OFS Credit Company, Inc. (OCCI): History, Ownership, Mission, How It Works & Makes Money

Ever wondered how OFS Credit Company, Inc. truly operates within the specialized niche of structured credit investments? Reporting net investment income of approximately $3.1 million for the fiscal quarter ending January 31, 2024, and managing a portfolio valued at over $135 million primarily in Collateralized Loan Obligation (CLO) equity and debt, OCCI presents a focused investment vehicle. But what is the story behind its formation, who guides its strategy, and precisely how does it generate returns from these complex assets? Understanding its operational mechanics and revenue streams is key to grasping its position in the market.

OFS Credit Company, Inc. (OCCI) History

Understanding the journey of OFS Credit Company provides crucial context for evaluating its current position and future prospects. Like many specialized investment vehicles, its history is tied closely to its initial public offering and the strategy set forth by its investment advisor.

OFS Credit Company's Founding Timeline

• Year established: Incorporated in Delaware on February 14, 2017. Commenced operations following its IPO in October 2018.
• Original location: Operations are managed by its investment advisor, OFS Capital Management, LLC, located in Rolling Meadows, Illinois.
• Founding team members: Established by OFS Capital Management, LLC, which serves as the external investment advisor. Key decisions are driven by the advisor's management team.
• Initial capital/funding: Raised approximately $48.5 million in gross proceeds through its Initial Public Offering (IPO) in October 2018, issuing 2,425,000 shares at $20.00 per share.

OFS Credit Company's Evolution Milestones

OFS Credit Company's Transformative Moments

The initial strategic decision to focus predominantly on CLO equity tranches set the company's risk and reward profile from the outset. This segment offers potentially high yields but also carries higher volatility and sensitivity to credit market conditions.

Successfully navigating the extreme market stress test of early 2020 was a critical period. The advisor's ability to manage liquidity and portfolio positioning during this volatility demonstrated operational resilience, though NAV was significantly impacted before recovering.

Adapting the investment strategy to the shifting interest rate cycle from near-zero rates to the higher levels seen in 2023 and 2024 has been essential. This involved managing exposures and capitalizing on the floating-rate nature of underlying CLO assets while monitoring default risk. Evaluating these historical responses provides insight when Breaking Down OFS Credit Company, Inc. (OCCI) Financial Health: Key Insights for Investors.

OFS Credit Company, Inc. (OCCI) Ownership Structure

OFS Credit Company, Inc. operates as a publicly traded closed-end management investment company, externally managed by OFS Capital Management, LLC. Its ownership structure reflects its public nature, with shares held by a mix of institutional investors and the general public.

OFS Credit Company, Inc. (OCCI) Current Status

As of the end of 2024, OFS Credit Company, Inc. (OCCI) is a publicly traded company listed on the Nasdaq Global Select Market. Being public means its shares are available for purchase by the general public, and it adheres to stringent regulatory and reporting requirements set forth by the Securities and Exchange Commission (SEC). This structure influences its governance and how decisions impacting shareholder value are made; understanding this is crucial for evaluating its operations, further detailed in Breaking Down OFS Credit Company, Inc. (OCCI) Financial Health: Key Insights for Investors.

OFS Credit Company, Inc. (OCCI) Ownership Breakdown

The ownership is distributed among different types of shareholders. Based on data available approaching year-end 2024, the approximate breakdown is as follows:

OFS Credit Company, Inc. (OCCI) Leadership

OFS Credit Company, Inc. is externally managed by OFS Capital Management, LLC, an affiliate of Orchard First Source Asset Management (OFSAM). Key decisions and strategic direction are guided by the leadership team of the external manager, acting on behalf of OCCI. As of late 2024, the key figures overseeing the company include:

• Bilal Rashid - Chairman and Chief Executive Officer (Also CEO of the external manager, OFS Capital Management, LLC)
• Jeffrey Cerny - Chief Financial Officer, Treasurer, and Secretary

This leadership team, operating through the external management agreement, directs the company's investment activities and operational strategy.

OFS Credit Company, Inc. (OCCI) Mission and Values

OFS Credit Company primarily defines its purpose through its clear investment objectives, focusing on delivering specific financial outcomes for its investors rather than outlining broad corporate values often seen elsewhere. The company's operational ethos centers on disciplined investment strategies within the structured credit markets.

OCCI's Core Purpose

While not articulated through traditional mission or vision statements commonly found in operating companies, OCCI's core purpose is embedded within its investment mandate as a registered closed-end management investment company. Its filings clearly outline its strategic goals.

Official mission statement

OCCI does not publicly list a formal mission statement. Its primary investment objective serves as its core guiding principle: to generate current income. This objective dictates its strategy and operational focus.

Vision statement

A distinct vision statement is not articulated publicly by the company. However, its secondary investment objective, to generate capital appreciation, provides insight into its longer-term aspirations for portfolio growth alongside income generation. Understanding who invests based on these objectives is key; you can find more details by Exploring OFS Credit Company, Inc. (OCCI) Investor Profile: Who’s Buying and Why?

Company slogan

OCCI does not utilize a specific company slogan in its public communications or filings.

OFS Credit Company, Inc. (OCCI) How It Works

OFS Credit Company operates as a closed-end management investment company, primarily investing in the debt and equity tranches of Collateralized Loan Obligations (CLOs) to generate income and potential capital appreciation for its shareholders. Its core function involves actively managing a portfolio concentrated in these structured finance securities.

