Quarterly report pursuant to Section 13 or 15(d)

Investments (Tables)

v3.24.2.u1
Investments (Tables)
 6 Months Ended
Jun. 30, 2024
Schedule of Investments [Abstract]  
Schedule of Investments in and Advances to Affiliates
The following table summarizes the Company’s realized gains and losses and changes in unrealized appreciation and depreciation on control and affiliate investments for the three and six months ended June 30, 2024 and 2023.
(in thousands) Three Months Ended June 30, 2024 Six Months Ended June 30, 2024
Portfolio Company(1)
Type Fair Value as of June 30, 2024 Interest & Dividend Income Fee Income Net Change in Unrealized Appreciation (Depreciation) Realized Gain (Loss) Interest & Dividend Income Fee Income Net Change in Unrealized Appreciation (Depreciation) Realized Gain (Loss)
Control Investments
Coronado Aesthetics, LLC Control $ 186  $ —  $ —  $ (97) $ —  $ —  $ —  $ (76) $ — 
Gibraltar Acquisition LLC(2)
Control 56,811  1,534  36  (1,670) —  2,567  72  (6,291) — 
Hercules Adviser LLC(3)
Control 42,728  1,751  —  844  —  3,503  —  2,015  — 
Tectura Corporation Control 11,534  172  —  (583) —  344  —  17  — 
Total Control Investments $ 111,259  $ 3,457  $ 36  $ (1,506) $ —  $ 6,414  $ 72  $ (4,335) $ — 
(in thousands) Three Months Ended June 30, 2023 Six Months Ended June 30, 2023
Portfolio Company(1)
Type Fair Value as of June 30, 2023 Interest Income Fee Income Net Change in Unrealized Appreciation (Depreciation) Realized Gain (Loss) Interest Income Fee Income Net Change in Unrealized Appreciation (Depreciation) Realized Gain (Loss)
Control Investments
Coronado Aesthetics, LLC Control $ 297  $ —  $ —  $ 41  $ —  $ —  $ —  $ (22) $ — 
Gibraltar Acquisition, LLC(2)
Control 44,392  731  19  2,667  —  1,527  38  6,402  — 
Hercules Adviser LLC Control 39,161  152  —  2,566  —  302  —  8,008  — 
Tectura Corporation Control 7,073  172  —  (701) —  342  —  (969) — 
Total Control Investments $ 90,923  $ 1,055  $ 19  $ 4,573  $ —  $ 2,171  $ 38  $ 13,419  $ — 
(1)In accordance with Rules 3-09, 4-08(g), and Rule 10-01(b)(1) of Regulation S-X, (“Rule 3-09”, “Rule 4-08(g)”, and “Rule 10-01(b)(1)”, respectively), the Company must determine if its unconsolidated subsidiaries are considered “significant subsidiaries”. As of June 30, 2024 and June 30, 2023, there were no unconsolidated subsidiaries that are considered “significant subsidiaries”.
(2)Gibraltar Acquisition LLC is a wholly-owned subsidiary, which is the holding company for their wholly-owned affiliated portfolio companies, Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC. The subsidiary has no significant assets or liabilities, other than their equity and debt investments and equity interest in Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC, respectively.
(3)Hercules Adviser LLC is owned by Hercules Capital Management LLC and presented with Hercules Partner Holdings, LLC which are both wholly owned by the Company. Please refer to “Note 1” for additional disclosure.
Schedule of Investments Portfolio
The following table shows the fair value of the Company’s portfolio of investments by asset class as of June 30, 2024 and December 31, 2023:
(in thousands) June 30, 2024 December 31, 2023
Investments at
Fair Value		 Percentage of
Total Portfolio		 Investments at
Fair Value		 Percentage of
Total Portfolio
Senior Secured Debt $ 3,320,419  93.0  % $ 2,987,577  92.0  %
Unsecured Debt 72,090  2.1  % 69,722  2.2  %
Preferred Stock 46,525  1.3  % 53,038  1.6  %
Common Stock 93,726  2.6  % 99,132  3.1  %
Warrants 28,922  0.8  % 33,969  1.0  %
Investment Funds & Vehicles 6,857  0.2  % 4,608  0.1  %
Total $ 3,568,539  100.0  % $ 3,248,046  100.0  %
A summary of the Company’s investment portfolio, at value, by geographic location as of June 30, 2024 and December 31, 2023 is shown as follows:
(in thousands) June 30, 2024 December 31, 2023
Investments at
Fair Value		 Percentage of
Total Portfolio		 Investments at
Fair Value		 Percentage of
Total Portfolio
United States $ 3,205,062  89.8  % $ 2,861,615  88.1  %
United Kingdom 164,218  4.6  % 222,136  6.9  %
Netherlands 92,769  2.6  % 89,995  2.8  %
Israel 78,516  2.2  % 52,868  1.6  %
Canada 16,093  0.5  % 15,730  0.5  %
Ireland 4,476  0.1  % —  0.0  %
Denmark 4,183  0.1  % 4,173  0.1  %
Singapore 1,791  0.1  % —  0.0  %
Germany 1,030  0.0  % 1,144  0.0  %
Other 401  0.0  % 385  0.0  %
Total $ 3,568,539  100.0  % $ 3,248,046  100.0  %
The following table shows the fair value of the Company’s portfolio by industry sector as of June 30, 2024 and December 31, 2023:
(in thousands) June 30, 2024 December 31, 2023
Investments at
Fair Value		 Percentage of
Total Portfolio 		Investments at
