Robert Dodd: Got it. Thank you. On the asset manager and I’m not talking about not this quarter, but kind of thematically of the next couple of year’s maybe. Can you give us any indication if plans have developed about how you’d like to handle MSC or if there are other initiatives that you plan on undertaking, I mean, obviously, you have two private loan funds in there as well. Just any more color on what you think is going to go? The outlook for that, really high return on risk-adjusted capital, if you will, business within Main over the next couple of years?
Dwayne Hyzak: Sure, Robert. So similar to what you just said there, we view the asset management business for us to be extremely attractive. It’s something that’s very unique to Main Street in relation to other BDCs. It has been and continues to be a very large contributor to our return on equity and our recurring net investment income. So it’s something that we put a lot of value on. We find it highly attractive just like we think most of our stakeholders do. So when you look at that, and you’ve heard us say this in the last couple of quarters, we have been and continue to be focused on trying to grow it, and we can grow it a couple of ways. One is through the private loan activities that we’ve had, obviously, we’re not planning to double the growth that there.
Those – the growth through those private loans will be very, very deliberate and as a result, it will probably be more moderate. Longer term, if we can find a solution that works for both us and for the shareholder of MSC Income Fund to grow that. We think that’s the biggest opportunity, and we continue to look at different strategic initiatives or activities that we can take on front to allow us to both deliver really, really good returns for their shareholders, but also deliver additional benefits to Main Street through the growth of that entity of that fund. I don’t have anything today that I can share with you, but I think you would expect, just given the comments I just provided in our prior comments, that we continue to work on that, and we’re hopeful that at some point in the future, we’ll have a really good outcome for all parties.
Robert Dodd: Got it. Thank you.
Operator: Our next question comes from Mark Hughes with Truist Securities. Please proceed with your question.
Mark Hughes: Yes. Thank you. Good morning. Dwayne, you talked about the – you’re seeing more interest from several buyers. You also categorized your pipelines as above average compared to average last quarter. What the – could you expand on that a little bit more uptick clearly in deal activity that you’re seeing? Do you think that’s a broader – what’s driving all that?
Dwayne Hyzak: Sure, Mark. Thanks. Thanks for the questions. I would say taking those two questions in reverse order. When you look at the activity both on the lower middle market side and the private loan side, we have seen a noticeable uptick on both sides. As you heard in our script and you saw in the numbers, we had really good investment activity in both strategies in the first quarter. And as you took from my comments, the pipeline in both situations or both cases, continues to be positive. I’m not sure if you just attribute that to the overall market kind of becoming more active or if it’s something that we’ve done specifically. I think it’s probably a combination of the two. I think more broadly, you probably heard other BDCs or other private equity, private debt investors, saying for the last couple of months that the market has become more active.
We’ve definitely seen that on the front end of the funnel. And I think we’ve seen, our experienced more success here recently, both in the lower middle market and private loan strategies and having more success on opportunities, moving through the funnel and resulting in actionable items that we get the opportunity to execute on. So nothing huge or significant just the market has improved, and we’re doing a good job of capturing those opportunities. On your first question about the uptick in potential realizations, from time to time, we’ll see that activity ebb and flow does not always mean that we get to an exit because there’s a lot of things just like on our new investment activity, a lot of things have to go well in order for us and our portfolio company to get to a good outcome from an exit standpoint, but we have seen that increase, both in terms of at least one company where our partners in the business have an increased desire to seek liquidity and then a couple of others where it’s inbound activity, kind of unsolicited activity from third parties that has prompted some activity there.
So we’ll continue to execute on that work to realize the best outcome for us and our partners in those lower middle market portfolio companies and hope for a good outcome. If we don’t exit, these – the companies that we’re referencing are all very strong, high-performing companies, and we’d be happy to continue to be invested in those companies long term.
Mark Hughes: Any observation about the kind of valuations? Are you seeing perhaps more attractive valuations that would prompt more realizations?
Dwayne Hyzak: I don’t know if I’d say there’s a big change there. I mean, the market has gotten a little more heated or competitive. So overall, say today valuations are probably a tick higher than they would have been 12 or 18 months ago. But I wouldn’t say that there’s anything that’s – that’s materially different. I’ll let David see if he has anything he wants to add. But it’s a healthy market, it’s a productive market, but not anything that we think is kind of a significant uptick. So David, I don’t know if you’d add anything.
David Magdol: Yes. Only thing I’d add is that if you look at the longer term for our size transactions, there has not been a material change in recent past. We did see some reluctance for sellers to come to market when interest rates picked up kind of more suddenly and there was concerns about the financing. So we saw some degradation in valuation multiples. Now there’s some normalcy in the new interest rate environment. It stabilized, but its back to historical norms for our lower middle market investment portfolio.
Mark Hughes: Appreciate that. Thank you.
Dwayne Hyzak: Thank you, Mark.
Operator: [Operator Instructions] Our next question comes from Eric Zwick with Hovde Group. Please proceed with your question.
Eric Zwick: Thanks. Good morning, everyone. First, just wanted to start on the second private loan fund, if you could just provide maybe an update on activity there in the first quarter. And then also I think you’ve previously indicated that you were targeting between $100 million and $300 million and curious if you’ve kind of narrowed that range or set a more kind of precise target? And then ultimately what factors do you consider in determining when to do the final closing. Is it just timing or size or changing market activity?
