TriplePoint Venture Growth BDC Corp. Announces Fourth Quarter and Fiscal Year 2023 Financial Results
- Achieved net investment income of $2.07 per share for fiscal year 2023
- Declared first quarter 2024 distribution of $0.40 per share
- Funded debt investments, received loan principal prepayments, and achieved a 15.6% weighted average annualized portfolio yield on debt investments for the quarter
- Raised net proceeds under the at-the-market equity offering program
- Net asset value of $9.21 per share as of December 31, 2023
- Fiscal year 2023 highlights include net investment income of $2.07 per share, total investment income of $137.5 million, and signed term sheets with venture growth stage companies
- Detailed credit quality, liquidity, and capital resources
- None.
Insights
TriplePoint Venture Growth BDC Corp.'s (TPVG) fiscal year 2023 financial results demonstrate a robust net investment income of $2.07 per share, which is a significant indicator for investors assessing the company's profitability and operational efficiency. The 15.4% weighted average annualized portfolio yield on debt investments for the fiscal year is notably high, reflecting TPVG's ability to generate income from its debt investments. This yield is a crucial metric, as it provides insights into the returns TPVG is able to secure from its lending activities and it is comfortably above the average yields seen in more traditional fixed-income investments.
TPVG's strategy of focusing on venture growth stage companies backed by select venture capital firms appears to be paying off, as evidenced by the 18.3% return on average equity based on net investment income for the fourth quarter. This outperformance could be attributed to the company's niche focus on technology and other high-growth industries, which have the potential to offer higher returns albeit with increased risk. The declaration of a $0.40 per share distribution for the first quarter of 2024 signals confidence in TPVG's earning potential and commitment to shareholder returns.
The company's liquidity position, with total liquidity of $306.6 million and the gross leverage ratio of 1.76x, are also of interest to investors as they reflect the company's financial health and its ability to meet short-term obligations. The asset coverage ratio of 157% indicates that TPVG is well within regulatory requirements, providing a cushion for investors against potential losses.
TPVG's investment in a diversified portfolio of 49 debt investments, 97 warrants and 46 equity investments in various portfolio companies showcases its broad exposure to the venture capital ecosystem. The company's ability to sign $471.0 million of term sheets and close $31.5 million of new debt commitments during a challenging venture capital market is an impressive feat. This indicates a strong pipeline and potential for future earnings growth, which is essential for investors looking for growth opportunities in the Business Development Company (BDC) sector.
The strategic moves by portfolio companies, such as Metropolis Technologies' agreement to purchase SP Plus Corporation for approximately $1.5 billion and Cohesity's intention to combine with Veritas Technologies LLC's data protection business in a $7 billion transaction, are indicative of TPVG's ability to pick winners and potentially benefit from their growth and exit events. These developments can have a considerable impact on TPVG's future realized and unrealized gains, potentially influencing the stock price.
However, the net decrease in net assets resulting from operations for the fiscal year 2023, which stood at $39.8 million, or $1.12 per share, warrants attention. This decrease could be due to market volatility and valuation adjustments in the high-growth sectors TPVG invests in. Investors should monitor these metrics closely as they can affect TPVG's net asset value and, consequently, investor sentiment and stock performance.
From a regulatory standpoint, TPVG's compliance with the asset coverage ratio, which is a legal requirement for BDCs to limit the amount of leverage they can employ, is reassuring for investors. The reaffirmation of TPVG's investment grade rating by DBRS, Inc. with a negative trend outlook in April 2023 suggests that the company is viewed as having a moderate risk of default. This rating is crucial for investors as it influences the company's borrowing costs and ability to raise capital. The negative trend outlook, however, implies potential future downgrades if adverse conditions persist, which investors should be aware of as it could impact the company's financial flexibility.
