Bain Capital Specialty Finance, Inc. - FORM 10-Q

Attached files

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EX-32 - EX-32 - Bain Capital Specialty Finance, Inc.	a17-12321_1ex32.htm
EX-31.2 - EX-31.2 - Bain Capital Specialty Finance, Inc.	a17-12321_1ex31d2.htm
EX-31.1 - EX-31.1 - Bain Capital Specialty Finance, Inc.	a17-12321_1ex31d1.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 814-01175

BAIN CAPITAL SPECIALTY FINANCE, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		81-2878769
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

200 Clarendon Street, 37th Floor Boston, MA		02116
(Address of Principal Executive Office)		(Zip Code)

(617) 516-2000

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer o

Non-accelerated filer x (Do not check if a smaller reporting company)		Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 11, 2017, the registrant had 16,772,174.54 shares of common stock, $0.001 par value, outstanding.

Table of Contents

TABLE OF CONTENTS

		Page

PART I	FINANCIAL INFORMATION	4

Item 1.	Financial Statements	4

	Statements of Assets and Liabilities as of March 31, 2017 (unaudited) and December 31, 2016	4

	Statements of Operations for the three months ended March 31, 2017 and 2016 (unaudited)	5

	Statements of Changes in Net Assets for the three months ended March 31, 2017 and 2016 (unaudited)	6

	Statements of Cash Flows for the three months ended March 31, 2017 and 2016 (unaudited)	7

	Schedules of Investments as of March 31, 2017 (unaudited) and December 31, 2016	8

	Notes to Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	39

PART II	OTHER INFORMATION	39

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	40

Item 6.	Exhibits	40

Signatures		42

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FORWARD-LOOKING STATEMENTS

Statements contained in this quarterly report on Form 10-Q (the “Quarterly Report”) (including those relating to current and future market conditions and trends in respect thereof) that are not historical facts are based on current expectations, estimates, projections, opinions and/or beliefs of the Company, BCSF Advisors, LP (the “Advisor”) and/or Bain Capital Credit, LP and its affiliated advisers (collectively, “Bain Capital Credit”). Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. Certain information contained in this Quarterly Report constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “seek,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” “target,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors we identify in the section entitled Part I, “Item 1A. Risk Factors” in our annual report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2016 and in our filings with the Securities and Exchange Commission (the “SEC”).

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in the section entitled Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this Quarterly Report because we are an investment company.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Bain Capital Specialty Finance, Inc.

Statements of Assets and Liabilities

	As of			As of
	March 31, 2017			December 31, 2016
	(Unaudited)
Assets
Investments at fair value:
Non-Control/non-affiliate investments (amortized cost of $192,137,544 and $106,251,499, respectively)	$	194,542,825		$	107,942,008
Total investments at fair value	194,542,825			107,942,008
Cash and cash equivalents	158,551,715			66,732,154
Foreign cash (cost of $9,331,647 and $0, respectively)	9,601,005			—
Deferred financing costs	998,523			1,088,751
Deferred offering costs	226,150			329,995
Interest receivable on investments	616,984			596,164
Prepaid insurance	91,328			139,875
Receivable for paydowns and sales of investments	3,087,529			20,415
Other assets	—			5,723
Total Assets	$	367,716,059		$	176,855,085

Liabilities
Revolving credit facility	$	—		$	59,100,000
Interest payable	71,791			17,992
Payable for investments purchased	26,627,633			6,266,467
Unrealized depreciation on forward currency exchange contracts	261,684			—
Base management fee payable	266,584			178,204
Incentive fee payable	347,005			253,576
Accounts payable and accrued expenses	670,007			478,419
Directors fees payable	—			133,806
Distributions payable	—			82,363
Total Liabilities	28,244,704			66,510,827

Commitments and Contingencies (See Note 10)

Net Assets
Preferred stock, $0.001 par value per share, 10,000,000,000 shares authorized, none issued and outstanding as of March 31, 2017 and December 31, 2016, respectively	—			—
Common stock, par value $0.001 per share, 100,000,000,000 and 100,000,000,000 shares authorized, 16,772,175 and 5,490,882 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively	16,772			5,491
Paid in capital in excess of par value	337,180,436			109,677,129
Accumulated undistributed net investment income (loss)	(39,219		)	(1,028,871		)
Accumulated undistributed net realized gains	184,833			—
Net unrealized appreciation	2,128,533			1,690,509
Total Net Assets	339,471,355			110,344,258
Total Liabilities and Total Net assets	$	367,716,059		$	176,855,085

Net asset value per share	$	20.24		$	20.10

See Notes to Financial Statements

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Bain Capital Specialty Finance, Inc.

