Item 1A. Risk Factors
Item 1A. Risk Factors
In addition to the risk factor below and other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2022, which could materially affect our business, financial condition and/or operating results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
The Company’s investment adviser sources originated loans from MidCap FinCo Designated Activity Company (“MidCap Financial”). MidCap Financial’s success in originating loans depends to a significant extent on the services provided by its personnel and the personnel of its manager. If MidCap Financial and its manager are unsuccessful in originating loans, the Company’s ability to reach its investment objectives may be adversely affected.
MidCap Financial is discretionarily managed by Apollo Capital Management, L.P., an affiliate of our Investment Advisor. As a result, MidCap Financial is currently under common control with us. Additionally, MidCap Financial originates a significant amount of senior secured first lien loans in which we participate pursuant to our co-investment order. Our Investment Adviser reviews, evaluates and negotiates, as applicable, each such potential investment to ensure it is appropriate for us. While Apollo’s investment management relationship with MidCap Financial currently allows us to access MidCap Financial’ s origination volume, Apollo and MidCap Financial are distinct and separate legal entities with different businesses and interests. Thus, if MidCap Financial were to terminate its investment management agreement with Apollo, we may no longer have the same access to MidCap Financial’s origination volume.
MidCap Financial is not an investment adviser, subadviser or fiduciary to us or to our Investment Adviser. MidCap Financial is not obligated to take into account our interests (or those of other potential participants in its originations) when originating loans across its platform. Various factors, including its ability to retain and attract personnel with origination experience, relationships and expertise, will affect MidCap Financial’s business. There can be no guarantee that MidCap Financial will continue to originate loans at its historic levels of quality or volume.
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