Furthermore, the ATM Program's remaining capacity of $28.3 million provides TPVG with an accessible channel to raise additional equity if needed, which could dilute existing shareholders but also offer financial flexibility to seize investment opportunities or manage debt levels. The balance between financial prudence and strategic capital deployment is a delicate one that TPVG appears to be managing well, as evidenced by its current liquidity and leverage metrics.
Achieved Net Investment Income of
DECLARES FIRST QUARTER 2024 DISTRIBUTION OF
Fourth Quarter 2023 Highlights
-
Signed
$100.1 million $4.2 million -
Funded
$24.4 million 18.8% weighted average annualized yield at origination; -
Received
$33.7 million -
Achieved a
15.6% weighted average annualized portfolio yield on debt investments for the quarter1; -
Earned net investment income of
$17.3 million $0.47 -
Generated total investment income of
$33.0 million -
Realized an
18.3% return on average equity, based on net investment income during the quarter; -
Five debt portfolio companies raised an aggregate
$156.8 million -
TPVG portfolio company Metropolis Technologies, Inc. agreed to buy SP Plus Corporation (Nasdaq: SP) for approximately
$1.5 billion $1.7 billion - Held debt investments in 49 portfolio companies, warrants in 97 portfolio companies and equity investments in 46 portfolio companies as of December 31, 2023;
- Debt investment portfolio weighted average investment ranking of 2.14 as of quarter’s end;
-
Raised
$15.1 million -
Net asset value of
$346.3 million $9.21 -
Total liquidity of
$306.6 million $118.1 million - Ended the quarter with a 1.76x gross leverage ratio;
-
Declared a first quarter distribution of
$0.40 $15.05 -
Portfolio company liquidity events subsequent to the fourth quarter include: TPVG portfolio company Cohesity, Inc. announced it intends to combine with Veritas Technologies LLC’s (“Veritas”) data protection business, which will be carved out of Veritas, in a transaction which values the combined company at approximately
$7 billion $430 million $5 billion
Fiscal Year 2023 Highlights
-
Earned net investment income of
$73.8 million $2.07 -
Generated total investment income of
$137.5 million -
Paid distributions of
$1.60 -
Signed
$471.0 million $31.5 million -
Funded
$125.3 million 15.6% 2 weighted average annualized portfolio yield at origination and funded$0.2 million -
19 debt portfolio companies raised an aggregate
$593.7 million -
Achieved a
15.4% weighted average annualized portfolio yield on debt investments[1]; - In April 2023, DBRS, Inc. reaffirmed TPVG’s investment grade rating, BBB Long-Term Issuer rating, with a negative trend outlook;
-
Raised
$21.1 million -
Estimated undistributed taxable earnings from net investment income (or “spillover income”) of
$41.5 million $1.10
”Venture capital markets continued to be challenging in the fourth quarter,” said Jim Labe, chairman and chief executive officer of TPVG. “We remain focused on our established priorities that we believe will enable the Company to navigate the current market environment.”
