SCHEDULE: Stellus Private Credit BDC: Cliffwater Group Boosts Stake to 33.4%

Cliffwater LLC and its affiliates, including the New York State Nurses Association Pension Plan, have reported a combined beneficial ownership of 33.4% in Stellus Private Credit BDC common stock.

Summary

• Cliffwater LLC, along with its advised funds (Cliffwater Corporate Lending Fund and Cliffwater Enhanced Lending Fund) and the New York State Nurses Association Pension Plan, collectively hold a significant beneficial ownership in Stellus Private Credit BDC.
• The aggregate beneficial ownership reported by Cliffwater LLC and Stephen Nesbitt is 4,130,035 shares, representing 33.4% of the class.
• Cliffwater Corporate Lending Fund beneficially owns 2,025,849 shares, or 16.4% of the class, with shared voting power over 618,571.40 shares and shared dispositive power over 2,025,849.00 shares.
• Cliffwater Enhanced Lending Fund beneficially owns 1,012,925 shares, or 8.2% of the class, with shared voting power over 618,571.40 shares and shared dispositive power over 1,012,925.00 shares.
• The New York State Nurses Association Pension Plan beneficially owns 1,091,261 shares, or 8.8% of the class, with shared voting power and shared dispositive power over all 1,091,261.00 shares.
• Cliffwater Corporate Lending Fund and Cliffwater Enhanced Lending Fund have agreed to waive voting power for shares held in excess of five percent of the class.
• The reporting persons are reporting indirect beneficial ownership as a result of their investment in Stellus Private Credit BDC Feeder LP.
• The securities were acquired and are held in the ordinary course of business and not for the purpose of changing or influencing control of the issuer, except for activities solely in connection with a nomination under Rule 14a-11.

Sentiment

Score: 7

Explanation: The filing indicates a substantial and consolidated beneficial ownership by a group of institutional investors and their adviser, which can be viewed positively as a vote of confidence in the issuer. The waiver of voting power above 5% by two funds mitigates immediate control concerns.

Positives

• Significant beneficial ownership by institutional investors and an investment adviser, indicating confidence in Stellus Private Credit BDC.
• The combined stake of Cliffwater LLC and its affiliates reaching 33.4% suggests a strong, long-term investment perspective.

Risks

• The concentration of a significant portion of voting power (even if partially waived by some entities) and dispositive power in a single group could influence corporate decisions.
• Potential for future changes in beneficial ownership to impact market perception or control dynamics.

Future Outlook

NA

Management Comments

• The securities referred to above were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect, other than activities solely in connection with a nomination under §§ 240.14a-11.

Industry Context

This filing reflects a significant investment by a specialized credit fund manager and a pension plan into a Business Development Company (BDC). BDCs typically invest in private companies, often providing debt financing, and are attractive to institutional investors seeking exposure to private credit markets. The substantial stake by Cliffwater, an investment adviser specializing in alternative investments, highlights continued institutional interest in the private credit sector.

Related Party Transactions

• Cliffwater LLC acts as the investment adviser for Cliffwater Corporate Lending Fund, Cliffwater Enhanced Lending Fund, and the New York State Nurses Association Pension Plan.
• Stephen Nesbitt is the Chief Executive Officer of Cliffwater LLC.
• All these entities are reporting beneficial ownership of Stellus Private Credit BDC, indicating a coordinated investment strategy among related parties.

Stakeholder Impact

• Shareholders: The significant beneficial ownership by a single group could lead to more stable long-term investment, but also potentially influence corporate strategy. The waiver of voting power above 5% by two funds limits immediate control concerns.
• Management: Management may need to consider the interests of this large shareholder group in strategic decisions.

Key Dates

Keywords

Stellus Private Credit BDC, Cliffwater LLC, beneficial ownership, Schedule 13G, institutional investment, pension plan, investment adviser, common stock, corporate lending, BDC