Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by. Welcome to the Hercules Capital Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Michael conference Investor Hara, like first to Relations. now today, speaker Managing would hand over the your I Director of Michael, floor. the you have

Michael Hara

Thank and on financial the to today An from CFO. Relations and the archived afternoon, and Hercules' close replay were Scott call. released results quarter Officer; following call you, section Bluestein, and are be call Meyer, from CEO on at Hercules second us today's the investor.htgc.com. conference webpage Investment least available just for welcome be can With XXXX. Hercules Stacey. Investor Good Relations Chief Hercules everyone, for webcast accessed will market conference Investor XX after the at Seth days

including, made made today's risks and SEC's our based expectations. in future Any upon and differ on Form Hercules statements no report our on this update on call this number call, filings identified and of of publicly forward-looking website. the but other Actual this be reasons, should limited investment During own for annual XX-K decision. statements These a made guarantees results the of statements that future. financial to statements obligation any forward-looking in current are only performance are not as are the during not to and making available any relied statements not may we assumes may in forward-looking date, call the forward-looking assumptions from during make such

with to Scott. that, call I'll over And the turn

Scott Bluestein

the earnings you, and Capital Michael, joining QX call. thank you, Thank Hercules for XXXX all

the record have QX, earnings lending standards stage growth in continued expect. historical and maintaining come to strong performance operating we credit and deliver to that while venture best-in-class Our platform

last of quarters. results QX by Our the we that record highlighted have discussed over the key few many themes were

with income rates M&A saw across remained and weighted levels. an show strong QX. that core Rising higher total remains portfolio increased combined and in balance investment raising we activity our strong robust, quantity. in from increasing investment our record Capital activity doubling onboarding to portfolio to combined yields average drove net prepayments. activity activities which and and accelerated, the exit quality portfolio Credit income, continue pipeline Deal increased drove with investment income, stable.

we As over optimistic others and in relative result, quarters. continue market to a our the further our positioning coming share very asset about to be the capture to ability class

well to business equity and over model with differentiated capital macro diversification, outperform credit is venture a continued and Our that investors a on longstanding private predicated in variety us fundamental and X,XXX allows serve us of has underwriting, to relationships environments.

half remain During an we to the the underwriting, service. prudent our and maintaining abundance venture stage will of liquidity, diversification, ecosystem asset an second unwavering of XXXX, and growth liability that commitment focus and on

our again once is the quarters. our QX to reflective quarterly-based distribution Our decision to business over outlook of strong in shareholders coming our raise for the

me and Let key highlights $XXX.X $XX.X investment million, our XX% record of the record QX, per $X.XX $X.XX income. investment record coverage newly distribution of This base increased providing per share or XX% investment net income In up million, income up delivering net of QX. generated of third and we performance our year-over-year for over recap year-over-year, total of quarter is XXX% of some of consecutive share. our

operating generated first history. the in also in XX% equity time We return for record over of QX on long our

across positioned. certain Our very our sheet With balance regulatory new the XX.X%, of core QX of our and portfolio robust of indicative loans. at and a and which platform, higher onboarding yield XX% yields a a in very for net GAAP well remains rate is increases yield continued leverage generated conservative recent effective XX.X% liquidity

balance market sheet that on to and us. that environment to the best improve the key quarters, believe the liquidity and over Hercules platform be maximum continues having we class As asset capitalize with coming of diversified will positions opportunity market our in front our believe deals differentiator we in a for a new for strong is

in on was QX later on with origination focus scaled The opportunities. emphasis and an diversification stage our for efforts

activity was once driven originations life and the our during funding delivering both sciences healthy teams QX quarter. Our again by performance technology

balance able Our capital performance of in funding that QX, relative activity milestones to new group. companies we expand in Consistent QX numerous two what strength different believe which with our demonstrated funded consistent relationship which quarter. and to the second borrower relationships. achieve between were core during our again funding drive XX our debt to we peer saw portfolio to companies outperformance verticals, we helps were six continued We with show

fundings In addition, will XXXX. expire by half lower in our the to $XXX available helped unfunded from which existing fundings $XXX the in XX% to available QX. strong was to of commitments markedly expected second of of Approximately commitments higher follow-on companies also million year, unfunded the down our driving level the million, of end

