Hercules Capital (HTGC) 24 Feb 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Hercules Capital Q4 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference call is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Michael Hara. you. Thank ahead. go Please

Meyer, Officer; Scott after Good quarter the and of just fourth and the Hercules Hercules' us Sherry. conference Investment XXXX. to Investor htgc.com. close, market and call financial on Chief are from today for accessed CFO. quarter were Relations from at XXXX Hercules' results fourth call CEO afternoon, Seth and you, released today's and welcome everyone, Hercules full-year With Bluestein, can Thank be and section full-year

We for webpage today's arranged passcode telephone a have call replay in at or number of Hercules' earnings provided the the release. by using and

from During the between confirmation statements this filed those based due in this to financial the forward-looking results. release and results and may with Actual call, make on the date current differ Exchange of contained and timing we herein delays audit expectations. Securities final may Commission

those uncertainties caused from from the including the uncertainties, this are of risks market forward-looking are statements factors the that not expressed the release the our that filings addition, factors in without time-to-time and could forward-looking performance pandemic in and including, SEC. materially future statements are historical, turbulence purely uncertainties and statements to subject COVID-XX cause are contained by and In differ results to other These limitation, statements. not in actual identify forward-looking the current guarantees other surrounding the we the with

on that also those result, inaccurate. be believe a those the which And forward-looking of be based assumptions forward-looking can we Although, to any on assumptions statements incorrect. the are prove these statements assumptions can reasonable, as

for over hereof, will These the visit events. reliance contained To copies please to I on should are this related Hercules that, to forward-looking no statements of obtain You forward-looking the obligation date And assumes made statements turn with filings, the in as update Web call place these SEC forward-looking our subsequent release site. undue statements. of Scott. and not

vibrancy continued new debt wholly-owned including platform, up a total up investment of put of robust safe Hercules equity million, $XXX.X I solid Thank subsidiary grow hope thank credit also ecosystem, incredibly achieve execution, up strength sheet total $X.XX X.X%; yet scale. strong million, healthy. achievements with for was of consecutive strong and outstanding formation finally, to over ending record of of record results, and outstanding; on to share year; of in X.X%; Capital on record and origination Despite deliver record associated able year balance position, to proud of joining importance having $XXX.X and XX In earnings million; XXX-plus all today. the and challenges position $XXX.X to is Hercules you and VC team Michael, We a to deliver liquidity multiple for Advisor COVID-XX or us solid based Hercules and am with assets $X us million was per partner M&A liquidity health available another were third fronts, pandemic, borrowers, able $X.X events; We IPO $XXX.X spillover investment as companies XXXX. in commitments Capital. financial our you, as the our and the billion, X.X%; and of of able income of staying sheet, the net they that performance. ability our strong everyone of the XXXX, of record and stable billion of to shares a our with balance demonstrate, the undistributed the income what

an then XXXX, some and I ensure discuss and our that overview I update the the will important. of be current the in balance also future for to we that work performance feel providing to position with environment. manage on the maintain substantial business maximize throughout areas us an strengthen QX, to of provide and Continuing to key flexibility of We liquidity, our operational theme strength, platform sheet further growth. am in continue the we did, are business in XXXX, going

QX. Let some delivered nearly commitments, recap of debt our performance of key highlights $XXX me the fundings $XXX new and originated equity of million more than million. for and We of gross

strong Our performance, fundings milestones the towards existing achievement relationships, of driven by were fourth equity weighted portfolio debt across current and and quarter portfolio. company largely the continued

we created and and stay capital an to disciplined in also QX, abundance Being the to believe structured opportunity underwriting strong of warrants warranted. to new pull be as business aggressive of chose when us terms deal at when During but origination. debt back it, challenges loosely on equity scale parameters, we true quality our prudent focus affords

QX Our performance team. sciences debt life from although sciences more and and life QX to mix were record companies, a our equity towards after were commitments a technology of technology companies in they weighted

unusually payoffs markets. hit are availability running the XXXX, across non-binding and XXXX, has with to very continued closed and early combined new our in XX, of team abundance frothiness effective capital despite an commitments, investment pleased during originations we capital have was close regards record the in Hercules has already and ground million we strong company QX, on of February the portfolio $XXX across and sheets. our performance Since of our quarter. the additional and This, strong fourth with ecosystem. by Our portfolio continued in an and yields drove signed strong term pending $XXX exits quarter-to-date, commitments million very liquidity of of QX performance as

which validate the with class, prepayments and underwriter in in velocity credit do $XXX QX from to QX, our the of prepayments were verticals. strong difficult $XXX in million million million. saw market model of sustaining The Nearly to of that over we activity our over our capital and ecosystem of repayments this this the makes leading achieving exits last being equity predict, capital was XX-plus companies ability $XXX up loan core Early always in our have QX proven to attributable able the guidance activity. scale and asset to XX% the disciplined some or identify a difficult, strong but in of While $XXX of and being years. we above M&A are to million, were partner

