Net Investment Income of $0.40 Per Share and
Net Increase in Net Assets of $0.47 Per Share
DECLARES FOURTH 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 third
quarter ended September 30, 2020 and the declaration by its Board
of Directors of its fourth quarter 2020 distribution of $0.36 per
share.
Third Quarter 2020 Highlights
- Earned net investment income of $12.2 million, or $0.40 per
share;
- Net increase in net assets of $14.4 million, or $0.47 per
share;
- Recorded $4.9 million from the realization of gains from the
sale of CrowdStrike, Inc. shares, with 16,747 shares still held as
of September 30, 2020;
- Recorded $1.1 million from the realization of gains from the
sale of Medallia, Inc. shares, with 18,616 shares still held as of
September 30, 2020;
- Net asset value of $409.4 million, or $13.28 per share, at
September 30, 2020, an increase of 0.9% from prior quarter;
- Signed $145.5 million of term sheets with venture growth stage
companies at TriplePoint Capital LLC (“TPC”), and TPVG closed $86.8
million of new debt commitments to venture growth stage companies,
an increase of 5x from prior quarter;
- Funded $38.0 million in debt investments to five portfolio
companies, an increase of 85% from prior quarter;
- Achieved a 14.1% weighted average annualized portfolio yield on
total debt investments for the quarter;
- Realized an 11.8% return on average equity, based on net
investment income during the quarter;
- Ended the quarter with a 0.63x leverage ratio;
- Declared a fourth quarter distribution of $0.36 per share,
payable on December 14, 2020; bringing total declared distributions
to $9.96 per share since the Company’s initial public offering;
and
- Portfolio company exit and liquidity events subsequent to the
third quarter include: Nestle USA announced that it acquired TPVG
portfolio company, Freshly Inc.; TPVG portfolio company Hims, Inc.
announced plans to go public through a merger with Oaktree
Acquisition Corp.; and TPVG portfolio company Qubole, Inc. was
acquired by Idera, Inc.
Year to Date 2020 Highlights
- Earned net investment income of $36.0 million, or $1.18 per
share;
- Paid distributions of $1.08 per share;
- Signed $317.9 million of term sheets with venture growth stage
companies at TPC, and TPVG closed $203.3 million of new debt
commitments to new and existing venture growth stage
companies;
- Funded $137.3 million in debt investments to 17 portfolio
companies with a 13.1% weighted average annualized portfolio yield
at origination;
- Achieved a 13.4% 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 from net investment income of
$10 million, or $0.33 per share, as of September 30, 2020.
“We had another quarter of strong performance, reflecting the
quality of our portfolio and our disciplined approach,” said Jim
Labe, chairman and chief executive officer of TPVG, adding, “We
continue to see growing demand for debt from venture growth stage
companies and anticipate a strong finish for 2020, as well as
robust momentum going into 2021.”
“We are pleased to see the levels of exit, liquidity and
prepayment events within our portfolio,” said Sajal Srivastava,
president and chief investment officer of the Company. “These
events generate exceptional returns on our investments and give us
the flexibility to efficiently redeploy our capital.”
PORTFOLIO AND INVESTMENT ACTIVITY
During the three months ended September 30, 2020, the Company
entered into $86.8 million of new debt commitments with nine
portfolio companies, funded debt investments totaling $38.0 million
to five portfolio companies, acquired warrants valued at $0.6
million in six portfolio companies and made equity investments of
$0.3 million in two portfolio companies. Debt investments funded
during the quarter carried a weighted average annualized portfolio
yield of 11.8% at origination. During the quarter, the Company had
$49.1 million of principal prepayments, $17.0 million of early
repayments and $19.4 million of scheduled principal amortization.
The weighted average annualized portfolio yield on total debt
investments for the third quarter was 14.1%. 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.
As of September 30, 2020, the Company held debt investments with
34 portfolio companies, warrants in 65 portfolio companies and
equity investments in 23 portfolio companies. The total cost and
fair value of these investments were $664.3 million and $646.8
million, respectively.
