Net Investment Income of $0.38 Per Share and
Net Increase in Net Assets of $0.69 Per Share
DECLARES THIRD QUARTER 2020 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 second
quarter ended June 30, 2020 and the declaration by its Board of
Directors of its third quarter 2020 distribution of $0.36 per
share.
Second Quarter 2020 Highlights
- Earned net investment income of $11.5 million, or $0.38 per
share;
- Net increase in net assets of $21.2 million, or $0.69 per
share;
- Recorded $19.4 million from the realization of warrant and
equity gains from the sale of CrowdStrike, Inc. shares, with 56,747
shares still held as of June 30, 2020;
- Net asset value of $405.5 million, or $13.17 per share, at June
30, 2020, an increase of 2.7% from prior quarter;
- Signed $92.9 million of term sheets with venture growth stage
companies at TriplePoint Capital LLC (“TPC”), and TPVG closed $13.9
million of new debt commitments to venture growth stage
companies;
- Funded $20.5 million in debt investments to seven portfolio
companies with a 14.4% weighted average annualized portfolio yield
at origination;
- Achieved a 13.7% weighted average annualized portfolio yield on
total debt investments for the quarter;
- Realized a 11.5% return on average equity, based on net
investment income during the quarter;
- Ended the quarter with a 0.75x leverage ratio;
- The Company’s investment adviser, TriplePoint Advisers LLC (the
“Adviser”), provided TPVG with an unsecured revolving credit line
of up to $50.0 million, with $25.0 million available at close (and
an accordion feature for an additional $25.0 million), subject to
approval by the Adviser; and
- Declared a third quarter distribution of $0.36 per share,
payable on September 15, 2020; bringing total declared
distributions to $9.60 per share since the Company’s initial public
offering.
Year to Date 2020 Highlights
- Earned net investment income of $23.8 million, or $0.78 per
share;
- Paid distributions of $0.72 per share;
- Signed $172.4 million of term sheets with venture growth stage
companies at TPC, and TPVG closed $116.5 million of new debt
commitments to new and existing venture growth stage
companies;
- Funded $99.3 million in debt investments to 15 portfolio
companies with a 13.6% weighted average annualized portfolio yield
at origination;
- Achieved a 13.2% weighted average annualized portfolio yield on
total debt investments;
- Raised $78.2 million of net proceeds from the public issuance
of 5.75 million shares of common stock;
- Raised $70.0 million in aggregate principal amount from the
private issuance of 4.50% institutional notes due 2025, initially
assigned a BBB rating by DBRS, Inc.; and
- Undistributed taxable earnings of $8.9 million, or $0.29 per
share, as of June 30, 2020.
“Our second quarter results demonstrate our unique venture
growth stage lending approach, the experience of our team, and the
high quality of our portfolio companies,” said Jim Labe, chairman
and chief executive officer of TPVG, adding, “While there remains
uncertainty in the global economic environment, we will continue to
focus on our investment portfolio and to deploy our capital in a
disciplined fashion to support venture growth stage companies.”
“We are pleased to realize gains from the sale of a substantial
portion of our warrant and equity investments associated with the
loan we committed to CrowdStrike, Inc. in 2016,” said Sajal
Srivastava, president and chief investment officer of the Company.
“These gains highlight the potential for additional returns and net
asset value accretion from our investments over the long-term.”
PORTFOLIO AND INVESTMENT ACTIVITY
During the three months ended June 30, 2020, the Company entered
into $13.9 million of new debt commitments with four portfolio
companies, funded debt investments totaling $20.5 million to seven
portfolio companies, acquired warrants valued at $0.2 million in
four portfolio companies and made an equity investment of $0.1
million in one portfolio company. Debt investments funded during
the quarter carried a weighted average annualized portfolio yield
of 14.4% at origination. During the quarter, the Company had $25.1
million of principal prepayments, and $12.1 million of scheduled
principal amortization. The weighted average annualized portfolio
yield on total debt investments for the second quarter was 13.7%.
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.
