Runway Growth Finance Corp. · NASDAQ:RWAY
Runway Growth Finance — Q3 2023 Earnings Presentation
32 slides from Runway Growth Finance's earnings presentation, Nov 7, 2023
Slide 1: Runway Growth Finance Corp. Third Quarter 2023 Investor Presentation
Runway Growth Finance Corp. Third Quarter 2023 Investor Presentation NASDAQ Listed I RWAY I RWAYL I RWAYZ November 2023 © Runway Growth Capital LLC 2023
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation dated November 2023 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 th
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: Third Quarter 2023 Investment Activity
Overview Of Runway Growth Finance Corp.1 Runway completed six investments in new and existing portfolio companies, Third Quarter 2023 representing $40.8 million in funded loans Investment Activity Received $125.3 million from principal repayments Aggregate fair value of $1,011 million comprised of $
Slide 5: The Runway Difference
The Runway Difference Public, pure-play late- Disciplined approach Sophisticated financing Seasoned 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 Decreasing market
Slide 6: Investment Highlights
Investment Highlights RUNWAY GROWTH FINANCE CORP. 6
Slide 7: Key Investment Highlights
Key Investment Highlights Large and Growing Market for Diversified Portfolio Across Debt Financing to Late and Sponsored/Non-sponsored, VC/PE- Growth Stage Companies backed, Industries & Geographies Experienced, Proven Management Team Attractive Financial Profile Generates Supported by a Deep Bench
Slide 8: Venture Capital Activity
Venture Capital Activity 400 .0 200 00 Venture Capital Deal Volume Trends1 180 00 Across All Sectors 350 .0 $347 160 00 300 .0 Deal value ($B) Deal count 140 00 250 .0 13,682 120 00 $245 200 .0 100 00 $171 800 0 150 .0 $166 $146 $150 600 0 100 .0 $90 400 0 $87 $84 3,402 $74 2,856 50. 0 200 0 $45 $50
Slide 9: Venture Lending In Perspective
Venture Lending In Perspective Returns Comparison1 Venture Debt Vs. Middle-Market Direct Lending 20.00% 15.00% 10.00% 5.00% Direct Lending Venture Debt 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Realized Loss Rates (Net) Debt + Equity / Warrants 1.20% 1.10% 1.00
Slide 10: Strong And Experienced Team
Strong And Experienced Team* Investment manager’s senior executive team has experience across multiple economic cycles David Spreng Tom Raterman Greg Greifeld Chairman, CEO, CIO, Founder CFO, COO Managing Director, Deputy CIO, Head of Credit Prior Experiences Prior Experiences Prior Experiences • Co
Slide 11: Our Credit-first, Weatherproof Approach
Our Credit-first, Weatherproof Approach Runway Is Built For All Economic Environments With Differentiated Experience To Judiciously Deploy Capital • Credit-first philosophy • Loan portfolio is 100% floating rate assets Underwriting • 99% of underlying investments are first lien senior secured loans
Slide 12: 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 venture capital and private equity firms that are funded directly by entrepreneurs and founders, or no longer require ins
Slide 13: Why Do Borrowers Choose Runway?
Why Do Borrowers Choose Runway? Disciplined and Ability to Robust Steady Hand Experience* Sophisticated Loan Scale Network Structures • We work with • Senior investment • While competitive • Bespoke solutions • Expansive network companies to professionals have on price, we are allow us to create of
Slide 14: 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 15: Portfolio Overview
Portfolio Overview Portfolio at Fair Value1: $1,011 million Current Investments by Security Type (by FMV) Current Investments by Origination Channel (by FMV) 1.4% 3.3% 1.4% Common Stock 0.2% 25% Preferred Stock Non-Sponsored Second Lien Term Loan Sponsored Senior Secured First Lien Term Loan Warrant
Slide 16: Key Portfolio Metrics
Key Portfolio Metrics Portfolio at FV & Investment Yield Sources of Investment Income 18.3% 16.7% 15.3% 15.1% 15.5% 15.2% 3% 2% 2% 2% 14.4% 2% 3% 1% 1% 1% 1% 14.0% 2% 2% 1% 5% 4% 1% 7% 7% 6% 4% 12.2% 8% 6% $1,126 $1,125 9% 10% 4% 5% 8% $1,095 5% 4% 6% 10% 17% 5% 7% 15% $1,011 13% 15% 12% $910 10% 3%
