Blackrock Tcp Capital (NASDAQ:TCPC) executives used the company’s fourth-quarter earnings call to provide additional context around a steep net asset value decline that was previously pre-announced in a January 23 filing, pointing to issuer-specific developments and concentrated markdowns in a handful of investments as the primary drivers.
Fourth-quarter and full-year results
Chairman, CEO, and Co-CIO Phil Tseng said full-year 2025 adjusted net investment income (NII) was $1.22 per share, down from $1.52 in 2024, and that annualized NII return on equity was 12.3% versus 14.5% in 2024. Adjusted NII was $0.25 per share for the fourth quarter, compared with $0.30 in the prior quarter and $0.36 in the fourth quarter of 2024.
NAV decline and key markdowns
Net asset value fell 19% to $7.07 per share as of December 31, 2025, from $8.71 per share as of September 30, with management noting the figure was in line with the midpoint of the range provided in the January 23 pre-announcement. Tseng said six portfolio companies represented about 67% of the NAV decline, or $1.11 per share.
Management detailed the six largest contributors:
- Edmentum: A position comprised entirely of preferred and common equity. Tseng said the valuation fell due to overall underperformance in the fourth quarter and lower anticipated future growth. The markdown represented 23% of the NAV decline, or $0.38 per share.
- Razor and SellerX: Previously restructured Amazon aggregators that continued to underperform. Razor contributed $0.24 per share (15% of the NAV decline) and was written down to zero, while SellerX contributed $0.22 per share (13%).
- Renovo: As discussed on the prior earnings call, the company moved forward with writing down the investment in the fourth quarter, negatively impacting NAV by $0.15 per share, consistent with prior expectations shared by management.
- Hylan: A provider of telecom and wireless engineering and construction services that had also been previously restructured. Ongoing underperformance and liquidity concerns led to a markdown of both debt and equity exposure, resulting in a $0.06 per share impact to NAV.
- InMobi: A digital advertising company where TCPC’s remaining exposure was warrants retained after full repayment of its term loan. Management reduced the valuation due to underperformance in the fourth quarter and an associated outlook change, resulting in a $0.06 per share NAV impact.
Tseng also said approximately 91% of the quarter’s NAV reduction came from investments underwritten in 2021 or earlier. He cited certain business types—including Amazon aggregators and e-learning platforms—that benefited from pandemic-era demand but later softened, and he noted that these positions were underwritten in a lower-rate environment and have faced challenges in a sustained higher interest rate backdrop.
Credit quality, non-accruals, and portfolio positioning
As of December 31, 2025, non-accrual debt investments represented 4% of the portfolio at fair market value and 9.7% at cost, compared with 5.6% at fair market value and 14.4% at cost for the fourth quarter of 2024.
President Jason Mehring said the year-end portfolio had a fair market value of $1.5 billion across 141 companies in more than 20 industry sectors, with an average position size of $10.9 million. He said 92.4% of the portfolio was invested in senior secured loans, all floating rate, and 7.5% was in equity investments. The largest investment represented 7.2% of the portfolio by fair value, and the five largest investments totaled 23.1%.
Mehring said TCPC continued efforts to reduce concentration risk, noting that the average size of investments in new portfolio companies during 2025 was $5.8 million, compared with an $11.7 million average position size at the end of 2024. He added that all new portfolio company investments in 2025 were first-lien loans, taking first-lien exposure to 87.4% of the portfolio by fair value, up from 83.6% the prior year.
At the end of the fourth quarter, the weighted average effective yield of the portfolio was 11.1%, down from 11.5% in the third quarter. Mehring said investments made during the quarter carried a weighted average yield of 9.7%, while exited investments had a weighted average yield of 11.1%, citing lower base rates and spread compression as contributors to current yields.
Capital allocation, liquidity, and leverage
The board declared a first-quarter dividend of $0.17 per share payable March 31, 2026, to shareholders of record March 17, 2026. Tseng said the company’s goal is to maintain a dividend that is sustainable and covered by NII.
Tseng also said TCPC repurchased 515,869 shares during the fourth quarter at a weighted average price of $5.84 per share, and bought an additional 233,541 shares after quarter-end at a weighted average price of $5.50 per share.
CFO Erik Cuellar said fourth-quarter gross investment income was $0.52 per share, including recurring cash interest of $0.41 per share and PIK income of $0.06 per share, among other components. PIK interest represented 10.9% of total investment income, up from 9.5% in the prior quarter, and Cuellar said it included no new names.
Operating expenses were $0.25 per share, including $0.18 per share of interest and other debt expenses. Cuellar said no incentive compensation was accrued in the quarter because cumulative total return did not exceed the total return hurdle, and he reiterated that the advisor waived a portion of the base management fee.
Cuellar reported net realized losses of $73.9 million, or $0.87 per share, with Anacomp and Astra cited as the most significant contributors. Net unrealized losses were $66.5 million, or $0.78 per share, primarily tied to the six markdowns discussed on the call. The net decrease in net assets for the quarter was $118.3 million, or $1.39 per share.
On the balance sheet, Cuellar said total liquidity at year-end was $570.2 million, including $482.8 million of available borrowings and $61.1 million of cash. Net regulatory leverage was 1.41x at year-end, compared with 1.2x at the end of the third quarter, resulting in a total debt-to-equity leverage ratio of 1.74x. He said net regulatory leverage improved to 1.34x after year-end due to paydowns, and management expects leverage to decline further as additional investments are exited.
Cuellar also noted that on February 9, 2026, the company paid down the full $325 million principal amount of its 2026 unsecured notes, resulting in current liquidity of approximately $290.8 million.
During the Q&A, management said it continues to evaluate ways to optimize shareholder returns but believes the best path forward is to keep improving portfolio credit quality and executing its strategy, including rotating toward first-lien lending and increasing diversification. Executives also said there was no change to valuation policy or process, and described the quarter’s markdowns as driven by a unique set of idiosyncratic factors that occurred in unison, leading the company to release an 8-K in January to update the market.
About Blackrock Tcp Capital (NASDAQ:TCPC)
BlackRock TCP Capital Corp is a publicly traded business development company (BDC) listed on the NASDAQ under the ticker TCPC. Externally managed by BlackRock, the firm provides customized financing solutions to U.S. middle-market companies, with a focus on sponsor-backed transactions. Its core strategy centers on delivering current income and capital appreciation through a diversified portfolio of debt and equity investments across a variety of sectors, including consumer products, healthcare, business services and industrials.
Since its initial public offering in 2013, BlackRock TCP Capital has partnered with private equity sponsors to underwrite and structure senior secured first-lien loans, second-lien loans, mezzanine debt and select equity co-investments.
