Fidus Investment (FDUS) Q3 2026 Earnings Report

The call was broadly positive. Fidus reported higher adjusted NII, a fully covered base dividend, substantial liquidity, a healthy portfolio with no debt investments on non-accrual, moderate leverage, and improving M&A activity. The main challenges were the $11 million of realized Virtex losses, limited third-quarter closed deal flow, uncertainty around the pace of the M&A recovery, competitive pricing, and limited near-term equity realizations.

For the remainder of 2026, management anticipates a higher level of investment activity from an origination and a repayment perspective due to a more active M&A market; repayments are expected to be relatively healthy in Q4, most likely less than originations, while equity realizations are expected to be very limited here in Q4, with some potential realizations in 2027 after 5 or 6 realizations this year. Assuming status quo, management expects a lift in M&A activity, but does not expect it to be overly robust, although there will be plenty of activity; pricing stability is the expectation, with a possible slight narrowing if rates do increase, leverage is expected to be stable or maybe a little bit lower, and loan-to-values on expected originations are expected to remain in the 30% to 50% range. Management intends to maintain leverage between 0.9:1 and 1.1:1, with a goal not to go too far over 1:1, and its general strategy remains up to 10% of capital deployed over time in equity investments; dividend income is episodic, so not expecting that every quarter probably makes sense.