Statements of Operations

(Unaudited)

	For the Three Months Ended March 31, 2017			For the Three Months Ended March 31, 2016
Investment income from non-controlled, non-affiliated investments
Interest income	$	2,242,416		$	—
Total investment income from non-controlled, non-affiliated investments	2,242,416			—

Expenses
Interest and debt financing expenses	$	195,477		$	—
Amortization of deferred offering costs	103,845			—
Base management fee	266,584			—
Incentive fee	93,428			—
Professional fees	413,539			—
Directors fees	67,812			—
Other general and administrative expenses	112,079			—
Total expenses	1,252,764			—
Net investment income	989,652			—

Net realized and unrealized gains (losses)
Net realized gain on non-controlled, non-affiliated investments	120,132			—
Net realized gain on foreign currency transactions	64,701			—
Net change in unrealized depreciation on foreign currency translation	(15,064		)	—
Net change in unrealized depreciation on forward currency exchange contracts	(261,684		)	—
Net change in unrealized appreciation on non-controlled, non-affiliated investments	714,772			—
Total net realized and unrealized gains (losses)	622,857			—

Net increase in net assets resulting from operations	$	1,612,509		$	—

Per Common Share Data
Basic and diluted net investment income per common share	0.09			—
Basic and diluted earnings per common share	0.15			—
Basic and diluted weighted average common shares outstanding	10,880,455.56			1,000.00

See Notes to Financial Statements

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Bain Capital Specialty Finance, Inc.

Statements of Changes in Net Assets

(Unaudited)

	For the Three Months Ended March 31, 2017		For the Three Months Ended March 31, 2016

Operations:
Net investment income	$	989,652	$	—
Net realized gains	184,833		—
Net change in unrealized appreciation	438,024		—
Net increase in net assets resulting from operations	1,612,509		—
Capital share transactions:
Issuance of common stock	227,513,324		—
Reinvestment of stockholder distributions	1,264		—
Net increase in net assets resulting from capital share transactions	227,514,588		—

Total increase in net assets	229,127,097		—
Net assets at beginning of period	110,344,258		—
Net assets at end of period	$	339,471,355	$	—

Net asset value per common share	$	20.24	$	—
Common stock outstanding at end of period	16,772,174.54		1,000.00

See Notes to Financial Statements

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Bain Capital Specialty Finance, Inc.

Statements of Cash Flows

(Unaudited)

	For the Three Months Ended March 31, 2017			For the Three Months Ended March 31, 2016
Cash flows from operating activities
Net increase in net assets resulting from operations	$	1,612,509		$	—
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Proceeds from principal payments and sales of investments	1,117,093			—
Net realized gain from investments	(120,132		)	—
Net change in unrealized depreciation on forward currency exchange contracts	261,684			—
Net change in unrealized appreciation on investments	(714,772		)	—
Net change in unrealized appreciation on foreign currency translation	15,064			—
Accretion of discounts and amortization of premiums	(137,944		)	—
Amortization of deferred financing costs and upfront commitment fees	90,228			—
Amortization of deferred offering costs	103,845			—
Changes in operating assets and liabilities:
Interest receivable on investments	(20,820		)	—
Prepaid insurance	48,547			—
Other assets	5,723			—
Interest payable	53,799			—
Base management fee payable	88,380			—
Incentive fee payable	93,429			—
Accounts payable and accrued expenses	191,588			—
Directors fees payable	(133,806		)	—
Net cash used in operating activities	(67,181,017		)	—

Cash flows from financing activities
Borrowings on revolving credit facility	3,859,900			—
Repayments on revolving credit facility	(62,959,900		)	—
Proceeds from issuance of common stock	227,513,324			—
Stockholder distributions paid	(81,099		)	—
Net cash provided by financing activities	168,332,225			—

Net increase in cash, foreign cash and cash equivalents	101,151,208			—
Effect of foreign currency exchange rates	269,358
Cash, foreign cash and cash equivalents, beginning of period	66,732,154			—
Cash, foreign cash and cash equivalents, end of period	$	168,152,720		$	—

Supplemental disclosure of cash flow information:
Cash interest paid during the period	$	50,502		$	—
Supplemental disclosure of non-cash information:
Reinvestment of stockholder distributions	$	1,264		$	—

See Notes to Financial Statements

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Bain Capital Specialty Finance, Inc.

Schedule of Investments

As of March 31, 2017

(Unaudited)

Portfolio Company	Industry	Asset Type (7)	Spread Above Index (1)	Interest Rate		Maturity Date	Principal/ Par Amount (9)		Amortized Cost			Fair Value			Percentage of Net Assets (4)

Salient CRGT, Inc.	Aerospace & Defense	First lien senior secured loan	L+ 5.75%	6.75	%	2/28/2022	3,853,763		$	3,777,856		$	3,810,409		1.1	%
						Total Aerospace & Defense			3,777,856			3,810,409			1.1	%

CST Buyer Company	Automotive	First lien senior secured loan	L+ 6.25%	7.61	%	3/1/2023	10,320,997		10,167,163			10,166,182			3.0	%
CST Buyer Company	Automotive	Revolver (2) (3)	—	—		3/1/2023	—		(13,284		)	(13,462		)	0.0	%
						Total Automotive			10,153,879			10,152,720			3.0	%

Columbus McKinnon Corporation	Capital Equipment	First lien senior secured loan	L+3.00%	4.15	%	1/31/2024	481,883		479,578			486,702			0.1	%
Dorner Manufacturing Corp	Capital Equipment	First lien senior secured loan	P+4.75%	8.75	%	3/15/2023	8,351,508		8,144,381			8,142,720			2.4	%
Dorner Manufacturing Corp	Capital Equipment	Revolver (3)	P+4.75%	8.75	%	3/15/2023	329,665		302,258			302,193			0.1	%
FineLine Technologies, Inc.	Capital Equipment	First lien senior secured loan	L+4.75%	5.90	%	11/2/2022	14,770,072		14,459,102			14,548,521			4.3	%
FineLine Technologies, Inc.	Capital Equipment	Revolver (3)	L+4.75%	5.84	%	11/2/2021	131,036		76,854			91,725			0.0	%
						Total Capital Equipment			23,462,173			23,571,861			6.9	%

