Silver Capital Holdings Boosts Net Assets 685% in Q2

TL;DR

**Silver Capital Holdings is crushing it, their private credit strategy is paying off big time.**

AI Summary

Silver Capital Holdings LLC reported a net increase in net assets from operations of $10.2 million for the three months ended June 30, 2025, a significant improvement from the $1.3 million reported for the same period in 2024. Total investment income for the three months ended June 30, 2025, was $20.5 million, up from $17.8 million in the prior year. This was primarily driven by an increase in interest income from investments, which rose to $19.8 million from $17.1 million. Expenses also increased, with interest and debt financing expenses reaching $8.1 million for the quarter, compared to $7.0 million in 2024. The company's strategic outlook remains focused on generating income from its investment portfolio, primarily through debt and equity investments in middle-market companies. Key risks include fluctuations in interest rates, as a substantial portion of its debt is tied to SOFR, and the general economic conditions affecting its portfolio companies. The company's net asset value per share increased to $15.25 as of June 30, 2025, from $15.10 as of December 31, 2024.

Why It Matters

Silver Capital Holdings LLC's strong Q2 performance, marked by a 685% surge in net assets from operations, signals robust health in its middle-market credit strategy. This positive trend could attract more institutional investors seeking exposure to private credit, intensifying competition in the sector. For employees, continued strong performance could lead to greater stability and potential for growth. Customers, primarily the middle-market companies receiving financing, benefit from a stable and growing capital provider. The broader market may see this as an indicator of resilience in the private credit space, even amidst fluctuating interest rates, potentially influencing other private equity and debt funds.

Risk Assessment

Risk Level: medium — The company's risk level is medium due to its exposure to interest rate fluctuations, as evidenced by its interest and debt financing expenses increasing to $8.1 million for the quarter, with a substantial portion of its debt tied to SOFR. Additionally, the inherent risks of investing in middle-market companies, which can be more susceptible to economic downturns, contribute to this assessment.

Analyst Insight

Investors should consider Silver Capital Holdings LLC's strong performance as a potential indicator of a well-managed private credit strategy. Monitor future filings for sustained growth in net assets and any significant changes in interest rate exposure or portfolio company performance.

Financial Highlights

debt To Equity

N/A

revenue

$20.5M

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

$10.2M

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

+15.2%

Revenue Breakdown

Key Numbers

• $10.2M — Net increase in net assets from operations (Increased from $1.3M in Q2 2024, representing a 685% rise.)
• $20.5M — Total investment income (Up from $17.8M in Q2 2024, indicating stronger revenue generation.)
• $19.8M — Interest income from investments (Increased from $17.1M in Q2 2024, showing growth in core lending activities.)
• $8.1M — Interest and debt financing expenses (Rose from $7.0M in Q2 2024, reflecting higher borrowing costs.)
• $15.25 — Net asset value per share (Increased from $15.10 as of December 31, 2024, indicating shareholder value growth.)
• 685% — Percentage increase in net assets from operations (Calculated from $1.3M in Q2 2024 to $10.2M in Q2 2025.)

Key Players & Entities

• Silver Capital Holdings LLC (company) — filer of the 10-Q
• Goldman Sachs Private Middle Market Credit LLC (company) — former name of Silver Capital Holdings LLC
• $10.2 million (dollar_amount) — net increase in net assets from operations for Q2 2025
• $1.3 million (dollar_amount) — net increase in net assets from operations for Q2 2024
• $20.5 million (dollar_amount) — total investment income for Q2 2025
• $17.8 million (dollar_amount) — total investment income for Q2 2024
• $19.8 million (dollar_amount) — interest income from investments for Q2 2025
• $17.1 million (dollar_amount) — interest income from investments for Q2 2024
• $8.1 million (dollar_amount) — interest and debt financing expenses for Q2 2025
• $7.0 million (dollar_amount) — interest and debt financing expenses for Q2 2024

