Good afternoon, ladies and gentlemen. Welcome to the Triplepoint Venture Growth BDC Corp. Fourth Quarter 2023 Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speaker's remarks, there will be an opportunity to ask questions and instructions will follow at that time. This conference is being recorded and a replay of the call will be available in an audio webcast on the Triplepoint Venture Growth website. Company management is pleased to share with you the company's results for the fourth quarter and full fiscal year of 2023. Today, representing the company is Jim Lebe, Chief Executive Officer and Chairman of the Board; Sajal Srivastava, President and Chief Investment Officer; and Chris Mathieu, Chief Financial Officer. Before I turn the call over to Mr. Lebe, I'd like to direct your attention to the customary safe harbor disclosure in the company's press release regarding forward-looking statements and remind you that during this call, management will make certain statements that relate to future events or the company's future performance or financial condition, which are considered forward-looking statements under Federal Securities Law. You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. The company does not undertake any obligation to update any forward-looking statements or projections unless required by law. Investors are cautioned not to place undue reliance on any forward-looking statements made during the call, which reflect management's opinions only as of today. To obtain copies of our latest SEC filings, please visit the company's website at www.tpvg.com. Now I'd like to turn the conference over to Mr. Lebe. Please go ahead.

Thanks. Good afternoon, everyone, and welcome to TPVG's fourth quarter earnings call. As expected, venture capital markets continued to be challenging during the fourth quarter. Consistent to what we have seen and been talking about over the last year, the venture industry continues to be affected by macroeconomic uncertainties, restrictive monetary policies, inflationary supply chain issues, public versus private market valuation disconnects, a changing investment landscape, geopolitical and other issues. These market challenges, which are impacting venture growth stage companies, especially hard, contributed to our NAV decline. We'll cover the contributing factors, including the effects certain industry sectors have had on a number of our companies, some realized losses, and the unrealized quarterly markdowns on the debt portfolio, and unrealized markdowns on the warrant and equity portfolios, given current market headwinds. Against this backdrop, we remain focused on our established and in-place priorities, which we believe will enable us to navigate through these current market conditions, including maintaining our earnings power and our strong liquidity, managing the portfolio, and positioning TPVG for the future. Turning to our earnings power, we generated Q4 net investment income of $17.3 million, or $0.47 per share, enabling us once again to over-earn our $0.40 -per-share regular quarterly dividend, including the first quarter dividend, cumulative dividends to shareholders since going public almost 10 years ago now total $15.05 per share. During this time, we've exceeded our distributions on a cumulative basis and continue to maintain sizable spillover income. For the fourth quarter, TPVG once again maintained a strong weighted average portfolio yield as we generated a 15.6% weighted average annualized yield that was largely driven by continued favorable interest rates and supplemented by additional income from loan prepayments. During the quarter, we enhanced our liquidity as we continued to experience repayment activity and modestly utilized…

Thank you, Jim, and good afternoon. Let me begin by reviewing our performance in Q4 and full year 2023, as well as highlight key expectations for 2024. Regarding investment portfolio activity during Q4, Triplepoint Capital signed $100 million term sheets with venture growth stage companies, compared to $58 million of term sheets in Q3, reflecting the increase in the strength of our pipeline, which we believe will result in higher investment activity in 2024. For the full year, Triplepoint Capital signed $471 million in term sheets with venture growth stage couples. With regards to new investment allocation to TPVG during the fourth quarter, given both current market conditions and TPVG's leverage ratio, we allocated a modest $4.2 million in new commitments with two companies to TPVG compared to $5.6 million to three companies in Q3. The commitments made during the fourth quarter were to existing portfolio companies. For the full year, we closed $31.5 million of debt commitments with 10 companies at TPVG, of which two were new companies and eight were existing portfolio companies. During the fourth quarter, TPVG funded $24.4 million in debt investments to six portfolio companies, up from $12.7 million in Q3. This funding level came in at the lower end of our guided range for the quarter, reflecting a lower utilization of unfunded commitments. These funded investments carried a weighted average annualized portfolio yield of 18.8% at origination, up from 14.2% in Q3. For the full year, we funded $125.3 million to 23 companies with a 15.6% weighted average portfolio yield at origination. During Q4, we had $33.7 million of loan prepayments, resulting in an overall weighted average portfolio yield of 15.6%, up from 15.1% in Q3. Excluding prepayments, core portfolio yield was 14.4%, up from 14.1% in Q3. For the full year, we had…

