Nasdaq: PSEC Middle Market Finance and Private Equity Overview

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Marvin Ward
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1 PROSPECT CAPITAL Nasdaq: PSEC Middle Market Finance and Private Equity Overview

2 Prospect Capital At a Glance Prospect Capital (NASDAQ symbol PSEC ) primarily provides non-control debt financing to corporate management teams or financial sponsors. Prospect also makes select control acquisitions by investing in multiple levels of the capital structure. As a publicly-traded company, provides investors with daily liquidity. Other highlights: One of top-two externally-managed Business Development Companies ( BDCs ) No corporate taxation as long as 90%+ distributions are made Attractive double-digit dividend yield, paid monthly Focus on diversified middle-market origination Senior secured investment focus Headquartered in New York City; manager founded in

3 Total Assets ($M) PSEC Growing Scale Prospect Has Grown Significantly 5,000 $4,784 4,500 4,000 3,500 $3,530 3,000 2,500 Portfolio Investments Source: Company filings. 2,000 1,500 1, $1,802 $1,076 $588 $689 $475 $298 $105 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/

4 ARCC PSEC AINV FSC MAIN SLRC HTGC TCAP PNNT GBDC BKCC NMFC TCRD MCC TICC TCPC MCGC MVC FDUS KCAP CPTA GARS WHF SUNS PFLT GAIN GLAD SCM NGPC HRZN MRCC OFS HCAP SAR FSFR Prospect: A BDC Leader 2 nd Largest Active BDC by Market Capitalization Market Capitalization, as of 11/04/2013 4,848 3,248 1,922 Company Ticker Company Ticker Apollo Investment Corp AINV Monroe Capital Corp MRCC Ares Capital ARCC MVC Capital MVC BlackRock Kelso Capital BKCC New Mountain Finance Corp NMFC Capitala Fiannce Corp CPTA NGP Capital Resources NGPC Fidus Investment Corporation FDUS OFS Capital OFS Fifth Street Capital FSC PennantPark Investment Corp PNNT Fifth Street Senior Floating Rate FSFR PennantPark Floating Rate Capital Ltd PFLT Garrison Capital Inc GARS Prospect Capital PSEC Gladstone Investment Corp GAIN Saratoga Investment Corp SAR Golub Capital GBDC Solar Capital SLRC Gladstone Capital GLAD Solar Senior Capital SUNS Harvest Capital Credit HCAP Stellus Capital Investment Corp. SCM Hercules Technology Grow th Capital HTGC TCP Capital TCPC Horizon Tech HRZN THL Credit TCRD Kohlberg Capital Corp KCAP TICC Capital TICC Main Street Capital Corp MAIN Triangle Capital Corporation TCAP MCG Capital Corporation MCG WhiteHorse Finance, Inc. WHF Medley Capital Corp MCC 1,423 1, Source: Bloomberg 4

5 Prospect: How We re Different Superior Transaction Flow 3,000+ opportunities originated per annum Larger Borrower Size Size of weighted average portfolio company EBITDA now $40+ million Portfolio Diversification Portfolio has 130 investment counterparties, representing significant portfolio diversity and risk mitigation Industry Diversification Portfolio is diversified across 33 industries with deep centers of industry expertise within the Prospect team Origination Mix Diversification Flexibility to vary origination mix profile among 7 strategies: (1) sponsor finance, (2) direct non-sponsor lending, (3) onestop operating buyouts, (4) one-stop finance buyouts, (5) structured credit, (6) real estate, and (7) syndicated debt Source: Company filings, investor presentations and management. 5

6 Industry Diversification PSEC Continues to Diversify Portfolio by Industry through Originations and Patriot Acquisition Portfolio by Industry at Fair Value (9/30/2013) 3% 3% 3% 19% - Other (all < 3%) 19% 9% 4% 5% 9% 6% 6% 7% 7% Diversified Financial Services Durable Consumer Products Software & Computer Services Commercial Services Food Products Real Estate Consumer Finance Consumer Services Healthcare Business Services Media Manufacturing Other 6 Source: Company filings, investor presentations.

Net Investment Income ($M per Fiscal Yr) PSEC Growing Income (FY as of 6/30) 350 Net Investment Income has Grown Each Year Over the Past Seven Years $324.9 $329.

