Runway Growth Finance Corp. · NASDAQ:RWAY
Runway Growth Finance — Q4 2023 Earnings Presentation
32 slides from Runway Growth Finance's earnings presentation, Mar 7, 2024
Slide 1: Runway Growth Finance Corp. Fourth Quarter 2023 Investor Presentation
Runway Growth Finance Corp. Fourth Quarter 2023 Investor Presentation NASDAQ Listed I RWAY I RWAYL I RWAYZ March 2024 © Runway Growth Capital LLC 2024
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation dated March 2024 is being provided by Runway Growth Finance Corp. (“Runway Growth” or 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 intende
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: Fourth Quarter 2023 Investment Activity Overview
Overview Of Runway Growth Finance Corp.1 Runway completed eight investments in new and existing portfolio companies, Fourth Quarter 2023 representing $154.6 million in funded loans Investment Activity Received $63.4 million from principal repayments Aggregate fair value of $1,025 million comprised o
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 20000 Venture Capital Deal Volume Trends1 18000 Across All Sectors 350.0 $348 16000 300.0 Deal value ($B) Deal count 14000 250.0 13,608 12000 $242 200.0 10000 $173 $171 8000 150.0 $147 $149 6000 100.0 $90 4000 $87 $84 3,402 $74 2,856 50.0 2000 $45 $50 $38 $37 $42 $30 $
Slide 9: 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 10: 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 • 99% of underlying investments are first lien senior secured loans Underwriting
Slide 11: Focused On Late and Growth Stage Companies
Focused On Late and Growth Stage Companies Illustrative Venture/Growth Lending Funding Continuum Early-Stage Venture Debt Late-Stage Venture and Growth Debt • No historical financials – lenders underwriting • 15+ year average operating history – lenders reputation of sponsor, not borrower underwriti
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: $1,025 million Current Investments by Security Type (by FMV)2 Current Investments by Origination Channel (by FMV) 3% 1% Preferred Stock 22% 1% Second Lien Term Loan Non-Sponsored Senior Secured First Lien Sponsored Term Loan Warrant 78% 94% Cumulative sin
Slide 16: Key Portfolio Metrics
Key Portfolio Metrics Portfolio at FV & Investment Yield Sources of Investment Income 18.3% 16.7% 16.9% 3% 3% 1% 2% 1% 2% 1% 2% 2% 15.1% 15.5% 15.2% 1% 2% 1% 2% 4% 1% 14.0% 14.4% 4% 2% 7% 7% 7% 6% 6% 7% 9% 9% 4% 5% 8% 3% 12.2% 6% 6% 10% $1,126 $1,125 4% 5% $1,095 7% 15% 12% $1,025 13% 15% $1,011 12%
Slide 17: Key Portfolio Metrics
Key Portfolio Metrics Committed Capital ($M) Inception-to-Date: Cumulative Commitments Avg. New Deal Commitment • 30% Portfolio Companies Upsized (20 Portfolio $2,541 Companies, 30 Upsize Transactions) $2,332 $2,332 $2,332 $2,352 • 10 Refinances or 15% of Portfolio Companies $2,005 $1,789 $1,589 $1,
Slide 18: Highly Diversified Portfolio
Highly Diversified Portfolio Portfolio at Fair Value by Industry Portfolio Fair Value by Geography 1 2 Canada 1% 5 % 0 2% 5 % % 13% 23% 40% 7 % U.K. 0% 0% 16% 8% 9% 54% Germany 3% 4% Breakout Across Verticals Consumer Services and Products/Financial Services 22% Life Sciences (1) Technology 19% 59%
Slide 19: Portfolio Risk Ratings
Portfolio Risk Ratings Investments at Fair Value by Weighted Average Risk Rating1 Risk Rating Category1 0.4% Category 2 2.39 37.0% 2.22 2.21 2.24 2.10 2.12 2.15 2.04 1.98 Category 3 Category 4 * * 62.6% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 99.6% Of The Portfolio Has A Weighted Avera
Slide 20: Warrants & Equity Portfolio
Warrants & Equity Portfolio Warrants and Other Equity ($M) Warrant and Other Equity Holdings • 22 Companies with both loan and warrant investments $51.1 $51.1 $48.6 $49.2 • 16 Companies with warrant investments only $46.5 $42.7 • 6 Companies with shares of common or preferred stock $35.5 $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% 13.1% 12.8% 12.7% Net IPO Proceeds of $93M 10.1% 9.8% 8.3% 7.9% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 0.13x 0.26x 0.40x 0.60x 0.97x 1.04x 0.97x 0.79x 0.95x Among industry’s lowest leverage
Slide 22: 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 $0.35 $0.34 $12,000 $0.30 $0.30 $10,000 $0.25 Earnings Per Share $0.26 Net Income $8,000 $0.21 $0.20 $0.17 $6,000 $0.15 $0.13 $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 4Q Cash & $1.8 $0.9 $0.9 $4.7 $3.5 $6.8 $5.8 $5.8 $3.3 $37.7 $15.0 $3.0 Equivalents Credit Facility $98.0 $98.0 $135.0 $154.0 $129.0 $117.7 $250.0 $88.0 $128.0 $190.0 $297.0 $278.0 Availability Net Assets $473.5 $477.7 $5
Slide 24: Fourth Quarter 2023 Portfolio & Financial Highlights
FOURTH QUARTER 2023 Portfolio & Financial Highlights RUNWAY GROWTH FINANCE CORP. 24
Slide 25: Portfolio Highlights
Portfolio Highlights Average Accounting Yield1 Annualized Dividend Yield2 16.5% 14.7% 14.6% 14.6% 15.7% 15.4% 14.4% 15.1% 14.1% 13.8% 13.3% 12.2% 12.2% 8.7% 9.1% 11.4% 11.1% 7.0% Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Weighted Aver
Slide 26: Financial Highlights
Financial Highlights STATEMENT OF ASSETS & LIABILITIES 1 December 31, 2023 December 31, 2022 Total investments at fair value 1,067,009 1,126,309 Cash and cash equivalents 2,970 5,761 Total assets 1,079,153 1,141,766 Debt2 510,078 548,957 Total liabilities 532,082 565,714 Total net assets 547,071 576
Slide 27: Q4-2023 NAV/Share Bridge
Q4-2023 NAV/Share Bridge 2 1. NAV/share calculated using weighted average share outstanding during Q4 2023 of 40,509,269 2. Distributions are based on taxable income rather than GAAP income (i.e. NII) and include spillover from prior year undistributed NII. The $0.46 dividend is comprised of a $0.40
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 2024 | 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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