Q4 2024 Runway Growth Finance Corp Earnings Call
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Runway Growth Finance fourth quarter and fiscal year ended 2024 earnings conference call. please be advised that today's conference is being recorded.
Ladies and gentlemen, thank you for standing by and welcome to the runway well finance fourth quarter and fiscal year ended 2024 earnings conference call.
Please be advised that today's conference is being recorded.
Quinlan Abel: I would now like to hand the conference over to Quinlan Abel, Assistant Vice President and Best of Relations. You may begin. Thank you, operator.
Quintin April: I would now like to hand, the conference over to Quintin April Assistant Vice President Investor Relations you may begin.
Quinlan Abel: Good evening, everyone, and welcome to the Runway Growth Finance conference call for the fourth quarter and fiscal year ended December 31st, 2024.
Thank you operator.
Quintin April: Good evening, everyone and welcome to the runway growth Finance conference call for the fourth quarter and fiscal year ended December 31st 2024.
Quinlan Abel: Joining us on the call today from Runway Growth Finance are David Spreng, Chairman and Chief Executive Officer, Greg Greifeld, Chief Investment Officer of Runway Growth Capital, LLC, our Investment Advisor, and Tom Raterman, Chief Financial Officer and Chief Operating Officer.
David sprang: Joining us on the call today from runway growth finance are David sprang, Chairman and Chief Executive Officer, Greg Greifeld, Chief investment officer of runway gross capital L. L C. Our investment advisor and Tom Ratterman, Chief Financial Officer, and Chief operating Officer.
Quinlan Abel: Runway Growth Finance's fourth quarter and fiscal year ended 2024 financial results will release just after today's market close and can be accessed from Runway Growth Finance's Investor Relations website at investors.runwaygrowth.com.
David sprang: Runway growth finances fourth quarter and fiscal year ended 2024 financial results were released just after today's market close and can be accessed from runway gross finances investor relations website at investors dot runway growth dotcom.
Quinlan Abel: We have arranged for a replay of the call to be available on the Runway Growth Finance website.
David sprang: We have arranged for a replay of the call to be available on the runway growth finance webpage.
Quinlan Abel: During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including, and without limitation, market conditions caused by uncertainty surrounding interest rates, changing economic conditions, and other factors we identified in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect.
David sprang: During this call I want to remind you that we may make forward looking statements based on current expectations.
David sprang: The statements on this call that are not purely historical are forward looking statements.
David sprang: These forward looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward looking statements, including and without limitation market conditions caused by uncertainties surrounding interest rates changing economic conditions and other.
David sprang: Factors, we identified in our filings with the SEC.
David sprang: Although we believe that the assumptions on which these forward looking statements are based are reasonable any of those assumptions can prove to be inaccurate and as a result, the forward looking statements based on those assumptions can be incorrect.
Quinlan Abel: You should not place undue reliance on these forward-looking statements.
David sprang: You should not place undue reliance on these forward looking statements.
Quinlan Abel: The forward-looking statements contained on this call are made as of the date hereof and Runway Growth Finance assumes no obligation to update the forward-looking statements or subsequent To obtain copies of SEC-related filings, please visit our website.
David sprang: The forward looking statements contained on this call are made as of the date hereof and runway growth finance assumes no obligation to update the forward looking statements or subsequent events.
David sprang: To obtain copies of our SEC related filings please visit our website.
David Spreng: With that, I will turn the call over to David. Thank you, Quinlan. And thanks, everyone, for joining us this evening. On today's call, we will discuss our fourth quarter and full year 2024 financial results, reflect on the recently closed acquisition of our advisor by BC Partners Credit, and share our market outlook for the year ahead. We are pleased with the performance of the portfolio and our strategic execution in 2020. For the fourth quarter, Runway delivered total investment income of $33.8 million and net investment income of $14.6 million. Against the evolving rate environment and macro backdrop, we focused on the health of our late and growth stage portfolio and maintain strong credit quality.
David sprang: With that I will turn the call over to David.
David sprang: Thank you Quinlan and thanks to everyone for joining us. This evening on today's call, we will discuss our fourth quarter and full year 2024 financial results reflect the recently closed acquisition of our adviser by BC partners credit and share our market outlook for the year ahead.
David sprang: We are pleased with the performance of the portfolio and our strategic execution in 2024.
David sprang: For the fourth quarter runway delivered total investment income of $33 8 million and net investment income of $14 6 million.
David sprang: Against the evolving rate environment and macro backdrop, we focused on the health of our late and growth stage portfolio and maintain strong credit quality.
David Spreng: The fourth quarter of 2024 was transformative for run We have enhanced our origination channels, expanded our product set, and built infrastructure to accelerate pipeline growth as we seek to optimize our portfolio. As we previously announced, during the fourth quarter, Runway Growth Capital, our investment advisor, entered into a definitive agreement to be acquired by BC Partners Credit as a long-term strategic investment. BC Partners Credit now has more than $10 billion in assets under management and is the credit arm of BC Partners, an alternative investment firm with over $40 billion in AUM. In January, we were pleased to announce the close of this transaction following a strong shareholder vote in favor of this path forward.
David sprang: The fourth quarter of 2024 was transformative for runway.
David sprang: We have enhanced our origination channels expanded our product set and built infrastructure to accelerate pipeline growth as we seek to optimize our portfolio.
David sprang: As we previously announced during the fourth quarter run rate growth capital our investment advisor entered into a definitive agreement to be acquired by BC partners credit as a long term strategic investment.
<unk> Partners' credit now has more than $10 billion in assets under management and as the credit arm of BC partners and alternative investment firm with over $40 billion in AUR.
David sprang: In January we were pleased to announce the close of this transaction following a strong shareholder vote in favor of this path forward to reiterate runway growth capital continues to operate with its full team intact and remains the investment advisor to runway growth finance.
David Spreng: To reiterate, Runway Growth Capital continues to operate with its full team intact and remains the investment advisor to Runway Growth Finance. The close of the BC Partners transaction ushers in a new era for our shareholders and borrowers, who we believe will benefit from our combined scale and expertise. Looking ahead, Runway Growth Capital is seeking to grow originations in the total loan size of $30 to $150 million. That said, our ideal allocation to the BDC will remain $20 to $45 million. Greg will cover this in more momentarily, but we believe this range of check size is positioned to benefit both runway and BC in the long term.
David sprang: The close of the BC partners transaction ushers in a new era for our shareholders and borrowers who we believe will benefit our <unk>.
David sprang: Combined scale and expertise.
David sprang: Looking ahead runaway growth capital is seeking to grow originations in the total loan size of $30 million to $150 million.
David sprang: That said, our ideal allocation to the BDC will remain 20% to $45 million.
David sprang: Meg will cover this in more momentarily, but we believe this range of check size is positioned to benefit both runway in BC in the long term.
David Spreng: Additionally, We expect this focus will further diversify our BDC's portfolio.
David sprang: Additionally.
David sprang: We expect this focus will further diversify our bdc's portfolio for example, a $50 million investment pays back its long we may seek attractive opportunities in the 20 to 30 million size to deploy that return capital we view this as a.
