Investments (Tables)
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9 Months Ended |
Sep. 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 nine months ended September 30, 2024 and 2023.
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(in thousands) |
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Three Months Ended September 30, 2024 |
|
Nine Months Ended September 30, 2024 |
Portfolio Company(1)
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|
Type |
|
Fair Value as of September 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 |
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Coronado Aesthetics, LLC |
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Control |
|
$ |
319 |
|
|
$ |
— |
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|
$ |
— |
|
|
$ |
133 |
|
|
$ |
— |
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$ |
— |
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$ |
— |
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$ |
57 |
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|
$ |
— |
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Gibraltar Acquisition LLC(2)
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Control |
|
57,302 |
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|
1,359 |
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|
36 |
|
|
(74) |
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— |
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3,926 |
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|
108 |
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(6,365) |
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— |
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Hercules Adviser LLC(3)
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Control |
|
43,433 |
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|
1,954 |
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— |
|
|
705 |
|
|
— |
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|
5,457 |
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|
— |
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2,720 |
|
|
— |
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Tectura Corporation |
|
Control |
|
12,043 |
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|
174 |
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— |
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|
509 |
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— |
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|
518 |
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— |
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|
526 |
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|
— |
|
Total Control Investments |
|
$ |
113,097 |
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$ |
3,487 |
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$ |
36 |
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$ |
1,273 |
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$ |
— |
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$ |
9,901 |
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$ |
108 |
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$ |
(3,062) |
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$ |
— |
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(in thousands) |
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Three Months Ended September 30, 2023 |
|
Nine Months Ended September 30, 2023 |
Portfolio Company(1)
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|
Type |
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Fair Value as of September 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 |
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Coronado Aesthetics, LLC |
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Control |
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$ |
247 |
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$ |
— |
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$ |
— |
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$ |
(50) |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
(72) |
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$ |
— |
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Gibraltar Acquisition, LLC(2)
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Control |
|
55,992 |
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|
772 |
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22 |
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(1,726) |
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— |
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2,299 |
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|
60 |
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4,676 |
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— |
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Hercules Adviser LLC(3)
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Control |
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40,668 |
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|
153 |
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— |
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1,507 |
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— |
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|
455 |
