SL Investment Fund II (SLIF II): A Private Morgan Stanley BDC With 16 Holders, a $52 Million Tender and an $800 Million Credit Line

What SLIF II is, and what it is not

SLIF II is a non-diversified BDC that lends to U.S. middle-market companies, defined in its 10-K as those with EBITDA of roughly $15 million to $200 million, mainly through “directly originated senior secured term loans” to companies controlled by private equity sponsors. It began on May 9, 2024 (inception), held its initial closing on September 13, 2024, and started at $20.00 a unit. Four points the name search blurs:

• It is a Morgan Stanley fund, not a Morgan Stanley subsidiary. The 10-K says that “we are not a subsidiary of, or consolidated with, Morgan Stanley.” The Adviser, MS Capital Partners Adviser Inc., is.
• It is not the listed MSDL, and not North Haven. The 10-K lists the “Fund Complex” as the company, Morgan Stanley Direct Lending Fund, North Haven Private Income Fund LLC, North Haven Private Income Fund A, LGAM Private Credit LLC and T Series Middle Market Loan Fund LLC. For the NYSE-listed one see our MSDL page; for the retail-channel one, North Haven Private Income Fund.
• “SL Investment” is not explained in the filings. The older vehicle called SL Investment Corp. is not named in SLIF II’s Form 10 or its 10-K, so we cannot describe any link between the two from the record (not verified).
• It is an Exchange Act filer, which is why you can read this. It registered units on Form 10 in 2024 and files 10-Ks, 10-Qs and 8-Ks, but registration is not an offering to the public. On our non-traded BDC list it ranks 46th of 67 by net assets, there because it filed a Schedule TO-I, although its units are offered privately.

Who can invest, and how money goes in

The Form 10 says investors in the initial private offering must be an “accredited investor” under Regulation D or a non-U.S. person under Regulation S. Each investor signs a subscription agreement with a capital commitment, and the fund calls it down in pieces. Drawdown notices go out “at least five business days” before funding, purchases are “generally” pro rata to commitments, and an investor who fails to fund “will be subject to certain default provisions.” Units cannot be sold or assigned without the fund’s prior written consent.

At June 30, 2026 the commitments stood at $594.95 million, of which $231.053 million had not been called. The ratio of contributed to committed capital was 61.16%. Five drawdowns since September 2025 are reported in the 8-Ks (Item 3.02); the last four are below.

The September 29, 2025 drawdown (1,470,297 units for $29.7 million, about $20.20 a unit) comes before this window. Each implied price sits a few cents above the latest NAV the fund had reported or used: $20.17 (September 30) for November, $20.28 (the January 31 tender price) for February, $19.87 (March 31) for April and $19.75 (June 30) for July. That is consistent with the 10-K’s statement that the price may be set “above the net asset value per Unit” to spread organizational expenses. The 8-Ks round the dollar amounts, so the prices are approximate. Units outstanding went from 15,534,867 at December 31, 2025 to 19,615,220 at August 12, 2026 (our arithmetic: up 26.3%).

The filings give no minimum commitment, no placement agent and no sales channel, so how an individual gets an allocation is not verified.

The January 2026 tender, and the holder that left

Liquidity is the part to read twice. The units “are not traded in any market.” With no secondary market, the board ran one tender offer, from January 2 to January 31, 2026, “in order to provide liquidity for our unitholders.” The Schedule TO-I filed December 31, 2025 offered to buy up to 2,575,000 units, about 16.5% of the 15,534,866.552 units outstanding on November 30, 2025, at NAV on January 31, 2026. The final amendment reports what happened:

• 2,567,661 units were tendered and not withdrawn, 99.7% of the offer (our arithmetic).
• The fund paid about $52,072,171 on or about February 20, 2026, at $20.28 a unit. The 10-Q adds that “all repurchase requests were satisfied in full.”
• It also cancelled $150.95 million of undrawn capital commitments, which is why net commitments dropped from $745.9 million at December 31, 2025 to $594.95 million at June 30, 2026.

Ownership explains the size of the request. In February 2025 a Schedule 13G jointly filed by Lockheed Martin Investment Management Company and the Lockheed Martin Corporation Master Retirement Trust reported 2,520,161 units, 20.01% of the class, at December 31, 2024. The amendment filed February 9, 2026 reports 0 units, 0%, with a date of event of January 31, 2026, the day the offer expired. The 13G/A does not say how the position was disposed of. What we can say is arithmetic: the 2,520,161 units are 98.2% of the 2,567,661 tendered, and the fund’s 10-K table of 5% holders, dated March 4, 2026, lists no one. The tender was in effect one holder’s exit, and the fund honored it in full.

The 10-K is blunt about repeating it: “While our Board has discretion to offer to repurchase units in any given quarter, we do not currently expect to make regular tender offers on a quarterly basis, if at all.” EDGAR shows no later Schedule TO-I for SLIF II as of October 27, 2026. Compare a fund that opens a window every quarter, such as Bain Capital Private Credit: here the one offer was filled in full, and whether there will be another is up to the board.

The structural backstop is the term. The Investment Period runs from the initial closing to the third anniversary, September 13, 2027, extendable by the Adviser for up to two one-year periods (our arithmetic on the dates). The fund’s term then runs to the fourth anniversary of the end of that period, about September 2031 without extensions, and if no “Liquidity Event” has happened the board is to use commercially reasonable efforts to wind the fund down. The Form 10 says the fund does not intend to list the units.

