Runway Growth Finance - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 total investment income was $33.8M and net investment income (NII) was $14.6M ($0.39 per share); NAV per share rose to $13.79 with net assets of $514.9M.
• Versus consensus, Q4 revenue of $33.8M missed $36.1M*, and EPS of $0.39 missed $0.418*; management attributed yield compression to base rate cuts and fewer prepayment accelerations, dampening fee income.
• Prepayments surged to $152.6M and funded investments were $154.0M, signaling active capital rotation; portfolio FV increased to $1.08B with 56 portfolio companies and one JV.
• Dividend policy reset: base dividend to $0.33 and supplemental $0.03 for Q1 2025, with targeted supplemental up to 50% of NII over base going forward; leverage target remains 1.2x–1.3x, and KeyBank credit facility extended by 3 years.
• Strategic catalyst: advisory combination with BC Partners Credit closed Jan 30, 2025, expanding origination channels and product set while retaining current team and terms; Board expanded to eight members.

Values retrieved from S&P Global for estimates (*).

What Went Well and What Went Wrong

What Went Well

• Elevated portfolio activity with $152.6M in prepayments and $154.0M in funded investments highlighted strong borrower performance and active redeployment.
• NAV per share increased sequentially to $13.79 (from $13.39 in Q3), driven by $16.5M net unrealized gains (largest contributor: Gynesonics) and positive marks across affiliate/control investments.
• Strategic platform enhancement: BC Partners Credit transaction closed, broadening origination reach and structured solutions; CEO emphasized “combined scale and expertise…to mitigate risk and drive heightened returns”.

What Went Wrong

• Revenue/earnings missed Wall Street consensus: Q4 revenue $33.8M vs $36.1M*, EPS $0.39 vs $0.418*; softness tied to rate cuts and fewer prepayment-related fee accelerations.
• Yield compression: dollar‑weighted annualized yield declined to 14.7% (from 15.9% in Q3 and 16.9% prior year), reflecting lower base rates and mix.
• Two loans on non‑accrual (Mingle Healthcare and Snagajob), though total exposure is modest at ~0.5% of FV; realized losses of $2.9M in Q4.

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by, and welcome to the Runway Growth Finance fourth quarter and fiscal year ended 2024 earnings conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Quinlan Abel, Assistant Vice President, Investor Relations. You may begin.

Quinlan Abel (Assistant VP of Investor Relations)

Thank you, Operator. Good evening, everyone, and welcome to the Runway Growth Finance Conference Call for the Fourth Quarter and Fiscal Year Ended December 31, 2024. Joining us on the call today from Runway Growth Finance are David Spreng, Chairman and Chief Executive Officer; Greg Greifeld, Chief Investment Officer of Runway Growth Capital LLC, our Investment Advisor; and Tom Raterman, Chief Financial Officer and Chief Operating Officer. Runway Growth Finance's Fourth Quarter and Fiscal Year Ended 2024 financial results were released just after today's market close and can be accessed from Runway Growth Finance's Investor Relations website at investors.runwaygrowth.com. We have arranged for a replay of the call to be available on the Runway Growth Finance webpage. During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements.

These forward-looking statements are not a guarantee 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 and without limitation, market conditions caused by uncertainties surrounding interest rates, changing economic conditions, and other factors we identified in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained on this call are made as of the date hereof, and Runway Growth Finance assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of SEC-related filings, please visit our website.

With that, I will turn the call over to David.

David Spreng (Chairman and CEO)

Thank you, Quinlan, and thanks, everyone, for joining us this evening. On today's call, we will discuss our fourth quarter and full year 2024 financial results, reflect on the recently closed acquisition of our advisor by BC Partners Credit, and share our market outlook for the year ahead. We are pleased with the performance of the portfolio and our strategic execution in 2024. For the fourth quarter, Runway delivered total investment income of $33.8 million and net investment income of $14.6 million. Against the evolving rate environment and macro backdrop, we focused on the health of our late and growth stage portfolio and maintained strong credit quality. The fourth quarter of 2024 was transformative for Runway. We have enhanced our origination channels, expanded our product set, and built infrastructure to accelerate pipeline growth as we seek to optimize our portfolio.