Given of the back second-half prepayments that normal across our portfolio, cadence before remain a near-term in strength to we reverting are more we seeing elevated the expect XXXX. to

$XXX we as QX, in materially higher in during the prepayments loan $XXX early base between million GAAP although QX, income QX million, of increase we to The effective XXX% resulted yields. $XX.X QX, change GAAP this or to repayments progress we distribution as in effective a For and could generated expect XX.X% of total be share, of compared In the million income per investment fee net yield. million, coverage and income cash quarter. in stronger $X.XX resulting investment and $XX.X

prepayment increased investment activity the resulting the the heavy to XX.X% QX. with will in XX.X% reduce QX. QX and with quality our of XX.X% X.XX, Overall, we the a portfolio rating on quality versus an credits focused weighted QX. term, QX, long right While to compared in QX, Grade in emphasis on internal in credit and XX.X% portfolio and credit X again debt decline on way, versus X.XX to building NII term. short confident our as the and portfolio for book in credits average Credit the remain decreased in are X Grade positioning improved QX, X

a million of have with non-accrual recovery on X Our credits quarter-end, loans non-accrual, and $XX.X respectively. of a X.X% with total position. have had and QX, In a our principle, received X.X% and debt Subsequent value fees. one QX rated net investments value or $XX portfolio fully And as X made seven proceeds the investment covers respectively, and the debt portfolio cost company's entire our cash fair exited investment X.X% percentage of non-accrual a on of we second cost at up and that all value. fair value, loan approximately million, that fair of we interest, and to we from cumulative full

we of business million, give of to million, $XXX our by exceptionally XX% liquidity the net value our of quality. ongoing equity with us In $XX.XX, unfunded on credit net the QX that onset portfolio, performance and our which ability share our sheet a capital per fund liability our COVID-XX dislocation, when market nearly our do activity, liquidity the potential the of be strong advantage near-term continues XX.X%, and us ability markets provides it commitments activity. highest we were on take material continued spoke available As of IPO no aggressive of coverage prudent balance asset maintaining With pandemic, we new NAV per and exceptionally believe QX since robust mark and deals $XXX of This well-positioned. share focus of about leverage in to substantial to XXXX, so. the increased strong in result across with seen is and ended exit and strength XXXX, to XXXX. to both QX At strong any and and have we We successful the balance sheet anticipated strong that areas. record regulatory is maturities

months the XX raising the on our Since Of strong. less of earnings estimate entire portfolio outstanding totaling of of When balance $X very portfolio XX of loans has seen currently sheet. our now how debt portfolio XX our of last nearly liquidity of new that months of we we current raise have their with of months currently XX with portfolio, debt less to in across new the our raise and are $X.X the capital balance pleased liquidity than our of loans to sheet; sheet currently XX% six we're beginning environment debt call, we what months terms plus that to total plus on have X% XX% of Capital or XX% current nearly by billion. over investment XX% another portfolio. Since COVID-XX fund portfolio of our make outbreak remains debt has today. to balance have companies also billion of at capital. the States, months a debt approximately currently with ability companies In up plus over growth, companies our the XX three liquidity, raised portfolio outstanding liquidity of continue had portfolio entire XX through or of on capital managing have looking United the liquidity

continued eight complete third finished their For public The events, we had the M&A the record year, ecosystem companies year for year. offerings. Venture consecutive XX in and Capital and territory to strength exhibit initial the

Venture XXXX record in billion Capital $XXX.X Association, data a XXXX over For XXXX, National in gathered put venture a funds endorse. to them of PitchBook strong capital continues to the compared compared cast record position in raised $XX.X $XX.X at according to pandemic to as that billion billion and invested and a billion by $XXX the U.S., the

credit liquidity, continues focus be appropriate our with level and maintaining to companies on actively of book, financial partners our working proactively. and Our an managing

Our busy investment for would also shareholder pipeline of new deals like that incredibly and exceeds potential to selective I capital team be And investments. distribution. evaluating an But billion our prudent to remains our very deployment. bar continue high. has $X active we been currently with discuss

