TriplePoint Venture Growth BDC Corp. · NYSE:TPVG
TriplePoint Venture Growth BDC — Q3 2018 Earnings Presentation
37 slides from TriplePoint Venture Growth BDC's earnings presentation, 2018
Slide 1: Investor Presentation
Investor Presentation Q u a r te r E nde d S e pte mbe r 3 0 , 20 18 w w w .t p v g .co m
Slide 2: Forward Looking Statement
Forward Looking Statement Some of the statements in this presentation constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this presentation involve risks and uncertainties, including statem
Slide 3: TriplePoint Venture Growth BDC Corp. Snapshot
TriplePoint Venture Growth BDC Corp. Snapshot Structure Publicly traded business development company (BDC) TPVG (NYSE) – Common Stock Symbol TPVY (NYSE) – 5.75% Notes Due 2022 (1) IPO Date March 5, 2014 Market Capitalization $336.0 million as of September 30, 2018 Net Asset Value $13.59 per share at
Slide 4: TriplePoint Venture Growth BDC Corp. Overview
TriplePoint Venture Growth BDC Corp. Overview - The 4 R’s - HIGHLY DIFFERENTIATED Relationships Reputation BUILT FOR SUCCESS References Returns ALIGNED WITH PUBLIC SHAREHOLDERS DELIVERING RESULTS 4
Slide 5: TriplePoint Venture Growth BDC Corp. Overview: Highly Differentiated
TriplePoint Venture Growth BDC Corp. Overview HIGHLY DIFFERENTIATED § Lend to venture capital backed companies at the venture growth stage INVESTMENT § Target companies backed by a select group of leading venture capital investors STRATEGY § Focus on technology, life sciences, and other high growth
Slide 6: TriplePoint Venture Growth BDC Corp. Overview: Built for Success
TriplePoint Venture Growth BDC Corp. Overview BUILT FOR SUCCESS § Externally-managed business development company (BDC) STRUCTURE § Common stock trades on the New York Stock Exchange: “TPVG” § $75 million of notes trade on the New York Stock Exchange: “TPVY” § Managed by TriplePoint Capital, the lea
Slide 7: Overview: Aligned with Public Shareholders
TriplePoint Venture Growth BDC Corp. Overview ALIGNED WITH PUBLIC SHAREHOLDERS § 1.75% management fee SHAREHOLDER FRIENDLY § 8% annualized hurdle rate for income incentive fee FEE STRUCTURE § Total return requirement whereby incentive fees are capped at 20% of cumulative pre-incentive fee net income
Slide 8: Overview: Delivering Results
TriplePoint Venture Growth BDC Corp. Overview DELIVERING RESULTS DEMONSTRATED § $2.3 billion of signed term sheets ORIGINATIONS § $1.7 billion of total originations CAPABILITIES (1) § $913.9 million of total fundings § $351.3 million of funded investments HIGH YIELDING, § Weighted average annualized
Slide 9: Financial Highlights: Third Quarter 2018
Financial Highlights THIRD QUARTER 2018 HIGHLIGHTS § Generated record total investment income of $17.7 million, or $0.82 per share; § Earned record net investment income of $10.0 million, or $0.46 per share; § Net increase in net assets of $10.9 million, or $0.50 per share; § Net asset value increas
Slide 10: Financial Highlights: Year to Date 2018
Financial Highlights YEAR TO DATE 2018 HIGHLIGHTS § Generated record total investment income of $46.8 million, or $2.46 per share; § Earned record net investment income of $24.8 million, or $1.30 per share; § Increased net asset value by $0.34 per share; § Signed $562.3 million of term sheets and cl
Slide 11: Investment Highlights
Investment Highlights Industry L eading Dif f erentiated Sponsor With Premium Investment Brand, Track Record Strategy and Pl atf orm Attractive Risk- L arge And Growing Adjusted Returns M arket With High With Equity Upside Barriers to Entry Potential Experienced Team Strong Financial Profil e With T
Slide 12: Highly Experienced Management Team
