Triplepoint Venture Growth BDC Corp (TPVG) 2018 Q1 法說會逐字稿

Good afternoon, and welcome to the TriplePoint Venture Growth First Quarter 2018 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Andrew Olson, Chief Financial Officer. Please go ahead.

Thank you, operator. And thank you, everyone, for joining us today. We are pleased to share with you our results for the full first quarter 2018. Here with me 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 direct your attention to the customary safe harbor disclosures in our press release regarding forward-looking statements and remind you that during this call, we may 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 filing with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. We do not undertake any obligation to update our forward-looking statements or projections unless required by law. To obtain copies of our latest SEC filings, please visit the company's website at tpvg.com.

And with that, I'll turn it over to Jim.

Thanks, Andrew, and good afternoon. Consistent with our prior statements in earnings calls, we're rock-solid and steady ahead right, on our 2018 course and continue to execute and deliver on the 2018 investment strategy and strategic goals we've previously laid out. We're off to an amazing start for the year. The first quarter was another strong quarter of earnings and performance. We have positive developments at several of our portfolio companies. As you may recall, we've also had the highest portfolio yield last year among the venture lending BDCs, and we were the only venture lending BDC to cover its dividend last year.

For the quarter, we had several notable achievements, all of which bodes well for 2018. We saw continued growth in our investment portfolio. Last quarter, it reached its highest level since our IPO. We had 165% increase in the dollar amount of new signed term sheets. These were at venture growth stage companies versus last quarter's. We have a 77% increase in new debt and equity financing commitments over the previous quarter. And at quarter's end, we were back in our target leverage ratio range. All of these will contribute to and serve as a fuel for future growth and earnings this year.

The demand we are experiencing for venture growth stage lending also continues unabated during the quarter. Our originations pipeline for venture growth stage companies again hit a new all-time high at the end of the quarter. There is no lack of deal flow nor are we finding any reduced demand for debt financing. The demand, in fact, has only increased every single quarter since the beginning of 2017.

At the same time, we continue on our path to diversify our portfolio and generate attractive portfolio yields on a risk-adjusted basis. Our weighted average portfolio yield for the first quarter was 14%. When you exclude the impact of early prepayments, the core portfolio yield was 13.6%. The portfolio continues to show its strength and high quality.

During the quarter, Ring announced its acquisition by Amazon, and the transaction subsequently closed here in the second quarter. Our reputation and approach have always differentiated us in the market, and this exit of Ring, our single largest investment as of the end of the first quarter, demonstrates our access to successful and innovative high-growth, venture-backed companies. Ring represented the very definition of the type of venture growth stage companies which we target. This includes companies that have meaningful enterprise value; differentiated technology of products; substantial equity dollars; very high growth rates; and, most importantly, backing from one or more of our leading select venture capital investors, which are oftentimes cited among the top venture capital funds in the U.S.

We are also well into deploying the cash proceeds we received into more great opportunities and venture growth stage companies this quarter. While we're happy with the outcome of Ring and other recent portfolio successes, such as MongoDB, Blue Bottle Coffee and others, only one has to take a look at some of the progress in a publicly announced fund raising activity and valuation from some of our current portfolio companies, such as Rent the Runway and Revolut, as basis for our belief that we will continue to see more successful exits in the future. And this doesn't include unannounced developments at other portfolio companies.

To round out the quarter, we're pleased to announce that we received our exemptive relief order, providing us with co-investment capabilities, which we will serve -- which will serve as an aid in continuing our portfolio diversification as well as increased deal size capabilities. We also renewed and expanded our credit facilities during the quarter. Andrew will go into more detail on this development.

There continues to be great opportunities for us, given the state of the venture capital markets. 2017 turned into a record year for venture capital equity investing. $84 billion of venture capital was invested last year, $400 million in the previous four years. The VC asset class continues to attract significant amounts of venture capital, and the venture capital funds themselves are actively deploying that capital into new and current investments.

In fact, venture capital funds invested more than -- I'm sorry, venture capital funds invested more in that first quarter, that's of 2018, than the entire 2009 as a whole, simply for comparison's sake. The first quarter also marked the fourth consecutive quarter that venture capital has invested more than $20 billion in any one quarter.