ASP Chromaflo Intermediate Holdings, Inc.	Chemicals, Plastics & Rubber	First lien senior secured loan	L+4.00%	5.00	%	11/20/2023	513,854		511,437			517,868			0.2	%
ASP Chromaflo Intermediate Holdings, Inc.	Chemicals, Plastics & Rubber	First lien senior secured loan	L+4.00%	5.00	%	11/20/2023	668,174		665,032			673,394			0.2	%
Niacet b.v.	Chemicals, Plastics & Rubber	First lien senior secured loan (6)	L+4.50%	5.50	%	2/1/2024	€	3,894,402	4,158,801			4,106,834			1.2	%
Niacet Corporation	Chemicals, Plastics & Rubber	First lien senior secured loan	L+4.50%	5.65	%	2/1/2024	2,240,000		2,218,176			2,237,200			0.6	%
				Total Chemicals, Plastics & Rubber					7,553,446			7,535,296			2.2	%

CSP Technologies North America, LLC	Containers, Packaging & Glass	First lien senior secured loan	L+5.25%	6.40	%	1/29/2022	12,381,322		12,381,322			12,412,275			3.7	%
				Total Containers, Packaging & Glass					12,381,322			12,412,275			3.7	%

Drive DeVilbiss	Healthcare & Pharmaceuticals	First lien senior secured loan	L+5.50%	6.65	%	1/3/2023	6,843,189		6,245,109			6,641,999			2.0	%
Great Expressions Dental Centers PC	Healthcare & Pharmaceuticals	First lien senior secured loan	L+4.75%	5.75	%	9/28/2023	8,125,170		8,012,276			8,084,544			2.3	%
Great Expressions Dental Centers PC	Healthcare & Pharmaceuticals	Delayed draw term loan (2) (3)	—	—		9/28/2023	—		(4,673		)	(3,335		)	0.0	%
Great Expressions Dental Centers PC	Healthcare & Pharmaceuticals	Revolver (3)	L+4.75%	5.75	%	9/28/2022	166,714		150,569			160,879			0.1	%
				Total Healthcare & Pharmaceuticals					14,403,281			14,884,087			4.4	%

Harbortouch Payments, LLC	High Tech Industries	First lien senior secured loan	L+4.75%	5.75	%	10/13/2023	12,106,497		11,989,929			12,167,030			3.6	%
Netsmart Technologies, Inc.	High Tech Industries	First lien senior secured loan	L+4.50%	5.65	%	4/19/2023	9,949,875		9,944,976			10,036,936			3.0	%
Zywave, Inc.	High Tech Industries	First lien senior secured loan	L+5.00%	6.15	%	11/17/2022	17,862,882		17,699,199			17,684,253			5.2	%
Zywave, Inc.	High Tech Industries	Revolver (2) (3)	—	—		11/17/2022			(18,037		)	(12,791		)	0.0	%
						Total High Tech Industries			39,616,067			39,875,428			11.8	%

NPC International, Inc.	Hotel, Gaming & Leisure	Second lien senior secured loan	L+ 7.50%	8.50	%	4/21/2025	4,703,667		4,680,148			4,777,162			1.4	%
				Total Hotel, Gaming & Leisure					4,680,148			4,777,162			1.4	%

Deluxe Entertainment Services Group Inc.	Media: Diversified & Production	First lien senior secured loan	L+6.00%	7.04	%	2/28/2020	13,035,008		12,447,924			13,035,008			3.8	%
International Entertainment Investments Limited	Media: Diversified & Production	First lien senior secured loan (6)	L+4.75%	5.01	%	5/31/2022	£	7,673,114	9,281,082			9,533,460			2.8	%
International Entertainment Investments Limited	Media: Diversified & Production	Delayed draw term loan (2) (3) (5) (6)	—	—		2/28/2022	£	—	(20,940		)	(25,411		)	0.0	%
				Total Media: Diversified & Production					21,708,066			22,543,057			6.6	%

See Notes to Financial Statements

Table of Contents

Bain Capital Specialty Finance, Inc.

Schedule of Investments

As of March 31, 2017

(Unaudited)

Portfolio Company	Industry	Asset Type (7)	Spread Above Index (1)	Interest Rate		Maturity Date	Principal/ Par Amount (9)	Amortized Cost				Fair Value			Percentage of Net Assets (4)

CH Hold Corp.	Retail	First lien senior secured loan	L+3.00%	4.00	%	2/1/2024	1,394,579	1,391,165				1,406,491			0.4	%
CH Hold Corp.	Retail	Second lien senior secured loan	L+7.25%	8.25	%	2/3/2025	1,215,470	1,209,411				1,235,981			0.4	%
CH Hold Corp.	Retail	Delayed draw term loan (2) (3)	—	—		2/1/2024	—	(349			)	1,191			0.0	%
K-Mac Holdings Corp.	Retail	First lien senior secured loan	L+4.75%	5.75	%	12/20/2022	14,310,000	14,096,943				14,095,350			4.1	%
						Total Retail		16,697,170				16,739,013			4.9	%

