Runway Growth Finance Corp. Announces Joint Venture with Cadma Capital Partners
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Insights
The establishment of a joint venture between Runway Growth Finance Corp. and Cadma Capital Partners signifies a strategic move in the venture debt market, one that could potentially enhance Runway Growth's portfolio and market position. The JV's focus on financing private and sponsor-backed late- and growth-stage companies taps into a niche yet burgeoning segment, where traditional equity financing might dilute company ownership or be less desirable.
With a financing capacity of up to $200 million, the joint venture, Runway-Cadma I LLC, is poised to leverage the strengths of both entities. Runway's track record and Cadma's asset-backed financing expertise could create a robust platform for extending credit. This alignment could lead to a diversified revenue stream for Runway Growth and potentially improve risk-adjusted returns for shareholders. However, the success of such a venture relies on stringent credit quality management and the ability to mitigate the inherent risks of lending to companies in their growth phase.
The collaboration between Runway Growth and Cadma, an affiliate of Apollo Global Management, underscores a strategic effort to capitalize on the growing demand for alternative financing solutions in the venture space. This demand is driven by a shift away from traditional equity financing, as companies increasingly seek non-dilutive funding options to fuel their growth trajectories.
By pooling their market expertise and resources, the joint venture may gain a competitive edge in attracting high-quality late-stage and growth companies. This could lead to an increased market share for both Runway and Cadma within the alternative lending space. However, the venture's long-term success will hinge on its ability to maintain excellent credit quality and navigate the cyclical nature of growth lending markets.
The joint venture announcement between Runway Growth and Cadma reflects broader economic trends, where access to capital is a critical factor for sustaining growth among late-stage companies. The partnership could be seen as a response to the macroeconomic environment where interest rates and economic uncertainties might make equity financing less attractive or feasible for growth-stage businesses.
From an economic standpoint, the JV's capacity to provide up to $200 million in financing could stimulate growth within the target sector by enabling companies to invest in expansion without the constraints of equity-based funding. The ripple effects of such an investment could contribute positively to job creation and innovation. Nonetheless, the economic impact will depend on the JV's ability to select and support companies that can thrive despite potential economic headwinds.
MENLO PARK, Calif., March 07, 2024 (GLOBE NEWSWIRE) -- Runway Growth Finance Corp. (Nasdaq: RWAY) (“Runway Growth” or the “Company”), a leading provider of flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity, today announced that the Company has established a joint venture (“JV”) with Cadma Capital Partners (“Cadma”), a credit financing platform for the venture and growth ecosystem that is an affiliate of Apollo Global Management. Cadma provides asset-backed financing to venture and growth lenders, high-growth companies, and financial sponsors.
"Cadma will serve as a disciplined and experienced partner that shares in our mission to deliver creative financing solutions to the highest quality late-stage and growth companies,” said Greg Greifeld, Acting Chief Executive Officer of Runway Growth, and Deputy Chief Investment Officer and Head of Credit of Runway Growth Capital LLC. “Our combined market expertise, track record as strategic partners, and leadership within the venture debt ecosystem positions us to achieve attractive economics while maintaining excellent credit quality. Through our partnership with Cadma, Runway will increase our presence in the growth lending markets as we seek to deliver returns for our shareholders.”
The newly formed joint venture, Runway-Cadma I LLC, will be an equal partnership between Runway and Cadma. The joint venture, with financing capacity of up to
“Runway and Cadma are forming a mutually beneficial partnership to expand high quality asset origination for our firms,” said Jon Beizer, CEO of Cadma. “We believe that our deep understanding of the venture ecosystem and Runway’s strong track record of serving dynamic growth companies will enable us to unlock substantial value. This is only the beginning, and we look forward to deepening this relationship in the years to come.”
About Runway Growth Finance Corp.
Runway Growth is a growing specialty finance company focused on providing flexible capital solutions to late- and growth-stage companies seeking an alternative to raising equity. Runway Growth is a closed-end investment fund that has elected to be regulated as a business development company under the Investment Company Act of 1940. Runway Growth is externally managed by Runway Growth Capital LLC, an established registered investment advisor that was formed in 2015 and led by industry veteran David Spreng. For more information, please visit www.runwaygrowth.com.
About Cadma Capital Partners
Cadma Capital Partners (“Cadma”) is an asset-backed finance platform built for the innovation economy. An affiliate of Apollo Global Management, Cadma provides unique financing solutions for venture and growth companies. In partnership with global leaders across the innovation ecosystem, Cadma structures creative financing solutions to unlock value, provide liquidity, and propel growth. Cadma operates globally, with a team of veteran technology investors and business builders based in New York City and Silicon Valley.
Forward-Looking Statements
Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. 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 Runway Growth’s filings with the Securities and Exchange Commission. Runway Growth undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
IR Contacts:
Stefan Norbom, Prosek Partners, snorbom@prosek.com
Thomas B. Raterman, Acting President, Chief Financial Officer and Chief Operating Officer, tr@runwaygrowth.com
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