And I think in terms of how they’re managing it, I think they’re doing kind of all they can sort of pulling the levers they can. A decent amount of company did have a certain amount of hedges, but they were never perfect, a lot of those could be rolling off. So I think it is an environment that portfolio company CFO, so the treasurers obviously have a lot to do these days and have to spend a lot of time sort of focused on that. And I think the majority of the portfolio has done a good job with them.
Brian Gerson: The other thing – this is Brian. The other thing that we’ve seen is for our more acquisitive companies, sponsor raising junior capital typically pick preferred or something like that to continue to drive acquisition strategies and growth, so – as well as sponsors contributing equity on their own. So we’re definitely seeing some junior capital support in certain companies.
Kenneth Lee: Got you. Very helpful there. And just one follow-up, if I may. I wonder if you could just talk about what you’re seeing around either covenants or documentation for recent investments, especially within the Upper Middle Market segment. Thanks.
Daniel Pietrzak: Yes. I think – the documentation, I think, is held, right? I think people know that we’re in – I’d like to say we’re in the storage business in direct lending and private credit, so they’re not in the movie business. So I think things like collateral, stripping or other terms like that have kind of now made their way into the market. I think covenants is a little bit more sort of case specific. I think guys, we’ve just been more and more active in sort of larger size deals. I mean the EBITDA numbers I spoke of in the prepared remarks, $250 million plus. You’re getting less access to what I would call financial covenants, but you’re lending to better companies which I think we’re sort of comfortable with that.
I don’t think those size numbers though will necessarily be sustainable, right, as companies have access to the public markets, some of them will take that, I think we’ll average more down. In line with what our historical kind of medians or weighted average numbers have been. But there will be certain parts of – or certain sort of sectors or size of companies where we would only do the deal with the financial covenant larger companies, I think we’ll be a little bit more flexible there because we’re going to like the credit risk.
Kenneth Lee: Got it. Very helpful there. Thanks, again.
Daniel Pietrzak: Thanks.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Mark Hughes from Truist Securities. Your question please.
Mark Hughes: Yes, thank you. Good morning. You had some good success with the asset base finance in the quarter. Is there anything there that was just kind of opportunistic? Or is there more activity?
Daniel Pietrzak: Yes. Thanks for the question, Mark. A little bit more, I’d say, activity. The one deal I mentioned in the prepared remarks, the high FICO sort of loan book out of BMO, we were pretty excited about that. $7-odd billion portfolio. We’re pretty constructive on the prime and sort of super prime part of the consumer portfolios about this. So I think we’re happy to be in that. The two other names, just you have it that probably drove that. We talked about on prior calls, the deal with PayPal in Europe, that transaction funded so we’re happy to see that getting off to a good start. And that we did do receivables facility, I think there was a press release out there on it for a company weather. So those were the three big drivers.
But we do think that’s a really interesting space right now. We do think what’s going on with the regional banks in the United States allows us to potentially acquire assets or fill certain void. So it’s an area we’re spending a lot of time on.
Mark Hughes: Understood. And then you talked about some pressure on spreads in the – I think, were larger deals. Does that extend down to the middle market, smaller deals?
Daniel Pietrzak: Yes, we do see it kind of extending. I mean I think we’re – our definition of upfront in the middle market is pretty broad, right? We’re thinking about companies historically in the kind of 50 to 150 context. Obviously, we’ve been above that with the numbers that we quoted in the remarks around the deal flow in Q4. I do think it’s an important point though to think about what the total return is on these deals versus the risk you’re taking versus where you’re sitting in the capital structure as sort of still pretty darn interesting risk-adjusted returns, but spreads definitely did move in Q4 downward.
Mark Hughes: Understood. Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Robert Dodd from Raymond James. Your question please.
Robert Dodd: Good morning. If I can ask another – kind of another question about the JV, right? So if we look at the BDC, total income dropped 3.5%, I think this quarter, but within the JV, it was down more than double that north of 8%. Yes, there’s some same exposure with [Reliant KBS], no one know where the dividend is dropping. But can you walk us through about what’s driving that greater decline at the JV than you’re experiencing at the BDC? And given that the guidance for the dividend for Q1 is down again. It appears maybe whatever is driving that isn’t over yet. So can you give us any color on that?
Daniel Pietrzak: Yes. It’s a fair question. I think part of it and then Steven Lilly might want to sort of add to this as well. But part of it was just a certain amount of larger fee income or ABF dividends on names that were probably overweight in the joint venture flowing through in Q3 than they were in Q4. There’s nothing kind of broader than that vis-a-vis kind of the rest of the portfolio there. If anything, I think we’ve got room to grow the joint venture room to sort of increased kind of dividend that can be paid out there over the coming quarters or during the overall kind of 2024, but – do you have anything to add?
Steven Lilly: Exactly. Yes.
Robert Dodd: Okay. Thank you.
Operator: Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Dan Pietrzak for any further remarks.
Daniel Pietrzak: Well, thank you all for joining the call today and the support during 2023. If you do have any follow-ups, please let us know. We’re very happy to spend the time. Thanks, and have a good day.
Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
