OFS Capital Corp (NASDAQ: OFS)

OFS Capital Corp is an externally managed closed end non diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. The company focuses on providing capital to middle market companies in the United States primarily through debt investments and to a lesser extent through equity investments. Its investment objective is to generate current income and capital appreciation for shareholders.

The company generates revenue mainly from interest income on its loan portfolio, dividend income on equity holdings and fees related to its investment activities. Interest earnings come from first lien, second lien, unitranche and subordinated loans made to portfolio companies. Dividends are received on preferred and common stock positions. Additionally the company may earn fees from structuring and managing investments.

OFS Capital Corp operates in a competitive landscape that includes other business development companies, commercial banks, private equity firms and hedge funds. Its competitive advantages stem from the deep experience of its investment team, the proprietary deal flow generated by its affiliate OFS and a disciplined underwriting process that seeks to limit downside risk. The company focuses on the middle market segment where many larger financial institutions are less active due to the intensive nature of sourcing and monitoring smaller companies.

The company provides capital to privately owned middle market businesses across various industries such as manufacturing, healthcare, business services and technology. Specific borrower names are not disclosed in the filing but the portfolio consists of dozens of companies with typical enterprise values between ten million and five hundred million dollars. Shareholders of the company also benefit from the income generated through dividends and interest payments.