Andrew Olson - CFO Jim Labe - Chairman and CEO Sajal Srivastava - President and Chief Investment Officer.

Fin O’Shea - Wells Fargo Casey Alexander - Compass Point Research & Trading.

Good afternoon, ladies and gentlemen, and welcome to TriplePoint Venture Growth Third Quarter Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer period and instructions will follow at that time.

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. Andrew Olson, Chief Financial Officer of TriplePoint Venture Growth. Mr. Olson, please go ahead..

Thank you, operator, and thank you everyone for joining us today. We are pleased to share with you the results for the third quarter of 2017. 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 disclosure 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 the most recent filings 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 obligations 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. With that, I’ll turn it over to Jim..

Thanks, Andrew. The third quarter was another quarter of exceptional performance and achievement for TPVG. We not only grew the portfolio but we also set some new records, a record level of investment fundings and a record level of signed term sheets.

This follows on the heels of a record net investment income and a record portfolio yield we set in the previous quarter.

We also announced, not long after the quarter, as many of you may know, GSAM AIMS, the Alternative Investments & Manager Selection Group of Goldman Sachs Asset Management along with the executive team here at TPVG, myself, Andrew and Sajal, purchased $23 million worth of TPVG stock in a private placement.

We are pleased to say, this currently makes GSAM AIMS, the largest investor in our stock. To continue with the baseball analogies that I look to use in these earnings calls, although I guess it is football season now.

While we truly had a great inning last quarter, our team has already stepped up to the play this quarter and is warming for the next series in 2018. The current quarter is off to an absolutely outstanding start.

To-date, we have already funded more than $35 million in additional investments and we’re only a little of third or away [ph] into the quarter.

Given the current market conditions and our strong pipeline, which is at the highest level it’s ever been, we believe this would translate into great portfolio growth and serve as a basis for generating attractive returns to shareholders in 2018 and beyond.

With that as a backdrop, I thought what I’d do this earnings call is something a little bit different. I am going to review the key goals and the objectives that I outlined last earnings call and then compare to our performance in the quarter. As you will see, when we say something, we deliver on it. We believe in achieving the goals that we set.

Last quarter, I identified several key goals for TPVG. These were to increase investment fundings, grow the portfolio, increase the dividend coverage, lever up the balance sheet, drive up our realized gains, and lower our cost of capital. I would like to briefly review the strong progress we made on every single one of these.

On the goal of increasing investment fundings, this past quarter, we had record fundings of $83 million of debt investments to 10 portfolio companies.

This was thanks in part to the record $267 million of new signed term sheets during the quarter but more importantly, this was also from a portion of last quarter’s $146 million worth of unfunded commitments, which we utilized this quarter. As we always said, unfunded commitments are a good indication for near-term portfolio growth.

On the goal of growing the portfolio, in Q3, it grew by nearly $60 million and that was after $22 million worth of customer prepayment and $3 million of scheduled amortization.

On the goal of increasing dividend coverage, on a year-to-date basis, we have already generated more than $40 million of total investment income or $2.53 a share and recognized more than $21 million or $1.32 per share in net investment income. Compare this with the $17 million or $1.08 per share in dividends we have paid out.

There should be absolutely no concern about our ability to cover the dividend this year. And I should add, we’ve projected to have spillover [ph] income into 2018. Keep in mind, the portfolio we funded this quarter alone had a 13.8% yield.

So, we continue to add attractive assets which improve our ability to cover our dividend, and that’s with or even without customer prepayments. And we expect this exceptional yield profile will remain a regular part of our go forward business model.

On the goal of increasing our leverage, while on a gross basis, our leverage ratio remained unchanged from last quarter, given the progress and new investment fundings I already mentioned we have experienced in this quarter, we expect to get back to our targeted leverage range.

On our goal of increasing realized gains, we realized the gain of $1 million from our portfolio company Nutanix where we began to sell a portion of our holdings realizing some of our unrealized gains and we are now realizing more gains here in the fourth quarter.

As you may know, we are also pleased to have portfolio company MongoDB complete its IPO just a few short weeks ago and it’s currently trading at roughly double our mark from Q3.

Finally, I’m sure many of you saw Nestlé’s announced majority stake in Blue Bottle, a great development given that our capital is outstanding from a very short period of time.

