As a follow up to yesterday’s post on AINV, I continued looking deeper into this as a potential little addition to our publicly traded levered debt companies that chunk out cash. Two things to note, first the current CEO of AINV is a co-founder and prior CEO of MidCap, so the association between the two is even closer than I thought prior. He took the CEO spot in 2016, when AINV received approval from the SEC to co-invest in affiliated investments (meaning invest in Apollo deals), and the prior CEO parted ways. Second, in going through past documents, the company used to post metrics in its progress from “trash fire” to a halfway respectable loan vehicle:
Based on the most recent earnings call, the management team has made it clear that core assets will only comprise of corporate lending going forward after aviation assets are liquidated (they are grouped in “core” above). For the most recent quarter, new corporate lending activity comprised of:
- 100% first lien
- 100% floating rate
- 98% co-invested with MidCap
- ~$7m average commitment size
This is roughly representative of what the AINV structure should look like within the next few years, a long way from the Dec-16 portfolio makeup above.
While AINV is far from the moonshot most stock investors aspire for, I think it may be a nice little loan pile to tuck into a liquid levered debt allocation if one’s portfolio strategy aligns. That said, an owner must be eyes wide open that these sorts of vehicles may materially detach from NAV during market dislocations. That’s all on this.
Disclosure: We don’t own shares of AINV at time of writing, this is not investment advice. Do your own work.