In line with a plan to narrow the gap between MVC Capital Inc.'s share price and net asset value, the company's board is exploring stock repurchase opportunities and implementing an 11% dividend hike.
MVC will pay a quarterly dividend of 15 cents per share, up from the previous 13.5 cents per share. It will be distributed Oct. 31 to shareholders of record as of Oct. 24.
The company is also pursuing the monetization of its non-yield investments. The $173 million sale of its 76% stake in U.S. Gas & Electric, for example, generated an almost $115 million capital gain.
The lending team of MVC Capital's investment adviser, Tokarz Group Advisers LLC, has so far generated an internal rate of return of more than 14% on completed investments focusing on the underserved lower middle market, the company said.
In addition, the company plans to increase its leverage with low-cost debt capital. It is also adjusting its management fee structure to tie fees to the share price discount from NAV.
The board's independent directors further agreed to lower their compensation by 25% until the NAV discount drops to 10% or lower. As of July 31, the share price-to-NAV discount was 22%.