Our QX share distribution in XXX% generated per $X.XX share. of NII quarterly of $X.XX coverage our per of based

also our $X.XX consecutive eighth share. declaring per of distribution we're $X.XX share, addition to of a distribution quarterly supplemental per In cash

losses well is as Our beyond upside to our provide warrant may and portfolio shareholders above our as debt potential returns and to investment net occur. mitigate potential equity income, that designed

forward As have ability with share, variable respect in tax to team to spillover subject to earnings or platform. of invest our to our base $XXX.X This continue undistributed per million flexibility filings. $X.XX and XXXX, final us approximately additional we going with provides of and the distribution QX generated

our to talent create believe and over growth. advisor. to After like and to team, to year be advisor the strengthening with infrastructure seek the year contributions briefly registered focused we investment ensuring of past the our in of that XXXX continued as platform of acknowledge activity will in the with in for This I of having each technology wholly organization raising success. was able our unique in for new position and BDC down and advisor, benefit investment systems a the potential they're portfolio the commitment last performance diversify months XX once We in their sponsors, company. registered I the levels the RIA their our investments future and to a no-action companies also our wholly-owned best shareholders. strong under our We systems. XXXX road. would on SEC dedicated our made and and some all made would closing, future in of position our a be to potential investments Because our In unwavering this and throughout stakeholders talented funds added us to on and HTGC. XXXX the received approval would the employees that thank despite expanding financial to made all in of we for extensive in for like shareholders series the owned to XXXX. many of us decision thank again their employees shareholders order Having relief and expand established the managing We so, maintain and significant platform. our of that made Finally, support would our done we able subsidiary terms progress and like place touch to their company dialogue structure of to for I our and or of challenging in Hercules new of that of puts May subsequently be a a

we class innovation I you economy call and very that Thank we as proved now will continue to new in eventually a normal. model business unique its XXXX asset resiliency and Our will the demonstrate Seth. to everyone. much the returned turn over to its believe strength

facility ourselves market modest very terms and year and license take good the of to million a quarter we the our with investments afternoon XXXX million another million and SBIC XXXX. to credit We led advantage of pricing. Hercules, leverage for for debt having in liquidity, Scott, $XXX $XXX well record With $XXX you, improving Thank upside Scott MUFG while attractive qualified obtained everyone. raised solid the $XX new of of ended financing successfully million opportunistically with mentioned positioning and as equity, completed

average over X.X% business, ROAA as an testament quarter. a grow our was the or saw ROAE average the capital NII access needed was Our for total we the our strength XX.X% or of and was fourth for on the where basis the NII markets to year over equity when right and quarter fourth assets to and The ability opportunities.

liquidity investment turn the on unrealized to and collaboratively performance our a realized working Today, challenge. sustainability manage no statement following income the from I'll business and NAV, areas, the income statement finally and in Our a outlook. teams work highlights, the of the the way seamless attention let's With focus remote providing and highlights. activity, environment the the to platforming that leverage $X.XX and income performance was Net investment matter was increase an income increase the and or $X.X driver million, increase for fee by driven QX, quarter. per during $XX.X X.X% $X.XX prior The and compared payoffs. the Total main total income an to increased was higher the net QX an quarter. million, compared coupon investment interest of million, or to $X.X nearly per share income million, of prior share $XX.X in in

and core respectively XX.X% Our in increase the again and primary quarter The the payoffs. to the fourth XX.X% yield the third related compared effective the was and yields driver higher were XX.X% in for quarter. to in XX.X% effective

the placement mainly by expenses Turning excise quarter, in our professional increased quarter million due to taxes. XXXX million quarter to compared securitization $XX.X higher fee increase increased to was the the expense reinvestment to million total and legal other related interest the for expenses, from the from pay of private prior $XX.X to due fees million $XX $XX to quarter, and in $XX.X the the down in the fees the and $XX.X to for increased period driven prior million to fees million in operating and expenses additional acceleration ending. prior the SG&A partial recognition of XXXX November

the average was period X.X%, the the the Our to re-investment small debt XXXX cost weighted quarter fee to securitization a of compared increase and ending related due prior acceleration.

unrealized realized and the now the Let's focus NAV activity. to switch

the of $X This for increased in NAV of an X.X% disposed due share million, unrealized and including of million, NAV per off unrealized our investments appreciation and per X.X% net share earning off the year-to-date. quarter, $XX.XX increase increase $XXX.X the quarter. drivers to change appreciation mainly or quarter-over-quarter The were reversals to of the During the increase per dividend $XX.X written in main represented our prior share.

the and unrealized $XXX.X including million and of by loan $XX.X debt $XXX.X the the and appreciation on key driven approximately well of appreciation, adjustments was sale as drivers equity million million or unrealized Our prior the of mark-to-market depreciation of portfolio the mark-to-market the appreciation portfolio. the equity in portfolio and of due write-off warrant The were as reversal appreciation yield our portfolio. of warrant on to

$X.X Excluding million third losses quarter prior were experienced on depreciation million of the yield certain in million positions $XX.X million losses net comprised warrants. $X.X loan and write-off expiration off from million based of of $XX.X the of portfolio reversal of disposal two realized an legacy loan the or positions, loans, $X.X of Net net write the and from appreciation. equity the losses from

