Triplepoint Venture Growth BDC Corp (TPVG) 2014 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the TriplePoint Venture Growth fourth-quarter and fiscal-year 2014 earnings conference call. (Operator Instructions). This conference call is being recorded and a replay of the call will be available as an audio webcast on the TriplePoint Venture Growth website.

I would now like to turn the call over to Mr. Harold Zagunis, Chief Financial Officer of TriplePoint Venture Growth. Mr. Zagunis, please go ahead.

Thank you, Chris, and thank you, everyone, for joining us today. We are pleased to share with you the results of the fourth-quarter 2014 and the 10-month period from our IPO on March 5, 2014, through December 31, 2014, which we refer to as fiscal-year 2014.

Here with me to discuss our results are Jim Labe, Chief Executive Officer and Chairman of the Board, and Sajal Srivastava, President and Chief Investment Officer.

Before I turn the call over to Jim, I would like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking statements and remind you that during this call we will make certain statements that relate to future events or the Company's future performance or financial condition, which may be considered forward-looking statements under federal securities law. We ask that you refer to our most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements.

With that, I will turn it over to Jim.

Thanks, Harold, and welcome, everyone.

We had an exceptional fourth quarter. One highlight was achieving a weighted average portfolio yield of almost 16.9%, one of the highest among all of the BDCs in the quarter. Another highlight was signing $186 million worth of new term sheets. We also now already have five companies out of our 27 tech and life science portfolio companies overall who have graduated into the so-called billion dollar club, companies that have closed private financing rounds in excess of $1 billion.

With all this as a preface, I would like to take a step back and focus on the larger picture, which is the highlights during fiscal 2014, which is what we consider to be the 10-month period from when we took the Company public last March 14, 2014, through the end of the year, December 31. This is a period in which we actually increased the dividend twice and, on top of that, also paid a special dividend of $0.15 per share in December.

During this period, we achieved a whole slew of milestones, which we believe demonstrate our unique venture lending model and the underlying earnings power of this business.

At the IPO, we acquired an initial portfolio consisting of $123 million in investments, with a yield on that portfolio of approximately 14.3%, and another $153 million of unfunded commitments as part of that.

Given our strong originations platform, during this period we closed an additional $270 million of investments to 15 customers, of which $160 million has been funded so far. These additional investments have added to the portfolio yield and brought it up to 14.5%, ignoring any prepayment activity. In the fourth quarter, we had two customers pre-pay and as a result that boosted the overall portfolio yield up to 16.9%.

During the period, we generated almost $13 million of net investment income, and on top of that, given the strong underlying credit performance and follow-on equity activity of our customers, we recognized another $1.5 million of unrealized gains, resulting overall in more than $14 million of net increase in net assets from operations.

In total, we paid out more than $12 million in dividends, including our regular and special dividends. We also generated another $1.2 million of taxable income in excess of those dividends paid, and that will spill over into 2015.

Our NAV also increased from $14.38 at the IPO up to $14.61 as of December 31, and that's even after the dividend payments of roughly $1.22 per share.

Also, last but not least during that period, we upped the credit facility by another $50 million. It now stands at $200 million total, and we have begun the process of increasing our credit lines even further.

While I have always said this is a long-term business, in this short 10-month period alone we believe we have demonstrated not only the uniqueness of our venture growth lending approach and the underlying earnings power of the business model, but also the value of our significant experience in venture lending, our strong brand in the market, and our disciplined approach to venture lending.

I have mentioned that an exciting and important part of the venture growth business is the warrant kicker in the equity component. As of year's end, we had warrants in 26 companies and equity investments in four. We are looking forward to showing the return potential of this portion of the business in 2015 as some of our portfolio companies continue to pursue M&A and IPO activities. In fact, one company has recently filed confidentially for its IPO.

A few weeks ago, The Wall Street Journal published a list of venture-backed companies that were valued at $1 billion or more, the billion-dollar club, if you will. We would like to extend congratulations to four of our portfolio companies that are on that list -- Nutanix, MongoDB, Shazam, and InMobi. It's a testament to the creativity and hard work of these teams at these companies.

