26North BDC's Investment Income Soars 348% Amid Asset Growth

TL;DR

**26North BDC is aggressively expanding its portfolio with massive debt, signaling strong growth but also elevated risk for investors.**

AI Summary

26North BDC, Inc. reported a significant increase in net investment income for the nine months ended September 30, 2025, reaching $32,741 thousand, up from $7,313 thousand in the same period of 2024. Total investment income surged to $78,590 thousand for the nine months ended September 30, 2025, compared to $19,600 thousand in the prior year, driven primarily by a substantial increase in interest income from non-controlled/non-affiliated investments to $75,813 thousand. The company's total assets grew to $1,278,208 thousand as of September 30, 2025, from $687,987 thousand at December 31, 2024, largely due to an increase in non-controlled/non-affiliated investments at fair value to $1,236,829 thousand. Debt also increased significantly to $662,890 thousand from $328,390 thousand, reflecting increased leverage to finance investments. Net assets increased to $602,189 thousand from $352,123 thousand over the same period. The net asset value per share remained relatively stable at $25.30 as of September 30, 2025, compared to $25.31 at December 31, 2024. The company issued 9,330,713 shares, raising $235,408 thousand in additional paid-in capital during the nine months ended September 30, 2025.

Why It Matters

This filing reveals 26North BDC's aggressive growth strategy, significantly expanding its investment portfolio and leveraging debt to do so. For investors, the substantial increase in net investment income and total assets indicates strong operational performance and potential for future distributions, though the increased debt also introduces higher risk. Employees benefit from a growing company, while customers (portfolio companies) see continued access to capital. The broader market gains insight into the health of the private credit sector, with 26North BDC competing for deals and influencing market rates.

Risk Assessment

Risk Level: medium — The company's debt increased from $328,390 thousand at December 31, 2024, to $662,890 thousand at September 30, 2025, representing a 101.8% increase. This significant reliance on borrowed money to finance investments, as highlighted in the 'Cautionary Statement Regarding Forward-Looking Statements,' increases sensitivity to interest rate changes and potential liquidity issues if investment performance falters.

Analyst Insight

Investors should closely monitor 26North BDC's debt-to-equity ratio and the performance of its underlying investments. While the growth in investment income is positive, the rapid increase in leverage warrants caution; consider if the increased returns adequately compensate for the heightened financial risk.

Financial Highlights

debt To Equity

1.10

revenue

$78,590,000

operating Margin

N/A

total Assets

$1,278,208,000

total Debt

$662,890,000

net Income

$32,741,000

eps

$25.30

gross Margin

N/A

cash Position

$N/A

revenue Growth

+301%

Revenue Breakdown

Key Numbers

• $32.7M — Net Investment Income (Increased from $7.3M in 2024 to $32.7M in 2025, a 348% rise.)
• $78.6M — Total Investment Income (Increased from $19.6M in 2024 to $78.6M in 2025, a 301% rise.)
• $1.28B — Total Assets (Increased from $688M at Dec 31, 2024, to $1.28B at Sep 30, 2025, a 86% increase.)
• $662.9M — Total Debt (Increased from $328.4M at Dec 31, 2024, to $662.9M at Sep 30, 2025, a 101.8% increase.)
• $602.2M — Total Net Assets (Increased from $352.1M at Dec 31, 2024, to $602.2M at Sep 30, 2025, a 71% increase.)
• $25.30 — Net Asset Value Per Share (Remained stable at $25.30 as of Sep 30, 2025, compared to $25.31 at Dec 31, 2024.)
• 9.3M — Shares Issued (Resulted in $235.4M in additional paid-in capital during the nine months ended Sep 30, 2025.)

