

31, 2024 and 2023 totaled $213.1 million and $161.0 million, respectively, and consisted primarily of interest income on our debt investments.

For the years ended December 31, 2024 and 2023, we had $2.7 million and $1.7 million, respectively, of PIK interest included in interest

As of December 31, 2024, we had three debt investments on non-accrual status.

As of December 31, 2023, we had one debt investment

on non-accrual status.

Operating expenses for the years ended December

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Total expenses

Management fee waiver (Note 3)

Incentive fee waiver (Note 3)

Net Realized Gains (Losses) on Investments

In November 2023, we completed a restructure of our investment in Arborworks

Acquisition LLC whereby the existing term loan and revolver were restructured to a new term loan and preferred and common equity.

Company recognized a $10.7 million realized loss due to the debt restructure.

During the year ended December 31, 2024, we had

realized gains of $0.5 million on our investments.

I n November 2023, we completed a restructure

of our investment in Arborworks Acquisition LLC whereby the existing term loan and revolver were restructured to a new term loan and preferred

and common equity.

The Company recognized a $10.7 million realized loss due to the debt restructure.

Net Unrealized Gains (Losses) on Investments

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Arborworks Acquisition LLC

M2S Group Intermediate Holdings, Inc.

American Soccer Company, Incorporated (SCORE)

CCFF Buyer, LLC (California Custom Fruits & Flavors, LLC)

WAM CR Acquisition, Inc.

Other portfolio companies unrealized gains

Other portfolio companies unrealized (losses)

LSL Industries, LLC (LSL Healthcare)

Gulf Pacific Holdings, LLC

Siegel Egg Co., LLC

Trademark Global LLC (1)

Sundance Holdings Group, LLC

Total Change in Unrealized Gain (Loss), net

(1) Portfolio company is non-controlled affiliated investment.

For the year ended

($ in millions)

Portfolio Company

Arborworks Acquisition LLC

BLP Buyer, Inc.

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Total Change in Unrealized Gain (Loss), net

For the year ended

($ in millions)

Portfolio Company

AIDC Intermediate Co 2, LLC (Peak Technologies)

American Soccer Company, Incorporated (SCORE)

BC CS 2, L.P.

(Cuisine Solutions)

IF&P Foods, LLC (FreshEdge)

CGI Automated Manufacturing, LLC

Other portfolio companies unrealized gains

Other portfolio companies unrealized (losses)

4 Over International, LLC

Curio Brands, LLC

PH Beauty Holdings III, Inc.

Trademark Global LLC

Arborworks Acquisition LLC

Total Change in Unrealized Gain (Loss), net

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are generated

primarily from the net proceeds of any offering of our shares of common stock, proceeds from borrowing under our credit facilities, proceeds

primarily from the net proceeds of any offering of our shares of common stock, proceeds from borrowing on our credit facilities, proceeds

from the issuance of senior unsecured notes and from cash flows from interest and fees earned from our investments and principal repayments

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leverage and could be required to sell a portion of our investments to repay some leverage when it is disadvantageous to do so.

December 31, 2023 and 2022, our asset coverage ratios were 198% and 203%.

We currently intend to target asset coverage of 200% to 180%

(which equates to a debt-to-equity ratio of 1.0x to 1.25x) but may alter this target based on market conditions.

December 31, 2024 and December 31, 2023, our asset coverage ratios were 238% and 198%, respectively.

We currently intend to target asset

coverage of 200% to 180% (which equates to a debt-to-equity ratio of 1.0x to 1.25x) but may alter this target based

on market conditions.

Over the next twelve months, we expect that cash

and cash equivalents, taken together with our undrawn capital commitments and available capacity under our credit facilities, will be

sufficient to conduct anticipated investment activities.

Beyond twelve months, we expect that our cash and liquidity needs will continue

to be met by cash generated from our ongoing operations as well as financing activities.

and cash equivalents, taken together with our available capacity under our credit facilities, will be sufficient to conduct anticipated

investment activities.