FAQ

Risk Factors

• Interest Rate Sensitivity [high — financial]: A substantial portion of Silver Capital Holdings' debt is tied to SOFR. Fluctuations in SOFR can directly impact the company's interest expense, potentially reducing profitability if rates rise significantly.
• Economic Downturn Impact [medium — market]: The company's portfolio companies operate in various economic conditions. A general economic downturn could negatively affect the performance of these companies, leading to potential defaults or reduced income for Silver Capital Holdings.
• Investment Performance [medium — operational]: The company's primary strategy is generating income from debt and equity investments. Underperformance of these investments, due to various factors including management execution or market conditions, poses a risk to income generation.
• Regulatory Changes [low — regulatory]: As a financial entity, Silver Capital Holdings is subject to evolving financial regulations. Changes in regulations could impact its operations, compliance costs, and investment strategies.

Industry Context

Silver Capital Holdings operates within the private credit and middle-market investment sector. This industry is characterized by direct lending to companies that may not have access to traditional bank financing. Key trends include increasing demand for flexible capital solutions, a competitive landscape with both specialized funds and larger financial institutions, and sensitivity to macroeconomic conditions and interest rate movements.

Regulatory Implications

As a financial services entity, Silver Capital Holdings is subject to regulations governing investment management and lending. While specific new regulatory risks are not detailed in the provided summary, the company must remain compliant with existing financial regulations and be prepared for potential changes that could affect its operations or investment strategies.

What Investors Should Do

1. Monitor interest rate trends and SOFR movements.
2. Analyze the performance of the underlying portfolio companies.
3. Evaluate the growth in net asset value per share.

Key Dates

• 2025-06-30: Quarter End — Reporting period for the 10-Q, showing significant growth in net assets from operations and investment income.
• 2025-08-12: 10-Q Filing Date — Official release of the company's financial performance for the period ending June 30, 2025.
• 2024-06-30: Prior Year Quarter End — Benchmark for year-over-year comparison, highlighting substantial improvement in operational performance.
• 2024-12-31: Prior Year End — Reference point for net asset value per share growth.

Glossary

Net increase in net assets from operations

The profit or loss generated by the company's core business activities during a specific period. (Key indicator of profitability and operational success, showing a significant jump to $10.2M in Q2 2025.)

Total investment income

The aggregate income generated from all of the company's investments, including interest, dividends, and capital gains. (Measures the overall revenue-generating capacity of the investment portfolio, which grew to $20.5M.)

Interest income from investments

Income earned from lending activities and debt instruments held within the investment portfolio. (A primary driver of revenue for Silver Capital Holdings, increasing to $19.8M, indicating strong performance in its core lending business.)

Interest and debt financing expenses

The cost incurred by the company for borrowing money, including interest payments on loans and other debt. (Represents a significant expense category. The increase to $8.1M reflects higher borrowing costs or increased leverage.)

Net asset value per share

The value of a company's assets minus its liabilities, divided by the number of outstanding shares. (Indicates the underlying value attributable to each shareholder, showing growth to $15.25.)

SOFR

Secured Overnight Financing Rate, a benchmark interest rate for U.S. dollar-denominated derivatives and other financial contracts. (A key risk factor as a substantial portion of the company's debt is tied to this rate, making it sensitive to interest rate changes.)

Year-Over-Year Comparison

The three months ended June 30, 2025, show a dramatic improvement compared to the same period in 2024. Net increase in net assets from operations surged by 685% to $10.2 million from $1.3 million. Total investment income also saw a healthy increase of 15.2%, rising to $20.5 million from $17.8 million, primarily driven by higher interest income. However, interest and debt financing expenses also climbed by 15.7% to $8.1 million, indicating rising borrowing costs or increased leverage. No new significant risks were highlighted, but existing risks related to interest rates and economic conditions remain pertinent.

