Net Investment Income of $0.54 Per Share for
the Third Quarter
DECLARES FOURTH QUARTER 2023 DISTRIBUTION OF
$0.40 PER SHARE
TriplePoint Venture Growth BDC Corp. (NYSE: TPVG) (the
“Company,” “TPVG,” “we,” “us,” or “our”), the leading financing
provider to venture growth stage companies backed by a select group
of venture capital firms in technology and other high growth
industries, today announced its financial results for the third
quarter ended September 30, 2023 and the declaration by its Board
of Directors of its fourth quarter 2023 distribution of $0.40 per
share.
Third Quarter 2023 Highlights
- Signed $58.1 million of term sheets with venture growth stage
companies at TriplePoint Capital LLC (“TPC”) and TPVG closed $5.6
million of new debt commitments to venture growth stage
companies;
- Funded $12.7 million in debt investments to five portfolio
companies with a 14.2% weighted average annualized yield at
origination;
- Received $37.3 million of loan principal prepayments;
- Achieved a 15.1% weighted average annualized portfolio yield on
total debt investments for the quarter;
- Earned net investment income of $19.1 million, or $0.54 per
share;
- Generated total investment income of $35.7 million;
- Realized a record 20.0% return on average equity, based on net
investment income during the quarter;
- Three debt portfolio companies raised an aggregate $46.8
million of capital in private financings during the quarter;
- Held debt investments in 54 portfolio companies, warrants in
106 portfolio companies and equity investments in 48 portfolio
companies as of September 30, 2023;
- Debt investment portfolio weighted average investment ranking
of 2.10 as of quarter’s end;
- Raised $6.2 million of net proceeds under the at-the-market
equity offering program (“ATM Program”) from the issuance of
563,565 shares of common stock;
- Net asset value of $374.1 million, or $10.37 per share, as of
September 30, 2023;
- Total liquidity of $262.5 million and total unfunded
commitments of $141.9 million;
- Ended the quarter with a 1.62x gross leverage ratio; and
- Declared a fourth quarter distribution of $0.40 per share,
payable on December 29, 2023; bringing total declared distributions
to $14.65 per share since the Company’s initial public
offering.
Year to Date 2023 Highlights
- Earned net investment income of $56.5 million, or $1.59 per
share;
- Generated total investment income of $104.5 million;
- Paid distributions of $1.20 per share;
- Signed $370.9 million of term sheets with venture growth stage
companies at TPC and TPVG closed $27.3 million of new debt
commitments to venture growth stage companies;
- Funded $100.9 million in debt investments to 19 portfolio
companies with a 14.7%1 weighted average annualized portfolio yield
at origination and funded $0.2 million in direct equity investments
in private rounds of financing to three portfolio companies;
- 16 debt portfolio companies raised an aggregate $436.9 million
of capital in private financings;
- Achieved a 14.8% weighted average annualized portfolio yield on
total debt investments;
- In April 2023, DBRS, Inc. reaffirmed TPVG’s investment grade
rating, BBB Long-Term Issuer rating, with a negative trend outlook;
and
- Estimated undistributed taxable earnings from net investment
income (or “spillover income”) of $37.3 million, or $1.03 per
share, as of September 30, 2023.
1
This yield excludes the impact of $2.0
million in short-term loans that were funded and repaid during the
three months ended March 31, 2023, which carried a higher interest
rate than our normal course investments, and the impact thereof on
our weighted average adjusted annualized yield at origination for
the period presented.
“We continue to navigate the challenging venture capital
markets,” said Jim Labe, chairman and chief executive officer of
TPVG. “Our focus remains on managing the portfolio, maintaining our
earnings power, and generating NII that exceeds our
distribution.”
“During the third quarter, we strengthened our liquidity
position and continued to enhance our investment capacity,” said
Sajal Srivastava, president and chief investment officer of the
Company. “We expect to increase our investment activity as market
conditions improve.”