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— |
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9,515 |
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— |
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Tectura Corporation |
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Control |
|
6,243 |
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|
174 |
|
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— |
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(830) |
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— |
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|
516 |
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— |
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(1,799) |
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— |
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Total Control Investments |
|
$ |
103,150 |
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$ |
1,099 |
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$ |
22 |
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|
$ |
(1,099) |
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$ |
— |
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$ |
3,270 |
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$ |
60 |
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$ |
12,320 |
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$ |
— |
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(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 September 30, 2024 and September 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 September 30, 2024 and December 31, 2023:
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(in thousands) |
September 30, 2024 |
|
December 31, 2023 |
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Investments at Fair Value |
|
Percentage of Total Portfolio |
|
Investments at Fair Value |
|
Percentage of Total Portfolio |
Senior Secured Debt |
$ |
3,306,724 |
|
|
92.9 |
% |
|
$ |
2,987,577 |
|
|
92.0 |
% |
Unsecured Debt |
73,854 |
|
|
2.1 |
% |
|
69,722 |
|
|
2.2 |
% |
Preferred Stock |
47,342 |
|
|
1.3 |
% |
|
53,038 |
|
|
1.6 |
% |
Common Stock |
95,693 |
|
|
2.7 |
% |
|
99,132 |
|
|
3.1 |
% |
Warrants |
30,023 |
|
|
0.8 |
% |
|
33,969 |
|
|
1.0 |
% |
Investment Funds & Vehicles |
6,877 |
|
|
0.2 |
% |
|
4,608 |
|
|
0.1 |
% |
Total |
$ |
3,560,513 |
|
|
100.0 |
% |
|
$ |
3,248,046 |
|
|
100.0 |
% |
A summary of the Company’s investment portfolio, at value, by geographic location as of September 30, 2024 and December 31, 2023 is shown as follows:
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(in thousands) |
September 30, 2024 |
|
December 31, 2023 |
|
Investments at Fair Value |
|
Percentage of Total Portfolio |
|
Investments at Fair Value |
|
Percentage of Total Portfolio |
United States |
$ |
3,219,874 |
|
|
90.4 |
% |
|
$ |
2,861,615 |
|
|
88.1 |
% |
United Kingdom |
174,566 |
|
|
4.9 |
% |
|
222,136 |
|
|
6.9 |
% |
Israel |
77,767 |
|
|
2.2 |
% |
|
52,868 |
|
|
1.6 |
% |
Netherlands |
59,562 |
|
|
1.7 |
% |
|
89,995 |
|
|
2.8 |
% |
Canada |
16,441 |
|
|
0.5 |
% |
|
15,730 |
|
|
0.5 |
% |
Ireland |
4,513 |
|
|
0.1 |
% |
|
— |
|
|
0.0 |
% |
Denmark |
4,176 |
|
|
0.1 |
% |
|
4,173 |
|
|
0.1 |
% |
Singapore |
1,999 |
|
|
0.1 |
% |
|
— |
|
|
0.0 |
% |
Germany |
1,219 |
|
|
0.0 |
% |
|
1,144 |
|
|
0.0 |
% |
Other |
396 |
|
|
0.0 |
% |
|
385 |
|
|
0.0 |
% |
Total |
$ |
3,560,513 |
|
|
100.0 |
% |
|
$ |
3,248,046 |
|
|
100.0 |
% |
The following table shows the fair value of the Company’s portfolio by industry sector as of September 30, 2024 and December 31, 2023:
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(in thousands) |
September 30, 2024 |
|
December 31, 2023 |
|
Investments at Fair Value |
|
Percentage of Total Portfolio |
|
Investments at Fair Value |
|
Percentage of Total Portfolio |
Drug Discovery & Development |
$ |
1,125,617 |
|
|
31.6 |
% |
|
$ |
1,257,699 |
|
|
38.7 |
% |
Software |
1,018,236 |
|
|
28.6 |
% |
|
764,985 |
|
|
23.6 |
% |
Healthcare Services, Other |
574,750 |
|
|
16.1 |
% |
|
300,079 |
|
|
9.3 |
% |
Consumer & Business Services |
355,831 |
|
|
10.0 |
% |
|
525,973 |
|
|
16.2 |
% |
Diversified Financial Services |
112,709 |
|
|
3.2 |
% |
|
114,722 |
|
|
3.5 |
% |
Electronics & Computer Hardware |
96,125 |
|
|
2.7 |
% |
|
20,324 |
|
|
0.6 |
% |
Information Services |
81,266 |
|
|
2.3 |
% |
|
126,605 |
|
|
3.9 |
% |
Medical Devices & Equipment |
56,153 |
|
|
1.6 |
% |
|
22,096 |
|
|
0.7 |
% |
Space Technologies |
46,082 |
|
|
1.3 |
% |
|
— |
|
|
0.0 |
% |
Biotechnology Tools |
35,311 |
|
|
1.0 |
% |
|
48,381 |
|
|
1.5 |
% |
Sustainable and Renewable Technology |
27,858 |
|
|
0.8 |
% |
|
9,581 |
|
|
0.3 |
% |
Communications & Networking |
26,465 |
|
|
0.7 |
% |
|
29,400 |
|
|
0.9 |
% |
Manufacturing Technology |
2,096 |
|
|
0.1 |
% |
|
11,006 |
|
|
0.3 |
% |
Consumer & Business Products |
1,285 |
|
|
0.0 |
% |
|
2,589 |
|
|
0.1 |
% |
Semiconductors |
655 |
|
|
0.0 |
% |
|
1,205 |
|
|
0.0 |
% |
Media/Content/Info |
55 |
|
|
0.0 |
% |
|
12,704 |
|
|
0.4 |
% |
Drug Delivery |
19 |
|
|
0.0 |
% |
|
21 |
|
|
0.0 |
% |
Surgical Devices |
— |
|
|
0.0 |
% |
|
676 |
|
|
0.0 |
% |
Total |
$ |
3,560,513 |
|
|
100.0 |
% |
|
$ |
3,248,046 |
|
|
100.0 |
% |
The following table summarizes information related to our SBICs as of September 30, 2024 and December 31, 2023.
