Runway Growth Finance Corp. - 7 Q3 FY2024 earnings call

Key Points

• David Spreng discussed third quarter financial results, the combination with BC Partners, and the investment environment. He mentioned the transaction positions Runway to deliver consistent returns and expand origination channels.
• Greg Greifeld provided a market overview, talked about portfolio performance, venture ecosystem, and credit quality. He noted funding seven investments in high-growth potential companies and stable credit quality.
• Tom Raterman went into financial details, including loan portfolio composition, expenses, liquidity, prepayments, stock repurchase, and the BC Partners acquisition. He also discussed NAV, investment income, and distributions.

In the third quarter of 2024, Runway Growth Finance had total investment income of $36.7 million and net investment income of $15.9 million or $0.41 per share. The total investment portfolio had a fair value of approximately $1.07 billion, an increase from $1.06 billion in the second quarter of 2024. The loan portfolio is 100% floating rate assets, with a dollar weighted average annualized yield of 15.9% for the third quarter. Net assets were $507.4 million, and NAV per share was $13.39 at the end of the third quarter.

Forward-Looking Statements

• Anticipates accelerating originations with BC Partners' partnership.
• Believes market for borrowers will gradually improve over coming quarters.
• Board approved a $15 million stock repurchase program expiring July 30, 2025.

Risks Identified

• Uncertainties surrounding interest rates, changing economic conditions, and other factors from SEC filings that could cause actual results to differ from forward-looking statements.

Q: Is BC Partners buying just the Oaktree stake or the whole thing? And what does the adviser merger mean for the future of the company?

A: They are buying the whole thing, including Oaktree's stake. The merger expands origination capability, extends the leadership team, fortifies the position in the market, and allows participation in other types of financing.

Q: How will the acquisition by BC Partners impact the asset yield on the portfolio?

A: Expanding the product suite does not change the return target; it is expected to provide a similar stream of income historically.

Q: Can we expect Snagajob investment to go back on accrual soon?

A: No, not in the short-term, but there is a plan in place to protect the asset value and it is expected to return to accrual status over the long-term.

Q: Should we expect deal-related expenses when the merger closes?

A: Under the '40 Act, transaction expenses like proxy and legal costs are borne by the adviser.