TPVG TriplePoint Venture Growth BDC Corp

Increase in Signed Term Sheets, Closed Commitments and Fundings Received $97.0 million from Liquidity Events Renews Revolving Credit Facility Declares Third Quarter 2024 Distribution of $0.30 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, 2024 and the declaration by its Board of Directors of its third quarter 2024 distribution of $0.30 per share.

Second Quarter 2024 Highlights

• Signed $188.4 million of term sheets with venture growth stage companies at TriplePoint Capital LLC (“TPC”), representing a 44% increase from the prior quarter, and TPVG closed $52.0 million of new debt commitments to venture growth stage companies, representing a 420% increase from the prior quarter;
• Funded $38.7 million in debt investments, representing an increase of 186% from the prior quarter, to five portfolio companies with a 15.5% weighted average annualized yield at origination;
• Received $97.0 million from liquidity events comprised of $51.2 million of loan principal prepayments, $27.9 million of scheduled principal amortization, $14.7 million in cash proceeds from the disposition of debt investments and $3.2 million in cash proceeds from the sale of warrant and equity investments;
• Achieved a 15.8% weighted average annualized portfolio yield on debt investments for the quarter1;
• Earned net investment income of $12.6 million, or $0.33 per share;
• Generated total investment income of $27.1 million;
• Realized an 14.6% return on average equity, based on net investment income during the quarter;
• Nine debt portfolio companies raised an aggregate $442.6 million of capital in private financings during the quarter;
• Held debt investments in 44 portfolio companies, warrants in 94 portfolio companies and equity investments in 46 portfolio companies as of June 30, 2024;
• Debt investment portfolio weighted average investment ranking of 2.24 as of quarter’s end;
• Raised $18.2 million of net proceeds under the at-the-market equity offering program (“ATM Program”);
• Net asset value of $353.0 million, or $8.83 per share, as of June 30, 2024;
• Total liquidity of $340.7 million (giving effect to the Revolving Credit Facility renewal post quarter-end) and total unfunded commitments of $71.4 million;
• Ended the quarter with a 1.15x gross leverage ratio;
• Declared a second quarter distribution of $0.30 per share, payable on September 30, 2024; bringing total declared distributions to $15.75 per share since the Company’s initial public offering; and
• Subsequent to the end of the quarter, the Company renewed its Revolving Credit Facility to, among other things, extend the revolving period to November 30, 2025 and the scheduled maturity date to May 30, 2027, as well as set total commitments to $300 million.

Year to Date 2024 Highlights

• Earned net investment income of $28.1 million, or $0.74 per share;
• Generated total investment income of $56.4 million;
• Paid distributions of $0.80 per share;
• Signed $318.8 million of term sheets with venture growth stage companies at TPC and TPVG closed $62.0 million of new debt commitments to venture growth stage companies;
• Funded $52.2 million in debt investments to seven portfolio companies with a 15.2% weighted average annualized portfolio yield at origination;
• 16 portfolio companies raised an aggregate $1.0 billion of capital in private financings;
• Achieved a 15.6% weighted average annualized portfolio yield on total debt investments 1 ;
• In April 2024, DBRS, Inc. issued TPVG’s investment grade rating, with a BBB (low) Long-Term Issuer rating, with a stable trend outlook;
• Raised $19.4 million of net proceeds under the ATM Program; and
• Estimated undistributed taxable earnings from net investment income (or “spillover income”) of $39.3 million, or $0.98 per share, as of June 30, 2024.

_____________

1 Please see the last table in this press release, titled "Weighted Average Portfolio Yield on Debt Investments," for more information on the calculation of the weighted average annualized portfolio yield on debt investments.

“Given continued challenges in the venture capital markets, we remained on our path of selectively increasing our investment activity and positioning TPVG for the future,” said Jim Labe, chairman and chief executive officer of TPVG. “We are pleased with the notable increase in signed term sheets, closed debt commitments and funding activity during the quarter and remained focused on proactively managing and diversifying our portfolio, and preparing for improving market conditions.”

“During the quarter, we took steps to build a strong foundation for the future,“ said Sajal Srivastava, president and chief investment officer of the Company. “We enter the second half of the year with strong liquidity, an improved leverage ratio, a growing pipeline, a meaningful portfolio of warrant and equity investments and a dividend aligned with the earnings power of our portfolio.”

