KKR Enhanced US Direct Lending Fund-L Inc. Annual Report - How We Performed This Year

What KKR Enhanced US Direct Lending Fund-L Inc. Invests In

KKR Enhanced US Direct Lending Fund-L Inc. lends money to many businesses. Think of us as a private bank. We mainly lend to middle-market companies in the U.S. These companies typically have $10 million to $100 million in annual operating profit (EBITDA). They often choose private lenders for quick, flexible, and reliable funding. Traditional banks might not offer this, especially for complex or growing businesses.

We mainly provide "senior secured loans." These make up over 80-90% of our total investments. They are the safest type of loan a company can get. If a business struggles, we are usually first in line to get our money back. This is because companies back these loans with assets. These assets can be equipment, real estate, or money owed to them. These loans also have strong rules to protect our money.

We spread our investments widely to reduce risk. As of December 31, 2025, we invested in over 150 companies. These companies operate across more than 30 different sectors. This is a very diverse mix, covering areas like:

• Technology: Companies making application software (e.g., Flexera Software LLC, Granicus Inc) and systems software (e.g., Bonterra LLC, Gigamon Inc).
• Healthcare: Healthcare services (e.g., Advanced Dermatology & Cosmetic Surgery, Dental Care Alliance Inc), equipment, and supplies.
• Financial Services: Asset management firms (e.g., Rockefeller Capital Management LP) and consumer finance companies.
• Industrial & Services: Aerospace and defense (e.g., Horizon CTS Buyer LLC), construction and engineering (e.g., Pike Corp, Turnpoint Services Inc), environmental services, and cargo transportation.
• Insurance: Insurance brokerage and services firms (e.g., Foundation Risk Partners Corp, Integrity Marketing Group LLC).

We don't just stick to these 'first in line' loans. To boost potential profits, we also invest a small part of our money in other types of investments. For some companies, we hold "subordinated debt." This typically makes up 5-10% of our investments. Think of these as loans paid back later if a company struggles. They offer a higher return for taking on more risk. Sometimes, we even own a small ownership share (called "equity") in a company. This typically accounts for less than 5% of our investments. This offers extra profit potential if a company performs very well. It's riskier, but can offer bigger rewards. For example, we hold both senior secured loans and ownership shares in companies like New Era Technology Inc and Alacrity Solutions Group LLC.

A key part of our strategy is relying on variable interest rates. Over 95% of our loans have these rates. This means the interest we earn changes with market rates. These rates often link to standards like SOFR in the US. (SOFR is a key short-term interest rate.) This structure protects us against rising prices and interest rates. Our earnings increase as these standard rates rise. This directly helps our investors.

We kept busy, comparing our investments from late 2024 to late 2025. We actively managed our investments this year. We added 35 new companies and made additional investments in over 50 existing companies. We also saw loans paid back or investments sold from 20 companies. This led to an overall increase in companies. The total worth of our investments grew by 15% year-over-year. We also branched into new areas. These include Healthcare Supplies, Highways & Railtracks, Internet Services, Leisure Facilities, Publishing, Research & Consulting, and Specialized Consumer Services. This shows we actively seek good lending chances across many different parts of the economy.

Finally, we also keep some money in safe places. These include money market funds (like BNY Mellon U.S. Treasury Fund and State Street Institutional U.S. Government Money Market Fund). We also hold government securities, which are short-term loans to the government. As of December 31, 2025, this cash made up about 5% of our total assets. This helps us manage cash for day-to-day needs, new investments, and investor withdrawals. It ensures money is ready without risking it in the market.