Also as you may have seen last week, our portfolio company SimpliVity? announced that they had just raised $150 million of equity capital and that was at $1 billion valuation. Our congratulations goes out to the SimpliVity? team as well and their entry into the billion-dollar club.

As we look ahead to 2015, we are pleased with the strong level of activity from our select venture capital investors and the strong demand in return potential for venture growth stage lending. We intend to continue capitalizing on this demand and grow our business with continued attractive returns.

I will finish by saying this. We are delivering on the promise of building our venture growth franchise and growing our portfolio in a measured and profitable fashion. As always, we remain disciplined and focused on what matters to us most, what we keep calling the four Rs -- reputation, relationships, references, and, of course, returns.

I would like to turn the call over now to Sajal, who will provide you with more detail about our fourth-quarter portfolio composition and investment activity.

Thanks, Jim, and good afternoon, everyone.

As the results indicate, we had a great fourth quarter, capping an overall strong first fiscal year as a publicly-traded company. During the quarter, TriplePoint Capital signed $186 million of term sheets and we entered into $147.5 million of new debt commitments with six obligors.

We funded seven debt investments for $40.5 million and acquired warrants valued at $1 million in seven companies. The $40.5 million of debt investments funded in the fourth quarter had a weighted average yield of approximately 14.7%. Of the loans funded in the quarter, approximately 62% were floating-rate loans with floors.

Two of our customers pre-paid their outstanding loans, totaling $27.7 million. As Harold will discuss in more detail, these prepayments helped boost our total weighted average portfolio yield to an impressive 16.9% for the quarter.

With regards to unfunded commitments, in Q4 we had $34 million of unfunded commitments expire unutilized and/or terminated, added $147.5 million of new unfunded commitments, and funded $40.5 million of investments, leaving us with $211 million of unfunded commitments as of December 31.

Based on fundings and terminations so far in Q1, our unfunded commitments are down to $166 million as of today. Of the $211 million of unfunded commitments as of December 31, $40.5 million are subject to milestones before the debt becomes available, $103.5 million will expire during 2015, and $107.5 million will expire during 2016.

Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company.

Over time, we generally expect about 75% of our gross unfunded commitments to eventually be drawn. However, as we look to our existing unfunded commitments, based on recent equity financing activity there are a number of companies with meaningful amounts of current liquidity, which we expect may result in either a higher percentage of unfunded commitments, delays in draw towards the end of their availability period, or requests to extend draw periods to give them more time to decide whether to utilize their loan with us.

Regarding credit quality, as of December 31 the weighted average internal credit rating of the debt investment portfolio was 2.06, compared to 1.97 at the end of the prior quarter. As a reminder, under our rating system, loans are rated 1 to 5, with 1 being the strongest credit rating and all new loans initially rated at 2.

During the quarter, one of our category 1 customers paid off its $5 million of loans, one of our category 2 customers paid off its $22.7 million of loans, and we funded $40.5 million of new loans to seven obligors, which were added to category 2.

We also downgraded one customer with $15 million in loans outstanding from category 2 to category 3. During Q1, we have further downgraded this customer, Coraid, to category 5 and nonaccrual status. However, a third party has entered into a term sheet that provides for it to purchase certain assets of the Company and to assume our loans to the Company.

With regards to other key indicators of portfolio health and quality, as of December 31 the weighted loan to enterprise value at the time of origination for our portfolio was approximately 9.1%, not a meaningful change from the end of Q3 and well below our general guideline of 25%.

We also had six customers close follow-on equity rounds during the quarter. While not all of our companies need additional equity capital, we generally view our customers doing so as a positive indicator and it typically improves their financial profile with the additional liquidity to service our debt and/or get them to an exit event.

As we look to 2015, TriplePoint Capital has signed $40 million of additional term sheets, we have funded $10.2 million of investments, and a customer prepaid one of its outstanding loans. We remind investors that not all signed term sheets will necessarily close, nor will they necessarily be assigned to us, and the timing of draws and unfunded commitments may be late in the quarter or slip to future quarters.

As a reminder, per our advisors' allocation policy, while we are the primary vehicle for committing and funding venture growth stage assets for TriplePoint Capital, during periods when we don't have sufficient investment capacity TriplePoint Capital will serve as the investment vehicle for new investments.

