Good day, ladies and gentlemen. And welcome to the Fidus Investment Corporation’s First Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions to be given at that time. (Operator Instructions) As a reminder, this conference is being recorded. I’d now like to turn the conference over to your host today, Ms. Stephanie Prince. Ma’am, you may begin.

Thank you, Dan, and good morning, everyone. This is Stephanie Prince from LHA. Thank you for joining us for Fidus Investment Corporation’s first quarter 2013 earnings conference call. With me this morning are Ed Ross, Fidus Investment Corporation’s Chairman and Chief Executive Officer; and Cary Schaefer, Chief Financial Officer and Chief Compliance Officer. Fidus Investment Corporation issued a press release yesterday afternoon with details of the company’s quarterly financial and operating results. A copy of the press release is available on the Investor Relations page of the company’s website at fidus, excuse me, at fdus.com. I’d like to remind everyone that today’s call is being recorded. A replay of today’s call will be available by using the telephone numbers and conference ID provided in the earnings press release. In addition, an archived webcast replay will be available on the Investor Relations page of the company’s website at fdus.com following the conclusion of this conference call. I’d also like to call your attention to the customary Safe Harbor disclosure regarding forward-looking information included in the earnings release. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, future potential operating results and cash flows of Fidus Investment Corporation. Although management believes these statements are reasonable based on estimates, assumptions and projections as of today, May 3, 2013, these statements are not guarantees of future performance. Time sensitive information may no longer be accurate at the time of any telephonic or webcast replay, actual results may differ materially as a result of risks, uncertainties and other factors, including but not limited to the factors set forth in the company’s filings with the SEC. Fidus undertakes no obligation to update or revise any of these forward-looking statements. I’d now like to turn the call over to Ed Ross. Ed?

Thank you, Stephanie. Good morning, everyone. And welcome to our first quarter 2013 earnings call. I’ll begin our discussion with a brief summary of our strategy and follow with highlights of the first quarter before discussing the investment activity and performance of our investment portfolio. I’ll close my comments with a brief market update and before opening the call up to questions, I'll turn the call over to Cary who will go into more detail about our financial results and liquidity position. For those of you who are new to Fidus, I’ll briefly review our strategy. Primary goal of Fidus Investment Corporation is to deliver stable and growing dividends to our stockholders. Our strategy is to build a well diversified portfolio of debt and to a lesser extent equity investments in high quality lower middle-market companies that are market leaders in their respective niches. In executing this strategy we focus on capital preservation while generating attractive risk-adjusted returns. We seek to invest in businesses that we believe will perform well over the long-term with an emphasis on companies that operate in industries we know well, that generate excess free cash flow for debt service and investments, and have positive outlooks. Also from a debt structuring perspective, we look to maintain significant cushions to a borrower’s enterprise value in support of our capital preservation and income goals. Some of the industries we know well and focus on include aerospace and defense, consumer products and services, retail and restaurants, business services, industrial products and services, transportation and logistics, healthcare products and services, and niche manufacturing. Notably, our senior investment professionals, most of whom have worked together for over 14 years, have an average of more than 20 years experience investing and advising in these broad sectors of the economy. Turning now to…

Thanks, Ed, and good morning, everyone. I’ll now review our first quarter results in more detail and close by commenting on our liquidity position. Total investment income was $9.8 million for the first quarter of 2013, an increase of $2.2 million or approximately 29% over the $7.6 million recorded during the first quarter of 2012. This increase was primarily driven by the increase in average outstanding debt investments in the first quarter of 2013 compared to last year. In addition, dividend income in Q1 2013 increased to $359,000 from $151,000 in last years first quarter. Driven by dividend from our portfolio equity investment. The total amount of this portfolio distribution was approximately $600,000 of which $165,000 has been estimated to be dividend income with the remaining $435,000 deemed return of capital. Fee income which may fluctuate from quarter to quarter, depending on the level of new investment activity as well as prepayment activity was $406,000 for the first quarter of 2013, was consistent with $425,000 for last year’s first quarter. Total expenses for the first quarter 2013 were $4.9 million compared to $4 million for the first quarter of 2012. Base management and incentive fees totaled $2.4 million for the first quarter 2013, including both income and capital gains incentive fees. In the first quarter 2013, incentive fees were partially offset by $57,000 reversal of previously accrued capital gains incentive fee due to modest net unrealized depreciation on investments for the quarter. Keep in mind that the capital gains incentive fees are only payable when net realized capital gains are in excess of gross unrealized depreciation. Administrative service expenses, professional fees and other general and administrative expenses totaled approximately $699,000, essentially flat with the first quarter of 2012, which totaled approximately $702,000. Interest expense on our SBA debentures was approximately…

