Capitala Disclosures

About Capitala Group

Capitala Group is an asset management firm that has been providing individually tailored, private credit and private equity capital to lower- and middle-market businesses throughout North America for over twenty years. Since our inception in 1998, Capitala has invested over $2.2 billion into small businesses and strives to make an impact through responsible investing and a unified mission to support ESG initiatives. We seek to partner with strong management teams to create value and support growth through strategic partnerships, operational expertise, and a shared vision for success.

Fund Performance

The returns disclosed are representative of Capitala’s SBIC investment strategy.As such, performance presented is limited to Capitala’s Legacy SBIC Funds (SBIC Fund I, SBIC Fund II, SBIC Fund III, and SBIC Fund IV).Performance of other non-SBIC vehicles can be made available upon request.

Net Return Calculations for Legacy Small Business Investment Company (“SBIC”) Funds

Net Return of 18% reflects the Net IRR of Capitala’s Legacy SBIC Funds, weighted based on dollars deployed, as of September 30, 2022.

Net IRR for a Legacy SBIC Fund is calculated as the net internal rate of return for capital contributed to the Legacy SBIC Fund by its limited partners and distributions made by the Legacy SBIC Fund to its limited partners and the limited partners allocated share of net asset value, calculated as of a specific date and expressed as a percentage return on capital invested in the Legacy SBIC Fund.

All net return calculations for the Legacy SBIC Funds are made as of a specific date net of and after deduction for the payment of management fees required to be paid by the Legacy SBIC Fund as of such date (other than any management fees irrevocably waived by the Legacy SBIC Fund), interest and other expense incurred by the Legacy SBIC Fund in its audited financial statements, carried interest distributions made as of such date to the Legacy SBIC Fund’s general partner, unpaid carried interest accrued as of such date, and transaction costs and other expenses incurred by the Legacy SBIC Fund in its audited financial statements. The net return calculations for the Legacy SBIC Funds’ investments do not include any deduction for the irrevocable waiver of $11 million of management fees by the Legacy SBIC Funds between 2007 and 2011, which had the effect of increasing the Net IRR for each of the Legacy SBIC Funds. Additionally, all net return calculations for the Legacy SBIC Fund’s investments are net of interest and other expenses associated with leverage obtained by the Legacy SBIC Fund. Some of the Legacy SBIC Funds have had access to, and have obtained, leverage under the SBIC program to finance at least some of their investments.

At the time of Capitala Finance Corp.’s (NASDAQ: CPTA) Initial Public Offering (“IPO”) on September 30, 2013, the partners of SBIC Fund II and SBIC Fund III exchanged their respective interests, based on the fair market value of the assets at the time of transfer, for shares of CPTA. Net IRR for SBIC Fund II and SBIC Fund III are calculated from the inception of each fund through the exchange of partnership interests for CPTA stock on September 30, 2013. As part of the IPO, SBIC Fund I sold its assets at fair market value in exchange for shares of CPTA. Net IRR for SBIC Fund I is calculated from the inception of the fund through the asset sale for CPTA stock on September 30, 2013.

Return Calculations – Timing Factors

Net IRR calculations take into account the timing of cash flows and the dollar amount invested at any given time. Net IRR calculations for each of the Legacy SBIC Funds are made using the actual dates of contributions made by and distributions made to the limited partners in such Legacy SBIC Fund.

Return Calculations - Treatment of Unrealized Portion of Investments

Net IRR for each Legacy SBIC Fund and its investors include an estimated valuation of the unrealized portion of such Legacy SBIC Fund’s investments as of the measurement date. Amounts ultimately realized or paid by a Legacy SBIC Fund and its investors at a future time with respect to the unrealized portion of its investments in each case and in the aggregate may differ materially and substantially from its estimated valuations made from time to time. For purposes of calculating Net IRR for the Legacy SBIC Funds, Capitala has valued such unrealized portions of investments at the fair values determined by it in its most recent valuation of that Legacy SBIC Fund’s investments. The fair values of each Legacy SBIC Fund’s investments are determined by Capitala in accordance with GAAP and a methodology that is consistent with the valuation method of the Fund described in the Partnership Agreement.

Capitala Finance Corp

Capitala Finance Corp. was a publicly listed company (NASDAQ:CPTA) managed by Capitala from September 30, 2013 to June 30, 2021. All performance data for CPTA investors is publicly available via CPTA’s SEC filings.

Please acknowledge that you understand that all private fund investments involve risk, including loss of investment. Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any targeted projections can and may differ from actual investment results had the strategies been deployed in actual fund portfolio accounts. Please refer to our disclosures available on this website for more detailed explanations of the risks of investing in private securities. Prospective investors should consult their own financial and legal advisors about risks associated with private fund investments and the suitability of investing in such assets.