I'd Next to our leverage. discuss like

done end increased to same to For on liquidity strengthens This to was prudent total regulatory do the prior investors quarter the with of in which to us offering and In sheet five-year our coupon we of repayments a At our to cost on respectively, $XX November so. issuance dated our ability million time, position the the due with in institutional record leverage more X.XX% GAAP when markets and of into a feel we the placement and than of XXXX, demonstrates million attractively a of early long our commitment leverage which and the respectively, below with XXXX million. in fixed private $XXX sheet, out the the heading was in an additional our later fixed notes tap XXX.X the liquidity regulatory with quarter, tranche. debt. a March leverage million GAAP and draw a successful coupon X.X%, decreased $XXX announced is Netting XX.X% at we well cash it position balance further for quarter. quarter very $XX balance XX.X% putting current of ended capital the strong the and liquidity and of We announced of XX% XXXX. the leverage compared

course to as continues enhanced normal interest liquidity our Our early by as be principal payoffs. our well monthly collections and

our payoffs normal us can inflows provide monthly reminder, de-lever a amortization and as when and early to As significant we use that needed.

Finally, we outlook let's to strong on nature. and in a short-term QX address of NII look and be in back basis, the million to on existing over resulting portfolio the and points. Based cost the With the quarter-to-date will build prudently and attributable $XXX the QX activity expect decline as we repayments be up. the $XXX to expectations in million portfolio QX QX debt investment early down portfolio declined QX to our decline -- our a NII pipeline, XXXX the

to XXXX. into guidance heading yield of core XX%, Our apply continues to XX%

expect expenses higher QX the of prior quarter, million first the SG&A employer $XX For taxes. higher has we always million, as to payroll than quarter $XX slightly

recognition two borrowing are SBA license. the an and natural increase expect costs our second first securitizations increase our the modestly due runoff fee continued We to in quarter to now as of pay-down to in

to $XXX activity the as prepayment predict, in $XXX to expect difficult communicated, quarter. very million in we Although Scott million first

operator providing going the to SBA for investments. best turn we approval on we operating over now will and delivered Sherry, Q&A to the to as call. in earlier, solid will In for a position $XXX part QX, over believe our focus we've environment. million we attractive the mentioned the financing will Finally, continue forward of license, quarter received of call begin to closing, the us I things that you. given the current qualified

first Your question Sandler. Instructions] Crispin of line from the [Operator comes from Love Piper

open. now is line Your

broader it worries afternoon. any recent you in any venture of in could impact could and potential know but the SPAC based are that levels because or Good Thanks. I VC the impact speak the to the Hercules medium-term? are Can SPACs venture proliferation near there you industry record see or demand industry? to on multiple of sources, that debt near the fundings dampen demand on that market,

no exploded the significant There's the SPAC portfolio. existing that Sure. quarters, here the several Thanks, has tailwinds that last market Crispin. provided to with and question has respect over

the now signed significant as If disclosed portfolio have SPAC about transactions. relative to a that's have quarter. a would companies publicly that our portfolio, we And in right you for a normal pretty think what across our compared activity agreements we complete us, see basis typically of on to five part

it's abundance prudent long you think some actually an horizon, beneficial don't think On capital. limited these very that just these it's It to the a terms ecosystem. has SPACs. and equity the when about origination view, I There's a continue But of companies that created it in Ultimately, we of to certainly and need validates side, to inflows think the on challenges have growth into long-term been actually lifecycle. companies we a very that ecosystem, take long-term underwriting. will

so an a the do road. financing those they if down team, think for of deals opportunities relationships to And best or SPAC the in the our are if near-term, those some I which pursue they financing business have great equity do

the to approach these we built whether the how we've to to as we're long you look operate which the a equity, net how SPAC-related public, long-term as I ecosystem. going positive continue a take this is abundance so to things, as And private, it's of at think and or business, business

And very you all income now distribution right very been spillover, nice and had Okay, Board about then has been that you in thanks. now? levels years, regular and also net investment balancing and $X.XX. recent That's helpful. right covering that regular supplemental stable are The How the really has distribution. the recent the distribution

to Board see -- think regular bump do distribution? the you what to to would So able bump be that and the that you need

just we so quarterly it's question. last dividend And calls great on look base short-term, decisions. look been when the something that long-term a It's on evaluates that terms those and and public distribution, variable reiterate that don't this board you know, policy, in several we're to absolutely see basis, on no now. as we clear of guidance making a guidance a call $X.XX we we very the that have risk our would We've we

near-term spillover to after way sitting more is gains pretty distributions, we've If have been seven trying which $X.XX We're do to I find close today, a our you think filings the think been and our currently, position, public $X.XX about a able of at on a able also warrant terms We're we're in to those distribution. to we've in $XXX.X shareholders the look special supplemental deliver what top our going And released to base things provide the subject equity market and continuity quarters, conditions, to that distributions. in across obviously per to were on, the special million. of six little where last distribution consistency of unrealized we or one bit here some a substantial supplemental of tremendous portfolio. the to

very to one again, as continue we've supplemental last spillover the six distributions confident continuity mentioned, things additional we'll at of in and trying seven that provide is, quarters. here we done that near-term So I to to I look those think consistency in be that the some number. of And

color. Okay. Thank you for the all

Ryan Devin from the next from Securities. of question JMP line comes Your

line now Your open. is

so thanks Good much. evening, Great, guys.

