Goldman Sachs Middle Market Lending Sees Income Jump, Eyes Merger

TL;DR

**Goldman Sachs Middle Market Lending Corp. II is growing income and merging, making it a strong play in private credit, but watch for merger execution risks.**

AI Summary

Goldman Sachs Middle Market Lending Corp. II reported a net increase in net assets from operations of $21.205 million for the six months ended June 30, 2025, up from $19.793 million in the prior year period. Total investment income rose significantly to $48.089 million for the six months ended June 30, 2025, compared to $35.148 million for the same period in 2024, primarily driven by increased interest income from non-controlled/non-affiliated investments, which reached $43.412 million. Total expenses also increased to $25.135 million from $19.367 million, with interest and other debt expenses accounting for $15.404 million. The company's total investments at fair value increased to $883.026 million as of June 30, 2025, from $856.776 million at December 31, 2024. Net asset value per share slightly increased to $19.07 from $18.72. A significant strategic development is the proposed merger with Goldman Sachs Private Credit Corp. (GSCR), as detailed in the Merger Agreement dated July 11, 2025, which introduces various risks related to its consummation and integration. The company's debt increased to $449.025 million from $425.906 million, reflecting continued leverage in its investment strategy.

Why It Matters

This 10-Q reveals Goldman Sachs Middle Market Lending Corp. II's robust income growth, primarily from its core lending activities, which is crucial for investors seeking yield in private credit. The proposed merger with Goldman Sachs Private Credit Corp. (GSCR) is a game-changer, potentially creating a larger, more diversified entity that could enhance market position and operational efficiencies, but also introduces integration risks. For employees, the merger could mean restructuring or new opportunities, while customers might see changes in service offerings or terms. In the broader market, this consolidation reflects a trend in the private credit space, signaling increased competition and potentially larger deal-making capacity, impacting other middle-market lenders.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in debt to $449.025 million as of June 30, 2025, from $425.906 million at December 31, 2024, indicating higher leverage. Additionally, the proposed merger with Goldman Sachs Private Credit Corp. introduces substantial execution risks, including potential failure to consummate the transaction, integration challenges, and diversion of management's attention, as explicitly stated in the 'Cautionary Statement Regarding Forward-Looking Statements'.

Analyst Insight

Investors should closely monitor the progress and terms of the proposed merger with Goldman Sachs Private Credit Corp. (GSCR), as its successful execution could unlock significant value through scale and synergy. Given the increased investment income and NAV per share, consider this a growth-oriented private credit play, but be mindful of the elevated debt levels and the inherent risks associated with large-scale corporate integrations.

Financial Highlights

debt To Equity

0.98

revenue

$48.089M

operating Margin

46.7%

total Assets

$912.756M

total Debt

$449.025M

net Income

$21.205M

eps

$0.88

gross Margin

N/A

cash Position

$18.047M

revenue Growth

+36.2%

Revenue Breakdown

Key Numbers

• $21.205M — Net increase in net assets from operations (For the six months ended June 30, 2025, up from $19.793M in 2024)
• $48.089M — Total investment income (For the six months ended June 30, 2025, up from $35.148M in 2024)
• $43.412M — Interest income from non-controlled/non-affiliated investments (For the six months ended June 30, 2025)
• $25.135M — Total expenses (For the six months ended June 30, 2025, up from $19.367M in 2024)
• $15.404M — Interest and other debt expenses (For the six months ended June 30, 2025)
• $883.026M — Total investments, at fair value (As of June 30, 2025, up from $856.776M at December 31, 2024)
• $19.07 — Net asset value per share (As of June 30, 2025, up from $18.72 at December 31, 2024)
• $449.025M — Debt (As of June 30, 2025, up from $425.906M at December 31, 2024)
• 23,959,372 — Common shares outstanding (As of August 12, 2025)
• $12.938M — Distributions to stockholders from distributable earnings (For the six months ended June 30, 2025)