To wrap up, I'm going to leave with [outperformance]; our leading yield profile; our strong credit quality; the size of our pipeline; the activity and progress among our portfolio companies, coupled with our forecast for this year of once again achieving earnings in excess of our dividend speaks for itself. We continue to see great growth opportunities and plan to capitalize on these in a big way in 2018.

With that, let me turn the call over to you, Sajal.

Thank you, Jim, and good afternoon, everyone. During the first quarter, we closed $115 million of debt commitments with 4 companies and added 2 new companies to the portfolio. The first was Toast, which offers a mobile, cloud-based point-of-sale and management system that helps restaurants improve operations, increase sales and create a better guest experience. The company has raised over $130 million of equity capital from Bessemer Venture Partners; GV, the venture capital line of Google; Generation Investment, which is Al Gore's investment firm; and others. The second was Quantcast, which is a machine learning and artificial intelligence-driven, direct audience insights and measurement platform. Quantcast has raised over $60 million of equity capital from Founders Fund, Revolution Partners, Polaris Ventures, Cisco and others. As Jim mentioned, we achieved a record level for our investment portfolio this quarter as a result of funding $38 million of investments, with a 13.8% weighted yield to 6 companies and increased our leverage ratio to 0.73. The majority of the funding occurred in the last month of the quarter, so they didn't contribute meaningfully to income in Q1. However, at this portfolio level, yield profile and leverage ratio, we cover our dividend from the portfolio without the need for any prepayment-related income.

Also during the quarter, HP prepaid a $3.3 million lease tranche for SimpliVity, a mature investment that was roughly 8 months away from its scheduled maturity date, which contributed an incremental 0.4% to our core portfolio yield of 13.6% for the quarter, bringing total portfolio yield to 14%, up from 13.5% last quarter.

Moving on to credit quality. There were no changes to the ratings of companies on our watch list during the quarter, and the weighted average internal credit rating of the debt investment portfolio was 2.03. As a reminder, under our rating system, loans are rated from 1 to 5, with 1 being the strongest credit quality, and all new loans are initially generally rated 2. So far in Q2, we've signed $80 million of term sheets, closed $70 million of debt commitments and funded $16 million of investments. We expect to deploy all the Ring repayment proceeds into investments this quarter and to reach even higher levels for our investment portfolio. Although, as usual, we expect the majority of fundings to occur at the end of the quarter.

Before I hand the call over to Andrew, I'd like to share some thoughts regarding our board's approval of the modified asset coverage requirements, enabling our asset coverage ratio to change from 200% to 150% effective April 24, 2019, and our intent to submit a proposal to shareholders to approve the application of the reduced asset coverage requirements earlier than April 24, 2019. In particular, the board approved the modified asset coverage requirement based on the company's strategic objectives; business opportunities; operating requirements; history of prudently using leverage; anticipated leverage utilization; and the benefits to stockholders while balancing the risks and other considerations. With regards to strategic objectives, as we articulated on last quarter's call, our highest priority in 2018 is to capitalize on the strong demand from venture growth stage lending and grow the company from an exceptional but small-cap BDC to a larger and more diversified BDC. We discussed our plans to achieve this by growing our investment portfolio, using our recently obtained exemptive order to co-invest with other funds or sponsor managers and raising more capital, both publicly and privately.

We believe that having the flexibility to incur additional leverage assist with these objectives by serving as another source of capital to fund the portfolio, especially when equity capital may not be readily available or when it may make sense to delay an equity capital raise until we believe conditions are optimal for one. We do not plan to change our investment strategy, product mix, security profile or the targeted yield profile of the investments we will make as a result of the availability of additional leverage. We see this as enabling us to continue to meet the strong demand and pipeline we have today and we expect to continue to see.

Our revolving warehouse credit facility lenders are supportive of reducing our asset coverage ratio below 200%, as our credit facility allows us to reduce our coverage ratio to match the statutory limit. And our publicly traded 5 3/4 notes due 2022, which we raised in July 2017, do not include any restrictions on our ability to reduce our asset coverage ratio. With regards to actual leverage utilization guidelines, we intend to use the additional leverage in a focused and balanced way and, in particular, are expanding our target leverage ratio range to 0.6 to 1.0. So again, 0.6 to 1.0. Given that our debt investments are initially structured as unfunded commitments and, once funded, typically have short-term durations with [authorization] and often prepay, we believe there may be periods when we may be below or above this target leverage ratio. We expect to use, however, proceeds from prepayments and repayments as well as proceeds from equity capital raises to reduce our leverage outstanding but may also maintain liquidity and borrowing capacity in anticipation of new unfunded commitments and investment fundings. We believe that with this approach, we are not changing the risk profile for our shareholders, while increasing the potential to drive higher returns on equity through a higher net investment income.

