Q1 2020 Earnings Call
Turning to train ticketing conference call.
Hi, all lines have been placed and listen I mean right.
After the speaker's remarks, there will be an opportunity to ask questions and instructions will follow at that time.
This conference call as they look coated in a replay of the coal will be available as an audio webcast well the trickle venture growth BDC website.
Company management.
I used to shave once you complete yourself.
First quarter Twentytwenty.
Today's today would present in the company, it's Jim <unk>, Chief Executive Officer, Chairman of the board.
Got you Srivastava.
President and Chief investment Officer.
Chris Matthews Chief Financial Officer.
Before I turn you over to Mr. led by Oh.
I would like to direct your attention to the customer customary safe Harbor disclosure and the company's press release.
Regarding forward looking statements and remind you that during this call management may make certain statements that relate to future events of the company's future performance.
When it show condition, which are considered forward looking statements under <unk> Federal Securities law.
You asked to refer to the company's most recent falling securities and Exchange Commission. So important factors that could cause actual results to differ materially from these statements.
The company does not undertake any obligation to update any forward looking statements all projections unless required by law.
Investors are cautioned not to place undue reliance on any forward looking statements made during the coal which reflect managements opinions only as of today.
So turning copies of the latest if they see filings places at the company's website at Www Dot TP BJ Dot com.
Now I'll turn the call over to Mr. today.
Thank you and good afternoon, everyone.
On behalf the TPVG, we hope that our shareholders and their families are healthy and continue to stay that way during this pandemic.
So I hope to make clear on today's call. Our first priority of TPVG is protecting the health of our employees and supporting our portfolio companies. During this global pandemic.
That's a global firm. We also continue to work closely with our venture capital partners.
On a per new worse and investors within the venture Eco system. During these challenging times.
The resilience of our portfolio companies and the strength of the venture community. It's never more evident during these times.
And we are grateful for all the support and collaboration within the venture community.
TPVG or greatest strengths is the quality and experience of our management team, which is some most experienced team and the venture lending S. A category Barr Nunn.
We have decades of experience in venture lending and had been through many economic cycles in the venture lending business over the last 30 years.
And this environment, we have a playbook and we've been operating in executing on it.
And although this is a very difficult period, and we are far from out of the words or focus on the venture lending segment of the BDC market bring some mitigating factors I mean, the current environment could affect us less than some of the broader segments of the BDC sector.
And I'll get into those shortly.
Our consistent results in Q1 demonstrate the value or expertise and execution of this playbook.
During the quarter, we grew the portfolio to a record separately Norton and $13 million that's fair value.
We continued to deliver stable portfolio yields.
We also generated and that's that's up our dividend not only covering the dividend, but then so.
We were also very proactive in the capital markets last quarter, raising both equity and debt capital, resulting in strengthened liquidity for the remainder of this year.
That's an added measure we announced today that we've put in place an unsecured revolving facility from our advisor.
Merely as a show a support.
And in keeping with our conservative in true beliefs, and best in class practices as a BDC.
I mentioned earlier that are differentiated venture lending segment can avoid some of the broader issues and some of those challenges which are facing other segments of the BDC market.
First we originate all our business directly so we don't have the complications that arise and syndications with multiple party blenders.
Second our portfolio companies or all backed by venture capital funds.
Our companies are not primarily funded through sources, such as PE funds hedge funds corporate or other sources.
TPVG, we further narrowly define this to a limited subset, but venture capital firms out there.
These are funds that we referred to as our select venture capital funds with whom we've had longstanding profitable relationships.
We believe venture capital backed companies are more durable during periods of stress as their venture capital as these venture capital investors and expect to invest new equity every 12 to 24 months or so and there are companies and they generally have equity capital reserve for this very PERC.
This so called dry powder as people say.
Our select venture capital funds have raised more than $50 billion since 2018.
30 billion up this was alone raised last year and here in 2020.
A number of them close new multi billion dollar funds and the for several months I'm 2020 alone.
We believe our approach a blending to companies back probably our select venture capital funds provides an additional Europe strain.
These funds have historically outperform not only during the bull market periods, but also during bear markets and that is one of the many reasons why triplepoint chooses to partner with their portfolio companies versus those of all the other venture capital funds.
Total and Chris will provide more details on the portfolio, but I'd like to jump into a brief overview of the cobot pandemic and its impact.
First we think our employees and the advisor as we continue to operate remotely across our east and West coast offices, providing backup continuity as well.
After safety our portfolio remains the main priority and we continue to monitor and stay on top of our existing portfolio.
This includes frequent an active conversations with our venture capital investors and our portfolio company, Ceos, and Cfos and others in the venture ecosystem.
Our portfolio companies have all implemented kobin strategies, including developing very conservative post coated plans.
We've also reviewed our pipeline and Recalibrated outstanding term sheet signed term sheets, and where needed adjusted for appropriate commitment size pricing and utilization.
Yes, I think of it are capitals crashes and will be funded only two companies that meet our expectations.
We've also learned one thing having all this experience that are in the very challenging times high quality opportunities may arise from future business.
Our select venture capital fund investors continue to fund existing companies as well as make investments in new companies.
Some great transactions a triplepoint capital for example were written in the wake up to 2008 recession.
By strategically deploying and growing originations Triplepoint will further solidify our partnership with our select venture funds.
Our playbook approach.
Focusing on our best venture capital relationships and deploying our precious capital with their portfolio companies. During this period is a critical means of deep thing the barriers to entry.
We are the trusted financing sources during challenging economic times.
Which will benefit us during more robust times as well.
Well, we expect TPVG to be highly selective but opportunistic here for those opportunities during the second and third quarter's with new debt commitments.
And we're going to focus on our best relationships and the most compelling investment opportunities during this period.
We also expect to increase and turned up originations materially that's we see economic recovery from the covert pandemic.
Well, we're pleased with the playbook achievements of growing our portfolio last quarter.
More than covering our dividend and closing both equity and debt capital raises during the quarter.
I'd like to wrap up with my opening remark.
We're not out of the woods by any stretch.
This is a very challenging period and for at least next quarter or too we will be working through the impacted the current economic environment.
We have the right team to manage our portfolio and maintain its stability.
As well as the liquidity to manage through this period for our shareholders.
Right now our three ours.
The foundation of our firm have never been more important.
Relationships reputation and references.
I wish all you continued good health I look forward to the Q1, a session and we'll now turn this over to Sejil.
Thank you Jim.
As a result of the covert pandemic, we are operating in a period of considerable volatility and uncertainty.