David Spreng: For example, a $50 million investment pays back its loan. We may seek attractive opportunities in the 20 to 30 million size to deploy that return capital. We view this as a win-win for our investors. They gain a scaled platform that offers stronger deal flow and more solutions to attract prospective borrowers, as well as a strategic focus that will further diversify our go forward portfolio and mitigate risk.
David sprang: Win win for our investors.
David sprang: Taking a scaled platform that offers stronger deal flow and more solutions to attract prospective borrowers as well as the strategic focus that will further diversify our go forward portfolio and mitigate risk.
David Spreng: We are just getting started. And as we embark on this new chapter with the support of BC partners, we are confident that our platform is well positioned to maximize our portfolio while maintaining disciplined underwriting practices. We remain focused on our long term vision of providing financing solutions to passionate entrepreneurs who are building innovative business. To that end, in the fourth quarter, we were pleased to execute on two investments with new companies and five investments with existing portfolio companies, representing $154 million in funded loans. Our new positions during the quarter include the completion of a $43 million loan to Piano Software, a global leader in digital experience management.
David sprang: We are just getting started and as we embark on this new chapter with the support of BC partners. We are confident that our platform is well positioned to maximize our portfolio, while maintaining disciplined underwriting practices.
David sprang: Remained focused on our long term vision of providing financing solutions to passionate entrepreneurs, who are building innovative businesses.
David sprang: To that end in the fourth quarter, we were pleased to execute on two investments with new companies and five investments with existing portfolio companies representing $154 million in funded loans.
Our new positions during the quarter include the completion of the $43 million loan to piano software.
David sprang: Global leader in digital experience management.
David Spreng: We also completed a $26.7 million investment to Hurricane Clean Code Limited, an integrated merchant acquiring and payment processing platform. Our investments made in the quarter are reflective of our focus on the high growth sectors of technology, healthcare, and consumer products and services.
David sprang: We also completed a $26 7 million dollar investment to Hurricane Clean Co Ltd, and integrated merchant acquiring and payment processing platform.
David sprang: Our investments made in the quarter are reflective of our focus on the high growth sectors of technology health care and consumer products and services.
David Spreng: As I wrap up, I want to reiterate our excitement for the path forward. Our portfolio is positioned to perform and we believe our borrowers will operate effectively against the macro backdrop taking shape in 2025. Looking ahead, Runway will continue to prioritize a credit-first investment philosophy, maintain selectivity as we seek to optimize our portfolio.
David sprang: As I wrap up I want to reiterate our excitement for the path forward our portfolio is positioned to perform and we believe our borrowers will operate effectively against the macro backdrop, taking shape in 2025.
David sprang: Looking ahead runway, we will continue to prioritize our credit first investment philosophy maintain selectivity as we seek to optimize our portfolio.
Greg Greifeld: With that, I'll turn it over to Greg. Thanks, David, and good evening, everyone. Today, I will offer a little more detail on our capital deployment philosophy and then wrap with our view on the current venture debt landscape. To echo David's sentiment, with the close of the BC Partners transaction, we are starting 2025 with an expanded product set, and we are already evaluating a growing pipeline of opportunities as a result. To begin, I want to drill down on a point David outlined earlier on our target allocation range of $20 to $45 million to the BDC. As a part of the broader BC Partners credit ecosystem, we have the ability to take part in larger deals and allocate the ideal allotment to runway growth finance.
Greg: With that I'll turn it over to Greg.
Greg: Thanks, David and good evening, everyone today, I will offer a little more detail on our capital deployment philosophy, and then wrap with our view on the current venture debt landscape.
Greg: Echo David's sentiment with the close of the BC partners transaction. We are starting 2025 with an expanded product set and we are already evaluating a growing pipeline of opportunities as a result to begin I want to drill down on the point, David outlined earlier on our target allocation range of 20% to $45 million for the BDC.
Greg: As a part of the broader BC partners credit ecosystem, we have the ability to take part in larger deals and allocate the ideal allotment to runway growth finance.
Greg Greifeld: A good example of this is our partnership with VertexOne, which closed in the fourth quarter. This transaction provided VertexOne with $131 million of growth capital, and $41 million was allocated to the BDC. This is one of the many tools we have available to us to drive originations and strike deals that are favorable to our investors across the entire platform. We look forward to sharing additional opportunities that present multifaceted wins.
Greg: Good example of this is our partnership with vertex one which closed in the fourth quarter. This transaction provided vertex one with $131 million of growth capital and $41 million was allocated to the BDC.
Greg: <unk> is one of the many tools, we have available to us to drive originations and strike deals that are favorable to our investors across the entire platform.
Greg: Look forward to sharing additional opportunities that present multifaceted wins subsequent to the end of the quarter. We saw a new administration take office and potential policies and new regulatory measures become a reality, while the economic impact of tariffs and the evolving government efficiencies initiatives represent a dynamic situation we built.
Greg Greifeld: Subsequent to the end of the quarter, we saw a new administration take office and potential policies and new regulatory measures become a reality. While the economic impact of tariffs and the evolving government efficiencies initiatives represent a dynamic situation, we believe our focus on high growth sectors with loans that are senior in the capital structure provides additional security and allows our portfolio to perform a cross-market backbone. Further, we believe our pure play focus on venture debt, which experienced explosive growth in 2024, will continue to be a key value driver moving forward. According to recent pitch book data, venture debt deal value increased to more than $53 billion in 2024, a dramatic increase from approximately $27 billion in 2023.
Greg: Leave our focus on high growth sectors with loans that are senior in the capital structure provides additional security and allows our portfolio to perform across market backdrops.
Greg: Further we believe our pure play focus on better debt, which experienced explosive growth in 2024 will continue to be a key value driver moving forward. According to recent Pittsburgh data venture debt deal value increased to more than $53 billion in 2020 for the dramatic increase from approximately 27.
Greg Greifeld: This increase can be attributed to several multi-billion dollar as AI companies raise debt. And while some of these transactions may have been idiosyncratic, we view this growth as a green shoot for the venture debt space writ large. In our view, Runway is positioned to execute amidst the tailwinds in venture debt, and our investors benefit from the following characteristics of the sector. First, our portfolio offers lower loan-to-value relative to middle-market lenders, which provide the martian of safety for investors. Second, our loans offer predictable cash flows that enable differentiated return profiles for the shorter lifetime. Third, we underwrite our solutions with enhanced control through covenants and milestones outlined in our debt agreement.
Greg: $1 billion in.
Greg: In 2023, this increase can be attributed to several multibillion dollar deals completed.
Companies raised debt and while some of these transactions may have been idiosyncratic. We view this growth as a green sheets of the venture debt space writ large and argue runway is positioned to execute amidst the tailwind in venture debt and our investors benefit from the following characteristics of the sector.
Greg: First our portfolio offers lower loan to value relative to middle market lenders, which provides a margin of safety for investors.
Greg: Our loans offer predictable cash flows that enable a differentiated return profiles for the shorter lifetime.
Greg: Third we underwrite our solutions with enhanced control through covenants and milestones outlined in our debt agreements.