are you? how Devin, Hey,

terrific. Doing

in in fourth the on just first in or of of pace So investment bit kind here, guess the progression activity or quarter quarter. little underwriting dig first I in the question the to more like a

bit quarter. fourth I conditions of about talked think little you looser in a kind the

And activity evolved for so, you until I'm things clearly that from how first thus have in far kind lot the curious now, of quarter. of a

kind so fourth you're could seeing and just since more opportunities, of or of that terms or changed just is through a pricing so quarter? function selective interesting actually they're And more you the of that's that looking be is

deployment from and by kind about it's $XXX right, when the we about or knowing you think not, of saw aggressive out. a think And more we we of start and those record didn't last QX, these to is we year, it be done. has when and several a sense above, When can then, of of of us and and knowing mentioned, lot sort In of part being to that was we to difficult push saw whether thought for ton fundings back. QX, in Devin. that on books our than it's business record a to million. $XXX And were pull say. our But kind a credit those think when get our if underwriter in assets just frankly, has to disciplined commitments in sort see in activity there new continue think of think process aggressiveness ebbs capital underwriting players I QX deal our I cadence sort that same bit Yes, million, of put QX. I more business, was all of it the milestones a of driven And the just between that. of portfolio that has seen with of some flows. markets. the we team through chose to strong in of interesting, to what chose a a sort I part portfolio. of a Part our lot I to other just we ecosystem business a be kind think And deals it, other the terms of that some this desire companies XXX-day across chase and companies We've in continue we changed our attractive year-end equity didn't we opportunities side current of seen aggressive taken contact show was we managers you capital also XX terms by haven't sit of across achieve as progress, make initiating deals, done of about from advantage when get an perspective. And to little as that things. of of rather interesting delivered And And

come just million term our fruition we great million, QX So, of and we're to another to a position the already great QX, commitments, where that so work signed we've in the so closed far. seeing start have that's quarter-to-date $XXX sheets lot new $XXX us team year, put and of has what did by in pleased a in very of

[technical on side those a difficulty] and leverage comments relative difficulty] Okay, terrific. lot targets [technical follow the to of of difficulty]. to in some capacity [technical the And

of up Or as to guys right are more out next interesting kind course in keep dislocation? So maybe now, few you about comfortable normal over leverage we kind business? a just we market trajectory? of some we the quarters, think of more look how extent to or leverage taking are opportunities powder you And in some you get the the should get what's dry looking really strong

it regulatory de-levered I'll I'll basis XXX%. Yes, leverage -- a to on regulatory as leverage and well address but our That we've announcement, over or high leverage, target a our ceiling significantly saw you leverage. it QX, Seth, in our course of through turn then level, is of sort at XX% XXX.X% GAAP the of below XX%

growth now to able to short-term that room within right year. side we of think to back the use of in sheet, the we year. for be our existing right. anything leverage leverage and expect in up fund There plenty absolutely prudently need it do have we to equity of our the leverage to So this And would I deploy to capacity first-half also first-half is as the bring of the just of strength us our speaks that no here targets on balance things. capital

between to a Yes. add The leverage. we COVID second-half. positioned we're to a I been thesis make only and expect has that XXXX And the vaccine period with is in that liquidity be period want we in and sure post our thing a split well would

that's steps why so And taken lower liquidity. we've our not to

that but We steps have make out and taken to go stays yet. sure our have it to additional add opportunities right and don't we now great need leverage well-maintained leverage,

already then So take of we of we'll the how that develops. that we'll second-half the year we the deploy see year decisions first-half the And capital how have. on in

the of a and questions on year. sense. That lot thanks end it. Got makes a taking of for Well congrats my nice

Thanks, Devin.

of next the question from from comes Your Christopher Nolan Ladenburg line Thalmann.

now is open. line Your

that a funds could BDCs Hey what? bit Is elaborate other advisors, the you to going or guys. little are to on Hercules sub-advisor that? -- you and

but sort us exemptive the there's would is prepared gives to flexibility se We've or approval public investment SEC be received a we BDC. in discuss, and subsidiary time, up a of able set It that XXXX at definitive advisor as we've announce that wholly year. variety owned last this variety out could could was sought X-K what of and registered us be things. to BDC. do nothing well. no we've now platform optionality to action done that an a of lot able per relief be announced and We grow And things explore we a of middle in diversify the the a publicly to raise of to the as that capital of that to manage of pools outside gives put in other private We the of

RIA activity benefit is is the given BDC, that public the that of for public our I do underneath that be would think the shareholders. would we by the company the I RIA the point wholly owned of make that any of though, key distinction

Great.

