New Mountain Finance Corporation (NMFC) is selling $477m (£353m) of assets to a third party in a bid to improve portfolio diversification and reduce payment-in-kind (PIK) income.
The public business development company (BDC), which specialises in direct lending to US-based middle market companies, announced the sale in its financial results covering the three months to the end of December 2025. The assets were sold at 94 per cent of fair value.
John R. Kline, NMFC’s chief executive, described the asset sale as a “positive catalyst” for the business, which is seeking to reduce PIK income, improve portfolio diversification and allocate capital to new loans and share buybacks.
“Since the end of the third quarter, NMFC has repurchased $30m worth of shares and we expect repurchases to continue in 2026, underscoring our confidence in NMFC’s long-term value,” Kline explained.
BDC liquidity has come under scrutiny of late, after Blue Owl Capital Corporation II sold $1.4bn of direct lending investments to meet redemption requests.
Read more: Blue Owl insists changes to OBDC II redemptions ‘not halting’ liquidity
In its fourth-quarter update, NMFC also announced plans to permanently reduce the company’s incentive fee to 15 per cent over an eight per cent hurdle at the expiration of the dividend protection program.
NMFC declared a first quarter 2026 distribution of $0.32 per share, payable on 31 March 2026. However, it expects the second quarter dividend to reduce to $0.25 per share as a result of base rate compression, lower market spreads and an “increasingly senior asset mix”.
Read more: StepStone: “Resilient” direct lending market can survive default uptick