Key Players & Entities

• Goldman Sachs Middle Market Lending Corp. II (company) — Registrant
• Goldman Sachs Private Credit Corp. (company) — Merger partner (GSCR)
• Goldman Sachs Asset Management, L.P. (company) — Investment Adviser and party to Merger Agreement
• SEC (regulator) — U.S. Securities and Exchange Commission
• Rocket Bidco, Inc. (company) — Portfolio company (dba Recochem)
• Prophix Software Inc. (company) — Portfolio company (dba Pound Bidco)
• Clearcourse Partnership Acquireco Finance Limited (company) — Portfolio company
• Frontgrade Technologies Holdings Inc. (company) — Portfolio company
• Buckeye Acquiror LLC (company) — Portfolio company (dba Superior Environmental Solutions)
• Kene Acquisition, Inc. (company) — Portfolio company (dba Entrust)

FAQ

Risk Factors

• Merger Integration Risks [high — financial]: The proposed merger with Goldman Sachs Private Credit Corp. (GSCR) introduces significant risks related to its consummation and successful integration. Failure to complete the merger or achieve anticipated synergies could negatively impact the company's financial performance and strategic objectives.
• Leverage and Debt Management [high — financial]: The company's debt increased to $449.025 million as of June 30, 2025, from $425.906 million at December 31, 2024. Continued reliance on leverage amplifies financial risk, particularly in volatile market conditions, potentially impacting profitability and the ability to service debt obligations.
• Interest Rate Sensitivity [medium — market]: A substantial portion of investment income is derived from interest. Fluctuations in interest rates can directly impact the company's net investment income and the fair value of its investments, posing a risk to earnings and asset values.
• Investment Performance [medium — operational]: The company's financial results are heavily dependent on the performance of its investment portfolio. Underperformance or significant write-downs in investments could lead to reduced income, capital losses, and a decline in net asset value.
• Regulatory Changes [low — regulatory]: As a financial entity, the company is subject to evolving regulatory frameworks. Changes in regulations could impact its investment strategies, operational costs, and overall profitability.

Industry Context

The middle market lending sector is characterized by providing debt financing to medium-sized companies. This segment often offers attractive risk-adjusted returns but can be sensitive to economic cycles and interest rate movements. Competition is significant, with various direct lenders, BDCs, and traditional financial institutions vying for deal flow.

Regulatory Implications

As a regulated investment company, Goldman Sachs Middle Market Lending Corp. II is subject to oversight by the SEC. Compliance with investment company regulations, capital requirements, and reporting standards is crucial. The proposed merger may also trigger specific regulatory reviews and approvals.

What Investors Should Do

1. Monitor merger progress and integration risks
2. Analyze expense structure and leverage levels
3. Evaluate investment portfolio performance

Key Dates

• 2025-06-30: Six months ended June 30, 2025 financial results reported — Demonstrates increased investment income and net asset growth, but also rising expenses and debt.
• 2025-07-11: Merger Agreement with Goldman Sachs Private Credit Corp. (GSCR) dated — Introduces significant strategic direction and associated integration and consummation risks for investors.
• 2025-12-31: Previous fiscal year-end financial position — Provides a baseline for comparison of current period performance and balance sheet changes.

Glossary

Payment-in-kind income

Interest income that is not paid in cash but is instead added to the principal balance of a loan, increasing the amount owed. (Contributes to investment income, particularly from non-controlled/non-affiliated investments, and reflects the nature of some debt instruments.)

Distributable earnings (loss)

The cumulative net income or loss of the company that is available for distribution to shareholders. (Indicates the company's ability to pay dividends or distributions to its common stockholders.)

Net asset value per share

The value of a company's assets minus its liabilities, divided by the number of outstanding shares. (A key metric for investors to assess the underlying value of their investment in the company.)

Non-controlled/non-affiliated investments

Investments in entities where the company does not have significant influence or control, and which are not related parties. (Represents the largest portion of the company's investment portfolio and a primary driver of its investment income.)