PORTFOLIO AND INVESTMENT ACTIVITY
During the three months ended September 30, 2023, the Company
entered into $5.6 million of new debt commitments with three
portfolio companies, funded debt investments totaling $12.7 million
to five portfolio companies and acquired warrants valued at $1.3
million in three portfolio companies. Debt investments funded
during the quarter carried a weighted average annualized portfolio
yield of 14.2% at origination. During the quarter, the Company
received $37.3 million of principal prepayments, $15.0 million of
early repayments and $20.0 million of scheduled principal
amortization. The weighted average annualized portfolio yield on
total debt investments for the third quarter was 15.1%. The Company
calculates weighted average portfolio yield as the annualized rate
of the interest income recognized during the period divided by the
average amortized cost of debt investments in the portfolio during
the period. The return on average equity for the third quarter was
20.0%. The Company calculates return on average equity as the
annualized rate of net investment income recognized during the
period divided by the Company’s average net asset value during the
period.
As of September 30, 2023, the Company held debt investments in
54 portfolio companies, warrants in 106 portfolio companies and
equity investments in 48 portfolio companies. The total cost and
fair value of these investments were $924.1 million and $870.2
million, respectively.
Total portfolio investment activity for the three and nine
months ended September 30, 2023 and 2022 was as follows:
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
(in thousands)
2023
2022
2023
2022
Beginning portfolio at fair value
$
941,955
$
876,718
$
949,276
$
865,340
New debt investments, net(a)
12,428
99,208
98,967
315,058
Scheduled principal amortization
(20,031
)
(3,282
)
(38,288
)
(19,446
)
Principal prepayments and early
repayments
(52,250
)
(723
)
(89,400
)
(171,295
)
Net amortization and accretion of premiums
and discounts and end-of-term payments
38
4,873
9,528
10,414
Payment-in-kind coupon
3,265
1,659
7,946
4,593
New warrant investments
1,334
1,873
1,502
4,833
New equity investments
384
2,951
1,320
6,747
Proceeds from dispositions of
investments
—
(4,616
)
(3,173
)
(4,862
)
Net realized gains (losses) on
investments
(25,545
)
(12,990
)
(23,682
)
(14,653
)
Net change in unrealized gains (losses) on
investments
8,600
(3,241
)
(43,818
)
(34,299
)
Ending portfolio at fair value
$
870,178
$
962,430
$
870,178
$
962,430
___________________(a) Debt balance is net of fees and discounts
applied to the loan at origination.
SIGNED TERM SHEETS
During the three months ended September 30, 2023, TPC entered
into $58.1 million of non-binding term sheets to venture growth
stage companies. These opportunities are subject to underwriting
conditions including, but not limited to, the completion of due
diligence, negotiation of definitive documentation and investment
committee approval, as well as compliance with the allocation
policy. Accordingly, there is no assurance that any or all of these
transactions will be completed or assigned to the Company.
UNFUNDED COMMITMENTS
As of September 30, 2023, the Company’s unfunded commitments
totaled $141.9 million, of which $38.2 million was dependent upon
portfolio companies reaching certain milestones. Of the $141.9
million of unfunded commitments, $45.7 million will expire during
2023, $73.3 million will expire during 2024 and $22.9 million will
expire during 2025, if not drawn prior to expiration. Since these
commitments may expire without being drawn, unfunded commitments do
not necessarily represent future cash requirements or future
earning assets for the Company.
RESULTS OF OPERATIONS
Total investment and other income was $35.7 million for the
third quarter of 2023, representing a weighted average annualized
portfolio yield of 15.1% on total debt investments, as compared to
$29.7 million and 13.8% for the third quarter of 2022. The increase
in total investment and other income was primarily due to a greater
weighted average principal amount outstanding on our income-bearing
debt investment portfolio and higher investment yields. For the
nine months ended September 30, 2023, the Company’s total
investment and other income was $104.5 million, as compared to
$84.5 million for the nine months ended September 30, 2022,
representing a weighted average annualized portfolio yield on total
debt investments of 14.8% and 14.5%, respectively.
Operating expenses for the third quarter of 2023 were $16.6
million as compared to $12.8 million for the third quarter of 2022.
Operating expenses for the third quarter of 2023 consisted of $9.3
million of interest expense and amortization of fees, $4.6 million
of base management fees, $0.6 million of administration agreement
expenses and $2.2 million of general and administrative expenses.
Due to the total return requirement under the income component of
our incentive fee structure, our income incentive fees were reduced
by $3.8 million during the three months ended September 30, 2023.
