Net Investment Income of $0.41 per share and
Net Increase in Net Assets of $0.96 per share
Record Investment Portfolio of $496.0
Million as of June 30, 2019
Declares Third Quarter 2019 Distribution of
$0.36 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 the technology, life sciences and other
high growth industries, today announced its financial results for
the second quarter ended June 30, 2019 and its third quarter 2019
distribution of $0.36 per share.
Second Quarter 2019 Highlights
- Earned net investment income of $10.1 million, or $0.41 per
share;
- Generated a net increase in net assets of $23.9 million, or
$0.96 per share, resulting in a net asset value of $14.19 per
share;
- Signed $203.6 million of new term sheets at TriplePoint Capital
LLC (“TPC”), and TPVG closed $98.4 million of new debt commitments
to venture growth stage companies;
- Funded $72.5 million in debt investments with a 13.8% weighted
average annualized portfolio yield at origination;
- Grew the investment portfolio to a record level of $496.0
million as of June 30, 2019;
- Achieved a 16.5% weighted average annualized portfolio yield on
debt investments, including the impact of prepayments;
- Realized a 12.0% return on average equity, based on net
investment income, during the quarter;
- Amended and renewed the Company’s revolving credit facility,
increasing funding capacity to $265.0 million;
- TPVG portfolio company CrowdStrike, Inc. completed a $612
million initial public offering; and
- Declared a third quarter distribution of $0.36 per share,
payable on September 16, 2019; bringing total distributions to
$7.80 per share since the Company’s initial public offering.
Year to Date 2019 Highlights
- Earned net investment income of $20.0 million, or $0.81 per
share;
- Generated a net increase in net assets of $34.9 million, or
$1.41 per share;
- Increased net asset value by $0.69 per share from December 31,
2018;
- Signed $453.7 million of new term sheets at TPC, and TPVG
closed $289.3 million of new debt commitments to venture growth
stage companies, an increase of 26.7% and 13.3% over the same
period in 2018, respectively;
- Funded $163.1 million in debt and equity investments to 17
portfolio companies, an increase of 79.9% over the same period of
2018;
- Achieved a 16.4% weighted average annualized portfolio yield on
debt investments; and
- Paid distributions of $0.72 per share.
“Our results for the second quarter demonstrate the earnings
power of our investment platform,” said Jim Labe, chairman and
chief executive officer of TPVG. “We delivered substantial
quarterly investment income, generated meaningful unrealized gains,
and grew our investment portfolio for the third quarter in a
row.”
“We appreciate the continued support of our lenders with the
amendment and renewal of our revolving credit facility,” said Sajal
Srivastava, President and Chief Investment Officer of the Company.
“The increased funding capacity gives us financial flexibility as
we focus on growing our investment portfolio in a disciplined
fashion and approaching our target leverage ratio.”
PORTFOLIO AND INVESTMENT ACTIVITY
During the second quarter of 2019, the Company entered into
$98.4 million of new debt commitments with nine companies, funded
seventeen debt investments totaling $72.5 million to thirteen
companies, acquired warrant investments valued at $0.7 million in
ten companies and made equity investments of $1.7 million in five
companies. Debt investments funded during the quarter carried a
weighted average annualized portfolio yield of 13.9% at
origination. During the quarter, the Company had $42.9 million of
early principal prepayments and principal amortization of $8.4
million. The weighted average annualized portfolio yield on debt
investments for the second quarter was 16.5%, including the impact
of prepayments and other activity, and 13.7% excluding the impact
of prepayments and other activity. 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 at the
beginning of each month in the period.1
As of June 30, 2019, the Company held 92 debt investments with
29 companies and 74 warrant and equity investments in 73 companies.
The total cost and fair value of these investments were $482.4
million and $496.0 million, respectively.