In summary, we are very pleased with the growth and performance of our portfolio not only during the quarter, but for the 10-month period since our IPO. We remain optimistic for near-term growth, given our creative and relationship-focused approach to lending, and we look forward to continuing to be able to deliver exceptional returns in a disciplined fashion to our investors.

With that, I will now turn the call back over to Harold.

Thanks, Sajal.

I would like to spend a minute reviewing the highlights from the fourth quarter and give you a quick overview of our financial position. Our total investment and other income for the fourth quarter was $10.7 million, representing a weighted average portfolio yield of 16.9% on our investments for the period held. Of that 16.9% yield, 11.1% was from cash coupon payments, 0.4% was from the original issued discount of upfront facility fees and warrants, 3% was from the accretion of end-of-term payments, and 2.4% was from the impact of prepayments.

Excluding the impact of prepayments, the weighted average portfolio yield for the quarter was 14.5%, which was consistent with the weighted average portfolio yield for the previous quarter.

Our expenses this quarter were $4.8 million, compared to $4.3 million from the prior quarter, due to increases in our assets, greater profitability, and increased leverage. More specifically, our base management fee was $1.1 million, which increased in line with our gross assets.

Our incentive fee was $1.4 million, which increased as a result of our greater profitability. Our debt expenses increased to $1.6 million, as our average borrowings for the quarter were approximately $114 million, up from an average of $90 million last quarter. Our administrative and general expenses remain steady at $1 million quarter over quarter.

We recorded net investment income of approximately $5.9 million or $0.59 per share. Excluding the impact of a reversal of our capital gains incentive fee of $216,000, our core net investment income was $5.6 million or $0.57 per share in the fourth quarter. This compares to $3.8 million or $0.38 per share in the third quarter.

Core net investment income is a non-GAAP financial measure. For a reconciliation of core net investment income to net investment income, please see the press release we issued earlier today. We believe core net investment income is an important measure of the investment income that we will be required to distribute each year, since capital gains incentive fees are accrued based on unrealized gains, but are not earned until realized gains occur.

Our loan fundings were a little more evenly distributed throughout the quarter than in past quarters. This quarter, approximately 31% funded in October, 25% in November, and 44% in December. Keep in mind, we won't see the full earnings contribution from these assets until subsequent quarters.

In the fourth quarter, we had a net unrealized loss of our investments of $1.1 million or $0.11 per share. This consisted of $700,000 for the reversal of unrealized gains that we recognized in the third quarter related to prepayments and termination of unfunded commitments, as in the third quarter one of our customers provided formal notice of prepayment for the fourth quarter.

This reversal was offset by the recognition of $700,000 of investment and other income in the fourth quarter as a result of the actual prepayment and termination of unfunded commitments. In other words, there was no net impact to our net change in net assets in the fourth quarter from this specific obligor's prepayment as it was already recognized in our third-quarter results on an unrealized basis.

We generally expect companies to notify us and pre-pay us in the same quarter so that any impact of prepayments would be recognized in the quarter they occur, as happened with the other obligor who prepaid its loans to us in the fourth quarter.

We also had a $300,000 net reduction in the fair value of our debt investments related to changes in discount rates and $37,000 net reduction related to the fair value of warrants. We had no realized gains or losses during the period.

Our net increase in net assets resulting from operations for the fourth quarter was $4.8 million or $0.48 per share, compared to $4.7 million or $0.47 per share for the third quarter. On an annualized return basis, our net increase in net assets this quarter represented a 13% return on our average net assets. Our core investment income was 5.3% on average net assets and our net investment income was 15.9% on average net assets.

As of December 31, we had 76 investments in 27 companies. Our investments included 46 debt investments, 26 warrant investments, and four direct equity investments. The total cost and fair value of these investments were approximately $256.5 million and $258 million, respectively.

As of December 31, the Company's net asset value was approximately $145 million or $14.61 per share, down slightly from the $14.64 per share at the end of the last quarter. The decrease is a result of our regular and special dividend payments exceeding the net change in net assets for the quarter.