Operating expenses for the third quarter of 2022 consisted of $7.2
million of interest expense and amortization of fees, $3.9 million
of base management fees, $0.1 million of income incentive fees,
$0.6 million of administration agreement expenses and $1.1 million
of general and administrative expenses. The Company’s total
operating expenses were $48.0 million and $41.4 million for the
nine months ended September 30, 2023 and 2022, respectively.
For the third quarter of 2023, the Company recorded net
investment income of $19.1 million, or $0.54 per share, as compared
to $16.9 million, or $0.51 per share, for the third quarter of
2022. The increase in net investment income between periods was
driven primarily by greater investment and other income. Net
investment income for the nine months ended September 30, 2023 was
$56.5 million, or $1.59 per share, compared to $43.1 million, or
$1.35 per share, for the nine months ended September 30, 2022.
During the third quarter of 2023, the Company recognized net
realized losses on investments of $25.6 million, resulting
primarily from the write-off of Hi.Q, Inc., which was rated Red (5)
on our watch list, and its removal from our investment portfolio.
During the third quarter of 2022, the Company recognized net
realized losses on investments of $13.2 million.
Net change in unrealized gains on investments for the third
quarter of 2023 was $8.6 million, consisting of $17.6 million of
net unrealized gains from the reversal of previously recorded
unrealized losses from investments realized during the period,
offset by $6.2 million of net unrealized losses on the existing
debt investment portfolio and $2.8 million of net unrealized losses
on the warrant and equity portfolio resulting from fair value
adjustments. Net change in unrealized losses on investments for the
third quarter of 2022 was $3.2 million. The Company’s net realized
and unrealized losses were $67.5 million for the nine months ended
September 30, 2023, compared to net realized and unrealized losses
of $51.3 million for the nine months ended September 30, 2022.
The Company’s net increase in net assets resulting from
operations for the third quarter of 2023 was $2.1 million, or $0.06
per share, as compared to a net increase in net assets resulting
from operations of $0.4 million, or $0.01 per share, for the third
quarter of 2022. For the nine months ended September 30, 2023, the
Company’s net decrease in net assets resulting from operations was
$11.0 million, or $0.31 per share, as compared to a net decrease in
net assets resulting from operations of $8.3 million, or $0.26 per
share, for the nine months ended September 30, 2022.
CREDIT QUALITY
The Company maintains a credit watch list with portfolio
companies placed into one of five credit categories, with Clear, or
1, being the highest rating and Red, or 5, being the lowest.
Generally, all new loans receive an initial grade of White, or 2,
unless the portfolio company’s credit quality meets the
characteristics of another credit category.
As of September 30, 2023, the weighted average investment
ranking of the Company’s debt investment portfolio was 2.10, as
compared to 2.07 at the end of the prior quarter. During the
quarter ended September 30, 2023, portfolio company credit category
changes, excluding fundings and repayments, consisted of the
following: one portfolio company with a principal balance of $27.7
million was upgraded from White (2) to Clear (1), three portfolio
companies with an aggregate principal balance of $19.4 million were
downgraded from White (2) to Yellow (3), two portfolio companies
with an aggregate principal balance of $9.0 million were downgraded
from Yellow (3) to Orange (4), and one portfolio company with a
principal balance of $10.6 million was downgraded from Orange (4)
to Red (5).
The following table shows the credit categories for the
Company’s debt investments at fair value as of September 30, 2023
and December 31, 2022:
September 30, 2023
December 31, 2022
Credit Category (dollars in
thousands)
Fair Value
Percentage of Total Debt
Investments
Number of Portfolio
Companies
Fair Value
Percentage of Total Debt
Investments
Number of Portfolio
Companies
Clear (1)
$
91,262
11.7
%
6
$
55,921
6.6
%
3
White (2)
584,279
74.6
35
699,008
81.9
48
Yellow (3)
68,669
8.8
6
88,912
10.4
5
Orange (4)
17,446
2.2
3
9,110
1.1
1
Red (5)
21,197
2.7
4
—
—
—
$
782,853
100.0
%
54
$
852,951
100.0
%
57
NET ASSET VALUE
As of September 30, 2023, the Company’s net assets were $374.1
million, or $10.37 per share, as compared to $419.9 million, or
$11.88 per share, as of December 31, 2022.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2023, the Company had total liquidity of
$262.5 million, consisting of cash, cash equivalents and restricted
cash of $122.5 million and available capacity under its Revolving
Credit Facility of $140.0 million (which excludes an additional
$50.0 million available under the Revolving Credit Facility’s
accordion feature), subject to existing advance rates, terms and
covenants. As of September 30, 2023, the Company held $1.4 million
of stock and warrant positions in publicly traded companies. The
Company ended the quarter with a 1.62x gross leverage ratio and an
asset coverage ratio of 162%.
