Runway Growth Finance Corp. · NASDAQ:RWAY
Runway Growth Finance — Q3 2022 Earnings Presentation
33 slides from Runway Growth Finance's earnings presentation, Nov 3, 2022
Slide 1: Runway Growth Finance Corp. Third Quarter 2022 Investor Presentation
Runway Growth Finance Corp. Third Quarter 2022 Investor Presentation NASDAQ Listed I RWAY I RWAYL November 2022 © Runway Growth Capital LLC 2022
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation dated November 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 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: Overview Of Runway Growth Finance Corp. Third Quarter 2022
Overview Of Runway Growth Finance Corp. 1 Third Quarter 2022 Completed 9 Investments in New and Existing Portfolio Companies Representing Investment Activity $216 Million in New Commitments and $161 Million in Funded Loans Received $55 million from principal repayments Total Investment Income $27.3
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 Continues to See Strong Levels of Activity
Venture Capital Continues to See Strong Levels of Activity VC funds closed on 2021 is the fifth ~3,700 venture $290B dry powder over $190B in 20222 consecutive year with funds, managing available to support surpassing 2020 deployments >$100B $548B in AUM1 (Venture Equity) 2 future investment2 levels
Slide 9: Venture Lending in Perspective: Comparison to Middle Market Lending
Venture Lending in Perspective: Comparison to Middle Market Lending (as of 9/30/22) Lower Loss Rates with Stronger Performance Loan To Value (LTV) Comparison, Current Realized Loss Rates (Net) Versus Max Level 80% 1.2% 1.10% 80.0% 1.0% 0.90% 60% 0.8% 40% 0.6% 60.0% 0.4% 20% 30.0% 30.0% 0.2% 14.9% 10
Slide 10: Strong And Experienced Team
Strong And Experienced Team Investment manager’s senior executive team has average of 30+ years of experience 39 years 41 years 13 years David Spreng Tom Raterman Greg Greifeld Chairman, CEO, CIO, Founder CFO, COO Managing Director, Deputy CIO, Head of Credit Prior Experiences Prior Experiences Prio
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 • 98% 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 inst
Slide 13: Can We Continue to Originate in This Environment?
Can We Continue to Originate in This Environment? Public and Private Market 1. Origination Opportunities Are Likely to Increase: Market volatility, Valuations economic uncertainty, and declining equity valuations are causing companies to build cash reserves, reduce cash burn and access available fin
Slide 14: 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 c
Slide 15: 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 16: Portfolio Overview
Portfolio Overview Portfolio at Fair Value: $910.2 million Current Investments by Security Type (by FMV) Current Investments by Origination Channel (by FMV) 2% 0%1%2% Common Stock 24% Preferred Stock Non-Sponsored Second Lien Term Loan Sponsored Senior Secured First Lien Term Loan 76% Warrant 95% Cu
Slide 17: Key Portfolio Metrics
Key Portfolio Metrics Investment Yield Sources of Investment Income 15.6% 14.4% 2% 1% 1% 1% 2% 1% 0% 2% 14.8% 15.2% 15.3% 15.1% 2% 1% 14.0% $910 2% 2% 2% 2% 2% 2% 1% 13.5% 0% 3% 6% 10% 7% 12.2% 8% $808 13% 20% 22% $754 $685 $590 $588 $586 $552 97% 94% $435 92% 89% 90% 88% 83% 77% 75% Q3'20 Q4'20 Q1'
Slide 18: Key Portfolio Metrics
Key Portfolio Metrics Committed Capital ($M) $2,005 Inception-to-Date: $1,789 $1,589 • 30% Portfolio Companies Upsized (19 Portfolio $1,449 Companies, 29 Upsize Transactions) $1,233 • 7 Refinances or 11% of Portfolio Companies $1,078 $885 $932 $709 $48.3 $48.0 $50.0 $47.5 $61.7 Year-to-Date: $50.0 $