Key Players & Entities

• 26North BDC, Inc. (company) — Registrant
• $32,741 thousand (dollar_amount) — Net investment income for nine months ended September 30, 2025
• $7,313 thousand (dollar_amount) — Net investment income for nine months ended September 30, 2024
• $78,590 thousand (dollar_amount) — Total investment income for nine months ended September 30, 2025
• $19,600 thousand (dollar_amount) — Total investment income for nine months ended September 30, 2024
• $1,278,208 thousand (dollar_amount) — Total Assets as of September 30, 2025
• $687,987 thousand (dollar_amount) — Total Assets as of December 31, 2024
• $662,890 thousand (dollar_amount) — Debt as of September 30, 2025
• $328,390 thousand (dollar_amount) — Debt as of December 31, 2024
• 23,801,573 (dollar_amount) — Shares of Common Stock outstanding as of November 7, 2025

FAQ

Risk Factors

• Increased Leverage [high — financial]: The company significantly increased its total debt to $662,890,000 as of September 30, 2025, from $328,390,000 at December 31, 2024. This 101.8% increase in debt was used to finance a substantial growth in investments, indicating higher financial risk.
• Investment Portfolio Volatility [medium — market]: The fair value of non-controlled/non-affiliated investments grew to $1,236,829,000 as of September 30, 2025. Fluctuations in the fair value of these investments, which constitute the vast majority of total assets ($1,278,208,000), can significantly impact net asset value and financial performance.
• BDC Regulatory Compliance [medium — regulatory]: As a Business Development Company (BDC), 26North is subject to specific regulatory requirements, including asset coverage ratios and dividend distribution rules. Non-compliance could lead to penalties or operational restrictions.
• Investment Origination and Management [medium — operational]: The significant increase in investment assets requires robust origination and management capabilities. Any deficiencies in due diligence, underwriting, or ongoing portfolio management could lead to credit losses and impact profitability.

Industry Context

26North BDC operates within the Business Development Company (BDC) sector, which provides financing to small and medium-sized businesses. The industry is characterized by its role in providing capital that may not be readily available from traditional lenders. BDCs often invest in a mix of debt and equity instruments, seeking to generate income through interest payments and capital appreciation.

Regulatory Implications

As a BDC, 26North is subject to regulations under the Investment Company Act of 1940, which impacts its leverage, asset coverage, and distribution requirements. Compliance is crucial to avoid penalties and maintain operational flexibility. The significant growth in assets and debt may bring increased scrutiny regarding these regulatory ratios.

What Investors Should Do

1. Monitor leverage ratios closely.
2. Analyze the performance of non-controlled/non-affiliated investments.
3. Evaluate the sustainability of investment income growth.
4. Assess the impact of share issuances on NAV per share.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported significant growth in net investment income ($32.7M vs $7.3M) and total assets ($1.28B vs $688M), driven by increased interest income and investments.
• 2025-09-30: Net Asset Value Per Share — Remained stable at $25.30, indicating that despite asset growth and share issuance, the per-share value was maintained.
• 2024-12-31: Total Assets — Stood at $687,987,000 prior to the significant growth observed in the first nine months of 2025.
• 2024-12-31: Total Debt — Was $328,390,000, serving as the baseline before the substantial increase in leverage during 2025.

Glossary

Net Investment Income

The income generated from a company's core business operations after deducting operating expenses. For a BDC, this typically includes interest income and dividends minus operating costs. (A key profitability metric for BDCs, indicating the income available to shareholders after expenses.)

Non-controlled/Non-affiliated Investments

Investments in companies where 26North does not have a controlling interest or affiliation. These are typically debt or equity investments in other businesses. (The primary asset class driving the company's revenue and asset growth, as highlighted by the substantial increase in interest income from these investments.)

Net Asset Value Per Share (NAV per share)

The value of a company's net assets (assets minus liabilities) divided by the number of outstanding shares. For a BDC, it represents the per-share book value. (Indicates the underlying value of the company's investments on a per-share basis. Stability suggests effective management of asset values relative to share count.)