Greg Greifeld: And lastly, our investors gain attractive exposure to the venture ecosystem through a portfolio of assets at the top of the capital. This offers strong risk mitigation compared to other venture investment solutions.
Greg: Lastly, our investors gain attractive exposure to the venture ecosystem through our portfolio of assets at the top of the capital stack. This offer strong risk mitigation compared to other venture investment solutions in short runway has exhibited strong portfolio management with minimal losses since inception and presents prospective investors with.
Greg Greifeld: In short, Runway has exhibited strong portfolio management with minimal losses since the inception and presents prospective investors with ample equity upside as we currently trade at a discount to our venture debt peers. The opportunity in front of us is clear, and we have the backing of a world class platform to deliver for our shareholders.
Greg: Ample equity upside as we currently trade at a discount to our venture debt peers the opportunity in front of US is clear and we have the backing of a world class platform to deliver for our shareholders with that I will now turn it over to Tom to discuss our financial results.
Tom Raterman: With that, I will now turn it over to Tom to discuss our financial results.
Tom Raterman: Thank you, Greg, and good evening, everyone. During the fourth quarter of 2024, Runway completed two investments in new companies and five investments in existing companies, representing $154 million in funded loans. Our Weighted Average Portfolio Risk Rating decreased to 2.33 in the fourth quarter of 2024, compared to 2.48 in the third quarter of 2024. Our rating system is based on a scale of 1 to 5, where 1 represents the most favorable credit rate.
Tom: Thank you, Greg and good evening, everyone. During the fourth quarter of 2024 runway completed two investments in new companies and five investments in existing companies representing $154 million in funded loans.
Tom: Our weighted average portfolio risk rating decreased to $2 33 in the fourth quarter of 2024 compared to $2 48 in the third quarter of 2024.
Tom: Our rating system is based on a scale of one to five where one represents the most favorable credit rating.
Tom Raterman: I think it may be valuable to take a moment to dive deeper into our ratings. For reference, All new transactions begin as a Category 2. Several performance items, as well as technical loan compliance matters, could cause a loan to move from Category 2 to Category 3. This might include a borrower deviating from its plan of record. I want to point out that the borrower's plan of record is generally not our underwriting plan and does not necessarily mean that the credit is now in trouble. In our experience, the majority of borrowers that move to Category 3 still pay their loan in full and on time.
Tom: I think it may be valuable to take a moment to dive deeper into our rating system for reference.
Tom: All new transactions begin as a category to several performance items as well as technical loan compliance matters could cause alone to move from category to category three.
This might include a borrower deviating from its plan of record I want to point out that the borrowers plan of record is generally not our underwriting plan and does not necessarily mean that the credit is now in trouble in our experience. The majority of borrowers that move to category three still pay their loan in full and on time. This.
Tom Raterman: This risk rating helps us monitor our portfolio accurately, but we do want to clarify that companies in Category 3 are not necessarily exhibiting subpar or weak operating For more information visit www.FEMA.gov Rather, these companies simply have deviated from the company plan that was laid out at the beginning of our agreement.
Tom: Risk rating helps us monitor our portfolio accurately, but we do want to clarify the company's in category three are not necessarily exhibiting subpar or weak operating performance. Rather these companies simply have deviated from the company plan that was laid out at the beginning of our agreement.
Tom Raterman: The full details of our rating system are included in our annual report on Form 10. As with previous quarters, we calculated the loan-to-value for loans that were in our portfolio at the end of the third quarter and at the end of the fourth quarter. In comparing this consistent grouping of loans, we found that our dollar weighted loan to value ratio decreased from 29.3% to 26.6%. Our total investment portfolio, excluding U.S. Treasury bills, had a fair value of approximately $1.08 billion, an increase from $1.07 billion in the third quarter of 2024, and an increase of 5% from $1.03 billion for the comparable prior year period.
Tom: The full details of our reading system are included in our annual report on Form 10-K.
Tom: As with previous quarters, we calculated the loan to value for loans that were in our portfolio at the end of the third quarter and at the end of the fourth quarter.
In comparing this consistent grouping of loans, we found that our dollar weighted loan to value ratio decreased from 29, 3% to 26, 6%.
Tom: Our total investment portfolio, excluding U S. Treasury bills had a fair value of approximately one point over $8 billion, an increase from one 7 billion in the third quarter of 2024, and an increase of 5% from $1 $3 billion for the comparable prior year period.
Tom Raterman: Our long portfolio continues to be comprised almost exclusively of first lean senior secured. At December 31st, 2024, Runway had net assets of $514.9 million, increasing from $507.4 million at the end of the third quarter of 2020. Nav4Share was $13.79 at the end of the fourth quarter, an increase of 3% compared to $13.39 at the end of the third quarter of 2021. Our loan portfolio is comprised of 97% floating rate assets. All loans are currently earning interest at or above agreed upon interest rate floors, which generally reflect the base rate plus the credit spread set at the time of closing or signing of the term.
Tom: Our loan portfolio continues to be comprised almost exclusively of first lien senior secured loans.
Tom: At December 31, 2024 runway had net assets of $514 9 million, increasing from $507 4 million at the end of the third quarter of 2024.
Tom: NAV per share was $13 79 at the end of the fourth quarter, an increase of 3% compared to $13 39.
Tom: At the end of the third quarter of 2024.
Our loan portfolio is comprised of 97% floating rate assets.
Tom: All loans are currently earning interest at or above agreed upon interest rate floors, which generally reflect the base rate plus the credit spread set at the time of closing or signing of the term sheet.
Tom Raterman: In the fourth quarter, we received $152.6 million in principal prepayments, an increase from $75 million in the third quarter of 2020. As previously stated, we believe elevated prepayments are an indicator of the strength in our approach to underwriting and the overall health of the portfolio and the ecosystem. We generated total investment income of $33.8 million, and net investment income of $14.6 million in the fourth quarter of 2024, compared to $36.7 million and $15.9 million in the third quarter of 2020. Our debt portfolio generated a dollar-weighted average annualized yield of 14.7% for the fourth quarter as compared to 15.9% for the third quarter of 2024 and 16.9% for the comparable period last year.
Tom: In the fourth quarter, we received $152 6 million in principal prepayments an increase from $75 million in the third quarter of 2024.
Tom: As previously stated we believe elevated prepayments are an indicator of the strength in our approach to underwriting and the overall health of the portfolio and the ecosystem.
Tom: We generated total investment income of $33 8 million and net investment income of $14 6 million in the fourth quarter of 2024 compared to $36 7 million and $15 9 million in the third quarter of 2024.
Tom: Our debt portfolio generated a dollar weighted average annualized yield of 14, 7% for the fourth quarter as compared to 15, 9% for the third quarter of 2024, and 16, 9% for the comparable period last year.
Tom Raterman: Moving to our expenses, total operating expenses were $19.2 million for the fourth quarter of 2024, a decrease from $20.8 million for the third quarter of 2024. We recorded a net realized loss on investments of $2.9 million in the fourth quarter of 2024 compared to no realized gains or losses in the third quarter. At December 31, 2024, we continue to have two loans on non-accrual status, Mingle Healthcare and Snagajob. Our loans at Mingle Healthcare has a cost basis of $5 million and fair market value of $2.1 million, or 43% of cost. Our Loans to Snag a Job has a cost basis of $3.8 million and fair market value of $3.4 million or $91.5 million.