As of June 30, 2020, the Company held debt investments with 37
portfolio companies, warrants in 61 portfolio companies and equity
investments in 21 portfolio companies. The total cost and fair
value of these investments were $708.5 million and $692.9 million,
respectively.
Total portfolio investment activity for the three and six months
ended June 30, 2020 and 2019 was as follows:
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
(in thousands)
2020
2019
2020
2019
Beginning portfolio at fair value
$
713,155
$
457,695
$
653,129
$
433,417
New debt investments, net(a)
20,126
71,082
97,151
158,721
Scheduled principal amortization
(12,134
)
(8,367
)
(17,947
)
(21,327
)
Principal prepayments and early
repayments
(25,105
)
(42,551
)
(26,105
)
(100,104
)
Accretion of debt investment fees
4,266
1,741
8,048
4,976
Payment-in-kind coupon
2,764
291
3,616
1,062
New warrant investments
153
710
1,227
2,524
New equity investments
125
1,662
1,545
2,162
Proceeds and dispositions of
investments
(20,658
)
20
(20,658
)
(302
)
Net realized gains (losses) on
investments
1,277
(17
)
988
(46
)
Net unrealized gains (losses) on
investments
8,884
13,755
(8,141
)
14,938
Ending portfolio at fair value
$
692,853
$
496,021
$
692,853
$
496,021
_____________ (a) Debt balance is net of fees and discounts
applied to the loan at origination.
SIGNED TERM SHEETS
During the three months ended June 30, 2020, TPC entered into
$92.9 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, 2020, the Company’s unfunded commitments totaled
$180.4 million, of which $33.3 million was dependent upon portfolio
companies reaching certain milestones. Of the $180.4 million of
unfunded commitments, $151.3 million will expire during 2020 and
$29.0 million will expire during 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 $23.8 million for the
second quarter of 2020, representing a weighted average annualized
portfolio yield of 13.7% on total debt investments, as compared to
$18.9 million and 16.5% for the second quarter of 2019. The
increase in total investment and other income was primarily due to
higher weighted average principal outstanding on our income-bearing
debt investments, partially offset by a lower effective yield due
to lower prepayment activity and a decrease in the Prime Rate. For
the six months ended June 30, 2020, the Company’s total investment
and other income was $44.6 million, as compared to $36.4 million
for the six months ended June 30, 2019, representing a year-to-date
weighted average annualized portfolio yield on total debt
investments of 13.2% and 16.4%, respectively.
Operating expenses for the second quarter of 2020 were $12.3
million as compared to $8.8 million for the second quarter of 2019.
Operating expenses for the second quarter of 2020 consisted of $4.3
million of interest expense and amortization of fees, $3.2 million
of base management fees, $2.9 million of income incentive fees,
$0.6 million of administration agreement expenses and $1.3 million
of general and administrative expenses. Operating expenses for the
second quarter of 2019 consisted of $3.0 million of interest
expense and amortization of fees, $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. The Company’s total operating expenses
were $20.9 million and $16.4 million for the six months ended June
30, 2020 and 2019, respectively.
For the second quarter of 2020, the Company recorded net
investment income of $11.5 million, or $0.38 per share, as compared
to $10.1 million, or $0.41 per share, for the second quarter of
2019. The increase in net investment income between periods was
driven primarily by an increase in total investment and other
income due to higher weighted average principal outstanding on our
income-bearing debt investments. Per share net investment income
decreased between periods due to a larger number of weighted
average shares outstanding in 2020 as a result of the Company’s
equity offering in January 2020. Net investment income for the six
months ended June 30, 2020 was $23.8 million, or $0.78 per share,
compared to $20.0 million, or $0.81 per share, for the six months
ended June 30, 2019.
During the second quarter of 2020, the Company recorded $0.8
million, or $0.03 per share, of net realized gains on investments,
consisting of $19.4 million of realized gains from the sale of
publicly traded shares held in CrowdStrike, Inc. offset by $18.0 of
realized losses from the finalization of asset sales and removal of
two obligors rated Red (5) on the Company’s credit watch list, and
$0.6 million of other net realized losses. During the second
quarter of 2019, the Company recorded net realized losses on
investments of $17,000, or less than $0.01 per share.