PORTFOLIO AND INVESTMENT ACTIVITY

During the three months ended June 30, 2024, the Company entered into $52.0 million of new debt commitments with five portfolio companies, funded debt investments totaling $38.7 million to five portfolio companies and acquired warrants valued at $0.3 million in six portfolio companies. Debt investments funded during the quarter carried a weighted average annualized portfolio yield of 15.5% at origination. During the quarter, the Company received $51.2 million of principal prepayments, $27.9 million of scheduled principal amortization and $14.7 million from disposition of debt investments. The weighted average annualized portfolio yield on debt investments for the second quarter was 15.8%. 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. The return on average equity for the second quarter was 14.6% based on net investment income. The Company calculates return on average equity as the annualized rate of net investment income recognized during the period divided by the Company’s average net asset value during the period.

As of June 30, 2024, the Company held debt investments in 44 portfolio companies, warrants in 94 portfolio companies and equity investments in 46 portfolio companies. The total cost and fair value of these investments were $745.6 million and $713.8 million, respectively.

The following table shows the total portfolio investment activity for the three and six months ended June 30, 2024 and 2023:

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

(in thousands)

 

2024

 

2023

 

2024

 

2023

Beginning portfolio at fair value

 

$

773,605

 

 

$

982,828

 

 

$

802,145

 

 

$

949,276

 

New debt investments, net(a)

 

 

37,727

 

 

 

30,164

 

 

 

50,882

 

 

 

86,538

 

Scheduled principal amortization

 

 

(27,884

)

 

 

(1,666

)

 

 

(34,696

)

 

 

(18,257

)

Principal prepayments and early repayments

 

 

(51,239

)

 

 

(33,750

)

 

 

(82,081

)

 

 

(37,150

)

Net amortization and accretion of premiums and discounts and end-of-term payments

 

 

2,185

 

 

 

4,172

 

 

 

2,589

 

 

 

9,490

 

Payment-in-kind coupon

 

 

3,821

 

 

 

2,597

 

 

 

7,609

 

 

 

4,682

 

New warrant investments

 

 

271

 

 

 

38

 

 

 

436

 

 

 

168

 

New equity investments

 

 

404

 

 

 

433

 

 

 

800

 

 

 

936

 

Proceeds from dispositions of investments

 

 

(21,036

)

 

 

(3,173

)

 

 

(22,142

)

 

 

(3,173

)

Net realized gains (losses) on investments

 

 

(18,943

)

 

 

1,863

 

 

 

(27,894

)

 

 

1,863

 

Net change in unrealized gains (losses) on investments

 

 

14,859

 

 

 

(41,551

)

 

 

16,122

 

 

 

(52,418

)

Ending portfolio at fair value

 

$

713,770

 

 

$

941,955

 

 

$

713,770

 

 

$

941,955

 

_____________

(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, 2024, TPC entered into $188.4 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 the 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, 2024, the Company’s unfunded commitments totaled $71.4 million, of which $5.0 million was dependent upon portfolio companies reaching certain milestones. Of the $71.4 million of unfunded commitments, $5.0 million will expire during 2024, $65.9 million will expire during 2025, and $0.5 million will expire during 2026, 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 $27.1 million for the second quarter of 2024, representing a weighted average annualized portfolio yield of 15.8% on debt investments, as compared to $35.2 million and 14.7% for the second quarter of 2023. The decrease in total investment and other income was primarily due to a lower weighted average principal amount outstanding on our income-bearing debt investment portfolio. For the six months ended June 30, 2024, the Company’s total investment and other income was $56.4 million, as compared to $68.8 million for the six months ended June 30, 2023, representing a weighted average annualized portfolio yield on total debt investments of 15.6% and 14.7%, respectively.