“We will further concentrate on delivering strong investment income, overearning our dividend, and managing our portfolio and credit quality,” said Sajal Srivastava, president and chief investment officer of the Company. “We plan to utilize our strong liquidity to capitalize on emerging opportunities in 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. |
| 2 This yield excludes the impact of |
PORTFOLIO AND INVESTMENT ACTIVITY
During the three months ended December 31, 2023, the Company entered into
As of December 31, 2023, the Company held debt investments in 49 portfolio companies, warrants in 97 portfolio companies and equity investments in 46 portfolio companies. The total cost and fair value of these investments were
The following table shows the total portfolio investment activity for the three months and years ended December 31, 2023 and 2022:
|
|
For the Three Months Ended December 31, |
|
For the Year Ended December 31, |
||||||||||||
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Beginning portfolio at fair value |
|
$ |
870,178 |
|
|
$ |
962,430 |
|
|
$ |
949,276 |
|
|
$ |
865,340 |
|
New debt investments, net(a) |
|
|
23,687 |
|
|
|
92,528 |
|
|
|
122,654 |
|
|
|
407,587 |
|
Scheduled principal amortization |
|
|
(9,173 |
) |
|
|
(3,464 |
) |
|
|
(47,461 |
) |
|
|
(22,910 |
) |
Principal prepayments and early repayments |
|
|
(42,238 |
) |
|
|
(69,431 |
) |
|
|
(131,638 |
) |
|
|
(240,727 |
) |
Net amortization and accretion of premiums and discounts and end-of-term payments |
|
|
2,245 |
|
|
|
3,488 |
|
|
|
11,773 |
|
|
|
13,903 |
|
Payment-in-kind coupon |
|
|
3,702 |
|
|
|
1,727 |
|
|
|
11,648 |
|
|
|
6,320 |
|
New warrant investments |
|
|
1,120 |
|
|
|
1,109 |
|
|
|
2,622 |
|
|
|
5,942 |
|
New equity investments |
|
|
392 |
|
|
|
725 |
|
|
|
1,712 |
|
|
|
7,471 |
|
Proceeds from dispositions of investments |
|
|
(1,634 |
) |
|
|
(7,680 |
) |
|
|
(4,807 |
) |
|
|
(12,542 |
) |
Net realized gains (losses) on investments |
|
|
(52,086 |
) |
|
|
(28,830 |
) |
|
|
(75,769 |
) |
|
|
(43,483 |
) |
Net change in unrealized gains (losses) on investments |
|
|
5,952 |
|
|
|
(3,326 |
) |
|
|
(37,865 |
) |
|
|
(37,625 |
) |
Ending portfolio at fair value |
|
$ |
802,145 |
|
|
$ |
949,276 |
|
|
$ |
802,145 |
|
|
$ |
949,276 |
|
________________ |
|
(a) |
Debt balance is net of fees and discounts applied to the loan at origination. |
SIGNED TERM SHEETS
During the three months ended December 31, 2023, TPC entered into
UNFUNDED COMMITMENTS
As of December 31, 2023, the Company’s unfunded commitments totaled
RESULTS OF OPERATIONS
Total investment and other income was
Operating expenses for the fourth quarter of 2023 were
For the fourth quarter of 2023, the Company recorded net investment income of
During the fourth quarter of 2023, the Company recognized net realized losses on investments of
Net change in unrealized gains on investments for the fourth quarter of 2023 was
The Company’s net decrease in net assets resulting from operations for the fourth quarter of 2023 was
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 December 31, 2023, the weighted average investment ranking of the Company’s debt investment portfolio was 2.14, as compared to 2.10 at the end of the prior quarter. During the quarter ended December 31, 2023, portfolio company credit category changes, excluding fundings and repayments, consisted of the following: one portfolio company with a principal balance of