Okay, helpful. relate there at were to That's other all, Is And [Ph] offset. good. loans? to loss or then realize that [OptraSCAN]

losses on realize details did usually in don't two We disclose QX. We individual loans though. the Yes.

the the position. Chris, largest Yes, equity driver was OptraSCAN

Got it.

guys. Okay, nice Thank quarter, you.

Thanks, Chris.

of from Wells Finian O'Shea Your next Fargo the Securities. question line from comes

now is open. line Your

afternoon. Good everyone. Hi,

I First appreciate RIA, color and question on question. understand from the Chris's Scott, the

facilitating a You aren't been going spec alternative's of SPACs, your vehicles. too couple into far question but a have on peers detail,

potentially you can lucrative elaborate it how saving needle. for not on the you Hercules that is for can think anything sure chance be for very move would I there in not but to under if the works So potential, manager willingness that RIA that. to I'm format, a and really be the do

kind Not which Fin. think Thanks, think I we've to going we're and the is to always to RIA think with of do at consistent sort good about you we're time, it's said, but I longevity. stick of where scale what and what gives tremendous going this potentially at us RIA, what flexibility, underneath to going built very we're be we've when the

activity. certainly And tremendous growth perspective sort our be And explore of platform ecosystem. I at likely related us I we're RIA things, existing that's for within to so, there's some from new things look amount in think a we'll more any a short-term much new think we'll and where of but aggressive

perhaps ones a another Okay. large you your there frosty to And is in agreements, you such. those and market technical you. the do? and are hedge are a view to equity was and IPOs had There obviously unrealized equities of the sort say very frank, these you Is lockup today's pretty would can on backfoots question Thank gains. able you few for that Are something lockups. of like these context directly to if say be

majority contractually vast In the from hedging-related agreements, you of prohibited activity. lockup are

cases, do So not in so. to we're in most -- able virtually

Okay, for that's helpful. all you. Thank me. that's And

Fin. Thanks,

Fin. Thanks,

Your of KBW. Lynch next the from Ryan from comes question line

Your open. line is now

Hey, good afternoon.

of it you been just in quarter, markets, there's pretty being very cycle, or guys, time the company markets has a the these what you of about period about approach the that of any been the your is philosophy, of in in as of of for know for or of very pulled of your as fourth be talked a activity reason term at the well you funding, so or talked SPACs. increase will conditions Do going part about if discussion increase question investment kind some continue maybe way weaker a to the sort little forward? you my life with terms years? several any any prolonged a back the you guys question, as lot of, which is, you I'm next on lot change venture frothy First you approach the market a in you in you curious been comments capital would look sort conditions, and market frothy there how partner there's construction current what the even big have it, the

great a Ryan. question, it's Yes,

we'll I we with not that and term be our it's little on look to and there we'll from something But ascertain I sheets, pull the that, activity. it for bit cautious. ebb that and expect process at and us we to QX can QX quarter-to-date, of in have through you QX, And equity we're to pace think be back, can over and think already million be our will debt QX will quarter-to-date don't $XXX obviously quarters will new signed and assuming you periods alone. expect, a get close long, flow, more where what it saw all you in commitments

at historically our staying good has very team a disciplined. done So think job I

mistake a lot when of think is people equity. that the I make a they chase

that's our So a capital, a underwriting just because the story. great case. that And it's they company just equity or not, always it's raises think that's not the view that great credit

I think is of the We the our story, very to team well to so, and underwrite underwrite equity the the what we to And profile credit, company. the much or don't And things equity valuation, to. at the or post raised does of underwriting that got come you're go. and because money is how being you've business a those have end fundamental the capital day, necessarily to