million to guided backend we the with funding activity fundings our QX of was on call, over As quarterly towards our in quarter June. coming earnings the of $XXX month QX in weighted of end our the

robust. typically seasonally venture quarter our slow Although across expect a we and origination activity QX the markets, in lending to is growth QX stage be

a liquidity constrained scale, holders of August borrowers or not by to already at strong Since equity QX deal market being our and driving leverage to $XXX.X being start the has million. and despite worry about having their consistently our QX business. team high is to low commitments X, and million and of $XXX.X able Operating XXXX, conditions close for deliver funded for closed new as of our

have term in non-binding sheets. additional We signed million an $XXX.X commitments pending of

high to the year remain better out. We expect quality continue as plays deal and to continue to get

one of for another closed industry had portfolio, events exits another in our be QX M&A closed across across portfolio eight to transactions the after be M&A Although continues having shortly transactions had end our and and the company activity After strong. liquidity slow, continue QX we to two portfolio in we closed QX.

that go public. in that announced closed, We in events recently with public. two to announced our yet and looking now to we Acquisition have a agreement additional have company combination addition, portfolio In the go three companies July, business Forbian portfolio not enGene have have pipeline been M&A

portfolio to the do. Our selective that great investment work underwriting validate teams activity and our continues

increased in in $XXX early As approximately million of an QX repayments to increase to XXXX. we within and further anticipated million million million $XXX loan our from guidance $XXX $XXX QX

remain we to QX prepayments million to to decrease but For XXXX, million. $XXX to expect $XXX healthy,

our we as identify of in the quarters, our target to change the ability and continue to the quarter. The quality of higher volatility, prepayments companies as most could as portfolio growth the stage several the this reflects Although the loan market last over levels progress promising market. despite in team's well

the Credit and debt remains stable. strong quality of investment portfolio

from X.XX of and at weighted in internal the Our rating the remains X.XX lower end of average QX range. credit rating historical our improved normal

compared Grade and relatively Our in flat at slightly XX.X% credits X QX to QX. XX.X% in credits remained higher were in X XX.X% XX.X% QX. at Grade X versus

credits decreased rated four once X.X% QX. were rated credits to in again and five X% slightly Our

value company's respectively, an end investment value we total $XX.X As approximately the as and a of at of the cost $X with of percentage and X.X% debt million of QX, X.X% respectively. investment portfolio investment and cost or million had on fair and one non-accrual

debt recent our current reporting, of are companies our payments Hercules. XXX% of on most As portfolio to contractual

over XX our portfolio capital capital of remains portfolio from up raising capital raising billion raising and strong in selectivity was and new with nearly sensitivity across capital in from This the QX. our over valuation investors, venture companies a strongest QX half. was the increased XXX% in year in and Despite $X.X new QX last quarter

$X.X $X.X on million. the by net of equity During $X.X of we QX, realized approximately exchange, million offset of of million Hercules have realized on the due year-to-date. This gains and million gains to and investments was due realized of foreign QX, Through to gains had debt two investments. $X gains smaller warrant loss net comprised sale generated

value billion share end asset $XXX asset We from QX an net per in we quarter QX. was of private per $XX.XX, our of QX of the net $X of with have liquidity reporting Inclusive was million. fourth increased liquidity X.X% QX strong value of approximately available an This over as liquidity ended of increase funds, consecutive of our XXXX. share. in Our

stay XXXX to continued Venture highs and with muted capital activity at investment that investment $XX XXXX, in half activity the by $XX data ecosystem the levels and historical we PitchBook-NVCA. to for witnessed respectively billion at relative to according first fundraising fundraising XXXX billion and activity at of gathered

of $XX for billion the investment QX In $XX slightly was the billion QX. XXXX. track invested to lower exceed pace investment puts pre-pandemic terms in VC investments with of or QX meet equity to industry relative VC activity, on This was levels than that

up pick years much lower at on. We investment expect continue goes fundraising levels the to activity and to to prior than year stay as

outstanding. earnings With spillover with performance we million, $X.XX exited year-to-date, ending QX undistributed of $XXX over our shares or operating record increased per