The following table shows the credit categories for the Company’s debt investments at fair value as of December 31, 2023 and 2022:
|
|
December 31, 2023 |
|
December 31, 2022 |
||||||||||||
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) |
|
$ |
100,309 |
|
13.8 |
% |
|
7 |
|
$ |
55,921 |
|
6.6 |
% |
|
3 |
White (2) |
|
|
471,195 |
|
64.5 |
|
|
28 |
|
|
699,008 |
|
81.9 |
|
|
48 |
Yellow (3) |
|
|
117,792 |
|
16.1 |
|
|
8 |
|
|
88,912 |
|
10.4 |
|
|
5 |
Orange (4) |
|
|
40,091 |
|
5.5 |
|
|
5 |
|
|
9,110 |
|
1.1 |
|
|
1 |
Red (5) |
|
|
908 |
|
0.1 |
|
|
1 |
|
|
— |
|
— |
|
|
— |
|
|
$ |
730,295 |
|
100.0 |
% |
|
49 |
|
$ |
852,951 |
|
100.0 |
% |
|
57 |
NET ASSET VALUE
As of December 31, 2023, the Company’s net assets were
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2023, the Company had total liquidity of
The Company maintains an ATM Program with UBS Securities LLC, providing for the issuance from time to time of up to an aggregate of
DISTRIBUTION
On February 27, 2024, the Company’s board of directors declared a regular quarterly distribution of
RECENT DEVELOPMENTS
Since December 31, 2023 and through March 5, 2024:
-
TPC’s direct originations platform entered into
$93.6 million -
The Company closed
$10.0 million -
The Company funded
$12.4 million
CONFERENCE CALL
The Company will host a conference call at 5:00 p.m. Eastern Time, today, March 6, 2024, to discuss its financial results for the quarter and fiscal year ended December 31, 2023. 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 April 6, 2024, by dialing (877) 344-7529 (domestic) or +1 (412) 317-0088 (international) and entering conference ID 2028677. 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) |
|||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
Assets |
|
|
|
||||
Investments at fair value (amortized cost of |
$ |
802,145 |
|
|
$ |
949,276 |
|
Cash and cash equivalents |
|
153,328 |
|
|
|
51,489 |
|
Restricted cash |
|
18,254 |
|
|
|
7,771 |
|
Deferred credit facility costs |
|
2,714 |
|
|
|
4,128 |
|
Prepaid expenses and other assets |
|
2,384 |
|
|
|
1,869 |
|
Total assets |
$ |
978,825 |
|
|
$ |
1,014,533 |
|
|
|
|
|
||||
Liabilities |
|
|
|
||||
Revolving Credit Facility |
$ |
215,000 |
|
|
$ |
175,000 |
|
2025 Notes, net |
|
69,738 |
|
|
|
69,543 |
|
2026 Notes, net |
|
199,041 |
|
|
|
198,598 |
|
2027 Notes, net |
|
124,117 |
|
|
|
123,839 |
|
Base management fee payable |
|
4,490 |
|
|
|
4,203 |
|
Other accrued expenses and liabilities |
|
20,133 |
|
|
|
23,410 |
|
Total liabilities |
$ |
632,519 |
|
|
$ |
594,593 |
|
|
|
|
|
||||
Net assets |
|
|
|
||||
Preferred stock, par value |
$ |
— |
|
|
$ |
— |
|
Common stock, par value |
|
376 |
|
|
|
353 |
|
Paid-in capital in excess of par value |
|
492,934 |
|
|
|
470,572 |
|
Total distributable earnings (loss) |
|
(147,004 |
) |
|
|
(50,985 |
) |
Total net assets |
$ |
346,306 |
|
|
$ |
419,940 |
|
Total liabilities and net assets |
$ |
978,825 |
|
|
$ |
1,014,533 |
|
|
|
|
|
||||
Shares of common stock outstanding (par value |
|
37,620 |
|
|
|
35,348 |
|
Net asset value per share |
$ |
9.21 |
|
|
$ |
11.88 |
|
TriplePoint Venture Growth BDC Corp. Consolidated Statements of Operations (in thousands, except per share data) |
|||||||||||||||
|
For the Three Months Ended December 31, |
|
