Record Investment Portfolio of $526.0
Million as of September 30, 2019
Declares Fourth 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 technology and other high growth
industries, today announced its financial results for the third
quarter ended September 30, 2019 and its fourth quarter 2019
distribution of $0.36 per share.
Third Quarter 2019 Highlights
- Signed $301.2 million of new term sheets at TriplePoint Capital
LLC (“TPC”), and TPVG closed $81.2 million of new debt commitments
to venture growth stage companies;
- Funded $84.7 million in debt investments with a 13.0% weighted
average annualized portfolio yield at origination;
- Grew the investment portfolio to a record level of $526.0
million as of September 30, 2019;
- Received $1.0 million of principal prepayments and $41.2
million of scheduled amortization and repayments;
- Appointed Christopher M. Mathieu as Chief Financial
Officer;
- Announced that TPVG received an investment grade rating of BBB
from DBRS, Inc.;
- Increased funding capacity under the Company’s revolving credit
facility to $300.0 million;
- Earned net investment income of $7.1 million, or $0.29 per
share;
- Reduction in net unrealized gains on public stock portfolio of
$4.6 million during the quarter, or $0.19 per share;
- Net asset value of $335.4 million, or $13.47 per share, at
September 30, 2019;
- TPVG portfolio company Medallia Inc. completed a $326 million
initial public offering;
- Declared a fourth quarter distribution of $0.36 per share,
payable on December 16, 2019; bringing total declared distributions
to $8.52 per share since the Company’s initial public offering;
and
- Subsequent to the third quarter, the Company funded $94.3
million in new debt investments.
Year to Date 2019 Highlights
- Earned net investment income of $27.2 million, or $1.09 per
share;
- Generated a net increase in net assets of $26.1 million, or
$1.05 per share;
- Signed $754.9 million of new term sheets at TPC, and TPVG
closed $377.9 million of new debt commitments to venture growth
stage companies, an increase of 34.3% and 18.6% over the same
period in 2018, respectively;
- Funded $246.7 million in debt investments to 20 portfolio
companies, an increase of 71.2% over the same period of 2018;
- Achieved a 14.9% weighted average annualized portfolio yield on
debt investments;
- Paid distributions of $1.08 per share; and
- Total return of 63.2% as of September 30, 2019.
“We continued to experience strong demand from venture growth
stage companies seeking debt financing and ended the quarter with a
record portfolio size,” said Jim Labe, chairman and chief executive
officer of TPVG, adding “and based on funding activity so far in
the fourth quarter we are on track for further portfolio
growth.”
“Our investment grade credit rating reflects our proven
long-term credit performance,” said Sajal Srivastava, president and
chief investment officer of the Company. “It also provides
flexibility in deploying capital and growing our investment
portfolio in a disciplined fashion to maximize returns to our
shareholders.”
PORTFOLIO AND INVESTMENT ACTIVITY
During the third quarter of 2019, the Company entered into $81.2
million of new debt commitments with four companies, funded 12 debt
investments totaling $84.7 million to nine companies, acquired
warrant investments valued at $0.9 million in six companies and
made equity investments of $1.0 million in two companies. Debt
investments funded during the quarter carried a weighted average
annualized portfolio yield of 13.0% at origination. During the
quarter, the Company had $1.0 million of principal prepayments and
scheduled principal amortization and repayments of $41.2 million.
The weighted average annualized portfolio yield on debt investments
for the third quarter was 13.0%, including the impact of
prepayments, and 12.8% excluding the impact of prepayments. 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 September 30, 2019, the Company held 82 debt investments
with 29 companies and 77 warrant and equity investments in 73
companies. The total cost and fair value of these investments were
$526.9 million and $526.0 million, respectively.
Total portfolio investment activity for the three and nine
months ended September 30, 2019 and 2018 was as follows:
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
(in thousands)
2019
2018
2019
2018
Beginning portfolio at fair value
$
496,021
$
398,405
$
433,417
$
372,103
New debt investments, net (1)
83,024
52,274
241,745
140,340
Scheduled principal payments from debt
investments
(9,159
)
(6,963
)
(30,485
)
(18,308
)
Early principal payments, repayments and
recoveries
(32,991
)
(95,990
)
(133,096
)
(154,338
)
Accretion of debt investment fees
2,523
2,012
7,499
7,821
Payment-in-kind coupon
565
662
1,627
1,951
New warrant investments
943
909
3,467
2,770
New equity investments
1,011
250
3,173
1,000
Proceeds and dispositions of
investments
(11
)
(1,182
)
(313
)
(4,553
)
Net realized (losses) gains
(1,801
)
942
(1,847
)
1,723
Net unrealized gains (losses) on
investments
(14,124
)
(4
)
814
806
Ending portfolio at fair value
$
526,001
$
351,315
$
526,001
$
351,315
(1) Debt balance is net of fees and
discounts applied to the loan at origination.