As Jim mentioned, from March 5, the date of our IPO, through December 31, we paid $12 million of dividends or $1.22 per share. This amount included our prorated regular dividend for our first quarter, which was for 27 days, given our IPO on March 5, and also included our special dividend in the fourth quarter.

We also had excess taxable income of $1.2 million, which will be carried forward in the form of distributions paid in 2015. Based on the approximately 9.9 million shares outstanding as of December 31, the spillover is equal to $0.12 per share.

Our total cash position was $14.9 million at quarter's end, with available capacity of $82 million under our credit facility. As of year-end, our leverage ratio was 8 -- 0.81 times, which is in line with our targeted leverage.

Finally, our Board of Directors declared a dividend of $0.36 per share for the first quarter of 2015, payable on April 16 to stockholders of record as of March 26. As previously mentioned, $1.2 million or $0.12 per share based on the shares outstanding as of December 31 will consist of spillover income from 2014.

With that, I will turn the call back over to Jim.

Thanks again, Harold. At this point, we will be happy to take your questions. Operator, can you please open up the line?

(Operator Instructions). Doug Harter, Credit Suisse.

Obviously, the pre-pay income delivered the big upside. Is there any way to think about what is a normal quarter going forward in terms of pre-pay activity and how we should think about that going forward?

Hi, Doug, this is Sajal here. Yes, I would say we look at it based on known events and known activity when it comes to pre-pays, so we have already had one pre-pay so far here in Q1.

We don't think it's unreasonable to expect at least one pre-pay a quarter, just given as the portfolio is maturing and the portfolio companies raise additional capital, be it the form of equity rounds or potential exit events.

Got it. Is there any way you could help size what the pre-pay -- the magnitude of that pre-pay was so far in the first quarter?

It was a small one, $2.5 million.

Got it. And then if you could just talk a little bit more about the loan that went on nonaccrual subsequent to quarter-end. I know you said that some of the assets are being purchased. I guess, where do you have that loan marked and what are your expectations for recovery?

Sure, so this was a recent development and clearly a situation we are working through in real time, so at this point we can say we are making progress and all the parties are engaged.

But this was a company in the data storage industry. It raised about $100 million of equity capital, and so, as we mentioned earlier, a third party has entered into a term sheet that provides for it to purchase certain assets of the company and to assume our loans.

We will have more to say as the process moves on, but we did mark it down in Q4 from category white to yellow, and then in Q1 we have again marked it down to category five.

Great. Thanks, Sajal.

Jordan Hymowitz, Philadelphia Financial.

Just to follow on a couple of Doug's questions, so of the $24.6 million, how much would that loan have been that got moved from yellow to red and then is now being bought?

I'm sorry, the Coraid loans, how much is -- it's $15 million is the Coraid loan.

We only had -- sorry, Jordan, we didn't have $24.6 million moved; we only had $15 million.

That was my question.

The other $9 million was already in there.

Okay. So if we would sit here today and nothing else had changed, that number would be about $10 million in yellow?

Correct.

Okay. My second question, again following Doug's very good questions, is you expect to have one loan pre-pay on average this year per quarter. It doesn't mean every quarter there will be one. I understand that.

And you said this one -- this quarter was a small one, $2.5 million. If you -- if there was some -- if this quarter provided approximately $0.20 of upside, would it be fair to think that there would be $0.10 on average of prepaid upside per quarter if there was one loan or were the two loans this quarter bigger than average? That's what I'm trying to get it.

Unfortunately, you can't interpolate that way. It really -- the amount of income that we generate on prepayments depends on every loan's specific factors and where in their process they pre-pay. If they pre-pay early, there is more upside, certainly, early in their term. So, unfortunately, I don't think you can draw that conclusion.

The two loans that prepaid this quarter, were they approximately average in their life payment size? Were they bigger, smaller?

No, only one loan is prepaid and it was $2.5 million.

No, no, in the fourth quarter, sorry.

Oh, I'm sorry, in Q1. Are you talking Q4?

Right. You had two loans pre-pay. Were they about midway through their life? Were they earlier, later? Were they bigger, smaller? How would (multiple speakers)

Since we have only been around for 10 months, they are all very early in their term.