Thank you, Sajal, and hello everyone. During the fourth quarter, we continued to generate strong interest income from our diversified loan portfolio. This was driven by increased yields compared to those at origination as a result of multiple increases in the U.S. prime rate since March of 2022. Leverage increased in the quarter as prepayments totaling $34 million were offset by a decline in net asset value. At the same time, we made further progress reducing unfunded commitment levels in the fourth quarter, and as a result, TPVG has significant liquidity at the ready to support our existing portfolio companies, satisfy our unfunded commitments, and make selective new investments. For the fourth quarter, total investment income was $33 million with a portfolio yield of 15.6% as compared to $35 million with a portfolio yield of 15.3% for the prior year period. Total investment income for the full year of 2023 increased 15% to a record $137 million. This compared to $119 million for the prior year period. For the fourth quarter, total operating expenses were $15.7 million, as compared to $14.5 million for the prior year period. These expenses consisted of $8.3 million of interest expense, $4.5 million of base management fees, $600,000 of administrative expense, and $2.3 million of G&A expense. Due to the shareholder-friendly total return requirement under the incentive fee structure, there were no incentive fees this quarter. Total operating expenses for the full year of 2023 totaled $63.7 million as compared to $55.9 million for the prior year period, a 14% increase. For the fourth quarter, net investment income totaled $17.3 million or $0.47 per share compared to $20.5 million or $0.58 per share for the prior year period. Total investment income for the full year of 2023 increased 16%, totaling $73.8 million as compared to…

We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Brian McKenna of Citizens JMP. Please go ahead.

Okay, great. Thanks. So you had well over $1 per share of net realized and unrealized losses in the quarter. And that drove an 11% decline in NAV, bringing the year-over-year decline at 23%. So I guess, is there a way to think about future losses across the portfolio moving forward? Are we getting near the end of these write downs and losses? And I'm just trying to think through the trajectory of NAV from here and ultimately when you think it will start to inflect higher.

Yes. Hi, Brian. It’s Sajal here. So, I mean, I'd say again, the reduction in NAV, if you look through it, there is also $0.66 of that is related to fair value marks on our warrant and equity position. So if you look right again, the cost basis and the fair value of our worn and equity investment portfolio are basically equal. And if you look over the years, historically, that's --fair value is traded significantly higher. So we believe there is room for that to come back and for us to have gains in excess on an unrealized basis and realized basis on a fair value basis as market conditions improve. With regards to credit, again, I think our credit scores reflect our current view on our existing [indiscernible] based on current market conditions. And so, again, we're seeing some good data points with the increase in equity raising activity of our existing portfolio companies. We discussed some of the specifics for some of the companies in each of the credit ratings and signed term sheets and positive developments. And so again, the market is challenging. We continue to remain proactive and diligent and manage this environment. But again, as conditions improve, we expect both credit profile and fair values to improve as well.

Okay, great. Thanks. And then just on leverage, I appreciate some of the color there and some of the dynamics kind of post-year end here. But you're kind of just looking at leverage. It remains pretty elevated here. So you're still working through some of these write downs and losses, which obviously isn't helping the leverage picture. But I mean, I know you have the ATM, but would you look to raise some equity capital here, or use some of the cash on hand maybe to pay down some of the upcoming maturities. I mean, I'm just trying to think through how this ultimately starts to work lower.

Yes, so I think as we mentioned in some of our prepared remarks, we do have some near-term expectations on prepayments, given some of the broader market updates that we gave. We also are selectively using the ATM program, but we're not currently expecting, given the overall cost to do an overnight or something in that vein, that's not something we're looking at right now. Again, remember that net leverage is 1.27 times. I think that's pretty close to the range where most firms, as well as us, are targeting. Our target is 1.25 times on a net basis. So I think we're on track, but there's still more work to do as we head into the first -- kind of finish up the first half of 2024.

All right. I'll leave it there. Thank you very much.

The next question comes from Casey Alexander of Compass Point. Please go ahead.

Yes. I just have one question. How can it be appropriate to sell 1.5 million shares into the market through the ATM program with the knowledge that significant material losses are on the way and a significantly lower NAV is going to be presented to shareholders when you report this quarter.

Yes. Casey, it’s Sajal. I'll take this. So again the ATM is a program that acts on its own, so it's set and it operates on our [Multiple Speakers]

Do you have the ability to shut it down?

Yes, And then as we said, as developments are learned or known, then we adjust and act according.

All right. Thank you. That's it.