SIGNED TERM SHEETS
During the third quarter of 2019, TPC entered into $301.2
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 September 30, 2019, the Company’s unfunded commitments
totaled $330.8 million, of which $70.3 million is dependent upon
portfolio companies reaching certain milestones. Of the $330.8
million of unfunded commitments, $108.0 million will expire during
2019, $207.8 million will expire during 2020 and $15.0 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 $15.7 million for the
third quarter of 2019, representing a weighted average annualized
portfolio yield of 13.0% on debt investments, as compared to $17.7
million and 19.3% for the third quarter of 2018. The decrease in
investment income was driven by a decrease in prepayment and other
income, partially offset by a higher average portfolio balance
between periods. For the nine months ended September 30, 2019, the
Company’s total investment and other income was $52.1 million, as
compared to $46.8 million for the nine months ended September 30,
2018, representing a year-to-date weighted average annualized
portfolio yield on debt investments of 14.9% and 16.8%,
respectively.
Operating expenses for the third quarter of 2019 were $8.6
million as compared to $7.7 million for the third quarter of 2018.
Operating expenses for the third quarter of 2019 consisted of $3.2
million of interest expense and amortization of deferred credit
facility costs, $2.3 million of base management fees, $1.7 million
of income incentive fees, $0.5 million of administration agreement
expenses and $0.9 million of general and administrative expenses.
Operating expenses for the third quarter of 2018 consisted of $2.1
million of interest expense and amortization of deferred credit
facility costs, $1.8 million of base management fees, $2.5 million
of income incentive fees, $0.5 million of administration agreement
expenses and $0.7 million of general and administrative expenses.
The Company’s total operating expenses were $25.0 million and $22.1
million for the nine months ended September 30, 2019 and 2018,
respectively.
For the third quarter of 2019, the Company recorded net
investment income of $7.1 million, or $0.29 per share, as compared
to $10.0 million, or $0.46 per share, for the third quarter of
2018. The decrease between periods was primarily driven by a
decrease in prepayment and other income and an increase in interest
expense, partially offset by a higher total investment income as a
result of an increase in the average portfolio balance between
periods. Net investment income for the nine months ended September
30, 2019 was $27.2 million, or $1.09 per share, compared to $24.8
million, or $1.30 per share, during the nine months ended September
30, 2018.
During the third quarter of 2019, the Company recorded $1.8
million, or $0.07 per share, of net realized losses on investments,
compared to net realized gains on investments of $0.9 million, or
$0.04 per share, for the third quarter of 2018. Net unrealized
losses on investments for the third quarter of 2019 was $14.1
million, or $0.57 per share, resulting primarily from market-price
related changes in two of TPVG’s publicly-traded equity and warrant
investments and credit-related adjustments affecting fair value
estimates on three portfolio companies, as compared to net
unrealized losses on investments of $5,000, or $0.00 per share, for
the third quarter of 2018. The Company’s net realized and
unrealized losses were $1.0 million for the nine months ended
September 30, 2019, compared to net realized and unrealized gains
of $2.5 million for the nine months ended September 30, 2018.
The Company experienced a net decrease in net assets resulting
from operations for the third quarter of 2019 of approximately $8.8
million, or $0.35 per share, as compared to a net increase in net
assets resulting from operations of $10.9 million, or $0.50 per
share, for the third quarter of 2018. For the nine months ended
September 30, 2019, the Company’s net increase in net assets
resulting from operations was approximately $26.1 million, or $1.05
per share, as compared to a $27.2 million, or $1.43 per share, for
the nine months ended September 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 September 30, 2019, the weighted average investment
ranking of the Company’s debt investment portfolio was 1.97, as
compared to 2.03 at the end of the prior quarter. During the three
months ended September 30, 2019, portfolio company credit category
changes, excluding fundings and repayments, consisted of the
following: two portfolio companies with a principal balance of
$13.6 million were upgraded from White (2) to Clear (1); one
portfolio company with a principal balance of $13.2 million was
downgraded from Yellow (3) to Orange (4); and one portfolio company
with a principal balance of $7.5 million was downgraded from Orange
(4) to Red (5). Additional information regarding our credit rating
methodology is detailed in our Form 10-Q for the three months ended
September 30, 2019.
The following table shows the credit rankings for the Company’s
debt investments at fair value as of September 30, 2019 and June
30, 2019.
