Hercules Capital Reports First Quarter 2021 Financial Results
Hercules Capital (HTGC) reported a strong start to 2021, with record new commitments of nearly $531 million and fundings of $355.3 million for Q1. The company maintained strong credit quality, achieving the highest internal ratings in a decade. Hercules introduced a supplemental distribution of $0.28 for the fiscal year to be paid quarterly, reflecting confidence in the venture ecosystem. The investment portfolio grew to $2.4 billion while net investment income for Q1 was $34.6 million or $0.30 per share, showing resilience despite a decrease from the previous year.
- New debt and equity commitments of $530.9 million in Q1 2021.
- Supplemental distribution of $0.28 per share for 2021, demonstrating shareholder value.
- Net investment income of $34.6 million for Q1 2021.
- Investment portfolio increased to $2.4 billion, reflecting growth.
- Credit quality improved to a weighted average grade of 2.01, the highest in years.
- Investment income decreased from $73.6 million in Q1 2020 to $68.8 million in Q1 2021.
- Net investment income per share fell from $0.37 in Q1 2020 to $0.30 in Q1 2021.
- Realized early loan repayments dropped by 32.2% compared to the previous quarter.
Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or the “Company”), the largest and leading specialty financing provider to innovative venture, growth and established stage companies backed by some of the leading and top-tier venture capital and select private equity firms, today announced its financial results for the first quarter ended March 31, 2021.
“We are off to a terrific start to 2021 with record levels of new commitments and fundings for the first quarter,” stated Scott Bluestein, chief executive officer and chief investment officer of Hercules. “Notably, we closed nearly
Bluestein added, “In addition to our base shareholder distribution this quarter, we are establishing a supplemental distribution program for fiscal year 2021 of
Bluestein concluded, “We are very pleased to have also raised and closed our first institutional private credit fund during the quarter. Having the fund in place gives us the opportunity to expand and diversify our investment platform while enhancing our level of service and capabilities we can provide to our current and future venture and growth stage portfolio companies.”
Q1 2021 Review and Operating Results
Debt Investment Portfolio
Hercules delivered new debt and equity commitments totaling
During the first quarter, Hercules realized early loan repayments of
The new debt investment origination and funding activities lead to a net debt investment portfolio increase of
The Company’s total investment portfolio, (at cost and fair value) by category, quarter-over-quarter is highlighted below:
Total Investment Portfolio: Q1 2021 to Q4 2020 |
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Equity & Inv. |
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| (in millions) | Debt | Funds | Warrants | Total Portfolio | ||||||||||||
| Balances at Cost at 12/31/20 | $ |
2,099.5 |
|
$ |
190.2 |
|
$ |
25.7 |
|
$ |
2,315.4 |
|
||||
| New fundings(a) |
|
348.7 |
|
|
6.1 |
|
|
1.1 |
|
|
355.9 |
|
||||
| Fundings assigned to External Funds |
|
(47.4 |
) |
|
(0.8 |
) |
|
(0.2 |
) |
|
(48.4 |
) |
||||
| Principal payments received on investments |
|
(18.3 |
) |
|
— |
|
|
— |
|
|
(18.3 |
) |
||||
| Early payoffs(b) |
|
(191.5 |
) |
|
— |
|
|
— |
|
|
(191.5 |
) |
||||
| Net changes attributed to conversions, liquidations, and fees |
|
(9.0 |
) |
|
1.0 |
|
|
(1.3 |
) |
|
(9.3 |
) |
||||
| Net activity during Q1 2021 |
|
82.5 |
|
|
6.3 |
|
|
(0.4 |
) |
|
88.4 |
|
||||
| Balances at Cost at 3/31/21 | $ |
2,182.0 |
|
$ |
196.5 |
|
$ |
25.3 |
|
$ |
2,403.8 |
|
||||
| Balances at Value at 12/31/20 | $ |
2,094.5 |
|
$ |
225.0 |
|
$ |
34.6 |
|
$ |
2,354.1 |
|
||||
| Net activity during Q1 2021 |
|
82.5 |
|
|
6.3 |
|
|
(0.4 |
) |
|
88.4 |
|
||||
| Net change in unrealized appreciation (depreciation) |
|
8.1 |
|
|
6.0 |
|
|
7.8 |
|
|
21.9 |
|
||||
| Total net activity during Q1 2021 |
|
90.6 |
|
|
12.3 |
|
|
7.4 |
|
|
110.3 |
|
||||
| Balances at Value at 3/31/21 | $ |
2,185.1 |
|
$ |
237.3 |
|
$ |
42.0 |
|
$ |
2,464.4 |
|
||||
(a) |
New funding amount includes |
||||
(b) |
Early payoffs includes |
||||
Debt Investment Portfolio Balances by Quarter |
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| (in millions) | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | |||||