Highly Experienced Management Team JIM LABÉ SAJAL SRIVASTAVA ANDREW OLSON Chairman & President & Chief Executive Officer Chief Investment Officer Chief Financial Officer § Co-Founder of TriplePoint § Co-Founder of TriplePoint § Joined TriplePoint Capital Capital Capital in July 2017 § Pioneer of the
Slide 13: TriplePoint Capital Platform Overview
TriplePoint Capital Platform Overview KEY HIGHLIGHTS § Founded in 2005 by Jim Labe and Sajal Srivastava § Headquartered on Sand Hill Road in Silicon Valley with regional offices in New York City and Boston § Provides debt, equity and complementary services to privately-held, venture capital-backed c
Slide 14: TriplePoint Capital - Financed 400+ Leading Companies
TriplePoint Capital - Financed 400+ Leading Companies (1) (1) Selected list of current and past TriplePoint Capital customers 14
Slide 15: TriplePoint Capital's Unique Lifespan Approach
TriplePoint Capital’s Unique Lifespan Approach BDC’s Target Stage Identifies Strong Opportunities and Establishes Relationships Across All Stages PUBLIC § Publicly traded shares VENTURE GROWTH STAGE LATER STAGE § “Crossed the chasm” § Generally at least $20 million in revenues EARLY STAGE § Further
Slide 16: TPVG's Approach / Venture Growth Stage
TPVG’s Approach / Venture Growth Stage WE TAKE OUR CUSTOMERS THROUGH THE RED ZONE TO THE END ZONE Venture Seed Early Later Growth Stage Stage Stage Stage 16
Slide 17: Venture Growth Stage Market
Venture Growth Stage Market Fragmented Market with Limited Competition Given High Barriers to Entry S E E D S TA G E E A RL Y S T AG E E A R LY S TA G E DE BT F UNDS L AT E R S TA G E L A T E R S T AG E O THER DE BT F UNDS V E NT URE BDCs V E NT URE BA NKS V E N T U R E G R O W TH S TAG E O P P O R
Slide 18: Compelling Relative Risk-Adjusted Returns
Compelling Relative Risk-Adjusted Returns HIGH YIELDS TO MATURITY WITH VC EQUITY SUPPORT AND LOW TOTAL LEVERAGE § Generally short term financings (3-4 years) Higher Return Potential § Typically amortizing facilities Through Warrants and Prepayments § Prepayment boost returns from acceleration of fee
Slide 19: Illustrative TPVG Product Pricing Summary
Illustrative TPVG Product Pricing Summary CUSTOMIZED DEBT FINANCING BASED ON ANALYSIS OF THE PROSPECTIVE OBLIGOR TRANSACTION PRODUCT SIZE TERM COLLATERAL WARRANTS Growth Capital $5 Million - $50 36-60 Months Senior on All Assets Typically Loans Million Equipment $5 Million - $25 36-48 Months Equipme
Slide 20: Time-Tested Investment Process & Portfolio Management
Time-Tested Investment Process & Portfolio Management BENEFITS FROM MORE THAN 25 YEARS OF EXPERIENCE & EXPERTISE INVESTMENT & INVESTMENT ORIGINATIONS LEGAL INVESTMENT PROCESS CREDIT ANALYSIS COMMITTEE § Leads and initial § Initial screening § Transaction presented § Transaction screening performed t
Slide 21: High Yielding, High Quality Portfolio
High Yielding, High Quality Portfolio (1) (2) $323.8 19.3% $16.9 $158.2 $10.6 $158.2 MILLION(1) YIELD MILLION(2)(1) MILLION MILLION(2)(1) MILLION DEBT PORTFOLIO YIELD PROFILE WARRANT PORTFOLIO EQUITY PORTFOLIO DEBT INVESTMENT FAIR WEIGHTED AVERAGE YIELD WARRANT FAIR VALUE DIRECT EQUITY FAIR VALUE VA
Slide 22: Portfolio Overview – Secured, Diversified Lending
Portfolio Overview – Secured, Diversified Lending (1) DIVERSIFIED ACROSS SUBSECTORS OF HIGH SECURED BY EITHER THE ENTIRE ENTERPRISE GROWTH INDUSTRIES OR SPECIFIC ASSETS Educational/Training Software, 1% Communications Software, 1% Database Software, 1% Restaurant / Food Service, 1% Direct Equity, Ot
Slide 23: Strong Credit Performance and Proactive Monitoring
Strong Credit Performance and Proactive Monitoring (1) CREDIT RATINGS CATEGORY FAIR VALUE % OF DEBT INVESTMENT # OF PORTFOLIO COMPANIES Clear (1) $39,512 12.2% 5 White (2) $224,566 69.4% 12 Yellow (3) $50,330 15.5% 3 Orange (4) $9,399 2.9% 2 Red (5) _ _ _ $323,807 100.0% 22 Weighted average investme
Slide 24: Portfolio Overview – Debt Investments