Thanks, Cary. In closing, as always, I’d like to acknowledge and thank the outstanding team at Fidus for their commitment and great work. I’d also like to thank our shareholders for their continued confidence and support. And thank you all for joining us today. I will now turn the call back over to Dan for Q&A?

(Operator Instructions) Our first question comes from the line of Robert Dodd of Raymond James. Your line is open. Please go ahead.

Hello, everybody. Good morning. Couple of questions. Obviously on the SBA, we will have to push you for some more clarify on that. First, not even your licensees are positioned really. But what’s the latest that you’ve heard from the industry policy talking about the potential for, obviously to be able to expand the total to 350 for a management company?

Sure. Good morning, Robert. And obviously that’s a very good and relevant question. I don't know that I have a good update for you. We continue to believe in everything we hear though this isn’t overly updated information is that I think the probability or likelihood of it is generally pretty high. Having said that, there is not a lot going on right now in Washington, as we all know in terms of new laws, and so I think we are a little bit stemming from that perspective. But generally speaking, I think we feel good about that change occurring over the long-term, the timing of which I think is impossible to predict.

Okay. Thanks. And then just to push you on your application. I mean, we’ve seen the SBA, there has been a long patch where they currently haven’t been doing much in terms of approvals, then we’ve seen recently a couple of other healthy BDCs starting to get their first licensee and sort of approval for second. But no movement from the information you are giving us regarding yours. No movement on yours right now. I mean, are you aware of any issues with regard to your license or is it…?

Just literally, obviously also a very good and fair question. And let me answer like this. We applied and I think Carry had mentioned specifically. We applied formally for the license in October, so it’s been over six months, just barely over six months which -- our expectation was it was going to take at least six months. So, I think the second point I will make is I think we’ve made a fair bit of progress on our application with the SBA over the last several months. And, so I think we are at a stage where we are hopeful that we will be hearing from them in the not-too-distant future. But we have worked very hard on it and we’ve made good progress. And so we're hopeful that it will continue to move forward in a good direction.

Okay. Great. Thanks. Moving on just a couple other quick ones kind of on the market. I mean, one of Fidus’ focused vision, is that you did, is a bit larger than average for you, slightly lower yields than average in a 12 plus one set. Is that a conscious decision to move up market, when a lot of other players seem to be trying to move down market frankly, or is that just kind of an element of opportunistic events?

The short answer would be a little bit more opportunistic. I think the reality of it is from a strategy standpoint, we continue to go about things the way, we've kind of always have, which is we are looking for very good companies and underlying investments in those companies. And when we find those, that’s where we are trying to invest and the reality of that is the, facts of that company a very good one from our perspective, a little bit larger than maybe the average size of our portfolio company. And so with that comes kind of a need to drop the yields typically is also, I would call it moderately leverage. So, I think it fits squarely in our strategy of what we are trying to do today, which definitely is in the realm of the lower middle-market. I’ll call it $3 million to $20 million in EBITDA, somewhat larger size for us. But it was an investment, a company that we like very much. And so when we find those situations, we try to do what we need to do to invest in those companies as attractive risk adjusted just returns. And I think we feel very good about that.

Okay. I appreciate. And one last one, if I can. Just on your comments about the overall market. It sounds like you are starting to see activity. Obviously, there is a pickup in activity. Obviously there is a lag between any pickup deals closing. So, I mean, we expect to -- it is reasonable expect originations activities expect in Q2 to be still pretty moderate and any pickup we would see would be Q2, Q3, Q4, et cetera? So with Q2, with one big repayment already with a pretty good yield from it, we would expect more of it in the portfolio as well, that would be realistic?