In closing, I'm pleased to say that we're on track with the game plan we articulated to investors for 2018, and our brand, reputation, relationships and track record continue to differentiate us in the market and with prospective portfolio companies.

I'll now turn the call over to Andrew to highlight some of the key financial metrics achieved during the quarter.

Thank you, Sajal. And I'm pleased to report our first quarter results. As discussed by Jim and Sajal, we had another quarter of measured investment fundings, coupled with continued income growth. We ended the quarter with long-term investments of $401 million, up nearly $30 million or 8% from the prior quarter. At quarter-end, we held 160 investments in 44 companies, with the cost and fair value of approximately $401 million. The company's debt portfolio ended the quarter with the cost of $382 million and generated a weighted average portfolio yield of 14%, including prepayments. Our core portfolio yield, excluding the impact of prepayments and other activity, was 13.6% or up slightly relative to the prior quarter.

At quarter-end, 64% of our debt investment secured floating rates, and we project that every 25 basis point increase in prime will generate approximately $0.03 of additional investment income per share annually. As previously mentioned, we continue to see strong demand and have a robust pipeline of near-term opportunities. Our unfunded commitments totaled $124 million to 11 companies, of which $33 million is dependent upon the companies reaching milestones.

Overall, our balance sheet is well positioned to meet the demand. During the quarter, we amended and renewed our revolving credit facility, which included an increase in the total commitment, extended the maturity and improved the economics. Our liquidity as of quarter-end consisted of total cash of $18 million and $113 million of undrawn availability under our $210 million revolving credit facility. Total outstanding borrowings as of quarter-end were approximately $170 million, consisting of $75 million of long-term fixed rate notes and $97 million outstanding under our credit facility. This put us at a leverage of 0.73, which is within our target range. Given the closing of the Ring transaction here in Q2 and projected fundings to date, we anticipate redeploying the proceeds during the quarter. Overall, we ended the quarter with 270 -- $237 million of equity capital, or $13.34 per share, up $0.09 from $13.25 per share in the prior quarter. At NAV, our annualized dividend yield generates nearly 11% return.

Looking at the income statement. Total investment and other income was $12.6 million or $0.71 per share for the first quarter of 2018 compared to $11.1 million or $0.64 per share in the fourth quarter of 2017. The increase was driven by continued portfolio growth. Our expenses this quarter were $6.7 million, consisting of interest and fee expense of $2.5 million; base management fee of $1.5 million; income incentive fee of $1.5 million; and administrative and general expenses of $1.1 million. Overall total expenses increased from $6.0 million in Q4 2017 due to higher weighted average borrowing on our credit facility used to fund the portfolio growth.

Net investment income for the quarter was $5.9 million or $0.34 per share compared to $5.1 million or $0.30 per share in the fourth quarter of 2017.

We recognized net realized gains of $8,000 due to foreign currency transaction in the first quarter compared to net realized gains of $2.2 million or $0.13 per share from the sale of investments in the fourth quarter of 2017.

We had net change in unrealized depreciation during the quarter of $2 million or $0.11 per share, primarily related to the appreciation of our investment in Ring Inc., which announced its acquisition by Amazon and slightly offset by mark-to-market activity on the remaining investment portfolio. This is compared to $3.5 million of debt unrealized depreciation in the fourth quarter of 2017 from the recognition of realized gains and mark-to-market activity.

The above activity resulted in net increase in net assets of $7.9 million or $0.45 per share compared to $3.9 million or $0.22 per share during the fourth quarter of 2017. On an annualized return basis, we generated a return on equity of 13.6% based on net income and 10.2% based on net investment income during the quarter ended March 31, 2018.

With that, I'm pleased to announce our Board of Directors declared a distribution of $0.36 per share, payable on June 15 to stockholders of record as of May 31. This marks the 17th consecutive quarter we have increased or maintained our quarterly distribution rate.

And now I'll turn it back over to Jim.

Thanks again, Andrew. At this point, we'll be happy to take your questions. Operator, can you please open the line?

(Operator Instructions) And our first question comes from Jonathan Bock with Wells Fargo.