Genuine Financial Holdings LLC	Services: Business	First lien senior secured loan	L+4.75%	5.81	%	1/26/2023	9,762,415	9,642,239				9,640,385			2.8	%
Learfield Communications LLC	Services: Business	Second lien senior secured loan	L+7.25%	8.25	%	12/2/2024	5,400,000	5,348,895				5,386,500			1.6	%
Restaurant Technologies, Inc.	Services: Business	First lien senior secured loan	L+4.75%	5.80	%	11/23/2022	5,306,452	5,256,137				5,299,818			1.6	%
Restaurant Technologies, Inc.	Services: Business	Second lien senior secured loan	L+8.75%	9.75	%	11/23/2023	1,693,548	1,660,933				1,685,081			0.5	%
Travel Leaders Group, LLC	Services: Business	First lien senior secured loan	L+5.25%	6.23	%	1/25/2024	296,316	294,923				300,575			0.1	%
						Total Services: Business		22,203,127				22,312,359			6.6	%

Masergy Holdings, Inc.	Telecommunications	First lien senior secured loan	L+4.50%	5.50	%	12/15/2023	698,366	695,120				705,350			0.2	%
Masergy Holdings, Inc.	Telecommunications	Second lien senior secured loan	L+8.50%	9.50	%	12/16/2024	778,846	771,479				790,529			0.2	%
Polycom, Inc.	Telecommunications	First lien senior secured loan	L+5.25%	6.25	%	9/27/2023	14,225,823	14,034,410				14,433,279			4.3	%
				Total Telecommunications				15,501,009				15,929,158			4.7	%

TOTAL INVESTMENTS - 57.3%								$	192,137,544			$	194,542,825		57.3	%

Cash Equivalents
Goldman Sachs Financial Square Government Fund								$		158,361,429		$		158,361,429	46.6	%
			Total Cash Equivalents					$		158,361,429		$		158,361,429	46.6	%

TOTAL INVESTMENTS AND CASH EQUIVALENTS - 103.9%								$	350,498,973			$	352,904,254		103.9	%

Table of Contents

Bain Capital Specialty Finance, Inc.

Schedule of Investments

As of March 31, 2017

(Unaudited)

Forward Currency Exchange Contracts (8)

Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
USD	4,104,797	EURO	3,860,000	Bank of New York Mellon	4/18/2017	$	(29,259	)
USD	9,376,957	POUND STERLING	7,680,000	Bank of New York Mellon	4/18/2017	(232,425		)
						$	(261,684	)

(1) The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or the Prime (“P”) and which reset daily, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the weighted average current interest rate in effect at March 31, 2017. Certain investments are subject to a LIBOR or Prime interest rate floor.

(2) The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.

(3) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion.

(4) Percentages are based on the Company’s net assets of $339,471,355 as of March 31, 2017.

(5) Used for capital expenditures.

(6) The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets.

(7) All of our investments are issued by eligible U.S. portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”) except for International Entertainment Investment Limited, which is an international company headquartered in the United Kingdom, and Niacet b.v., which is an international company headquartered in the Netherlands. All investments are non-controlled/non-affiliated company investments, unless otherwise noted.

(8) Unrealized appreciation/(depreciation) on forward currency exchange contracts.

(9) The principal amount (par amount) for all debt securities is denominated in U.S. dollars, unless otherwise noted. £ represents Pound Sterling and € represents Euro.

See Notes to Financial Statements

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Bain Capital Specialty Finance, Inc.

Schedule of Investments

As of December 31, 2016

Portfolio Company	Industry	Asset Type	Spread Above Index (1)	Interest Rate		Maturity Date	Principal/ Par Amount		Amortized Cost			Fair Value			Percentage of Net Assets (4)

FineLine Technologies, Inc.	Capital Equipment	First lien senior secured loan	L+4.75%	5.75	%	11/2/2022	$	14,807,089	$	14,482,151		$	14,659,018		13.3	%
FineLine Technologies, Inc.	Capital Equipment	Revolver (3)	L+4.75%	5.68	%	11/2/2021	$	393,109	336,017			366,901			0.3	%
				Total Capital Equipment					14,818,168			15,025,919			13.6	%

ASP Chromaflo Intermediate Holdings, Inc.	Chemicals, Plastics & Rubber	First lien senior secured loan	L+4.00%	5.00	%	11/20/2023	$	515,142	512,574			520,293			0.5	%
ASP Chromaflo Intermediate Holdings, Inc.	Chemicals, Plastics & Rubber	First lien senior secured loan	L+4.00%	5.00	%	11/20/2023	$	669,849	666,510			676,550			0.6	%
				Total Chemicals, Plastics & Rubber					1,179,084			1,196,843			1.1	%

Drive DeVilbiss	Healthcare & Pharmaceuticals	First lien senior secured loan	L+5.50%	6.50	%	12/21/2022	$	6,886,228	6,266,467			6,318,114			5.7	%
Great Expressions Dental Centers PC	Healthcare & Pharmaceuticals	First lien senior secured loan	L+4.75%	5.75	%	9/28/2023	$	8,145,585	8,027,008			8,104,857			7.4	%
Great Expressions Dental Centers PC	Healthcare & Pharmaceuticals	Delayed draw term loan (2) (3)	—	—		9/28/2023			(4,849		)	(3,335		)	0.0	%
Great Expressions Dental Centers PC	Healthcare & Pharmaceuticals	Revolver (3)	P+3.75%	7.25	%	9/28/2022	$	166,714	149,845			160,879			0.2	%
				Total Healthcare & Pharmaceuticals					14,438,471			14,580,515			13.3	%

