What is BDC in private equity?

A BDC is a closed-end fund that is required to invest at least 70% of its assets in private or thinly traded public companies in the form of long-term debt and/or equity capital, with the goal of generating current income and/or capital gains. Generally, BDCs are either listed, non-listed or private.

Are BDC a good investment?

Are BDCs worthwhile investments for the public? The study finds that BDCs live up to their reputation for high dividend yields. Moreover, the total returns of BDCs (stock returns plus dividends) appear to match or beat the benchmark indices. However, BDCs incur substantially greater risk than their benchmarks.

What is a BCD investment?

BDCs are investment companies that help smaller firms meet their capital needs through loans or sometimes even equity investments.

Related Question What does BDC stand for in finance?

What does BDC stand for dealership?

The goal of the Business Development Center (BDC) is to develop sales and service business for the dealership. However, dealers often find themselves asking the question, “Is setting up a BDC a prudent investment or a misuse of time and resources?” Surprisingly, the right answer is, “It depends.”

Is a BDC a stock?

2021 BDC Stocks List | The Best Business Development Companies Now. Business Development Companies, otherwise known as BDCs, are highly popular among income investors. BDCs widely have high dividend yields of 5% or higher. The strongest BDCs also have the ability to raise their dividends on occasion.

Are BDCs mutual funds?

In some ways, BDCs are similar to other investment funds - like mutual funds, other closed-end funds, and exchange-traded funds (ETFs): Investors own shares representing a pro rata or proportional part of the BDC. BDCs' offerings of shares are registered with the SEC, and BDCs are regulated by the SEC.

Is a BDC a 40 Act fund?

A BDC is not, as a technical matter, registered under the 1940 Act, but elects to be subject to regulation by the SEC under many of the provisions of the 1940 Act, including independence requirements for board members, valuation requirements and restrictions on investments in other investment companies.

Who would most likely invest in a BDC?

The BDC must invest at least 70% of its assets in private or public U.S. firms with market values of less than US$250 million. These companies are often young businesses, seeking financing, or firms that are suffering or emerging from financial difficulties.

How are BDC dividends taxed?

As Regulated Investment Companies, BDCs aren't considered taxable entities. In exchange for this favorable tax treatment, however, a BDC must distribute at least 90% of its taxable income to shareholders as ordinary dividends each year. Since they retain very little of their earnings, BDCs don't pay corporate taxes.

Do BDC pay qualified dividends?

Dividends paid by tax-exempt corporations or trusts such as Business Development Corporations (BDCs), Master Limited Partnerships (MLPs), Limited Liability Corporations (LLCs), or Real Estate Investment Trusts (REITs) are considered non-qualified, and may be taxed at ordinary rates.

What is a BDC lender?

What are BDCs? The BDC is a non-bank lender that raises capital from both institutional and retail sources, invests it mainly in the debt, and to a lesser extent into the equity, of middle-market companies, and then pays out proceeds to investors in the form of a dividend, which is subject to ordinary income tax rates.

How do you evaluate BDCs?

Tangible book value growth is the best way to gauge a BDC's performance, from a shareholder value perspective. Shareholders equity is assets minus liabilities. Book value is shareholders equity expressed on a per-share basis.

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