Beyond twelve months, we expect that our cash and liquidity needs will continue to be met by cash generated from

our ongoing operations as well as financing activities.

As of December 31, 2024, we had $75 million Notes

outstanding, $620.8 million borrowed under our credit facilities and cash and cash equivalents of $46.9 million (including short-term

investments).

As of February 22, 2024, we had $75 million Notes outstanding, $600.0 million borrowed under our credit facilities and cash

and cash equivalents of $29.8 million (including short-term investments).

Capital Contributions

During the years ended December 31, 2023 and 2022,

we issued and sold 5,422,524 and 16,305,034 shares of our common stock, respectively, related to capital called at an aggregate purchase

price of $90.6 million and $268.2 million, respectively.

On December 5, 2023, we completed our final close of subscription agreements

with investors.

As of February 22, 2024, we had aggregate capital commitments of $1,046.9 million, and we had undrawn capital commitments

of $269.9 million from investors ($777.0 million or 74.2% funded).

outstanding, $783 million borrowed under our credit facilities and cash and cash equivalents of $71.1 million (including short-term investments).

As of that date, we had $442 million of undrawn commitments available on our credit facilities (subject to borrowing base restrictions

and other conditions).

As of February 21, 2025, we had $75 million Notes outstanding, $882.5 million borrowed under our credit facilities

and cash and cash equivalents of $12.3 million (including short-term investments).

IPO and Capital Contributions

On May 24, 2024, we completed our IPO, issuing 6,000,000 shares

of our common stock at a public offering price of $16.63 per share.

Net of underwriting fees and offering expenses, we received net cash

proceeds, of $92.4 million.

The Company’s common stock began trading on the New York Stock Exchange (“NYSE”) under the

ticker symbol “KBDC” on May 22, 2024.

On April 2, 2024, we issued 16,232,415 shares

of our common stock related to capital called at an aggregate purchase price of $269.9 million.

Following the final close on April 2,

2024, we had called all of our capital relating to our $1,046.9 million in existing subscription agreements that we had entered into with

investors through a private offering, and we do not have any remaining undrawn capital commitments.

Senior Unsecured Notes

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Corporate Credit Facility:

As of December

31, 2023, we are party to a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total

commitment of $400 million.

The facility’s commitment termination date and the final maturity date are February 18, 2026 and February

18, 2027, respectively.

The Corporate Credit Facility also provides for a feature that allows us, under certain circumstances, to increase

the overall size of the Corporate Credit Facility to a maximum of $550 million.

The interest rate on the Corporate Credit Facility is

equal to Term SOFR (a forward-looking rate based on SOFR futures) plus an applicable spread of 2.35% per annum or an “alternate

to a senior secured revolving credit facility (the “Corporate Credit Facility”), that has a total commitment of $400 million

with a maturity date of November 22, 2029.

The facility’s commitment termination date and the final maturity date are November 22,

2028 and November 22, 2029, respectively.

The Corporate Credit Facility also provided for a feature that allows us, under certain circumstances,

to increase the overall size of the Corporate Credit Facility to a maximum of $600 million.

The interest rate on the Corporate Credit

Facility is equal to Term SOFR (a forward-looking rate based on SOFR futures) plus an applicable spread of 2.10% per annum or an “alternate

base rate” (as defined in the agreements governing the Corporate Credit Facility) plus an applicable spread of 1.00%.

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Revolving Funding Facility:

As of December

31, 2023, we and our wholly owned, special purpose financing subsidiary, Kayne Anderson BDC Financing, LLC (“KABDCF”), are

party to a senior secured revolving funding facility (the “Revolving Funding Facility”), that has a total commitment of $455

The Revolving Funding Facility is secured by all of the assets held by, and the membership interest in, KABDCF.

The end of the

reinvestment period and the stated maturity date for the Revolving Funding Facility are February 18, 2025 and February 18, 2027, respectively.

The interest rate on the Revolving Funding Facility is equal to daily SOFR plus 2.75% per annum.

