Stellus Capital Investment Corp (NYSE: SCM) is a business development company (BDC) that lends to and invests in private middle-market companies primarily through first lien debt, along with equity co-investments. It earns income through interest on floating-rate loans, fees, and incentive compensation paid by its external manager, Stellus Capital Management. SCM trades on the NYSE under the symbol SCM and has been publicly listed since November 8, 2012. The portfolio spans a wide range of U.S. states, with Texas (16.15% of investments at fair value), California (16.00%), and Florida (10.98%) representing the three largest geographic concentrations as of the FY2025 filing. The company is externally managed, meaning Stellus Capital Management controls day-to-day investment decisions and earns both a base management fee and an incentive fee tied to investment income and net capital gains. Capital structure relies on a mix of equity issuances, a credit facility, and institutional notes payable, including $125.0 million in 2030 Notes Payable issued during 2025.
- Revenue model
- SCM generates income primarily from interest on floating-rate first lien loans (priced at SOFR plus a spread) made to middle-market portfolio companies. Stellus Capital Management also collects an incentive fee from SCM calculated as a percentage of quarterly investment income above a hurdle rate, plus a separate incentive fee on net capital gains with no hurdle rate. Additional income sources include loan origination fees and payment-in-kind interest on select investments.
- Products and services
- First lien term loans (including delayed draw facilities), second lien loans, and equity co-investments (common units, preferred units, partnership interests, and warrants) in private middle-market companies. The portfolio includes investments across industries such as business services, high tech industries, media, and healthcare, among others, based on portfolio company disclosures in the FY2025 10-K.
- Customers and end markets
- Borrowers are private, middle-market U.S. companies across a broad range of industries. Portfolio companies identified in the FY2025 filing include entities in business services, technology, environmental services, elder care, aviation, media, and consumer sectors. Geographic end-market concentration as of FY2025: Texas 16.15%, California 16.00%, Florida 10.98%, Illinois 5.94%, Pennsylvania 5.71%, with additional exposure to Canada (3.40%) and other U.S. states.
- Value-chain role
- Direct lender and equity co-investor to private middle-market companies. SCM originates, underwrites, and holds debt and equity positions; it does not syndicate or serve as an agent bank. Stellus Capital Management, as external adviser, sources deals and manages the portfolio on SCM's behalf.
- Geographic exposure
- Primarily United States, with top concentrations in Texas (16.15%), California (16.00%), and Florida (10.98%) at fair value as of the FY2025 10-K filing. Minor exposure to Canada (3.40% at fair value). Remaining exposure spread across Illinois, Pennsylvania, Arizona, New York, Ohio, Colorado, Wisconsin, District of Columbia, Georgia, North Carolina, Tennessee, Massachusetts, Missouri, Iowa, Idaho, New Jersey, and other states.
