Runway Growth Finance Corp. · NASDAQ:RWAY
Runway Growth Finance — Q1 2022 Earnings Presentation
30 slides from Runway Growth Finance's earnings presentation, May 5, 2022
Slide 1: Runway Growth Finance Corp. First Quarter 2022 Investor Presentation
Runway Growth Finance Corp. First Quarter 2022 Investor Presentation May 5, 2022
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation dated May 2022 is being provided by Runway Growth Finance Corp. (the “Company”) for discussion purposes only and is neither an offer to sell, nor a solicitation of an offer to purchase, an interest in the Company. It is solely intended to describe the gen
Slide 3: Overview of Runway Growth Finance Corp.
OVERVIEW OF RUNWAY GROWTH FINANCE CORP. Our investment objective is to maximize total return to stockholders by providing financing solutions to late and growth-stage companies that are more flexible than traditional credit and less dilutive than equity. Committed Capital Weighted Average Annualized
Slide 4: The Runway Difference
THE RUNWAY DIFFERENCE Public, pure-play Flexible approach Creative financing Seasoned late- and growth-stage to underwriting solutions meet the management team lending platform sponsored and non- borrowers’ needs with distinguished sponsored deals as they scale track record • Robust venture capital
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 6: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 1 Large and Growing Market for Debt Financing to Late and Growth Stage Companies Experienced, Proven Management Team Supported by a Deep Bench of Dedicated 2 Investment Professionals 3 Rigorous Disciplined Investment Process and Proprietary Risk Analytics Diversified Portfo
Slide 7: Venture Capital Continues to See Elevated Levels of Activity
VENTURE CAPITAL CONTINUES TO SEE ELEVATED LEVELS OF ACTIVITY VC funds closed on 2021 was the fourth ~3,700 venture $230B dry powder consecutive year with over $70B in Q1 funds, managing available to support deployments >$100B 20222 $548B in AUM1 future investment2 (Venture Equity) 2 Venture Capital
Slide 8: Venture Lending in Perspective: Comparison to Middle Market Lending
VENTURE LENDING IN PERSPECTIVE— COMPARISON TO MIDDLE MARKET LENDING (as of 3/31/22) Lower Loss Rates With Stronger Performance Loan To Value (LTV) Comparison, current versus max level Realized Loss Rates (Net, Annualized) 80% 1.4% 80.0% 1.16% 1.2% 60% 1.0% 0.84% 0.8% 40% 0.6% 60.0% 30.0% 0.4% 20% 30
Slide 9: Strong and Experienced Team
STRONG AND EXPERIENCED TEAM Senior executive team has average of 30+ years of experience Years of experience 38 years 40 years 12 years David Spreng Tom Raterman Greg Greifeld Chairman, CEO, CFO, COO Managing Director, Deputy CIO, Founder CIO, Head of Credit Prior Experiences Prior Experiences Prior
Slide 10: Origination Model
ORIGINATION MODEL Sponsored Growth Lending Non-Sponsored Growth Lending • Loans to late- and growth-stage companies backed by • Loans to late- and growth-stage, private companies that are venture capital and private equity firms funded directly by entrepreneurs and founders, or no longer require ins
Slide 11: Why Do Borrowers Choose Runway?
WHY DO BORROWERS CHOOSE RUNWAY? Steady Hand Experience Creative Loan Structures Ability to Scale Robust Network We work with Senior investment While competitive on Bespoke solutions allow Expansive network of companies to navigate professionals have price, we are rarely the us the ability
Slide 12: Runway Has an Edge in Pricing Risk and Ascribing Company Value
RUNWAY HAS AN EDGE IN PRICING RISK AND ASCRIBING COMPANY VALUE APPROACH TO UNDERWRITING Low Loan-to-Value Structured amortization schedule “Core vs. Growth” – Understanding of cash burn of the borrower Covenants that allow us to act before problems become critical Active portfolio monitoring and pro
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW Portfolio at Fair Value $754.3 million Current Investments by Security Type (by FMV) Current Investments by Origination Channel (by FMV) 3% 1% 2% 2% 25% Common Stock Non-Sponsored Preferred Stock Sponsored Second Lien Term Loan 75% 92% Cumulative since inception1 Current portfolio
Slide 14: Key Portfolio Metrics
KEY PORTFOLIO METRICS Investment Yield Sources of Investment Income 18.4% 15.6% 15.2% 15.3% 14.5% 14.8% 13.5% 14.0% 1% 1% 1% 2% 1% 3% 1% 2% 12.2% 2% 4% 2% 2% 2% 2% 2% 2% 2% 6% 3% 8% $754 13% 17% 20% 22% $685 $590 $588 $586 $552 $435 95% 97% 94% $410 92% 88% $361 83% 78% 77% 75% Q1'20 Q2'20 Q3'20 Q4'