For the Year Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
||||||||
Investment income |
|
|
|
|
|
|
|
||||||||
Interest income from investments |
$ |
32,424 |
|
|
$ |
34,430 |
|
|
$ |
133,249 |
|
|
$ |
116,573 |
|
Other income |
|
548 |
|
|
|
519 |
|
|
|
4,241 |
|
|
|
2,851 |
|
Total investment and other income |
$ |
32,972 |
|
|
$ |
34,949 |
|
|
$ |
137,490 |
|
|
$ |
119,424 |
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses |
|
|
|
|
|
|
|
||||||||
Base management fee |
$ |
4,490 |
|
|
$ |
4,203 |
|
|
|
17,893 |
|
|
$ |
15,753 |
|
Income incentive fee |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,651 |
|
Interest expense and amortization of fees |
|
8,309 |
|
|
|
8,383 |
|
|
|
36,795 |
|
|
|
26,761 |
|
Administration agreement expenses |
|
574 |
|
|
|
585 |
|
|
|
2,293 |
|
|
|
2,258 |
|
General and administrative expenses |
|
2,313 |
|
|
|
1,283 |
|
|
|
6,703 |
|
|
|
4,446 |
|
Total operating expenses |
$ |
15,686 |
|
|
$ |
14,454 |
|
|
$ |
63,684 |
|
|
$ |
55,869 |
|
|
|
|
|
|
|
|
|
||||||||
Net investment income |
$ |
17,286 |
|
|
$ |
20,495 |
|
|
$ |
73,806 |
|
|
$ |
63,555 |
|
|
|
|
|
|
|
|
|
||||||||
Net realized and unrealized gains/(losses) |
|
|
|
|
|
|
|
||||||||
Net realized gains (losses) on investments |
$ |
(52,032 |
) |
|
$ |
(28,963 |
) |
|
$ |
(75,762 |
) |
|
$ |
(46,000 |
) |
Net change in unrealized gains (losses) on investments |
|
5,953 |
|
|
|
(3,326 |
) |
|
|
(37,865 |
) |
|
|
(37,625 |
) |
Net realized and unrealized gains/(losses) |
$ |
(46,079 |
) |
|
$ |
(32,289 |
) |
|
$ |
(113,627 |
) |
|
$ |
(83,625 |
) |
|
|
|
|
|
|
|
|
||||||||
Net increase (decrease) in net assets resulting from operations |
$ |
(28,793 |
) |
|
$ |
(11,794 |
) |
|
$ |
(39,821 |
) |
|
$ |
(20,070 |
) |
|
|
|
|
|
|
|
|
||||||||
Per share information (basic and diluted) |
|
|
|
|
|
|
|
||||||||
Net investment income per share |
$ |
0.47 |
|
|
$ |
0.58 |
|
|
$ |
2.07 |
|
|
$ |
1.94 |
|
Net increase (decrease) in net assets per share |
$ |
(0.79 |
) |
|
$ |
(0.33 |
) |
|
$ |
(1.12 |
) |
|
$ |
(0.61 |
) |
Weighted average shares of common stock outstanding |
|
36,457 |
|
|
|
35,283 |
|
|
|
35,706 |
|
|
|
32,690 |
|
|
|
|
|
|
|
|
|
||||||||
Regular distributions declared per share |
$ |
0.40 |
|
|
$ |
0.37 |
|
|
$ |
1.60 |
|
|
$ |
1.45 |
|
Special distributions declared per share |
|
— |
|
|
|
0.10 |
|
|
|
— |
|
|
|
0.10 |
|
Total distributions declared per share |
$ |
0.40 |
|
|
$ |
0.47 |
|
|
$ |
1.60 |
|
|
$ |
1.55 |
|
Weighted Average Portfolio Yield on Debt Investments |
||||||||||||
Ratios (Percentages, on an annualized basis)(1) |
|
For the Three Months Ended December 31, |
|
For the Year Ended December 31, |
||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||
Weighted average portfolio yield on debt investments(2) |
|
15.6 |
% |
|
15.3 |
% |
|
15.4 |
% |
|
14.7 |
% |
Coupon income |
|
12.0 |
% |
|
11.5 |
% |
|
12.1 |
% |
|
10.8 |
% |
Accretion of discount |
|
0.8 |
% |
|
0.9 |
% |
|
0.9 |
% |
|
0.8 |
% |
Accretion of end-of-term payments |
|
1.6 |
% |
|
1.8 |
% |
|
1.7 |
% |
|
1.8 |
% |
Impact of prepayments during the period |
|
1.2 |
% |
|
1.1 |
% |
|
0.7 |
% |
|
1.3 |
% |
___________ |
|
(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
The IGB Group
Leon Berman
212-477-8438
lberman@igbir.com
Source: TriplePoint Venture Growth BDC Corp.
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