Additional Paid-in Capital

The amount of capital received from investors in exchange for stock, above the stock's par value. It reflects capital raised through equity offerings. (Shows the capital raised by the company through issuing new shares, which was used to fund investment growth.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, 26North BDC, Inc. has experienced a dramatic increase in financial activity. Total investment income surged by 301% to $78.6 million, primarily driven by a substantial rise in interest income from non-controlled/non-affiliated investments. This fueled a 348% increase in net investment income to $32.7 million. Concurrently, the company significantly expanded its balance sheet, with total assets growing by 86% to $1.28 billion, financed by a 101.8% increase in total debt to $662.9 million. Despite this aggressive growth and leverage, net asset value per share remained remarkably stable, indicating effective capital deployment and management.

Key Financial Figures

• $0.001 — ct: Shares of Common Stock, par value $0.001 per share (Title of Class) Indicate

Filing Documents

• ck0001950976-20250930.htm (10-Q) — 6623KB
• ck0001950976-ex31_1.htm (EX-31.1) — 18KB
• ck0001950976-ex31_2.htm (EX-31.2) — 20KB
• ck0001950976-ex32_1.htm (EX-32.1) — 13KB
• 0001193125-25-272386.txt ( ) — 21323KB
• ck0001950976-20250930.xsd (EX-101.SCH) — 1238KB
• ck0001950976-20250930_htm.xml (XML) — 6232KB

Financial Information

Part I. Financial Information Item 1.

Financial Statements

Financial Statements 3 Consolidated Statements of Assets and Liabilities as of September 30, 2025 (Unaudited) and December 31, 2024 3 Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (Unaudited) 4 Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2025 and 2024 (Unaudited) 5 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (Unaudited) 7 Consolidated Schedules of Investments as of September 30, 2025 (Unaudited) and December 31, 2024 8 Notes to the Consolidated Financial Statements (Unaudited) 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 39 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 54 Item 4.

Controls and Procedures

Controls and Procedures 55

Other Information

Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 56 Item 1A.

Risk Factors

Risk Factors 56 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56 Item 3. Defaults Upon Senior Securities 56 Item 4. Mine Safety Disclosures 56 Item 5. Other Information 56 Item 6. Exhibits 57

SIGNATURES

SIGNATURES 58 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (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 (the "Annual Report") and in this Report, 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. our future operating results; our ability to source investment opportunities; our inability to control the business operations of our portfolio companies, and potential inability to dispose of our in

F INANCIAL INFORMATION

PART I. F INANCIAL INFORMATION ITEM1. FINAN CIAL STATEMENTS 26North BDC, Inc. Consolidated Sta tements of Assets and Liabilities (in thousands, except share and per share amounts) September 30, 2025 (Unaudited) December 31, 2024 Assets Non-controlled/non-affiliated investments at fair value (amortized cost $ 1,236,252 and $ 665,676 , respectively) $ 1,236,829 $ 666,141 Cash and cash equivalents 26,319 12,923 Interest and other income receivable from non-controlled/non-affiliated investments 7,468 3,509 Deferred financing costs 5,644 4,891 Subscriptions receivable 1,214 55 Dividend receivable from non-controlled/non-affiliated investments 544 — Prepaid assets 190 468 Total Assets $ 1,278,208 $ 687,987 Liabilities Debt 662,890 328,390 Interest payable 6,392 3,667 Management fees payable 2,123 1,107 Other liabilities and accrued expenses 1,344 846 Investment income incentive fees payable 1,338 733 Expense reimbursement payable 1,200 558 Accrued administrative services expense payable 674 516 Capital gains incentive fees payable 58 47 Total Liabilities $ 676,019 $ 335,864 Commitments and contingencies (Note 7) Net Assets Common stock, $ 0.001 par value ( 1,000,000,000 shares authorized, 23,801,573 and 13,909,942 shares issued and outstanding, respectively) $ 24 $ 14 Additional paid-in capital 597,022 347,648 Distributable earnings (loss) 5,143 4,461 Total Net Assets $ 602,189 $ 352,123 Total Liabilities and Net Assets $ 1,278,208 $ 687,987 Net asset value per share $ 25.30 $ 25.31 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents 26North BDC, Inc. Consolidated St atements of Operations (in thousands, except share and per share amounts) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30,

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