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September 30, 2024 |
|
December 31, 2023 |
Description |
|
HC IV |
SBIC V |
|
HC IV |
SBIC V |
Number of investments held |
|
28 |
1 |
|
25 |
— |
|
Fair value of investments (in millions) |
|
$ |
352.4 |
$ |
11.2 |
|
$ |
331.5 |
$ |
— |
|
Percentage of fair value of investments based on the Company's total investment portfolio |
|
9.9 |
% |
0.3 |
% |
|
10.2 |
% |
0.0 |
% |
Tangible assets (in millions) |
|
$ |
369.7 |
$ |
13.3 |
|
$ |
341.8 |
$ |
— |
|
Percentage of tangible assets based on the Company's total assets |
|
10.1 |
% |
0.4 |
% |
|
10.0 |
% |
0.0 |
% |
|
Schedule of Investment Collateral |
The Company's investments were collateralized as follows as of September 30, 2024 and December 31, 2023:
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Percentage of debt investments (at fair value), as of |
|
September 30, 2024 |
|
December 31, 2023 |
Senior Secured First Lien |
|
|
|
All assets including intellectual property |
63.1 |
% |
|
52.3 |
% |
All assets with negative pledge on intellectual property |
16.1 |
% |
|
24.0 |
% |
“Last-out” with security interest in all of the assets |
10.3 |
% |
|
12.5 |
% |
Total senior secured first lien position |
89.5
|
% |
|
88.8
|
% |
Second lien |
8.3 |
% |
|
8.9 |
% |
Unsecured |
2.2 |
% |
|
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 September 30, 2024 and December 31, 2023:
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|
|
(in thousands) |
|
Fair Value |
Derivative Instrument |
Statement Location |
|
September 30, 2024 |
|
December 31, 2023 |
Foreign currency forward contract |
Other assets |
|
$ |
— |
|
|
$ |
— |
|
Foreign currency forward contract |
Accounts payable and accrued liabilities |
|
1,168 |
|
|
766 |
|
|
Total |
|
$ |
1,168 |
|
|
$ |
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 nine months ended September 30, 2024 and 2023 are in the following locations in the Consolidated Statements of Operations:
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|
(in thousands) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Derivative Instrument |
Statement Location |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Foreign currency forward contract |
Net realized gain (loss) - Non-control / Non-affiliate investments |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(849) |
|
|
$ |
— |
|
Foreign currency forward contract |
Net change in unrealized appreciation (depreciation) - Non-control / Non-affiliate investments |
|
(1,356) |
|
|
784 |
|
|
(402) |
|
|
230 |
|
|
Total |
|
$ |
(1,356) |
|
|
$ |
784 |
|
|
$ |
(1,251) |
|
|
$ |
230 |
|
|
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:
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|
|
|
|
|
|
|
|
|
(in thousands) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Contractual interest income |
$ |
90,288 |
|
|
$ |
89,747 |
|
|
$ |
268,441 |
|
|
$ |
258,685 |
|
Exit fee interest income |
12,047 |
|
|
10,904 |
|
|
34,519 |
|
|
34,340 |
|
PIK interest income |
12,706 |
|
|
6,652 |
|
|
37,870 |
|
|
17,999 |
|
Dividend income |
2,100 |
|
|
— |
|
|
5,800 |
|
|
— |
|
Other investment income(1)
|
1,909 |
|
|
3,036 |
|
|
5,728 |
|
|
8,198 |
|
Total interest and dividend income |
$ |
119,050 |
|
|
$ |
110,339 |
|
|
$ |
352,358 |
|
|
$ |
319,222 |
|
(1)Other investment income includes OID interest income and interest recorded on other assets.
|
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|
|
|
|
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|
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|
|
(in thousands) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Recurring fee income |
$ |
2,423 |
|
|
$ |
2,243 |
|
|
$ |
7,081 |
|
|
$ |
6,418 |
|
Fee income - expired commitments |
413 |
|
|
300 |
|
|
1,790 |
|
|
651 |
|
Accelerated fee income - early repayments |
3,362 |
|
|
3,862 |
|
|
10,578 |
|
|
11,774 |
|
Total fee income |
$ |
6,198 |
|
|
$ |
6,405 |
|
|
$ |
19,449 |
|
|
$ |
18,843 |
|
|
Schedule of Unamortized Capitalized Fee Income |
As of September 30, 2024 and December 31, 2023, unamortized capitalized fee income was recorded as follows:
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|
|
|
|
|
|
|
|
|
|
|
(in millions) |
September 30, 2024 |
|
December 31, 2023 |
Offset against debt investment cost |
$ |
36.7 |
|
|
$ |
32.9 |
|
Deferred obligation contingent on funding or other milestone |
9.7 |
|
|
9.4 |
|
Total Unamortized Fee Income |
$ |
46.4 |
|
|
$ |
42.3 |
|
|
Schedule of Loan Exit Fees Receivable |
As of September 30, 2024 and December 31, 2023, loan exit fees receivable were recorded as follows:
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(in millions) |
September 30, 2024 |
|
December 31, 2023 |
Included within debt investment cost |
$ |
37.0 |
|
|
$ |
35.9 |
|
Deferred receivable related to expired commitments |
3.4 |
|
|
4.3 |
|
Total Exit Fees Receivable |
$ |
40.4 |
|
|
$ |
40.2 |
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