Total portfolio investment activity for the three and nine
months ended September 30, 2020 and 2019 was as follows:
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
(in thousands)
2020
2019
2020
2019
Beginning portfolio at fair value
$
692,853
$
496,021
$
653,129
$
433,417
New debt investments, net(a)
37,315
83,024
134,466
241,745
Scheduled principal amortization
(19,479
)
(9,159
)
(37,426
)
(30,485
)
Principal prepayments and early
repayments
(66,052
)
(32,991
)
(92,157
)
(133,096
)
Accretion of debt investment fees
4,086
2,523
12,134
7,499
Payment-in-kind coupon
2,271
565
5,887
1,627
New warrant investments
561
943
1,788
3,467
New equity investments
287
1,011
1,832
3,173
Proceeds and dispositions of
investments
(7,242
)
(11
)
(27,901
)
(313
)
Net realized gains (losses) on
investments
4,063
(1,801
)
5,051
(1,847
)
Net unrealized gains (losses) on
investments
(1,850
)
(14,124
)
(9,990
)
814
Ending portfolio at fair value
$
646,813
$
526,001
$
646,813
$
526,001
_____________
(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, 2020, TPC entered
into $145.5 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, 2020, the Company’s unfunded commitments
totaled $168.3 million, of which $31.5 million was dependent upon
portfolio companies reaching certain milestones. Of the $168.3
million of unfunded commitments, $85.0 million will expire during
2020 and $83.3 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 $23.1 million for the
third quarter of 2020, representing a weighted average annualized
portfolio yield of 14.1% on total debt investments, as compared to
$15.7 million and 13.0% for the third 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 and a higher effective yield due to greater prepayment
activity, partially offset by a decrease in the U.S. Prime Rate.
For the nine months ended September 30, 2020, the Company’s total
investment and other income was $67.8 million, as compared to $52.1
million for the nine months ended September 30, 2019, representing
a year-to-date weighted average annualized portfolio yield on total
debt investments of 13.4% and 14.9%, respectively.
Operating expenses for the third quarter of 2020 were $10.9
million as compared to $8.6 million for the third quarter of 2019.
Operating expenses for the third quarter of 2020 consisted of $3.5
million of interest expense and amortization of fees, $3.3 million
of base management fees, $3.1 million of income incentive fees,
$0.4 million of administration agreement expenses and $0.6 million
of general and administrative expenses. Operating expenses for the
third quarter of 2019 consisted of $3.2 million of interest expense
and amortization of fees, $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. The Company’s total operating expenses
were $31.8 million and $25.0 million for the nine months ended
September 30, 2020 and 2019, respectively.
For the third quarter of 2020, the Company recorded net
investment income of $12.2 million, or $0.40 per share, as compared
to $7.1 million, or $0.29 per share, for the third 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. Net investment income for the nine
months ended September 30, 2020 was $36.0 million, or $1.18 per
share, compared to $27.2 million, or $1.09 per share, for the nine
months ended September 30, 2019.
During the third quarter of 2020, the Company recorded $4.1
million, or $0.13 per share, of net realized gains on investments,
consisting of $6.0 million of realized gains from the sale of
publicly traded shares held in CrowdStrike, Inc. and Medallia,
Inc., offset by $1.9 of realized losses from the finalization of
asset sales and removal from the investment portfolio of one
obligor, which was rated Red (5) on the Company’s credit watch
list. During the third quarter of 2019, the Company recorded net
realized losses on investments of $1.8 million, $0.07 per
share.
Net unrealized losses on investments for the third quarter of
2020 were $1.9 million, or $0.06 per share, resulting from the
reversal of $4.5 million of unrealized gains associated with the
sale of shares of CrowdStrike, Inc. and Medallia, Inc, partially
offset by the reversal of $1.4 million of unrealized losses from
the finalization of asset sales and removal from the investment
portfolio of one obligor, which was rated Red (5) on the Company’s
credit watch list, and $1.2 million of net unrealized gains from
fair value adjustments. Net unrealized losses on investments for
the third quarter of 2019 were $14.1 million, or $0.57 per share.
The Company’s net realized and unrealized losses were $5.4 million
for the nine months ended September 30, 2020, compared to net
realized and unrealized losses of $1.0 million for the nine months
ended September 30, 2019.
The Company’s net increase in net assets resulting from
operations for the third quarter of 2020 was $14.4 million, or
$0.47 per share, as compared to a net decrease in net assets
resulting from operations of $8.8 million, or $0.35 per share, for
the third quarter of 2019. For the nine months ended September 30,
2020, the Company’s net increase in net assets resulting from
operations was $30.5 million, or $1.00 per share, as compared to
$26.1 million, or $1.05 per share, for the nine months ended
September 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 September 30, 2020, the weighted average investment
ranking of the Company’s debt investment portfolio was 2.08, as
compared to 2.03 as of the end of the prior quarter. During the
quarter ended September 30, 2020, portfolio company credit category
changes, excluding fundings and repayments, consisted of the
following: two portfolio companies with an aggregate principal
balance of $16.0 million were upgraded from White (2) to Clear (1);
and one portfolio company with a principal balance of $2.8 million
was 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 September 30, 2020
and December 31, 2019:
September 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)
$
101,207
16.6
%
8
$
121,866
20.2
%
8
White (2)
381,641
62.4
21
425,016
70.3
23
Yellow (3)
107,915
17.7
4
31,103
5.1
3
Orange (4)
20,289
3.3
1
22,956
3.8
1
Red (5)
-
-
-
3,577
0.6
3
$
611,052
100.0
%
34
$
604,518
100.0
%
38
NET ASSET VALUE
As of September 30, 2020, the Company’s net assets were $409.4
million, or $13.28 per share, as compared to $332.5 million, or
$13.34 per share, as of December 31, 2019.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2020, the Company had total liquidity of
$213.7 million, consisting of cash and restricted cash of $25.7
million and available capacity under its revolving credit facility
of $188.0 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 October 29, 2020, the Company’s board of directors declared a
quarterly distribution of $0.36 per share for the fourth quarter of
2020, payable on December 14, 2020 to stockholders of record as of
November 27, 2020.