Harbortouch Payments, LLC	High Tech Industries	First lien senior secured loan	L+4.75%	5.75	%	10/13/2023	$	12,136,840	12,017,183			12,167,182			11.0	%
Netsmart Technologies, Inc.	High Tech Industries	First lien senior secured loan	L+4.50%	5.50	%	4/19/2023	$	9,974,937	9,969,553			10,027,934			9.1	%
Zywave, Inc.	High Tech Industries	First lien senior secured loan	L+5.00%	6.00	%	11/17/2022	$	17,907,651	17,730,634			17,728,575			16.1	%
Zywave, Inc.	High Tech Industries	Revolver (2) (3)	—	—		11/17/2022			(18,827		)	(19,187		)	0.0	%
				Total High Tech Industries					39,698,543			39,904,504			36.2	%

Deluxe Entertainment Services Group Inc.	Media: Diversified & Production	First lien senior secured loan	L+6.00%	7.00	%	2/28/2020	$	16,127,446	15,345,715			16,046,808			14.5	%
				Total Media: Diversified & Production					15,345,715			16,046,808			14.5	%

Learfield Communications LLC	Services: Business	Second lien senior secured loan	L+7.25%	8.25	%	12/2/2024	$	5,400,000	5,346,301			5,410,125			4.9	%
Restaurant Technologies, Inc.	Services: Business	First lien senior secured loan	L+4.75%	5.75	%	11/23/2022	$	5,306,452	5,253,787			5,299,819			4.8	%
Restaurant Technologies, Inc.	Services: Business	Second lien senior secured loan	L+8.75%	9.75	%	11/23/2023	$	1,693,548	1,659,838			1,685,081			1.5	%
				Total Services: Business					12,259,926			12,395,025			11.2	%

Masergy Holdings, Inc.	Telecommunications	First lien senior secured loan	L+4.50%	5.50	%	12/15/2023	$	700,117	696,644			706,024			0.6	%
Masergy Holdings, Inc.	Telecommunications	Second lien senior secured loan	L+8.50%	9.50	%	12/16/2024	$	778,846	771,112			778,846			0.7	%
Polycom, Inc.	Telecommunications	First lien senior secured loan	L+6.50%	7.50	%	9/27/2023	$	7,253,125	7,043,836			7,307,524			6.6	%
				Total Telecommunications					8,511,592			8,792,394			7.9	%

TOTAL INVESTMENTS - 97.8%									$	106,251,499		$	107,942,008		97.8	%

(1) The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or the Prime (“P”) and which reset daily, quarterly or semiannually.

For each, the Company has provided the spread over LIBOR or Prime and the weighted average current interest rate in effect at December 31, 2016. Certain investments are subject to a LIBOR or Prime interest rate floor.

(3) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion.

(4) Percentages are based on the Company’s net assets of $110,344,258 as of December 31, 2016.

See Notes to Financial Statements.

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BAIN CAPITAL SPECIALTY FINANCE, INC.

NOTES TO FINANCIAL STATEMENTS

(unaudited)

Note 1. Organization

Bain Capital Specialty Finance, Inc. (the “Company”) was formed on October 5, 2015 and commenced investment operations on October 13, 2016. The Company has elected to be treated and is regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes the Company intends to elect to be treated, and intends to qualify annually thereafter, as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), effective with its taxable year ended December 31, 2016. The Company is externally managed by BCSF Advisors, LP (the “Advisor”), our investment adviser that is registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Advisor also provides the administrative services necessary for the Company to operate (in such capacity, the “Administrator”).

The Company’s investment objective is to provide risk-adjusted returns and current income to investors by investing primarily in middle-market companies. The Company intends to focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. The Company may also invest in mezzanine debt and other junior securities and in secondary purchases of assets or portfolios, as described below. Investments are likely to include, among other things, (i) senior first lien, stretch senior, senior second lien, unitranche, (ii) mezzanine debt and other junior investments and (iii) secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. The Company may also invest, from time to time, in equity securities, distressed debt, debtor-in-possession loans, structured products, structurally subordinate loans, investments with deferred interest features, zero-coupon securities and defaulted securities.

There was no operating activity from January 1, 2016 to March 31, 2016. The Company completed the sale of its common stock and commenced operations on October 13, 2016.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company’s financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. These financial statements reflect adjustments that in the opinion of the Company are necessary for the fair statement of the financial position and results of operations for the periods presented herein. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies. The functional currency of the Company is U.S. dollars and these financial statements have been prepared in that currency.

The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates and such differences could be material.

Valuation of Portfolio Investments

Investments for which market quotations are readily available are typically valued at such market quotations. Market quotations are obtained from an independent pricing service, where available. If a price cannot be obtained from an independent pricing service or if the independent pricing service is not deemed to be current with the market, certain investments held by the Company will be valued on the basis of prices provided by principal market makers. Generally investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of

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quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value, subject at all times to the oversight and approval of the board of directors of the Company (the “Board”), based on, among other things, the input of the Advisor, the Company’s Audit Committee and one or more independent third party firms engaged by the Board.

