Audax Private Credit Fund, LLC - A Plain-English Investor Guide

I created this guide to help you understand Audax Private Credit Fund, LLC. My goal is to explain their filings in plain English so you can decide if this fund fits your portfolio.

1. What does this company do?

Think of Audax as a specialized lender. Instead of a traditional bank, they lend to "middle-market" companies—businesses with annual profits between $10 million and $100 million. These companies are too big for local banks but not ready to issue public bonds.

Audax focuses on "first lien" senior secured loans. This means if a borrower runs into trouble, Audax has the first claim on their assets. They are first in line to get paid back. In April 2025, they became a "Business Development Company" (BDC) to simplify how they raise money and follow regulations.

2. How they make money (and what it costs you)

Audax makes money on the "spread"—the difference between the interest they collect from borrowers and the interest they pay on their own debt. They use "leverage" (borrowing money to invest) to boost returns, aiming to keep their debt at 1.0 to 1.25 times their equity. This strategy increases potential returns but also makes the fund more sensitive to interest rate changes.

The Costs:

• Management Fee: You pay a base fee of 1.25% of the fund’s net assets. In 2025, the fund waived $1.0 million of this fee, resulting in an effective cost of 0.99% for investors.
• Performance Fee: This is a bonus for performance. The fund takes 17.5% of profits, provided they exceed a 6% annual return. In 2025, these fees totaled $3.0 million.
• Administrative Costs: These cover daily operations like accounting and legal work, which cost $0.2 million in 2025.

3. Why they think they have an edge

Audax has been lending since 2000 and has handled $53 billion across 1,200 deals. Their process relies on two main pillars:

• The "Gauntlet": Their Investment Committee reviews every deal and rejects over 90% of the opportunities they see.
• Active Monitoring: They require monthly reports from borrowers and include strict rules in their loan agreements that force borrowers to keep debt levels low, allowing Audax to intervene if a company struggles.

4. The Risks

• No Easy Exit: These shares do not trade on a public stock exchange, meaning your money is locked in. The fund offers limited opportunities each quarter to buy back a small portion of shares.
• Valuation Delays: Because these private loans have no daily market price, Audax estimates their value each quarter using internal models and outside experts.
• Conflict of Interest: The team managing the fund also helps value the assets. Since their fees are tied to the fund’s value, there is an inherent incentive to maintain higher valuations.
• Borrower Health: If the economy slows, these smaller companies may struggle to pay back loans, which increases the risk of default.

5. Future Outlook

Audax manages $46 billion in credit, which provides a significant advantage in sourcing new deals. They plan to pay out 90% or more of their taxable income to shareholders every quarter. Their success depends on their ability to select companies that can maintain interest payments even during economic downturns.

Final Thought for Your Decision: When considering this fund, ask yourself if you are comfortable with a "buy and hold" investment that lacks daily liquidity. Because your capital is tied to the performance of private middle-market companies, this fund is best suited for investors who prioritize long-term income over the ability to sell their shares at a moment's notice.