Tom: Moving to our expenses total operating expenses were $19 2 million for the fourth quarter of 2024, a decrease from $20 8 million for the third quarter of 2024.
Tom: We recorded a net realized loss on investments of $2 9 million in the fourth quarter of 2024 compared to no realized gains or losses in the third quarter of 2024.
Tom: At December 31, 2024, we continue to have two loans on non accrual status.
Tom: <unk> healthcare and snag, a job or loan to mingle healthcare has a cost basis of $5 million in fair market value of $2 1 million or 43% of cost or loan to spinnaker job as a cost basis of $3 8 million in fair market value of $3 4 million or <unk>, 91% of cost.
Tom Raterman: Together, these loans represent only a half percent of the total investment portfolio at fair value as of December 31st, 2021. At the end of the fourth quarter of 2024, our leverage ratio and asset coverage remained at 1.08 and 1.92 times, respectively, consistent with the third quarter of 2024. As of December 31st, 2024, our total available liquidity was $244.8 million, including unrestricted cash and cash equivalents, and we had borrowing capacity of $239 million.
Tom: Together these loans represent only a half percent of the total investment portfolio at fair value as of December 31, 2024.
Tom: At the end of the fourth quarter of 2024, our leverage ratio and asset coverage remained at one point OA and 192 times, respectively, consistent with the third quarter of 2024.
Tom: As of December 31, 2024, our total available liquidity was $244 8 million, including unrestricted cash and cash equivalents and we had borrowing capacity of $239 million.
Tom Raterman: Subsequent to quarter end, we extended our credit facility with KeyBank by three years subject to the terms and conditions as reflected in the amended credit facility agreement. We believe the amended credit facility provides increased availability and additional lending verticals to support our businesses growth. As of December 31st, 2024, we had a total of $176.7 million in unfunded commitments, which was comprised of $147.3 million to provide debt financing to our portfolio companies and $29.4 million to provide equity financing to Runway CADMA 1 LLC. Approximately 24.8 million of available unfunded commitments are eligible to be drawn based on achieved mileage.
Tom: Subsequent to quarter end, we extended our credit facility with Keybank by three years subject to the terms and conditions as reflected in the amended credit facility agreement.
Tom: We believe the amended credit facility provides increased availability and additional lending verticals to support our business growth.
Tom: As of December 31, 2024, we had a total of $176 7 million in unfunded commitments, which was comprised of $147 3 million to provide debt financing to our portfolio companies and $29 4 million to provide equity financing to runaway cat one.
Tom: LLC.
Tom: Approximately $24 8 million of available unfunded commitments are eligible to be drawn based on achieved milestones.
Tom Raterman: During the fourth quarter, we experienced five prepayments totaling $152.6 million and scheduled amortization of $2.4 million.
Tom: During the fourth quarter, we experienced five prepayments totaling $152 6 million in scheduled amortization of $2 4 million.
Tom Raterman: I'll now close with an update on our capital allocation strategy.
Tom: I will now close with an update on our capital allocation strategy.
Tom Raterman: Earlier today, our Board of Directors declared aggregate distributions of $0.36 per share for the first quarter of 2025, which is comprised of a $0.33 per share base dividend and a $0.03 per share supplemental dividend. Subject to board approval, we expect that going forward, the company will continue to pay a quarterly base dividend of $0.33 per share and a targeted supplemental dividend that we expect will be up to 50% of the delta that our NII per share exceeds the base dividend. As we focus on near-term capital allocation strategy on building and preserving NAV, we believe our lower base dividend will enable us to deliver consistent yield to our shareholders.
Tom: Earlier today, our board of directors declared aggregate distributions of 36 per share for the first quarter of 2025, which is comprised of a 33 per share base dividend and a <unk> <unk> per.
Tom: For sure supplemental dividend.
Tom: Subject to board approval, we expect that going forward. The company will continue to pay our quarterly base dividend of <unk> 33 per share and a targeted supplemental dividend that we expect will be up to 50% of the delta that our NII per share exceeds the base dividend.
Tom: As we focus on near term capital allocation strategy on building and preserving NAV, we believe our lower base dividend will enable us to deliver consistent yield to our shareholders.
Tom Raterman: even if we face rate environment volatility. Our board will continue to evaluate and approve future distributions, knowing how important consistency is to our fellow shareholders.
Tom: Even if we face rate environment volatility.
Tom: Our board will continue to evaluate and improve future distributions, knowing how important consistency as to our fellow shareholders.
Operator: With that, operator, please open the line for questions. Thank you.
Speaker Change: With that operator, please open the line for questions.
Operator: Ladies and gentlemen, to ask a question, please press star 1-1 on your telephone, then wait for your name to be announced. To withdraw your question, please press start 1-1 again.
Tom: Thank you.
Speaker Change: Ladies and gentlemen to ask to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.
Operator: Please stand by while we compile the Q&A roster.
Casey Alexander: Our first question comes from the line of Casey Alexander with Compass Point Research and Trading. Your line is open. Yeah, good afternoon.
Casey Alexander: Our first question comes from the line of Casey Alexander with Compass Point Research and trading your line is open.
David Spreng: First of all, I was A little surprised that there were not more. New originations here in the first quarter. You gave some information up to this point in time, two million and 13 million coming off revolvers, I think it was. Now, I do know that that originations are generally very back ended. Would you expect that here in the next 10 days before the quarter ends, that there would be additional origination? Yeah, I think you're completely correct, Casey, that the originations are typically typically back ended. You know, and I wouldn't say that necessarily what we have done, done to this point is a sign for where the quarter will end up overall.
Casey Alexander: Yes. Good afternoon first of all I was.
Casey Alexander: A little surprised.
Casey Alexander: There were not more.
Casey Alexander: <unk>.
Casey Alexander: New originations here in the first quarter you gave some information up to this point in time $2 million and $13 million coming off of a revolver. So I think it was.
Casey Alexander: I do know that originations are generally very back ended.
Speaker Change: Would you expect that here in the next 10 days before the quarter end Smith, there would be additional originations.
Smith: Yes, I think you are completely correct Casey originations.
Speaker Change: Originations articulate typically back ended.
Speaker Change: And I wouldn't say that necessarily but we have done to this point is assigned for where the quarter will end up overall.
David Spreng: We are working with a number of number of companies, and could very easily have some some originations close this quarter, but they may also, as you pointed out, since there's just 10 days left in the quarter, you know, one might might push to the next Secondly... Do you know what percentage of your loan book is now trading at their interest rate floors as of December 31st, of course? Casey, I think the majority and I'll look up the number specifically, but I think the majority are either at or above the floors. Most are would still continue to be above the floor.
Speaker Change: We are working with a number of companies.
Speaker Change: And could very easily have some some originations closed this quarter, but they may also as you pointed out since Theres, just 10 days left in the quarter.
Speaker Change: One might pushed to the next quarter.
