Renew Financial LLC: IIIQ 2021 Update

We have only a flimsy understanding of Apollo Investment’s (AINV) Renew Financial LLC position, which also includes an affiliate called AIC SPV Holdings II, LLC, and also goes by the name Renewable Funding, LLC. If that wasn’t enough, there’s also a Renew JV LLC stake. Taking these businesses together, AINV has invested $16.9mn – all in preferred or common. As of September 30, 2021, the FMV was given as $6.1mn – a (64%) discount, and no income was being generated. This finance company for alternative energy investments dates back to as 2014 when alternative energy was a core investment target for the BDC , and its parent the Apollo Group.

That’s all changed and Renew is now counted as “non-core”, but we get very little to nothing in terms of updates from AINV’s management as to any exit strategy that might be involved. All we know is that these related companies have been underperforming since IQ 2020, and just reached a valuation low point.

The Renew entities are rated CCR 4, as an eventual loss seems more likely than a recovery. In fact – given the trend and the junior nature of the capital – a full write-off might be in the cards one day. Given the absence of any income therefrom and the low cost (0.6% of total cost) and FMV this is a minor exposure for AINV. (If the investment gets written down below $2mn we will drop coverage). The investment is not Trending as recent write-downs were modest – under ($1mn). This is just another example amongst many of AINV investments gone wrong that just sit in the BDC’s portfolio ad infinitum, and with no clear raison d’etre or exit strategy as far as we have been told.