Finally, on the goal we set last quarter of lowering our cost of capital, Andrew will go into more detail about the specifics but we lowered the spread on our bonds and we’re also in the process of renewing our warehouse facility. Simply said, we delivered on the goals we set.

To wrap up, once again, I see great growth opportunities heading into 2018 in both the venture capital equity and the venture lending markets.

We plan to capitalize on the opportunities in a significant way in 2018, given the strength and reputation of the TriplePoint global platform and the quality of venture growth stage companies in our pipeline and those that are reaching out to us.

As always, we’ll continue to work with our select group of leading venture capital investors, firms that have sponsored some of the biggest tech and life science successes of the past few decades and would strike the high quality of our venture capital backed portfolio companies.

As we look ahead to 2018, based on our pipeline, commitment levels and portfolio growth, we expect to continue to build upon the momentum which I hope you sense, is already well underway this quarter and aim to win the series next year. I’ll now turn the call over to Sajal..

Thank you, Jim, and good afternoon, everyone. In the third quarter, we signed more than 267 million of new term sheets at TriplePoint Capital and closed more than a $122 million of debt and equity investments.

On a year-to-date basis, we have signed more than $460 million of term sheets and have closed nearly $270 million of debt and equity investments. Furthermore, as Jim mentioned, we had record debt and equity investment fundings during the quarter of more than $83 million, bringing the year-to-date total to more than $155 million.

New customers in the quarter included Ring, the leading provider of residential and neighborhood security products whose suite of video door bells, outdoor cameras and home security kits provides rings of security around your front door, home and neighborhood.

Ring is a very high profile and exciting company that has raised more than $200 million of equity capital from Kleiner Perkins, Goldman Sachs, Richard Branson, and others.

BlueVine Capital, a FinTech company that offers working capital financing to small and medium sized businesses, using proprietary technology and algorithms to streamline the underwriting and customer management process.

BlueVine has raised more than $270 million of capital from Lightspeed Ventures, Menlo Ventures, Fortress Investment Group and others.

OUTFITTERY, a European focused personalized online shopping service for men’s clothing, which leverages human stylists, customer preferences and other data with its advanced machine-learning technology to provide recommendations to its subscribers. Some described OUTFITTERY as the equivalent of fit [ph] for men in Europe.

OUTFITTERY is based in Berlin, which is developed into a major European tech up, has raised more than $60 million from investors including Highland Europe, Octopus Ventures and Northzone Ventures and others.

During the quarter, we also made an equity investment in Revolut, one of Europe’s higher profile FinTech companies and exceptionally fast-growing digital banking alternative for international individuals and businesses that allows them to send, exchange and spend money globally for no foreign exchange fees.

Revolut has raised more than $80 million from Balderton Capital, Index Ventures and Ribbit Capital. During Q3, we funded nearly $83 million in debt investments to 10 companies, $300,000 of equity investments in two companies, and acquired warrants valued at $1.5 million in seven companies.

The new debt investments funding during the quarter had a weighted average portfolio yield of 13.8%. We also had $21.8 million of prepayments from two portfolio companies. Our portfolio yield for the quarter was 15.4% including prepayments. Without prepayments, our portfolio yield was 13.5%, which was up from 13% for the second quarter.

Approximately, 60% of our portfolio is floating rate at this time, up from 55% in Q2. Consistent with the prior quarter, we continue to see a healthy amount of capital activity with companies in our portfolio.

We view these events as a testament to the quality of the kind of companies we hold in our portfolio and our superior ability to select winners. Some of the publicly disclosed equity rounds that occurred during Q3 include for ForgeRock’s $88 million rounds of equity financing and MapR’s $56 million rounds of equity financing.

We also had a number of portfolio companies raise equity rounds but have not yet been publicly disclosed. We expect another three to five portfolio companies to raise additional equity rounds here in Q4.

Some other portfolio company highlights include the $1 million of realized gains from the sale of our Nutanix shares plus Blue Bottle announced its majority stake sale to Nestlé as Jim mentioned, and MongoDB went public here in Q4 and has been trading well.

We see a strong path for continued portfolio growth based on our very unique and disciplined venture growth stage lending approach to companies backed by select group of venture capital investors.

Our new assets funded during the quarter exceeded our prepayment activity, resulting in growth of long-term investments by nearly 23% from the prior quarter. This momentum continues into the current quarter with $36 million of funding so far.