Speaker Change: Okay.
Speaker Change: Lee.
Do you know what percentage of your loan book is now trading at their interest rate floors as of December 31 and of course.
Speaker Change: Casey I think the majority and I'll look up the number specifically, but I think the majority are.
Speaker Change: Either at or above the <unk>.
Speaker Change: <unk> Master would still continue to be above the floor is certainly the newer deals are.
Casey Alexander: Certainly the the newer deals are at at the floors, the older deals that have been on the books are trading above Okay, thank you.
Speaker Change: At at the floors. The older deals that had been on the books are true.
Speaker Change: Trading above the floor.
Casey Alexander: That's it for me now. I'll follow up later. Thank you.
Okay. Thank you.
Speaker Change: That's it from me now ill follow up later.
Speaker Change: Thank you.
Operator: Please stand by for our next question.
Speaker Change: Please standby for our next question.
Finnean O'Shea: Our next question comes from the line of Finnean O'Shea with Wells Fargo. The line is open. Hey everyone.
Speaker Change: Our next question comes from the line of Finian O'shea with Wells Fargo. Your line is open.
Greg Greifeld: Sort of extending on that topic, can you talk about the sort of remaining impact on yield from the Fed cuts What drove the sort of additional, I think there was a point that came off of your book accounting guild this quarter. So maybe some more of that was spread. I know there were low other fees as well. But what we could sort of think of as a first quarter rate, given the portfolio movement and the decline in base rates. Yeah, thanks, Finn. Certainly a big chunk of the decline was a result of the decline in interest rates.
Speaker Change: Hey, everyone.
Speaker Change: Sort of extending on that topic can you talk about the.
Speaker Change: Sort of remaining impact on yield from the fed cuts.
Speaker Change: What drove the sort of additional I think there was a point that came off of your.
Speaker Change: Book accounting yield this quarter. So maybe some more of that was spread I know there were low other fees as well, but what we could sort of think of as.
Speaker Change: Our first quarter rate given the portfolio movement and the decline in base rates.
Ken: Yes, Thanks, Ken.
Ken: Certainly a big chunk of the decline was a result of the of the decline in interest rates, we think that's pretty stable.
Greg Greifeld: We think that's pretty stable, at least in the short term. The other change in the book accounting yield is a result of just fewer accelerations as a result of prepayments. So, as deals take a little longer to prepay, there may be a smaller prepayment fee and there's less end-of-term payment and the like to accelerate. So, as you see the variation in our portfolio yield over time, it typically spikes when we have a significant number of early-term payments.
Ken: At least in the short term the other change in the in the book accounting yield as a result of just a.
Ken: Fewer acceleration.
Ken: As a result of prepayments.
Ken: So as deals take a little longer to two.
Ken: Prepay.
There may be a smaller prepayment fee and there is less end of term payments and the likes to accelerate so you see the variation.
Ken: Our.
Ken: Our portfolio yield over time, it typically spikes when we have significant number of early terminations.
Greg Greifeld: Was there, is the PREF in SNAG a job accruing interest or will it next, was that to happen somewhere in the quarter? The Snagajob Press is a non-interest-bearing instrument.
Ken: Was there.
Ken: As the press and snag, a job accruing interest or will it next.
Ken: To happen somewhere in the quarter.
Ken: Snack job press is a non noninterest bearing instrument.
Ken: Okay.
Greg Greifeld: Um, one more on the dividend. It looks like you guys just sort of. Thought about that. Earnings were sort of... you know, straddling it. I think you had some announcements, but new. or expanded a new board of directors roster. Can you talk about sort of what the changes were? If it goes beyond the base rates and new spreads, and this was more about, I think you talked about capital allocation, does this mean lower leverage? Is that sort of in the outlook?
Ken: One more on the dividend it looks like you guys just sort of.
Ken: Sorry about that earnings were sort of.
Ken: Straddling it.
Ken: I think you had some announcements but new.
Ken: For expanded a new board of directors roster.
Ken: Can you talk about sort of what the changes were.
Ken: If it goes beyond the base rates and new spreads.
And this was more about I think you talked about capital allocation.
Ken: Does this mean.
Ken: Lower leverage.
Greg Greifeld: And then a base dividend cut that's fairly substantial, sort of second question, is always a time when there's a discussion of a look back, a credit look back, so seeing your thoughts on that as well. Thanks. Yeah, so as the board of directors looked at the dividend, and keep in mind, we have a new board of directors coming in. They've certainly recognized the importance of a stable and consistent and predictable dividend. And so as they they looked at it, they adopted wanted to adopt a base dividend like many like the BDCs on the BC Partners platform that was clearly sustainable and wasn't necessarily going to be interrupted by fluctuations in interest rates, variability of prepayment fees and other income from early terminations, and then continue to maintain a payout with that target of 50% of the delta over NII.
Ken: Is that sort of in the outlook and then.
Ken: Base dividend cut that's fairly substantial sort of second question.
Ken: There's always a time when there is a discussion of.
Ken: I'll look back credit look back so seeing your thoughts on that as well. Thanks.
Ken: Yes.
Ken: No.
Speaker Change: As the board of directors looked at the dividend and keep in mind, we have a new board of directors coming in.
David certainly recognize the importance of stable and consistent and predictable dividend and so as they looked at it they adopted.
Speaker Change: Wanted to adopt a base dividend.
Speaker Change: Many of the Bdcs on the BC partners platform.
Speaker Change: It was clearly sustainable and it wasn't necessarily going to be interrupted by.
Speaker Change: Fluctuations in interest rates variability.
Speaker Change: Prepayment fees and other income from.
Speaker Change: Early terminations and then and then continue to maintain.
Speaker Change: Maintaining a payout.
Speaker Change: That target of 50% of the Delta over.
Greg Greifeld: There's nothing in terms of a change of outlook with respect to lowering leverage. Our leverage target still remains at 1.2 to 1.3. and what will drive that is originations. I do think we have, the board has a little bit of a preference to build NAV, but that does not trump the desire for consistent and stable and predictable.
Speaker Change: There is there is nothing in terms of a change of outlook with respect to lowering leverage our leverage targets still remains.
Speaker Change: One two to one three.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: What will drive that is as originations I do think we have the board has a little bit of a preference to to build NAV.
Speaker Change: But.
Speaker Change: That does not Trump the desire for consistent and stable and predictable dividend.
Greg Greifeld: Okay, and the look back. The shareholders in the board just approved the investment management agreement in January with the change of control. So they're confident that the current arrangement is market and no changes. Thank you.
Speaker Change: Okay, and the look back.
And the shareholders and the board.
Speaker Change: Ian just approved the investment management agreement in January with the change of control.
So they are confident that.
Speaker Change: The current arrangement is as market and.
Speaker Change: And no changes.
Speaker Change: Thanks, so much.
Melissa Wedel: Please stand by for our next question. Our next question comes from the line of Melissa Wedel with J.P. Morgan. Your line is open. Good afternoon. Thanks for taking my questions.
Speaker Change: Thank you Lisa.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Melissa Wedel with Jpmorgan. Your line is open.
