Runway Growth Finance Corp. · NASDAQ:RWAY
Runway Growth Finance — Q1 2023 Earnings Presentation
32 slides from Runway Growth Finance's earnings presentation, May 9, 2023
Slide 1: Runway Growth Finance Corp. First Quarter 2023 Investor Presentation
Runway Growth Finance Corp. First Quarter 2023 Investor Presentation NASDAQ Listed I RWAY I RWAYL I RWAYZ May 2023 © Runway Growth Capital LLC 2023
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation dated May 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 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: Overview Of Runway Growth Finance Corp. First Quarter 2023
Overview Of Runway Growth Finance Corp.1 First Quarter 2023 Runway completed seven investments in existing portfolio companies, Investment Activity representing $12.9 million in funded loans Received $10.2 million from principal repayments Total Investment Income $39.3 million Net Investment Income
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 Seeks To Supported by a Deep Bench o
Slide 8: Venture Capital Activity
Venture Capital Activity 400 .0 200 00 Venture Capital Deal Volume Trends1 180 00 Across All Sectors 350 .0 $346 160 00 300 .0 Deal value ($B) Deal count 14,777 140 00 250 .0 $246 120 00 200 .0 100 00 $201 $171 800 0 150 .0 $146 $150 600 0 100 .0 $87 $90 400 0 $84 50. 0 3,402 $74 $50 200 0 $38 $45 $
Slide 9: Venture Lending in Perspective: Comparison to Middle Market Lending
Venture Lending in Perspective: Comparison to Middle Market Lending (as of 3/31/23) Lower Loss Rates with Stronger Historical Performance Loan To Value (LTV) Comparison, Current Realized Loss Rates (Net) Versus Max Level 80% 1.2% 1.01% 80.0% 1.0% 0.90% 60% 0.8% 40% 80.0% 0.6% 0.4% 20% 30.0% 30.0% 0.
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 inst
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 c
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: $1,125 million Current Investments by Security Type (by FMV) Current Investments by Origination Channel (by FMV) 2% 3% 1% 23% Common Stock Preferred Stock Non-Sponsored Sponsored Second Lien Term Loan Senior Secured First Lien Term Loan 77% Warrant 94% Cu
Slide 16: Key Portfolio Metrics
Key Portfolio Metrics Investment Yield Sources of Investment Income 15.2% 15.3% 15.1% 15.5% 15.2% 14.0% 14.4% 13.5% 12.2% 2% 2% 2% 3% 3% 1% 2% 2% 1% $1,126 $1,125 1% 2% 5% 7% 5% 4% 1% 1% 7% 4% 1% 7% 7% 9% 4% 6% 11% 5% 10% 13% 13% 17% 4% 8% $910 7% 6% 11% 15% 8% $808 10% 4% $754 6% 2% $685 $590 $588
Slide 17: Key Portfolio Metrics
Key Portfolio Metrics Committed Capital ($M) Inception-to-Date: $2,332 $2,332 $2,005 $1,789 • 30% Portfolio Companies Upsized (19 Portfolio $1,589 Companies, 29 Upsize Transactions) $1,449 • 8 Refinances or 11% of Portfolio Companies $1,233 $1,078 $932 $48.0 $50.0 $47.5 $61.7 Trailing 12 Month: $41.
Slide 18: Highly Diversified Portfolio
Highly Diversified Portfolio Portfolio at Fair Value by Industry Portfolio Fair Value by Geography as a % of Net Assets 1 2 Canada 1% % 0 5 6% 5 % % 7% 32% 30% 7 %16% 0% U.K. 54% 7% 5% 8% 8% 3% Germany 4% Breakout Across Verticals Consumer Services & Products 15% Technology 59% (1) (2) Life Sciences
Slide 19: Portfolio Risk Ratings
Portfolio Risk Ratings Investments at Fair Value by Weighted Average Risk Rating1 Risk Rating Category1 1% 9% 2.31 2.37 2.20 2.22 2.15 2.10 2.12 2.04 1.98 * * 90% Category 2 Category 3 Category 5 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Stable Q4-2022 to Q1-2023 Weighted Average Risk Ra
Slide 20: Warrants & Equity Portfolio
Warrants & Equity Portfolio Warrants and Other Equity ($M) Warrant and Other Equity Holdings $56.7 $54.7 $51.1 • 26 Companies with both loan and warrant investments $50.5 $48.6 $42.7 • 10 Companies with warrant investments only $35.5 $34.2 • 5 Companies with shares of common or preferred stock $32.5
Slide 21: Strong Balance Sheet Provides For Flexibility & Growth
Strong Balance Sheet Provides For Flexibility & Growth Historical ROE1 and Leverage Private 12.8% 12.7% Capital Net IPO Call of Proceeds $19M of $93M 10.1% 9.8% 9.8% 9.5% 8.8% 8.3% 7.9% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 0.25x 0.24x 0.16x 0.13x 0.26x 0.40x 0.60x 0.97x 1.04x Indust
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 SOFR Rate $16,000 $0.40 $14,000 $0.35 $0.33 $12,000 $0.30 $0.29 $10,000 $0.25 Earnings Per Share $0.25 Net Income $8,000 $0.20 $0.21 $6,000 $0.17 $0.15 $0.13 $4,000 $0.10 $0.08 $2,000 $0.05
Slide 23: Leverage & Liquidity
Leverage & Liquidity Liquidity 2021 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Cash & Equivalents $1.8 $0.9 $0.9 $4.7 $3.5 $6.8 $5.8 $5.8 $3.3 Credit Facility $98.0 $98.0 $135.0 $154.0 $129.0 $117.7 $250.0 $88.0 $128.0 Availability Net Assets $473.5 $477.7 $504.2 $606.2 $597.5 $579.4 $573.7 $576.1 $569.8
Slide 24: Portfolio & Financial Highlights
FIRST QUARTER 2023 Portfolio & Financial Highlights RUNWAY GROWTH FINANCE CORP. 24
Slide 25: Portfolio Highlights
Portfolio Highlights Accounting Yield1 Annualized Dividend Yield2 16.5% 14.4% 13.3% 14.1% 13.8% 12.2% 10.4% 10.4% 9.6% 12.2% 12.2% 8.7% 9.1% 12.0% 11.5% 11.4% 7.0% 11.1% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Weighted Average Inter
Slide 26: Financial Highlights
Financial Highlights STATEMENT OF ASSETS & LIABILITIES 1 March 31, 2023 December 31, 2022 Total investments at fair value2 1,160,316 1,126,309 Cash and cash equivalents 3,271 5,761 Total assets 1,173,453 1,141,766 Debt 583,923 548,957 Total liabilities 603,646 565,714 Total net assets 569,807 576,05
Slide 27: NAV/Share Bridge
NAV/Share Bridge $0 Credit Losses in 2023 1. NAV/share calculated using weighted average share outstanding during Q1 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 Bryce Rowe, CFA Casey Alexander Erik Zwick, CFA John Rowan Melissa Wedel, CFA Mickey Schleien, CFA Mitchel Penn, CFA Vilas Abraham Finian O’Shea, CFA 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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