Operating expenses for the second quarter of 2024 were $14.5 million as compared to $16.3 million for the second quarter of 2023. Operating expenses for the second quarter of 2024 consisted of $8.7 million of interest expense and amortization of fees, which includes $1.8 million of one-time fees related to minimum utilization on the Revolving Credit Facility, $3.8 million of base management fees, $0.6 million of administration agreement expenses and $1.3 million of general and administrative expenses. Due to the total return requirement under the income component of our incentive fee structure, our income incentive fees were reduced by $2.5 million during the three months ended June 30, 2024. Operating expenses for the second quarter of 2023 consisted of $9.9 million of interest expense and amortization of fees, $4.5 million of base management fees, $0.6 million of administration agreement expenses and $1.3 million of general and administrative expenses. Due to the total return requirement under the income component of our incentive fee structure, our income incentive fees were reduced by $3.8 million during the three months ended June 30, 2023. The Company’s total operating expenses were $28.3 million and $31.4 million for the six months ended June 30, 2024 and 2023, respectively.

For the second quarter of 2024, the Company recorded net investment income of $12.6 million, or $0.33 per share, as compared to $18.8 million, or $0.53 per share, for the second quarter of 2023. The decrease in net investment income between periods was driven primarily by lower total investment and other income.

During the second quarter of 2024, the Company recognized net realized losses on investments of $18.8 million, consisting primarily of $20.2 million of net realized losses on the debt investment portfolio from the write-off and restructuring of investments, partially offset by $1.3 million of net warrant and equity gains from the sale and dispositions of investments. During the second quarter of 2023, the Company recognized net realized gains on investments of $1.9 million.

Net change in unrealized gains on investments for the second quarter of 2024 was $14.9 million, consisting of $12.8 million of net unrealized gains on the warrant and equity portfolio resulting from fair value adjustments and $10.9 million of net unrealized gains from the reversal of previously recorded unrealized losses from investments realized during the period, offset by $8.8 million of net unrealized losses on the existing debt investment portfolio resulting from fair value adjustments. Net change in unrealized losses on investments for the second quarter of 2023 was $41.6 million. The Company’s net realized and unrealized losses were $11.5 million for the six months ended June 30, 2024, compared to net realized and unrealized losses of $50.6 million for the six months ended June 30, 2023.

The Company’s net increase in net assets resulting from operations for the second quarter of 2024 was $8.6 million, or $0.22 per share, as compared to a net decrease in net assets resulting from operations of $20.9 million, or $0.59 per share, for the second quarter of 2023. For the six months ended June 30, 2024, the Company’s net increase in net assets resulting from operations was $16.6 million, or $0.43 per share, as compared to a net decrease in net assets resulting from operations of $13.2 million, or $0.37 per share, for the six months ended June 30, 2023.

CREDIT QUALITY

The Company maintains a credit watch list with portfolio companies placed into one of five credit 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 credit category.

As of June 30, 2024, the weighted average investment ranking of the Company’s debt investment portfolio was 2.24, as compared to 2.21 at the end of the prior quarter. During the quarter ended June 30, 2024, portfolio company credit category changes, excluding fundings and repayments, consisted of the following: one portfolio company with a principal balance of $25.0 million was upgraded from White (2) to Clear (1), one portfolio company with a principal balance of $4.7 million was downgraded from Clear (1) to White (2), one portfolio company with a principal balance of $13.0 million was downgraded from White (2) to Yellow (3), one portfolio company with a principal balance of $12.3 million was downgraded from White (2) to Orange (4), one portfolio company with a principal balance of $24.7 million was downgraded from Yellow (3) to Orange (4), and one portfolio company with a principal balance of $0.7 million was downgraded from Yellow (3) to Red (5).

The following table shows the credit categories for the Company’s debt investments at fair value as of June 30, 2024 and December 31, 2023:

 

 

June 30, 2024

 

December 31, 2023

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)

 

$

61,473

 

10.0

%

 

4

 

$

100,309

 

13.8

%

 

7

White (2)

 

 

400,272

 

65.0

 

 

27

 

 

471,195

 

64.5

 

 

28

Yellow (3)

 

 

95,768

 

15.6

 

 

6

 

 

117,792

 

16.1

 

 

8

Orange (4)

 

 

58,087

 

9.4

 

 

6

 

 

40,091

 

5.5

 

 

5

Red (5)

 

 

56

 

—

 

 

1

 

 

908

 

0.1

 

 

1

 

 

$

615,656

 

100.0

%

 

44

 

$

730,295

 

100.0

%

 

49

NET ASSET VALUE

As of June 30, 2024, the Company’s net assets were $353.0 million, or $8.83 per share, as compared to $346.3 million, or $9.21 per share, as of December 31, 2023.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2024, the Company had total liquidity of $340.7 million, consisting of cash, cash equivalents and restricted cash of $50.7 million and available capacity under its Revolving Credit Facility of $290.0 million (adjusted for renewal of the Revolving Credit Facility on August 6, 2024). As of June 30, 2024, the Company held $0.5 million of stock and warrant positions in publicly traded companies. The Company ended the quarter with a 1.15x gross leverage ratio and an asset coverage ratio of 187%.

