Investments (Tables)
|
3 Months Ended |
Mar. 31, 2023 |
|---|
| Schedule Of Investments [Line Items] |
|
| 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 months ended March 31, 2023 and 2022.
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|
(in thousands) |
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
|
Portfolio Company(1) |
|
Type |
|
Fair Value as of March 31, 2023 |
|
|
Interest Income |
|
|
Fee Income |
|
|
Net Change in Unrealized Appreciation (Depreciation) |
|
|
Realized Gain (Loss) |
|
Control Investments |
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|
|
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|
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|
|
|
Coronado Aesthetics, LLC |
|
Control |
|
$ |
256 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(63 |
) |
|
$ |
— |
|
Gibraltar Acquisition LLC (p.k.a. Gibraltar Business Capital, LLC) |
|
Control |
|
|
40,701 |
|
|
|
796 |
|
|
|
19 |
|
|
|
3,735 |
|
|
|
— |
|
Hercules Adviser LLC |
|
Control |
|
|
36,595 |
|
|
|
150 |
|
|
|
— |
|
|
|
5,442 |
|
|
|
— |
|
Tectura Corporation |
|
Control |
|
|
7,774 |
|
|
|
170 |
|
|
|
— |
|
|
|
(268 |
) |
|
|
— |
|
Total Control Investments |
|
$ |
85,326 |
|
|
$ |
1,116 |
|
|
$ |
19 |
|
|
$ |
8,846 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
Three Months Ended March 31, 2022 |
|
Portfolio Company(1) |
|
Type |
|
Fair Value as of March 31, 2022 |
|
|
Interest Income |
|
|
Fee Income |
|
|
Net Change in Unrealized Appreciation (Depreciation) |
|
|
Realized Gain (Loss) |
|
Control Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coronado Aesthetics, LLC |
|
Control |
|
$ |
614 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
49 |
|
|
$ |
— |
|
Gibraltar Business Capital, LLC |
|
Control |
|
|
42,622 |
|
|
|
834 |
|
|
|
16 |
|
|
|
(1,227 |
) |
|
|
— |
|
Hercules Adviser LLC |
|
Control |
|
|
24,694 |
|
|
|
111 |
|
|
|
— |
|
|
|
2,554 |
|
|
|
— |
|
Tectura Corporation |
|
Control |
|
|
8,347 |
|
|
|
170 |
|
|
|
— |
|
|
|
78 |
|
|
|
— |
|
Total Control Investments |
|
$ |
76,277 |
|
|
$ |
1,115 |
|
|
$ |
16 |
|
|
$ |
1,454 |
|
|
$ |
— |
|
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Affiliate Investments |
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|
Black Crow AI, Inc.(2) |
|
Affiliate |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(120 |
) |
|
$ |
3,772 |
|
Pineapple Energy LLC (2) |
|
Affiliate |
|
|
4,830 |
|
|
|
1,047 |
|
|
|
— |
|
|
|
873 |
|
|
|
— |
|
Total Affiliate Investments |
|
$ |
4,830 |
|
|
$ |
1,047 |
|
|
$ |
— |
|
|
$ |
753 |
|
|
$ |
3,772 |
|
Total Control & Affiliate Investments |
|
$ |
81,107 |
|
|
$ |
2,162 |
|
|
$ |
16 |
|
|
$ |
2,207 |
|
|
$ |
3,772 |
|
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 March 31, 2023 and March 31, 2022, there were no unconsolidated subsidiaries that are considered “significant subsidiaries”.
|
| Schedule of Investment Collateral |
Concentrations of Credit Risk
The Company’s customers are primarily privately held companies and public companies which are active in the “Drug Discovery & Development", "Software”, “Consumer & Business Services”, “Healthcare Services, Other”, and “Communications & Networking" sectors. These sectors are characterized by high margins, high growth rates, consolidation and product and market extension opportunities. Value for companies in these sectors is often vested in intangible assets and intellectual property.
Industry and sector concentrations vary as new loans are recorded and loans are paid off. Loan revenue, consisting of interest, fees, and recognition of gains on equity and warrant or other equity interests, can fluctuate materially when a loan is paid off or a related warrant or equity interest is sold. Revenue recognition in any given year can be highly concentrated among several portfolio companies.
As of March 31, 2023 and December 31, 2022, the Company’s ten largest portfolio companies represented approximately 29.5% and 29.0% of the total fair value of the Company’s investments in portfolio companies, respectively. As of March 31, 2023 and December 31, 2022, the Company had six and eight portfolio companies, respectively, that represented 5% or more of the Company’s net assets. As of March 31, 2023, the Company had four equity investments representing approximately 48.6% of the total fair value of the Company’s equity investments, and each represented 5% or more of the total fair value of the Company’s equity investments. As of December 31, 2022, the Company had four equity investments which represented approximately 39.8% of the total fair value of the Company’s equity investments, and each represented 5% or more of the total fair value of such investments.