As we navigate TPVG through these circumstances, we don't know how long these conditions will last so our thought as to share. Some short term guidance on our playbook and as I review our performance for Q1, I will provide our outlook for the business for the next one to two quarters based on what we know today and what we can reasonably expect.
During the first quarter, we signed 79.5 million of term sheets with venture growth stage companies and Triplepoint capital and close to 102.6 million of debt commitments with seven companies that TPVG.
As Jim mentioned, our advisor is in frequent communication with our select group of venture capital firms and we continue to see robust demand for debt financing.
Our priority at TPVG in the near term is on our existing portfolio, we expect TPVG to be active for new debt commitments, but highly selective and opportunistic focusing on our best relationships and the most compelling investment opportunities. We act expect to increase originations more.
Materially as we see economic recovery from the Koby crisis.
Our investment portfolio reached its highest level since our IPO. This corner as a result of funding 78.8 million of debt investments with a 13, 4% weighted average yield to 11 companies. We also invested 1.4 million of equity into companies and received warrants in 10 companies valued at one.
21 million.
Our 78.8 million of funding this quarter was down significantly from our 171 million a debt investment fundings in Q4, and our 90 million of debt investment fundings in Q1 2019.
We think this me to double a fundings demonstrates the strong existing cash position and operating runway yet many of our portfolio companies as well as the trust and confidence they and their venture capital investors, having a triplepoint platform as a consistent and dependable financing park.
As we look to the rest of the year, we expect to see fundings in the 50 to 80 million range for core.
So far this quarter, we funded approximately 16.7 million in new debt investments in line with the range I just discussed.
During Q1, we had 1 million in portfolio company, prepayments, which had a negligible impact to our 12.7% overall weighted average quarterly portfolio yield on debt investments.
Core portfolio yield was stable. Despite the continued reduction in the U.S. prime rate as of Q1, 29% of our funded debt investments were fixed rate loans, and 71% were floating rate loans.
Of those floating rate loans, 97% have a prime for set to four in a quarter or higher.
So far in Q2, we've had 10 million of prepayments, which generated 1.1 million of accelerated interest income.
As we look to the next one to two quarters, we expect the level of pre payments to be mild as companies look to keep higher balances of cash on hand.
During Q1, we received 5.8 million scheduled principal amortization and repayments.
As a reminder, our portfolio companies pay us monthly and our debt investment portfolio is scheduled to generate 108 million of gross cash flows from contractual payments from Q2 through Q4 of which 61 million represent scheduled principal amortization.
Okay.
This reinforces the high yielding short term and amortizing nature of our loans and serves as a substantial source of liquidity for TPVG that we intend to strategically and selectively deploy it over the course of the year.
We're pleased to see continued equity fund raising activity in the portfolio with nine companies raising over 1.3 billion of equity capital in private rounds of financing during the quarter.
This is in addition to the 10 portfolio companies raising over 1.1 billion of equity in private rounds during Q4 2090.
During the quarter. We also had one portfolio company Kasper sleep completed its IPO, which raised 100 million.
We believe these doled developments demonstrate the attractiveness resiliency and credit quality of portfolio companies in our venture growth stage investment strategy.
So far in Q2, we've had three portfolio companies raise equity rounds as well.
I would like to highlight that the large existing cash balances of the majority of our venture growth stage portfolio companies.
And their ability to reduce operating expenses to further extend runway adds to the resiliency and stability of our portfolio.
There are extended cash runway not only provides them time to batten down the hatches and whether the coated storm, but also gives them time to recover after the storm is over.
Top of that are companies generally have supported venture capital investors that in many cases have capital reserved for additional investment typically in the future round or potentially sooner if needed.
Moving onto a credit quality the weighted average investment ranking of our debt investment portfolio was 2.0 at the end of Q1 as compared to 1.94 at the end of the prior quarter.
Under our rating system loans are rated from one to five with one being the strongest credit quality and new loans are typically initially rated too.
During the quarter two companies were upgraded from category two to category one.
Two companies were also upgraded from category three to category too.
And three companies were downgraded from category to category three.
No Obligors were added to category four or five and no new obligors were placed on non accrual during the quarter.
With regards to credit downgrades during the quarter generally speaking the three companies downgraded this quarter from two to three either had capital raises that were delayed were impacted by coated or had recent execution challenges.
Assuming refinancing rounds close and the company's execute to plan, we expect them to be upgraded later this year.
We'd like to next provide a high level overview of our approach to valuation this quarter.
As Jim mentioned, our venture growth stage lending business is very different from traditional middle market lending.
Our loans are directly originated and we hold and control 100%.
There's no syndication market or secondary markets for our loans.
As we originate new loans, we generally focus on total debt return thresholds and we establish our spreads based on the then current prime rate and said it as the floor. This protects our returns in a decreasing rate environment and generally increases our returns when the prime rate goes up.
While market rates haven't drastically changed as we approach devaluation. This quarter, we made adjustments to reflect higher level of market volatility and covert risk in the world.
On top of that we also made adjustments for certain companies in industries and sub sectors, which have been more negatively impacted by coded such as consumer travel real estate and lending.
Finally for certain companies, we also adjusted our recovery expectations, given the uncertain economic conditions.
As a result, we took a mark against every loan and our book, except generally those with all the doors were profitable or who have operating cash runway on hand in excess of our loan maturity date.
Resulting in an unrealized loss of 17 point Sixmillion on the loan book were 4.3% of our net asset value.
Of that 17 point Sixmillion unrealized loss in the low loan book 11.7 million worth 34 cents per share was related to companies rated one through three on our credit watch list and 5.9 million or 19 cents per share was related to reductions on fair value on watch list names right.
Added four and five.
During the first quarter, we had 600000 of unrealized gain attributed to warrant and equity investments. This was comprised of 700000 of unrealized gains associated with our public portfolio companies crab striking medallia, which has generated over 14.6 million of net unrealized gains.
On the equity in warrants, we hold since we receive them.
The 700 Kaye of unrealized gains was offset by 100000 of unrealized losses on our private warning equity portfolio again, primarily related to mark to market and impacts of new equity rounds.
As of March 31st our top five positions represented 25.3% of the total debt investment portfolio on a fair value basis.
I'm from 27.7% last quarter and from 37.5% in Q1 2019.
We continue to make progress in building the scale of TPVG, while diversifying our portfolio. Thanks in part to overall portfolio growth Prepays and utilization of our co investment capabilities.
Since receiving our Exemptive order TPVG has made 22 co investments with Triplepoint capital is proprietary vehicles.
The ability to co invest with the larger Triplepoint cat capital platform is a real strategic advantage for TPVG as an externally manage B C.