Slide 19: Highly Diversified Portfolio
Highly Diversified Portfolio Portfolio at Fair Value by Industry as % of Net Assets Portfolio Fair Value by Geography as a 1 % of Net Assets 2 Canada 2% % 5 0 8% 5 % % 13% 48% 41% 7 % 0% 16% U.K. 54% 12% 11% 15% 8% 3% Germany 8% Breakout Across Verticals Consumer Services & Products 18% Biotechnolog
Slide 20: Portfolio Risk Ratings
Portfolio Risk Ratings Investments at Fair Value by Weighted Average Risk Rating1 Risk Rating Category1 4.00 1% 3.50 16% 3.00 2.42 2.37 2.50 2.32 2.31 2.20 2.22 Category 2 2.10 2.04 1.98 2.00 Category 3 1.50 Category 5 * * 1.00 83% 0.50 0.00 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Stab
Slide 21: Warrants & Equity Portfolio
Warrants & Equity Portfolio Warrants and Other Equity ($M) Warrant and Other Equity Holdings $60.0 $56.7 $54.7 • 25 Companies with both loan and warrant investments $49.5 $50.5 $48.6 $50.0 • 9 Companies with warrant investments only $42.7 $39.4 $40.0 $35.5 • 1 Company with both loan and preferred st
Slide 22: 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. Historical ROE1 and Leverage Private Capital Net IPO Call of Proceeds $19M of $93M 10.2% 10.1% 9.7% 9.8% 9.5% 9.8% 8.8% 8.3% 7.9% Q3'20 Q4'20 Q1'21 Q2'21
Slide 23: Interest Rates & Asset Sensitivity: Earnings Per Share
Interest Rates & Asset Sensitivity Rising Interest Rate Impacts on Net Income and EPS Basis Point Movement in LIBOR Rate $16,000 $0.40 $14,000 $0.35 $0.34 $12,000 $0.30 $0.29 $10,000 $0.25 Earnings Per Share $0.25 Net Income $8,000 $0.20 $0.20 $6,000 $0.16 $0.15 $4,000 $0.12 $0.10 $0.08 $2,000 $0.05
Slide 24: Leverage & Liquidity
Leverage & Liquidity Liquidity 2022 2021 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Cash & Equivalents $3.5 $6.8 $5.8 - $1.8 $0.9 $0.9 $4.7 Credit Facilities $129.0 $117.0 $250.0 - $98.0 $98.0 $135.0 $154.0 Net Assets $597.5 $579.4 $573.7 - $473.5 $477.7 $504.2 $606.2 Debt Capital Structure KeyBank Credit Facility $25
Slide 25: Third Quarter 2022 Portfolio & Financial Highlights
THIRD QUARTER 2022 Portfolio & Financial Highlights RUNWAY GROWTH FINANCE CORP. 25
Slide 26: Portfolio Highlights
Portfolio Highlights Accounting Yield1 Annualized Dividend Yield2 12.2% 10.9% 13.8% 10.4% 10.4% 10.4% 13.4% 9.6% 12.5% 12.2% 12.2% 9.1% 12.0% 11.5% 8.7% 11.1% 11.4% 7.0% Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Weighted Average Inter
Slide 27: Financial Highlights
Financial Highlights Three Months Ended Three Months Ended STATEMENT OF OPERATIONS September 30, 2022 September 30, 2021 Total investment income 27,328,704 18,610,066 Total operating expenses 12,831,755 7,868,942 Net investment income 14,496,949 10,741,124 Net realized and unrealized gain (losses) (
Slide 28: NAV/Share Bridge
NAV/Share Bridge $0 Credit Losses in 2022 1. NAV/share calculated using weighted average share outstanding during Q3 2022 of 40,774,154 RUNWAY GROWTH FINANCE CORP. © Runway Growth Capital LLC 2022 | 28
Slide 29: Analyst Coverage
Analyst Coverage RUNWAY GROWTH FINANCE CORP. 29
Slide 30: 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 Vilas Abraham Initiated coverage: 11/15/21 Erik Zwick, CFA Initiated coverage:
Slide 31: Supplemental Information
Supplemental Information RUNWAY GROWTH FINANCE CORP. 31
Slide 32: 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 33: Contact us with any questions or comments.
Contact us with any questions or comments. investors@runwaygrowth.com
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