KABDCF is also required to pay a commitment

fee of between 0.50% and 1.50% per annum depending on the size of the unused portion of the Revolving Funding Facility.

Revolving Funding

On December 22, 2023, we and our wholly owned, special purpose financing subsidiary, Kayne Anderson BDC Financing II,

LLC (“KABDCF II”), entered into a new senior secured revolving credit facility (the “Revolving Funding Facility II”).

The Revolving Funding Facility II has an initial commitment of $150 million which, under certain circumstances, can be increased up to

$500 million.

The Revolving Funding Facility II is secured by all of the assets held by KABDCF II and the Company has agreed that it will

not grant or allow a lien on the membership interest of KABDCF II.

The end of the reinvestment period and the stated maturity date for

the Revolving Funding Facility II are December 22, 2026, and December 22, 2028, respectively.

The interest rate on the Revolving Funding

Facility II is equal to 3-month term SOFR plus 2.70% per annum.

KABDCF II is also required to pay a commitment fee of 0.50% between December

22, 2023 and September 22, 2024 and 0.75% thereafter on the unused portion of the Revolving Funding Facility II.

Subscription Credit Agreement:

As of December

31, 2023, we are party to a senior secured revolving credit agreement that includes a capital call facility (the “Subscription Credit

The Subscription Credit Agreement permits us to elect the commitment amount each quarter to borrow up to $50 million,

subject to availability under the borrowing base which is calculated based on the unused capital commitments of the investors meeting

various eligibility requirements.

The Subscription Credit Agreement has a maximum commitment of $50 million and the interest rate under

the facility is equal to Term SOFR plus 2.25% (subject to a 0.275% floor).

We are also required to pay a commitment fee of 0.25% per annum

on the unused portion of the Subscription Credit Agreement.

We also pay an extension fee of 0.075% per quarter on the elected commitment

amount on the first day of each calendar quarter.

The Subscription Credit Agreement will expire on December 31, 2024.

wholly owned, special purpose financing subsidiary, Kayne Anderson BDC Financing, LLC (“KABDCF”), are party to a senior secured

revolving funding facility (the “Revolving Funding Facility”).

We and KABDCF have a commitment of $675 million.

The Revolving

Funding Facility is secured by all of the assets held by, and the membership interest in, KABDCF.

The end of the reinvestment period is

April 2, 2027 and the maturity date is February 13, 2030.

The interest rate on the Revolving Funding Facility is daily SOFR plus 2.15%

KABDCF is also required to pay a commitment fee

of between 0.50% and 1.50% per annum depending on the size of the unused portion of the Revolving Funding Facility.

Revolving Funding Facility II:

wholly owned, special purpose financing subsidiary, Kayne Anderson BDC Financing II, LLC (“KABDCF II”), are party to a senior

secured revolving credit facility (the “Revolving Funding Facility II”).

The Revolving Funding Facility II has an initial

commitment of $250 million which, under certain circumstances, can be increased up to $500 million.

The Revolving Funding Facility II

is secured by all of the assets held by KABDCF II and we have agreed that it will not grant or allow a lien on the membership interest

of KABDCF II.

The end of the reinvestment period and the stated maturity date for the Revolving Funding Facility II are December 22, 2026,

and December 22, 2029, respectively.

The interest rate on the Revolving Funding Facility II is equal to 3-month term SOFR plus 2.25% per

KABDCF II is also required to pay a commitment fee of 0.75%.

Contractual Obligations

A summary of our significant contractual

principal payment obligations related to the repayment of our outstanding indebtedness at December 31, 2023 is as follows:

A summary of our significant contractual principal payment obligations

related to the repayment of our outstanding indebtedness at December 31, 2024 is as follows:

Payments Due by Period ($ in millions)

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Revolving Funding Facility II

Subscription Credit Agreement

Total contractual obligations

Off-Balance Sheet Arrangements

As of December 31, 2023

and 2022, we had an aggregate $147.9 million and $149.3 million, respectively, of unfunded commitments to provide debt financing to our

portfolio companies.