Joe Mazzoli filling in for Jonathan. So the first question -- so you received co-exemptive relief with your private funds which, of course, is great news, and allocating across the platform provides a path for smaller hold sizes and less concentration within TPVG. So the question is, how big are the private funds? And then how much of that can -- is actually mandated to invest in similar deal flows to TPVG?

Yes. Hey, Joe, this is Sajal here. So the beauty, I guess, of our private funds is they have significant appetite for venture growth stage assets. So we think it's actually a strength for us in order to enter into even larger or potentially large transactions and smooth over and diversify investments for TPVG. We don't comment publicly on the size of the funds, but we have several hundred million of funding capacity available for venture growth stage assets.

Okay, got it. So -- And then now to the 2 to 1 leverage, and you provide some color there, and that was helpful. But you mentioned that you would not change the type of assets that you'd be investing in with higher leverage, so I'm curious kind of what the financing would look like for this. I mean, you have the baby bond now as well as the revolving credit facility, not a lot drawn under the revolving credit. Is part of the reason the revolver is not used more because of the asset concentration, maybe more diversification would allow for higher leverage there? If you could just provide some thoughts there broadly.

I mean, I think overall, yes. I mean, currently, the balance sheet gives us ample room to kind of maintain within our asset -- within our target leverage ratio. But between co-investment and increased leverage, we'll continue to be able to utilize the facility to its max rate.

Yes. I think at this time, Joe, I think we're -- we think, as we've said in some of our filings, it's -- we see a combination of long-term and short-term debt as the way to lever the business up, and so I think we're going to be opportunistic and thoughtful about optimizing cost and term and tenure. And so the good news is our warehouse facility lenders are not only supportive with the asset coverage, allowing us to lower, but they also have some creative ideas to allow us to modify our existing facility, to get excess funding capacity, plus there, obviously, other forms of long-term debt that we can explore as well.

Okay, that's great. And just one final question. As we think about higher leverage within the BDC, even though the leverage targets that you outlined really aren't that different than the initial targets, right, it sounds like you kind of -- would just be using it for more headroom, right? But still the cap that you gave was about 1.0x debt to equity. What is the leverage at the private funds? And I'm just curious how you've managed capital privately, and what is kind of the maximum leverage that you think is appropriate for this type of asset.

Yes. Well, I guess, maybe the first point is, we think the return speak for themselves, right? So 14% portfolio yield, 13.6% core yield of just the investments on a stand-alone basis. So as we look at it, we don't need aggressive amounts of leverage or any leverage to make those returns compelling on a stand-alone basis to our shareholders. I think as -- the message that we conveyed is we see so much quality demand because of our great relationships with our sponsors, our brand name recognition. And so there's the potential of missing out for TPVG to the extent that we approach the higher end of the older leverage ratio and are essentially kind of at capacity and then have to allocate capital to our private funds, which TPVG would miss out on. So we think, again, the beauty here is the leverage -- the additional leverage is not intended to, again, to focus on a different segment or lower-yielding assets, it's just to help grow TPVG and take on more of these high-quality -- more Rings and more Revoluts, I guess, is how we describe it. But -- and maybe to answer the other part of your question, yes, we historically have run with higher leverage on our private capital, and we have a history of using leverage, using it prudently at the platform, a 15-year relationship with Deutsche Bank. And so yes, we know how to use it thoughtfully, and we plan to continue to do so.

Our next question comes from Christopher Nolan with Ladenburg Thalmann.

You mentioned in your prepared comments that you expect, with the increased leverage, that you'll have higher equity returns, and, obviously, you have some data backing that up. Can you give us an indication as to where you think equity returns will improve to?

I think, overall, just a function of leverage, obviously, it increases the overall returns, right? So I think, given our current targets, we're not fundamentally changing the overall business performance, we're just looking into -- in periods where we see opportunities, we'll continue to add those assets to the portfolio. And to the extent we're at the higher end of that, the leverage ratio, we would be able to meet or exceed our dividend. And in any period where we're at the higher end or above the higher end, we would be in excess of our current dividend rate.

Okay. As a follow-up to that, assuming higher leverage return brings higher equity returns, is that assuming that your cost of debt doesn't really change or your returns on assets don't really change either?

Yes, that's right. I mean, based on the returns of the current assets and fundamentally, we've said we're targeting the same profile of investments with -- even with or without increased leverage, they generate sufficient return to be accretive to shareholders immediately.

