- Closed New Debt and Equity Commitments
for Q3 2016 of $178.0 million including five (5) new portfolio
companies
- Unscheduled Principal Repayments “Early
Pay-offs” for Q3 2016 of $84.2 million
- One portfolio company successfully
completed its IPO debut
- Four (4) Hercules’ portfolio companies
currently in IPO Registration
- Five (5) completed or announced
portfolio company IPOs or M&A liquidity events during Q3
2016
Hercules Capital, Inc. (NYSE:HTGC) (“Hercules” or the
“Company”), the leading specialty financing provider to innovative
venture growth, pre-IPO and M&A stage companies backed by
leading venture capital firms, today provided its portfolio update
for Q3 2016.
“Hercules Capital achieved another solid quarter of new
originations and fundings as we continue to build our debt
investment portfolio to our desired target of $1.35 billion,”
stated Manuel A. Henriquez, chairman and chief executive officer of
Hercules. “While Q3 is normally our seasonally softest calendar
quarter, our team continued to execute our ‘slow and steady’ growth
and origination strategy achieving nearly $180 million of new
commitments, including five new innovative venture growth stage
technology and life sciences companies, backed by some of the
leading venture capital firms in the U.S. The success of our
origination team is a reflection of our strong brand and reputation
within the venture capital and entrepreneurial communities.”
Henriquez continued, “During the quarter, we also witnessed a
healthy pick up in M&A activities with four companies
announcing or completing M&A events, further bolstering our
growing earnings spillover, as we look to harvest those capital
gains for potential future distributions to our shareholders. We
were also excited to see one of our portfolio companies, TPI
Composites (NASDAQ:TPIC), successfully complete its IPO and become
part of the Russell 2000 Index as it had nearly doubled its market
capitalization prior to that event. During the quarter we were also
able to bolster our liquidity and strengthen our balance sheet,
positioning us well for the fourth quarter as we work to convert
this strong liquidity into new interest-earning investments in a
methodical fashion across our key investment markets driving
additional growth in our debt investment portfolio.”
New Debt and Equity Commitments for Q3 2016
As of September 30, 2016, Hercules has originated $178.0
million of debt and equity commitments to new and existing
portfolio companies.
Five (5) new commitments to innovative venture growth stage
companies:
Technology Portfolio – $45.0
Million
- $25.0 million to a technology developer
of enterprise analytics focused on customer and employee
interactions and behaviors
- $20.0 million to a software developer
that designs a leading application for note taking, organizing and
archiving
Life Sciences Portfolio – $85.0
Million
- $35.0 million to a pharmaceuticals
sales and distribution company
- $30.0 million to a physician management
and technology company that provides physician practice management
and population health technology
- $20.0 million to a biopharmaceutical
company dedicated to developing therapeutics that address important
unmet medical needs in otolaryngology
New Commitments to Existing Portfolio
Companies – $48.0 Million
Unscheduled Principal Repayments “Early
Pay-Offs:”
As of September 30, 2016, Hercules received $84.2
million in unscheduled principal repayments “early
pay-offs.”
Portfolio Company IPO and M&A Activity in Q3
2016:
IPO Activities
1. TPI Composites, Inc., (NASDAQ:TPIC) the largest
U.S.-based independent manufacturer of composite wind blades for
the wind energy market, raised $69.0 million by offering 6.25
million shares of its common stock at $11.00 per share in July
2016. Hercules committed a total of $20.0 million in two (2)
venture debt financings to TPI Composites beginning in June 2013.
Hercules held warrants for 160 shares of Preferred Series B stock
as of June 30, 2016, which represents an unrealized gain of
approximately $1.2 million as of the closing price of $18.47 for
TPI Composites on September 14, 2016.
2. As of September 30, 2016, Hercules held warrant and equity
positions in four (4) portfolio companies that had filed
Registration Statements in contemplation of a potential IPO,
including:
- Four companies filed confidentially
under the JOBS Act
There can be no assurances that companies that have yet to
complete their IPOs will do so.
M&A Activities
1. Celator Pharmaceuticals, Inc. (NASDAQ:CPXX), a
pharmaceutical company developing new and more effective therapies
to treat cancer, was acquired by Jazz Pharmaceuticals, Inc.