SUBSEQUENT EVENTS
Since September 30, 2020 and through November 4, 2020:
- The Company received $32.0 million of principal prepayments
generating approximately $2.4 million of accelerated income;
- TPC’s direct originations platform entered into $30.0 million
of additional non-binding signed term sheets with venture growth
stage companies;
- The Company closed $15.0 million of additional debt
commitments; and
- The Company funded $6.0 million in new investments.
CONFERENCE CALL
The Company will host a
conference call at 5:00 p.m. Eastern Time, today, November 5, 2020,
to discuss its financial results for the quarter ended September
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 December 5, 2020, by dialing 1 (877) 344-7529 (domestic) or
1 (412) 317-0088 (international) and entering conference ID
10149164. 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)
September 30, 2020
December 31, 2019
Assets
(unaudited)
Investments at fair value (amortized cost
of $664,349 and $660,675, respectively)
$
646,813
$
653,129
Cash
24,858
20,285
Restricted cash
836
6,156
Deferred credit facility costs
750
1,603
Prepaid expenses and other assets
2,178
2,975
Total assets
$
675,435
$
684,148
Liabilities
Revolving credit facility
$
112,000
$
262,300
2022 Notes, net
73,837
73,454
2025 Notes, net
69,098
-
Other accrued expenses and liabilities
11,145
15,888
Total liabilities
$
266,080
$
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; 30,828 and 24,923 shares issued and
outstanding, respectively)
308
249
Paid-in capital in excess of par value
412,486
333,052
Total distributable earnings (loss)
(3,439)
(795)
Total net assets
$
409,355
$
332,506
Total liabilities and net
assets
$
675,435
$
684,148
Net asset value per share
$
13.28
$
13.34
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,
2020
2019
2020
2019
Investment income
Interest income from investments
$
22,218
$
15,434
$
65,760
$
50,477
Other income
907
256
2,001
1,645
Total investment and other
income
$
23,125
$
15,690
$
67,761
$
52,122
Operating expenses
Base management fee
$
3,347
$
2,270
$
9,357
$
6,107
Income incentive fee
3,051
1,745
5,935
6,754
Interest expense and amortization of
fees
3,509
3,202
11,983
8,415
Administration agreement expenses
416
463
1,671
1,238
General and administrative expenses
597
897
2,837
2,457
Total operating expenses
$
10,920
$
8,577
$
31,783
$
24,971
Net investment income
$
12,205
$
7,113
$
35,978
$
27,151
Net realized and unrealized gains
(losses)
Net realized gains (losses) on
investments
$
4,089
$
(1,801
)
$
4,559
$
(1,847
)
Net change in unrealized gains (losses) on
investments
(1,850
)
(14,124
)
(9,989
)
814
Net realized and unrealized gains
(losses)
$
2,239
$
(15,925
)
$
(5,430
)
$
(1,033
)
Net increase in net assets resulting
from operations
$
14,444
$
(8,812
)
$
30,548
$
26,118
Basic and diluted net investment income
per share
$
0.40
$
0.29
$
1.18
$
1.09
Basic and diluted net increase in net
assets per share
$
0.47
$
(0.35
)
$
1.00
$
1.05
Basic and diluted weighted average shares
of common stock outstanding
30,792
24,865
30,475
24,825
Weighted Average Portfolio
Yield on Total Debt Investments
Ratios
For the Three Months
Ended
September 30,
For the Nine Months
Ended
September 30,
(Percentages, on an annualized
basis)(1)
2020
2019
2020
2019
Weighted average portfolio yield on total
debt investments(2)
14.1
%
13.0
%
13.4
%
14.9
%
Coupon income
10.0
%
10.3
%
10.0
%
10.3
%
Accretion of discount
1.0
%
0.8
%
1.0
%
0.9
%
Accretion of end-of-term payments
1.8
%
1.8
%
1.7
%
2.0
%
Impact of prepayments during the
period
1.3
%
0.2
%
0.7
%
1.8
%
U.S. Prime Rate at end of period(3)
3.25
%
5.00
%
3.25
%
5.00
%
_____________
(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/20201105006176/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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