Okay. So they may be somewhat representative of the average loan pre-pay?

Yes.

Okay. Thank you very much and congratulations on a good quarter.

(Operator Instructions). Jonathan Bock, Wells Fargo Securities.

Thank you for taking my questions and I reiterate Mr. Hymowitz' congratulations.

So if we take a look, obviously, InMobi was one of the pre-payers in the quarter, and we see the inclusion in the billion-dollar club. I am curious, Jim, Sajal, how would you rate the probability of repayment to the extent someone falls in such a high valuation category, higher, average, or lower?

That's actually a really good question. You know, I would say it's -- generally speaking, it's more of a function of how much equity capital that company raises in conjunction with a round of financing than necessarily what their valuation is because, obviously, the more liquidity the company has, the more cash -- excess cash they have sitting in a bank account earning no interest, the more likely that they would be willing or motivated to pre-pay our debt outstanding.

So I would say it's more likely to excess cash reserves than it is to necessarily enterprise valuation.

(multiple speakers) I would echo that. There is no real rule of thumb, and it has to do usually with the capital planning and strategy on an individual basis at these companies.

Then maybe rephrasing the question, how would you look at the liquidity situation or the cash balances on hand at companies generally looking at those levels -- high, average, or low?

So I would say not just with our billion-dollar portfolio companies, but in Q4, Jon, we had six companies close follow-on rounds of financing and in Q1 so far we have had four companies close follow-on rounds of equity financing, and so there are 10 companies right there with fair amounts of liquidity.

Now not all those companies have debt outstanding, and so to the extent those that have raised significantly large rounds of financing, then we would argue there is probably a higher than likely chance of them prepaying. And then, the other impact as we talked about earlier with regards to existing unfunded commitment, that those companies that are awash in liquidity may not draw on their unfunded commitments or may take it to the end of their availability periods before they draw or may ask us to extend their availability periods to give them more time to draw on our debt.

Got it, got it. And then, maybe taking just a [wordsmith] question to the slight nonaccrual, I understand that you've worked that through. But when you say they have assumed your loan, are they assuming it at your fair value mark or are they assuming it at cost or par?

This is all working through real time, and so I think as the situation develops, we will have more to say, Jon, on the process, but it's still early on in the process.

Okay. One item just that brings it up, because we see an EOT, end of term payment, there in excess of 6 and this creates a good discussion between first-lien venture asset versus a lien, but perhaps maybe behind a venture bank, which I guess in this case there might be another creditor ahead of you guys. Maybe I'm right or not. I don't know.

But the question is, obviously you lend to enterprise value. We get that, but is there a level of -- or how does one get around the level of risk to the extent you're subordinated to a venture bank, and then maybe talking about it and loosely using color from this situation as to how you protect investor principal, knowing that, look, venture lending is not -- it is not always home runs. It is just -- it's a matter of a steady consistent performance. That second-lien discussion would be very helpful to us.

Good question. So I would say so with regards to the one specific credit, we are the senior creditor. There is no other debt financing or debt provider in place.

I would say as we look generally to our, quote unquote, second lien, where we are junior only to a venture bank, our underwriting guidelines are generally that these have to be more robust companies with significant enterprise. We have to have very low loan-to-values for those companies and they have to have material and significant revenue and revenue growth.

And so, again, generally speaking, I think we were at 20% for the quarter in terms of those companies where there was a bank facility ahead of us as of the end of Q4, and if you look, the majority -- or those 20% of companies were -- are probably some of the much larger from an enterprise or from a revenue perspective within the portfolio.

Got it. I guess the last question would be if we are looking at the ability to fund new investments in the future, obviously with repayments and earnings on the rise, anything that you are looking at is potentially accretive.

But giving us a sense as to how you look at equity capital in this environment and if you were looking at an opportunity, what goes in your mind in terms of how one is going to generate an adequate risk-adjusted return on capital that you may be given in the future, provided that the valuation works out? And would you ever have any intention to raise below book value? That's always a good question that people want to know.

I will start. First, we think the 14.5% portfolio yield just without any impact of prepayments, the 16.9% as of the end of Q4 with the impact of prepayments, we think is exceptional return on its own, and so it justifies our ability to continue to deploy capital, particularly given the quality of investments and the strength of the pipeline that we see and the demand from venture growth stage companies looking for debt from us.

