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,
2018 and declared a third quarter 2018 distribution of $0.36 per share.
Second Quarter 2018 Highlights:
Year-To-Date 2018 Highlights:
“We had another exceptional quarter of performance and achieved our
highest quarterly income since our IPO,” stated Jim Labe, chairman and
chief executive officer of the Company. “Demand for our financing is at
an all-time high and we are well-positioned for a strong finish for the
year.”
“The first half of 2018 once again demonstrated the earnings power of
our business model which is focused on lending to and investing in
companies backed by select venture capital firms,” stated Sajal
Srivastava, president and chief investment officer of the Company. “The
financial flexibility from our reduced asset coverage requirement allows
us to optimize growth, further diversify the investment portfolio, and
generate even higher returns.”
Portfolio and Investment Activity:
During the second quarter of 2018, the Company entered into $140.4
million of new debt commitments, funded 11 debt investments totaling
$52.9 million, made one equity investment totaling $0.5 million and
acquired warrant investments valued at $1.2 million. Debt investments
funded during the quarter carried a weighted average annualized
portfolio yield of 13.4% at origination. During the quarter, the Company
experienced $50.0 million of early principal prepayments from one
portfolio company and had principal amortization of $5.5 million on the
remaining debt portfolio. The weighted average annualized portfolio
yield on debt investments for the second quarter was 17.2%, including
the impact of prepayments and other activity, and 13.9% 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 June 30, 2018, the Company held 74 debt investments with 23
companies and 51 warrant and equity investments in 41 companies. The
total cost and fair value of these investments were $399.2 million and
$398.4 million, respectively. Total portfolio investment activity for
the three and six months ended June 30, 2018 and 2017 was as follows:
Signed Term Sheets:
During the second quarter of 2018, TPC entered into $212.0 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, even though the Company is the primary vehicle through which
TPC focuses its venture growth stage business.
Unfunded Commitments:
As of June 30, 2018, the Company’s unfunded commitments totaled $203.4
million, of which $87.0 million is dependent upon portfolio companies
reaching certain milestones. Of the $203.4 million of unfunded
commitments, $57.9 million will expire during 2018, $75.5 million will
expire during 2019 and $70.0 million will expire during 2020, 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 $16.6 million for the second
quarter of 2018, representing a weighted average annualized portfolio
yield of 17.2%, as compared to $15.7 million and 19.9%, for the second
quarter of 2017. The increase in investment income and portfolio yield
reflected a higher average investment balance offset by lower prepayment
and other income as compared to a year ago. For the six months ended
June 30, 2018, the Company’s total investment and other income was $29.2
million, as compared to $30.0 million for the six months ended June 30,
2017, representing a year-to-date weighted average annualized portfolio
yield on debt investments of 15.6% and 18.2%, respectively.
Operating expenses for the second quarter of 2018 were $7.7 million as
compared to $6.8 million for the second quarter of 2017. Operating
expenses for the second quarter of 2018 consisted of $2.5 million of
interest expense and amortization of deferred 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. Operating expenses for the second quarter
of 2017 consisted of $2.1 million of interest expense and amortization
of deferred costs, $1.7 million of base management fees, $2.0 million of
income incentive fees, $0.3 million of administration agreement expenses
and $0.7 million of general and administrative expenses. The Company’s
operating expenses were $14.4 million and $13.2 million for the six
months ended June 30, 2018 and 2017, respectively.
For the second quarter of 2018, the Company recorded net investment
income of $8.8 million, or $0.50 per share, as compared to $8.8 million,
or $0.55 per share for the second quarter of 2017. Higher revenue
generated in the second quarter of 2018, as compared to the second
quarter of 2017, was partially offset by an increase in income incentive
fee due to fund performance and higher borrowing costs related to
increased benchmark interest rates relative to the prior year. Net
investment income for the six months ended June 30, 2018 was $14.7
million, or $0.83 per share compared to $16.7 million, or $1.05 per
share during the six months ended June 30, 2017.
During the second quarter of 2018, the Company recorded $0.8 million of
net realized gains, or $0.04 per share, compared to net realized losses
of $(1.7) million, or $(0.11) per share, for the second quarter of 2017.
Net unrealized depreciation for the second quarter of 2018 was $(1.2)
million, or $(0.07) per share, mainly consisting of the reversal of
previously recognized unrealized gains and losses into realized income.
This compares to net unrealized appreciation of $0.8 million, or $0.05
per share, for the second quarter of 2017. The Company’s net realized
and unrealized gains and losses were $1.6 million and $(5.1) million for
the six months ended June 30, 2018 and 2017, respectively.
The Company’s net increase in net assets resulting from operations for
the second quarter of 2018 was approximately $8.4 million, or $0.47 per
share, as compared to approximately $7.9 million, or $0.50 per share,
for the second quarter of 2017. For the six months ended June 30, 2018,
the Company’s net increase in net assets resulting from operations was
approximately $16.3 million, or $0.92 per share, as compared to a $11.7
million, or $0.73 per share, for the six months ended June 30, 2017.
Credit Quality:
The Company maintains a credit watch list with borrowers placed into one
of five categories, with Clear, or 1, being the highest rating and Red,
or 5, being the lowest. All new loans are initially assigned a rating of
White, or 2. As of June 30, 2018, the weighted average investment
ranking of the Company’s debt investment portfolio was 1.92, as compared
to 2.03 at the end of the prior quarter. Additional information
regarding our credit rating methodology is detailed in our Form 10-Q for
the three months ended June 30, 2018.
The following table shows the credit rankings for the Company’s debt
investments at fair value as of June 30, 2018 and as of December 31,
2017.
% of DebtInvestmentPortfolio
# of PortfolioCompanies
% of DebtInvestmentPortfolio
# of PortfolioCompanies
Net Asset Value:
As of June 30, 2018, the Company’s net assets were $239.0 million, or
$13.45 per share, as compared to $234.9 million, or $13.25 per share, as
of December 31, 2017.
Liquidity and Capital Resources:
As of June 30, 2018, the Company had total liquidity of $134.0 million,
consisting of cash of $11.0 million and available capacity of $123.0
million under its revolving credit facility, 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 2018 payable on September 14,
2018, to stockholders of record as of August 31, 2018.
Subsequent Events:
Since June 30, 2018:
Conference Call:
The Company will host a conference call at 5:00 p.m. Eastern time today,
August 1, 2018, to discuss its financial results for the second quarter
ended June 30, 2018. 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 1, 2018,
by dialing 1 (877) 344-7529 (domestic) or 1 (412) 317-0088
(international) and entering conference ID 10122753. The conference call
also will 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 serves as the primary financing source for 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 primarily lending 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. 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.
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.
June 30, 2018
December 31, 2017
3,733
502,683
14,414
263,692
WEIGHTED AVERAGE PORTFOLIO YIELD ON DEBT INVESTMENTS
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.
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