As of September 30,
2019
As of June 30, 2019
Category (dollars in thousands)
Fair Value
% of Debt Investment
Portfolio
# of Portfoli
Companies
Fair Value
% of Deb Investment
Portfolio
# of Portfolio
Companies
Clear (1)
$
92,778
19.4
%
6
$
80,010
18.0
%
4
White (2)
336,884
70.5
17
302,832
68.1
18
Yellow (3)
20,870
4.4
2
33,879
7.6
3
Orange (4)
24,598
5.1
2
23,687
5.3
2
Red (5)
2,658
0.6
2
4,305
1.0
2
Total debt investments
$
477,788
100.0
%
29
$
444,713
100.0
%
29
NET ASSET VALUE
As of September 30, 2019, the Company’s net assets were $335.4
million, or $13.47 per share, as compared to $334.5 million, or
$13.50 per share, as of December 31, 2018.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2019, the Company had total liquidity of
$189.8 million, consisting of cash of $60.6 million and available
capacity under its revolving credit facility of $129.2 million,
subject to existing advance rates, terms and covenants. The Company
ended the quarter with a 0.73x leverage ratio.
DISTRIBUTION
The Company’s board of directors declared a quarterly
distribution of $0.36 per share for the fourth quarter of 2019,
payable on December 16, 2019 to stockholders of record as of
November 29, 2019.
SUBSEQUENT EVENTS
Since October 1, 2019:
- The Company closed $61.3 million of additional debt
commitments;
- The Company received $26 million of principal prepayments
generating approximately $2.8 million of accelerated income;
and
- TPC’s direct originations platform entered into $43.3 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, November 6, 2019,
to discuss its financial results for the third quarter ended
September 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 December 6, 2019, by dialing 1 (877) 344-7529 (domestic) or
1 (412) 317-0088 (international) and entering conference ID
10136612. 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)
September 30, 2019
December 31, 2018
Assets
(unaudited)
Investments at fair value (amortized cost
of $526,862 and $435,084, respectively)
$
526,001
$
433,417
Short-term investments at fair value (cost
of $0 and $19,999, respectively)
-
19,999
Cash
29,385
3,382
Restricted cash
31,242
6,567
Deferred credit facility costs
1,887
1,179
Prepaid expenses and other assets
2,568
2,510
Total assets
$
591,083
$
467,054
Liabilities
Revolving credit facility
$
170,776
$
23,000
2022 Notes (net of deferred financing
costs of $1,424 and $1,807, respectively)
73,326
72,943
Payable for U.S. Treasury Bill assets
-
19,999
Other accrued expenses and liabilities
11,535
16,581
Total liabilities
$
255,637
$
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; 24,895 and 24,780 shares issued and
outstanding, respectively)
249
248
Paid-in capital in excess of par value
332,929
331,329
Total distributable earnings
2,268
2,954
Total net assets
$
335,446
334,531
Total liabilities and net
assets
$
591,083
467,054
Net asset value per share
$
13.47
$
13.50
TriplePoint Venture Growth BDC
Corp.
Consolidated Statements of
Operations
(in thousands, except per share
data)
(unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2019
2018
2019
2018
Investment income
Interest income from investments
$
15,434
$
16,969
$
50,477
$
44,995
Other income
256
709
1,645
1,854
Total investment and other
income
$
15,690
$
17,678
$
52,122
$
46,849
Operating expenses
Base management fee
$
2,270
$
1,848
$
6,107
$
5,144
Income incentive fee
1,745
2,503
6,754
6,190
Interest expense and amortization of
fees
3,202
2,141
8,415
7,191
Administration agreement expenses
463
456
1,238
1,308
General and administrative expenses
897
720
2,457
2,259
Total operating expenses
$
8,577
$
7,668
$
24,971
$
22,092
Net investment income
$
7,113
$
10,010
$
27,151
$
24,757
Net realized and unrealized gains
(losses)
Net realized gains (losses) on
investments
$
(1,801
)
$
904
$
(1,847
)
$
1,685
Net change in unrealized gains (losses) on
investments
(14,124
)
(5
)
814
805
Net realized and unrealized gains
(losses)
$
(15,925
)
$
899
$
(1,033
)
$
2,490
Net increase (decrease) in net assets
resulting from operations
$
(8,812
)
$
10,909
$
26,118
$
27,247
Basic and diluted net investment income
per share
$
0.29
$
0.46
$
1.09
$
1.30
Basic and diluted net increase (decrease)
in net assets per share
$
(0.35
)
$
0.50
$
1.05
$
1.43
Basic and diluted weighted average shares
of common stock outstanding
24,865
21,641
24,825
19,056
Weighted Average Portfolio
Yield on Debt Investments
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2019
2018
2019
2018
Weighted average portfolio yield on debt
investments
13.0
%
19.3
%
14.9
%
16.8
%
Coupon income
10.3
%
10.7
%
10.3
%
10.7
%
Net amortization and accretion of premiums
and discounts
0.8
%
1.1
%
0.9
%
1.0
%
Net accretion of end-of-term payments
1.8
%
2.2
%
2.0
%
2.1
%
Impact of prepayments
0.2
%
5.3
%
1.8
%
3.0
%
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20191106005953/en/
INVESTOR RELATIONS AND MEDIA CONTACT Abernathy MacGregor
Group Alan Oshiki / Barry Hutton 212-371-5999 | 415-926-7961
aho@abmac.com | brh@abmac.com
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