And so, I think based on the guidance we have given, we see the opportunity to continue to grow. Obviously, we need to live within our means, but we see the opportunity to continue to deploy investor capital and make exceptional returns associated with that.

You are correct -- or to point out, we do not have investor approval to raise capital below NAV, and so from our perspective we are living within our means. We are looking opportunistically at quality venture growth stage assets, but we also have the benefit of the TriplePoint Capital platform and so that's why we continue to be originating venture growth stage assets with great companies because we are continuing to be in market with our platform.

And then, Jim, Sajal, just an industrywide question as it relates to consolidation of venture banks, et cetera, it would appear that, given levered lending guidance and potential constraints that are put on the banks, that venture lending, provided it's not looked at from an ABL perspective and perhaps even if it is if it's categorized as an HLT, could be constrained. But that creates financing for venture assets that I would imagine probably would be a little cheaper from a spread standpoint than you would perhaps want to put in this portfolio, or not.

The question is, are there growing opportunities for people that have a wide origination funnel, such as yourselves, and is that consolidation net accruing to your benefit over time?

I will take the first stab. We really see this, the various consolidations and things going on, some of which I will put in a little bit of the [heba] category, as being a net plus to our business.

The banks and what's going on there presently, those that work with venture companies, that doesn't really affect our business. It never really has affected our business as we're in the non-bank category, and it is still not clear what the fallout will be from some of the various acquisitions of these venture-oriented banks. Some have moved in and out a little bit here.

So long term, I think this is a net plus to our category. In the short term, we really work with all of these banks and have worked with them and complementary financings to them, as opposed to having some kind of material effect on our business of late.

I would only add, Jon, that our business is not providing bank financing, and so we don't necessarily view this as an opportunity for us to provide lower-yielding assets because there are fewer banks out there to necessarily provide that bank type financing.

I think, again, we are very return focused, very asset quality focused, and so I don't think from our perspective you would see us starting to originate bank type assets and bringing our overall yield profile down, just because we see enough quality opportunities within our target profile, within our target return profile, risk profile and credit profile that we don't need to dip into bank type deals.

Sounds good. Guys, congratulations. Thank you.

Matthew Howlett, UBS.

Thanks for taking my question and congrats. Just as a new and young company like yourself, I just want to go over a few questions that we typically go over for other BDCs. First, SBIC, where are you with that process on getting the license?

Two, securitization, something that BDCs utilize, whether or not you would be open for that in terms of expanding your funding or using an alternative funding source.

And then, three, this 30% basket nonqualified. BDCs typically have some plan to utilize that.

Maybe you could just go over those three points and where you guys are planning here on the early stages.

Yes, as you said -- this is Harold. Thank you, Matt. We are in the early stages. We are looking at all alternatives of raising -- having access to other forms of debt, including SBIC and securitization. We are in the process of those applications and looking at -- talking to other parties about securitization. At the appropriate time, we will roll those out.

The 30 -- we are focused on our business. We think what we do is appropriate. We know what we are doing and we do it well, and we don't need to focus on a 30% bucket because all the loans that we originate are, for the most part, qualified within the good asset bucket.

Yes, I think the only thing -- we occasionally provide equipment lease financing and to the extent that may -- to the extent it's a true lease, it may fall into the 30% bucket, but otherwise generally, Matt, everything else that we do falls outside of that 30% bucket.

Now when you talk about the SBIC, would that -- is that -- are the assets qualified in terms of what you have done today?

(multiple speakers). The assets that we originate qualify for SBIC.

We believe they qualify.

We believe they qualify and we are in the process of completing that process.

Right, so presumably that would be attractive financing?

Absolutely, yes. Obviously, there are other venture lenders that have pursued the financing both on the SBIC and on securitization, and so there is no doubt that there is precedent for that, and so it's something that is in process for us.

Great, guys, and then what's unique to your situation is clearly the participation with warrants. Listening to the prepared remarks, it is great to see the portfolio moving -- a good part of the portfolio moving towards potentially some liquidation event.