Such commitments are generally subject to the satisfaction of certain financial and nonfinancial covenants and involve,

to varying degrees, elements of credit risk in excess of the amount recognized in our financial statements.

Other than contractual commitments

and other legal contingencies incurred in the normal course of our business, we do not have any other off-balance sheet financings or

As of December 31, 2024 and 2023, we had an aggregate

$186.3 million and $147.9 million, respectively, of unfunded commitments to provide debt financing to our portfolio companies.

Such commitments

are generally subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of

credit risk in excess of the amount recognized in our financial statements.

Other than contractual commitments and other legal contingencies

incurred in the normal course of our business, we do not have any other off-balance sheet financings or liabilities.

Critical Accounting Estimates

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securities purchased in conjunction with debt investments.

While we anticipate these equity securities to be issued by private companies,

we may hold equity securities that are publicly traded.

Equity securities listed on any exchange other than the NASDAQ Stock Market,

(“NASDAQ”) are valued, except as indicated below, at the last sale price on the business day as of which such value

is being determined.

If there has been no sale on such day, the securities are valued at the mean of the most recent bid and ask prices

While we anticipate these equity securities to be issued by privately held

companies, we may hold equity securities that are publicly traded.

Equity securities listed on any exchange other than the NASDAQ Stock

(“NASDAQ”) are valued, except as indicated below, at the last sale price on the business day as of which such

value is being determined.

If there has been no sale on such day, the securities are valued at the mean of the most recent bid and ask

prices on such day.

Securities admitted to trade on the NASDAQ are valued at the NASDAQ official closing price.

Equity securities traded on

more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined at

the close of the exchange representing the principal market for such securities.

Equity securities traded

on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined

at the close of the exchange representing the principal market for such securities.

Equity securities traded in the over-the-counter market,

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Valuation Designee .

The applicable investments will be valued no less frequently than quarterly by the Advisor, with new investments valued at the time

such investment was made.

The value of each Level 3 investment will be initially reviewed by the persons responsible for such portfolio

company or investment.

The Advisor will use a standardized template designed to approximate fair market value based on observable

market inputs, updated credit statistics and unobservable inputs to determine a preliminary value.

The Advisor will specify the titles

of the persons responsible for determining the fair value of Company’s investments, including by specifying the particular

functions for which they are responsible, and will reasonably segregate fair value determinations from the portfolio management of

the Company such that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on,

the fair values ascribed to portfolio investments.

The applicable investments will be valued no less frequently than quarterly by the Advisor, with new investments valued at the time such investment was made.

The value of each Level 3 investment will be initially reviewed by the persons responsible for such portfolio company or investment.

The Advisor will use a standardized template designed to approximate fair market value based on observable market inputs, updated credit statistics and unobservable inputs to determine a preliminary value.

The Advisor will specify the titles of the persons responsible for determining the fair value of the Company’s investments, including by specifying the particular functions for which they are responsible, and will reasonably segregate fair value determinations from the portfolio management of the Company such that the portfolio manager(s) may not determine, or effectively determine by exerting substantial influence on, the fair values ascribed to portfolio investments.

Valuation Firm .

Quarterly, a third-party valuation firm engaged by the Advisor reviews the valuation methodologies and calculations employed for

each of the Company’s investments that the Advisor has placed on the “watch list” and approximately 25% of the

Company’s remaining investments.

The third-party valuation firm will review and independently value all of the Level 3 investments

at least once per year, on a rolling twelve-month basis.

The quarterly report issued by the third-party valuation firm will provide

positive assurance on the fair values of the investments reviewed.

has appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted

by Rule 2a-5 under the 1940 Act.

The Audit Committee shall aid the Board in overseeing the Advisor’s fair valuation of securities

that are not publicly traded or for which current market values are not readily available.

The Audit Committee shall meet quarterly

to review the fair value determinations, processes and written reports of the Advisor as part of the Board’s oversight responsibilities.