The Company maintains an ATM Program with UBS Securities LLC, providing for the issuance from time to time of shares of its common stock. As of June 30, 2024, $56.5 million in shares remained available for sale under the ATM Program.

DISTRIBUTION

On July 31, 2024, the Company’s board of directors declared a regular quarterly distribution of $0.30 per share for the third quarter, payable on September 30, 2024 to stockholders of record as of September 16, 2024. As of June 30, 2024, the Company had estimated spillover income of $39.3 million, or $0.98 per share.

RECENT DEVELOPMENTS

Since June 30, 2024 and through August 6, 2024:

• TPC’s direct originations platform entered into $56.0 million of additional non-binding signed term sheets with venture growth stage companies;
• The Company closed $11.0 million of additional debt commitments;
• The Company funded $6.3 million in new investments;
• On August 2, 2024, the Company’s board of directors appointed Matthew Galiani to serve as interim Chief Financial Officer of the Company, effective as of the close of business on August 9, 2024. Mr. Galiani joined the Company in 2019 and has served as the Company’s Controller since December 2022; and
• Subsequent to the end of the quarter, the Company renewed its Revolving Credit Facility to, among other things, extend the revolving period to November 30, 2025 and the scheduled maturity date to May 30, 2027, as well as set total commitments to $300 million.

CONFERENCE CALL

The Company will host a conference call at 5:00 p.m. Eastern Time, today, August 7, 2024, to discuss its financial results for the quarter ended June 30, 2024. To listen to the call, investors and analysts should dial (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 7, 2024, by dialing (877) 344-7529 (domestic) or +1 (412) 317-0088 (international) and entering conference ID 5227745. The conference call also will be available via a live audio webcast in the investor relations section of the Company’s website, https://www.tpvg.com. An online archive of the webcast will be available on the Company’s website for one year after the call.

ABOUT TRIPLEPOINT VENTURE GROWTH BDC CORP.

TriplePoint Venture Growth BDC Corp. is an externally-managed business development company focused on providing customized debt financing with warrants and direct equity investments to venture growth stage companies in technology and other high growth industries backed by a select group of venture capital firms. The Company’s sponsor, TriplePoint Capital, is a Sand Hill Road-based global investment platform which provides customized debt financing, leasing, direct equity investments and other complementary solutions to venture capital-backed companies in technology and other high growth industries at every stage of their development with unparalleled levels of creativity, flexibility and service. For more information about TriplePoint Venture Growth BDC Corp., visit https://www.tpvg.com. For more information about TriplePoint Capital, visit https://www.triplepointcapital.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute forward-looking statements. Forward-looking statements are not guarantees of future performance, investment activity, financial condition or results of operations 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 events, investment activity, performance, condition or 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, and the impact of such changes 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 actual events and the Company’s performance and 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 or will be 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 Annual Report on Form 10-K and 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, 2024

 

December 31, 2023

Assets

(unaudited)

 

 

Investments at fair value (amortized cost of $745,644 and $850,142, respectively)

$

713,770

 

 

$

802,145

 

Cash and cash equivalents

 

50,434

 

 

 

153,328

 

Restricted cash

 

241

 

 

 

18,254

 

Deferred credit facility costs

 

2,507

 

 

 

2,714

 

Prepaid expenses and other assets

 

4,316

 

 

 

2,384

 

Total assets

$

771,268

 

 

$

978,825

 

 

 

 

 

Liabilities

 

 

 

Revolving Credit Facility

$

10,000

 

 

$

215,000

 

2025 Notes, net

 

69,843

 

 

 

69,738

 

2026 Notes, net

 

199,262

 

 

 

199,041

 

2027 Notes, net

 

124,257

 

 

 

124,117

 

Other accrued expenses and liabilities

 

14,929

 

 

 

24,623

 

Total liabilities

$

418,291

 

 

$

632,519

 

 

 

 

 

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

 

399

 

 

 

376

 

Paid-in capital in excess of par value

 

514,023

 

 

 

492,934

 

Total distributable earnings (loss)

 

(161,445

)

 

 

(147,004

)

Total net assets

$

352,977

 

 

$

346,306

 

Total liabilities and net assets

$

771,268

 

 

$

978,825

 

 

 

 

 

Shares of common stock outstanding (par value $0.01 per share and 450,000 authorized)

 

39,953

 

 

 

37,620

 

Net asset value per share

$

8.83

 

 

$

9.21

 

TriplePoint Venture Growth BDC Corp.