I last XX we've broader financed of question sustain of XXX sort to that different and being over years. sort period, of you're excess had the funded asking, XX-year the think nearly companies, committed the $XX of billion terms in a that now In we've we've over success able

not be the but I opportunities position today little just larger, more as the relationships a existing stronger, companies and in our to sheet of flow sophistication. majority our require as can those companies has gotten after, have and we're and bit think that's we've where team our of the gotten focus And here so, that on And as flexibility upstream likely part terms as liquidity take advantage within network short greater where medium-term. more has that of asset to to bit new balance see portfolio deal increased, to our tremendous we built-up market go our has a likely base stronger, of the stage portfolio, just to in proprietary And a well. types of, going of little activity you're established deals tend to and

income makes the today. roughly conversation just you look of gains spillover million that $XXX you, use kind around but If that in XXXX. three your then you questions appreciate of the I have million and sense. mentioned could $XXX another of I And Got portfolio pivoting, realized investments, at dividend with you

you gain. where Of today's never could But valuations you have prices, additional course, change, million can will that an those based on end-up. know $XXX

spillover these income to or special isn't potential work supplemental to So, gains. for plus historical dividend to the going $X.XX really try realized manage your

in approaching, income? you're coming managing your combination for spillover potential about large how huge So these already have policy XXXX, any distributing in developed thinking with you or gains very

per and with to obviously in $X.XX share. to distribution to in the this sitting the that supplemental so realized have market they're spillover use right, gains, make million the unrealized Yes, gains, if and And gains. as because and right, terms We're want respect do those We made potential not dividend. ordinary the of the we quarter, harvest word in important you how I of $X.XX some decision on, those and $X.XX you $XXX monetized said, we'll think and our base potential We're great do the for just future reacts. obviously we'll monetize there course been position decisions the see the is when distribution.

going one response the of think certainly to the dividend, to ensure here, try spillover, respect As the And several dividends us of to mentioned, the a is of I but with this But more shareholders. special and And we the board form find our be we'll gives obviously the for goal of little to with evaluate next in us, next to questions, the additional call aware only certainly respect distributions. to look it's the continuity upside consistency these I here on through way coverage handle look it the that provide something of bit a to to more provide provide near-term. and we're earlier just also tremendous over flexibility size to that how supplemental to to a base consistency to little those to bit here will near-term try quarters. continue how not will

a and problem definitely to be have. good Yes, to a it's position certainly in favorable

great really quarter afternoon, this guys. time appreciate and the So

Ryan. Thanks,

next from comes John the question of Jefferies. from Your Hecht line

now line Your open. is

asked, guys, you bit is last follow-on is about afternoon stretch. congratulations. questions from been you taking I Most talked a the little market of Good thanks don't a of questions and guys one my first the a my discussion of but bit for and frothy guess a have

have a selective and frothy token mentioned But of on you had, been. very you one kind You're you market.

On momentum core of the right I QX increased your got other from lot now. think spreads you've to actually a side, QX,

a basis. prior from So, may broader relative we're intermediate you the a on to shifts competition where quarter-to-quarter maybe, seeing just perspective competitive couple on longer-term Scott But or be it are Clearly, a of years? environment. and now, about discussion what

eight back five impacts had the in XXXX, very companies thanks now transactions. public in markets, IPO continues have first our two biggest private question, alternative our QX. to activity think have right now technology John, just right, in sort primarily portfolio. of strong the private the And of in public markets, then competition for we in also signed sciences we're which following markets, life QX equity got right we in I capital side, portfolio, the we've which tremendous be So, seeing the the primarily equity IPOs IPOs We alone, impacts that equity velocity had

which are in changed kind several the think remarks, the and I And a what those to them debt from did aggressive get of just others of a sit I what my of perspective, is competitive deals. lot players there chase deals has we which choose very, in to of those see QX, is do, out outside on so the There debt competitor let in that we deals. we the the we come And right kind is encouraged team ordinary of course. not couple see equity. across that of And side now, traditional actually a did very our players to in mentioned very, majority

looking we're in aggressive signed now the in of sitting with our right see same a that at. far then $XXX seen I QX. and you deals terms of with that, has and $X I deployment. that numbers, that, actively think million of already And trend be on we're top right more qualified, can think haven't so sort million that another closed, commitments We that we've capital much pipeline, And in $XXX on and team to allowed of billion

near-term? helpful. Yes, and have some you industries the maybe subcategories over would picture okay, And than time, in into Anything big focusing been know so renewables level then guys similar oriented, you I other the commentary. and life kind lean that your in that's of some more SAS, higher forth. one sciences kind of on of

will then I that where Hercules of where to And platform. be like will year the last QX, there periods unique team, very think our life what QX that quarters what think We be outperform. to year want one target. is we're same transactions And it underneath there competitive and Life our our like being will us over I book. that targeted sciences over goal credit balanced advantage. originate to of that's sort for The targeting the is market, target the a course that technology of roughly XX:XX we've No, significantly we're or continuing to at exposure. now, that the to or right year we're And current sure run XX:XX continuing so always to is Sciences last keep and technology outperform. the umbrella here. tried and structure, portfolio make that's in transactions balanced balanced, do exposure is is book And to able team so will as something significant a underwrite, that possible, as we've And

much. Thanks Okay. very

Thanks, John.