Okay. So it's fair to say that you don't expect your debt cost or cost of debt to increase as a function of the higher leverage?

No, I mean, based on our balance sheet today, we have ample room, headroom, within our credit facility to meet our target leverage ratios that we've outlined today. So there's no incremental cost that we're looking at, at this point in time. So our cost of capital that we have on our balance sheet today is consistent with what we would expect under the leverage ratio.

And we'll be opportunistic when it comes to other forms of financing, be it long-term debt or others. But Chris, to your point, absolutely, I don't think we expect to see any material movement in the cost of the capital -- of the debt capital.

So the idea -- on that assumption that you're correct, then we should see the interest rate sensitivity increase and that the portfolio leverage is up?

Sure, sure. I mean I guess, right now, our -- as I mentioned, about 2/3 of our portfolio is floating rate. And to the extent -- we continue to add investments and, primarily, those are going to be floating rate investments. The debt that we'd be drawing to fund those investments is from our credit facility, which is also floating rate, so we'd be match-funding for the most part.

And our next question is from Casey Alexander with Compass Point.

I'm looking for a little bit of a clarification of something that you said regarding your credit facility, that the sort of the covenants of your credit facility anticipate being good up to the statutory limit. By that, do you mean that, assuming when the -- if the shareholder vote goes through or the year is up on the additional leverage, that then your credit facility would support a leverage ratio of 1.5 at that time?

The answer is, on the covenants, yes. The ultimate underlying borrowing that we're going to -- advanced rate on the facility would remain unchanged.

Yes, just to clarify, we don't have a financial covenant restricting or requiring the 200% asset coverage. We -- the covenant, it matches our asset coverage requirement to the statutory limit.

Okay. I'm a little -- I understand that once you have access to the additional leverage, you expect a target ratio of 0.6x to 1.0x. Why wouldn't you raise the bottom side of that and shoot to maintain something more like 0.8x 1.0x?

Yes, a great question, Casey. Well, as you know, these assets are short-term and prepay, and so we want to be mindful of, again, of the fact that we will have prepayments, and we may end up at the lower end or below the lower end for short periods of time. And so I guess we wanted to make sure that folks continue to be aware of that.

Well, I mean, you've been below the target leverage ratio, as it exists now, for some period of time. It would seem to make sense that if your strategy is to attach additional leverage to the platform, that your target leverage ratio would be higher, even on the lower end. Let me ask you a different question. Assuming that there's no shareholder vote, and you have to wait a year, would you press above the top end of the existing target leverage ratio, up to 0.85x or 0.9x, knowing that eventually you're going to have access to higher leverage, regardless of whichever way the vote goes?

Yes, well, I guess we run the business as -- to be thoughtful. And so to the extent that -- let's ignore the shareholder vote, if we don't have it, it would not make sense for us to run at a higher leverage ratio. I think that, that wouldn't be thoughtful or prudent. We would not take the target leverage ratio up in the period beforehand. But given, as Andrew mentioned, some of the dynamics if we had a wave of portfolio fundings, and we didn't have prepayments, we would naturally take up the actual leverage by virtue of the fact that we've drawn more of our lines to fund our unfunded commitments.

Your next question is from Ryan Lynch with KBW.

First one is on the leverage. So as you kind of outline your strategy, I can definitely appreciate the strategy, it didn't look like it changed too much but a little more flexibility maybe on the upside, maybe drive a little bit higher returns. Can you just walk me through, though, the thought process you guys had of why you guys chose not to pursue maybe more balance sheet leverage as well as derisking the portfolio into some more higher-quality, lower-yielding loans? That seems like a strategy that some other BDCs had at least discussed pursuing so just the thought process behind not pursuing that strategy and pursuing the strategy you guys outlined here, which I think's a good one as well.

Hey, Ryan, this is Andrew. I'll answer the first part, and I'll let Jim and Sajal answer the second part of that question. So the first part is, overall, our target leverage range has typically -- it's designed to meet or exceed our dividend from an NII perspective. The low end of the range -- we've always said, we will meet our dividend coverage level at the low end of the range with prepayments. The high end of the range, we would cover our dividend absent any prepayments in the portfolio. So really, the range itself is designed as a mechanism to ensure that we're being prudent and generating the right amount of return for our shareholders. Now we increased the top end of that range, a, to give us flexibility, but also we see a lot of demand, and so we think there's opportunity to help -- there's a benefit to shareholders from a return perspective, from a diversification perspective and also just from a portfolio-scale perspective. And I'll let Jim, Sajal answer the second part of the question.

