Prospect Capital Corporation - Closed End Fund

Prospect Capital Corp. is a U.S.-based closed-end investment company organized as a business development company (BDC) that lends to and invests in middle-market privately held companies. Its portfolio strategy combines senior and subordinated debt, equity investments, and structured credit, with investments made directly and through wholly owned holding companies and financing subsidiaries.

— Prospect Capital Corporation - Closed End Fund
%
Direct lending40% Senior and syndicated loans originated to privately held middle-market borrowers.
Subordinated debt20% Junior debt and mezzanine-style financings that sit below senior loans.
Equity investments20% Minority and control equity stakes in operating companies and holding companies.
Structured credit15% CLOs, subordinated structured notes, and other structured credit positions.
Other portfolio and fee income5% Ancillary income and investment-related activities tied to the portfolio.

Prospect’s primary counterparties are privately held middle-market companies that need capital for acquisitions,...

  • Middle-market private borrowersprimary

    Privately held operating companies that borrow senior or subordinated capital for growth, acquisitions, or refinancing.

  • Private equity sponsor-backed companiesprimary

    Companies owned or backed by financial sponsors that use direct lending and mezzanine capital.

  • Control investment portfolio companiessecondary

    Operating businesses where Prospect owns controlling equity and may also provide debt financing.

  • Real estate-related borrowerssecondary

    Real estate companies receiving control equity or lending capital under the real estate strategy.

  • Structured credit counterpartiessecondary

    Issuers and securitization structures tied to CLO and structured credit investments.

Prospect is headquartered in the United States and its investment activity is primarily centered on U.S...

  • •Headquartered and organized in the United States
  • •Primary investment exposure is to U.S. middle-market companies
  • •Portfolio companies may operate across multiple U.S. regions
  • •Some investments have global end-market exposure through portfolio companies
  • •Geography matters mainly through borrower credit quality and local demand

Prospect’s strategy is to generate current income and long-term capital appreciation through a mix of debt and equity...

01
Maintain diversified origination across lending and equity strategiesmedium-term

Diversification helps spread credit risk across borrowers, sectors, and capital structures.

02
Target companies with identifiable repayment supportshort-term

Cash flow, asset collateral, and contracted revenue improve underwriting confidence and downside protection.

03
Use control positions where value creation is availablemedium-term

Control investments can provide governance influence and potential equity appreciation.

Prospect’s main risks come from credit losses, illiquidity, and valuation uncertainty in privately held portfolio...

high

Portfolio company default and impairment

The company lends to leveraged middle-market borrowers that may have limited resources and shorter operating histories.

Scope
Senior debt, subordinated debt, and equity investments
Materiality
high
high

Illiquidity of private investments

Many holdings are privately negotiated positions without active secondary markets.

Scope
Control investments and private credit positions
Materiality
high
high

Valuation uncertainty

Fair value depends on management estimates, market inputs, and portfolio company performance.

Scope
ASC 820 fair value measurements
Materiality
high
high

Macroeconomic and interest-rate sensitivity

Borrower credit quality and portfolio valuations can weaken when financing conditions tighten.

Scope
Middle-market lending and structured credit
Materiality
high
medium

Conflict of interest from external management

The adviser earns management and incentive fees and may have competing client obligations.

Scope
Investment selection and opportunity allocation
Materiality
medium
Fair value of investments
Unrealized gains and losses can be significant
Consolidation of controlled portfolio companies
Can materially alter balance sheet size and income statement composition
Interest income and non-accruals
Affects reported investment income and credit quality indicators
Level 3 valuation inputs
Increases sensitivity to management estimates

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: 29.4.2026