Fair Value		 Percentage of
Total Portfolio
Drug Discovery & Development $ 1,244,782  34.9  % $ 1,257,699  38.7  %
Software 948,141  26.6  % 764,985  23.6  %
Healthcare Services, Other 568,751  15.9  % 300,079  9.3  %
Consumer & Business Services 351,632  9.9  % 525,973  16.2  %
Diversified Financial Services 111,312  3.1  % 114,722  3.5  %
Information Services 77,434  2.2  % 126,605  3.9  %
Electronics & Computer Hardware 76,191  2.1  % 20,324  0.6  %
Medical Devices & Equipment 55,653  1.6  % 22,096  0.7  %
Space Technologies 45,498  1.3  % —  0.0  %
Biotechnology Tools 35,149  1.0  % 48,381  1.5  %
Communications & Networking 29,778  0.8  % 29,400  0.9  %
Sustainable and Renewable Technology 20,301  0.6  % 9,581  0.3  %
Manufacturing Technology 1,680  0.0  % 11,006  0.3  %
Consumer & Business Products 1,223  0.0  % 2,589  0.1  %
Semiconductors 903  0.0  % 1,205  0.0  %
Media/Content/Info 94  0.0  % 12,704  0.4  %
Drug Delivery 17  0.0  % 21  0.0  %
Surgical Devices —  0.0  % 676  0.0  %
Total $ 3,568,539  100.0  % $ 3,248,046  100.0  %
Schedule of Investment Collateral The Company's investments were collateralized as follows as of June 30, 2024 and December 31, 2023:
Percentage of debt investments (at fair value), as of
June 30, 2024 December 31, 2023
Senior Secured First Lien
All assets including intellectual property 61.0  % 52.3  %
All assets with negative pledge on intellectual property 18.5  % 24.0  %
“Last-out” with security interest in all of the assets 10.6  % 12.5  %
Total senior secured first lien position 90.1  % 88.8  %
Second lien 7.8  % 8.9  %
Unsecured 2.1  % 2.3  %
Total debt investments at fair value 100.0  % 100.0  %
Summary of Fair Value and Location of the Company's Derivative Instruments The following is a summary of the fair value and location of the Company’s derivative instruments in the Consolidated Statements of Assets and Liabilities held as of June 30, 2024 and December 31, 2023:
(in thousands) Fair Value
Derivative Instrument Statement Location June 30, 2024 December 31, 2023
Foreign currency forward contract Other assets $ 188  $ — 
Foreign currency forward contract Accounts payable and accrued liabilities —  766 
Total $ 188  $ 766 
Summary of Net Realized and Unrealized Gains and Losses
Net realized and unrealized gains and losses on derivative instruments recorded by the Company during the three and six months ended June 30, 2024 and 2023 are in the following locations in the Consolidated Statements of Operations:
(in thousands)   Three Months Ended June 30, Six Months Ended June 30,
Derivative Instrument Statement Location 2024 2023 2024 2023
Foreign currency forward contract Net realized gain (loss) - Non-control / Non-affiliate investments $ (849) $ —  $ (849) $ — 
Foreign currency forward contract Net change in unrealized appreciation (depreciation) - Non-control / Non-affiliate investments 725  (554) 954  (554)
  Total $ (124) $ (554) $ 105  $ (554)
Schedule of Investment Interest Income and Fee Income
The Company’s investment portfolio generates interest, fee, and dividend income. The composition of the Company’s interest income and fee income is as follows:
(in thousands) Three Months Ended June 30, Six Months Ended June 30,
  2024 2023 2024 2023
Contractual interest income $ 87,439  $ 86,147  $ 178,153  $ 168,938 
Exit fee interest income 10,592  14,054  22,472  23,436 
PIK interest income 15,267  5,819  25,164  11,347 
Dividend income 2,100  —  3,700  — 
Other investment income(1)
2,131  2,966  3,819  5,162 
Total interest and dividend income $ 117,529  $ 108,986  $ 233,308  $ 208,883 
(1)Other investment income includes OID interest income and interest recorded on other assets.
(in thousands) Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
Recurring fee income $ 2,203  $ 2,135  $ 4,658  $ 4,175 
Fee income - expired commitments 730  108  1,377  351 
Accelerated fee income - early repayments 4,544  5,002  7,216  7,912 
Total fee income $ 7,477  $ 7,245  $ 13,251  $ 12,438 
Schedule of Unamortized Capitalized Fee Income
As of June 30, 2024 and December 31, 2023, unamortized capitalized fee income was recorded as follows:
(in millions) June 30,
2024		 December 31,
2023
Offset against debt investment cost $ 38.1  $ 32.9 
Deferred obligation contingent on funding or other milestone 10.5  9.4 
Total Unamortized Fee Income $ 48.6  $ 42.3 
Schedule of Loan Exit Fees Receivable
As of June 30, 2024 and December 31, 2023, loan exit fees receivable were recorded as follows:
(in millions) June 30,
2024		 December 31,
2023
Included within debt investment cost $ 36.8  $ 35.9 
Deferred receivable related to expired commitments 5.2  4.3 
Total Exit Fees Receivable $ 42.0  $ 40.2