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Why Medley Capital's IPO (MCC) priced below range

|Includes:Golub Capital BDC (GBDC), GLAD, TCRD

Today Medley Capital today priced its IPO at $11, down 18.5% from the range mid-point of $13.50.  MCC is trading now up 9%. 

Just as $13.50 was too high, $11 was too low on a valuation basis.

At $13.50 MCC was trying to get a 1.8% premium to net asset value.  That didn't work because typically Business Development Corps (BDC's) don't get a premium to net asset value. 

For example, Golub Capital (NASDAQ:GBDC), THL Credit (NASDAQ:TCRD) and Gladstone Cap (NASDAQ:GLAD) were selling yesterday at discounts to net asset value of 0%, -2% and –2% respectively.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.