Total portfolio investment activity for the three and six months
ended June 30, 2019 and 2018 was as follows:
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
(in thousands)
2019
2018
2019
2018
Beginning portfolio at fair value
$
457,695
$
401,258
$
433,417
$
372,103
New debt investments, net (1)
71,082
51,098
158,721
88,066
Scheduled principal payments from debt
investments
(8,367
)
(5,469
)
(21,327
)
(11,345
)
Early principal payments, repayments and
recoveries
(42,551
)
(50,000
)
(100,104
)
(58,348
)
Accretion of debt investment fees
1,741
2,861
4,976
5,809
Payment-in-kind coupon
291
684
1,062
1,289
New warrant investments
710
1,246
2,524
1,861
New equity investments
1,662
500
2,162
750
Proceeds and dispositions of
investments
20
(3,368
)
(302
)
(3,371
)
Net realized (losses) gains
(17
)
773
(46
)
781
Net unrealized gains (losses) on
investments
13,755
(1,178
)
14,938
810
Ending portfolio at fair value
$
496,021
$
398,405
$
496,021
$
398,405
(1) Debt balance is net of fees and discounts applied to the
loan at origination.
SIGNED TERM SHEETS
During the second quarter of 2019, TPC entered into $203.6
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 TPC’s 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 June 30, 2019, the Company’s unfunded commitments totaled
$350.1 million, of which $91.3 million is dependent upon portfolio
companies reaching certain milestones. Of the $350.1 million of
unfunded commitments, $162.7 million will expire during 2019,
$157.3 million will expire during 2020 and $30.0 million will
expire in 2021 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 $18.9 million for the
second quarter of 2019, representing a weighted average annualized
portfolio yield of 16.5% on debt investments, as compared to $16.5
million and 17.2%, for the second quarter of 2018. The increase in
investment income was driven by a higher average portfolio balance
between periods. For the six months ended June 30, 2019, the
Company’s total investment and other income was $36.4 million, as
compared to $29.2 million for the six months ended June 30, 2018,
representing a year-to-date weighted average annualized portfolio
yield on debt investments of 16.4% and 15.6%, respectively.
Operating expenses for the second quarter of 2019 were $8.8
million as compared to $7.8 million for the second quarter of 2018.
Operating expenses for the second quarter of 2019 consisted of $3.0
million of interest expense and amortization of deferred credit
facility costs, $2.1 million of base management fees, $2.5 million
of income incentive fees, $0.4 million of administration agreement
expenses and $0.8 million of general and administrative expenses.
Operating expenses for the second quarter of 2018 consisted of $2.5
million of interest expense and amortization of deferred credit
facility costs, $1.8 million of base management fees, $2.2 million
of income incentive fees, $0.4 million of administration agreement
expenses and $0.8 million of general and administrative expenses.
The Company’s operating expenses were $16.4 million and $14.4
million for the six months ended June 30, 2019 and 2018,
respectively.
For the second quarter of 2019, the Company recorded net
investment income of $10.1 million, or $0.41 per share, as compared
to $8.8 million, or $0.50 per share, for the second quarter of
2018. The increase between periods was primarily driven by higher
total investment income as a result of an increase in the average
portfolio balance. Net investment income for the six months ended
June 30, 2019 was $20.0 million, or $0.81 per share, compared to
$14.7 million, or $0.83 per share, during the six months ended June
30, 2018.
During the second quarter of 2019, the Company recorded $(17)
thousand, or $(0.00) per share, of net realized losses on
investments, compared to net realized gains on investments of $0.8
million, or $0.04 per share, for the second quarter of 2018. Net
unrealized appreciation on investments for the second quarter of
2019 was $13.8 million, or $0.55 per share, mainly resulting from
market-related changes affecting fair value estimates, as compared
to net unrealized depreciation on investments of $(1.2) million, or
$(0.07) per share, for the second quarter of 2018. The Company’s
net realized and unrealized gains were $14.9 million and $1.6
million for the six months ended June 30, 2019 and 2018,
respectively.
The Company’s net increase in net assets resulting from
operations for the second quarter of 2019 was approximately $23.9
million, or $0.96 per share, as compared to approximately $8.4
million, or $0.47 per share, for the second quarter of 2018. For
the six months ended June 30, 2019, the Company’s net increase in
net assets resulting from operations was approximately $34.9
million, or $1.41 per share, as compared to a $16.3 million, or
$0.92 per share, for the six months ended June 30, 2018.
CREDIT QUALITY
The Company maintains a credit watch list with portfolio
companies placed into one of five 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 (2)
unless the portfolio company’s credit quality meets the
characteristics of another risk category.