With respect to unquoted securities, the Company will value each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will use the pricing indicated by the external event to corroborate and/or assist us in our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

With respect to investments for which market quotations are not readily available, the Advisor will undertake a multi-step valuation process, which includes among other things, the below:

· The Company’s quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Advisor responsible for the portfolio investment or by an independent valuation firm.

· Preliminary valuation conclusions are then documented and discussed with the Company’s senior management and the Advisor. Agreed upon valuation recommendations are presented to the Audit Committee.

· The Audit Committee of the Board reviews the valuations presented and recommends values for each of the investments to the Board.

· The Board will discuss valuations and determine the fair value of each investment in good faith based upon, among other things, the input of the Advisor, independent valuation firms, where applicable, and the Audit Committee.

In following this approach, the types of factors that are taken into account in the fair value pricing investments include, as relevant, but not limited to: comparison to publicly traded securities, including factors such as yield, maturity and measures of credit quality; the enterprise value of a portfolio company; the nature and realizable value of any collateral; the portfolio company’s ability to make payments and its earnings and discounted cash flows; and the markets in which the portfolio company does business. In cases where an independent valuation firm provides fair valuations for investments, the independent valuation firm provides a fair valuation report, a description of the methodology used to determine the fair value and their analysis and calculations to support their conclusion. The Company currently conducts this valuation process on a quarterly basis.

The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. The fair value of a financial instrument is the amount that would be received in an orderly transaction between market participants at the measurement date. The Company determines the fair value of investments consistent with its valuation policy. The Company discloses the fair value of its investments in a hierarchy which prioritizes and ranks the level of market observability used in the determination of fair value. In accordance with ASC 820, these levels are summarized below:

· Level 1—Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

· Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

· Level 3—Valuations based on inputs that are unobservable and significant to the fair value measurement.

A financial instrument’s level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuations of Level 2 investments are generally based on quotations received from pricing services, dealers or brokers. Consideration is given to the source and nature of the quotations and the relationship of recent market activity to the quotations provided.

Transfers between levels, if any, are recognized at the beginning of the quarter in which the transfers occur. The Company evaluates the source of inputs used in the determination of fair value, including any markets in which the investments, or similar investments, are trading. When the fair value of an investment is determined using inputs from a pricing service (or principal market makers), the Company considers various criteria in determining whether the investment should be classified as a Level 2 or Level 3 investment. Criteria considered includes the pricing methodologies of the pricing services (or principal market makers) to determine if the inputs to the valuation are observable or unobservable, as well as the number of prices obtained and an assessment of the quality of

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the prices obtained. The level of an investment within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment.

The value assigned to these investments is based upon available information and may fluctuate from period to period. In addition, it does not necessarily represent the amount that might ultimately be realized upon sale. Due to inherent uncertainty of valuation, the estimated fair value of investments may differ from the value that would have been used had a ready market for the security existed, and the difference could be material.

Securities Transactions, Revenue Recognition and Expenses

The Company records its investment transactions on a trade date basis. The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sales and the amortized cost basis of the investment, using the specified identification method. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium to par value on investments acquired are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Loan origination fees, original issue discount and market discount or premium are capitalized and amortized into or against interest income using the effective interest method or straight-line method, as applicable. For the Company's investments in revolving bank loans, the cost basis of the investments purchased is adjusted for the cash received for the discount on the total balance committed. The fair value is also adjusted for price appreciation or depreciation on the unfunded portion. As a result, the purchase of commitments not completely funded may result in a negative value until it is offset by the future amounts called and funded. Upon prepayment of a loan or debt security, any prepayment premium, unamortized upfront loan origination fees and unamortized discount are recorded as interest income.

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.

Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon being called by the issuer. PIK is recorded as interest or dividend income, as applicable. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual status.

Certain structuring fees and amendment fees are recorded as other income when earned. Administrative agent fees received by the Company are recorded as other income when the services are rendered.

Expenses are recorded on an accrual basis.

Non-Accrual Loans

Loans or debt securities are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest generally is reversed when a loan or debt security is placed on non-accrual status. Interest payments received on non-accrual loans or debt securities may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans and debt securities are restored to accrual status when past due principal and interest are paid and, in management’s judgment, principal and interest payments are likely to remain current. The Company may make exceptions to this treatment if a loan has sufficient collateral value and is in the process of collection. As of March 31, 2017 and December 31, 2016, no securities had been placed on non-accrual status.

Distributions

Distributions to common stockholders are recorded on the record date. The amount to be distributed, if any, is determined by the Board. Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with U.S. GAAP. The Company may pay distributions in excess of its taxable net investment income. This excess generally would be a tax-free return of capital in the period and generally would reduce the stockholder’s tax basis in its shares. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent; they are charged or credited to paid-in capital in excess of par, accumulated undistributed net investment income or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses.

The amount to be paid out as a distribution is determined by the Board each quarter and is generally based upon the earnings estimated by the Investment Advisor. The Company may pay distributions to its stockholders in a year in excess of its net ordinary income and capital gains for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. The Company intends to timely distribute to its stockholders substantially all of its annual taxable income for each year, except that the Company may retain certain net capital gains for reinvestment and, depending upon the level of the Company’s taxable income earned in a year, the Company may choose to carry forward taxable income for distribution in the following year and incur applicable U.S. federal excise tax. The specific tax

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characteristics of the Company’s distributions will be reported to stockholders after the end of the calendar year. All distributions will be subject to available funds, and no assurance can be given that the Company will be able to declare such distributions in future periods.