The Company maintains an ATM Program with UBS Securities LLC,
providing for the issuance from time to time of up to an aggregate
of $50.0 million in shares of its common stock. As of September 30,
2023, $43.7 million in shares remain available for sale.
DISTRIBUTION
On October 26, 2023, the Company’s board of directors declared a
regular quarterly distribution of $0.40 per share for the fourth
quarter, payable on December 29, 2023 to stockholders of record as
of December 15, 2023. As of September 30, 2023, the Company had
estimated spillover income of $37.3 million, or $1.03 per
share.
RECENT DEVELOPMENTS
Since September 30, 2023 and through October 31, 2023:
- TPC’s direct originations platform entered into $17.5 million
of additional non-binding signed term sheets with venture growth
stage companies;
- The Company closed $3.0 million of additional debt commitments;
and
- The Company funded $10.0 million in new investments.
CONFERENCE CALL
The Company will host a conference call at 5:00 p.m. Eastern
Time, today, November 1, 2023, to discuss its financial results for
the quarter ended September 30, 2023. To listen to the call,
investors and analysts should dial (844) 826-3038 (domestic) or +1
(412) 317-5184 (international) and ask to join the TriplePoint
Venture Growth BDC Corp. call. Please dial in at least five minutes
before the scheduled start time. A replay of the call will be
available through December 1, 2023, by dialing (877) 344-7529
(domestic) or +1 (412) 317-0088 (international) and entering
conference ID 1131961. The conference call also will be available
via a live audio webcast in the investor relations section of the
Company’s website, https://www.tpvg.com. An online archive of the
webcast will be available on the Company’s website for one year
after the call.
ABOUT TRIPLEPOINT VENTURE GROWTH BDC CORP.
TriplePoint Venture Growth BDC Corp. is an externally-managed
business development company focused on providing customized debt
financing with warrants and direct equity investments to venture
growth stage companies in technology and other high growth
industries backed by a select group of venture capital firms. The
Company’s sponsor, TriplePoint Capital, is a Sand Hill Road-based
global investment platform which provides customized debt
financing, leasing, direct equity investments and other
complementary solutions to venture capital-backed companies in
technology and other high growth industries at every stage of their
development with unparalleled levels of creativity, flexibility and
service. For more information about TriplePoint Venture Growth BDC
Corp., visit https://www.tpvg.com. For more information about
TriplePoint Capital, visit https://www.triplepointcapital.com.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute
forward-looking statements. Forward-looking statements are not
guarantees of future performance, investment activity, financial
condition or results of operations and involve a number of
substantial risks and uncertainties, many of which are difficult to
predict and are generally beyond the Company’s control. Words such
as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,”
“continue,” “believes,” “seeks,” “estimates,” “would,” “could,”
“should,” “targets,” “projects,” and variations of these words and
similar expressions are intended to identify forward-looking
statements. Actual events, investment activity, performance,
condition or results may differ materially from those in the
forward-looking statements as a result of a number of factors,
including as a result of changes in economic, market or other
conditions, and the impact of such changes on the Company’s and its
portfolio companies’ results of operations and financial condition,
and those factors described from time to time in the Company’s
filings with the Securities and Exchange Commission. More
information on these risks and other potential factors that could
affect actual events and the Company’s performance and financial
results, including important factors that could cause actual
results to differ materially from plans, estimates or expectations
included herein or discussed on the webcast/conference call, is or
will be included in the Company’s filings with the Securities and
Exchange Commission, including in the “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” sections of the Company’s Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. Readers are cautioned
not to place undue reliance on these forward-looking statements,
which reflect management’s opinions only as of the date hereof. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by law.
TriplePoint Venture Growth BDC
Corp.
