BCIC

• Balance Sheet and Capital Structure Improvements

  • Total par borrowings declined by $56 million during the quarter to $286 million, from $342.2 million at the end of Q1
  • Asset coverage ratio improved to 162% from 156% in the prior quarter, while gross leverage declined to 1.6x from 1.8x
  • Subsequent to quarter end, the company amended and upsized its key bank credit facility: committed capacity increased from $75 million to $150 million, borrowing spreads were reduced by 30 basis points, the reinvestment period and maturity were extended by two years, and the facility was used to retire the existing Great Lakes revolving credit facility with J.P. Morgan, consolidating secured borrowings into a single facility
  • Proceeds from $50 million in 7.5% notes due 2029 issued in March were used to redeem $40 million of 2026 notes at par during the quarter

• Portfolio and Credit Performance

  • Net asset value (NAV) per share declined to $14.49 from $15.60 in the prior quarter, with total NAV falling to $179.5 million from $193 million
  • The NAV decline was driven primarily by unrealized mark-to-market markdowns across the portfolio, concentrated in software sector investments; management states markdowns reflect sector-specific valuation pressure and market dislocation rather than fundamental credit deterioration
  • Non-accrual portfolio share declined to 5.7% of the portfolio at amortized cost from 6.2% in Q1, with the number of non-accrual portfolio companies falling from 9 to 7
  • A $10.5 million net realized loss was recorded, primarily from resolution of two legacy non-accrual positions, with losses already reflected in prior period NAV
  • 93.5% of the company's software exposure is rated low to medium AI impact, concentrated in mission-critical, vertically specialized businesses with proprietary data, embedded workflows, and high switching costs, held as senior secured positions with contracted cash flows and covenant protection

• Investment Activity

  • Marketwide transaction volumes were meaningfully lower in Q2; the company maintained a disciplined, selective approach to underwriting, focusing on opportunities with existing borrowers and smaller, complex situations where the firm can dictate terms
  • The company completed 3 new investments and 4 follow-on investments in the quarter, with total originations of $20.9 million and total repayments/sales of $34.9 million, resulting in a net repayment of $14 million
  • Over half of origination dollar volume went to follow-on investments in existing, well-performing portfolio companies
  • The overall yield on par value of new debt investments in Q2 was 13.3%, compared to a portfolio weighted average annualized yield of 12.2% as of quarter end
  • The portfolio remains highly diversified, with an average par balance of $3.2 million per investment

• Distributions

  • Total distributions of $0.30 per share were paid in Q2, consisting of a $0.27 base distribution and a $0.03 supplemental distribution from Q1 earnings
  • Monthly base distributions of $0.09 per share were declared for Q3 2026, and the board approved a Q4 2026 base distribution of $0.27 per share, payable in monthly $0.09 installments

No explicit numerical full-year guidance was provided in the call. Management's forward-looking priorities and outlook are:

• The company expects to continue net portfolio repayment to further reduce leverage from current levels, which remain slightly above the firm's long-term average target
• Management will maintain a disciplined, selective approach to new originations, prioritizing high-quality risk-adjusted returns in core target markets over volume, and expects most new opportunities to be focused on companies with low AI exposure
• When the firm is not restricted from open market repurchases, the company prioritizes buying back its own stock (which trades at a large discount to NAV) over deploying new capital into new investments, within the limits of the stock's available liquidity
• Management expects most remaining non-accrual positions will be resolved via exit rather than restructured continued investment, with proceeds used for reinvestment or further debt repayment

BCP Investment Corporation reports consolidated results only, with no separate product segments disclosed. For the second quarter ended June 30, 2026: total investment income was $15.2 million, down from $17.6 million in Q1 2026. Total operating expenses were $9.6 million, down from $10.7 million in Q1 2026. Net investment income was $5.5 million ($0.45 per share), compared to $6.9 million ($0.55 per share) in Q1 2026. Core net investment income was $3.3 million ($0.27 per share), compared to $4.1 million ($0.33 per share) in Q1 2026. As of quarter end, the debt investment portfolio (excluding CLO funds, equities, and joint ventures) was $349.7 million at fair value, spread across 71 portfolio companies in 33 industries. Non-accrual investments represented 5.7% of the portfolio at amortized cost and 3.1% at fair value. Software investments accounted for 34% of the quarter's unrealized markdowns, and 47% when including software-exposed names, and represent less than 13% of the total portfolio.

• Broad market valuation dislocation and sector-specific pressure on software investments has driven material unrealized markdowns, and continued spread widening or valuation pressure could negatively impact future NAV
  • Marketwide M&A and transaction volume remains depressed, limiting the availability of attractive new origination opportunities
  • AI disruption poses uncertain risk, particularly for non-mission-critical software and general technology businesses; unmanaged AI use by portfolio company management creates untested intellectual property and data security risks
  • Low stock liquidity limits the company's ability to repurchase undervalued shares at scale
  • The portfolio's unrealized discounts to par may not close if market dislocation persists, limiting potential upside to NAV

Q: The company has made good progress deleveraging, but leverage is still above target. Will the firm continue using cash flow and repayments to pay down borrowings going forward? / A: Management confirms current leverage is still slightly above the firm's long-term average target. Consistent with the last several quarters of net repayment, the company expects this trend to continue. The firm is being selectively prudent on new investments, and will generally use net repayments to continue reducing overall leverage.

Q: Half of this quarter's unrealized depreciation came from software investments. How can shareholders be comfortable this will not continue dragging on NAV in future quarters? / A: Software now makes up less than 13% of the total portfolio, and almost all of this exposure is in mission-critical software with structural market protections. Management notes there is a disconnect between current private market transaction pricing for software (where deals still get done at close to par) and the larger markdowns applied to the portfolio's holdings based on broader public market valuation dislocations.

Q: What is the company's cadence for capital deployment, and how do you prioritize new deal deployment versus repurchasing your stock that trades at a large discount to NAV? / A: Management expects spreads to continue widening amid broader industry redemption pressure and slowing fundraising, and the M&A market remains weak. The company prioritizes buying back stock during open trading windows over deploying new capital, as the current share price does not reflect fair value. There are strict limits to how much can be bought back due to the stock's low liquidity, so the firm balances repurchases with originating new accretive assets.

Q: How has AI risk changed your investment diligence, particularly related to unsecure data use by company management? / A: The firm actively prioritizes avoiding sectors with high AI disruption risk. All deals already include full IT diligence focused on cyber security and cyber insurance. AI-related data risk is an evolving area of focus; the firm leverages AI expertise from its parent BC Partners to evaluate this risk during underwriting, and flags improper data handling during standard IT due diligence.