The Company distributes net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, the Company may decide in the future to retain such capital gains for investment, incur a corporate-level tax on such capital gains, and elect to treat such capital gains as deemed distributions to stockholders.

Dividend Reinvestment Plan

The Company has adopted a dividend reinvestment plan that provides for the reinvestment of cash dividends. Prior to the listing of the Company’s shares on a national securities exchange (a “Listing”), stockholders who “opt in” to the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.

Subsequent to a Listing, stockholders who do not “opt out” of the Company’s dividend reinvestment plan will have their cash dividends and distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash dividends and distributions.

Stockholders can elect to “opt in” or “opt out” of the Company’s dividend reinvestment plan in their Subscription Agreements, as later defined. The elections of stockholders that make an election prior to a Listing shall remain effective after the Listing.

Segments

In accordance with ASC Topic 280 — Segment Reporting, the Company has determined that our operations comprise only a single reportable segment.

Cash and Cash Equivalents

Cash and cash equivalents consist of deposits held at custodian banks, and highly liquid investments, such as money market funds, with original maturities of three months or less. Cash and cash equivalents are carried at cost or amortized cost, which approximates fair value. The Company may deposit its cash and cash equivalents in financial institutions and, at certain times, such balances may exceed the Federal Deposit Insurance Corporation insurance limits.

Foreign Currency Translation

The accounting records of the Company are maintained in U.S. dollars. The fair values of foreign securities, currency holdings and other assets and liabilities denominated in foreign currency are translated to U.S. dollars based on the current exchange rates at the end of each business day. Income and expenses denominated in foreign currencies are translated at current exchange rates when accrued or incurred. Unrealized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to the changes in foreign currency exchange rates are included in the net change in unrealized translation appreciation (depreciation) from foreign currency translation on the statements of operations. Net realized gains and losses on foreign currency holdings and non-investment assets and liabilities attributable to changes in foreign currency exchange rates are included in net realized gain (loss) on foreign currency transactions on the statements of operations. The portion of both realized and unrealized gains and losses on investments that result from changes in foreign currency exchange rates is not separately disclosed, but is included in net realized gain on investments and net change in unrealized appreciation (depreciation) on investments, respectively, on the statements of operations.

Forward Currency Exchange Contracts

The Company may enter into forward currency exchange contracts to reduce the Company’s exposure in foreign currency exchange rate fluctuations in the value of foreign currencies. A forward currency exchange contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The Company does not utilize hedge accounting and as such the Company recognizes the value of its derivatives at fair value on the statements of assets and liabilities with changes in the net appreciation (depreciation) of forward currency contracts recorded on the statements of operations. Forward currency exchange contracts are valued using the prevailing forward currency exchange rate of the underlying currencies. Unrealized appreciation (depreciation) on forward currency exchange contracts are recorded on the statements of assets and liabilities by counterparty on a net

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basis, not taking into account collateral posted which is recorded separately, if applicable. Notional amounts and the gross fair value of forward currency exchange contracts assets and liabilities are presented separately on the schedule of investments.

Changes in net unrealized appreciation (depreciation) are recorded on the statements of operations in net change in unrealized appreciation (depreciation) on forward currency contracts. Realized gains and losses on foreign currency exchange contracts are determined using difference between the fair market value of the forward currency exchange contract at the time it was opened and the fair market value at the time it was closed or covered. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms.

Deferred Financing Costs

The Company records costs related to issuance of debt obligations as deferred financing costs. These costs are deferred and amortized using the effective yield method, or straight-line method for revolving credit facilities, over the stated maturity life of the obligation.

Offering Costs

Offering costs consist primarily of fees and expenses incurred in connection with the offering of shares, legal, printing and other costs associated with the preparation and filing of applicable registration statements. Offering costs of the Company are recognized as a deferred charge and are amortized on a straight line basis over 12 months beginning on the date of commencement of operations and are shown in the Company’s statements of operations.

Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act. The Company intends to elect to be treated as a RIC under the Code. The Company intends to elect to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). So long as the Company maintains its status as a RIC, it will generally not be subject to corporate-level U.S. federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. As a result, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s stockholders and will not be reflected in the financial statements of the Company.

The Company intends to comply with the applicable provisions of the Code pertaining to RICs and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the financial statements.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes, if any, are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. Management has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded to related to uncertain tax positions on returns to be filed by the Company for all open tax years. The Company identifies its major U.S. tax jurisdiction as the United States, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

Recent Accounting Pronouncements

In January 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. The Company is currently evaluating the impact these changes will have on the Company’s financial statements and disclosures.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) (“ASU 2016-10”). The amendments in ASU 2016-10 will clarify the identification of performance obligations and the licensing implementation guidance. ASU 2016-10 is effective for annual reporting periods beginning after December 15, 2017. The Company does not believe these changes will have a material impact on the Company’s financial statements and disclosures.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that the statements of cash flows explain the change during the period in the total of cash, cash

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equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. This new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted and is to be applied on a retrospective basis. The Company is currently evaluating the impact these changes will have on the Company’s financial statements and disclosures.