As we previously announced, during the fourth quarter, Runway Growth Capital, our Investment Advisor, entered into a definitive agreement to be acquired by BC Partners Credit as a long-term strategic investment. BC Partners Credit now has more than $10 billion in assets under management and is the credit arm of BC Partners, an alternative investment firm with over $40 billion in AUM. In January, we were pleased to announce the close of this transaction following a strong shareholder vote in favor of this path forward. To reiterate, Runway Growth Capital continues to operate with its full team intact and remains the Investment Advisor to Runway Growth Finance. The close of the BC Partners transaction ushers in a new era for our shareholders and borrowers, who we believe will benefit from our combined scale and expertise.

Looking ahead, Runway Growth Capital is seeking to grow originations in the total loan size of $30-$150 million. That said, our ideal allocation to the BDC will remain $20-$45 million. Greg will cover this in more momentarily, but we believe this range of check size is positioned to benefit both Runway and BC in the long term. Additionally, we expect this focus will further diversify our BDC's portfolio. For example, a $50 million investment pays back its loan. We may seek attractive opportunities in the $20-$30 million size to deploy that returned capital. We view this as a win-win for our investors. They gain a scaled platform that offers stronger deal flow and more solutions to attract prospective borrowers, as well as a strategic focus that will further diversify our go-forward portfolio and mitigate risk.

We are just getting started, and as we embark on this new chapter with the support of BC Partners, we are confident that our platform is well-positioned to maximize our portfolio while maintaining disciplined underwriting practices. We remain focused on our long-term vision of providing financing solutions to passionate entrepreneurs who are building innovative businesses. To that end, in the fourth quarter, we were pleased to execute on two investments with new companies and five investments with existing portfolio companies, representing $154 million in funded loans. Our new positions during the quarter include the completion of a $43 million loan to Piano Software, a global leader in digital experience management. We also completed a $26.7 million investment to Hurricane CleanCo Limited, an integrated merchant acquiring and payment processing platform.

Our investments made in the quarter are reflective of our focus on the high-growth sectors of technology, healthcare, and consumer products and services. As I wrap up, I want to reiterate our excitement for the path forward. Our portfolio is positioned to perform, and we believe our borrowers will operate effectively against the macro backdrop taking shape in 2025. Looking ahead, Runway will continue to prioritize a credit-first investment philosophy, maintain selectivity as we seek to optimize our portfolio. With that, I'll turn it over to Greg.

Greg Greifeld (Chief Investment Officer)

Thanks, David, and good evening, everyone. Today, I will offer a little more detail on our capital deployment philosophy and then wrap with our view on the current venture debt landscape. To echo David's sentiment, with the close of the BC Partners transaction, we are starting 2025 with an expanded product set, and we are already evaluating a growing pipeline of opportunities as a result. To begin, I want to drill down on a point David outlined earlier on our target allocation range of $20-$45 million to the BDC. As a part of the broader BC Partners Credit ecosystem, we have the ability to take part in larger deals and allocate the ideal allotment to Runway Growth Finance. A good example of this is our partnership with VertexOne, which closed in the fourth quarter.

This transaction provided VertexOne with $131 million of growth capital, and $41 million was allocated to the BDC. This is one of the many tools we have available to us to drive originations and strike deals that are favorable to our investors across the entire platform. We look forward to sharing additional opportunities that present multifaceted wins. Subsequent to the end of the quarter, we saw a new administration take office, and potential policies and new regulatory measures become a reality. While the economic impact of tariffs and the evolving government efficiency initiatives represent a dynamic situation, we believe our focus on high-growth sectors with loans that are senior in the capital structure provides additional security and allows our portfolio to perform across market backdrops.