base increased out months XX and to For for being the and of able the $X.XX our in distribution QX, $X.XX distribution This distribution our third increase supplemental of is represents consecutive pay distribution. of a distribution last $X.XX we the shareholder shareholders. XXth total of quarter to declared a to base a supplemental

on In fee which drive quarterly our first excludes over early lending from our of the time repayments. institutionalized operating our forward history, platform QX, is significant accelerations Hercules to fees $XXX ability business to the record our core in benefit another our continues delivered closing, our for a milestone changing In prepayment long levels. or business. operating competitive capitalize for and performance scale to of environment income, This million and rapidly

market plus the We business and partners conditions well trust take us about the tremendous business. every XXX are venture power Our with a generating assets, attributable opportunities, result, remain efforts private as positioned the to how of success to and our and and we day. grow optimistic that earnings employees place our capabilities is advantage our dedication, given our equity capital and of core income the of

Hercules management many the partner their continue investors make choice. to thankful are teams that of to and companies, We

I call the to will now Seth. over turn

Seth Meyer

gentlemen. made. and good Capital. that solid to conservative execution, Thank of the of I'll Hercules some balance for afternoon, sheet management QX another has marked points some financial and Scott, and you, quarter add emphasis performance, now record ladies Scott

to with strong balance borrowing are sheet spread no a material our and rates maturities. the see operating continuing We and benefits lending a between from near-term with healthy

The platform income more investment are million, and which net the at total return investment our investment $X.XX of QX, investments In income share net on performance. made had our that $XX.X record equity record a operating we to financial per record now scale drive $XXX and we are per million, share, we've record of income in of than XX%. helping record of investment

over better sheet for us attractive team the that to Our of positions advantage the will take strong quarters. continue opportunity to be coming our incredibly market able investments and get balance defensive well to new believes

in points outlook. mind, areas: unrealized the these With the performance leverage realized income following liquidity and and highlights, NAV then and statement and the financial let's review activity, finally,

the first the excludes that size income highlights. investment portfolio of row true non-GAAP on the solid business Turning was million, benchmark in increase core to quarter This $XXX third managed as of at portfolio driven measure recognized and and also team. million investment the the income total income quarter $XXX.X by a that exceeded income million result the in rates. to prior statement prepayments. debt at a This income Core exceeded the of and the quarter an It is $XXX loan in growth benefit by a now new underwriting performance was million. testament $XXX.X

record another record Net NII million increase, a row. was XX% QX. been in $X.XX quarters or investment for $XX.X XX.X% has above income share a now in margin per three at quarter-over-quarter of

rate compared yields to to quarter the XX% coupon in and increase second a The in core XX.X%, in core quarter. XX.X% in increase respectively increases. interest of were was result benchmark XX% due effective the as the Our and yield prior an and interest

leveling a quarters recent minimal from hereafter of Fed rate to in due forecast yield the the to after coming increase. the core continue most We movement

Turning to expenses.

slightly were expense to million prior RIA, million Our and million from likely Strong $XX.X of quarter. $XX million and prior the million. $XX.X these expenses year to in trends. weighted modestly of start our gross quarter increased first costs operating cost compared increased the recharged higher of QX the investment average activity to Net $XX.X the Interest portfolio to the $XX.X in expenses to in quarter to debt. for growth fees continue funding the operating will due the of half the

million, $XX.X slightly $XX.X recharge million. RIA, SG&A flat expenses $XX of at of remain SG&A my the the cost million. guidance to expenses above Net were

facilities Our reflecting weighted debt in to compared half due of prior the investment a tiny portfolio the X.X%, quarter, the the year. greater average of of cost was first credit to utilization the growth increase mere a of

NII increased our to average total realized or ROAA and NII and XX%. the assets NAV first Switching quarter, activity. average over ROAE was unrealized or XX.X% for to Our equity over

fourth our quarter-over-quarter. quarter, to represents $X.XX NAV by of X.X% NAV the an During $XX.XX increased per share per share. consecutive increase for per the This quarter share

drivers unrealized for off in in mainly income net unrealized Net main change depreciation the disposed due dilution or The the of written-off. $X.X offset of from reversal including prior the million, investments disposals compensation. the distribution and investment million, of by to depreciation increase $XX.X to dividends ATM sales were net supplemental and accretion of quarter, paid stock the due