Slide 15: Key Portfolio Metrics
KEY PORTFOLIO METRICS Committed Capital ($M) 1,800 $1,589 250.0 Inception-to-Date: 1,600 $1,449 1,400 $1,233 200.0 • 28% Portfolio Companies Upsized (16 Portfolio 1,200 $1,078 Companies, 25 Upsize Transactions) 1,000 $885 $932 150.0 • 6 Refinances or 11% of Portfolio Companies 800 $659 $709 $599 100
Slide 16: Highly Diversified Portfolio
HIGHLY DIVERSIFIED PORTFOLIO Portfolio Fair Value by Geography as a % of Net Assets 1 2 Canada 2% % 5 0 7% 5 % 12% % 4% 38% 39% 0% 7 16% 54% % U.K. 11% 6% 13% 8% 3% Germany 6% Breakout Across Verticals Specialized Consumer Services & Consumer Biotechnology, Products Services, 8% 5% 23% Other Tech* T
Slide 17: Portfolio Risk Ratings
PORTFOLIO RISK RATINGS Weighted Average Risk1 4.00 3.50 3.00 2.40 2.42 2.37 2.50 2.33 2.32 2.31 2.20 2.04 1.98 2.00 1.50 1.00 * (1) (1)* 0.50 0.00 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Calculated after thorough Weighted average internal risk rating decreased review and discussion of
Slide 18: Warrants & Equity Portfolio
WARRANTS & EQUITY PORTFOLIO Warrants and Other Equity ($M) Warrant and Other Equity Holdings $56.7 $54.7 19 Companies with both loan and warrant investments $49.5 $50.5 $48.6 $42.7 $41.1 $39.4 9 Companies with warrant investments only $35.3 3 Companies with both loan and shares of common, pref
Slide 19: Strong Balance Sheet Provides for Flexibility & Growth
STRONG BALANCE SHEET PROVIDES FOR FLEXIBILITY & GROWTH Opportunity to expand investment portfolio and leverage; near term D/E target of 0.8–1.1x Private Historical ROE1 and Leverage capital Net IPO call of Proceeds $19M of $93M 10.2% 10.2% 9.7% 9.8% 9.5% 8.8% 8.2% 8.3% 7.9% Q1'20 Q2'20 Q3'20 Q4'20 Q
Slide 20: Interest Rates & Asset Sensitivity
INTEREST RATES & ASSET SENSITIVITY Rising Interest Rate Impacts on Net Income and EPS Basis Point Movement in LIBOR Rate $12,000 $0.30 $0.27 $10,000 $0.25 $0.24 $8,000 $0.20 $0.20 Earnings Per Share Net Income $0.17 $6,000 $0.15 $0.13 $4,000 $0.10 $0.10 $0.07 $2,000 $0.05 $0.03 $- 1 $- 0.25 0.50 0.7
Slide 21: Key Financial Metrics
KEY FINANCIAL METRICS Liquidity Select Balance Sheet Data ($M) 2022 2021 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Cash & Equivalents $3.5 - - - $1.8 $0.9 $0.9 $4.7 Credit Facilities $86.0 - - - $117.0 $117.0 $80.0 $61.0 Total Net Assets $597.5 - - - $473.5 $477.7 $504.2 $606.2 Debt Capital Structure 2026 4.25% Notes
Slide 22: First Quarter 2022 Portfolio & Financial Highlights
FIRST QUARTER 2022 PORTFOLIO & FINANCIAL HIGHLIGHTS
Slide 23: Portfolio Highlights
PORTFOLIO HIGHLIGHTS Portfolio Yields Annualized Dividend Yield2 1 Average LIBOR Spread Average Accounting Yield 11.4% 10.9% 10.2% 10.4% 10.4% 10.4% 13.8% 13.7% 9.6% 13.4% 12.5% 8.7% 12.2% 12.0% 11.5% 11.4% 7.0% 11.1% 8.8% 8.7% 8.7% 8.9% 8.8% 9.0% 9.0% 8.6% 8.6% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q
Slide 24: Financial Highlights
FINANCIAL HIGHLIGHTS Three Months Ended Three Months Ended STATEMENT OF OPERATIONS March 31, 2022 March 31, 2021 Total investment income 19,258,898 16,422,773 Total operating expenses 6,799,005 4,941,041 Net investment income 12,459,893 11,481,732 Net realized and unrealized gain (losses) (9,606,802
Slide 25: NAV/Share Bridge
NAV/SHARE BRIDGE $0 Credit Losses in Q1-2022 RUNWAY GROWTH FINANCE CORP. 25
Slide 26: Analyst Coverage
ANALYST COVERAGE
Slide 27: Robust Industry Analyst Coverage
ROBUST INDUSTRY ANALYST COVERAGE Finian O’Shea, CFA • Initiated coverage: 11/15/21 Melissa Wedel, CFA • Initiated coverage: 11/15/21 Mitchel Penn, CFA • Initiated coverage: 11/15/21 Casey Alexander • Initiated coverage: 11/15/21 Brock Vandervliet • Initiated coverage: 11/15/21 Bryce Rowe, CFA • Init
Slide 28: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 29: Regulation and Structure
REGULATION AND STRUCTURE Runway Growth is an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a BDC and treated as a RIC for tax purposes Business Development Company (BDC) Regulated Investment Company (RIC) • Regulated by the SEC under
Slide 30: Runway Growth Finance Corp.
Runway Growth Finance Corp. Contact us with any questions or comments investors@runwaygrowth.com
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