Further, we believe our pure-play focus on venture debt, which experienced explosive growth in 2024, will continue to be a key value driver moving forward. According to recent PitchBook data, venture debt deal value increased to more than $53 billion in 2024, a dramatic increase from approximately $27 billion in 2023. This increase can be attributed to several multi-billion dollar deals completed as AI companies raised debt. While some of these transactions may have been idiosyncratic, we view this growth as a green shoot for the venture debt space writ large. In our view, Runway is positioned to execute amidst the tailwinds in venture debt, and our investors benefit from the following characteristics of the sector. First, our portfolio offers lower loan-to-value relative to middle market lenders, which provides a margin of safety for investors.

Second, our loans offer predictable cash flows that enable differentiated return profiles for the shorter lifetime. Third, we underwrite our solutions with enhanced control through covenants and milestones outlined in our debt agreements. Lastly, our investors gain attractive exposure to the venture ecosystem through a portfolio of assets at the top of the capital stack. This offers strong risk mitigation compared to other venture investment solutions. In short, Runway has exhibited strong portfolio management with minimal losses since inception and presents prospective investors with ample equity upside as we currently trade at a discount to our venture debt peers. The opportunity in front of us is clear, and we have the backing of a world-class platform to deliver for our shareholders. With that, I will now turn it over to Tom to discuss our financial results.

Tom Raterman (CFO and COO)

Thank you, Greg, and good evening, everyone. During the fourth quarter of 2024, Runway completed two investments in new companies and five investments in existing companies, representing $154 million in funded loans. Our weighted average portfolio risk rating decreased to 2.33 in the fourth quarter of 2024 compared to 2.48 in the third quarter of 2024. Our rating system is based on a scale of one to five, where one represents the most favorable credit rating. I think it may be valuable to take a moment to dive deeper into our rating system. For reference, all new transactions begin as a Category 2. Several performance items, as well as technical loan compliance matters, could cause a loan to move from Category 2 to Category 3. This might include a borrower deviating from its plan of record.

I want to point out that the borrower's plan of record is generally not our underwriting plan and does not necessarily mean that the credit is now in trouble. In our experience, the majority of borrowers that move to Category 3 still pay their loan in full and on time. This risk rating helps us monitor our portfolio accurately, but we do want to clarify that companies in Category 3 are not necessarily exhibiting subpar or weak operating performance. Rather, these companies simply have deviated from the company plan that was laid out at the beginning of our agreement. The full details of our rating system are included in our annual report on Form 10-K. As with previous quarters, we calculated the loan-to-value for loans that were in our portfolio at the end of the Third Quarter and at the end of the Fourth Quarter.

In comparing this consistent grouping of loans, we found that our dollar-weighted loan-to-value ratio decreased from 29.3% to 26.6%. Our total investment portfolio, excluding U.S. Treasury bills, had a fair value of approximately $1.08 billion, an increase from $1.07 billion in the Third Quarter of 2024, and an increase of 5% from $1.03 billion for the comparable prior year period. Our loan portfolio continues to be comprised almost exclusively of first lien senior secured loans. At December 31, 2024, Runway had net assets of $514.9 million, increasing from $507.4 million at the end of the Third Quarter of 2024. NAV per share was $13.79 at the end of the Fourth Quarter, an increase of 3% compared to $13.39 at the end of the Third Quarter of 2024. Our loan portfolio is comprised of 97% floating-rate assets.

All loans are currently earning interest at or above agreed-upon interest rate floors, which generally reflect the base rate plus the credit spread set at the time of closing or signing of the term sheet. In the fourth quarter, we received $152.6 million in principal prepayments, an increase from $75 million in the third quarter of 2024. As previously stated, we believe elevated prepayments are an indicator of the strength in our approach to underwriting and the overall health of the portfolio and the ecosystem. We generated total investment income of $33.8 million and net investment income of $14.6 million in the fourth quarter of 2024, compared to $36.7 million and $15.9 million in the third quarter of 2024.

