Hercules Capital (HTGC) significantly expanded its venture debt portfolio last quarter, according to third quarter earnings results.
The Palo Alto, California-based business development company committed $235.1 million in new debt and equity investments across eight new companies and 11 existing relationships during the third quarter. The amount of capital committed in the three months ending 30 September was up 52.3 percent from the same time last year.
These new allocations bring the vehicle’s investments over the first three quarters to $968.3 million, which is up 74.8 percent from the first nine months of 2017. HTGC has already invested $84 million in new commitments since the start of the fourth quarter.
The vehicle’s total investment portfolio is worth over $1.6 billion and is made up of 84.4 percent senior secured first-lien loans – 97 percent of which are floating rate. The core returns from Q3 were 12.7 percent.
HTGC itself raised over $450 million so far this year for debt and equity financings.
The BDC expects this loan portfolio growth to continue into the fourth quarter with between $75 million and $125 million in growth, resulting in 5-8 percent quarter-over-quarter loan growth, according to Manuel Henriquez – the founder, chairman and chief executive officer of HTGC.
“With just a few months left to the year, we’re on pace to set new all-time records across many key indicators,” Henriquez said on HTGC’s Q3 earnings call.
“Especially as it relates to total new annual commitments and loan portfolio growth, which now we expect to exceed $1.1 billion in total new commitments for calendar year 2018. This is a level that we’ve never seen before and it amplifies the tremendous amount of dealflow that we’re currently seeing in the marketplace.”
The net asset value per share for the third quarter was $10.38 in comparison to $10.22 at the end of the first half of the year.
Hercules Capital is a venture lending firm targeting growing companies of various sizes that focus on technology and life science. The firm was founded in 2003 and currently oversees more than $1.8 billion in total assets.