And we expect a strong finish heading into year end with targeted fundings for the quarter in total of between $60 million and $80 million given the fundings so far are current and unfunded commitments in our healthy pipeline.

I should also mention that we are not aware of any prepayments at this time for this quarter but will of course receive principal back from amortizing deals and those that are scheduled to mature during the quarter.

So, again, we are on track for continued portfolio growth and as a result on track to approach the lower end of our target leverage ratio towards the end of Q4.

We will achieve this portfolio growth in part due to our existing unfunded commitments which at quarter’s end totaled a $158.2 million to 11 companies of which $50 million is dependent upon the Company’s reaching milestones before the debt commitments becomes available to them.

$31 million of the $158.2 million will expire if unused during 2017 and $97.2 million is scheduled to expire if unused in 2018. During Q3, no unfunded commitments expired. Moving on to credit quality.

As of September 30th, the weighted average internal credit rating of the debt investment portfolio was 2.02 as compared to 2.06 at the end of the prior quarter. As a reminder, under our rating system, loans are raised from 1 to 5 with 1 being the strongest credit rating and new loans are initially generally rated 2.

Changes in the quarter included two upgrades totaling 15.8 million to category 1 as well as 9.5 million of new loan fundings to category 1 portfolio companies. 73.3 million of new loan fundings were added to category 2. 20 million of loans removed from category 2 due to prepays. And finally two loans totaling 15.8 million were downgraded to category 3.

During the quarter, the numbers were finalized by the KnCMiner’s trustee. And so, we’re pleased to report that we revised the recovery expectations up by 500,000 from prior quarter and continue to expect a full recovery over time from GoGreenLight, the party which acquired the remaining KnC assets.

I’m also very pleased to report that subsequent to quarter-end, we received a $2.4 million distribution from the trustee which will be reflected as a recovery against our cost basis and investment in Q4, bringing our total recoveries to-date at $2.8 million and we expect another $400,000 from the trustee over the next one to two quarters.

We then expect to recover our remaining balance from our annual GoGreenLight profit sharing. Before I hand off to Andrew, I would like to further elaborate on our recent placement with Goldman Sachs Asset Management.

As mentioned by GSAM in the press release for the transaction, they view this as an investment and the leader in the venture lending space and are excited by the outlook for venture lending. GSAM purchased 1.6 million shares at $13.54, and our Q3 NAV was $13.39.

So, the purchase price was at premium and there’s no underwriting fee associated with this offering. Executive management team also invested $1 million alongside GSAM and all investors agreed for an 18-month lockup. GSAM is also obligated to buy an additional 200,000 shares after TPVG’s next equity offering.

We look forward to finding strategic and creative ways to expand our relationship with them.

Finally, I would like to point out that when you take into account the fact that we repurchased almost 1 million shares of our stock through our buyback program in 2016 at an average of $11.48 and issued shares at $13.54, we added 2 million or $0.12 per share of NAV, so another example of our prudent approach to capital management.

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

Thank you, Sajal. I’m pleased to report our third quarter results, and key performance metrics. We had another strong quarter of investment fundings which drove total long-term investments to over $311 million as of September 30th, up over $57 million or 23% from the prior quarter. As of Q3, we had 97 investments in 41 companies.

Our investments included 53 debt investments, 32 warrant investments, and 12 direct to equity investments. The total cost of these investments was approximately $309 million of which $295 million consisted of debt investments and of those 59% were at floating rates.

On the liability side of the balance sheet, we continue to manage our cost of capital through a combination of long-term financing with our unsecured bonds and just in time capital with our credit facility. Careful to ensure we did not have periods of excess cash flow dips or inefficient cash drag.

As part of this capital strategy and disclosed subsequent to Q2, during the quarter we raised approximately $72.2 million of net proceeds from the issuance of unsecured bonds priced at 5.75% and exercised our options to redeem 54.6 million of bonds priced at 6.75%. This transaction served many purposes.

First and foremost, it lowered our cost of borrowing by 100 basis points, saving us approximately $500,000 or $0.03 per share annually. Second, it extended the maturity date for long term debt. And third, it added $20 million to our capital base, giving us the leg room to expand and take advantage of opportunities we see in the market.

As of September 30, our total cash position was $8.5 million and we had $174.5 million available under our $200 million revolving credit facility. This put us at a current leverage ratio of 0.47x, giving us plenty of runway to fill the strong demand and opportunity we see in the market and drive us for a target leverage of 0.6x to 0.8x.