Investment Collateral
In the majority of cases, the Company collateralizes its investments by obtaining a first priority security interest in a portfolio company’s assets, which may include its intellectual property. In other cases, the Company may obtain a negative pledge covering a company’s intellectual property. The Company's investments were collateralized as follows as of March 31, 2023 and December 31, 2022:
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Percentage of debt investments (at fair value), as of |
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
Senior Secured First Lien |
|
|
|
|
|
All assets including intellectual property |
|
44.4 |
% |
|
|
42.0 |
% |
All assets with negative pledge on intellectual property |
|
25.6 |
% |
|
|
26.1 |
% |
“Last-out” with security interest in all of the assets |
|
11.5 |
% |
|
|
11.6 |
% |
Total senior secured first lien position |
|
81.5 |
% |
|
|
79.7 |
% |
Second lien |
|
16.5 |
% |
|
|
18.4 |
% |
Unsecured |
|
2.0 |
% |
|
|
1.9 |
% |
Total debt investments at fair value |
|
100.0 |
% |
|
|
100.0 |
% |
|
| 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 March 31, |
|
|
2023 |
|
|
2022 |
|
Contractual interest income |
$ |
82,791 |
|
|
$ |
49,544 |
|
Exit fee interest income |
|
9,382 |
|
|
|
6,726 |
|
PIK interest income |
|
5,528 |
|
|
|
4,975 |
|
Other interest income (1) |
|
2,196 |
|
|
|
1,007 |
|
Total interest income |
$ |
99,897 |
|
|
$ |
62,252 |
|
|
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|
|
|
|
|
|
(in thousands) |
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
|
Recurring fee income |
$ |
2,040 |
|
|
$ |
1,779 |
|
Fee income - expired commitments |
|
243 |
|
|
|
87 |
|
Accelerated fee income - early repayments |
|
2,910 |
|
|
|
1,039 |
|
Total fee income |
$ |
5,193 |
|
|
$ |
2,905 |
|
(1)
Other interest income includes OID interest income and interest recorded on other assets.
|
| Schedule of Unamortized Capitalized Fee Income |
As of March 31, 2023 and December 31, 2022, unamortized capitalized fee income was recorded as follows:
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|
(in millions) |
March 31, |
|
|
December 31, |
|
|
2023 |
|
|
2022 |
|
Offset against debt investment cost |
$ |
44.6 |
|
|
$ |
43.1 |
|
Deferred obligation contingent on funding or other milestone |
|
10.9 |
|
|
|
10.9 |
|
Total Unamortized Fee Income |
$ |
55.5 |
|
|
$ |
54.0 |
|
|
| Schedule of Loan Exit Fees Receivable |
As of March 31, 2023 and December 31, 2022, loan exit fees receivable were recorded as follows:
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(in millions) |
March 31, |
|
|
December 31, |
|
|
2023 |
|
|
2022 |
|
Included within debt investment cost |
$ |
33.0 |
|
|
$ |
32.5 |
|
Deferred receivable related to expired commitments |
|
3.4 |
|
|
|
5.0 |
|
Total Exit Fees Receivable |
$ |
36.4 |
|
|
$ |
37.5 |
|
|
| Industry Sector |
|
| Schedule Of Investments [Line Items] |
|
| Investment Holdings, Schedule of Investments [Table Text Block] |
The following table shows the fair value of the Company’s portfolio by industry sector as of March 31, 2023 and December 31, 2022:
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|
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|
(in thousands) |
March 31, 2023 |
|
|
December 31, 2022 |
|
|
Investments at
Fair Value |
|
|
Percentage of
Total Portfolio |
|
|
Investments at
Fair Value |
|
|
Percentage of
Total Portfolio |
|
Drug Discovery & Development |
$ |
1,220,057 |
|
|
|
39.0 |
% |
|
$ |
1,150,707 |
|
|
|
38.8 |
% |
Software |
|
828,712 |
|
|
|
26.5 |
% |
|
|
798,264 |
|
|
|
26.9 |
% |
Consumer & Business Services |
|
474,883 |
