Fidus Investment reports record originations as private equity activity rebounds in 2026

On its fourth-quarter earnings call, Fidus Investment Corporation reported its strongest quarter for new originations in the company’s history and said management expects deal activity to pick up through 2026 as private equity owners return more assets to market. On the call, Chairman and CEO Ed Ross said fourth-quarter originations reached $213.7 million, which he attributed in part to “pent-up demand” following what he called “Liberation Day” last April, a period he said had temporarily stalled M&A decision-making.

For the full year 2025, Fidus said it invested $498.2 million across new and existing portfolio companies, producing net originations of $210.2 million and expanding its portfolio to $1.3 billion at fair value. According to the company’s announcement, that portfolio comprised 97 active holdings and several former portfolio companies whose operations have been sold, with the weighted average yield on debt investments reported at 12.6% as of 31 December 2025.

The fourth-quarter investment run rate reflected a heavier concentration of first-lien credit: management said $206.5 million, or 97% of the quarter’s originations, were in first-lien securities, while equity investments accounted for $3.2 million. For the year, first-lien positions made up 86% of the debt portfolio by fair value and the equity sleeve represented roughly 10.7% of the total at fair value. Ross noted the company has been shifting toward senior-secured structures and cited underwriting cushions intended to protect loan-to-value metrics.

Fidus reported improved income generation and a modest increase in adjusted net investment income (NII). Adjusted NII rose 5.1% year over year to $19.4 million for the quarter, driven by higher average income-producing assets and a roughly 60% jump in fee income compared with the fourth quarter of 2024. On a per-share basis adjusted NII was $0.52. The company recorded total investment income of $42.2 million in the quarter, an increase from the prior quarter, and noted $1.5 million of net realised losses tied mainly to an exit from US Green Fiber that were offset by gains on other disposals.

Fidus continued to distribute above its base dividend. Management reiterated a base dividend of $0.43 per share and said total dividends paid in the fourth quarter amounted to $0.50 per share. The board declared a first-quarter 2026 distribution of $0.52 per share , comprising the $0.43 base plus a $0.09 supplemental dividend , payable 30 March 2026 to holders of record on 20 March 2026. The company said it finished the year with estimated spillover income of $1.01 per share available for future distributions.

Net asset value climbed during 2025, with NAV rising to $741.9 million at year-end from $655.7 million a year earlier; NAV per share was reported at $19.55 versus $19.33 at 31 December 2024. Management flagged strong credit metrics: non-accruals were below 1% of the portfolio at fair value and roughly 2% at cost at year-end. The firm emphasised continued underwriting discipline and loan structures meant to preserve downside protection.

Fidus discussed its exposure to software and tech-enabled services, an area management described as containing both “AI opportunities and risks.” The software and tech-enabled services book stood at $464 million, about 92% first-lien debt, 4% junior debt and 4% equity, diversified across 28 companies with an average position of approximately $17 million. Ross said the weighted average loan-to-value for that segment was 37%, below the 44% LTV for the overall portfolio, and that debt marks in the software pool were at 100% of cost as of 31 December 2025. He outlined characteristics the firm seeks in software borrowers , including “data moats,” niche market focus, contracted revenue and management teams prepared to adopt change , and said many portfolio companies are layering AI features or deploying AI to reduce costs. Ross also noted that annual recurring revenue (ARR) loans represent about 22% of the software portfolio, equivalent to roughly 7.5% of total assets, and that Fidus structures ARR financings with covenants to drive transitions toward EBITDA-based cash flow.

On leverage and liquidity, Chief Financial Officer Shelby Sherard reported total debt outstanding of $658.3 million at year-end, a net debt-to-equity ratio of 0.8x and statutory leverage excluding exempt SBA debentures of 0.6x. The firm said the weighted average interest rate on outstanding borrowings was 5.2%. Fidus used proceeds from a $100 million add-on to existing notes to redeem the remaining $100 million of unsecured notes due in January, expanded its credit facility capacity from $175 million to $225 million via an accordion, and raised $31.5 million of net proceeds through accretive share issuance under an ATM programme. Total reported liquidity at 31 December 2025 was approximately $304.8 million, made up of cash, revolver availability and available SBA debentures.

Looking ahead, Ross characterised deal flow as “a little more modest” entering the first quarter , attributing the slower start to seasonality , but said he expects activity to accelerate through the year as private equity sponsors seek to return capital after extended holding periods. He said repayments in the first quarter were likely to be lower than originations, supporting some portfolio growth, and that potential dislocations in software markets could create selective buying opportunities even though such dynamics had not yet materialised in Fidus’s lower-middle-market focus.

Industry reporting and the company’s own release underline that 2025 was a year of increased deployment and portfolio expansion for Fidus, with management signalling confidence that a resumption of M&A activity and sponsor-led dispositions will underpin further originations in 2026.