Sure. Yeah. It’s a very good question. As you know, it’s so hard to predict but we are obviously working on some things that could happen in the quarter. I think your assessment is a fair one and we are hopeful that M&A related activity picks up in the second half of the year. And to some degree I expect that but we’ll have to all see, but activity levels are picking up. I do think on the M&A side of things at the banker level, if you will. So, this quarter, we’re working on stuff just like we are every quarter. It’s hard to predict, but I don’t think your assessment is one that you should make, put it that way.

Okay. Got it. Thank you.

Thank you. (Operator Instructions). Our next question comes from the line of Bryce Rowe of Robert W. Baird. Your line is open. Please go ahead.

Thanks. Good morning. I have a couple of questions here and just to follow-up on the conversation about the SBA. I noticed that you guys commenced operations of Fund II on March 29th. Just logistically, can you help us with what happens there, did you fund that fund with some new capital and kind of, are just waiting now for that application to be approved?

I’ll let, Cary take that one.

Sure. Good morning, Bryce. Yeah, the answer is we did, we funded. We did just funded nice some equity down into that I think and maybe we are just mentioning the mechanics of how the SBA leverage works. They require you to fund the equity first in order to access any leverage at the subsidiary level. So we have begun funding that with the anticipation and a hope that we will be in a position to have a license and working on a commitment with the SBA in the not-too-distant future.

Okay. And then so, did any investments fit in that fund yet?

Yeah.

Yeah. Okay. All right, the second question you guys talked about where within a one to five rating scale your investments are rated and there was a bit of an uptake into the three rated investments. Just wanted to get maybe some detail around that or some color. Are you seeing some investments, or some of the financials within the investments to deteriorate a little bit or is that just company specific?

Sure. That’s a great question, Bryce. I think, as you know, we have 32 companies today at the end of the quarter. And we’re always going to have some that are over performing and some that are underperforming and so that is our expectation. So there’re no surprises from our perspective. I think the move you’re talking about is more company specific. And there was one move that we moved a company down into that category. For us, three assets doesn’t mean we’re in trouble. It means we’re watching some, there’s been an event or there is a trend that we’re paying attention to. It could get worse. It could be a situation where they quit paying at some point in time but that is not the situation. So we’re -- it’s kind of normal course is what I would say. And it’s -- when you have 32 companies, we expect to have a few that are moving around a little bit and ones that we’re working extra hard on, if you will, and so -- the one we’re talking about falls in that category.

Okay and last question. You talk about potential for accelerated or elevated refinancing in realization activity throughout the rest of the year. Beyond the Westminster, are you hearing anything specifically from your companies that would suggest some repayment or refinancing activity?

Sure. A great question. And the answer to that is, we are hearing to a certain degree and there’s really two things going on, right? There are some companies that are -- thankfully we’ve got a portfolio where there’s a fair number of companies performing very well. And so in certain situations just like the Westminster situation where there is an opportunity to reduce the company’s overall cost of debt capital, there are some companies looking at doing that over -- during this year. It’s very hard to predict when and if those things happen. But it’s clearly a situation, I guess, we’re fortunate we are in that situation where your company is performing that they can do that. I think the second piece of it is, we do have several companies that have hired advisors to evaluate strategic alternatives. And so I think thankfully we’ve got equity investments in over 90% of our portfolio companies. So I think overall that’s a good thing. In the short term, it can create a need to kind of reinvest those proceeds, but in the long term, we do expect to realize all these investments. And so we think it’s healthy generally speaking. But there -- so there’re two things going on. And I think overall, I think the statement I made we do think there is an increased probability that the repayments and realizations go up or above last year’s levels or that’s your size of portfolio as well.

NH.

NH portfolio.

Yeah.

Okay.

We don’t view it as negative it’s just kind of part of the business.

Yeah. I mean, it’s definitely going to get paid back, right?

Absolutely, absolutely. So our expectation will be there will be an increase this year from a probability standpoint.

Yeah. Okay. Thank you.

Good talking to you Bryce.

And me too. Thanks.

Thank you. (Operator Instructions) And I’m showing no additional questions. I’d like to turn the conference back over to Mr. Ross for any closing remarks.

Okay. Thanks Ben. And thank you everyone for joining us this morning. We look forward to speaking with you on our second quarter call in early August. I hope everyone has a great day and a great weekend and thank you again for joining us. Good bye.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may all disconnect. Have a great rest of the day.