Hercules Capital Provides Interim Portfolio Update for Q3 2017
October 03 2017 - 6:00AM
Business Wire
Year-to-Date Momentum Continues with New
Originations and Closed Commitments on Pace to Exceed
2016
- Closed total new debt and equity
commitments of ~$154.0 million to seven (7) companies including
five (5) new and two (2) existing portfolio companies in Q3 2017
- Closed total new debt and equity
commitments of ~$552.0 million for the first nine months of
2017
- “Early loan pay-offs,” or unscheduled
principal repayments of ~$115.0 million, consisting of a large
amount of older loans which typically have lower call premiums, for
Q3 2017
- Early loan pay-offs for the first nine
months of 2017 of ~$382.0 million
- Seven (7) Hercules portfolio companies
currently in IPO Registration
- Four (4) Hercules portfolio companies
completed or announced M&A liquidity events during Q3 2017
Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or the
“Company”), the leading specialty finance company to innovative
venture growth, pre-IPO and M&A stage companies backed by
leading venture capital firms, today announced its interim
portfolio update for the third quarter 2017.
“Our team’s strong origination activities, which resulted in
approximately $154.0 million in new commitments, continues to show
the strength of the Hercules Capital platform and helped offset
higher than anticipated early loan repayments in what is also
typically our slowest quarter seasonally,” stated Manuel A.
Henriquez, founder, chairman and chief executive officer of
Hercules. “Further, we remain steadfast in continuing our
disciplined ‘slow and steady’ portfolio and earnings growth
strategy. During the third quarter, we converted a healthy amount
of our unfunded commitments, as a subset of our portfolio companies
achieved important financial and operating milestones, into new
loan growth and allowing us to modestly grow our debt investment
portfolio. Unscheduled early loan repayments continue at elevated
levels, driven by a combination of M&A activity, increased
portfolio company milestone and development achievements, and an
abundance of liquidity in the broader capital markets looking for
assets and more attractive pricing.”
New Debt and Equity Commitments for Q3 2017:
In the three months ended September 30, 2017, Hercules has
originated ~$154.0 million of new debt and equity commitments to
seven (7) new and existing portfolio companies.
Five (5) new commitments to innovative venture growth stage
companies
Technology Portfolio – $101.0
Million
- $54.0 million to a developer of email
marketing technologies that offers a software that enables
organizations to create, send and track email marketing campaigns
and online surveys
- $30.0 million to a leading provider of
affordable and interoperable healthcare information technology
solutions and services
- $10.0 million to a leading technology
developer of a social analytics platform that global companies use
to run brands, build businesses and connect with consumers
- $7.0 million to a developer of the
largest working capital marketplace in the world in which companies
across the globe use the technology to improve their financial
position
Life Sciences Portfolio – $30.0
Million
- $30.0 million to a rapidly growing and
innovative population health business operating primary care
clinics focused on Medicare beneficiaries
Two (2) New Commitments to Existing
Portfolio Companies – $23.0 Million
- $15.0 million to a leading designer and
installer of residential and commercial solar systems in Southern
California
- $8.0 million to a privately-held
fabless semiconductor corporation developing high-performance field
programmable gate arrays (FPGAs) and embedded FPGA IP
solutions
Unscheduled Early Principal Repayments “Early
Pay-Offs:”
For the three months ended September 30, 2017, Hercules received
~$115.0 million in unscheduled early principal repayments
“early pay-offs.”
Portfolio Company IPO, M&A and Other Activity in Q3
2017:
IPO Activities
As of September 30, 2017, Hercules held warrant and equity
positions in seven (7) portfolio companies that had filed
Registration Statements confidentially under the JOBS Act in
contemplation of a potential IPO.
There can be no assurances that companies that have yet to
complete their IPOs will do so.
M&A Activities
- In August 2017, Hercules’ portfolio
companies Cempra, Inc. (NASDAQ: CEMP), a clinical-stage
pharmaceutical company focused on developing differentiated
anti-infectives for acute care and community settings to meet
critical medical needs in the treatment of infectious diseases, and
Melinta Therapeutics, Inc., a privately held company focused
on discovering, developing, and commercializing novel antibiotics
to treat serious bacterial infections, announced that the companies
had entered into a definitive agreement under which Melinta will
merge with a subsidiary of Cempra. The merger is expected to create
a NASDAQ-listed company committed to discovering, developing and
commercializing important anti-infective therapies for patients and
physicians in areas of significant unmet need. The merger is
expected to close in the fourth quarter of 2017, subject to the
approval of the stockholders of each company as well as other
customary conditions. Hercules committed $40.0 million in venture
debt financing to Cempra from 2011 to 2014. Hercules initially
committed $30.0 million in venture debt financing to Melinta in
December 2014 and currently holds 1,194,448 shares of Preferred
Series 4 stock as of June 30, 2017.
- In August 2017, Hercules’ portfolio
company CashStar, Inc., a leading provider of gift card
commerce solutions at the forefront of mobile payments and digital
gifting innovation, was acquired by Blackhawk Network, Inc., a
global financial technology company and a leader in connecting
brands and people through branded value solutions, for $175.0
million in cash. Hercules initially committed $8.0 million in
venture debt financing in June 2013, and currently holds warrants
for 727,272 shares of Preferred Series C-2 stock as of June 30,
2017.
- In September 2017, Hercules’ portfolio
company Cloud Technology Partners, Inc., a
born-in-the-cloud services company with strong enterprise
experience, announced that Hewlett Packard Enterprise intends to
acquire the company to accelerate IT services growth as they
transition from a traditional hardware business to a hybrid IT
strategy. Terms of the deal were not disclosed. Hercules initially
committed $14.4 million in venture debt financing in December 2016,
and currently holds warrants for 113,960 shares of Preferred Series
C stock as of June 30, 2017.
Portfolio Company
Activities
- In June 2017, Hercules’ portfolio
company AVEO Oncology (NASDAQ: AVEO), a biopharmaceutical
company dedicated to advancing a broad portfolio of targeted
therapeutics for oncology and other areas of unmet need, announced
that the company’s pivotal TIVO-3 trial has reached its enrollment
target of 322 patients, more than two months ahead of the company’s
initial guidance. Hercules currently holds 426,931 shares of common
stock and warrants for 2,069,880 shares of common stock as of June
30, 2017.
- In September 2017, Hercules’ portfolio
company Insmed Incorporated (NASDAQ: INSM), a global
biopharmaceutical company focused on the unmet needs of patients
with rare diseases, announced positive top-line results from Phase
3 CONVERT study of ALIS (Amikacin Liposome Inhalation Suspension)
in adult patients with treatment-refractory Nontuberculous
Mycobacterial (NTM) lung disease caused by Mycobacterium Avium
Complex (AVM). Hercules currently holds 70,771 shares of common
stock as of June 30, 2017.
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 broad variety of technology, life
sciences and sustainable and renewable technology industries. Since
inception (December 2003), Hercules has committed more than $6.9
billion to over 380 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 one outstanding bond issuance of 6.25%
Unsecured Notes due July 2024 (NYSE: HTGX).
Forward-Looking Statements
This press release may contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. You should understand that under Section 27A(b)(2)(B) of
the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of
the Securities Exchange Act of 1934, as amended, or the Exchange
Act, the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995 do not apply to forward-looking
statements made in periodic reports we file under the Exchange
Act.
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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Hercules Capital, Inc.Michael Hara, 650-433-5578 HT-HNInvestor
Relations and Corporate Communicationsmhara@htgc.com
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