Quarterly, a third-party valuation firm engaged by the Advisor reviews the valuation methodologies and calculations employed for each of the Company’s investments that the Advisor has placed on the “watch list” and approximately 25% of the Company’s remaining investments.

The third-party valuation firm will review and independently value all of the Level 3 investments at least once per year, on a rolling twelve-month basis.

The quarterly report issued by the third-party valuation firm will provide positive assurance on the fair values of the investments reviewed.

The Board has appointed the Advisor as the valuation designee for the Company for purposes of making determinations of fair value as permitted by Rule 2a-5 under the 1940 Act.

The Audit Committee shall aid the Board in overseeing the Advisor’s fair valuation of securities that are not publicly traded or for which current market values are not readily available.

The Audit Committee shall meet quarterly to review the fair value determinations, processes and written reports of the Advisor as part of the Board’s oversight responsibilities.

Refer to Note 5 – Fair Value – for

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Investment Advisory Agreement.

On February 5,

2021, we entered into the Investment Advisory Agreement with our Advisor.

On March 7, 2023, the Board approved a one-year renewal

of the Investment Advisory Agreement through March 15, 2024.

Our Advisor will agree to serve as our investment advisor in accordance

with the terms of our Investment Advisory Agreement.

Payments under our Investment Advisory Agreement in each reporting period will consist

of the base management fee equal to a percentage of the fair market value of investments, including, in each case, assets purchased with

borrowings under credit facilities and issuances of senior unsecured notes, but excluding cash, U.S.

government securities and commercial

paper instruments maturing within one year of purchase as well as an incentive fee based on our performance.

For services rendered under the Investment Advisory Agreement, we will

pay a base management fee quarterly in arrears to our Advisor based on the of the fair market value of our investments including, in each

case, assets purchased with borrowings under credit facilities and issuances of senior unsecured notes, but excluding cash, U.S.

securities and commercial paper instruments maturing within one year of purchase.

We will also pay an incentive fee on income and an incentive

fee on capital gains to our Advisor.

Prior to an initial public offering or listing

on an exchange of our common stock (an “exchange listing”), any incentive fees earned by the Advisor shall accrue as earned

but only become payable in cash to the Advisor upon consummation of an exchange listing.

To the extent the Company does not complete

an exchange listing, the incentive fees will be payable to the Advisor (a) upon consummation of a sale of the Company or (b) once

substantially all proceeds from a Company liquidation payable to the Company’s common stockholders have been distributed to such

stockholders.

In addition, on March 6, 2024, the Board approved an amended

and restated investment advisory agreement (the “Amended Investment Advisory Agreement”) and a fee waiver agreement (the “Fee

Waiver Agreement”) between the Company and the Advisor, which became effective upon the completion of the initial public offering

of shares of common stock on May 24, 2024 (the “IPO Date”).

On February 19, 2025, the Board approved an additional one-year

term of the Investment Advisory Agreement from March 15, 2025 to March 15, 2026.

services rendered under the Investment Advisory Agreement, we pay a base management fee quarterly in arrears to our Advisor based on

the of the fair market value of our investments including, in each case, assets purchased with borrowings under our credit facilities

and issuances of senior unsecured notes, but excluding cash, U.S.

government securities and commercial paper instruments maturing within

one year of purchase.

We also pay an incentive fee on income and an incentive fee on capital gains to our Advisor.

The Amended Investment Advisory Agreement is materially

the same as the Investment Advisory Agreement except, following the IPO Date, the base management fee is calculated at an annual rate

of 1.00% and the incentive fee on income is subject to a twelve-quarter lookback quarterly hurdle rate of 1.50% as opposed to

a single quarter measurement and is subject to an Incentive Fee Cap based on our Cumulative Pre-Incentive Fee Net Return.

This lookback

feature provides that the Advisor’s income incentive fee may be reduced if our portfolio experiences aggregate write-downs or

net capital losses during the applicable Trailing Twelve Quarters.