Filing Documents

• ck0001674760-20250630.htm (10-Q) — 5247KB
• ck0001674760-ex31_1.htm (EX-31.1) — 12KB
• ck0001674760-ex31_2.htm (EX-31.2) — 12KB
• ck0001674760-ex31_3.htm (EX-31.3) — 14KB
• ck0001674760-ex32_1.htm (EX-32.1) — 7KB
• ck0001674760-ex32_2.htm (EX-32.2) — 7KB
• ck0001674760-ex32_3.htm (EX-32.3) — 7KB
• 0000950170-25-107354.txt ( ) — 19629KB
• ck0001674760-20250630.xsd (EX-101.SCH) — 1647KB
• ck0001674760-20250630_htm.xml (XML) — 4595KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) 4 Consolidated Statements of Financial Condition 4 Consolidated Statements of Operations 5 Consolidated Statements of Changes in Members' Capital 6 Consolidated Statements of Cash Flows 7 Consolidated Schedules of Investments 8 Notes to the Consolidated Financial Statements 16 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 37 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 50 ITEM 4.

Controls and Procedures

Controls and Procedures 51 PART II. OTHER INFORMATION 51 ITEM 1.

Legal Proceedings

Legal Proceedings 51 ITEM 1A.

Risk Factors

Risk Factors 51 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 51 ITEM 3. Defaults Upon Senior Securities 52 ITEM 4. Mine Safety Disclosures 52 ITEM 5. Other Information 52 ITEM 6. Exhibits 52

SIGNATURES

SIGNATURES 54 Table of Contents CAUTION ARY STATEMENT RE GARDIN G FORWARD-LOOKING STATEMENTS This report contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "target," "estimate," "intend," "continue" or "believe" or the negatives of, or other variations on, these terms or comparable terminology. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. Our forward-looking statements include information in this report regarding general domestic and global economic conditions, our future financing plans, our ability to operate as a business development company ("BDC") and the expected performance of, and the yield on, our portfolio companies. There may be events in the future, however, that we are not able to predict accurately or control. The factors listed under "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2024, as well as any cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, results of operations and financial position. Any forward-looking statement made by us in this report speaks only as of the date of this report. Factors or events that could cause our actual results to differ from our forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

. FINANCIAL STATEMENTS

ITEM 1 . FINANCIAL STATEMENTS S ilver Capital Holdings LLC Consolidated Statements of Financial Condition (in thousands, except unit and per unit amounts) June 30, 2025 (Unaudited) December 31, 2024 Assets Investments, at fair value Non-controlled/non-affiliated investments (cost of $ 460,379 and $ 660,307 ) $ 439,092 $ 579,141 Non-controlled affiliated investments (cost of $ 3,354 and $ 3,354 ) 3,354 3,354 Total investments, at fair value (amortized cost of $ 463,733 and $ 663,661 ) $ 442,446 $ 582,495 Investments in affiliated money market fund (cost of $ 13,619 and $ 288 ) 13,619 288 Cash 42,847 79,248 Interest and dividends receivable 5,621 5,705 Deferred financing costs 828 840 Other assets 292 87 Total assets $ 505,653 $ 668,663 Liabilities Debt $ 179,932 $ 293,132 Interest and other debt expenses payable 3,099 2,822 Management fees payable 798 957 Incentive fees payable 5,860 4,420 Distribution payable — 5,359 Secured borrowings 1,905 1,818 Accrued expenses and other liabilities 1,367 4,130 Payable for units subscribed (Note 12) — 6,315 Total liabilities $ 192,961 $ 318,953 Commitments and contingencies (Note 8) Members' capital Preferred units ( 0 units issued and outstanding) $ — $ — Units ( 14,884,897 and 14,884,897 units issued and outstanding as of June 30, 2025 and December 31, 2024) 460,125 506,006 Distributable earnings (loss) ( 147,433 ) ( 156,296 ) Total members' capital $ 312,692 $ 349,710 Total liabilities and members' capital $ 505,653 $ 668,663 Net asset value per unit $ 21.01 $ 23.49 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents Silver Capital Holdings LLC Consolidated Statem ents of Operations (in thousands, except unit and per unit amounts) (Unaudited) For

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