Goldman Sachs BDC (NYSE:GSBD) executives said the business continued to advance its post-2022 integration into Goldman Sachs’ broader direct lending platform, pointing to a larger average portfolio company profile, a higher mix of first-lien exposure, and reduced concentrations in annual recurring revenue (ARR) loans. Management also discussed how it is evaluating AI-related disruption risk in software lending, while reporting fourth-quarter results that included modest net asset value (NAV) pressure from realized and unrealized losses.
Integration progress and portfolio repositioning
Co-CEO Vivek Bantwal said the integration into Goldman Sachs’ Direct Lending platform has expanded GSBD’s sourcing, underwriting, and portfolio oversight. As of the quarter, management said 57% of the portfolio reflected deals benefiting from the 2022 reorganization, while 43% remained in a “legacy portfolio” originated before the integration.
- Median EBITDA of portfolio companies increased 84% from year-end 2021 to $71.8 million at year-end 2025.
- First-lien exposure rose to 97% of the portfolio from 89% over the same period.
- Non-accruals decreased slightly year-over-year to 1.9% of fair value, down from 2.0% (and below a post-integration high of 3.4%).
Management also highlighted a decline in payment-in-kind (PIK) income as a share of total investment income to 9% in fourth-quarter 2025 from 15.3% in fourth-quarter 2024. Bantwal said 5.5% of total investment income in the quarter came from PIK introduced through loan modifications or amendments, “the vast majority of which relates to the legacy portfolio.”
Reduced ARR exposure and a focus on EBITDA-based lending
Executives addressed ARR-based software lending exposure, describing it as a key risk area the platform has worked to reduce since 2022. Bantwal said ARR exposure in the broader BDC complex declined to roughly 5% at year-end 2025 from a peak of 36.5% in third-quarter 2022. Within GSBD specifically, ARR loans fell to 11% of the portfolio at fair value from nearly 39% over that period.
He attributed the shift to a strategic focus on EBITDA-based investments and “proactive” mitigation of ARR loans in the legacy book through exits or conversions.
Software sector and AI disruption framework
With increased market attention on AI’s potential impact on software business models, Bantwal said the firm views disruption risk as “highly company-specific and nuanced.” He emphasized that GSBD’s position at the top of the capital structure differs from equity investors, though he noted severe disruption could still affect creditworthiness.
Management said the direct lending platform began formalizing its approach to AI risk earlier in the cycle, including passing on a deal due to AI concerns in October 2023. An internal framework to evaluate AI disruption risk was rolled out in early 2025 and is now incorporated into all new investments and ongoing monitoring, with underwriting considerations including (among others):
- Mission-critical systems of record with proprietary data and deep domain expertise
- Complex use cases with deterministic outcomes and low tolerance for errors
- Platform breadth versus single-product tools
- Modern architecture and limited technical debt
- Ongoing innovation and embedding AI into products
- Regulated, risk-averse end markets with long-term customer relationships
Bantwal said the Direct Lending Americas platform has closed or committed to 26 new software deals since January 2025 and provided operating metrics for that group, including an average Rule of 40 of 55.8%, comprised of 16.6% recurring revenue growth and 39.1% cash EBITDA margins. He also said the platform’s software portfolio showed improved revenue growth and EBITDA margins in third-quarter 2025 versus the prior year period.
As an example, management discussed Clearwater Analytics, describing it as the company’s largest committed software deal during the quarter. In December 2025, the Goldman Sachs private credit complex committed to 100% of a $3.5 billion unitranche financing supporting a take-private by Warburg Pincus and Permira, before additional lenders joined. Management said the complex retained $1.235 billion and that GSBD is expected to own $75 million at closing. Executives also said Goldman Sachs’ broader ecosystem contributed to origination and diligence, including customer experience with the product and internal engineering consultations.
Fourth-quarter results, dividends, and leverage
Co-CEO David Miller reported fourth-quarter net investment income (NII) of $0.37 per share and NAV of $12.64 per share as of quarter-end, a roughly 1% decline from the prior quarter that he attributed largely to net realized and unrealized losses. The board declared a $0.03 per share supplemental dividend for fourth-quarter 2025, payable around March 20, 2026, and a first-quarter 2026 base dividend of $0.32 per share.
Leverage increased, with net debt-to-equity of 1.27x at December 31, 2025, compared with 1.17x at September 30, 2025.
Originations, repayments, buybacks, and credit quality
Management said GSBD made approximately $1.2 billion of new commitments in 2025 across 35 new deals, with Goldman playing a lead role in about 75% of those transactions. In the fourth quarter, new commitments totaled $394.9 million across 27 portfolio companies (seven new and 20 existing), and 100% of the quarter’s originations were first-lien loans.
President and COO Tucker Greene said sales and repayment activity was $251.6 million in the quarter, driven primarily by the full repayment and exit of 13 portfolio companies. Greene highlighted one software-related exit: the firm sold a loan at $0.99 to other lenders despite steady performance, citing anticipated headwinds and AI disruption risk in the staffing, recruitment, and contingent labor software segment.
Total repayments in 2025 were $1.1 billion, and Greene said more than 78% of repayment activity came from pre-2022 vintage loans. Pre-2022 investments represented about 43% of the portfolio at fair value at year-end.
GSBD also continued share repurchases under a 10b5-1 plan, repurchasing more than 1.5 million shares for $15 million during the quarter, which Greene said was accretive to NAV by $0.04 per share. Since the plan’s implementation in June 2025, GSBD repurchased $52.2 million, or 4.7 million shares.
On credit quality, Greene said Pluralsight’s first-lien, senior secured “last out” position was placed on non-accrual during the quarter. Non-accruals increased to 2.8% of the portfolio at amortized cost and 1.9% at fair value, up from 2.5% and 1.5%, respectively, at September 30, 2025.
In the Q&A, executives said they viewed bilateral, confidentiality-sensitive take-private financings as a potential source of incremental economics, while also expressing comfort with the current base dividend level given underwriting and what they described as early signs of 25 to 50 basis points of spread and original issue discount (OID) widening. Management also said undistributed taxable net income was about $109 million, or $0.97 per share, but noted there were no current plans for a special distribution.
About Goldman Sachs BDC (NYSE:GSBD)
Goldman Sachs BDC, Inc (NYSE: GSBD) is an externally managed, closed-end, non-diversified management investment company organized as a business development company (BDC) under the U.S. Investment Company Act of 1940. The company’s primary objective is to generate current income and capital appreciation through debt and equity investments in U.S. middle-market companies. It principally invests in senior secured loans, mezzanine debt, preferred equity and, to a lesser extent, common equity, focusing on sponsor-backed transactions and special-situation financings.
The fund is advised by affiliates of Goldman Sachs Asset Management’s Private Credit Group, leveraging the firm’s global research capabilities and risk management infrastructure.