Also, we ended the quarter with new assets of $214.8 million or $13.39 per share, down slightly from the comparable quarter but generally flat to that of Q3 2016, $214.4 million. Now, turning to the income statement. We continue to see robust core portfolio yields, resulting in strong top-line earnings.

Total investment and other income was $10.4 million on weighted principal outstanding of $264 million. Given that slightly less than half of our Q3 fundings occurred in the last month of the quarter, the full impact of income accretion will be recognized in Q4 and beyond.

Total investment and other income for the nine months ended September 30, 2017 totaled $40.4 million or up approximately 23% over the same period of 2016.

Total expenses for the quarter were $6.1 million, consisting of our base management fee of $1.6 million, incomer incentive fee of $1.1 million, interest and fee expense of $2.3 million, and administrative and general expenses of $1.1 million.

Total expenses were down nearly 12% from $6.9 million in the prior quarter due to lower incentive fees on higher net income and generally flat with that of Q3 2016. As a reminder, our expenses in the current quarter included approximately $300,000 or $0.02 per share of interest overlap on the 2020 notes due to a 30-day required notification period.

We ended the quarter with net investment income of $4.4 million or $0.27 per share, down from the prior quarter of $8.8 million or $0.55 per share due to the robust level of prepayment income experienced in the prior quarter.

Net investment income for the nine months ended September 30, 2017 totaled $21.1 million or $1.32 per share, up nearly 18% from $18.2 million or $1.12 per share over the same period in 2016.

We had net realized gains from the sale of investments of $1 million, consisting entirely realized gains from the sale of Nutanix, publicly traded company where we sold 60,000 shares for approximately one-third of our position in Q3.

In addition, as previously noted, we elected to exercise our option to redeem our 2020 notes to replace them with our 2022 notes which resulted in a realized loss on debt extinguishment of approximately 1.1 million related to the one-time non-cash acceleration of unamortized issuance costs.

With regards to unrealized gains and losses, there were no material changes to credit or mark-to-market activities during the quarter.

We had a net change in unrealized losses of approximately $620,000 consisting primarily of the reversal of previously recorded unrealized gains of $836,000 and the recognition of realized gains related to the sale of Nutanix. This was offset by $200,000 of unrealized appreciation on the investment portfolio related to mark-to-market activity.

On an annualized return basis, our net investment income generated a return on equity of 13.1% and a return on assets of 7.9% for the nine months ended September 30, 2017. Our net increase in net assets was $3.7 million or $0.23 per share.

Year-to-date net income was $15.4 million or $0.96 per share up from $4.2 million or $0.26 per share for the nine months ended September 30, 2016. As of the end of the Q3, our NII exceeded our distribution by $3.8 million or $0.23.

I’m proud to report for the fourth quarter, our Board of Directors declared a distribution of $0.36 per share payable on December 1st to stockholders on record as of November 17th. And with that I’ll turn it back over to Jim..

Thanks, Andrew. At this point, we’d be happy to take your questions.

Operator, could you please open the line?.

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jonathan Bock of Wells Fargo Securities. Please go ahead..

Good afternoon, guys. It’s Fin O’Shea in for Jonathan Bock. Thanks for taking our question and congratulations on other solid quarter. We first had a question on one of your goals outlined, which is realized gains. I think you noted some progress recently Nutanix, MongoDB.

Can you kind of give us a sense of your broader ability to move these names, say if they don’t do an IPO and keep the equity portion of your portfolio at a reasonably low level, kind of as you guys mature in terms of this portfolio and have a lot of repayments that might not pay off on equity?.

Hi, Fin. Sajal here. I’ll take the first cut, and then Jim and Andrew, please jump in. So, you’re correct. So, we’re a lender, we’re not an equity investor. We don’t take forward sit. So, we definitely do not have any control over the timing of when our portfolios -- portfolio companies monetize.

I would say, our perspective is, given the high quality of companies we work, they’re attractive targets for both the M&A and the IPO, exit, that’s given again our venture growth stage approach. With regards to direct equity investments, again, our approach is to keep just a small percentage of the overall investment portfolio.

But, I think the interesting insight is, we get access to investment opportunities in these top tier deals that even other VCs can’t get access to. And so, you need proprietary access to offer those high quality investments to public shareholders.