7 Net Investment Income ($M per Fiscal Yr) PSEC Growing Income (FY as of 6/30) 350 Net Investment Income has Grown Each Year Over the Past Seven Years $324.9 $329.3 (1) $ Source: Company filings (1) 1Q 2014 Annualized $94.2 $66.5 $59.2 $45.1 $23.1 $2.4 $

8 Diversified Origination Strategy Control Type Private Equity Control ( Sponsor ) Company Control ( Direct ) Prospect Control ( Buyout ) Target Return 10-15% IRRs 12-17% IRRs 20-30%+ IRRs Key Advantages Significant junior cash/equity below Prospect Better management / larger businesses Industry/size diversity Repeat business Senior secured debt Higher yields Free warrants/equity Lower leverage Few lender competitors One stop advantage (PSEC provides term debt) Equity upside/dividends Management control Operating buyouts Tax efficient financial buyouts (high yields) Strategic buyouts (Patriot) Control Type Structured Credit Real Estate Syndicated Debt Investing Target Return 15-25% IRRs 15-20% IRRs 10-15% IRRs Key Advantages Default rate well below market average Diversified credit exposure Larger and more liquid credits Attractively priced AAA funding No mark-to-market exposure Multi-family residential focus Fully-developed properties Steady cash flow Long-term funding from GSEs Recession resilient Diversified tenants Larger upper middle-market businesses More liquid market Increase market activity during market dislocation Decrease market activity during bull markets Protective control strategy 8

9 Disciplined Credit Strategy Solid Businesses Value-Oriented Discipline Solid Financial Performance Significant Financial Sponsor Involvement Infrastructure and business model barriers Recurring, visible, and sustainable profitability Experienced management with skin in the game Lending focus with equity upside Conservative multiples/ratios, with yield protection Flexibility to address both primary and secondary markets Flexibility to address sponsor finance, direct lending and control buyout opportunities Conservative multiples/ratios with emphasis on recurring cash flow Recurring demand and recurring revenues Solid cash flow and fixed charge coverages Strong asset coverage Significant sponsor investment Leverage sponsor experience and diligence Relationship building and repeat business Protective Agreements Financial and other covenants for protections, re-pricings, and seat at the table Asset liens and security in the capital structure Cash sweeps, LIBOR floors and prepayment protection / premium None of the $6.3+ Billion of Investments Originated In The Past Nearly 6 Years Have Gone On Non-Accrual Status 9

Superior Deal Flow Large Team and Relationships Drive Broad Opportunity Set 91 person organization helps drive originations through superior scale and market coverage 3,000+ opportunities originated

10 Superior Deal Flow Large Team and Relationships Drive Broad Opportunity Set 91 person organization helps drive originations through superior scale and market coverage 3,000+ opportunities originated per annum, with over 80% via established relationships Multi-channel origination results in consistently high volume of investment opportunities regardless of market conditions, market timing, and competitive dynamics Systematic Calling Effort Cold-Calling Effort Management Team Private equity sponsors Relationships ~200 Tier 1 and ~600 Tier 2 relationships Other intermediaries ~4,000 total Business brokers, boutique corporate finance and financial advisory firms, investment and commercial banks (large Source: Company and small), filings. law firms, accounting firms Small-to-mid cap companies with identified financing needs Dedicated call center with 7 professionals Proprietary deal flow From 100+ past and present portfolio companies Add-on investments, new investments, assistance with due diligence and postclosing value add Contact Database 75,000+ contacts built over two decades Receive all transaction announcements, resulting in both in-bound opportunities and top-of-mind awareness In-Bound Opportunities From scale and visibility of Prospect $5.5 billion of capital under management (including undrawn credit facility) 10

11 Disciplined Execution Approximately 1% - 2% of initially screened investments advance to closing Experience Incentives Reputation Robust Processes Discipline Consensus Responsiveness Sector Experience Originate Screen Structure Close Monitor Exit Trade shows / pubs marketing (~50K database) Broker network Banks / coinvestors Efficient templates Prioritization knowledge Selectivity Scale team, calls 3 times a week Negotiated deals Standard term sheet Control not required Syndication network Loyal opposition / subcomittees 3 rd party diligence (quality of earnings) Legal expertise Background checks Environmental diligence Board observation Compliance certification Information covenants Managerial assistance Permanent capital Recurring yield Trade sale network IPO network 2,000 3,000 / year per year per year 129 investments 11

12 Portfolio Quality Trends None of the $6.3+ billion of loans originated in almost 6 years have gone on non-accrual status Historical Non-Accruals (% of Total Assets) (% of Total Assets) 7.0% 6.0% 5.8% 5.0% 4.1% 4.0% 3.5% 3.0% 2.0% 1.9% 1.0% 0.3% 0.3% 0.0% June 30, 2009 June 30, 2010 June 30, 2011 June 30, 2012 June 30, 2013 September 30, 2013 Source: Company filings, management 12

13 Secured Lending Commitment to Investing in High Quality Debt 4.0% 17.1% 2.6% 0.6% 21.7% 3.3% 27.7% 54.0% 68.9% 9/30/13 - Total Portf olio 9/30/13 - Total Debt Portf olio (1) Secured 76% 97% Source: Company filings, management. Based on fair value as of 9/30/2013 (1) Excludes CLO Debt and CLO Residual Interest First Lien CLO Debt CLO Residual Interest Second Lien Subordinated Unsecured Debt Equity 13

Monroe Capital Corporation (NASDAQ: MRCC) Company Overview. August 2015

Monroe Capital Corporation (NASDAQ: MRCC) Company Overview August 2015 Disclaimer These materials and any presentation of which they form a part are neither an offer to sell, nor a solicitation of an offer