The realized related resulted comprised appreciation primarily and in of public due a of warrant and of debt appreciation due million driven to to $X equity appreciation an equity sale the reversal of $X.X and loan million offset of net unrealized loss was portfolio. additional on by foreign of the unrealized gain $X.X investments million warrant of the $XX net the on gains $XXX,XXX investments. $XX.X two unrealized was portfolio, Our to appreciation exchange by realized of to prior million million gains

leverage to Moving liquidity. and

and regulatory maintaining which over the on of high respectively, XXX.X% leverage collected decreased the quarter to with quarter. GAAP regulatory balance on compared prior based Netting the net reduction and the respectively. sheet, cash our borrowings out decreased facility quarter in more and balance credit the cash prepayments leverage XX.X%, to XX.X% end and XX.X%, normal and leverage due to the GAAP Our were a

quarter ended liquidity. We of available with $XXX the million

As The companies positions new by us amounts, excludes liquidity. subsidiary. support portfolio capital of managed wholly-owned funds source well this has the our a strong and our platform very these by Inclusive over $X reminder, Hercules raised existing of RIA to opportunities. the liquidity available billion

we we near-term to ATM NAV. opportunistically In the raised debt to additional have a $XX per giving raise and market in We decide to to share business that accretion continue anticipate. the no should support QX, us the we be capital ability to maturities opportunistic growth resulting million, access $X.XX

On the outlook points.

expect XX.X% XX.X%. For be at the core remainder range XXXX, yield to we of to our

our floor, additional recent approximately interest will portfolio any the with is hike a debt As reminder, core XX% going XXXX forward. floating so rate benefit in a yield of our and

activity million the to to difficult $XXX third expect as we communicated very million Although in predict, prepayment quarter. by Scott, $XXX for

to the interest quarter. expense expect remain We to our third quarter stable compared prior

quarter, third million. to million expect million allocation SG&A $XX we RIA $XX the expense expenses approximately of and For of $X.X

opportunities. well In closing, our opportunistically balance the sheet remains strong to support our invest existing portfolio best as as in

I Stacy begin call. you. will call to now of turn the Q&A to portion Stacy, over the to over the

Operator

you. Thank

with now John, will John Our with a Instructions] from question-and-answer ahead your call question. conduct session. first We Hecht Jefferies. [Operator is go

John Hecht

had reported in lives and was Hey issues obviously Maybe to guys. U.S. and one the great our sold SVB, financing is, Congratulations entities the much. the here. Citizens. First Scott, it market in Thanks another very first quarter. on of Making question that's obviously, your the changed world easier major since the then

you noting? wondering, just are changes industry I'm framework in of you any describe any that the seeing can are of So overall kind the worth –

Scott Bluestein

Yes.

John, what bit So in talked market. of on was across SVB I we I of think call, to we've about the our think, which little the last seen failure, post a normalization sort addition

some of benefit which the in is of lending them banks our stabilizing seen with First done there ecosystem, Outside a has that number think, from I Citizens, think net have I deals for Citizens, a pulled back great at the business. well. as actually of them working are market business. commercial venture We've that We're deals. handful a a job First on on

consistently team tight in deal, that here we're key the to abundance themes the in that our operate and that is non-bank low think a allows of On of in our seeing deals parameters. underwriting they're be certainly fit and competitors essentially and of high sitting all leverage we're think I side, puts we deal by lot a going market that pricing whereas by either the position really after to and having with market hamstrung liquidity our are where leverage low it and two the any them the or liquidity,

John Hecht

favorable And then, like mean, a capitalist behaviors from the is it's guys it you sounds net-net competitive terms in pretty – either venture like they to like either I stable? anything perspective. way Okay. obviously of But moving changing process Or funding? their that

Scott Bluestein

Yes.