Yes. Again, I think the pipeline is so strong, the demand is so big. I guess, we -- that was the strategy we articulated to our shareholders. That's the targeted yield profile. That's what we've been articulating. So I guess, we would view -- we don't see any benefit to changing that strategy, and we don't think -- we don't find lower-yielding assets as attractive nor do we necessarily believe that there are lower risks, given the growth stage of the portfolios that we lend to -- or the companies that we lend to. And again, I'd just say we have plenty of demand, we're not desperate for assets which, I'd argue, I assume may need to do that. But again, I think a 14% yielding portfolio, I don't see why shareholders wouldn't want to see more of assets like that, assuming it's -- we stick to our knitting, which we are, of the select group of top-tier VC investors.

Sure, that makes sense. And I can definitely appreciate you guys stick to the strategy that you guys outlined when you went public and not changing it now just because the leverage changed. You talked about over the -- really have a robust investment pipeline and really a strong demand for venture debt in the marketplace. You've really seen that come through in your commitments and had originations of really -- were pretty strong over the last 12 months. Can you just talk about why we've seen an increase in, I guess, investor demand for venture debt over the last several quarters?

Well, I guess, as I think about it, we've talked about what's happening in the venture capital markets and the robust activity and the growth in terms of the fundraising. But recall, we work with just a select group of what we consider leading venture capital investors, and they have been raising very, very large funds. There is a great deal of activity. And to be honest, when you couple our reputation, our references, our relationships, the deals that we have done, the successes we've had, and again, I got to go back to those 3 Rs, I don't want to say the phone is ringing off the hook, but, as you heard, I said we are at an all-time high for our pipeline. So I like to think, as I can determine, that this is unique to us, unique to the TriplePoint story. I can't speak for others, but we have been expanding, and we plan to continue growing. And again, it's all based on the reputation, the relationships that this pipeline is what it is, at least that we're experiencing.

Okay, it's fair enough. And then just one last one on Ring. And I'm not sure if you guys said this, and I missed it. But as far as you guys realizing or [accessing] that investment in the second quarter, to me it looks like, on our calculations, you guys should realize about $2.5 million of kind of onetime fees. Is that in the ballpark?

Yes. I mean, I think during the quarter, during Q1, we marked the position to what we thought the exit value was, and we took a markup of $2.4 million on just the debt position during the quarter. And then on the warrant position, there was also about $600,000 markup during the quarter.

(Operator Instructions) Our next question is from -- excuse me, it's a follow-up from Christopher Nolan with Ladenburg Thalmann.

Given that you're limiting your leverage at this point to 1.0, is that any sort of consideration for discussions you might have, even long-term discussions, with the rating agencies?

Just to clarify, we're not necessarily limiting our high end, we're just saying our target leverage ratio again is 0.6 to 1.0. I'd say, we have not had any conversations recently with ratings agencies. I think we're probably a little too small at this stage for some of the larger ratings agencies. But we're interested to see how it plays out with ratings agencies over time and how that impacts some of the other BDCs out there.

Okay. Well, understanding that the conversation [forward] with these guys tend to take years, just thinking whether or not -- does that play into your strategy in terms of not really going above what the rating agencies currently want for their current investment grade-rated name.

Yes. I mean, I think we have dialogue with the rating agencies. I think given our portfolio size and our business today, we don't see the advantage of going out and getting a rating agency based on what we book [RDEs] as they sit today.

I guess, maybe -- Chris, it wasn't because of that but it's a benefit of it, I guess, is how I'd answer it.

And at this time, I'm showing no further questions. So I would like to turn the conference back over to Jim Labe for any closing remarks.

Okay, great, thanks. I'm -- I think there's been some good questions here on leverage, and we certainly love the flexibility from this new legislation. But I want to go right back to what we said consistently in these calls, which is we plan to continue to stick to our knitting and the quality of the companies that we deal with. And we're really excited in terms of the market and the pipeline we see for the growth outlook here for 2018. So I'll close by expressing my appreciation to everyone for your continued interest and also your support in TriplePoint Venture Growth. Thanks, and we hope to speak to you again soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.