Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 75

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 75
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 such persons may be committed to providing investment advisory and other services for other clients, and engage in other business
ventures in which we have no interest. As a result of these separate business activities, the Adviser has conflicts of interest in allocating
management time, services and functions among us, other advisory clients and other business ventures. See “Conflicts of Interest.”

Our incentive fee structure may incentivize the Adviser to pursue speculative investments, use leverage when it may be unwise to do so, or refrain from de-levering when it would otherwise be appropriate to do so.

The incentive fee payable by us to the Adviser
may create an incentive for the Adviser to pursue investments on our behalf that are riskier or more speculative than would be the case
in the absence of such compensation arrangement. Such a practice could result in our investing in more speculative securities than would
otherwise be the case, which could result in higher investment losses, particularly during economic downturns. The incentive fee payable
to the Adviser is based on our Pre-Incentive Fee Net Investment Income, as calculated in accordance with our Investment Advisory Agreement.
This may encourage the Adviser to use leverage to increase the return on our investments, even when it may not be appropriate to do so,
and to refrain from de-levering when it would otherwise be appropriate to do so. Under certain circumstances, the use of leverage may
increase the likelihood of default, which would impair the value of our securities. See “— Risks Related to Our Investments — We may leverage our portfolio, which would magnify the potential for gain or loss on amounts invested and increase the risk of investing in us.”

A general increase in interest rates may have the effect of making it easier for the Adviser to receive incentive fees, without necessarily resulting in an increase in our net earnings.

Given the structure of our Investment Advisory
Agreement, any general increase in interest rates will likely have the effect of making it easier for the Adviser to meet the quarterly
hurdle rate for payment of income incentive fees under the Investment Advisory Agreement without any additional increase in relative performance
on the part of the Adviser. This risk is more acute in rising rate environment, such as the one we are in now. In addition, in view of
the catch-up provision applicable to income incentive fees under the Investment Advisory Agreement, the Adviser could potentially receive
a significant portion of the increase in our investment income attributable to such a general increase in interest rates. If that were
to