OFS Credit Company's Product/Service Portfolio

OFS Credit Company's Operational Framework

The company relies on its external advisor, OFS Capital Management, LLC, for day-to-day operations and investment management decisions. This includes identifying, evaluating, structuring, and monitoring investments within the CLO market. The advisor employs a rigorous due diligence process focusing on underlying collateral quality, structural protections, and manager capabilities.

• Investment Selection: Leverages the advisor's expertise and network to source CLO investment opportunities.
• Portfolio Management: Actively manages the portfolio composition based on market conditions and risk assessments. You can delve deeper into their financial standing here: Breaking Down OFS Credit Company, Inc. (OCCI) Financial Health: Key Insights for Investors.
• Regulatory Compliance: Operates under the regulations of the Investment Company Act of 1940, ensuring transparency and specific operational conduct.
• Fee Structure: Compensation to the advisor typically includes a base management fee, calculated on gross assets (around 1.75% annually as per recent data), and potentially incentive fees based on performance hurdles.

OFS Credit Company's Strategic Advantages

OCCI's competitive position stems from several key factors inherent in its structure and focus. The deep expertise of its external manager, OFS Capital Management, LLC, in the niche and complex CLO market provides a significant edge in sourcing and analyzing potential investments. This specialization allows for a focused strategy that many diversified credit funds cannot replicate.

• Manager Expertise: Access to a seasoned team with extensive experience in structured credit and leveraged loans.
• Niche Focus: Specialization in CLO securities offers investors targeted exposure to this specific asset class.
• Yield Potential: CLO equity, forming the bulk of the portfolio, historically offers the potential for higher yields compared to traditional fixed-income investments, albeit with commensurate risk.
• Access to Deal Flow: The advisor's established presence and relationships in the market potentially provide access to a wider range of investment opportunities.

OFS Credit Company, Inc. (OCCI) How It Makes Money

The company primarily generates income through interest distributions received from its investments, predominantly Collateralized Loan Obligation (CLO) equity and debt securities. Its profitability hinges on the difference between the yield generated by these assets and its financing and operating costs.

The Company's Revenue Breakdown

Based on financial data trends observed through mid-2024, the primary revenue sources are structured as follows:

The Company's Business Economics

The core economic engine relies on investing in CLO structures, aiming to capture the spread between the high yields typically offered by CLO equity tranches and the company's cost of capital, including debt financing and operating expenses. CLO equity is the riskiest part of a CLO but offers the potential for higher returns, driven by the difference between the interest collected on the underlying loan portfolio and the payments made to CLO debt tranches. CLO debt investments provide more stable, albeit lower, interest income. Key expenses impacting net income include interest expense on borrowings used for leverage and management fees paid to its external advisor. The company's strategy aligns with its objectives, which you can explore further in the Mission Statement, Vision, & Core Values of OFS Credit Company, Inc. (OCCI).

• Yield Spread: Success depends significantly on maintaining a positive spread between asset yields and funding costs.
• Leverage: Utilizing leverage can amplify returns but also increases risk, particularly sensitivity to interest rate changes and credit performance.
• Management Fees: As an externally managed fund, it incurs base management fees and potentially incentive fees based on performance.

The Company's Financial Performance

Key indicators reflect the operational results and financial health, based on reporting around mid-2024. Net Investment Income (NII) per share, a critical measure of earnings available for distribution, was trending around $2.00 - $2.20 annualized based on early 2024 results. Net Asset Value (NAV) per share, representing the underlying value of the company's assets minus liabilities, stood near $9.50 as of April 30, 2024, though this fluctuates with market conditions and portfolio performance. The company maintained a distribution yield attractive to income investors, often exceeding 18% annualized based on prevailing market prices and distribution rates in early 2024. The leverage ratio, typically measured as debt-to-equity, remained moderate, generally below 0.5x, indicating controlled use of borrowed funds relative to its equity base.

OFS Credit Company, Inc. (OCCI) Market Position & Future Outlook

OFS Credit Company operates as a niche player focused on Collateralized Loan Obligation (CLO) equity and debt investments, seeking attractive risk-adjusted returns primarily through current income. Its future outlook hinges on navigating interest rate volatility and credit cycles within the leveraged loan market, leveraging the expertise of its external manager.

Competitive Landscape

The market for CLO investments features several specialized players, with OCCI being one of the smaller publicly traded entities competing for assets.

Opportunities & Challenges

Success requires balancing potential rewards against inherent market risks.

Industry Position

OFS Credit Company maintains a specific position within the investment landscape, concentrating on CLO securities, a segment known for complexity and potential high yield. Compared to larger competitors like ECC and OXLC, OCCI operates with a significantly smaller asset base, reporting total investments at fair value of approximately $103.8 million and total assets of $112.2 million as of September 30, 2023. Its net asset value (NAV) per share stood at $6.11 at that time. The company's strategy relies heavily on its external manager's ability to select and manage these specialized assets effectively to generate income for shareholders. Understanding who invests in companies like this offers further insight. Exploring OFS Credit Company, Inc. (OCCI) Investor Profile: Who’s Buying and Why? Delving into the investor base can reveal alignment between the company's strategy and shareholder expectations, particularly regarding income generation versus capital appreciation within this specialized CLO market niche.