As analysts and as investors, we are not new to seeing this. It's hard to obviously predict. We watch the NASDAQ and we could do different things, but what would you suggest in terms of monitoring that? What can we -- could we presume that would be paid out of that capital? I think gains would be paid out as special dividends, like you guys have been doing. Is that just a reoccurring part of the model that we could just get used to? How should we think about that as we get used to your Company?

First of all, just to clarify, our special dividend from last year, none of that was from any exit event or none of it was capital gains. That was all from ordinary income.

Got you.

So going forward, our plan is to distribute any capital gains income as they happen.

As a special dividend.

As a special dividend. In terms of -- I will hand it over to Sajal to talk about how to monitor it.

I think, Matt, I think it's hard to predict when exit events happen, and then, obviously, for those publicly-traded companies you are generally subject to a lockup period, and so there is a time period between when the event occurs and then when the actual liquidation occurs, and our thesis is to liquidate as quickly as possible after an event.

So I would say we're in the early innings, but we have got some guys on base and the pitch count's in our favor, so we're optimistic for seeing some runs this year.

So in other words if something was to list 180 days, typical lock up and we can follow the ticker, we can just do that and figure out what could potentially be the proceeds and most of that would be distributed to shareholders as a special?

Correct. That's our intent, to distribute capital gains as special dividends.

Great. Great, thanks, guys. Congrats.

Andrew Kerai, BDC Income Fund.

Hi, good afternoon, and thank you for taking my questions. So I want to talk about Coraid for a second, if I can. I know you guys have already had a couple of questions about that -- about that loan and you said it's an ongoing story in that as well.

So obviously looking back at the 9/30 numbers, and I can obviously take a look at the K once it is filed as well, marked about $15 million at par. It has obviously been downgraded to category 5 now, and I know you have certainly given commentary that it is an ongoing discussion and there has been certain assets put up for sale and your loan is going to be taken out and all that.

If you had to mark that asset today, so assuming we fast forward two weeks to 3/31, where is that mark relative to the $15 million? It seems like you had it as of 12/31.

Correct, so we did mark it down as of 12/31 based on the downgrading from white to yellow. (multiple speakers) this time -- I'm sorry?

Oh, no, sorry.

Sorry, so at this time, I think, given it is a real-time situation, I don't think we can provide any guidance at this time in terms of what the actual mark will be. I think as the process develops, then we will provide an update on where our mark will be.

Okay, sure, fair enough. Then I just wanted, I guess, some more broader market commentary. One of your internally managed competitors has given some color that there are some new entrants in the space, some maybe without as much experience.

I guess maybe a case in point that I think of, so there is about a BDC, it's about a $3 billion AUM BDC that has had its recent struggles, certainly, so like it had in the middle market -- excuse me, in the venture lending -- about, call it, five, six quarters ago, right? So, obviously, I wouldn't trust this BDC to underwrite a sponsor loan, much less a venture debt deal. I don't think they have the expertise.

So with seeing something like that, and I suspect there are other entrants out there that probably don't have the experience or don't have the team that you guys or a couple of others do, have you seen any evidence of potentially distressed venture debt out there, anything like that that you think might represent an opportunity to buy up, call it, poorly underwritten paper at enough of a discount for you and your workout team to go in and potentially realize some upside there?

Andrew, that's a little foreign to us, at least in the circles and companies and investors we have been working with, so I am not aware -- I don't know if anyone else is aware -- of that kind of opportunity or that going on, but we just stick to our select investors and the high-quality portfolio companies that we always have and always will here at venture lending, and that's news to the management team. But it's nothing we would ever look at, get involved with, and right now I haven't heard of anything like that.

Great, no, thank you. Appreciate the color and congrats on a strong three quarters out of the gate here.

There are no further questions at this time. I will turn the call back over to Mr. Labe for any closing remarks.

Okay, thanks. I will close by again expressing my appreciation to all of you for your continued interest and support in TriplePoint Venture Growth, TPVG. We are going to continue to build our franchise and portfolio in order to meet growing market demand and deliver these attractive returns to you. We look forward to talking with you again soon as we continue to execute on this growth strategy. Thank you.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.