As of June 30, 2019, the weighted average investment ranking of
the Company’s debt investment portfolio was 2.03, as compared to
1.95 at the end of the prior quarter During the three months ended
June 30, 2019, portfolio company credit category changes, excluding
fundings and repayments, consisted of the following: one portfolio
company with a principal balance of $11.0 million was upgraded from
Orange (4) to Yellow (3); one portfolio company with a principal
balance of $10.0 million was downgraded from White (2) to Yellow
(3); two portfolio companies with a combined principal balance of
$28.7 million were downgraded from Yellow (3) to Orange (4); and
one portfolio company with a principal balance of $3.2 million was
downgraded from White (2) to Red (5). Additional information
regarding our credit rating methodology is detailed in our Form
10-Q for the three months ended June 30, 2019.
The following table shows the credit rankings for the Company’s
debt investments at fair value as of June 30, 2019 and March 31,
2019.
As of June 30, 2019
As of March 31, 2019
Category (dollars in thousands)
Fair Value
% of Debt Investment
Portfolio
# of Portfolio
Companies
Fair Value
% of Debt Investment
Portfolio
# of Portfolio
Companies
Clear (1)
80,010
18.0
%
4
81,225
19.1
%
4
White (2)
302,832
68.1
18
293,911
69.3
20
Yellow (3)
33,879
7.6
3
40,163
9.5
3
Orange (4)
23,687
5.3
2
6,886
1.6
1
Red (5)
4,305
1.0
2
2,211
0.5
1
444,713
100
%
29
424,396
100
%
29
NET ASSET VALUE
As of June 30, 2019, the Company’s net assets were $352.7
million, or $14.19 per share, as compared to $334.5 million, or
$13.50 per share, as of December 31, 2018.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2019, the Company had total liquidity of $203.6
million, consisting of cash of $24.4 million and available capacity
under its revolving credit facility of $179.2 million, subject to
existing advance rates, terms and covenants.
DISTRIBUTION
The Company’s board of directors declared a quarterly
distribution of $0.36 per share for the third quarter of 2019, of
which 51.6% represents a spillover dividend as a result of
overearning the quarterly dividends in the fiscal year ended
December 31, 2018, payable on September 16, 2019 to stockholders of
record as of August 30, 2019.
SUBSEQUENT EVENTS
Since July 1, 2019:
- TPVG portfolio company Medallia, Inc. completed a $326 million
initial public offering;
- The Company funded $11.1 million in new investments; and
- TPC’s direct originations platform entered into $130.0 million
of additional non-binding signed term sheets with venture growth
stage companies.
CONFERENCE CALL
The Company will host a
conference call at 5:00 p.m. Eastern Time today, July 31, 2019, to
discuss its financial results for the second quarter ended June 30,
2019. To listen to the call, investors and analysts should
dial 1 (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 August 31, 2019, by dialing 1 (877) 344-7529 (domestic) or
1 (412) 317-0088 (international) and entering conference ID
10133895. The conference call will also be available via a live
audio webcast in the investor relations section of the Company’s
website, http://www.tpvg.com. An online archive of the webcast will
be available on the Company’s website for 30 days after the
call.
ABOUT TRIPLEPOINT VENTURE GROWTH BDC CORP.