| Ending Balance at Cost |
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| Weighted Average Balance |
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Debt Investment Portfolio Composition by Quarter |
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| (% of debt investment portfolio) | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | |||||
| First Lien Senior Secured |
|
|
|
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| Floating Rate w/Floors |
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Effective Portfolio Yield and Core Portfolio Yield (“Core Yield”)
The effective yield on Hercules’ debt investment portfolio was
Core yield, a non-GAAP measure, was
Income Statement
Total investment income decreased to
Non-interest and fee expenses were
Interest expense and fees were
The Company had a weighted average cost of borrowings comprised of interest and fees, of
NII – Net Investment Income
NII for Q1 2021 was
Continued Credit Discipline and Strong Credit Performance
Hercules’ net cumulative realized gain/(loss) position, since its first origination activities in October 2004 through March 31, 2021, (including net loan, warrant and equity activity) on investments, totaled (
When compared to total new debt investment commitments during the same period of over
Realized Gains/(Losses)
During Q1 2021, Hercules had net realized gains of
Unrealized Appreciation/(Depreciation)
During Q1 2021, Hercules recorded
Portfolio Asset Quality
As of March 31, 2021, the weighted average grade of the debt investment portfolio, at fair value, improved to 2.01, compared to 2.16 as of December 31, 2020, based on a scale of 1 to 5, with 1 being the highest quality. Hercules’ policy is to generally adjust the credit grading down on its portfolio companies as they approach their expected need for additional growth equity capital to fund their respective operations for the next 9-14 months. Various companies in the Company’s portfolio will require additional rounds of funding from time to time to maintain their operations.
Additionally, Hercules may selectively downgrade portfolio companies, from time to time, if they are not meeting the Company’s financing criteria, or underperforming relative to their respective business plans.
As of March 31, 2021, grading of the debt investment portfolio at fair value, excluding warrants and equity investments, was as follows:
| Credit Grading at Fair Value, Q1 2021 - Q1 2020 ($ in millions) | ||||||||||||||||||||||||||||||
Q1 2021 |
Q4 2020 |
|
Q3 2020 |
|
Q2 2020 |
|
Q1 2020 |
|||||||||||||||||||||||
| Grade 1 - High | $ |
497.5 |
22.8 |
% |
$ |
411.0 |
19.6 |
% |
$ |
406.5 |
17.9 |
% |
$ |
443.6 |
20.1 |
% |
$ |
390.4 |
17.7 |
% |
||||||||||
| Grade 2 | $ |
1,240.7 |
56.8 |
% |
$ |
1,027.9 |
49.1 |
% |
$ |
1,053.1 |
46.5 |
% |
$ |
877.9 |
39.6 |
% |
$ |
818.1 |
37.3 |
% |
||||||||||
| Grade 3 | $ |
426.2 |
19.5 |
% |
$ |
621.3 |
29.7 |
% |
$ |
772.3 |
34.1 |
% |
$ |
849.7 |
38.3 |
% |
$ |
917.2 |
41.8 |
% |
||||||||||
| Grade 4 | $ |
20.4 |
0.9 |
% |
$ |
25.3 |
1.2 |
% |
$ |
26.7 |
1.2 |
% |
$ |
25.0 |
1.1 |
% |
$ |
54.3 |
2.5 |
% |
||||||||||
| Grade 5 - Low | $ |
0.2 |
0.0 |
% |
$ |
8.9 |
0.4 |
% |
$ |
5.9 |
0.3 |
% |
$ |
20.1 |
0.9 |
% |
$ |
15.5 |
0.7 |
% |
||||||||||
| Weighted Avg. |
|
2.01 |
|
2.16 |
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FAQ
What were Hercules Capital's financial results for Q1 2021?
Hercules Capital reported new debt and equity commitments of $530.9 million and net investment income of $34.6 million, or $0.30 per share.
How much is Hercules Capital's supplemental distribution for 2021?
The supplemental distribution for 2021 is $0.28 per share, payable quarterly.
What is the current status of Hercules Capital's investment portfolio?
As of Q1 2021, Hercules Capital's total investment portfolio grew to $2.4 billion.
What improvements were made to Hercules Capital's credit quality?
The weighted average grade of the debt investment portfolio improved to 2.01, the highest internal rating in 10 years.
How did early loan repayments change in Q1 2021 for Hercules Capital?
Early loan repayments decreased by 32.2%, dropping to $191.5 million in Q1 2021 compared to the previous quarter.
Hercules Capital, Inc.
NYSE:HTGCHTGC RankingsHTGC Latest NewsHTGC Stock Data
3.19B
164.61M
1.82%
26.98%
3.49%
Asset Management
Financial Services
United States of America
SAN MATEO
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