And so, we think, again, we like to opportunistically take advantage of investing, but it’s not intended to be a significant portion of the total investment portfolio..

I would only quickly add, if you may recall, we target specific venture growth stage companies and our guidance has always been generally we expect liquidity events such as IPOs or acquisitions in the one to three-year timeframe, after we make the investment..

Another concept here we sort of wanted to thread together; there’s discussion on keeping cash drag to a minimal, in relation to signing the credit facility. I think those are items investors appreciate very much.

Also, with some discussion on the post quarter GSAM deal and potential future raises, can you give us a reminder of how you look at your debt profile and especially term debt? Do you want to keep that as a percent of the equity base or percent of the portfolio, how should we look at that?.

So, it’s Sajal here, and I’ll ask Andrew to answer as well. So, as lenders, we definitely believe in debt and so we believe in using it. We have great relationships with our warehouse lenders. And so, we view our warehouse facilities, really the intent is essentially to fund our unfunded commitments.

And that’s the beauty of having a revolving facility like that. So, again, our goal is to get to our target leverage ratio, again demonstrates the significant earnings power profile of our business. And then assuming we see continued portfolio growth opportunities which we do, raise more capital.

And so, I think the beauty of the GSAM private placement was it was a way for us to bring in a quality investor, a meaningful amount of capital and even more critically, not disrupt the stock which is usually what you see when you have a typical equity offering.

And so, we are very proud of I call the just-in-time type financing and of course bringing in a marquee investor in and then obviously doing it at a slight premium to net asset value, I think again are all critical elements of -- again of being a prudent manager of our capital space..

Very well. Thank you. And just one more small question.

Can you just give an update on SimpliVity pursuant to the Hewlett Packard investment? Are they keeping -- just keeping this debt on the books or is it something we should expect to roll off near-term?.

So, yes, again, HP assumed all the SimpliVity debt; essentially, HP is parent company, so it’s guaranteed by HP. And so, they are paying us, I think it’s on average 7% on our equipment leases. So, as far as we know and their current payment, [ph] so they obviously have the option to prepay the loans but they have not prepaid them as of yet..

[Operator Instructions] Our next question comes from Casey Alexander of Compass Point Research & Trading. Please go ahead..

Hi, good afternoon. Can you sort of break down for me, of the deployments of the fundings that came in the quarter, how many were sort of new, how many were bolt-on to existing companies? And then, I guess, there’s sort of a third category that was in unfunded; you had not funded it yet.

So, it’s not technically new but it’s the first time it’s been funded.

Can you sort of break it up for me that way?.

I think overall we have funded out of unfunded something -- I don’t have the exact number in front of me, somewhere between $30 million to $40 million of that bucket. And then of the positions, we added additional unfunded commitments during the period, all of those investments had at least some draw associated with them.

So, there were no strictly commitments that were made during the period that didn’t have a draw associated with that..

Secondly, it’s great news about KnCMiner because you’ve contended all along that you were going to get your money back. And I guess with these upcoming payments that gets you about half way home.

Did you know -- is GoGreenLight still -- I mean, have they completely changed the model or are they actually still using the machines to make bitcoin? Because when they acquired it out of bankruptcy bitcoin was $300 a coin, and it’s now 7,000 a coin.

And it would seem to me that that might accelerate your profit sharing interest in getting your money back?.

Casey, Sajal here. Yes. GoGreenLight, actually they issued some press releases regarding some of the heating contracts that they’ve signed in Sweden. So, all great developments validating the next gen business model that they have.

But then, yes, absolutely great comment and observation, they continue to mine bitcoins and bitcoins continue to hit record levels. And so, as we look to our recovery estimates, we’ll be updating them based on our updates in the company with regards to annual performance.

But one would expect that given where bitcoins are and they continue to mine bitcoins that they continue to perform well..

Lastly, any update on Mind Candy?.

Yes. Again, good news is, they continue to raise more equity capital. So, that’s a great data point, showing investor support and they’re gearing up for a very hopefully lucrative and busy holiday season, so a big coming quarter for them. But we continue to be pretty optimistic on the outlook..

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jim Labe for any closing remarks..

End of Q&A:.

Well, I’ll close again by expressing by appreciation for everyone on the line and ask your continued interest and support in TriplePoint Venture Growth. Thanks and we’ll speak with everyone again soon..

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