Runway Growth Finance Corp. - 7 Q4 FY2024 earnings call

• The fourth quarter was transformative with enhanced origination channels, expanded product set, and infrastructure build. - Acquisition of Runway Growth Capital by BC Partners Credit closed in January, bringing combined scale and expertise. - Seeks to grow originations in loan size $30M to $150M, with ideal BDC allocation $20M to $45M. - In Q4, executed 2 new company investments and 5 existing portfolio investments totaling $154M, focusing on tech, healthcare, consumer products. - Venture debt deal value increased to over $53B in 2024, with Runway positioned to benefit from sector tailwinds.

For the fourth quarter of 2024, Runway delivered total investment income of $33.8 million and net investment income of $14.6 million. The weighted average portfolio risk rating decreased to 2.33, with the loan-to-value ratio dropping from 29.3% to 26.6%. The total investment portfolio (excluding U.S. Treasury Bills) had a fair value of approximately $1.08 billion, an increase from the prior quarter. Net assets were $514.9 million, and NAV per share was $13.79, up 3% from the prior quarter. The loan portfolio was mostly floating rate assets, with $152.6 million in principal prepayments in Q4.

• Runway Growth Capital aims to grow originations in loan size $30M to $150M, with ideal BDC allocation $20M to $45M. - Board declared aggregate distributions of $0.36 per share for Q1 2025, with base dividend $0.33 and supplemental $0.03, targeting 50% of NII delta for supplemental. - Extended credit facility with KeyBank by 3 years, providing increased availability and lending verticals.

• Uncertainties in interest rates, changing economic conditions, which could materially affect actual results. - Market conditions and regulatory changes pose risks to portfolio performance and origination activities.

Q: Was there expected additional originations in the next 10 days before the quarter ends?

A: Greg Greifeld said originations are typically back-ended, and they could have some closed that quarter but some might push to next quarter.

Q: What percentage of loan book is trading at interest rate floors?

A: Greg Greifeld said majority are at or above floors, newer deals at floors, older deals above.

Q: Impact of Fed cuts on yield?

A: Tom Raterman said big chunk of yield decline due to interest rate decline, and fewer accelerations from prepayments affecting yield.

Q: Dividend changes and Board changes?

A: Tom Raterman said Board focused on stable dividend, base dividend set sustainable, new Board approved investment management agreement.

Q: Origination opportunity set with BC Partners?

A: Greg Greifeld said BC combination broadens funnel, allows access to more products like revolvers, expects funnel to expand with larger network.

Q: Equity sales and gains?

A: Tom Raterman said Gynesonics merger led to gain, mostly reflected in fair value at 12/31.

Q: Share repurchases and venture market?

A: Tom Raterman said discussed share repurchases, Greg Greifeld said venture market has slower exits, expecting uptick in new fundings and M&A later.

Q: Equity portfolio size and spillover?

A: Tom Raterman said equity portfolio is debt-focused, Gynesonics was primary driver of unrealized gain, goal is to maintain at least one quarter of spillover.