at roughly look, And what we half investors caveat that $XX that U.S. year-to-date that volatile consecutive So quarters to first we the continues down saying capital. the where I is But us look the basis the I flux. when in capital think we've $XX we gets of billion throughout ecosystem or VC had have venture somewhat now would to equity a be pandemic. year. data, materially of on invested were seeing billion and the by That through quarterly the mentioned more from two

if the $XX per and up it was basis. a billion So down at averaging numbers the pre-pandemic $XX while you XXXX levels to numbers, VC That pandemic were $XX is where billion, almost the from quarter. on look from billion still investors XXXX

So what have think robust. but this when that we year-to-date, more are being capital is investing and investors much down, look they it's are the companies healthy at still still a we it's and terms to. we venture What selective the positive, in it's noticed, seen we've of

XX,XXX a down you XXXX. year-to-date. on if basis, about by individual approximately were So investments X,XXX XXXX, VC in it the That's XX,XXX, done numbers look at firms to

be actually exceed to and to less pace healthy, that valuation. pre-pandemic But capital we're be view be robust it's levels. and venture ecosystem would a we continues seeing of on seeing of deals on focus the the done we're to continues get that So more much

John Hecht

and spreads pretty then mean, healthy, terms And a think that's when leadership, have obviously, changing helpful. note just reflection been comes market is, of and but deal That's opportunity in talked warrant trends you like and final question right. anything about maybe what like your I of structures? like things it All the other worth about things coverage there I that, Okay. to

Scott Bluestein

increased fee. can from In terms come It fees. term come from that can can yields we variety different of on from It coupon. of come can from come have. pricing, focused warrants. facility we're that come of It can a triggers end It through

side, And playing can structuring on then the specific just we this you of outside continue and onboarding is outperform over that we're So tell emphasis higher to that to nothing with on here, continue emphasis the we I a long game yields, an mention. business on would general I run how long-term. do the what

And be very to so our deals structured. tightly continue

by that Our I deals us in will something well underwritten the what believe forward. incredibly we team business, that best that, and going continue is to is be view the serve

John Hecht

very right. much All Thanks guys.

Scott Bluestein

John. Thanks,

Operator

Our from with [Operator question Sandler. go next your Crispin Love question. Instructions] comes Piper with ahead Crispin,

Crispin Love

questions. Thanks. appreciate taking my I you

to on market exit. up the market question in the level on made the earlier potential ahead. SVB. in share call increasing the following Scott, the comments do you've share for months? To few the you what just years five last Just and And be here gains, accelerate think over already given SVB's about think some will you for by and next or four of begun the absence actually from kind quarters benefit SVB's available runway you do

in Just competitive just given just landscape? in size for you changes if of opportunities any curious the you there's the the front way to

Scott Bluestein

three their in player, the a over for space years. was inclination to strong very acquired, player that market. better four over last that It's is of or happened coming do the the we and not years. that we're the going Obviously, sort We largest to were but Silicon this same is March actually Silicon our benefit get them well they in the XX certainly it a over the to Valley Bank year. over current months, in view rooting quarters once continue opportunity do question. team as in have of great coming from Yes. that the still Thanks, very what to and business continue the begun was. last it formidable will – with But Crispin. Valley the to be They're Bank think new

weeks don't in and in Hercules into the believe to our May, going some to into But with Those deal they'll deals, teams impact we're we more these more what business turn in week three that These in or conversations the April this companies happened over a QX, weeks. several in tied positive start QX. transactions have to in March that next quarters, two of a year. on conversations QX, or turn continue and in see

over And very set that next that, several quarters. rise we're the to opportunity optimistic continues so

Crispin Love

curious just Very quarter just expect just outlook normalization your actually give because color any credit credit where just far can to you sit on your on term? credit And Thanks, intermediate put helpful in decreased you so the in say Do we near your market there. seeing credit you And in you here just – Scott. results. today, are are the if the I'm in then portfolio results over any up update seeing you issues. as one the others otherwise. quality. just companies that are any stress Non-accruals

Scott Bluestein

Yes.

