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All
About BDCs
Business Development Corporations/Private Equity
Investors
BDC Directory
In
1980, the U.S. Congress created a class of corporation called business
development corporations to encourage the flow of public equity capital to
private businesses.
To
qualify as a "regulated investment company," a BDC must invest
at least 70% of its assets in private or thinly traded, public U.S.
corporations, and must distribute at least 90% of its taxable income to
shareholders in the form of dividends. BDCs must also make available
significant managerial assistance to their client companies. BDCs often
take an equity interest in their client companies which can result in
capital gains when they liquidate those positions. BDCs gain an additional
tax advantage if they distribute at least 98% of their ordinary income and
98% of their capital gains to shareholders.
Until 2003, there
were only four publicly traded BDCs: Allied Capital, American
Capital Strategies, Gladstone Capital, and MCG Capital. However, since then,
many new BDCs have gone public.
One of the firms listed, Compass Diversified
Holdings, is a trust, not a BDC. Rather than lending money, Compass is
similar to a private equity investor. It acquires controlling interests in
small firms serving niche markets.
Here's a
list of
BDCs. |