Melissa Wedel: Good afternoon, Thanks for taking my questions.
Melissa Wedel: I wanted to start with maybe just a broader understanding of the origination opportunity set now as part of BC Partners. Can you put some sort of framework around that for us? I know you gave the example of Vertex One as being something that was sourced through that platform. Going forward, how much broader do you expect the funnel to be and then what type of asset yield should we be expecting versus your sort of legacy historical origination? Yeah, no, definitely. I think this is a topic that we're really excited to talk about and to fill folks in on.
Melissa Wedel: Wanted to start with maybe just a broader understanding of.
Melissa Wedel: The origination opportunities that now as part of BGC partners can you put some sort of framework around that for US I know you gave the example of vertex one as being something that was sourced through that platform going forward.
Melissa Wedel: How much broader do you expect the final to be core.
Melissa Wedel: Are you and then what type of asset.
Melissa Wedel: Should we be expecting.
Melissa Wedel: Firstly here sort of legacy historical origination.
Speaker Change: Yes, no definitely I think this is a topic that we're really excited to talk about and to fill folks in on.
Melissa Wedel: You know, VertexOne, I think, is one example of us bringing a legacy portfolio company and something from our pipeline and allowing us to access a broader set of products than we previously had, you know, the expertise to underwrite, where historically we had been exclusively first lien senior secured loans. As you'll see, as you pour through our SOI, the new $131 million facility of which we took $41 million is bifurcated between a first lien deal, as well as a second lien PIC instrument with a convertible feature above a certain MOIC. You know, we will, for the most part, lean in more heavily towards the first lien portion of a deal like that, but we think that it allows us to appropriately price risk and potentially participate in some greater upside for other opportunities that we previously had been able to.
Speaker Change: Vertex one I think is one example of us, bringing a legacy portfolio company and something from our pipeline and allowing us to access a broader set of products than we previously had DXP.
Speaker Change: The expertise to underwrite where historically, we had been exclusively first lien senior secured loans.
Speaker Change: As you'll see as you pour through our soi the new $131 million facility of which we took $41 million is bifurcated between a first lien deal as well as a second lien peg instrument with a convertible feature above.
Speaker Change: A certain myc.
Speaker Change: We will for the most part lean in more heavily towards the first lien portion of the deal like that but we think that it allows us to.
Speaker Change: Appropriately price risks.
Speaker Change: And potentially participate in some greater upside.
Speaker Change: For other opportunities that we previously had been able to I would say theres two parts of where the PC combination is really going to.
Melissa Wedel: I would say, you know, there's two parts of where the BC combination is really going to change our funnel. The first of which is being part of, as David said, a now greater than $10 million platform, just has more eyes out there looking at opportunities and brings more things across our desk, which we're greatly appreciative of. But then the second part about it is being part of a large diversified credit firm. It also provides us the expertise to help underwrite some different structures than we previously would have done. So, as I said, you know, we will look on a selected basis more junior things, but also, it allows us to look at things like revolvers.
Speaker Change: Change our funnel the first of which is being part of as David said is now greater than $10 billion platform.
Speaker Change: Has more is out there looking at opportunities and brings Todd brings more things across our desk, which were greatly appreciate above but then the second.
Speaker Change: Part of that is being part of a large diversified credit firm.
Speaker Change: <unk> provides us the expertise to help underwrite some different structures than we previously would have done so as I said.
Speaker Change: We'll look at some on a selected basis basis more juniors things, but also.
Speaker Change: It allows us to look at things like revolvers, we very frequently have gotten the question from folks are we able to provide a revolver and thats not something that we've been able to do which has.
Melissa Wedel: We very frequently have gotten the question from folks, are we able to provide a revolver? And that's not something that we've been able to do, which has led those situations to provide other people that are able to do both. And we believe that, you know, now with this expertise, it's going to help us convert a greater amount of deals. And regarding your questions for returns, you know, we don't expect there to be any material change to our return target. You know, we expect it to be in line with where it has been historically. Okay, thanks for that.
Speaker Change: Let let those situations to provide other.
Speaker Change: Able to do both and we believe that.
Speaker Change: Now with this expertise, it's going to help us convert a greater amount of deals and regarding your question for returns.
Speaker Change: Don't expect there to be any material change to our return target.
Speaker Change: We expect it to be in line with where it has been historically.
Melissa Wedel: And that's just on size of the funnel. Yeah, I do think the funnel will expand as we just are able to leverage a larger network of professionals who are out there in the market, meeting with companies, meeting with sponsors, meeting with brokers.
Speaker Change: Okay. Thanks for that and then just on size of the funnel.
Speaker Change: Yes, I do think the funnel will will expand as we just are able to leverage a larger network of professionals, who are out there in the market meeting with companies meeting with sponsors meeting with brokers.
Melissa Wedel: Okay, a follow-up question for you. In the, I believe it was in the press release, there was a reference to expected sales of some equity and warrant positions in the first quarter. I'm curious if there are any gains or losses associated with that. Are those currently reflected in MARC? Thank you. Thanks, Melissa.
Speaker Change: Okay.
Speaker Change: Follow up question for you Andy.
Speaker Change: I believe it was in the press release.
Speaker Change: There was a reference to expected sales of some equity and warrant positions in the first quarter I am curious if there are any.
Speaker Change: Gains or losses associated with that and are those currently reflected in mark. Thank you.
Speaker Change: Yes, Thanks Melissa.
Melissa Wedel: It's public that the Gynasonics There was a merger of Gynasonics. It was acquired by another entity. We had a preferred equity position that did have a gain on it, and so there will be a gain. That gain was, for the most part, reflected in the fair value at 1231. Thank you.
Speaker Change: It's public.
Speaker Change: That the kind of sonics.
Speaker Change: Yes.
Speaker Change: There was a merger of Guyana Sonics. It was acquired by another entity we had a.
Speaker Change: The preferred equity position.
Speaker Change: It did have a gain on it and so there will be again that gain was for the most part reflected in the fair value at 12 31.
Speaker Change: Thank you.
Doug Hodder: Please stand by for our next question. Our next question comes from a line of Doug Hodder with UBS. Your line is open.
Speaker Change: Thank you Lisa.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Doug Harter with UBS. Your line is open.
Corey Johnson: Hi, this is actually Corey Johnson on for Doug Carter. I just was trying to understand, you know, I guess, given the cut in the dividend, do you expect maybe to give any capital return back in the form of share repurchases? I think I think you have the current plan might be coming towards the towards the end of its life. So there any discussion in regards to possibly starting up a new plan? And so we repurchased close to $25 million in shares during 2024. And the current plan, as you accurately stated, is nearing its expiration. It's something that the management team and the board certainly frequently discuss.
Speaker Change: Hi, This is actually Cory Johnson on for Doug Harter.
Speaker Change: Chris.
Speaker Change: I'm just trying to understand.
Speaker Change: I guess given the cut.
Speaker Change: Dividend.
Speaker Change: You may begin.
Speaker Change: Any like capital return back in the form of share.
Speaker Change: Share repurchases I think I think.
Speaker Change: Current plan might be.
