BCSF WACC - Weighted Average Cost of Capital
The WACC of Bain Capital Specialty Finance Inc (BCSF) is 8.2%.
| Range | Selected | |
| Cost of equity | 7.4% - 13.7% | 10.55% |
| Tax rate | 1.7% - 2.5% | 2.1% |
| Cost of debt | 4.3% - 9.1% | 6.7% |
| WACC | 5.6% - 10.9% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.77 | 1.58 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.4% | 13.7% |
| Tax rate | 1.7% | 2.5% |
| Debt/Equity ratio | 1.42 | 1.42 |
| Cost of debt | 4.3% | 9.1% |
| After-tax WACC | 5.6% | 10.9% |
| Selected WACC | 8.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BCSF | Bain Capital Specialty Finance Inc | 1.42 | 0.56 | 0.23 |
| AINV | Apollo Investment Corp | 1.69 | 1.74 | 0.65 |
| CGBD | TCG BDC Inc | 0.96 | 0.57 | 0.29 |
| EIT.UN.TO | Canoe EIT Income Fund | 0.1 | 1.18 | 1.07 |
| GCG.TO | Guardian Capital Group Ltd | 0.11 | 1.1 | 1 |
| OCSL | Oaktree Specialty Lending Corp | 1.44 | 0.53 | 0.22 |
| PZN | Pzena Investment Management Inc | 0 | 1.3 | 1.3 |
| SLRC | SLR Investment Corp | 1.2 | 0.54 | 0.25 |
| TCPC | BlackRock TCP Capital Corp | 1.83 | 0.64 | 0.23 |
| WETF | Wisdom Tree Investments Inc | 0.42 | 1.44 | 1.02 |
| Low | High | |
| Unlevered beta | 0.28 | 0.79 |
| Relevered beta | 0.66 | 1.87 |
| Adjusted relevered beta | 0.77 | 1.58 |
BCSF's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for BCSF:
cost_of_equity (10.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.77) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.