The next question comes from Christopher Nolan of Ladenburg Thalmann. Please go ahead.

Hi. In case I missed it, what were the unfunded commitments to date? Have they changed at all since 12/31? A - James Labe At 12/31 there were $118 million of unfunded and we didn't report on kind of where they are since then as far as new fundings and yes, let me actually -- so we had new fundings of $12.4 million since the end of the year and that would go against the $118 million. And then we had new commitments of $10 million. So kind of net decline of $2.4 million.

On your comments of deleveraging, is that going to be basically running -- basically letting investments in the portfolio run off or to use some of the elevated cash liquidity to pay down borrowings?

Actually, both. So we've already done the pay down of a substantial amount of the cash that was on balance sheet as of the end of the year to a much, much lower single digit million carrying cash balance. And then -- so that's part, that's temporary. And then we are just letting the portfolio amortize and prepay naturally. And as Sajil mentioned during his prepared remarks, we've had at a low end of the funding range, and that's intentional as we look to de-lever below the net 1.27 times -- 1.27 times leverage.

Okay, that's it for me. Thank you.

The next question comes from Paul Johnson of KBW. Please go ahead.

Good evening, guys. Thanks for taking my questions. I realize you've already provided some good commentary on the watch list movements during the quarter or the internal rating movements. But if I kind of look at it quarter-over-quarter, investments rated yellow or below. Last quarter with 13.7% this quarter was 21.7% of the total portfolio. So big jump there. It's obviously on fair values accounting for the write downs as well. I guess given that change and the stuff that you've mentioned, I mean, how can get comfortable and get the market confident that you guys have stabilized the situations you identified as troubled and that there's a plan forward here.

Yeah. The way I think we look at it is it's multifactored, right? So the first element is that, as Jim described in detail the market condition. So we are in the winter of all things venture capital. So I think a critical element is in particular, the technology subsector of venture capital and the venture growth stage in particular of these companies that raise large rounds at a high valuation during peak periods. So we're seeing these companies are getting more impacted than companies at other stages of the venture capital lifespan. So I'd say a significant amount is related to the venture capital, the equity investment activity. And so if we see data points of promising activity of capital raises and increasing capital raises that gives us confidence in terms of the overall outlook for the industry, the sector, and the portfolio. I think the second element of what we talked about is, one of the reasons why we've seen a fair amount of challenge too has been this -- the weak IPO and M&A markets, in particular the M&A markets, and we described a number of scenarios of transactions essentially collapsing because of the dynamics of these acquisitions where [indiscernible] more robust times, these transactions would have closed, it would have closed at higher values. I think the last piece as we look at the watch list itself. We look at it on a specific name basis and facts and circumstances from our perspective. So very much it's hard to generalize for a category to say if it's in a certain category it naturally implies where directly it's going to end up. I would say very much we look at for each of our reds, oranges, and yellows is each specific name, what the outlook is for those companies market appropriately from a credit rating and from a fair value perspective, and then make sure our teams are as proactive as they can be to manage those situations. I think as I described during the call, I think the good news or some positive outlook is that some positive events are happening within those companies, in those ratings, term sheets and events happening, but until they happen and close, given this environment, we need to remain cautious and optimistic -- proactive, and then when those events close, then move them up and upgrade them.

Got it. Thanks for that. And then last question for me on dividend. At this point on this quarter's NAV, it's about a 17% yield on NAV where the current dividend rate is at. You can talk about you're probably going to be deleveraging at least in the first half of this year. I guess what can you say kind of thoughts around that payout level and your confidence to generate that level of earnings?

Yes. So I would say two things. One is, when you think about the elevation of the yields in --60% of our portfolio is floating rate, 40% is fixed. There's also a substantial portion of our leverage that is fixed rate. So the net interest margin is pretty well protected for at least some period of time in a declining rate environment, so we're pretty comfortable with that. Also with the declining leverage, there is some room. So one of the things to think about is when --in 2022 2023, when yields were going up, the dividend was increased, but it was not excessively increased during those periods. And as a result, you've seen that the spillover income continue for almost two years to increase. So I think there's substantial ordinary income that's stored to maintain a stable dividend. But the ordinary income or NII is expected to be pretty stable as well, given the strength of the income-producing portfolio.

Thanks. That’s are from me.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jim Lebe for any closing remarks.

Thank you, operator. As always, I'd like to thank everyone for listening and participating in today's call. We look forward to talking with you all again next quarter. Thanks again and have a nice day.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.