Speaker Change: Coming towards me towards the end of its lifestyle, there any discussion with regards to possibly starting up a new client.
Speaker Change: And so we repurchased close to $25 million in shares during 2024.
Speaker Change: The current plan as you accurately stated as is nearing.
Speaker Change: Its exploration, it's something that.
Speaker Change: The management team and the board certainly frequently discussed and it's always a matter, which creates the better the better return building the portfolio and increasing the leverage and.
Corey Johnson: And it's always a matter of which creates the better return, building the portfolio and increasing the leverage. And potentially enhancing the supplemental or the base dividend or using share repurchases. We'll have to see where the equity trades. Whether we repurchase shares or not, we think we're significantly undervalued at this point. So we'll have to look at our bank availability in the pipeline and make an assessment as to what's best in terms of building long term value.
Speaker Change: Potentially enhancing the supplemental where the where the base dividend.
Speaker Change: Or using share repurchases.
Speaker Change: We have to see where the equity trades.
Speaker Change: Whether we repurchase shares or not.
Speaker Change: We are significantly undervalued at this point.
Speaker Change: So we will have to look at our bank availability in the pipeline and make an assessment as to what's best.
Speaker Change: In terms of building long term value.
Corey Johnson: Thanks.
Corey Johnson: And my last question, just in regards to like, you know, what you're seeing out there in the venture market and in regards to like, you know, capital, capital markets activity and such, how, what, what are you kind of seeing currently? And maybe how has that happened? Yeah. How is what you're seeing now versus what you expected possibly a quarter ago? Yeah, I think we are seeing, you know, for selective companies, activity continue. I think that in general, exits have remained slower than folks might have hoped or anticipated, which is seeing, I think, both a slowdown in recycling of capital, as firms are not getting back maybe some of the dry powder to deploy that they might have expected.
Speaker Change: Thanks, and then my last question.
Speaker Change: Just with regard to what Youre seeing out there.
Speaker Change: Thank you market in regards to like capital.
Speaker Change: Capital markets activity and such.
Scott: Thanks Scott.
Speaker Change: What what are you kind of seeing currently and maybe how is that.
Speaker Change: How is what you're seeing now versus what you expected, possibly a quarter ago.
Speaker Change: Yes, I think we are seeing.
First for selective companies activity continue.
Speaker Change: I think that in general exits have remained slower than folks might have hoped or anticipated, which is seeing I think both a.
Speaker Change: Slowdown in recycling of capital as firms are not getting back maybe some of the dry powder to deploy that they might have expected and similarly next.
Corey Johnson: And similarly, that's leading to less M&A, which for some of the larger later stage companies, such as ours, is leading to less upsize opportunities than we might have otherwise seen. You know, there is an expectation that at some point in the next quarters that that will revert, and you will see an uptick in not only new fundings, but also M&A volume.
Speaker Change: Leading to less M&A, which for some of the larger later stage companies such as ours is leading to less upside opportunities than we might have otherwise seen.
Speaker Change: There is an expectation that at some point.
Speaker Change: In the next quarters that will reverse and you will see.
Speaker Change: Uptick in not only new fundings, but also M&A volume.
Speaker Change: Great. Thank you.
Operator: Thank you. Please stand by for our next question.
Speaker Change: Thank you ladies standby for our next question.
Erik Zwick: Our next question comes from the line of Erik Zwick with Lucid Capital Markets. Your line is open. Thanks.
Speaker Change: Our next question comes from the line of Erik Zwick with Lucid capital markets. Your line is open.
Erik Zwick: Good afternoon, everyone. Most of my questions have been answered, but maybe one or two more I can squeeze in here. The equity portfolio at fair value is now up to about 10 percent of the total portfolio. I assume some of the quarter over quarter increases due to the this NAGA job sale. But just curious how you think about the appropriate size for that. And, you know, kind of maybe building a little bit on the last question of, you know, M&A does pick up. That may give you some opportunity to realize some gains or sell some of those.
Erik Zwick: Thanks, Good afternoon, everyone.
Speaker Change: Most of my questions have been answered, but maybe.
Erik Zwick: One or two more I can squeeze in here.
Erik Zwick: Equity portfolio at fair value is now about 10% of the total portfolio I assume some of that quarter over quarter increase was due to the.
Erik Zwick: <unk> sale, but just curious how you think about the appropriate size for that and maybe building a little bit on the last question. If M&A does pick up that may give you some opportunity to.
Erik Zwick: Realize some gains or sell some of those but I'm. Just curious how you think about the appropriate size and how large you would like that to get before you got there maybe you took a more proactive stance to managing that.
Erik Zwick: But just curious how you think about the appropriate size and how large you would let that get before you got maybe you took a more proactive stance to managing that. Yeah, thanks, Erik.
Greg Greifeld: So we are debt investors, our job is not to be long term equity investors. In both the cases that have, we saw the tick up, it was above kind of that normal core of, you know, two, three, 4%, that would arise from warrants or excess fees that come attached to many of our deals. And it was driven, you know, largely by the Gynasonics restructure number years ago, we split our loan into two pieces so that the company could raise fresh capital. was a very successful approach, then we did follow on preferred investment because the company was performing.
Erik Zwick: Yes, Thanks, Eric.
Speaker Change: We are debt investors, our job is not to be long term equity investors.
Speaker Change: In both the cases that have we saw the tick up it was above kind of that normal core of two to three 4% that would arise from warrants or success fees.
Speaker Change: That they'd come attached to many of our deals and it was driven.
Speaker Change: Largely by the Guyana Sonics restructure a number of years ago, we split our loan into two pieces. So that the company could raise fresh capital.
Speaker Change: It.
Speaker Change: It was a very successful approach than we did a follow on preferred investment because the company was performing and then the other area will where they will arise is.
Greg Greifeld: And then the other area where they will arise is in the event of a troubled situation or suboptimal performance, and that's the case of Snagajob, where the sale that we were able to help facilitate with the company was executed as an equity sale. And the goal there was for us to protect the value of the asset. We expect that there'll be cash return on that at some point, not in the short term. So that's what drives fluctuations over the normal course. We're always looking at opportunities to... Realize on that equity portfolio where there's a liquid investment Last year, we had a warrant position in a portfolio company, we went back to the existing investors, they had just done a new round, and we were able to sell our position out and take a gain.
Speaker Change: In the event of a.
Speaker Change: Of a troubled.
Speaker Change: Situation or sub optimal performance and that's the case of snag a job where.
Speaker Change: The same.
Speaker Change: The sale.
Speaker Change: We were able to.
Speaker Change: Helped facilitate with the with the company.
Speaker Change: Was executed as an equity sale.
Speaker Change: And the goal there was for us to protect the value of the asset.
Speaker Change: We expect that there'll be cash return on that at some point in the short term.
Speaker Change: So that's what drives fluctuations over over the normal course, we're always looking at opportunities to two.
Speaker Change: Realize on that equity portfolio, where there is a liquid investment.
Speaker Change: So last year, we had a warrant position in a portfolio company, we went back to the existing.
Speaker Change: Investors, they've just done a new round and we were able to sell our position out and take a gain so we're always on the lookout for opportunities like that.