Year-Over-Year Comparison

For the six months ended June 30, 2025, Goldman Sachs Middle Market Lending Corp. II reported a net increase in net assets from operations of $21.205 million, an increase from $19.793 million in the prior year period. Total investment income saw a substantial rise to $48.089 million, up from $35.148 million, driven by higher interest income from non-controlled/non-affiliated investments. However, total expenses also grew to $25.135 million from $19.367 million, with interest and other debt expenses being a significant contributor. The company's total investments and debt have both increased, indicating continued growth and leverage in its strategy.

Key Financial Figures

• $0.001 — he registrant's common stock, par value $0.001 per share, outstanding as of August 12,

Filing Documents

• ck0001865174-20250630.htm (10-Q) — 8668KB
• ck0001865174-ex31_1.htm (EX-31.1) — 26KB
• ck0001865174-ex31_2.htm (EX-31.2) — 26KB
• ck0001865174-ex31_3.htm (EX-31.3) — 27KB
• ck0001865174-ex32_1.htm (EX-32.1) — 7KB
• ck0001865174-ex32_2.htm (EX-32.2) — 7KB
• ck0001865174-ex32_3.htm (EX-32.3) — 7KB
• 0000950170-25-107356.txt ( ) — 27559KB
• ck0001865174-20250630.xsd (EX-101.SCH) — 1595KB
• ck0001865174-20250630_htm.xml (XML) — 8563KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) 5 Consolidated Statements of Assets and Liabilities 5 Consolidated Statements of Operations 6 Consolidated Statements of Changes in Net Assets 7 Consolidated Statement of Cash Flows 8 Consolidated Schedules of Investments 9 Notes to the Consolidated Financial Statements 25 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 44 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 56 ITEM 4.

Controls and Procedures

Controls and Procedures 56 PART II OTHER INFORMATION 57 ITEM 1.

Legal Proceedings

Legal Proceedings 57 ITEM 1A.

Risk Factors

Risk Factors 57 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 59 ITEM 3. Defaults Upon Senior Securities 59 ITEM 4. Mine Safety Disclosures 59 ITEM 5. Other Information 59 ITEM 6. Exhibits 60

SIGNATURES

SIGNATURES 61 2 Table of Contents CAUTIONARY STATEMENT REGARDIN 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 this quarterly report on Form 10-Q and 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

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Goldman Sachs Middle Market Lending Corp. II Consolidated Statements of A ssets and Liabilities (in thousands, except share and per share amounts) June 30, December 31, 2025 (Unaudited) 2024 Assets Investments, at fair value Non-controlled/non-affiliated investments (cost of $ 852,792 and $ 831,560 ) $ 856,846 $ 832,591 Non-controlled affiliated investments (cost of $ 29,224 and $ 25,292 ) 26,180 24,185 Total investments, at fair value (cost of $ 882,016 and $ 856,852 ) $ 883,026 $ 856,776 Investments in affiliated money market fund (cost of $ 2,214 and $ 9,506 ) 2,214 9,506 Cash 18,047 15,673 Interest and dividends receivable 4,716 5,981 Deferred financing costs 4,598 5,239 Other assets 155 132 Total assets $ 912,756 $ 893,307 Liabilities Debt $ 449,025 $ 425,906 Interest and other debt expenses payable 2,054 2,224 Management fees payable 1,679 1,606 Incentive fees based on income payable 2,040 2,223 Distribution payable — 11,740 Accrued expenses and other liabilities 1,098 1,015 Total liabilities $ 455,896 $ 444,714 Commitments and contingencies (Note 7) Net assets Preferred stock, par value $ 0.001 per share ( 1,000,000 shares authorized and no shares issued and outstanding) $ — $ — Common stock, par value $ 0.001 per share ( 200,000,000 shares authorized, 23,959,371 and 23,959,371 shares issued and outstanding as of June 30, 2025 and December 31, 2024) 24 24 Paid-in capital in excess of par 447,964 447,964 Distributable earnings (loss) 8,872 605 Total net assets $ 456,860 $ 448,593 Total liabilities and net assets $ 912,756 $ 893,307 Net asset value per share $ 19.07 $ 18.72 The accompanying notes are an integral part of these unaudited consolidated financial statements. 5 Table of Contents Goldman Sachs Middle Market Lending Corp.

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