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Investment income

 

 

 

 

 

 

 

Interest income from investments

$

26,590

 

 

$

34,501

 

 

$

55,118

 

 

$

66,754

 

Other income

 

517

 

 

 

650

 

 

 

1,263

 

 

 

2,025

 

Total investment and other income

$

27,107

 

 

$

35,151

 

 

$

56,381

 

 

$

68,779

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Base management fee

$

3,832

 

 

$

4,496

 

 

$

8,134

 

 

$

8,807

 

Income incentive fee

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Interest expense and amortization of fees

 

8,702

 

 

 

9,944

 

 

 

15,713

 

 

 

19,189

 

Administration agreement expenses

 

648

 

 

 

567

 

 

 

1,259

 

 

 

1,140

 

General and administrative expenses

 

1,321

 

 

 

1,307

 

 

 

3,148

 

 

 

2,227

 

Total operating expenses

$

14,503

 

 

$

16,314

 

 

$

28,254

 

 

$

31,363

 

 

 

 

 

 

 

 

 

Net investment income

$

12,604

 

 

$

18,837

 

 

$

28,127

 

 

$

37,416

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains/(losses)

 

 

 

 

 

 

 

Net realized gains (losses) on investments

$

(18,846

)

 

$

1,859

 

 

$

(27,653

)

 

$

1,826

 

Net change in unrealized gains (losses) on investments

 

14,859

 

 

 

(41,551

)

 

 

16,122

 

 

 

(52,418

)

Net realized and unrealized gains/(losses)

$

(3,987

)

 

$

(39,692

)

 

$

(11,531

)

 

$

(50,592

)

 

 

 

 

 

 

 

 

Net increase (decrease) in net assets resulting from operations

$

8,617

 

 

$

(20,855

)

 

$

16,596

 

 

$

(13,176

)

 

 

 

 

 

 

 

 

Per share information (basic and diluted)

 

 

 

 

 

 

 

Net investment income per share

$

0.33

 

 

$

0.53

 

 

$

0.74

 

 

$

1.06

 

Net increase (decrease) in net assets per share

$

0.22

 

 

$

(0.59

)

 

$

0.43

 

 

$

(0.37

)

Weighted average shares of common stock outstanding

 

38,729

 

 

 

35,398

 

 

 

38,189

 

 

 

35,373

 

Total distributions declared per share

$

0.40

 

 

$

0.40

 

 

$

0.80

 

 

$

0.80

 

Weighted Average Portfolio Yield

on Debt Investments

 

Ratios (Percentages, on an annualized basis)(1)

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

Weighted average portfolio yield on debt investments(2)

 

15.8

%

 

14.7

%

 

15.6

%

 

14.7

%

Coupon income

 

11.6

%

 

11.8

%

 

11.9

%

 

11.8

%

Accretion of discount

 

0.8

%

 

0.7

%

 

0.9

%

 

0.9

%

Accretion of end-of-term payments

 

1.5

%

 

1.6

%

 

1.5

%

 

1.7

%

Impact of prepayments during the period

 

1.9

%

 

0.6

%

 

1.3

%

 

0.3

%

_____________

(1)

Weighted average portfolio yields on 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. The calculation of weighted average portfolio yields on debt investments excludes any non-income producing debt investments, but includes debt investments on non-accrual status. The weighted average yields reported for these periods are annualized and reflect the weighted average yields to maturities.

(2)

The weighted average portfolio yields on debt investments reflected above do not represent actual investment returns to the Company’s stockholders.

 

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INVESTOR RELATIONS AND MEDIA CONTACT The IGB Group Leon Berman 212-477-8438 lberman@igbir.com