Greg Greifeld: So we're, we're always on the lookout for opportunities like that. But, you know, and there may be opportunities going forward with BC partners to look at some kind of structured equity pieces, but that's not gonna move the needle in a significant way on what our core equity portfolio is intended.
Speaker Change: But.
Speaker Change: And there may be opportunities going forward with with BC partners to look at some kind of structured equity pieces, but that's not going to move the needle in a significant way on what.
Speaker Change: Our core <unk>.
Speaker Change: Equity portfolio is intended to be.
Greg Greifeld: I appreciate the color there. And in terms of the unrealized gain in the quarter, I think it was $16.5 million. Was Gynasonics, was that the primary driver of that? Or were there other factors as well? There were a mix, but the single largest was definitely Gynasonics.
Speaker Change: I appreciate the color there.
Speaker Change: And in terms of the unrealized gain in the quarter I think it was $16 $5 million.
Speaker Change: <unk> was that the primary driver of that or whether there are other.
Speaker Change: Factors as well.
Speaker Change: There were a mix, but the single largest was definitely Guyana sonics.
Greg Greifeld: And then last one for me, are you able to update us on the amount of spillover you have now currently just in dollar terms or per share value? It's not something we've published, but you know, our goal is to maintain at least one quarter of spillover and over the course of this new dividend policy to grow that in the coming quarters. Thanks for taking my questions this afternoon. I appreciate it. Thanks, Erik.
Speaker Change: And then last one for me.
Speaker Change: Are you able to update us on.
Speaker Change: The amount of spillover you have now currently just in dollar terms our per share value.
Speaker Change: It's not something we've published but our goal is to maintain at least.
Speaker Change: One quarter of spin.
Speaker Change: Spillover in <unk>.
Speaker Change: Over the course of this new dividend policy to grow that.
Speaker Change: In the coming quarters.
Speaker Change: Thanks for taking my questions. This afternoon I appreciate it thanks Eric.
Operator: Please stand by for our next question.
Speaker Change: Please standby for our next question.
Finnean O'Shea: We have a follow-up question from the line of Finneann O'Shea with Wells Fargo. Your line is open. Oh, hey, everyone. Thanks for the follow up. I was interested in some of the conversation on the the BC Partners platform integration. How much is is that the global? you know, deal flow expected to Reshape your portfolio. I think in an earlier question you talked about, you know, a lot, the ability to do revolvers. And then on the last question, less so. So if you could give us guidance there on, you know, sort of the run rate or future split between yours and theirs.
Speaker Change: We have a follow up question from the line of Finian O'shea with Wells Fargo. Your line is open.
Speaker Change: Okay.
Speaker Change: Hey, everyone. Thanks for the follow up I was interested in some of the.
Speaker Change: The conversation on the BC partners platform integration.
Speaker Change: How much is that the global.
Speaker Change: Deal flow expected too.
Speaker Change: Reshape your portfolio I think in an earlier question you talked about.
Speaker Change: The ability to do revolvers and then the last question.
Speaker Change: Less so so if you could give us guidance there.
Speaker Change: On.
Speaker Change: Sort of the.
Run rate or future split between yours and theirs and then I was also a second.
Finnean O'Shea: And then I was also a second, a bonus one, interested in the last question on spillover. Were you guiding that you're going to ramp that from, you know, one quarter to all the way, like three quarters? Thanks.
Speaker Change: <unk> one.
Speaker Change: Interested in the last question on spillover.
Speaker Change: Are you guiding that youre going to ramp that from one quarter to all the way like three quarters. Thanks.
Greg Greifeld: Yeah, so I'll take the first one about the combination. And I definitely don't want to give the impression that this will be any sort of wholesale change or anything like that. If anything, this is more a benefit in terms of it being additive to the pipeline and potential future portfolio, rather than us saying, hey, we're going to get a meaningful portion of our flow and of our sourcing from BC going forward. I do think that the ability for us to invest in the size loans that we like, the larger loans to later stage companies, while being confident that we can give a more appropriate allocation to the BDC, so that we can drive further diversification, is one of the key points and takeaways that I expect this to be just a wholesale change or acceleration of our origination efforts.
Speaker Change: Yes, so I'll take the first one about.
Speaker Change: Combination then I definitely don't want to give the impression that this.
Speaker Change: It will be any sort of wholesale change or anything like that if anything this is more a benefit.
Speaker Change: Benefit.
Speaker Change: In terms of it being additive to the pipeline and potential future portfolio rather than.
Speaker Change: Saying, hey, we're going to get a meaningful portion of our.
Speaker Change: Flow and of our <unk>.
Speaker Change: Sourcing from BC going forward I do think that the ability for us to invest in the sized loans that wed.
Speaker Change: The larger loans to later stage companies, while being confident that we can give a more appropriate allocation to the BDC such that we can drive further diversification is one of the key points and takeaways that I hope you get from this rather than saying that.
Speaker Change: We expect this to be just a wholesale change or acceleration of our origination efforts and in terms of things like adding in revolvers are second liens or other types of.
Greg Greifeld: And in terms of things like adding in revolvers or second liens or other types of things that differ from the traditional first lien senior secured that we've done, you know, again, I expect that to be additive and for things to help us win opportunities that we otherwise wouldn't have, rather than to go out and say, hey, you know, this is a completely different strategy than what we've had historically. And then on this spillover question, I didn't intend to signal that we were going to grow to some specific numbers rather than just say with the math, the way the target of up to 50% of the delta between the base dividend and NII works is likely to build.
Speaker Change: Things that differ from the traditional first lien senior secured debt. We've done again, I expect that to be additive and for things to help us.
Speaker Change: When opportunities that we otherwise wouldn't have rather than to go out and say hey, this is a completely different strategy than what we've had historically.
Speaker Change: And then on the spillover question fin.
Speaker Change: Attended.
Speaker Change: The signal that we were going to grow to some specific numbers rather than just say with the math the way the target of up to 50% of the delta between the base dividend and NII works.
Speaker Change: Is this likely to build.
Greg Greifeld: But I don't want you to read anything into that, negative or positive, in terms of our anticipated earnings. It's just a strategy. Thank you.
Speaker Change: But I don't want you to read anything into that negative or positive in terms of our anticipated earnings. It's just the strategy.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, I am showing no further questions in the queue.
Tom: Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back over to Tom for closing remarks.
Tom Raterman: I would now like to turn the call back over to Tom for closing remarks. Thank you, Operator. We're proud of the progress we achieved in 2024 that has laid the groundwork for the BDC to execute in 2025. Thank you all for joining us today, and we look forward to speaking with you again in May to review our first quarter performance.
Tom: Thank you operator, we're proud of the progress we achieved in 2024 that has laid the groundwork for the BDC to execute in 2025. Thank you all for joining US today and we look forward to speaking with you again in May to review, our first quarter performance.
Operator: Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may now disconnect.
Tom: Ladies and gentlemen that does concludes today's conference call. Thank you for your participation you may now disconnect.
Tom: Okay.
Tom: [music].
Operator: Thanks for watching!
Tom: Okay.
Tom: Okay.
Tom: [music].