Right it distressed, debt type XXX of even a quality the going of And that I I positions, course, there's credits are Grade we both underwriting portfolio. really on upon to we've enhance XXXX and that last terms a overall on and something credit call ourselves of over course but have credits relationships basis was quarterly with type a want has and in some you years. some look, in in is think health business don't have performance of we our fundamental an to of credit and a million credit of that's zero to started the focus industry and underwriting. focus be I credits. the Grade $X-plus always X continued $XX on. and to on that the XX of billion emphasis speaks XX, And – the that something So This we think have and portfolio of pride now, issues. When expand performance, that led team X handful

can us Things that going material quarterly on change way. QX change that seeing either quarter-to-date there's basis. We're tells a be a not anything to

which You our have that That our legacy actually value represents mentioned have the for Codiak was loan, perspective. end we on was QX now, basis. fair bankruptcy that one from Biosciences and improved to the loan at a a Right on marked of very X% – filed quarterly end was did of non-accruals the sorry, of one non-accrual. down We and in marked QX. at portfolio down

not We are close mark to already approximately our XX% of you managing received have portfolio. the that's in QX finish principal recovered And of but line what that our original in credit of that an terms fair think can and date, of great I that in we XXX% cash. our team, example the to our work that in team workout. investment amount I tell And only is, does value we've

Crispin Love

All taking right. Well I Thanks. my appreciate you Scott. questions,

Scott Bluestein

Crispin. Thanks, Sure.

Operator

your & Trading. with [Operator Point Research question Compass Alexander from go next Casey, Casey ahead Instructions] with comes question. Our

Casey Alexander

of the Yes. same or afternoon. way, lot same comments, not going to around get a deal but If to better. but a the seems question I deal of you're high came it. I'm and your characterizing Good the as understand the from quality a commitments, your quarter ask there be during to your question different unfunded try interest activity to lot likely in

commitments? new the as the going that So of what's deal will just opposed activity drawing unfunded catalyst get to out

Scott Bluestein

Yes.

clear, the new our quarter XX% from in be the in unfunded of were came quarter XX% fundings fundings of commitments. from our commitments, to Casey, So

a And differently how we've would very it little so question. in new the volume. the I you characterize than seen characterized think activity healthy We funding bit deal

are and of – in that at able quality we would we best new that were businesses. are seen new the add QX, were that in over that now If the we companies are added in to – later-stage we which we QX XX that debt the companies have you these the These companies look think scale mature the transactions SOI, years. last we've some the

million that process. commitments commitments And million at quarter-to-date closing and the $XXX signed we're over quality seeing. that we are QX very in the have already we and quantity when have We pleased new look over of $XXX by you are the activity, closed and our of

Casey Alexander

reference cost right. you've having out to signpost borrowers of debt being and higher In All around run dominant of in capital market, that of for Great. somewhat you say everybody the sort because comments of Valley would venture embedded of Silicon to that them a that that the used the lack to Bank permanent competitor relative space?

Scott Bluestein

One, want clear. So of I not transactions. that seeing really did actually two with them We're working post them specifically Silicon on market. transactions. market. things. actually be done Citizens nice has that announced First on They're We the say Bank think the deals. We're a I out is referenced Valley I a to job acquisition. several They've in handful of

the able permanently think from of the question, a part its is of yield changed market to believe So we Historically, has With to we Silicon the happened the they are March in Valley this respect SVB certainly with changed. fundamentally in yes. has down to form not Bank legacy essentially was out answer drive and of the business market. second absolutely what That perspective, that year.

Casey Alexander

helpful. That's Great. Okay. quite

or Lastly, over you've that the is do where it few elevated leverage next and has might company million tremendous shares more what of got the given X ratio be X level? the a used return capacity, see likely quarters, from recently a levels would a to million that been the quarter the we to ATM

Scott Bluestein

it's think say, tough Casey. I to

clear pretty we marks. public in our were I think

forced of a a with their is focused sheet concept very think that pristine with I struggling manage The business to abundance We an deal lot balance maintaining on to are are liquidity. being of deal. BDCs

to equity ratio, to raise have down. spike You you leverage your bring it

market You're consistently. not in the

behind You sheet in want the sure make the incredibly to conversations our that gives share. take bid We balance liquid ability has and that is on opportunity and deals. a with can't us companies them the pristine, investors has to and is that bigger team market continue best to

and something basis, seeing a of the on of on what I on think quantity we're to pipeline based evaluate that we'll in just So deals. continuous new and continue that's quality terms