Slide 17: Key Portfolio Metrics: Committed Capital
Key Portfolio Metrics Committed Capital ($M) Inception-to-Date: Cumulative Commitments Avg. New Deal Commitment $2,332 $2,332 $2,332 $2,352 • 30% Portfolio Companies Upsized (19 Portfolio Companies, 29 Upsize Transactions) $2,005 $1,789 • 8 Refinances or 13% of Portfolio Companies $1,589 $1,454 $1,2
Slide 18: Highly Diversified Portfolio
Highly Diversified Portfolio Portfolio at Fair Value by Industry Portfolio Fair Value by Geography 1 2 Canada 1% % 0 5 3% 5 % % 10% 25% 36% 7 % U.K. 0% 9% 4% 16% 8% 54% Germany 3% 4% Breakout Across Verticals Consumer Services & Products 21% Technology 57% (1) (2) Life Sciences 22% 1 1% We currently
Slide 19: Portfolio Risk Ratings
Portfolio Risk Ratings Investments at Fair Value by Weighted Average Risk Rating1 Risk Rating Category1 0.4% 1.2% 17.3% 2.20 2.22 2.21 2.24 2.10 2.12 2.15 Category 2 2.04 1.98 Category 3 Category 4 * * Category 5 81.1% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 98.4% Of The Portfolio Has
Slide 20: Warrants & Equity Portfolio
Warrants & Equity Portfolio Warrants and Other Equity ($M) Warrant and Other Equity Holdings $54.7 • 20 Companies with both loan and warrant investments $51.1 $51.1 $48.6 $49.2 • 17 Companies with warrant investments only $42.7 $35.5 • 5 Companies with shares of common or preferred stock $34.2 $32.5
Slide 21: Strong Balance Sheet Provides For Flexibility & Growth
Strong Balance Sheet Provides For Flexibility & Growth Historical ROE1 and Leverage 15.4% 13.8% Private 12.8% 12.7% Capital Net IPO Call of Proceeds $19M of $93M 10.1% 9.8% 8.8% 8.3% 7.9% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 0.16x 0.13x 0.26x 0.40x 0.60x 0.97x 1.04x 0.97x 0.79x Amon
Slide 22: Earnings Per Share: Interest Rates & Asset Sensitivity
Interest Rates & Asset Sensitivity Rising Interest Rate Impacts on Net Income and EPS1 Basis Point Movement in Interest Rate $16,000 $0.40 $14,000 $0.36 $0.35 $12,000 $0.32 $0.30 $0.27 $10,000 $0.25 Earnings Per Share Net Income $0.23 $8,000 $0.20 $0.18 $6,000 $0.15 $0.14 $4,000 $0.10 $0.09 $2,000 $
Slide 23: Leverage & Liquidity
Leverage & Liquidity Liquidity 2021 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Cash & Equivalents $1.8 $0.9 $0.9 $4.7 $3.5 $6.8 $5.8 $5.8 $3.3 $37.7 $15.0 Credit Facility $98.0 $98.0 $135.0 $154.0 $129.0 $117.7 $250.0 $88.0 $128.0 $190.0 $297.0 Availability Net Assets $473.5 $477.7 $504.2 $606.2 $59
Slide 24: Portfolio & Financial Highlights
Third QUARTER 2023 Portfolio & Financial Highlights RUNWAY GROWTH FINANCE CORP. 24
Slide 25: Portfolio Highlights
Portfolio Highlights Average Accounting Yield1 Annualized Dividend Yield2 16.5% 15.7% 15.4% 14.7% 14.6% 13.3% 14.4% 14.1% 12.2% 13.8% 9.6% 8.7% 9.1% 12.2% 11.5% 11.4% 7.0% 11.1% Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Weighted Avera
Slide 26: Financial Highlights
Financial Highlights STATEMENT OF ASSETS & LIABILITIES 1 September 30, 2023 December 31, 2022 Total investments at fair value 1,010,927 1,126,309 Cash and cash equivalents 14,945 5,761 Total assets 1,034,191 1,141,766 Debt2 440,985 548,957 Total liabilities 463,700 565,714 Total net assets 570,491 5
Slide 27: Q3-2023 NAV/Share Bridge
Q3-2023 NAV/Share Bridge $0 Credit Losses YTD in 2023 1. NAV/share calculated using weighted average share outstanding during Q3 2023 of 40,509,269 RUNWAY GROWTH FINANCE CORP. © Runway Growth Capital LLC 2023 | 27
Slide 28: Analyst Coverage
Analyst Coverage RUNWAY GROWTH FINANCE CORP. 28
Slide 29: Robust Industry Analyst Coverage
Robust Industry Analyst Coverage Finian O’Shea, CFA Melissa Wedel, CFA Mitchel Penn, CFA Casey Alexander Vilas Abraham Erik Zwick, CFA Mickey Schleien, CFA Bryce Rowe, CFA John Rowan RUNWAY GROWTH FINANCE CORP. © Runway Growth Capital LLC 2023 | 29
Slide 30: Supplemental Information
Supplemental Information RUNWAY GROWTH FINANCE CORP. 30
Slide 31: 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 unde
Slide 32: Contact us with any questions or comments.
Contact us with any questions or comments. investors@runwaygrowth.com
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