NAV, income and the distribution

Total members’ capital includes $1.545 million of paid-in capital on 515 Series A Preferred Units (12.0% cumulative, sold September 20, 2024 at $3,000 a unit to individual accredited investors). The 2024 distribution was for the stub period since May 9, 2024.

Assets have grown 2.5 times since December 2024 (our arithmetic: $757.6 million against $306.4 million), with $340.0 million more debt and $104.3 million more members’ capital (our arithmetic). NAV per unit has not grown with them. The first-half 2026 return on members’ capital was 3.29%, against 4.66% a year earlier (not annualized), and unrealized depreciation of $6.649 million on investments offset a net investment income of $17.972 million. At June 30 the investments were carried at 99.3% of amortized cost, against 100.2% at year-end (our arithmetic).

The payout has kept rising. The fund declares quarterly “an amount up to the Company’s taxable earnings per Common Unit,” so it is a variable pass-through, not a fixed rate:

• 2025: $1.84 a unit, 9.1% of the year-end $20.11 NAV (our arithmetic). Net investment income after taxes was $25.476 million against $25.376 million of distributions declared, including preferred (100.4%, our arithmetic).
• First half of 2026: $1.03 a unit ($0.48 and $0.55), or 10.4% annualized on the $19.75 NAV (our arithmetic). Net investment income was $17.972 million against $17.893 million declared (100.4%).
• Second quarter alone: $0.55 a unit against a quarterly net investment income of $9.944 million, essentially all of it paid out: $9.9 million to common plus $47 thousand to preferred (99.97%, our arithmetic).

A fund that distributes about 100% of net investment income while NAV falls is telling you the dividend is being earned, not subsidized, and also that nothing is being retained as a cushion. Second-quarter total investment income was $16.264 million, 77% above $9.175 million a year earlier (our arithmetic), as the portfolio grew to 92 companies from 78 at year-end. The weighted average yield on debt and income-producing investments was 8.9% at both cost and fair value. The board declared the next distribution on August 4, 2026, for income from July 1 to September 30, payable on or about October 30, 2026; the amount is not stated in the 10-Q.

Fees: very low base, but borrowing does the work

The fee is low, but the expense ratio is not: total expenses were 7.13% of average members’ capital annualized in the first half of 2026, against 5.41% in 2025, because interest and other financing expenses were $10.544 million of $11.825 million of half-year expenses. We did not find a sales load or placement fee in the filings (not verified against the subscription agreement).

Leverage: $800 million of room on $359 million of equity

SLIF II borrows through SLIF II Financing SPV LLC, a wholly owned subsidiary, under a Loan and Servicing Agreement with UBS AG as administrative agent. The size has been raised three times:

At June 30, 2026, $385.5 million was drawn and $214.5 million was available on the then-$600 million line, at a weighted average interest rate of 5.54% for the quarter. Debt was 1.07 times members’ capital and total liabilities 1.11 times (our arithmetic), and the reported asset coverage ratio was 193.00%, against the 150% minimum. Unfunded commitments to portfolio companies were $203.413 million. Cash was $20.8 million, with $231.1 million of investor commitments still to call, and the 10-Q says the fund believes it has adequate financial resources to meet those portfolio commitments. The two later increases came after the quarter, and the 8-Ks do not give the amount drawn.

What is in the portfolio

At June 30, 2026 the fund held 92 portfolio companies in 26 industries, up from 78 and 23 at December 31, 2025, with an average position of $7.9 million. The mix was 99.6% first-lien debt, 0.2% other debt and 0.2% equity, 99.8% floating rate, and 97.6% of debt investments were sponsor-backed. Weighted average net leverage through the fund’s tranche was 5.7 times and weighted average interest coverage 2.0 times (both from borrower data the fund says it has not independently verified).

On credit, the 10-Q lists no non-accrual debt at either date. One loan, $1.933 million or 0.3% of fair value, was rated 3 at June 30, up from none at December 31; no loan was rated 1 or 4, and the rest were rated 2.

Where this leaves a holder, or someone looking at it

• If you are already in, your constraint is the fund’s calendar, not the market: the board has run one tender, and decides whether to run another. Keep cash for drawdown notices, because the uncalled $231 million is callable on five business days’ notice.
• If you want to buy, you cannot do it on an exchange, and the 10-K shows 16 holders, which means any allocation is a private transaction with the fund. Whether feeder or wealth-platform access exists is not verified.
• What would show stress: a second Schedule TO-I and how much of it is requested, the amount drawn on the $800 million line, the 3-rated loan count, and whether the 10-Q for the quarter ended September 30, 2026 (expected around mid-November; our inference from the November 12, 2025 and August 12, 2026 filings) shows NAV under $19.75.
• Other private-credit queues are tracked in our private credit redemptions tracker, and the listed BDCs are in the BDC stocks list.

One housekeeping item from the filings: a director resigned effective September 26, 2026, “not the result of any disagreement with the Company” (Form 8-K, accession 0001193125-26-407719).

FAQ

All figures are from SL Investment Fund II LLC’s SEC filings read on EDGAR on October 27, 2026: the Form 10 amendment of November 7, 2024, the Form 10-K for 2025 (accession 0001193125-26-091861), the Forms 10-Q for September 30, 2025, March 31, 2026 and June 30, 2026 (accessions 0001193125-25-277634, 0001193125-26-223928 and 0001193125-26-346866), the Schedule TO-I of December 31, 2025 and its final amendment of February 23, 2026, the Schedule 13G of February 2025 and 13G/A of February 2026, and Forms 8-K from September 2025 to October 2026. Percentages, sums, implied prices, coverage ratios and the 98.2% comparison are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.