Portfolio Overview – Debt Investments Growth Capital Loan Growth Capital Loan Growth Capital Loan Growth Capital Loan Growth Capital Loan Growth Capital Loan Growth Capital Loan Growth Capital Loan Equipment Financing Growth Capital Loan Growth Capital Loan Growth Capital Loan Growth Capital Loan Gr
Slide 25: Portfolio Overview – Warrant and Equity Investments
Portfolio Overview – Warrant and Equity Investments 25
Slide 26: Financial Highlights
Financial Highlights As of September 30, 2018
Slide 27: Financial Highlights: Portfolio Size and Yield
Financial Highlights PORTFOLIO SIZE * $500.0 $401.3 $398.4 $374.3 $372.1 $400.0 $351.3 $308.9 $328.4 $311.1 $21.0 $23.2 $14.3 $253.8 $20.0 $27.5 $300.0 $16.3 $15.4 $18.4 $200.0 $17.9 $360.0 $352.1 $380.3 $375.2 $292.6 $313.0 $292.7 $323.8 $100.0 $235.9 $0.0 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18
Slide 28: Financial Highlights: ROAE, ROAA and Leverage Ratio
Financial Highlights NII RETURN ON AVERAGE EQUITY (ROAE) AND NII RETURN ON AVERAGE ASSETS (ROAA) 18.0% 16.6% 14.8% 14.9% 16.0% 13.6% 14.0% 12.3% 12.0% 10.2% 9.0% 8.9% 10.0% 8.0% 8.0% 10.3% 9.7% 9.0% 6.0% 7.8% 8.3% 4.0% 5.6% 5.7% 6.0% 5.2% 2.0% 0.0% Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-
Slide 29: Financial Highlights: Statement of Operations
Financial Highlights STATEMENT OF OPERATIONS * FINANCIAL HIGHLIGHTS THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS ENDED 9/30/18 ENDED 9/30/17 ENDED 9/30/18 ENDED 9/30/17 Total investment and other income $17,678 $10,419 $46,849 $40,405 Total operating expenses 7,668 6,052 22,092 19,288 Net inves
Slide 30: Financial Highlights: Statement of Assets and Liabilities
Financial Highlights STATEMENT OF ASSETS AND LIABILITES * PERIOD ENDED 9/30/18 6/30/18 3/31/18 12/31/17 9/30/17 Investments at fair value $351,315 $398,405 $401,258 $372,103 $311,136 Short-term investments 69,866 89,590 124,911 124,909 94,962 Cash** 14,060 10,955 18,320 10,006 8,472 Total assets 438
Slide 31: Overview of Leverage
Overview of Leverage SUMMARY OF REVOLVING CREDIT FACILITY Facility Size: $210 million (upsized from $200 million in January 2018) Lenders: Deutsche Bank AG (Syndication Agent), KeyBank, TIAA Bank and Union Bank (updated in conjunction with facility renewal in January 2018) Rate: 1-Month LIBOR or Len
Slide 32: Research Coverage
Research Coverage Casey Alexander George Bahamondes Mitchel Penn (646) 452-7083 (212) 250-1587 (410) 583-5976 [email protected] [email protected] [email protected] Ryan Lynch Christopher Nolan Finian O’Shea, CFA (314) 342-2918 (212) 409-2068 (212) 214-5082 [email protected] cnolan@la
Slide 33: Investment Highlights
Investment Highlights Industry L eading Dif f erentiated Sponsor With Premium Investment Brand, Track Record Strategy and Pl atf orm Attractive Risk- L arge And Growing Adjusted Returns M arket With High With Equity Upside Barriers to Entry Potential Experienced Team Strong Financial Profil e With T
Slide 34: Appendix
Appendix pt
Slide 35: Venture Market: Investment and Commitments
Venture Market VENTURE INVESTMENT BY QUARTER $30.0 1,416 $27.5 1,450 1,371 1,362 $25.0 1,400 1,327 $20.3 $21.1 Number of Deals 1,302 $23.0 1,350 $20.0 $ in Billions $15.2 $19.6 1,245 1,300 $15.0 $14.5 1,233 1,229 $19.1 1,206 1,250 $10.0 $13.0 1,200 $5.0 1,150 $0.0 1,100 Q3 -2016 Q4 -2016 Q1 -2017 Q2
Slide 36: Venture Market: Exits and Exit Timing
Venture Market VENTURE-BACKED EXITS BY YEAR 800 726 711 700 569 Number of Deals 600 545 502 492 482 500 394 372 400 300 200 117 67 50 49 81 77 58 68 100 39 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD IPOs M&A Deals EXIT TIMING BY YEAR 10 8 8 7 7 7 7 7 7 6 Years to Exit 6 6 6 6 5 4 5 5 5 5 5 4
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TriplePoint Venture Growth BDC — Q3 2018 Earnings Presentation on 6ix