Well many talk about being best in class managers, we believe our actions validate the uniqueness of our global investment platform.
John Co investing we were one of the few bdcs to raise equity in a formal public offering last quarter. We did so at a premium to net asset value and we were consistent with the guidance. We gave of waiting to raise equity until we levered up TPVG and the use case supported the additional proceeds.
Then just months later in the middle of the Kobin Storm, we privately raised 70 million of five your investment grade institutional nodes at 4.5%, which was our first debt offering after receiving our investment grade credit rating and was consistent with our stated goal of diversifying our funding sources.
Lowering our cost of capital and running at a more consistent leverage level.
Also in Q1, we again demonstrated the benefits of our best in class fee structure, and our alignment with our shareholders with our incentive fee cap and its look back to our IPO, where we generated and high five cents above the distribution as result of the impact of unrealized losses on our portfolio.
And despite the dilution of issuing new shares during the quarter.
And on top of that earlier today, we announced that our advisor has provided us an unsecured revolver for up to 50 million through year end, which is a strong charlotte's support make no mistake, we already have substantial liquidity from the 150 million an equity capital sorry of capital raised last quarter, our three had.
Third million credit facility, and it's 100 million accordion feature and 108 million in schedule cash flows from our portfolio companies. This year, but we feel this additional backstop demonstrates the triplepoint capital platforms commitment to the success of TPVG in these uncertain times.
In closing our substantial liquidity puts us in a position of strength to support our portfolio companies and to originate high quality debt investment opportunities, but to be clear, we will continue to be highly disciplined and very cautious as we manage our portfolio and our firm at all times in a manner that is accretive to our stake.
Holders not only to protect their investment, but also to provide them with an attractive yields on their investment.
Jim and I have been through multiple cycles through our 21 years of working together interrupted the challenge of navigating our firm and being stewards of your capital. During this cobot pandemic I'll now turn the call over to Chris to highlight some of the key financial metrics achieved during the quarter.
Thank you saw Joel and Hello, everyone.
The first quarter was an interesting period to say the least T. P. E. G finished the quarter on a strong though.
Let me take you through an update on the results for the first quarter.
Total investment in other income was 20.8 million for the first quarter 2020, as compared to 17.5 million for the first quarter 2019.
The weighted average annualized portfolio yield was 12.7% on total debt investments for the first quarter of 2020.
The increase in total investment income was driven by a higher average portfolio balance in the quarter.
Total operating expenses were $8.6 million for the first quarter 2020, as compared to 7.6 million for the first quarter of 2019.
Total operating expenses for the first quarter consisted of 4.2 million of interest expense 2.8 million, a base management fees and 1.6 million of DNA.
The increase in total operating expenses was primarily related to asset growth, which generated increase in management fees and higher interest expense from a higher average portfolio balance in the quarter.
Net investment income or Eni for the first quarter 2020.
It was 12.2 million or 41 cents per share compared to 9.9 million or 40 cents per share in the first quarter of 2019.
Net unrealized losses on investments for the first quarter $17 million or 57 cents per share.
Resulting primarily from mark to market related changes as well as credit related adjustments as all previously discussed on this call by subject.
The net decrease in net assets from operations for the quarter was 5.1 million or 17 cents per share compared to a net increase in net assets from operations of 11.1 million or 45 cents per share in the first quarter 2019.
At quarter end total assets were $803 million, including 713 million up investments at fair value and cash on balance sheet of $85.6 million.
We ended the quarter with total net asset value or NAV of $395 million or $12, an 85 cents per share compared to 332.5 million or $13.34 per share at December 31st 2019.
The increase in aggregate NAV is due to the common stock offering that we completed in January.
Set by a net decrease in net assets, resulting from operations for the three months ended March 31st.
As previously disclosed the common stock offering was successfully completed as an under written offering a 5.75 million shares which resulted in net proceeds of $78 million. The net proceeds were initially used to pay down our revolving credit facility and we then began to deploy those proceeds during the quarter.
We reported unfunded commitments totaling $209 million of which 41 million were subject to milestones.
Of the 209 million of unfunded commitments to 173 million or 83% will expire during 2020 and 36 million will expire during 2021, it's not prior.
Too it's not drawn prior to expiration.
In addition, all of our unfunded commitments have a crime rates floor set to four and a quarter.
Or higher.
As of March 31st the company had total liquidity of 128.6 million consisting of cash of 85.6 million and available capacity under its revolving credit facility, a $43 million subject to existing advance rates terms and covenants. In addition, we can expand the current.
Commitments under our revolving credit facility by up to an additional $100 million under the credit facilities existing accordion feature.
In addition, as of March 31st the company held $16.5 million in publicly traded stock available for sale.
In March the company completed a private offering that $70 million in aggregate principal amount of notes these notes or unsecured and bear interest at a fixed rate of 4.5 per cent per year payable semiannually and matures in March of 2020 fives.
The 2025 notes represent the company's first institutional notes offering after receiving its investment grade credit rating by DBRS in the second half of 2019.
Total outstanding borrowings as of the quarter end was $402 million consisting of $75 million retail fixed rate baby bonds listed on NYSE, which mature in 2020 to 2025 notes I just referenced and also $257 million outstanding under our credit facility.
But this level of outstanding borrowings, we reported a leverage ratio of 1.02 times leverage or an asset coverage ratio of 198%.
Despite having increased our outstanding common stock during the quarter by 23% as a result up our equity raise in January we were able to generate eni in excess of the declared distribution by five cents per share. Thanks to a high yield portfolio and the total return requirement that you that such already mentioned you had enough.
For example of the benefit of an externally managed best in class platform.
During the first quarter, we distributed 36 cents per share from ordinary income as part of our regular quarterly distribution I'm pleased to announce that for the second quarter 2020, Our board of directors has declared a distribution of 36 cents per share payable on June Thirtyth, just stockholders of record as of June 16th.
As we look for our district at or we looked at our distribution strategy for 2020.
Management and the board evaluated among other things the yield profile of our debt investments are expected fundings and leverage profile and concluded to hold our distribution at 36 cents per share. This marks the 25th consecutive quarter. We have increased were maintained our quarterly distribution.
We're pleased to know that won't be covered our distribution for the quarter with ordinary income. We also continue to have spillover income from 2019 of approximately $7.3 million to support additional distributions in the future.
We appreciate that all of you took the time to join US today and acknowledge the many many scheduling hurdles. This week that everyone must be dealing with and appreciate your time on the call.
At this time, we would be happy to take your questions and so operator can you. Please open the line at this time.
Thank you.
To ask a question he may Chris Star then one on you touched on fine if you're using a speakerphone. Please pick up your hands it before Christian the case to its Joe Your question, Please Chris Dodd into.
At this time, we'll pause momentarily to assemble a roster.
Your first question comes from Finian O'shea from Wells Fargo.
Based go ahead.
Hi, guys. Good afternoon hope a everyone's doing well there.
First want to ask a question on some of the new commitments to.
Your existing companies I know this is normal.
For the the nature of your deal flow.
But this quarter saw a few that are nearer term one source grow our Rowley I think that one mature before the quarter and so can you give us some color on.
The nature of a shorter term loan you'll do and what that means for the liquidity of those issuers.
Sure Jim I'll start and then maybe you can jump in so so then as you know I'm when it comes to ER, our unfunded commitments. So our customers have our debt commitment to them or structures lines of credit and so they generally have six to 12 months to drawn there.
Lines from US and then we typically give them multiple amortization schedules and maturity dates to match fund the use of proceeds for the strategic purpose. So they're they're not just drawing on our capital just to have excess capital in their balance sheet and so in any given quarter, we'll have funding.
From new customers that we commit during the quarter and funding on those facilities plus prior quarters, a unfunded commitments being utilized and I'd say generally its arnie S.K. company specific which options are structures. They shoes to the extent that maybe marketing expense relate.
Did they may choose shorter term options inventory or asset based uses the shorter term options to the extent, it's more runway extension don't tend to use the longer term options.
Jim I don't know if you weren't ad.
Yeah, I can't really add much to that other than we strive to provides flexibility to companies to meet their financing needs and partners. So some of these are are shorter term duration, others are longer term and we work with the companies to optimize their financing strategies.
It is not at Liberty to talk about these are privately held companies but.
Some of the short term financing, so very beneficial and one of the advantages of working with TPVG <unk>.
Very well.
Thank you for the color.
Yeah, just though it's a follow on I guess higher level or higher portfolio level.
To do.
Our milestones or any covenants typically set to.
Revenue were profitability numbers understanding that.
So a lot of your portfolio companies are probably.
Oh challenge and the revenue side, but you know able to cut back and preserve cash show on on one metric might lag, but overall profitability is okay, but does that impact anything with your your lending parameters are your liquidity parameters.
Yeah, Jim if you don't mind I'll take the first cotton then please jump in so so fan I think you hit on a very important point that I'd like to maybe parse through pieces. So so I think the first thing is on all of our unfunded commitments milestone or not.
We have various protections in place so to ensure that companies are generally are materially performing to plan or maybe the other way inversely that material adverse change generally has not occurred obviously, it's a it's a very high bar when you're going to call in something like that but I also think it's important that.
Unlike my I'd say, maybe bank revolvers, where there is no form of protection for us.
There is performance there there is some general requirement. In addition to the fact that we have great relationships with these companies the entrepreneurs their vcs, we pick up the phone we talk regardless of what legal document may say, but on the other hand, we generate I've been in the startup World Me 20 plus years Jim.
30, plus years no company ever meets plan and so there is also the reality, although there are so I'm not I take that back there definitely companies that meet and beat plan, but but I think as venture lenders. We also generally have a a higher tolerance for variability in financial performance because.
As you know a lot of valuations or future around valuations are set to future revenue expectations, but having said that more specifically to answer your question for those companies with milestone based unfunded commitments typically the milestone is said either to a future capital raise revenue per.
Four months or some strategic execution or operating milestone for the company validating the company to have access to more debt capital and so those are generally well, what we look to for a milestones, but again when we underwrite our loans were also looking to the intended use of proceeds were and we also.
I have the appropriate legal remedies in protections on the non milestone basis, but again, we're very as Jim mentioned in his script reputation relationships are very important and so we think a.
Very kindly in <unk> and significantly when you have an underperforming company that's looking to drawn capital.
Yeah, I don't think such a covered that nicely I don't have too much more data other than at the time, we put the first of all companies rarely are on plan a good number a more actually ahead of plan some behind plan and things change not unexpected but overall.
When we put these milestones together at the time of the origination of the deal based on the plan that we are presented in such also hit the nail them on the costs and which as we staying very close contact with the teams. The investors at these companies and so we know where they are versus your original plan and the milestone.
So aren't just revenue oftentimes or its multiple ones. So its revenues that are equity round closed its <unk> performance in terms of cash flow, there's a whole bunch of metrics or it's not just some top line number and again, it's fluid and there's some resiliency and we work with the.
With these companies.
Got it that's all very helpful. Thank you all back into queue.
Thank you Sir your next question comes from Casey Alexander with Compass point. Please go ahead.
Yeah, Hi, good afternoon.
One question I have a you know back in 2014 2015, when your shares were trading at a significant discount the company had a fairly active share repurchase program why is there no share repurchase program now.
In case, Yeah I'll take this question then Jim and Chris Please jump in listen I think we're in the middle of the the Koby crisis and I would say right now liquidity is a position of strength not for necessarily new investment opportunities. Although that's important but I also think again just.
Concern about counterparty risk lenders and other things and so.
We haven't pattern of being aligned with their shareholders and at the appropriate time expect to have the conversation with our board about a buyback program, but you know we've been a little bit restricted in our ability to communicate given the the capital raises underway in the world knowing about them and so after we've had a the world to season on our reserve.
Ultimate were up to I think it's a next logical thing to have that conversation.
Well in that vein, then I'm surprised to see if the ended the quarter that you still own the position in crowds strike and frankly at today's closing price, that's $20 million of equity and potential liquidity and you can use that for investments or you can use that for sure.
Our repurchase program and frankly with the stock at a 58% discount if you use that to repurchase shares that'd be two and a half million shares the equivalent crowd Frank would have to go to $142 counting dividends to give the equivalent value that you could get are using that in the share repurchase program. So so I'm I don't I'm cure.
Yes, it what the thought process is continuing to own crowd strike in a period, where capital is precious and you need to receive a line from the parent platform.
Yeah, No there's no doubt.
There are again I can't disclose what our trading strategies are on crowd strike, but our position is to orderly liquidate.
After a lock up is occurred so so you would say no one should be surprised to see us liquidating or are positioning crowd strike over the next couple of quarters listen I think we were.
I have all the levers in the crisis and things we were worried about in Q1 I think the liquidity was probably the most important thing and in ensuring the viability of the platform the team the portfolio going through the playbook and so I'd say Q1's playbook. The priority was not a buyback it was other execute.
And tasks and here in Q2 in Q3, those are very logical and very thoughtful and analytically, you're you're absolutely right and those are the conversations we expect to have with aren't born about a casey but in Q1 in the heart of coated that was not at the highest top of our priority given all the other things that were managed through managing through.
During the crisis. Okay. Thank you for that can you give us sort of the temper of the activity at the ended the quarter versus the beginning of this quarter I mean, how much of your origination activity usually you know it's the software model that you guys close lots of stuff at the end of the quarter Wednesday's close.
These close early in the quarter did things quiet down at the ended the quarter and and [noise].
You know and how is that transition as we've moved into the second quarter.
Yeah, Jim I'm happy to start first and then please jump in so I think we had the benefit of case you know we had our Q4 earnings call during the quarter. So during then again in that release you can see that we were actually had a very busy.
First two months of of Q1.
So you will have to you'll have to forgive me. If when you reported Q4 feels like a billion years ago [laughter]. So over yet so as of the time of the Q1 call, which Q4 call, which is March 4th we had closed 96 million and we had funded 41 million of investments. So so.
Really a as and again no surprise right I mean, Q code Red really hit US here in the U.S. and particularly the Bay area second third week of March So really we didn't see until two to three weeks of March and so start off clearly January February, particularly strong robust the capital raises obviously were.
Or end market on our institutional debt raise and then when the covert crisis happened again. This is something we're very proud of.
Just the calmness sensibility of again, so we're at 40 million before the crisis really hit and then from crisis to end of quarter. We funded don't less than 40 million of new investments and if you look here in the first month of Q2 16 million a.
Of new funding, so very calm very stable. It goes to the comment we made about the large cash liquidity positions, the resiliency and the stability of our our portfolio companies and more importantly, the the equity investment activity and so again and as Jim mentioned during his comment Jim. Please jump in just how we manage.
The pipeline, Jim I don't know if you want to talk a little bit about managing the originations the pipeline and.
Yeah. So you know we've been through I don't know, how many rodeos overtime here in venture lending in the demand now which is no surprise to US is very very strong as companies try to think through a this period of uncertainty and revise or plan.
And think about their cash needs. So so the pipeline and the band is strong but what we've learned is this is a time, where we want to be thoughtful we want to be conservative we want to understand I'm, you know the cash needs and structured the deals accordingly so.
I think somewhere I mentioned, we went through existing portfolio are signed term sheets the deals in the.
Due diligence and did a good hard look understanding in the impact of Cove. It on the revised plans with these companies but also.
There are so much equity out there in the venture capital World with these select venture capital investors and our companies are raising money 1.5 billion in the last.
Three four months just among some TPVG portfolio companies that demand is strong we want to be careful there are some new investment opportunities.
But we're working with these companies and.
Helping with their financing strategy I don't.
I think there's any particular Ah you know drawdown schedule out there.
Okay. Thank you.
Lastly, how many oh.
Company loans are on nonaccrual compared to last quarter.
Chris do you want take that one yeah. It's it yeah Casey its the same number as such I mentioned, there's no new loans on non accrual. So there's there's four four obligors.
[noise] same as last quarter same names.
Okay. All right. Thank you all right I appreciate you taking my questions. Thanks very much.
Thank you Sir Your next question comes from Chris York from JMP Securities. Please go ahead.
Hey, guys. Thanks for taking my questions. So want to talk a little bit about cash at the portfolio company basis pitch books reported that the median runway for VC backed companies is about 10 months.
Josh is clearly king today, especially for venture capital investing so I'm curious if you could provide us any data for your portfolio on the cash runway to.
To that.
Yeah. Thank you want to tackle that feel free a feel free to add social so Chris Olin. So with these better venture capital funds our portfolio companies that they work with you know every company has some kind of the impact from coded and quite frankly, a few of them are tailwinds, they're not all.
Or some headwind issues and they're all.
Managing their cash and revise plans very conservatively and we're working lock step with them and we haven't had any.
Dramatic change them. So it took a right into your question.
In terms of cash runway. These are things we look at again these are private companies and they're moving targets because number them have just close rounds. One company close around last week, we talked about the huge the multibillion <unk> 1.5 billion close by.
Then awhile and then there's more cash coming in and somewhere else or about to close so make long story short more than half of the TPVG portfolio companies have more than 12 months of cash we really haven't segment and it because again some of the burn rates.
Our changing from what they were as we speak into some much lower burn rates, but we're we're feeling pretty good about the portfolio in terms of operating cash runway.
Great very helpful. Certainly understand that burn rates are changing very quickly, but just a the common 50% of your portfolio and 12 month it's helpful.
And then I'll tell you appreciate the comments you provided on portfolio companies that have raised capital on the first quarter and then second quarter I missed that can you just a repeat that for me and then secondly did a your LTV in any of those situations actually improve or was there an injection below the round fundraise, where new extended that.
Great question, Chris So you had to repeat the statistic in.
Q1, we had nine portfolio companies raise over 1.3 billion of of capital.
You know I would say that the majority of those companies were pre cove, it or those terms in those valuations were all pre covidien. So as you can imagine a they were all up to our valuations are flat at the worst so generally speaking strong performance.
Even with it within the companies that have announced rounds in Q3, despite the impact of Cove. It those three have all been an up brown valuations in fact, one portfolio company I can comment a cohesive he announced there are 250 million as equity round out the two and half billion valuation double their last round.
Relation, which was a prior round was led by Softbank and now this round as a devaluation higher than something so so we're seeing strong activity as Jim talked to and we're seeing valuation accretion and again, it's a great companies are doing great things and but it's a balance it's still early.
We expect to see some impact on valuations and some impact on.
Flat being the new up and down being the new flat.
Very helpful. Sizable you eat up my next question you talked a little bit about Softbank, obviously start cohesively Andres very very positive for for your portfolio company there, but on the topic of Softbank do you anticipate any issue they're with their willingness to support any of your portfolio company.
Yeah listen I am I can't comment on isolated one investor a you know we've we've historically had when I say almost a dozen mutual portfolio companies with Softbank I think TPVG only has one portfolio company with debt outstanding that is backed by Softbank I don't know.
That's good or bad it's just a the statistic. It is what it is and so listen I think they we continue to see them active in the markets supporting portfolio companies I think he sees a great statistic are a great I ask statistic of ability for softbank backed portfolio companies to raise rates.
Sounds that valuations higher than Softbank. So so I would say I think they get a bad wrap and they've only been good to us in our portfolio companies and so we have nothing negative to say about them.
Very good point case, he touched on my part of my question on crowd strike, but I did have a left over.
Well you subject to a 12 month lockup at IPO.
No we were not no standard six month.
Okay. So it is so your position today could be sold today.
Correct.
Okay, and then last question, maybe for Chris or tumor cells, you certainly can jump in Chris Your comments about the main the dividend seem to me to be like there was a deliberate deliberation that the board level to what degree of confidence you have in your portfolio providing earnings at this run rate at the dividend.
Beyond the second quarter.
Yeah, I think that.
The board always has a discussion and it's a prudent thing to do so I think that we were just kind of elaborating a and sharing those conversations that are natural for each quarter that we're we're talking about it a distribution level I think just given the.
Robust discussion that always happens we thought it would be fair to say.
That we're we're comfortable where we are with the portfolio with the additional leverage that we have and the earnings power the portfolio. So.
It was really just sharing a little bit behind the curtain, what we talked about nothing nothing else.
Okay. That's great. That's it for me be Wilton, because he doesn't.
Thanks, Chris.
Thank you. Your next question comes from Christopher Nolan from London, Dick Feldman. Please go ahead.
Hey, guys, how often are you evaluating the discount rate when you value your debt investments.
Chris do you want to take that.
Sure, Yes, so its part of our valuation process for.
Our quarterly close so we do that at least quarterly in connection with the the fair value process is that for the entire portfolio or just for a portion of the portfolio.
Your percent Yep, yeah. So the way that we work this is that 100% of the portfolio, we assess the discount rate compare if there's an implicit rate in the transaction should there be an adjustment whether it's at credit migration adjustment or a market rate adjustment and we do that across the entire portfolio every quarter in turn.
And then we have an external valuation process, where we have to valuation firms that.
Support our efforts and the board's efforts to come up with the fair value process and they they to look at discount rates and the the impact of any credit migration for under or over performing as well as market dynamics.
Helpful. Thank you and then I guess for saw Joel I notice that the yields on new investments weighted average yield is 13.74 versus 13.5 last quarter.
It's actually seeing stronger pricing power.
In this market.
Hi, Chris a good question, let me start and then please Jim I think were to jump in I would say.
Two elements one is a new deals I'll, let Jim talk about the new deals and the current rate for new deals I'll talk more of remember, we do have unfunded commitments and so they're locked in we set the prime floors at the prime at the time that we do the deals so in any given quarter. You know we have I called the backlog from prior on fund.
The commitments and the rates and terms set from those prior deals. So that's the installation right. The 97% of our book <unk> of our funded a variable rate loans are floating loans are have prime floors at foreign corner higher, but our unfunded commitments also equally happy.
Hi percentage of prime floors, a set a fourth quarter and higher so so I'd say, we have that benefit that lock in that lag effect of the unfunded commitments from prior deals closed and the higher prime rate floors on those Jim do you want to talk about current market rate dynamics.
Yeah, I guess I'd, just add them, so first and foremost where a guess during this period emphasizing a higher <unk> highest quality of new transactions out there and again, that's very strong demand so were very carefully going through that and because of this period of.
Uncertainty. These companies are looking for trusted partners when it comes to a financing an in depth and so we are being mindful and opportunistic and there has been.
An opportunity, let's say to to tighten up structures in pricing as a.
I don't want to say capitalize on these times, but just the appropriate for the the risk and uncertainties that these times and were there and a lot of these companies you know looking again for trusted partner, it's got the reputation referencing the relationships. So there are opportunities.
These shifts.
And I'd only add Chris just our goal here is not to push rates up its lower a low risk and so we're focusing as Jim said on higher quality investments. If we went downstream I'm sure we can charge more but that's not our underwriting methodology or expertise.
Great and final question given the liquidity concerns given that prepayments to date have been 10 million. Your fundings up in 16 million is it fair to say they go and try to keep your Prepays and your new fundings relatively the same general amounts to sandy or so.
Yeah, you know, we can't control Prepays, obviously prepays are a function of the portfolio companies and their activities be an equity raising or strategic M&A IPO or whatever that may be and so I think from our perspective, we're just focused on really good credits and really good companies and we want our great companies to use our.
Capital when it strategically beneficial for them. So I'd say, we're not intentionally controlling or guiding we want to our companies to use it when its most strategic understanding that it's not cheap capital and it's not something that they put on their balance sheets for rainy days, it's something that for the cost associated with it should have.
The strategic use great. That's it for me stay well guys. Thanks, yes.
<unk>.
The next question comes from George but how Monday's from does show Bank. Please go ahead.
Hey, everyone. Good afternoon I'm, just wondering if you can give us a sense of what percentage of the portfolio or borrowers have reached out about loan modifications.
Of course 19.
Jim do you want take that.
Oh, yeah, so its been very very few.
The only reason I'm hesitating as we have a very large portfolio cost so triplepoint platform and until my knowledge, it's a very few and far but swing that TPVG portfolio.
Companies could christy might actually or social no it, but oh, let's say it it's not a material or major issue a problem right now of them.
Companies <unk> <unk> am I would just add the the only portfolio a modifications that happened during the quarter were on credit watch list companies and so no credit <unk> new modifications happened on non lower rated credit watch list I you know, Georgia.
You would think they they should ask I guess to a certain extent, but but again I think it goes to the thoughtfulness and.
The strong liquidity positions of our portfolio companies with regards to how they use debt and manage cash.
Sure it not concert thanks for the quarter that's helpful.
During your prepared remarks, there was a commentary around I'm spillover income you guys just repeat that number I missed that.
Yeah. This is going up or seven 7.3 million.
7.3 million.
That's right Yeah that was spillover from 2019.
And since recovered the distribution for Q1, there's a little bit added, but we make statements as to the balance on an annual basis.
Understood Great. That's it for me appreciate the comments.
Okay.
The next question is from Matthew Howlett from Nomura. Please go ahead.
Hi, guys. Thanks for taking my question first that's what's driving the capital management part with that with the cap rate and once you before the all started I guess the question is on the cash balance you're running at a little over 80 million elaborate a little one well over one times higher.
Want to do what can you tell me in terms of the cadence on putting the cash maybe drawing down that unsecured lines. Just got what can you tell me in terms of what to expect in terms of leverage in that cash.
Yeah, maybe I'll start Matt and then Chris please jump in listen if you.
Obviously.
Particularly the last two weeks of March were some very chaotic and crazy periods and so for US we felt.
Having as much look reasonable liquidity on hand was a position of strength as we ended the quarter as you know fundings tend to be strong at the end of the quarter and then right are you know if there's some spillover that first weekend. So we wanted to be in the strong liquidity position given just all the factors in the market things going on which ended up.
Matt as you pointed out our gross our gross leverage ratio was one times that obviously, our net leverage ratio is lower I think as we see more stability in calmness in the market, which we're seeing we expect our net leverage position or our excess cash position more.
Translate it's is it will be lower as we just maintain less cash on hand, and pay down our credit facilities and then again use the cash on hand to fund a new debt investments in so I do think you know one of our goals pre Cove. It was we wanted to just stabilizing.
Operate at a higher leverage so that there was less variability and given that we hit our target leverage ratio in Q4 without the world seeing it and then we came with the equity raise we wanted it again to just to have had the benefit of running at a higher leverage.
Higher portfolio raid and again Smoothes out some of the Lumpiness that we had in between our equity capital raises.
Chris.
Yeah, I would just add that you know on it he kind of <unk> direct response to your question on leverage you know on a net basis. If we if we took that cash and applied it to our debt we'd be at more like 0.8 times lever, so more and more kind of the low end of the range that we spoke about but for the focus on liquidity as we went into Q.
Quarter end.
Right you can remind me again is or is there a floor on the on the bank credit facilities in terms of level or.
<unk>.
No there is not.
So that's going to come down the presume that.
That's right that that makes sense, yet it'll bounce around a little bit, but generally down with the market.
Got it Okay, and then got that Okay that then.
I'm getting you guys. It's been through the cycles like you say well, let me again sort of earned over you know not I think of that sort of recession, how well a lot of venture.
<unk> held up relative to the broader middle markets based.
What are sort of remind me again, if you think so to that does play out we get a recessionary romley would that be the case and then they've that could that show them on that playbook. What are you seeing in the back half year. It gets you excited is it sort of deal is it sort of pent up demand will there be.
Opportunities and the social distancing company better terms I could just sort of last week.
<unk>.
Yeah, well, maybe I'll start and then Jim please jump in so.
So it's a matter I I think it's hard to compare what was the scenario. We're in now or the market conditions. Now you know I'd say that the benefit to us in the venture World and Oh wait no nine as old as it may sound is the financial crisis really didnt impact the the VC ecosystem as much right I mean, our startup companies.
I would generally relatively insulated from the impact of the financial crisis from a liquidity perspective from a revenue from a being able to work being able to sell product less impacted I would say you know the code pandemic is unprecedented in terms of its its touching every aspect of our lies our account.
To me in the world as a whole so so I guess, maybe rest assured that in the o. eight or nine times heard financial crisis.
Venture, let I mean, we as Jim said, we restructured some of our highest returning transactions across the platform during that period of time, because we focused on our best sponsors are best relationships and and used our balance sheet in or partnership as a means of deepening that barriers to entry by full.
Solidifying our relationships with our VC partners.
And that also helped credit performance right. When you have multiple portfolio company relationships with the VC fund.
Your an entrenched reliable dependable partner, so so I'd say credit performed particularly well in a way down nine.
Returns on our equity Kickers were also particularly strong I. Just think you know we're in this unprecedented covenant environment right now were where everything is generally impacted and so.
It's too soon to tell obviously Q1 only had two weeks of real covert impact we don't want to be overly confident we're lender show, we should always be paranoid. It all the time, so I don't want to say and Jim said this as well we're far from out of the Woods said, we're here on the defensive paranoid and staying on top of our portfolio.
But so you got your other point, we're definitely seeing some pent up demand some pockets of excitement and Jim If you want to talk about as our outlook for for Irrs for origination and excitement as we end to end or over the next couple of quarters.
Yeah, So again, hopefully the expenses being duplicative, but there's definitely an an adjustment underway and you know their massive amounts of fresh venture capital among our select venture funds and some of the better opportunities and having made the relevance with some of these century.
Capitalist.
Historically have grown out of.
Some of the more challenging times. So just post to 2008 2009, I don't want to rattle all the company names, but some of the better highest returns for some of the best companies in the VC World.
Have historically aster I don't want to say out of the ashes, but out of some of the.
Again more challenging times within created notes have all been opportunities and Pcs for us to go back in the Triplepoint playbook and I can pick on Facebook and some others that we did a you know some very large ones, but post 2008, but the vcs Oh, there's opportunities here.
We're already starting to see them and.
We could spend that afternoon on some of the sectors and industries, but there's a lot of things developing investments in I guess I'd call. It the of the new office of the future a in the environment of the future and the new work environments and.
An awful lot of exciting things and technologies a it in terms of investments for the post coded up ever. So there are you know and again, that's a strong demand.
Thanks, a lot really appreciate it.
Thank you. The next question comes from Ryan Lynch from KBW. Please go ahead.
Hey, guys hope, you're all doing well I wanted to touch back online.
Some of the discussion regarding liquidity and unfunded commitments. So if I look at your unfunded commitments that are non milestone related that's about 168 million.
When you compare that to your current liquidity as of March 31st of a 130 million.
I wanted to get your guys thoughts on if in the near term. If you had all of your unfunded commitments from from your borrowers they're not milestone related it came to you and wanted to to all borrow that capital in the next month or so how would you fund that.
Great question, Ryan and so exact that that's a an over the segue to our backstop facility. So so is the playbook is obviously cash on hand, plus we have the warehouse facility plus the accordion plus we have a crowd strike a and then we have the backstop.
From the advisor and that's why we put the facility in place. We we don't see a scenario that happening and I'll explain why we we wouldn't expect to see all hundred 60, all 170 million of.
Fundings requests come in but that's the thought process in the logic by having that backstop facility as if in that scenario, where more than well positioned to cover it why do I think thats not going to well and let me also add to the portfolio amortization right. So we did have a pre pay of 10 million that just came in in the beginning of them.
Month, we obviously got April one collections may one collections. So that's another 20 to 30 million right. There. So so I would say well positioned without the backstop. The backstop just gives us even more buffer, but I think the more deeper point is the other statistic that I mentioned during my call.
Nine portfolio companies, raising 1.3 billion in Q1 10 companies I believe raising 1.1 billion in Q4, if you look at our unfunded commitments I'll pick on Cohesively for example, cohesively announced a 250 million equity raise about three weeks ago, we have a 30 million unfunded commitment to cohesive.
We would love for cohesive your drawn that 30 million unfunded commitment we wish they would.
Very few other lenders have the opportunity to lend 30 million at double digit a interest rates two companies sitting on $250 million of cash I could go through the list. A capsule is another company on that list that Oh announced a large equity round earlier. This year that has an unfunded commitment from Austin So.
I guess is we parse through the unfunded the good or the bad is.
It's defined balance of those companies that have significant liquidity and that's why we don't think that scenario, but because we are best in class because were proactive we're ahead of the curve.
Thats why we have the cash flows the pre pays the accordion, Andy the backstop from our advisor.
Okay, and I think you mentioned a in the prepared remarks, so Joe the 108 million, though for the rest of Europe cash flows you talked about two months, but it's a total of 108 million just the remainder of the you know I'm, just saying as up where we are today. We've already received 10 million from the pre pay and then two months worth of cash cow.
Elections against 100 million.
Yeah Okay.
That makes sense.
The other question that I had a when I was looking at your.
Our 10-Q.
No when I look at gross unrealized changes in your portfolio valuation.
Your debt investments look like they had about a 44 million dollar unrealized loss a across the board this quarter, which was a pretty big uptake from the 26 million last quarter.
Which would make sense, given the cold and related and then make and wider spreads et cetera et cetera.
But when I look at your equity investments.
You guys had a 15.7 million dollar unrealized gain in your equity book at the end of this quarter, which was actually a bigger game 14.7 million last quarter. So it actually looked like you guys Rocher equity book opt in total.
Just wondering how is that possible getting.
The broad base decline in equity indices in the first quarter as well as I see that the current pandemic environment today.
Yeah, maybe I'll start and then Chris if you want to jump in so so obviously crowd striking medallia, our two publicly traded portfolio companies with our equity Kickers that were converted to to warrants convert to equity represents a meaningful amount as I mentioned in our.
Prepared remarks of the games that we had about 700000 related to just those two companies trading up during the quarter.
And that so that's that and so the meaningful amount of the cumulative unrealized gain Ryan as I mentioned in my prepared remarks, I think it was 14.3, Chris you can correct me is from those two companies just those two company. So so again as you look to the the rest of the warrant portfolio.
I guess that the great opportunity is where we really undervalued the warrant book because the majority of the unrealized gains have come from.
Those two names. Despite the fact that we have some some real winners and promising companies in the private equity in warrant portfolio. For example, resolute closed around at a 5 billion valuation toast closed the rounded up 4 billion valuation and you'll see only slight accretion in value of the equity Kickers in.
In fact, one of the resolute warrants went down in value for the quarter. So so I would say.
So again that addresses the first half and then the second point is you know again to our valuation policy is looking if those rounds have generally happened within the the most recent quarters you know if a willing buyer pay those rates in those valuations we look to those and then after a period of time, we then look to mark.
Get rates on top of that and so.
It's no surprise in Q1, you would see less impact on the equity warrant book and in subsequent quarters potentially seeing more impact to the rest of the book as those rounds get older and we rely more on market rates versus those last rounds of financing unless those companies raise new rounds, and then we will look to those valuations too.
<unk> said our valuation.
Okay understood and then.
You talk about did.
Any of your.
Borrowers.
See.
Payment protection program loans. This this quarter and and they did you just give a sense of approximately how many did.
Jim do I have <unk> yeah.
Yeah, I can jump in on that because.
It's a privately held companies who cannot things up.
I think would be appropriate to share, but I'd say a number number them have applied for the P.P.P. program and some are considering it some have been approved others actually had passed on it and a few of actually returned to fund so there's a mixture there.
And.
You know I don't think of the appropriate ishares specific numbers percentages, but.
But that number them have applied I'm, sorry, if a number them or are in those various stages with the people CP program I think a good point Jim is that our company's qualifying. So I think there was some concern, particularly for PE backed companies, we've seen or the data points are shown that venture backed companies.
Do qualify have qualified and as Jim said I think each company and its board is making a decision independently of whether or not they want to pursue or except a return, but we do definitely have portfolio companies in TPVG that that have taken.
Okay. That's helpful clarification that they are eligible.
Those are all my questions I appreciate and times that I Hope you guys all stay well.
Thank you. Thank you.
Thank you you know how to follow up question from Casey Alexander from Compass point. Please go ahead.
Yeah, and I would note in relation to the other question you've got the crowd strikes up another $5 million in this quarter. So so hoping you sell it tomorrow and not to the first day of the quarter [laughter].
Hey, good can you break down the out of the $17 million of unrealized losses can you break down break it down between.
You know how much was a what percentage was spread unrelated marks versus credit related marks and what was the benchmark that you used to to create the spread related marks.
Let me start with the the approach and then Chris if you could parse through the the various categories to these if we have available if not Casey we can follow up with you.
So as I said in my prepared remarks, we looked at where at least our approach was making adjustment for the market aspect the risk and volatility. So all the portfolio companies generally I received to all the debt investments received an adjustment related to that.
And then those companies in those specific sectors that I mentioned, primarily E commerce consumer travel real estate lending a those got an additional adjustment to the extent that those businesses were negatively impacted <unk> by covered two big sent that.
We had companies outperforming are performing better to plan because of Kobe. They did not get the industry sector adjustment associated with that.
Then with regards to companies on the watch list the lower quality assets so to speak.
We applied higher.
Market rate discounts are higher industry sector discounts for those to reflect the fact that these were companies that were on the watch list and so they should get a a credit adjustment.
An additional adjustment for credit and then on top of that we revisited any of those companies where their recovery based assumptions in the valuation in this environment you have to take into account recoveries, maybe lower it may take longer things of that nature. So, we then applied and an additional discount or to those companies.
Due to recovery based assumptions, what I had shared in my remarks was I didn't break it down between what was market what was sector. What was all the other buckets I did say at least the the categories. One two and three the higher quality rated assets that 17.6 11.7.
One represented adjustments to to those top three buckets and then the bottom two buckets represented about 5.9 million a the total 17.6.
Yeah, Okay, and all right and Casey just say just to provide kind of guidance to lead you to the the 10-Q in the investment footnote, there's a table of inputs and we show aware the allocation of discount rate on kind of the on a on observable inputs the range of discount rates of <unk>.
About six and a half all the way up to 26%, depending on which debt investment we're talking about with a weighted average a little over a 15%. So it's a it's a mixed bag is but we really describing depending on the facts and circumstances of.
Industry sector and overall market rate.
Great. Thank you secondly on the on the unfunded commitments and I had to come back to this but is there not also an adverse event clause gate that the that somebody has to go through that that if if their business is substantially damaged they can't just run to.
And take down one already unfunded commitments.
Yes, absolutely.
I thought I believe I mentioned that their money, yes, yes, absolutely.
Okay, Great alright, thanks for taking my questions I appreciate.
This concludes my question answer session I would like to turn the conference specs agenda today for closing remarks.
Okay. Thank you operator, and the other want to thank everyone for their patients says we do a remotely.
Operated a conference call here and again on behalf of TPVG, We hope that our shareholders all the analysts and others on the phone and their families stay healthy and thank you very much for your time today I'm sure we'll be talking to you all soon thank you.
Goodbye.
That concludes today's call you may now disconnect.
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