Net unrealized gains on investments for the second quarter of
2020 were $8.9 million, or $0.29 per share, resulting from the
reversal of $18.0 million of previously recorded unrealized losses
from the finalization of asset sales and removal of two obligors
rated Red (5) on the Company’s credit watch list and by $2.5
million of net unrealized gains from mark-to-market related changes
and credit-related adjustments, partially offset by the reversal of
$11.6 million of previously recorded unrealized gains associated
with the shares of CrowdStrike, Inc. sold during the quarter. Net
unrealized gains on investments for the second quarter of 2019 were
$13.8 million, or $0.55 per share. The Company’s net realized and
unrealized losses were $7.7 million for the six months ended June
30, 2020, compared to net realized and unrealized gains of $14.9
million for the six months ended June 30, 2019.
The Company’s net increase in net assets resulting from
operations for the second quarter of 2020 was $21.2 million, or
$0.69 per share, as compared to $23.9 million, or $0.96 per share,
for the second quarter of 2019. For the six months ended June 30,
2020, the Company’s net increase in net assets resulting from
operations was $16.1 million, or $0.53 per share, as compared to
$34.9 million, or $1.41 per share, for the six months ended June
30, 2019.
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, or 2,
unless the portfolio company’s credit quality meets the
characteristics of another risk category.
As of June 30, 2020, the weighted average investment ranking of
the Company’s debt investment portfolio was 2.03, as compared to
2.00 as of the end of the prior quarter. During the quarter ended
June 30, 2020, portfolio company credit category changes, excluding
fundings and repayments, consisted of the following: one portfolio
company with an aggregate principal balance of $15.0 million was
upgraded from White (2) to Clear (1); one portfolio company with an
aggregate principal balance of $10.0 million was upgraded from
Yellow (3) to White (2); one portfolio company with an aggregate
principal balance of $21.6 million was downgraded from White (2) to
Yellow (3); and two portfolio companies with an aggregate principal
balance of $17.0 million were removed from Red (5) as a result of
the finalization of asset sales. The following table shows the
credit rankings for the Company’s debt investments at fair value as
of June 30, 2020 and December 31, 2019:
June 30, 2020
December 31, 2019
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)
$
116,596
17.9
%
7
$
121,866
20.2
%
8
White (2)
415,232
63.6
24
425,016
70.3
23
Yellow (3)
104,205
16.0
4
31,103
5.1
3
Orange (4)
15,000
2.3
1
22,956
3.8
1
Red (5)
1,500
0.2
1
3,577
0.6
3
$
652,533
100.0
%
37
$
604,518
100.0
%
38
NET ASSET VALUE
As of June 30, 2020, the Company’s net assets were $405.5
million, or $13.17 per share, as compared to $332.5 million, or
$13.34 per share, as of December 31, 2019.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2020, the Company had total liquidity of $165.0
million, consisting of cash and restricted cash of $23.0 million
and available capacity under its revolving credit facility of
$142.0 million (which excludes an additional $100.0 million
available under the credit facility’s accordion feature), subject
to existing advance rates, terms and covenants. The Company also
has available capacity under its unsecured revolving credit line
provided by the Adviser, of up $50.0 million (which includes $25.0
million available under the facility’s accordion feature), subject
to approval by the Adviser.
DISTRIBUTION
On July 30, 2020, the Company’s board of directors declared a
quarterly distribution of $0.36 per share for the third quarter of
2020, payable on September 15, 2020 to stockholders of record as of
August 31, 2020.
SUBSEQUENT EVENTS
Since June 30, 2020 and through August 4, 2020:
- The Company received $29.1 million of principal prepayments
generating approximately $1.0 million of prepayment fees and
interest income;
- TPC’s direct originations platform entered into $43.2 million
of additional non-binding signed term sheets with venture growth
stage companies;
- The Company closed $22.0 million of additional debt
commitments; and
- The Company funded $3.9 million in new investments.