Consolidated Statements of
Assets and Liabilities
(in thousands, except per share
data)
September 30, 2023
December 31, 2022
(unaudited)
Assets
Investments at fair value (amortized cost
of $924,127 and $959,407, respectively)
$
870,178
$
949,276
Cash and cash equivalents
105,003
51,489
Restricted cash
17,461
7,771
Deferred credit facility costs
3,068
4,128
Prepaid expenses and other assets
2,770
1,869
Total assets
$
998,480
$
1,014,533
Liabilities
Revolving Credit Facility
$
210,000
$
175,000
2025 Notes, net
69,685
69,543
2026 Notes, net
198,930
198,598
2027 Notes, net
124,048
123,839
Other accrued expenses and liabilities
21,717
27,613
Total liabilities
$
624,380
$
594,593
Net assets
Preferred stock, par value $0.01 per share
(50,000 shares authorized; no shares issued and outstanding,
respectively)
$
—
$
—
Common stock, par value $0.01 per
share
361
353
Paid-in capital in excess of par value
478,445
470,572
Total distributable earnings (loss)
(104,706
)
(50,985
)
Total net assets
$
374,100
$
419,940
Total liabilities and net
assets
$
998,480
$
1,014,533
Shares of common stock outstanding (par
value $0.01 per share and 450,000 authorized)
36,086
35,348
Net asset value per share
$
10.37
$
11.88
TriplePoint Venture Growth BDC
Corp.
Consolidated Statements of
Operations
(in thousands, except per share
data)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Investment income
Interest income from investments
$
34,070
$
29,214
$
100,825
$
82,142
Other income
1,668
484
3,693
2,333
Total investment and other
income
$
35,738
$
29,698
$
104,518
$
84,475
Operating expenses
Base management fee
$
4,596
$
3,932
$
13,403
$
11,550
Income incentive fee
—
101
—
6,651
Interest expense and amortization of
fees
9,297
7,153
28,486
18,378
Administration agreement expenses
579
593
1,720
1,673
General and administrative expenses
2,162
1,059
4,389
3,162
Total operating expenses
$
16,634
$
12,838
$
47,998
$
41,414
Net investment income
$
19,104
$
16,860
$
56,520
$
43,061
Net realized and unrealized
gains/(losses)
Net realized gains (losses) on
investments
$
(25,556
)
$
(13,187
)
$
(23,730
)
$
(17,038
)
Net change in unrealized gains (losses) on
investments
8,600
(3,241
)
(43,818
)
(34,299
)
Net realized and unrealized
gains/(losses)
$
(16,956
)
$
(16,428
)
$
(67,548
)
$
(51,337
)
Net increase (decrease) in net assets
resulting from operations
$
2,148
$
432
$
(11,028
)
$
(8,276
)
Per share information (basic and
diluted)
Net investment income per share
$
0.54
$
0.51
$
1.59
$
1.35
Net increase (decrease) in net assets per
share
$
0.06
$
0.01
$
(0.31
)
$
(0.26
)
Weighted average shares of common stock
outstanding
35,609
33,373
35,453
31,816
Total distributions declared per share
$
0.40
$
0.36
$
1.20
$
1.08
Weighted Average Portfolio
Yield
on Total Debt
Investments
Ratios (Percentages, on an
annualized basis)(1)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Weighted average portfolio yield on total
debt investments(2)
15.1
%
13.8
%
14.8
%
14.5
%
Coupon income
11.6
%
11.3
%
11.7
%
10.6
%
Accretion of discount
0.9
%
0.8
%
0.9
%
0.8
%
Accretion of end-of-term payments
1.6
%
1.7
%
1.7
%
1.7
%
Impact of prepayments during the
period
1.0
%
—
%
0.5
%
1.4
%
_____________
(1)
Weighted average portfolio yields on total
debt investments for periods shown are the annualized rates of
interest income recognized during the period divided by the average
amortized cost of debt investments in the portfolio during the
period.
(2)
The weighted average portfolio yields on
total debt investments reflected above do not represent actual
investment returns to the Company’s stockholders
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101444723/en/
INVESTOR RELATIONS AND MEDIA The IGB Group Leon Berman
212-477-8438 lberman@igbir.com
TriplePoint Venture Grow... (NYSE:TPVG)
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TriplePoint Venture Grow... (NYSE:TPVG)
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