In December 2016, the FASB issued ASU 2016-19, “Technical Corrections and Improvements,” which amends ASC Topic 820 to clarify the difference between a valuation approach and a valuation technique, and requires an entity to disclose when there has been a change in a valuation approach, a valuation technique or both. This new guidance is effective prospectively for fiscal years beginning after December 15, 2016, as well as for interim periods within those fiscal years. The Company has evaluated the impact of this new guidance on its financial statements and disclosures, and determined that ASU 2016-19 did not have and is expected not to have a material impact on its financial statements and disclosures.

Note 3. Investments

The following table shows the composition of the investment portfolio, at amortized cost and fair value as of March 31, 2017 (with corresponding percentage of total portfolio investments):

	As of March 31, 2017
	Amortized Cost		Percentage of Total Portfolio	Fair Value		Percentage of Total Portfolio
First Lien Senior Secured Loan	$	178,466,678	92.9%	$	180,667,572	92.9%
Second Lien Senior Secured Loan	13,670,866		7.1	13,875,253		7.1
Total	$	192,137,544	100.0%	$	194,542,825	100.0%

The following table shows the composition of the investment portfolio, at amortized cost and fair value as of December 31, 2016 (with corresponding percentage of total portfolio investments):

	As of December 31, 2016
	Amortized Cost		Percentage of Total Portfolio	Fair Value		Percentage of Total Portfolio
First Lien Senior Secured Loan	$	98,474,248	92.7%	$	100,067,956	92.7%
Second Lien Senior Secured Loan	7,777,251		7.3	7,874,052		7.3
Total	$	106,251,499	100.0%	$	107,942,008	100.0%

The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of March 31, 2017 (with corresponding percentage of total portfolio investments):

	As of March 31, 2017
	Amortized Cost		Percentage of Total Portfolio	Fair Value		Percentage of Total Portfolio
United States	$	178,718,601	93.0%	$	180,927,942	93.0%
United Kingdom	9,260,142		4.8	9,508,049		4.9
Netherlands	4,158,801		2.2	4,106,834		2.1
Total	$	192,137,544	100.0%	$	194,542,825	100.0%

The following table shows the composition of the investment portfolio by geographic region, at amortized cost and fair value as of December 31, 2016 (with corresponding percentage of total portfolio investments):

	As of December 31, 2016
	Amortized Cost		Percentage of Total Portfolio	Fair Value		Percentage of Total Portfolio
United States	$	106,251,499	100.0%	$	107,942,008	100.0%
Total	$	106,251,499	100.0%	$	107,942,008	100.0%

The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of March 31, 2017 (with corresponding percentage of total portfolio investments):

	As of March 31, 2017
	Amortized Cost		Percentage of Total Portfolio	Fair Value		Percentage of Total Portfolio
High Tech Industries	$	39,616,067	20.6%	$	39,875,428	20.4%
Capital Equipment	23,462,173		12.2	23,571,861		12.1
Media: Diversified & Production	21,708,066		11.3	22,543,057		11.6
Services: Business	22,203,127		11.6	22,312,359		11.5
Retail	16,697,170		8.7	16,739,013		8.6
Telecommunications	15,501,009		8.1	15,929,158		8.2
Healthcare & Pharmaceuticals	14,403,281		7.5	14,884,087		7.7
Containers, Packaging & Glass	12,381,322		6.4	12,412,275		6.4
Automotive	10,153,879		5.3	10,152,720		5.2
Chemicals, Plastics & Rubber	7,553,446		3.9	7,535,296		3.9
Hotel, Gaming & Leisure	4,680,148		2.4	4,777,162		2.4
Aerospace & Defense	3,777,856		2.0	3,810,409		2.0
	$	192,137,544	100.0%	$	194,542,825	100.0%

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The following table shows the composition of the investment portfolio by industry, at amortized cost and fair value as of December 31, 2016 (with corresponding percentage of total portfolio investments):

	As of December 31, 2016
	Amortized Cost		Percentage of Total Portfolio	Fair Value		Percentage of Total Portfolio
High Tech Industries	$	39,698,543	37.4%	$	39,904,504	37.0%
Media: Diversified & Production	15,345,715		14.4	16,046,808		14.9
Capital Equipment	14,818,168		14.0	15,025,919		13.9
Healthcare & Pharmaceuticals	14,438,471		13.6	14,580,515		13.5
Services: Business	12,259,926		11.5	12,395,025		11.5
Telecommunications	8,511,592		8.0	8,792,394		8.1
Chemicals, Plastics & Rubber	1,179,084		1.1	1,196,843		1.1
	$	106,251,499	100.0%	$	107,942,008	100.0%

Note 4. Fair Value Measurements

Fair Value Disclosures

The following table presents fair value measurements of investments, by major class, cash equivalents and derivatives as of March 31, 2017, according to the fair value hierarchy:

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Investments:
First Lien Senior Secured Loan	$	—	$	57,349,020	$	123,318,552	$	180,667,572
Second Lien Senior Secured Loan	—		12,190,172		1,685,081		13,875,253
Total Investments	$	—	$	69,539,192	$	125,003,633

Bain Capital Specialty Finance, Inc. - FORM 10-Q - May 12, 2017

Attached files