CONFERENCE CALL
The Company will host a
conference call at 5:00 p.m. Eastern Time, today, August 5, 2020,
to discuss its financial results for the quarter ended June 30,
2020. 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 September 5, 2020, by dialing 1 (877) 344-7529 (domestic)
or 1 (412) 317-0088 (international) and entering conference ID
10146187. 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 as a result of changes in
economic, market or other conditions, the impact of the COVID-19
pandemic and its effects 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 the Company’s
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 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 most recently
filed annual report on Form 10-K, as well as in subsequent filings,
including the Company’s 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)
June 30, 2020
December 31, 2019
Assets
(unaudited)
Investments at fair value (amortized cost
of $708,540 and $660,675, respectively)
$
692,853
$
653,129
Cash
19,080
20,285
Restricted cash
3,871
6,156
Deferred credit facility costs
1,035
1,603
Prepaid expenses and other assets
1,999
2,975
Total assets
$
718,838
$
684,148
Liabilities
Revolving credit facility
$
158,000
$
262,300
2022 Notes, net
73,709
73,454
2025 Notes, net
69,047
-
Other accrued expenses and liabilities
12,559
15,888
Total liabilities
$
313,315
$
351,642
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; 30,784 and 24,923 shares issued and
outstanding, respectively)
308
249
Paid-in capital in excess of par value
412,016
333,052
Total distributable earnings (loss)
(6,801)
(795)
Total net assets
$
405,523
$
332,506
Total liabilities and net
assets
$
718,838
$
684,148
Net asset value per share
$
13.17
$
13.34
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,
2020
2019
2020
2019
Investment income
Interest income from investments
$
23,269
$
17,896
$
43,542
$
35,043
Other income
527
1,045
1,095
1,389
Total investment and other
income
$
23,796
$
18,941
$
44,637
$
36,432
Operating expenses
Base management fee
$
3,235
$
2,076
$
6,010
$
3,837
Income incentive fee
2,884
2,530
2,884
5,009
Interest expense and amortization of
fees
4,312
3,010
8,474
5,213
Administration agreement expenses
574
353
1,255
775
General and administrative expenses
1,255
849
2,241
1,560
Total operating expenses
$
12,260
$
8,818
$
20,864
$
16,394
Net investment income
$
11,536
$
10,123
$
23,773
$
20,038
Net realized and unrealized gains
(losses)
Net realized gains (losses) on
investments
$
801
$
(17
)
$
471
$
(46
)
Net change in unrealized gains (losses) on
investments
8,885
13,755
(8,140
)
14,938
Net realized and unrealized gains
(losses)
$
9,686
$
13,738
$
(7,669
)
$
14,892
Net increase in net assets resulting
from operations
$
21,222
$
23,861
$
16,104
$
34,930
Basic and diluted net investment income
per share
$
0.38
$
0.41
$
0.78
$
0.81
Basic and diluted net increase in net
assets per share
$
0.69
$
0.96
$
0.53
$
1.41
Basic and diluted weighted average shares
of common stock outstanding
30,747
24,827
30,315
24,805
Weighted Average Portfolio
Yield on Total Debt Investments
Ratios
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
(Percentages, on an annualized
basis)(1)
2020
2019
2020
2019
Weighted average portfolio yield on total
debt investments(2)
13.7
%
16.5
%
13.2
%
16.4
%
Coupon income
10.1
%
10.6
%
10.0
%
10.6
%
Accretion of discount
0.9
%
0.8
%
1.0
%
0.9
%
Accretion of end-of-term payments
1.7
%
2.3
%
1.7
%
2.2
%
Impact of prepayments during the
period
1.0
%
2.8
%
0.5
%
2.7
%
U.S. Prime Rate at end of period(3)
3.25
%
5.50
%
3.25
%
5.50
%
_____________
(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.
(3)
Included as a reference point for coupon
income and weighted average portfolio yield.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805006029/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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