Casey Alexander

enough. Fair you questions. for taking my Thank

Scott Bluestein

Casey. Thanks

Operator

Our Nolan [Operator question question. ahead go Thalmann next & from Company. Ladenburg comes Christopher your with Christopher, Instructions] with

Christopher Nolan

of my negotiate Casey position have asked things – like guys. because that Scott, better you that? able market, to Hey terms question. and dominant and are Are an your in just a you advantage question. prepayment fees conditions you're and you quick in seeing the

Scott Bluestein

necessarily I prepayment it don't fees. negotiate think to us allows better

robust. done think our allows strong on to quality call I in I this the continues that deals. that some incredibly that continues we've very and passing we win deals we get to number high market. done mentioned and at pipeline also to be a the that would to before, this We ended chase us that on, don't in said of seen level. deals up tougher be it better and I've have the I mention market that get the of track

want So seeing us allows tougher forced done I market pick that getting and that the think to deals versus smaller in having a dominant choose the we're position of do the really to essentially the market. we in deals do being some to

Christopher Nolan

are or... life industry allocating and question venture guys terms you rethinking in my given debt resources by and venture all technology so less you your turmoil science, And more follow-up is, of the how capital, are

Scott Bluestein

Yes.

book the us our at on diversification. really managing now, we're think key XX-XX. I for Right roughly is

in So companies. of positions in base companies approximately – are of is invested XX% of our companies. our sciences XX% debt Approximately life our asset technology

intend on and quarterly on the Right managing XX-XX, roughly macro that's what toggle we're we through certainly or maintain view our will is. a of depending the We quarter basis so. book next at now, to environment percentage the that what

Christopher Nolan

Thank you.

Scott Bluestein

Chris. Thanks

Operator

with your next KBW. go Our comes with question [Operator Instructions] Paul, ahead Johnson Paul question. from

Paul Johnson

were have than just of for asked. think, of of a for – guys your guess little reported. few we counter bit, a a higher ones so BDCs I guess. higher Thanks me, quarter lot been other I I good But maybe expecting. I already And this guess, my were little sort just have to A taking some But bit questions. Yes. prepayments venture than the

a wondering there bit been have activity of this and higher kind prepayments than with Just going you in on why little environment? expect what's

Scott Bluestein

things. Two Paul. Thanks,

our line were with public prepayments our First, guidance. in

and terms $XXX things. Year-to-date, was portfolio. within – We public XX spike space I our relatively QX you speaks to have driving for are is the obviously others because to guidance. different think to quality in closed lenders at in the All prepayments. of across which prepayments to our M&A And of venture had so about we've events our And higher significant of up million portfolio, I portfolio. we'll Our what's tell in million. our quality other continue think $XXX $XXX million, M&A certainly of can to ended the public a why it relative guidance reporting different I already that's leads

Paul Johnson

particular then on are of more you Thanks, makes quarter. sort call, just the diversification Scott. particularly It if finding value any And curious attracted you type better guys sense. of mentioned in emphasizing opportunities this in I'm established you've Are any growth? seen seeing pretty specific versus best and years you much it's of of stage all expansion kind versus good? and attractive stage companies market the

Scott Bluestein

But publicly sectors comment talk to we're or But certainly stages on that Paul. market, of not to certain strong talk the going stages and we're publicly. much really market a Obviously, it's not parts now. focused or that there that after or are on. on the industries more we that's about about going that areas we just We're we'll something finished quarter. are focused think I

Paul Johnson

Thanks. me. That's good Congratulations for a Hey quarter. guys. all on

Scott Bluestein

Paul. Thanks,

Operator

time. questions remarks. back would like to now turn to over further the at this no showing I conference closing for Scott I'm

Scott Bluestein

Thank joining you, Stacy, our today. thanks for call and to everyone

September York. March in on participating Midtown will final As we a New note, be the KBW XX in

you Hara. forward our XXXX event, directly contact earnings day. great look progress are We our attending Michael on you, If a interested call. Thank to QX KBW and have please this in reporting or

Operator

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Hercules Capital (HTGC) 3 Aug 232023 Q2 Earnings call transcript