Fidus Investment Corp.’s strong performance continues

fidus office evanston
The office of Fidus in Evanston(Jingnan Huo/MEDILL)

By Jingnan Huo

Evanston-based business development company Fidus Investment Corp. (NASDAQ: FDUS) late Thursday reported strong performance in the fourth quarter ended Dec. 31 reaching net investment income of $7.8 million, or 39 cents per share, rising 9.3 percent from $7.2 million, or 44 cents per share, in the year-ago quarter.

Net assets from operations per share increased to 62 from 48 cents.

The company declared a quarterly dividend of 39 cents per share.

The last quarter has been the most active quarter in terms of amount of investments since the company’s inception, said an analyst report from Bryce W. Rowe of Robert W. Baird & Co. Inc. Baird increased its 2017 net investment income per share estimate to $1.54 from $1.49.

Fidus invested $93.4 million in debt and equity securities in the quarter, including seven new portfolio companies, said the company’s press release. For the full year, Fidus’s net asset value per share rose to $15.76 from $15.17.

Fidus raised $51.2 million from a public offering of 420,000 common shares in December, according to a press release. The company intends to request Small Business Administration approval for the remaining $25 million of SBA debentures for Fidus Mezzanine Capital L.P., a fund approved by the SBA to be a small business investment company, or SBIC, in the coming quarter, and to apply for a third SBIC license in 2017, the management said in the conference call Friday.

As of Dec. 31 Fidus’s liquidity and capital resources comprised cash and cash equivalents of $57.1 million, unfunded SBA commitments of $51 million, and $50 million of availability on a line of credit, resulting in total liquidity of $158.1 million, said Shelby Sherard, chief financial officer, in the conference call.

The company is not likely to be affected by an interest rate hike of the Federal Reserve, a report from Mitchel Penn of
Janney Montgomery Scott LLC said, because Fidus’s portfolio is comprised primarily of fixed rate investments, with only one loan of $8.2 million at a viable rate, and the portfolio is entirely funded with fixed rate debt.

“Dividend income in Q4 was $1.7 million versus $0.9 million in Q3, an increase of $0.8 million primarily related to higher than usual distribution received in Q4 from equity investments in nine portfolio companies including $1.1 million in distributions of earnings and profits related to dividend recap for two of our equity investments in The Wolf Organization and Worldwide Packaging,” said Sherard in the conference call.

The company’s dividend income jumped to $3.7 million in 2016 compared with $960,000 in 2015. “I think last year was probably a very healthy year in terms of that kind of dividend income,” said CEO Edward H. Ross.

“I would not forecast that the same levels would happen this year,” Ross stated.

The only non-accrual investment was restructured and removed from non-accrual, a report from Ryan Lynch of Keefe, Bruyette & Woods Inc. said. As of Dec. 31, 2016, there were no investments in non-accrual status, Fidus’s annual report stated.

Fidus stock rose 22 cents, or 1.29 percent, to $17.24 Friday.

Photo at top: The office of Fidus in Evanston (Jingnan Huo/MEDILL)