next Sherbetchyan from from B the Riley of question Securities. Your comes line Sarkis

is now Your open. line

my question taking for thanks here. And afternoon. Good

commentary, regular Would were as to 'XX fiscal the looks for a that that guess, it your repayments? let's of the the if kind think back Would simple. Just look fiscal 'XX you outlook we make quarter say lot, period, just back kind a up and more and like book build of very you follow-up Right. the on second-half. originations I of of then like wanted of 'XX kind like first-half half of to

your for Thanks question. sure. Yes,

more your environment. be would the I the I'll So to we with expect second-half, end of think question, start of pre-COVID a

already market equity evidence the with development, You are pretty even of anticipating valuations. markets the increase that high see the

XXXX, of a would of for that we expect expect would the environment So I second-half more ourselves. pre-COVID

take time may to bit little that a in. kick Although of

I that For still in QX of XXXX deals it QX, who where we're right to would with second-half the we're and all approaching expect being we're taking the more the as not prudent working deals. like very and be would and or opposed

lower, seems any the taking spread margin, Thanks the towards look kind of Great. and a down. component for to guess on of as net your and back more cost opportunistically if cost as piece gaining the you And of debt comments the interest deploy will you to then better environment hopes further be I normal take ability debt and essentially. the of kind the that. I into of better average of

a Yes, question. now that's great

liquidity that of you're taking than anticipation spot to think that vaccine was we of of we're cost liquidity the banner the the including SBIC down. We debt. that we'll and until In our will XXX new in comes we continue for $XXX be our of majority excess a I license our I million. current be to XXXX in expecting steps with down approaching expect the market. cautious the year rate would bringing the work to of to going on in utilize again, growth drive more out. did that as But us, not available position November million

of facility indications protracted start expect interest stay at time. that utilize period are very expected we as cost credit year, we future. low second the with low clearly for market, that for the with we're of private expectation license. price The the up fact we've and And are SBIC lowered little bit off, The liquidity to the the placement priced go actually the is securitizations off paying taken of the it is is associated that market And steps long-term the first-half with average the already a a that see the actually reason the that coming have. that to debt the but You'll running in why we our we basis foreseeable last year. rates the Fed with a in because down can that

first we to debt at need We be opportunities we work need will when see additional our this way need as get and then we lower we to right when as right that the now. But turns raising will of market to. liquidity advantage use the we of come definitely the that the market cost taking up it in at back kind and

That's all me. Thanks. Great. for

for success Continued guys. you

Sarkis. Thanks,

Sarkis. Thanks,

question from line comes next Casey from of Alexander Point. the Your Compass

Your line is open. now

possibility reasonably questions afternoon. All the look but of the bucket? the those back back, in of Most them in using of sheet. companies there bucket balance you what answered, alone because forcing being less a the tight constraint is be as at earlier the of the on good originations why stage part have remind capitalization's, asset is of that one falls have fact there And companies, into of could constraint, of market that reason little been you're quarter. market question. I right, bad a may get mature. and of larger some before is market that expansion that do you have guys capitalizations, perhaps RIA the given pulling a fourth a us invest Is And able pull capitalization some off to the The and a method expansion

Casey. Thanks,

okay, three parts there. So,

$XXX part bad market of one-time done at test. test is million. a That's cap or test the asset the origination. It's purposes one, So, ineligible for asset

the And above It appreciates does that, so that it that to originated asset. loan and then not extent cap the a below that. paint market has

the $XXX million. of that done So it's at a test onboarding original one-time loan and it's

activity. the second have no we impact of new absolutely our terms business In question, on

pretty and healthy We a asset now. very margin that have bucket that always to continue bad margin maintain against maintained XX% bucket we healthy substantial a against

the our impact activity. or of part any near-term is third that recent investment So yes. did And then not absolutely,

BDC. be of RIA asset to of of one the purposes in the that without market bad for a public part us of million the on benefits aggressive $XXX would So go-forward it test that the the structure the potential constraints more basis of is allow

done credit of fund the -- our the a one went decision. do to of after drivers and that extent terms more theme aggressively market the benefit activity we RIA that with the key I it's It the public did that something And BDC. respect be So private be for wholly-owned by company in again, that that would public is would shareholders. because think of to of

All questions. That's right, great. my Thank all you.

Thanks, Casey.

Casey. Thanks,

time. this There Mr. call are at Michael Hara. turn no I'm going further the to questions to back

Markets thanks will next our joining be Conference progress and forward We our Financial reporting QX attending everyone in to RBC operator, earnings you Thank Also, to virtually for we call. our Capital March. today. call Institutions on the look XXXX

interested RBC with you meeting this If Markets Hara. contact us afternoon. and please good are you, in Thank Michael at event, or Capital

concludes all conference This for you today's call. Thank joining.

now may disconnect. You