Pursuant to the Fee Waiver Agreement, commencing on the IPO Date, the

Advisor implemented waivers of (i) the income incentive fee for three calendar quarters commencing the quarter the initial public

offering was completed and (ii) a portion of the base management fee for one year following the completion of the initial public

Amounts waived by the Advisor pursuant to the Fee Waiver Agreement are not subject to recoupment by the Advisor.

Administration Agreement.

5, 2021, we entered into the Administration Agreement with our Advisor, which serves as our Administrator and will provide or oversee

the performance of its required administrative services and professional services rendered by others, which will include (but are not

limited to), accounting, payment of our expenses, legal, compliance, operations, technology and investor relations, preparation and filing

of its tax returns, and preparation of financial reports provided to its stockholders and filed with the SEC.

On March 7, 2023, the Board

approved a one-year renewal of the Administration Agreement through March 15, 2024.

We will reimburse the Administrator for its costs and expenses incurred

in performing its obligations under the Administration Agreement, which may include its allocable portion of office facilities, overhead,

and compensation paid to or compensatory distributions received by its officers (including our Chief Compliance Officer and Chief Financial

Officer) and its respective staff who provide services to the Company.

As the Company reimburses the Administrator for its expenses, such

costs (including the costs of sub-administrators) will be ultimately borne by common stockholders.

The Administrator does not receive

compensation from us other than reimbursement of its expenses.

The Administration Agreement may be terminated by either party with 60

days’ written notice.

On February 5,

2021, we entered into the Administration Agreement with our Advisor, which serves as our Administrator and provides or oversees the performance

of its required administrative services and professional services rendered by others, which include (but are not limited to) accounting,

payment of our expenses, legal, compliance, operations, technology and investor relations, preparation and filing of its tax returns,

and preparation of financial reports provided to its stockholders and filed with the SEC.

On February 19, 2025, the Board approved an

additional one-year term of the Administration Agreement through March 15, 2026.

We reimburse the Administrator for its costs and

expenses incurred in performing its obligations under the Administration Agreement, which may include its allocable portion of office

facilities, overhead, and compensation paid to or compensatory distributions received by its officers (including our Chief Compliance

Officer and Chief Financial Officer) and its respective staff who provide services to the Company.

As the Company reimburses the Administrator

for its expenses, such costs (including the costs of sub-administrators) will be ultimately borne by common stockholders.

The Administrator

does not receive compensation from us other than reimbursement of its expenses.

The Administration Agreement may be terminated by either

party with 60 days’ written notice.

Since the inception of the Company, the Administrator

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Administrator has not sought reimbursement of its expenses other than expenses incurred by the sub-administrators.

On March 28, 2023,

the Administrator engaged Ultimus Fund Solutions, LLC under a sub-administration agreement.

Under the terms of the sub-administration

agreement, Ultimus Fund Solutions, LLC will provide fund administration and fund accounting services.

The Company pays fees to Ultimus

Fund Solutions, LLC, which constitute reimbursable expenses under the Administration Agreement.

The Administrator may enter into additional

sub-administration agreements with third-parties to perform other administrative and professional services on behalf of the Administrator.

The Administrator has

engaged Ultimus Fund Solutions, LLC under a sub-administration agreement.

Under the terms of the sub-administration agreement, Ultimus

Fund Solutions, LLC provides fund administration and fund accounting services.

The Company pays fees to Ultimus Fund Solutions, LLC, which

constitute reimbursable expenses under the Administration Agreement.

The Administrator may enter into additional sub-administration agreements

with third parties to perform other administrative and professional services on behalf of the Administrator.

Non-Controlled, Affiliated Investment .

We hold Trademark Global LLC and TG Parent Newco LLC (Trademark Global LLC), both non-controlled, affiliated investments, as defined in

the 1940 Act.

– Notes to Consolidated Financial Statements – Note 3.

Agreements and Related Party Transactions”

for further details.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis