Q3 2024 TriplePoint Venture Growth BDC Corp Earnings Call

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Good afternoon, ladies and gentlemen, welcome to the Triple point venture growth BDC Corp, third quarter 2024 earnings Conference call.

Operator: Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Corp. 3rd Quarter 2024 Earnings Conference.

Operator: At this time, all lines have been placed in a listen-only mode. After the speaker's remarks, there will be an opportunity to ask questions, and instructions will follow at that time. The conference is being recorded and a replay of the call will be available in an audio webcast on the TriplePoint Venture Growth website.

At this time all lines have been placed in a listen only mode.

After the Speakers' remarks, there will be an opportunity to ask questions and instructions will follow at that time.

This conference is being recorded and a replay of the call will be available in an audio webcast on the triple point venture growth website.

Speaker Change: Company management is pleased to share with you the company's results for the third quarter of 2024.

Operator: share with you the company's results for the third quarter of 2020.

Operator: Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board. Sajal Srivastava, President and Chief Investment Officer. and Matthew Galiani, Interim Chief Financial Officer.

Today, representing the company is Jim Levee, Chief Executive Officer, and Chairman of the board.

Speaker Change: Two jaw Srivastava, President and Chief investment Officer.

And Matthew Guiliani interim Chief Financial Officer.

Speaker Change: Before I turn the call over to Mr. La Bae I'd like to direct your attention to the customary safe Harbor disclosure in the company's press release regarding forward looking statements and remind you that during this call management will make certain statements that relate to future events or the company's future performance or financial condition, which are considered forward looking.

Operator: Before I turn the call over to Mr. Labe, I'd like to direct your attention to the following Please post a Mary Safe Harbor disclosure in the company's press release regarding forward-looking statements and remind you that during this call, management will make certain statements that relate to future events or the company's future performance or financial condition, which are considered forward-looking statements under federal securities law.

<unk> statements under Federal Securities Law.

Speaker Change: You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements.

Operator: You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these The company does not undertake any obligation to update any forward or projections unless required by law. Investors are cautioned not to place undue reliance on any forward-looking statements made during the call, which reflect management's opinions only, as of today.

Speaker Change: The company does not undertake any obligation to update any forward looking statements or projections unless required by law.

Speaker Change: Investors are cautioned not to place undue reliance on any forward looking statements made during the call, which reflect management's opinions only as of today.

To obtain copies of our latest SEC filings. Please visit the company's website at Www Dot T. P. D G dotcom.

Operator: to obtain copies of our latest SCC file.

Operator: please visit the company's website at www.tpvg.com Now I'd like to turn the conference over to Mr. Labe. Please go ahead.

Speaker Change: Now I'd like to turn the conference over to Mr. Leblanc. Please go ahead.

Mr. Leblanc: Thank you operator, good afternoon, everyone and welcome to <unk> third quarter earnings call.

James Labe: Thank you, operator.

James Labe: Good afternoon, everyone, and welcome to TPVG's third quarter earnings call. During the quarter, we made further progress on the core priorities we have been focused on as we executed on our playbook of managing both the portfolio and positioning TPVG for the future.

During the quarter, we made further progress in our core priorities, we have been focused on as we executed on our playbook and managing both the portfolio and positioning T. P V G for the future.

Speaker Change: I'd like to share some of the highlights for the quarter.

James Labe: I'd like to share some of the highlights for the court. We increased our NAV by 3% to $9.10 per share. We over-earned our dividend, generating $13.8 million in NII, or net investment income, equaling $0.35 per share. We maintained our strong portfolio yield, achieving a 15.7% weighted average portfolio yield for this quarter, and our core yield increased 1% over the previous quarter. We improved our weighted average credit score with three upgrades for companies on the watch list and one downgrade from clear to white. We maintained our target leverage range of 1.1 times. We renewed our credit facility to $300 million during the quarter with an accordion feature to increase it up to $400 million.

Speaker Change: We increased our NAV by 3% to $9.10 per share.

Speaker Change: We over earned our dividend generating $13 8 million in NII or net investment income equaling 35 cents per share.

Speaker Change: We maintained our strong portfolio yield achieving a 15.7% weighted average portfolio yield for this quarter and our core yield increased 1% over the previous quarter.

Speaker Change: We improved our weighted average credit score with three upgrades for companies on the watch list and one downgrade from cleaner way.

Speaker Change: We maintained our target leverage range of one one times.

Speaker Change: We renewed our credit facility to 300 million during the quarter with an accordion feature to increase it up to 400 million.

Speaker Change: We enhanced our financial strength and liquidity ending the quarter with $340 million in total liquidity.

James Labe: We enhanced our financial strength and liquidity, ending the quarter with $340 million in total liquidity. We had a reduction in the number of companies unknown and cruel status. We had 70 million of additional signed term sheets for venture growth stage companies come into TriplePoint Capital post the quarter's end. And finally, we reported $8.8 million in net realized and unrealized gains, including continued increases in fair value in our warrant and equity investment position. Our warrant and equity positions now constitute warrant positions in 95 portfolio companies and equity investment positions in 48. We believe these positions bode well for our ability to improve NAB over the long term.

Speaker Change: We had a reduction in the number of companies on non accrual status.

Speaker Change: We had 70 million of additional signed term sheets for venture growth stage companies come into Triple point capital post the quarter's end.

Speaker Change: And finally, we reported $8 8 million and net realized and unrealized gains including continued increases in fair value in our warrant and equity investments positioned.

Speaker Change: Our warrant and equity positions now constitute warrant positions in 95 portfolio companies and equity investment positions and 48.

Speaker Change: We believe these positions bode well for our ability to improve NAV over the long term.

James Labe: Underscoring this point, there lies an increase in fair value on our Revolute, Warren, and Equity positions, which contributed to the quarterly NAV increase. Moving to credit quality, we're encouraged by the strengthening performance of a number of our portfolio companies, which is reflected in the positive credit migration we experienced during the quarter. as well as the continued success of TPVG's debt portfolio companies that raise capital. For the third quarter, eight debt portfolio companies raised $656 million. And for the nine month period of 2024, first nine months of this year, 23 debt portfolio companies raised $1.7 billion.

Speaker Change: Underscoring this point realized an increase in fair value on our revolute warrant and equity positions, which contributed to the quarterly NAV increase.

Speaker Change: Moving to credit quality, we're encouraged by the strengthening performance of a number of our portfolio companies, which is reflected in the positive credit migration, we experienced during the quarter as.

Speaker Change: As well as the continued success of T. P V G step portfolio companies have raised capital.

Speaker Change: For the third quarter eight portfolio companies raised $656 million.

Speaker Change: And for the nine month period of 'twenty 'twenty four first nine months of this year 23 debt portfolio companies raised $1 7 billion.

James Labe: That's a 285% increase over the first nine months of 2023. In addition, several other companies have raised rounds post this. Going forward, the team will continue to closely manage and monitor the portfolio, while at the same time concentrating on further diversifying the portfolio and investing in today's attractive sector. which are those in which our select venture capital investors are active. The focus will remain on companies that have recently raised capital, have ample cash runways, have backing from these select venture investors, have prudent management teams, and whose business models have attractive unit economics and high retention.

Speaker Change: That's a 285% increase over the first nine months of 2023.

Speaker Change: In addition, several other companies have raised round post this quarter.

Speaker Change: Going forward the team will continue to closely manage and monitor the portfolio while at the same time concentrating on further diversifying the portfolio and investing in today's attractive sectors, which are those in which our select venture capital investors are active.

Speaker Change: The focus will remain on companies that have recently raised capital have ample cash runways had backing from these select venture investors have prudent management teams and whose business models have attractive unit economics and high retention rate.

James Labe: We continue to actively seek companies which have tailwinds in spaces such as verticalized software, aerospace and defense, health tech, and AI. These industries offer some exciting investment opportunities driven by a variety of macroeconomic, technological, and geopolitical trends. Portfolio companies such as Crest Intelligence. Panorama Education, and Loft Orbital are some of the many examples.

Speaker Change: We continue to actively seek companies, which have tailwind in spaces, such as vertical I software aerospace and defense health Tech and AI.

Speaker Change: These industries offers some exciting investment opportunities driven by a variety of macroeconomic technological and geo political trends.

Speaker Change: Portfolio companies, such as crest intelligence, Panorama education, and loft orbital or some of the many examples.

James Labe: While investment activity is continuing, it's important to note that the venture capital markets have not yet recovered and the road to recovery remains uneven. We believe in the widely shared view that it will continue to take time for market conditions to improve. Despite pitchfork citing venture deal value being on track to reach more than $175 billion in surpassed 2020. They point out that a meaningful market rebound has not yet occurred and the market has just started on its journey on the long road to recovery. Venture capitalists have to balance the need to generate returns for their LP investors while at the same time taking advantage of new investment opportunities and stay patient.

Speaker Change: Well investment activity is continuing its important to note that the venture capital markets have not yet recovered and the road to recovery remains uneven.

Speaker Change: We believe in the widely shared view that it will continue to take time for market conditions to improve.

Speaker Change: Despite pitch book, citing venture deal value being on track to reach more than 175 billion and surpassed 2020.

Speaker Change: They point out that a meaningful market rebound has not yet occurred in the market has just started on its journey on the long road to recovery.

Speaker Change: Venture capitalists have to balance the need to generate returns for their L. P investors while at the same time, taking advantage of new investment opportunities and stay patient.

James Labe: The lack of IPOs and M&A exit opportunities for many venture growth stage companies remains a major obstacle. And venture-backed companies are staying private longer as they wait for a better environment. Our select venture investors are opting for quality over quantity, increasing their time on due diligence and carefully structuring deal terms. Likewise, as a venture lender, this is the same prudent approach that we're also employing at TPVG and believe is the right one to follow.

Speaker Change: The lack of Ipos and M&A exit opportunities for many venture growth stage companies remains a major obstacle.

Speaker Change: And venture back companies are staying private longer as they wait for a better environment.

Speaker Change: Our select venture investors are opting for quality over quantity, increasing their time on due diligence and carefully structuring deal terms.

Speaker Change: Likewise as a venture lender. This is the same prudent approach that we're also employing a T. P V G and believe as it right one to follow.

James Labe: Based on many years of experience and throughout numerous venture capital cycles, we don't believe this is a time to open the valves and to grow for the sake of growth or to expand markets. Caution remains the guiding principle in our playbook given this morning.

Speaker Change: Based on many years of experience in throughout numerous venture capital cycles. We don't believe this is a time to open the valves and to grow for the sake of growth or to extend market.

Speaker Change: Caution remains a guiding principle and our playbook given this market.

James Labe: In summary, this quarter was one of progress and execution. We're pleased with the progress made this quarter and continue to focus on executing on our plans, given the underlying market conditions. We're well positioned from a liquidity standpoint to take advantage of increased activity as the markets improve. While we'll continue to maintain our careful disapproval of the We're seeing some signs of gradual improvement in the venture capital market. in TPVG's portfolio and in new business investment opportunities, and eagerly looking forward to what we expect will be increased investment opportunities in 2025.

Speaker Change: In summary, this quarter was one of progress and execution.

Speaker Change: We're pleased with the progress made this quarter and continue to focus on executing on our plans given the underlying market conditions.

Speaker Change: We're well positioned from a liquidity standpoint to take advantage of increased activity as the markets improve.

Speaker Change: Well, we'll continue to maintain our careful disciplined we're seeing some signs of gradual improvement in the venture capital market and T. P V ge's portfolio, and a new business investment opportunities and eagerly looking forward to what we expect will be increased investment opportunities in 'twenty 'twenty.

Speaker Change: Five in the years ahead.

James Labe: in the years ahead.

Sajal Srivastava: With that, I'll turn the call over to Thank you, Jim, and good afternoon. During the third quarter, TriplePoint Capital signed 94 million of term sheets with venture growth stage companies, down from 188 million in Q2. This reflects our continued selectivity given market conditions, as well as an element of seasonality, as signed term sheets so far in Q4 are already at 70 million. With regards to new investment allocation to TPBG during the quarter, TriplePoint Capital allocated 41 million in new commitments to four companies to TPBG, including two new portfolio companies, compared to 52 million in new commitments and two new portfolio companies in Q2.

Sergio: With that I'll turn the call over to Sergio.

Sergio: Thank you Jim and good afternoon during the third quarter Triple point capital signed $94 million of term sheets with venture growth stage companies down from $188 million. In Q2. This reflects our continued selectivity given market conditions as well as an element of seasonality a signed term sheet. So far in Q4.

Speaker Change: Already at $70 million with.

Speaker Change: With regards to new investment allocation to TPG during the quarter drove one capital allocated $41 million new commitments to for companies to TPG, including two new portfolio companies compared to $52 million in new commitments and new two new portfolio companies in Q2.

Sajal Srivastava: Commitments to new portfolio companies during Q3 included Panorama Education, an education software platform backed by General Atlantic, Emerson Collective, Chan Zuckerberg Initiative, and other investors, as well as Aquilas, a fintech infrastructure company backed by Oak, Bullpen Capital, Mubadala Capital, and other investors. During the quarter, we also had follow-on investments in one recent portfolio company, as well as refinancing of another existing portfolio company in conjunction with an upsell. During the quarter, TPBG funded $33 million in debt investments to four portfolio companies, which is slightly down from $38.7 million in debt investments to five portfolio companies in Q2, as fundings were primarily related to transactions closed during the quarter.

Speaker Change: Commitments to new portfolio companies. During Q3 included Panorama education, and education software platform backed by General Atlantic Emerson Collective Chan Zuckerberg initiative and other investors as well as the awkwardness of Fintech infrastructure company backed by Oak bullpen capital Mubadala capital.

Speaker Change: And other investors.

Speaker Change: During the quarter.

Speaker Change: Had follow on investments in one recent portfolio company as well as refinancing of another existing portfolio company in conjunction with an upsize.

Speaker Change: During the quarter TPG funded $33 million of debt investments to four portfolio companies, which is slightly down from $38 7 million in debt investments to five portfolio companies in Q2, as fundings were primarily related to transactions closed during the quarter.

Sajal Srivastava: Year-to-date, we have funded $85.2 million to 10 portfolio companies. Debt investments funded this quarter carried a weighted average annualized portfolio yield of 13.4% at origination, down from 15.5% in Q2, given the combination of lower base rates, lower yields associated with asset-based financings, as well as more robust enterprises we're lending to. Our quarterly gross funding target continues to be in the $25 to $50 million range for Q4 and as we head into 2025. As a reminder, new fundings don't materially contribute to income in the quarter in which they fund, given they typically occur at the end of the quarter.

Speaker Change: Year to date, we have funded $85 2 million to 10 portfolio companies.

Speaker Change: The debt investments funded this quarter carried a weighted average annualized portfolio yield of 13, 4% at origination down from 15, 5% in Q2.

Speaker Change: Given the combination of lower base rates lower yields associated with asset based financings as well as more robust enterprises were lending to.

Speaker Change: Our quarterly gross funding target continues to be in the $25 million to $50 million range for Q4, and as we head into 2025.

Speaker Change: As a reminder, new fundings don't materially contribute to income in the quarter in which they fund given they typically occur at the end of the quarter.

Sajal Srivastava: During Q3, we had $36 million of loan prepayments, down from $51 million in Q2, representing $117.8 million of prepayments year-to-date. The payment-related income this quarter contributed to an overall weighted average portfolio yield of 15.7 percent, in line with last quarter's portfolio. excluding prepayments or portfolio yield was 14.9%, up from 13.9% in Q2, primarily due to the reduction in non-accruals. We expect at least one prepay here in Q4 and believe that prepayment activity in 2025 will depend on improving market conditions, continued equity fundraising activity, as well as other factors related to seasoning of our vintage. We do expect the pace of contractual principal amortization and repayments to increase in 2025, given contractual amortization requirements.

Speaker Change: During Q3, we had $36 million loan prepayments down from $51 million in Q2, representing a $117 8 million in prepayments year to date.

Speaker Change: Payment related income this quarter contributed to an overall weighted average portfolio yield of 15, 7% in line with last quarter's portfolio yield excluding prepayments for portfolio yield was 14, 9% up from 13, 9% in Q2, primarily due to the reduction of nonrecurring non.

Speaker Change: Accruals.

Speaker Change: We expect at least one prepay here in Q4 and believe that prepayment activity in 2025 will depend on improving market conditions continued equity fundraising activity.

Speaker Change: Well as other factors related to seasoning of our vintages, we do expect the pace of contractual principal amortization and repayments to increase in 2025, given contractual amortization requirements and we therefore continue to focus on ensuring that we sufficiently grow the portfolio over time in addition to replacing fee paid in.

Sajal Srivastava: And we therefore continue to focus on ensuring that we sufficiently grow the portfolio over time, in addition to replacing prepaid and repaid loans. With regards to fundraising activity, eight portfolio companies with debt outstanding as of quarter's end raised $656 million during the quarter, compared to nine portfolio companies with debt outstanding raising $443 million in Q2. We are pleased to see not only the level of activity and round sizes increase, but also the expanding number of sub-industries of technology, including consumer, attracting capital despite market conditions, all of which reflects the quality of these portfolio We expect to continue to see capital raising activity within our portfolio.

Speaker Change: We paid loans.

Speaker Change: With regards to fund raising activity eight portfolio companies with debt outstanding as of quarters in raised $656 million during the quarter compared to nine portfolio companies with debt outstanding raising $443 million in Q2.

Speaker Change: We are pleased to see not only the level of activity and round sizes increase but also the expanding number of sub industries of technology, including consumer attracting capital despite market conditions, all of which reflects the quality of these portfolio companies.

Speaker Change: We expect to continue to see capital raising activity within our portfolio. We believe this fund raising activity should bode well for the outlook for our Arbor gores their credit quality as well as for the value of our warrant and equity investments in these companies.

Sajal Srivastava: We believe this fundraising activity should bode well for the outlook for our obligors, their credit quality, as well as for the value of our more inequity investments in these companies. As of September 30th, we held 90 warrants in 95 companies and equity investments in 48 companies with a total fair value of $116 million. Our Warren and Equity portfolio experienced a $9.4 million net unrealized gain in fair value, or $0.23 per share for the quarter, primarily driven by an increase in the fair value of Revolut as a result of its announced secondary transaction of shares at a $45 billion valuation.

Speaker Change: As of September 30th we held 90 warrants in 95 companies and equity investments in 48 companies with a total fair value of $116 million.

Speaker Change: Our warrant and equity portfolio experienced a $9 4 million net unrealized gain in fair value or <unk> 23 per share for the quarter, primarily driven by an increase in the fair value of revenue as a result of its announced secondary transaction of shares at a 45 billion valuation.

Sajal Srivastava: Revolut is now reportedly Europe's most valuable private tech company, and our total Warren and Equity holdings in Revolut currently valued at $37 million, so a substantial appreciation on our investment since our initial loan commitment to them in 2018. Europe continues to be an important market for the TriplePoint Capital Platform, as we've been active in that market and have served as a key financing source in that ecosystem since 2008. Another portfolio activity of the quarter, Good Eggs was acquired by GrubMarket, a privately held company with substantial scale revenues in EBITDA per public source. We received equity in Grub Market for consideration for our loans, and Good Eggs was removed from Category 4 on our credit watch.

Speaker Change: Resolute is now reportedly Europe's most valuable private tech company and our total warrant and equity holdings in revolute currently valued at $37 million. So substantial appreciation on our investment since our initial loan commitment to them in 2018.

Speaker Change: Europe continues to be an important market for the Triple point capital platform as we've been active in that market and have served as a key financing source in that ecosystem since 2008.

Speaker Change: And other portfolio activity during the quarter. Good eggs was acquired by drug market, a privately held company with substantial scale revenues and EBITDA per public sources, we received equity in drug market for consideration for our loans and good eggs was removed from category four on our credit watch list.

Sajal Srivastava: As Jim mentioned, credit improved within the portfolio during the quarter with three upgrades and one down. Flink, with a principal balance of $27 million, was upgraded from Category 4 to Category 3 as a result of closing around and positive performance. One portfolio company with a principal balance of $6 million was upgraded from Category 3 to Category 2. Another portfolio company with a principal balance of $20 million was upgraded from Category 2 to Category 1, and one company with a principal balance of $10 million was downgraded from Category 1 to Category 2. During the quarter, we amended our $27.5 million outstanding loan with Moda Aberranda, rated Category 3 on our watch list, and placed the loans back on approval in conjunction with the company raising new finances.

Speaker Change: As Jim mentioned credit improved within the portfolio during the quarter with three upgrades at one downgrade fleet with a principal balance of $27 million was upgraded from category to category three as a result of closing around and positive performance.

Speaker Change: One portfolio company with a principal balance of $6 million was upgraded from category to category two.

Speaker Change: Other portfolio company with a principal balance of $20 million was upgraded from category two to category, one and one company with a principal balance of $10 million was downgraded from category to category two.

Speaker Change: During the quarter, we amended our 27 5 million outstanding loan with Moda operandi weighted category three of our watch list and place the loans back on approval in conjunction with the company raising new financings.

Sajal Srivastava: We remain focused on executing our plan for positioning TPBG for the future.

Speaker Change: We remain focused on executing our plan for positioning TPG for the future in light of our industry, leading sponsor Triple point capital its commitment to <unk> success as will alignment with TPG shareholders, We announced earlier today that starting with Q1 2025 and through the end of 2025.

Sajal Srivastava: In light of our industry-leading sponsor, TriplePoint Capital, its commitment to TPBG's success, as well as alignment with TPBG shareholders, we announced earlier today that starting with Q1 2025 and through the end of 2025, if payment of the quarterly incentive fee prevents the company from covering the quarterly distribution from NII, the advisor will waive that portion of its quarterly income incentive fee for that quarter necessary to cover the distribution up to the full amount of the quarterly income incentive fee. Although we continue to feel encouraged by the potential for improving market conditions, our pipeline, and our ability to increase the pace of new commitments and investment fundings over the course of 2025, we believe that this waiver provides a cushion in the near term, if necessary, despite our considerable spillover, while we execute on our longer-term plan to increase TPBG's scale, durability, portfolio diversification, and income-generating assets.

Speaker Change: Payment of the quarterly incentive fee prevents the company from covering the quarterly distribution from NII. The adviser will waive that portion of its quarterly income incentive fee for that quarter necessary to cover the distribution up to the full amount of the quarterly income incentive fee.

Speaker Change: Although we continue to feel encouraged by the potential for improving market conditions, our pipeline and our ability to increase the pace of new commitments in investment fundings over the course of 2025, we believe that this waiver provides a cushion in the near term if necessary. Despite our considerable spillover, while we execute on our longer term.

Speaker Change: Plan to increase <unk> scale durability portfolio diversification and income generating assets with that I'll now turn the call over to Matt.

Matthew Galiani: With that, I'll now turn the call over to Matt. Thank you, Sajal, and hello everyone. For the third quarter, total investment income was $26.5 million with a portfolio yield of 15.7% as compared to $35.7 million and a portfolio yield of 15.1% for the prior year period. The decrease in total investment income was primarily due to a lower-weighted average principal amount outstanding on our income-bearing debt investment portfolio. For the third quarter, total operating expenses were $12.7 million, as compared to $16.6 million for the prior year period. These expenses consisted of $7.1 million of interest expense, $3.4 million of base management fees, and $2.2 million of general and administrative expenses, of which $150,000 represents an increase to our excise tax accrual from the prior quarter due to an increase in estimated undistributed income, or spillover income, for the full fiscal year.

Matt: Thank you Chantal and Hello, everyone for the third quarter total investment income was $26 5 billion with a portfolio yield of 15, 7% as compared to $35 7 million in a portfolio yield of 15, 1% for the prior year period. The decrease in total investment income was primarily due to a lower weighted average.

Matt: Average principal amount outstanding on our income bearing debt investment portfolio.

Speaker Change: For the third quarter total operating expenses were $12 7 million as compared to $16 6 million for the prior year period. These expenses consisted of $7 1 million of interest expense $3 4 million of base management fees and $2 2 million of general and administrative expenses of which 150000 represents and.

Speaker Change: Increase to our excise tax accrual from the prior quarter due to an increase in estimated undistributed income or spillover income for the full fiscal year. The company did not incur an incentive fee this quarter for.

Matthew Galiani: The company did not incur an incentive fee this quarter. For the third quarter, net investment income totaled $13.8 million, or $0.35 per share, as compared to $19.1 million, or $0.54 per share, for the prior year period. And our net increase in net assets resulting from operations for the third quarter totaled $22.6 million, or $0.57 per share, compared to $2.1 million, or $0.06 per share, for the three months ended September 30, 2023. During the quarter, the company recognized net realized losses on investments of $5 million, primarily due to the acquisition of one portfolio company, where as a result, we received equity in the acquirer in consideration for our loans.

Speaker Change: For the third quarter net investment income totaled $13 8 million or <unk> 35 per share as compared to 19 point 19.

Speaker Change: $19 1 million or <unk> 54 per share for the prior year period, and our net increase and net assets, resulting from operations for the third quarter totaled $22 6 million or <unk> 57 per share compared to $2 1 million or <unk> <unk> per share for the three months ended September 32023.

Speaker Change: During the quarter the company recognized net realized losses on investments of 5 million, primarily due to the acquisition of one portfolio company, whereas the result, we received equity in the acquire and consideration for our loans.

Matthew Galiani: Net change in unrealized gains on investments for the third quarter was $13.9 million, consisting of $9.4 million of net unrealized gains on the existing warrant and equity portfolio, resulting from fair value adjustments, $5.2 million of net unrealized gains from the reversal of previously recorded unrealized losses on investments that were realized during the period, and $700,000 of net unrealized losses from fair value adjustments on the debt investment portfolio. As of quarter end, net asset value was $364.3 million, or $9.10 per share. This compares to $346.3 million, or $9.21 per share at the end of the year, and is up $11.3 million, or $0.27 per share from the end of the prior quarter.

Speaker Change: Net change in unrealized gains on investments for the third quarter was $13 9 million consisting of $9 4 million of net unrealized gains on the existing warrant and equity portfolio, resulting from fair value adjustments $5 2 million of net unrealized gains from the reversal of previously recorded unrealized losses on investments that were.

Speaker Change: During the period and 700000 of net unrealized losses from fair value adjustments on the debt investment portfolio.

Speaker Change: As of quarter end net asset value was $364 3 million or $9 10 per share. This compares to $346 3 million or $9 21 per share at the end of the year and is up $11 3 million or <unk> 27 per share from the end of the prior quarter.

Matthew Galiani: Last week, the company's board declared a regular quarterly distribution of $0.30 per share with a record date of December 13th to be paid on December 27th. As of September 30th, the company had estimated spillover income of $41.5 million, or $1.03 per share.

Speaker Change: Last week, the company's board declared a regular quarterly distribution of <unk> 30 per share with the record date of December 13th to be paid on December 27.

Speaker Change: As of September 30th the company had estimated spillover income of $41 5 million or $1 <unk> per share.

Matthew Galiani: Now just an update on unfunded investment commitments, balance sheet leverage, and overall liquidity. Our unfunded commitments decreased from $118 million at year-end to $74 million as of September 30th. Of the $74 million of unfunded commitments, $73.2 million will expire during 2025, and $800,000 will expire during 2026. We continue to maintain a diversified capital structure, and as of the end of the quarter, TPBG had a total of $405 million of debt outstanding, consisting of $395 million of fixed-rate investment-grade term notes and $10 million outstanding on its credit facility. We continue to improve leverage levels, as we ended the quarter with a leverage ratio of 1.11 times.

Speaker Change: Now just an update on unfunded investment commitments balance sheet leverage and overall liquidity.

Speaker Change: Our unfunded commitments decreased from $118 million at year end to 74 million as of September 38 of the $74 million of unfunded commitments $73 2 million will expire during 2025 and 800000 will expire during 2026.

Speaker Change: We continue to maintain a diversified capital structure and as at the ended the quarter TPG had a total of $405 million of debt outstanding consisting of $395 million of fixed rate investment grade term notes and $10 million outstanding on its credit facility, we continue to improve leverage levels as we ended the quarter, but.

Speaker Change: The leverage ratio of 111 times and.

Matthew Galiani: In August, the company renewed and extended its revolving credit facility. The company also elected to reduce total commitments under the credit facility to $300 million to closer align with anticipated utilization. As of quarter end, the company had total liquidity of $339 million, consisting of $49 million in cash and $290 million of available capacity under the revolving credit facility.

Speaker Change: In August the company renewed and extended its revolving credit facility. The company also elected to reduce total commitments under the credit facility to 300 million to closer aligned with anticipated utilization.

Speaker Change: As of quarter end the company had total liquidity of 339 million consisting of $49 million in cash and 200 $990 million of available capacity under the revolving credit facility.

Matthew Galiani: This completes our prepared remarks for today.

Speaker Change: This completes our prepared remarks for today. So operator could you. Please open the line for questions at this time.

Operator: So, operator, could you please open the line for questions at this time? We will now begin the question and answer To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the button. To withdraw your question, please press star Once again that was star then one to ask a question and at this time we will pause momentarily to assemble the roster.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: Once again that with Star then one to ask a question at this time, we will pause momentarily to assemble the roster.

Crispin Love: Your first question comes from Crispin Love of Piper Sandler. Please go ahead. Thank you. Good afternoon, everyone.

Speaker Change: Our first question comes from Crispin Love of Piper Sandler. Please go ahead.

Crispin Love: Thank you good afternoon, everyone. Just first off just on the on the news of the day with Trump winning the presidential election can you just discuss some of the potential implications whether positive or negative for triple point pivoting on just the debenture eco a bunch of capital ecosystem as a whole. Thank you.

Sajal Srivastava: Just first off, just on the news of the day with Trump winning the presidential election, can you just discuss some of the potential implications, whether it's positives or negatives for TriplePoint deal activity and just the venture capital ecosystem as a whole? Thanks. Hi, Crispin.

Speaker Change: Hi, Kristen this is Todd I'll take the question listen I think it's too early for us to opine on the impact to the venture markets or interest rates or inflation.

Sajal Srivastava: And Sajal, I'll take the question. Listen, I think it's too early for us to opine on the impact to the venture markets or interest rates or inflation. We're far from experts on that. I think what we can opine on is we do think that potentially this new administration will see a more favorable M&A environment. And so we think that our portfolio companies and capital markets will see some benefits. So we think exit activity should improve, which will be potentially positive for capital markets activities, which could theoretically be beneficial for potential IPO activity as well. But too soon to say, and we're far from experts on that.

Speaker Change: Far from experts on that I think what we can't opine on is we do think that potentially this new administration, we will see a more favorable M&A mark environment, and so we think that.

Speaker Change: Our portfolio companies and capital markets will see some benefits. So we think exit activity.

Speaker Change: Crude which will be.

Speaker Change: Potentially positive for capital markets activities, which should could theoretically be beneficial for potential IPO activity as well.

Speaker Change: But too soon to say.

Speaker Change: Yeah.

Speaker Change: We're far from experts on that.

Christopher Nolan: Absolutely, no, I appreciate all the color there, Sajal, it makes sense. And then just on credit quality, I was just scanning the 10-Q during the prepared remarks, but it looks like non-improvement costs improved to $29 million from $68 million last quarter. Sajal, can you just discuss some of the major changes driving the decrease there? Apologies if you hit on that in the prepared remarks, but I just don't think I got them all there. Sure, yeah. Kind of two obligors. The improvement was due to two obligors. One was Good Eggs, which we announced last quarter had been acquired subsequent to quarter end by Grub Market.

Speaker Change: Absolutely no.

Speaker Change: We slowed all the color there.

Speaker Change: Makes sense and then.

Speaker Change: Just on the unpredictability.

Speaker Change: I was just scanning the palms you during the prepared remarks, but it looks like non accruals at cost improved to $29 million from $68 million last quarter. So can you just discuss some of the.

Speaker Change: Major changes driving the decrease there apologies if you hit on that in your prepared remarks, but I just don't think I got them all down.

Speaker Change: Sure Yes.

Speaker Change: Kind of two obligor is associated with the improvement is due to two <unk>. One was good eggs, which we announced last quarter had been acquired subsequent to quarter end by Grub market and so that was the removal of them. We did receive equity market as a result, and then the second one was we put moda operandi back on.

Sajal Srivastava: And so that was the removal of them. We did receive equity in Grub Market as a result.

Sajal Srivastava: And then the second one was we put Moda Operandi back on accrual as a result of us modifying our loans to them in conjunction with them raising a new round of finance.

Speaker Change: Accrual as a result of us modifying our loans to them in conjunction with them raising.

Speaker Change: A new round of financing.

Christopher Nolan: Great, thank you, and I appreciate you taking my questions, Dr. Nairn. Thanks.

Speaker Change: Great. Thank you and appreciate you taking my questions.

Operator: The next question.

Speaker Change: Thanks.

Speaker Change: The next question comes from Christopher Nolan of Ladenburg Thalmann. Please go ahead, Hey, guys, Hey, what was the portfolio company that drove the realized loss. Please.

Douglas G. Hart: Christopher Nolan of Ladenburg-Thalmann, please go ahead. Good eggs. It was as a result of the acquisition and receiving equity in for our debt instrument, we took a realized loss. Good eggs was not a cruel last quarter. Correct. Okay, great.

Speaker Change: Okay.

Speaker Change: Good eggs.

Speaker Change: As a result of the acquisition and are receiving.

Speaker Change: Equity and four our debt instrument, we took a realized loss.

Speaker Change: Good eggs was non accrual last quarter as I recall.

Speaker Change: Right.

Speaker Change: Okay great.

Douglas G. Hart: And then... interest expenses declined.

Speaker Change: And then.

Speaker Change: Interest expenses declined.

Douglas G. Hart: Douglas G. Hart, CFP®, Financial Planner & Investment Advisor Yeah, I think in particular, lower utilization on the credit facility, just given where we had lower fundings and prepay activities, so we didn't have to utilize the revolver and so benefited from it. And then, of course, we had the lower expense of the term loan at, I think, under 5%.

Speaker Change: Helping drive your net investment income up quarter over quarter, what was the catalyst for that decline.

Speaker Change: Yes, I think in particular lower utilization on their credit facilities, just given where we had lower fundings and prepay activity. So we didn't have to use utilize that was offered so benefited from it.

Speaker Change: Of course, we have the.

Speaker Change: Yes.

Speaker Change: Lower expense.

Speaker Change: The term loan the term loan it.

Speaker Change: Under 5%.

Douglas G. Hart: Great and finally, I appreciate the comments as always in terms of the condition of the venture market.

Speaker Change: Great and then finally I appreciate the comments as always on in terms of the condition of the venture market are you seeing any changes in the industry sectors within the venture capital markets, which are seeing where capital inflows.

Douglas G. Hart: Are you seeing any changes in the industry sectors within the venture capital markets which are seeing more capital inflows?

James Labe: Yeah, Jim, if you want to take that one. Yeah, we are starting to see signals, slow but gradual signals of, I guess I'd call it continued investor sector rotation, but also increased investment activity and deployment of, it's now over 300 billion, which venture capitalists are sitting on the sideline to deploy here. But in terms of sectors, a little bit more space economy, defense economy, we're seeing robotics, cybersecurity, insure tech, and these are all in addition of course to AI. So there is, I guess, starting to hear more and more about disruptive technologies and innovative technologies and investment opportunities for us.

Speaker Change: Yes, Jim we do want to echo.

Speaker Change: Yeah, we are starting to see signal slow, but gradual signals of them.

Speaker Change: I guess I'd call it continued investor.

Speaker Change: The rotation.

Speaker Change: But also increased investment activity in deployment of it's now over 300 billion, which venture capitalists are sitting on the sideline to deploy here.

Speaker Change: But in terms of sectors.

Speaker Change: There's a little bit more space economy defense economy, we're seeing robotics cyber security insured Tech and these are all in addition of course to AI. So there is I guess.

Speaker Change: Starting to hear more and more.

Speaker Change: About disruptive technologies.

Speaker Change: Innovative technologies and investment opportunities for us.

James Labe: It's on the increase.

Speaker Change: It's on the increase.

Douglas G. Hart: Great. Thank you.

Speaker Change: Great. Thank you that's it for me thank you.

Speaker Change: This concludes.

Paul Johnson: Our next question comes from Paul Johnson of KBW, please go ahead. Yeah, thanks for taking my questions. Just on your comments around, you know, not being as a favorable time to invest, being a little bit more cautious, not time to quite open the the spigot for deployment. Can you just kind of expand on that a little bit? I guess why why you're a little bit more cautious now is it holding back and waiting for more MNA activity or what's what's kind of the reasoning there?

Speaker Change: Our next question comes from Paul Johnson of <unk>. Please go ahead.

Paul Johnson: Yes, thanks for taking my questions.

Speaker Change: On your comments around.

Speaker Change: Not being as a favorable time.

Speaker Change: Two investing a little bit more cautious not timely quite open.

Speaker Change: The spigot for deployment can you just kind of expand on that a little bit and just describe I guess why why you're a little bit more.

Speaker Change: Cautious now is it holding back and waiting for more M&A activity or or what's what's kind of the reasoning there.

Speaker Change: Okay.

Sajal Srivastava: Yeah, let me take that question.

Speaker Change: Yes, I'll take that question.

Sajal Srivastava: Sorry, go ahead, Jen. No, that's all right. Go ahead, Sajal. I was going to say, you know, I think it's an important thing just to see where the venture capital equity investors are deploying their capital and their pace of investment. So I think, Paul, it's important for us. We want to make sure that we're lending to those companies that are attracting follow on capital from those investors. And so while we have a strong pipeline and companies reach out, you know, new companies every quarter, in some quarters, there are companies in sectors that can attract capital.

Speaker Change: Sorry go ahead Jim.

Speaker Change: Military Oh go ahead sorry.

Jim Levee: I was going to say I think it's an important thing just to see where the venture capital equity investors are deploying their capital and their pace of investment.

Speaker Change: I think Paul it's.

Speaker Change: Important for US we want to make sure that we're lending to those companies that are attracting follow on capital from those investors and so while we have a strong pipeline and companies reach out new companies every quarter.

Speaker Change: And some quarters, where companies in sectors that can attract capital and so that's why they're calling lenders are reaching out so for us we don't want to be pressured to put we're not pressured to put capital out the doors. So we wanted to be very selective to ensure that we're lending to companies as Jim described that recently raised financings that have validated their last rounds.

Sajal Srivastava: And so that's why they're calling lenders or reaching out. So for us, you know, we don't want to be pressured to put or not pressured to put capital out the door. So we want to be very selective to ensure that we're lending to companies, as Jim described, that have recently raised financing, that have validated their last rounds, are in industry sectors that are experiencing growth or businesses that are growing.

Speaker Change: And industry sectors that are experiencing growth our businesses that are growing and so you've got to manage the timing of when they come to market versus when companies that may not have those favorable characteristics come to market and choose not to work with them, even though it's low hanging fruit.

Sajal Srivastava: And so you've got to manage the timing of when they come to market versus when companies that may not have those favorable characteristics come to market and choose not to work with them, even though it's low hanging fruit.

Paul Johnson: I mean, where are we, I mean, at this point in terms of valuations, I mean, are the, uh, Down Rounds, and such.

Speaker Change: Got.

Speaker Change: That makes sense I mean, where are we I mean at this point in terms of.

Speaker Change: Valuations I mean or are the.

Speaker Change: The down rounds, and as such it is that behind US at this point I mean are the companies that are raising doing so higher valuations kind of where are we I guess relative to where.

Paul Johnson: Is that behind us at this point? I mean, are the companies that are raising, doing so, higher valuations?

Sajal Srivastava: Where are we, I guess, relative to where venture valuations were at pre-rate hike 2022? And again, I know PitchBook has a fair amount of data on this, so I would say, you know, there are two answers to this question. One, very high level, I think, for PitchBook, you know, the good or the bad is the number of the unicorns that have raised, you know, large rounds of financing during the peak periods. Not all of them have come back to market yet, and so I would say we're still in a period generally of recalibration and reality check for certain companies.

Speaker Change: We're better valuations were at pre pre rate hike 2022.

Speaker Change: Yeah.

Speaker Change: Again, I know Pittsburgh has a fair amount of data on this so so I would say to answer. This question one very high level I think for pitch book.

Speaker Change: Good or bad as a number of the unicorns that have raised large rounds of financing during the peak periods not all of them have come back to market, yet and so so I would say we're still in a period generally or recalibrate recalibration in reality check for for certain companies I would say more closer to home as we look to our.

Sajal Srivastava: I would say more closer to home as we look to our portfolio, particularly from the activity in, you know, during Q3. Again, record level of activity, record level of amount raised, you know, given a date, so to speak, or improving that record. But also increasing round sizes, increasing diversification of industry sectors, and more importantly, improving valuations. And that's why we saw it in the morning equity portfolio. Beyond just Revolute, we saw improvement, so we're pleased to see that.

Speaker Change: Portfolio, particularly from the activity.

Speaker Change: During Q3 again record level of activity record level of amount raised.

Speaker Change: Year to date so to speak.

Speaker Change: Moving that record, but but also increasing round sizes.

Speaker Change: The increasing diversification of industry sectors, and more importantly, improving valuations and Thats why we saw it in the warrant and equity portfolio beyond just sort of alluded we saw improvement. So so we're pleased to see that Joe Theres definitely a class of companies that still need that kind of valuation check, but I think more importantly within our portfolio.

Sajal Srivastava: So there's definitely a class of companies that still need that kind of valuation check, but I think more importantly within our portfolio, we are seeing a balance of both flat rounds, down rounds, and up rounds.

Speaker Change: So we are seeing balances, but with flat rounds down round the end up brands.

Paul Johnson: Thank you. That's very helpful.

Speaker Change: Thank you that's very helpful. That's all for me.

Paul Johnson: That's all for me.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Mr. Jim <unk> for any closing remarks.

Operator: This concludes our question and answer session.

James Labe: I would like to turn the conference back over to Mr. Jim Labe for any closing remarks. As always, I'd like to thank everyone for listening and participating in today's call. We look forward to updating and talking with you all again next quarter.

Speaker Change: And as always I'd like to thank everyone for listening and participating in today's call. We look forward to updating and talking with you all again next quarter. Thanks.

James Labe: Thanks again, and everyone have a nice day.

Speaker Change: Thanks, again and everyone have a nice day.

Speaker Change: Goodbye.

Operator: Conference is now concluded. Thank you for attending today's.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

Operator: and you may now disconnect.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].