Middle Market Investing: Surveying the Runway Thomson Reuters LPC Middle Market Conference

April 27, 2017

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Important Disclosures KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A.. Banking products and services are offered by KeyBank N.A..

The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. This report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual person or entity.

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Contacts: Robyn Roof KeyBanc Capital Markets 212-476-7423 / rroof@key.com

Middle Market Investing: Surveying the Runway Moderator:

James Hussney Managing Director, Loan Syndicate, Sales and Research KeyBanc Capital Markets, Inc. jhussney@key.com Panelists:

Spyro Alexopoulos Managing Director Golub Capital salexopoulous@golubcapital.com Carey Davidson Head of Capital Markets Monroe Capital cdavidson@monroecap.com Heath Fuller Capital Markets Head NXT Capital heath.fuller@nxtcapital.com Christine Harrington Managing Director Apollo Global Management charrington@apollolp.com

Steve Rasoletti KeyBanc Capital Markets 216-689-3228 / stephen.rasoletti@key.com

James Hussney KeyBanc Capital Markets 216-689-3559 / jhussney@key.com

Juan Gomez KeyBanc Capital Markets 216-689-3234 / juan.gomez@key.com

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Agenda I. Pre-Flight / Fueling

II. In-Flight / Flight Plan

III. Flight Conditions & Duration

IV. Landing Approach

Agenda I. Pre-Flight / Fueling

II. In-Flight / Flight Plan

III. Flight Conditions & Duration

IV. Landing Approach

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Pre-Flight / Assessment

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Middle Market Asset Manager Vehicles CLO BDC Direct Lending Platforms

Pre-Flight / Assessment

Note: Each category organized top down, from newest to oldest Sources: SEC filings, Thomson Reuters’ LPC Loan Connector, Standard & Poor’s Leveraged Commentary & Data (“LCD”), Bloomberg & individual investor websites * Denotes inaugural MM CLO issuance Denotes merger or consolidation Denotes partnership

*

* *

Banks

*

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Pre-Flight / Fueling Are middle market sources of capital unlimited?

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Pre-Flight / Fueling Are middle market sources of capital unlimited?

Source: Thomson Reuters’ LPC Loan Connector

Annual Middle Market Loan Fundraising

$17.0 $23.3

$57.8

$18.2

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2014 2015 2016 YTD2017

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In-Flight / Flight Plan

What are the parameters in which you operate: segment, structure, yield

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In-Flight / Flight Plan

Illiquidity,

10 year lock-up

Intermediate Liquidity, 5-to-7-

year lock-up

Daily Liquidity

COMPARATIVE RISK/RETURN OF PRIVATE CREDIT

5% 10% 20%

Corporate Bonds 2-4%

Broadly Syndicated Large Bank Loans 3-5%

High Yield Bonds 5-7%

Senior Direct Lending 6-8% IRRD

Mezzanine 10-15%

IRR

Distressed Credit

20+% IRR Unitranche

7-10% IRR

Source: Brown Advisory. The disclosure for alternative investments is available at: http://www.brownadvisory.com/en/alternativeinvestmetndisclosures

Less Liquid, Higher Return Private credit – ranging from senior direct lending to distressed credit – offers a higher potential return than publicly traded fixed income securities while requiring a longer lock-up period

What are the parameters in which you operate: segment, structure, yield

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Flight Conditions & Duration Is it smooth sailing or is there turbulence ahead?

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Annual Middle Market Loan Fundraising

Source: Thomson Reuters’ LPC Loan Connector

Flight Conditions & Duration Is it smooth sailing or is there turbulence ahead?

$17.0 $23.3

$57.8

$18.2

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2014 2015 2016 YTD2017

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Landing Approach How do economic conditions and investment performance look?

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Landing Approach Middle market investing 4.0 – what does it look like?

Appendix

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Dec-16 Capital One Establishes Unitranche Loan Program

Jul-16 BB&T completes national Penn conversion

Jun-16 PrivateBank parent to be acquired in $3.8 billion deal

Feb-16 Can Hudson Executive Capital activists remake Comerica?