|
|
|
15.2 |
% |
|
|
439,384 |
|
|
|
14.8 |
% |
Healthcare Services, Other |
|
214,199 |
|
|
|
6.8 |
% |
|
|
198,763 |
|
|
|
6.7 |
% |
Communications & Networking |
|
107,201 |
|
|
|
3.4 |
% |
|
|
101,833 |
|
|
|
3.5 |
% |
Diversified Financial Services |
|
87,805 |
|
|
|
2.8 |
% |
|
|
68,569 |
|
|
|
2.3 |
% |
Information Services |
|
62,039 |
|
|
|
2.0 |
% |
|
|
60,759 |
|
|
|
2.1 |
% |
Manufacturing Technology |
|
48,993 |
|
|
|
1.6 |
% |
|
|
46,109 |
|
|
|
1.6 |
% |
Biotechnology Tools |
|
33,032 |
|
|
|
1.1 |
% |
|
|
32,825 |
|
|
|
1.1 |
% |
Electronics & Computer Hardware |
|
21,476 |
|
|
|
0.7 |
% |
|
|
21,517 |
|
|
|
0.7 |
% |
Sustainable and Renewable Technology |
|
12,899 |
|
|
|
0.4 |
% |
|
|
15,486 |
|
|
|
0.5 |
% |
Media/Content/Info |
|
9,956 |
|
|
|
0.3 |
% |
|
|
35 |
|
|
|
0.0 |
% |
Surgical Devices |
|
4,189 |
|
|
|
0.1 |
% |
|
|
3,038 |
|
|
|
0.1 |
% |
Consumer & Business Products |
|
2,593 |
|
|
|
0.1 |
% |
|
|
2,821 |
|
|
|
0.1 |
% |
Medical Devices & Equipment |
|
1,155 |
|
|
|
0.0 |
% |
|
|
1,834 |
|
|
|
0.1 |
% |
Semiconductors |
|
966 |
|
|
|
0.0 |
% |
|
|
21,921 |
|
|
|
0.7 |
% |
Drug Delivery |
|
23 |
|
|
|
0.0 |
% |
|
|
90 |
|
|
|
0.0 |
% |
Total |
$ |
3,130,178 |
|
|
|
100.0 |
% |
|
$ |
2,963,955 |
|
|
|
100.0 |
% |
|
| Geographic Location |
|
| Schedule Of Investments [Line Items] |
|
| Investment Holdings, Schedule of Investments [Table Text Block] |
A summary of the Company’s investment portfolio, at value, by geographic location as of March 31, 2023 and December 31, 2022 is shown as follows:
|
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|
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|
|
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|
|
|
|
|
|
|
|
(in thousands) |
March 31, 2023 |
|
|
December 31, 2022 |
|
|
Investments at
Fair Value |
|
|
Percentage of
Total Portfolio |
|
|
Investments at
Fair Value |
|
|
Percentage of
Total Portfolio |
|
United States |
$ |
2,829,873 |
|
|
|
90.4 |
% |
|
$ |
2,670,520 |
|
|
|
90.1 |
% |
United Kingdom |
|
174,678 |
|
|
|
5.6 |
% |
|
|
171,629 |
|
|
|
5.8 |
% |
Netherlands |
|
89,952 |
|
|
|
2.9 |
% |
|
|
88,915 |
|
|
|
3.0 |
% |
Canada |
|
11,132 |
|
|
|
0.4 |
% |
|
|
19,472 |
|
|
|
0.7 |
% |
Israel |
|
19,432 |
|
|
|
0.6 |
% |
|
|
9,052 |
|
|
|
0.3 |
% |
Denmark |
|
3,739 |
|
|
|
0.1 |
% |
|
|
— |
|
|
|
0.0 |
% |
Germany |
|
893 |
|
|
|
0.0 |
% |
|
|
990 |
|
|
|
0.0 |
% |
Other |
|
479 |
|
|
|
0.0 |
% |
|
|
573 |
|
|
|
0.0 |
% |
Ireland |
|
— |
|
|
|
0.0 |
% |
|
|
2,804 |
|
|
|
0.1 |
% |
Total |
$ |
3,130,178 |
|
|
|
100.0 |
% |
|
$ |
2,963,955 |
|
|
|
100.0 |
% |
|
| Security Type Member |
|
| Schedule Of Investments [Line Items] |
|
| Investment Holdings, Schedule of Investments [Table Text Block] |
The following table shows the fair value of the Company’s portfolio of investments by asset class as of March 31, 2023 and December 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
March 31, 2023 |
|
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at
Fair Value |
|
|
Percentage of
Total Portfolio |
|
|
Investments at
Fair Value |
|
|
Percentage of
Total Portfolio |
|
Senior Secured Debt |
$ |
2,910,526 |
|
|
|
93.0 |
% |
|
$ |
2,741,388 |
|
|
|
92.5 |
% |
Unsecured Debt |
|
58,125 |
|
|
|
1.9 |
% |
|
|
54,056 |
|
|
|
1.8 |
% |
Preferred Stock |
|
40,345 |
|
|
|
1.3 |
% |
|
|
41,488 |
|
|
|
1.4 |
% |
Common Stock |
|
84,072 |
|
|
|
2.7 |
% |
|
|
92,484 |
|
|
|
3.1 |
% |
Warrants |
|
33,210 |
|
|
|
1.0 |
% |
|
|
30,646 |
|
|
|
1.1 |
% |
Investment Funds & Vehicles |
|
3,900 |
|
|
|
0.1 |
% |
|
|
3,893 |
|
|
|
0.1 |
% |
Total |
$ |
3,130,178 |
|
|
|
100.0 |
% |
|
$ |
2,963,955 |
|
|
|
100.0 |
% |
|