The Company was formed to expand the venture growth stage
business segment of TriplePoint Capital LLC, the leading global
provider of financing across all stages of development to
technology, life sciences and other high growth companies backed by
a select group of venture capital firms. The Company’s investment
objective is to maximize its total return to stockholders primarily
in the form of current income and, to a lesser extent, capital
appreciation by lending primarily with warrants to venture growth
stage companies. The Company is an externally managed, closed-end,
non-diversified management investment company that has elected to
be regulated as a business development company under the Investment
Company Act of 1940, as amended. More information is available at
http://www.tpvg.com.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute
forward-looking statements. Forward-looking statements are not
guarantees of future performance, condition or results 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 results may differ
materially from those in the forward-looking statements as a result
of a number of factors, including those described from time to time
in the Company’s filings with the Securities and Exchange
Commission. 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)
June 30, 2019
December 31, 2018
Assets
(unaudited)
Investments at fair value (amortized cost
of $482,433 and $435,083, respectively)
$
496,021
$
433,417
Short-term investments at fair value (cost
of $0 and $19,999, respectively)
-
19,999
Cash
12,415
3,382
Restricted cash
11,956
6,567
Deferred credit facility costs and other
assets
4,875
3,689
Total assets
$
525,267
$
467,054
Liabilities
Revolving credit facility
$
85,776
$
23,000
2022 Notes, net
73,199
72,943
Payable for U.S. Treasury Bill assets
-
19,999
Prepaid expenses and other assets
13,640
16,581
Total liabilities
$
172,615
$
132,523
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
(450,000 shares authorized; 24,859 and 24,780 shares issued and
outstanding, respectively)
249
248
Paid-in capital in excess of par value
332,375
331,329
Total distributable earnings (loss)
20,028
2,954
Total net assets
$
352,652
334,531
Total liabilities and net
assets
$
525,267
467,054
Net asset value per share
$
14.19
$
13.50
TriplePoint Venture Growth BDC
Corp.
Consolidated Statements of
Operations
(in thousands, except per share
data)
(unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2019
2018
2019
2018
Investment income
Interest income from investments
$
17,896
$
15,410
$
35,043
$
28,026
Other income
1,045
1,142
1,389
1,145
Total investment and other
income
$
18,941
$
16,552
$
36,432
$
29,171
Operating expenses
Base management fee
$
2,076
$
1,768
$
3,837
$
3,296
Income incentive fee
2,530
2,200
5,009
3,687
Capital gains incentive fee
-
-
-
-
Interest expense and amortization of
fees
3,010
2,532
5,213
5,050
Administration agreement expenses
353
445
775
852
General and administrative expenses
849
807
1,560
1,539
Total operating expenses
$
8,818
$
7,752
$
16,394
$
14,424
Net investment income
$
10,123
$
8,800
$
20,038
$
14,747
Net realized and unrealized gains
(losses)
Net realized gains (losses) on
investments
$
(17
)
$
773
$
(46
)
$
781
Net change in unrealized gains (losses) on
investments
13,755
(1,178
)
14,938
810
Net realized and unrealized gains
(losses)
$
13,738
$
(405
)
$
14,892
$
1,591
Net increase in net assets resulting
from operations
$
23,861
8,395
34,930
16,338
Basic and diluted net investment income
per share
$
0.41
$
0.50
$
0.81
$
0.83
Basic and diluted net increase in net
assets per share
$
0.96
$
0.47
$
1.41
$
0.92
Basic and diluted weighted average shares
of common stock outstanding
24,827
17,754
24,805
17,742
Weighted Average Portfolio
Yield on Debt Investments
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2019
2018
2019
2018
Weighted average portfolio yield on debt
investments
16.5
%
17.2
%
16.4
%
15.6
%
Coupon income
10.6
%
10.8
%
10.6
%
10.7
%
Net amortization and accretion of premiums
and discounts
0.8
%
0.9
%
0.9
%
0.9
%
Net accretion of end-of-term payments
2.3
%
2.2
%
2.2
%
2.2
%
Impact of prepayments
2.8
%
3.3
%
2.7
%
1.8
%
Weighted average portfolio yield on debt investments for periods
shown are the annualized rate of the interest income recognized
during the period divided by the average amortized cost of debt
investments in the portfolio at the beginning of each month in the
period. The weighted average portfolio yields on debt investments
reflected above do not represent actual investment returns to the
Company’s stockholders.
1 The Company’s weighted average annualized portfolio yield on
debt investments may be higher than an investor’s yield on an
investment in shares of its common stock. The weighted average
annualized portfolio yield on debt investments does not reflect
operating expenses that may be incurred by the Company. In
addition, the Company’s weighted average annualized portfolio yield
on debt investments disclosed above does not consider the effect of
any sales commissions or charges that may be incurred in connection
with the sale of shares of its common stock.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190731005975/en/
INVESTOR RELATIONS AND MEDIA CONTACT Abernathy MacGregor
Group Alan Oshiki / Sheila Ennis 212-371-5999 / 415-745-3294
aho@abmac.com / sbe@abmac.com
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