(NASDAQ:JAZZ), an international biopharmaceutical company focused
on improving patients’ lives by identifying, developing and
commercializing meaningful products that address unmet medical
needs, for $30.25 per share. The transaction closed on July 12,
2016. Hercules initially committed $15.0 million in venture debt
financing to Celator Pharmaceuticals in May 2014. The Company
recognized a net realized gain of approximately $1.5 million from
the sale of shares, generating a fully realized internal rate of
return (“IRR”) of approximately 19.8% from its loan repayments and
equity/warrant gains.
2. ReachLocal, Inc. (NASDAQ:RLOC), a leader in powering
online marketing, helping local businesses grow and operate their
business better with leading technology and expert service, was
acquired by Gannett Co., Inc., (NYSE:GCI), a next-generation media
company committed to strengthening communities across the company’s
network, for $4.60 per share in cash, via a tender offer. The
transaction closed on August 9, 2016. Hercules initially committed
$25.0 million in venture debt financing to ReachLocal in April
2015. The Company recognized a net realized gain of $610,000 from
the transaction, generating a fully realized IRR of approximately
24.1% from its loan repayments and equity/warrant gains.
3. TouchCommerce, a technology partner and leader in
digital customer service and engagement solutions, was acquired by
Nuance Communications, Inc. (NASDAQ:NUAN), a leading provider of
voice and language solutions for businesses and consumers around
the world, for $215.0 million in total consideration. The
transaction closed on August 16, 2016. Hercules committed a total
of $18.0 million in three (3) venture debt financings to
TouchCommerce beginning in June 2013. Hercules held warrants for
2.3 million shares of Preferred Series E stock, as of June 30,
2016, which represents a realized gain of approximately $698,000
and an unrealized gain of approximately $770,000 as of the closing
price of $14.46 for Nuance Communications on September 14,
2016.
4. IronPlanet, a leading online marketplace for used
heavy equipment and other durable assets, announced that it had
entered into a definitive agreement on August 29, 2016 under which
Ritchie Bros. Auctioneers Incorporated (NYSE & TSX: RBA), the
world’s largest industrial auctioneer and a leading equipment
distributor, will acquire IronPlanet for approximately US $758.5
million, subject to customary closing adjustments. Hercules
initially committed $37.5 million in venture debt financing to
IronPlanet in October 2014. Hercules currently holds warrants for
1.2 million shares of Preferred Series D stock, as of June 30,
2016.
About Hercules Capital, Inc.
Hercules Capital, Inc. (NYSE:HTGC) (“Hercules”) is the leading
and largest specialty finance company focused on providing senior
secured venture growth loans to high-growth, innovative venture
capital-backed companies in a broadly diversified variety of
technology, life sciences and sustainable and renewable technology
industries. Since inception (December 2003), Hercules has committed
more than $6.1 billion to over 350 companies and is the lender of
choice for entrepreneurs and venture capital firms seeking growth
capital financing. Companies interested in learning more about
financing opportunities should contact info@htgc.com, or call
650.289.3060.
Hercules’ common stock trades on the New York Stock Exchange
under the ticker symbol "HTGC."
In addition, Hercules has three outstanding bond issuances
of:
- 7.00% Unsecured Notes due April 2019,
NYSE listed under the symbols “HTGZ,”
- 7.00% Unsecured Notes due September
2019, NYSE listed under the symbols “HTGY,” and
- 6.25% Unsecured Notes due July 2024,
NYSE listed under the symbols “HTGX.”
Forward-Looking Statements
The information disclosed in this press release is made as of
the date hereof and reflects Hercules most current assessment of
its historical financial performance. Actual financial results
filed with the SEC may differ from those contained herein due to
timing delays between the date of this release and confirmation of
final audit results. These forward-looking statements are not
guarantees of future performance and are subject to uncertainties
and other factors that could cause actual results to differ
materially from those expressed in the forward-looking statements
including, without limitation, the risks, uncertainties, including
the uncertainties surrounding the current market volatility, and
other factors the Company identifies from time to time in its
filings with the SEC. Although Hercules believes that the
assumptions on which these forward-looking statements are based are
reasonable, any of those assumptions could prove to be inaccurate
and, as a result, the forward-looking statements based on those
assumptions also could be incorrect. You should not place undue
reliance on these forward-looking statements. The forward-looking
statements contained in this release are made as of the date
hereof, and Hercules assumes no obligation to update the
forward-looking statements for subsequent events.
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version on businesswire.com: http://www.businesswire.com/news/home/20161005005407/en/
Hercules Capital, Inc.Michael Hara, 650-433-5578 HT-HNInvestor
Relations and Corporate Communicationsmhara@htgc.com
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