Jan-16 Huntington Bancshares to strengthen Midwest franchise with financially and strategically accretive merger with FirstMerit Corporation

Oct-15 KeyCorp to acquire First Niagara Financial Group

Mar-15 Cerberus PNC Senior Loan Fund, LP

Pre-Flight / Fueling - Banks

Sources: SEC filings, Thomson Reuters’ LPC Loan Connector, Standard & Poor’s Leveraged Commentary & Data (“LCD”), Bloomberg & individual investor websites

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Pre-Flight / Fueling– CLOs

Sources: SEC filings, Thomson Reuters’ LPC Loan Connector, Standard & Poor’s Leveraged Commentary & Data (“LCD”), Bloomberg & individual investor websites

Feb-17 SoftBank Group to Acquire Fortress Investment Group for $3.3 Billion

Jan-17 Marble Point Acquires ACCLOM

Aug-16 CIFC to be acquired by F.A.B Partners for $333 million in cash

Jun-16 Blackstone acquiers minority stake in Marathon Asset Management

Apr-17 Antares Capital prices $2.1B debut middle market CLO L+172.5

Nov-16 Brightwood Capital prices $750M middle-market LCO via Natixis

Mar-17 WFC prices dual RR $511M Neuberger Berman CLO 24 L+123

Mar-17 WFC prices $406M MM CLO for NXT Capital L+170

Feb-17 DB prices $816M CIFC funding 2017 L+136

Feb-17 NewStar prices $397M middle-market deal via Natixis L+178

Dec-16 Citi prices $304M MM CLO for Maranon Capital L+210

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Sep-16 Tennenbaum Capital closes $264.2M MM loan warehouse CLO L+225

Aug-16 WFS prices debut TIAA Churchill MM CLO: L+215

Aug-16 Alliance Bernstein debuts middle market CLO

Jul-16 Monroe Capital prices $305M middle market CLO via BNP L+225

Apr-16 GC prices $354M middle market Golub 31 CLO L+220

Pre-Flight / Fueling – CLOs

Sources: SEC filings, Thomson Reuters’ LPC Loan Connector, Standard & Poor’s Leveraged Commentary & Data (“LCD”), Bloomberg & individual investor websites

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Feb-17 Solar, Deerfield form loan venture

Jan-17 New York Life Investments builds platform with purchase of Credit Value Partners

May-16 Ares Capital grows even bigger with $3.4B American Capital Purchase

Jul-16 Providence Equity Partners subsidiary agrees to buy BDCA Adviser

Oct-16 Credit Suisse sells BDC to CION Investment

Apr-17 Middle Market: Owl Rock Capital

Mar-17 Middle market lender WhiteHorse files for security sale

Mar-17 Golub Capital BDC offering common stock

Jan-17 PennantPark files $500M shelf

Sources: SEC filings, Thomson Reuters’ LPC Loan Connector, Standard & Poor’s Leveraged Commentary & Data (“LCD”), Bloomberg & individual investor websites

Pre-Flight / Fueling– BDCs

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Direct Lending Platforms

Sources: SEC filings, Thomson Reuters’ LPC Loan Connector, Standard & Poor’s Leveraged Commentary & Data (“LCD”), Bloomberg & individual investor websites

Mar-17 NXT manages $500M debt portfolio for Aflac

Dec-16 PIMCO, Solar Capital form JV to expand private credit efforts

Nov-16 Northleaf Capital Partner acquiers minority stake in Anatares

Aug-16 Varagon, Ares Capital complete initial $3B funding for SDLP fund

Feb-17 Hancock Capital Adds Leveraged Credit Leadership Team in Chicago

Jan-17 Crescent Direct Lending Exceeds $1.7B of AUM and Builds Out Investment Team

Apr-16 Onex launches lending platform, hires sponsor-finance veteran

Sep-16 Capitala closes $500M private credit fund for middle market loans

Oct-16 Audax closes $500M fund for middle market debt investments

Oct-16 NXT Capital closes new fund for middle market direct lending

Jun-16 Apollo BDC management rejig may signal subtle strategy shift