Our debt portfolio generated a dollar-weighted average annualized yield of 14.7% for the fourth quarter, as compared to 15.9% for the third quarter of 2024 and 16.9% for the comparable period last year. Moving to our expenses, total operating expenses were $19.2 million for the fourth quarter of 2024, a decrease from $20.8 million for the third quarter of 2024. We recorded a net realized loss on investments of $2.9 million in the fourth quarter of 2024, compared to no realized gains or losses in the third quarter of 2024. At December 31, 2024, we continued to have two loans on non-accrual status: Mingle Healthcare and Snagajob. Our loan to Mingle Healthcare has a cost basis of $5 million and fair market value of $2.1 million, or 43% of cost.

Our loan to Snagajob has a cost basis of $3.8 million and fair market value of $3.4 million, or 91% of cost. Together, these loans represent only 0.5% of the total investment portfolio at fair value as of December 31, 2024. At the end of the Fourth Quarter of 2024, our leverage ratio and asset coverage remained at 1.08 and 1.92x, respectively, consistent with the Third Quarter of 2024. As of December 31, 2024, our total available liquidity was $244.8 million, including unrestricted cash and cash equivalents, and we had borrowing capacity of $239 million. Subsequent to quarter end, we extended our credit facility with KeyBank by three years, subject to the terms and conditions as reflected in the amended credit facility agreement. We believe the amended credit facility provides increased availability and additional lending verticals to support our business's growth.

As of December 31, 2024, we had a total of $176.7 million in unfunded commitments, which was comprised of $147.3 million to provide debt financing to our portfolio companies and $29.4 million to provide equity financing to Runway Cadma One LLC. Approximately $24.8 million of available unfunded commitments are eligible to be drawn based on achieved milestones. During the fourth quarter, we experienced five prepayments totaling $152.6 million and scheduled amortization of $2.4 million. I'll now close with an update on our capital allocation strategy. Earlier today, our board of directors declared aggregate distributions of $0.36 per share for the first quarter of 2025, which is comprised of a $0.33 per share base dividend and a $0.03 per share supplemental dividend.

Subject to board approval, we expect that going forward, the company will continue to pay a quarterly base dividend of $0.33 per share and a targeted supplemental dividend that we expect will be up to 50% of the delta that our NII per share exceeds the base dividend. As we focus our near-term capital allocation strategy on building and preserving NAV, we believe our lower base dividend will enable us to deliver consistent yield to our shareholders, even if we face rate environment volatility. Our board will continue to evaluate and approve future distributions, knowing how important consistency is to our fellow shareholders. With that, Operator, please open the line for questions.

Operator (participant)

Thank you. Ladies and gentlemen, to ask the question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Casey Alexander with Compass Point Research and Trading. Your line is open.

Casey Alexander (Managing Director and Senior Equity Analyst)

Yeah, good afternoon. First of all, I was a little surprised that there were not more new originations here in the first quarter. You gave some information up to this point in time, $2 million and $13 million coming off revolvers, I think it was. Now, I do know that originations are generally very back-ended. Would you expect that here in the next 10 days before the quarter ends, that there would be additional originations?

Greg Greifeld (Chief Investment Officer)

Yeah, I think you're completely correct, Casey, that the originations are typically back-ended. I wouldn't say that necessarily what we have done to this point is a sign for where the quarter will end up overall. We are working with a number of companies and could very easily have some originations close this quarter, but they may also, as you pointed out, since there's just 10 days left in the quarter, one might push to the next quarter.

Casey Alexander (Managing Director and Senior Equity Analyst)

Okay. Secondly, do you know what percentage of your loan book is now trading at their interest rate floors as of December 31, of course?

David Spreng (Chairman and CEO)

Casey, I think the majority, and I'll look up the number specifically, but I think the majority are either at or above the floors. Most would still continue to be above the floor. Certainly, the newer deals are at the floors. The older deals that have been on the books are trading above the floor.

Casey Alexander (Managing Director and Senior Equity Analyst)

Okay, thank you. That's it for me now. I'll follow up later.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of Finian O'Shea with Wells Fargo. The line is open.

Finian O'Shea (Director of WFS Research)

Hey, everyone. Sort of extending on that topic, can you talk about the sort of remaining impact on yield from the Fed cuts? What drove the sort of additional, I think there was a point that came off of your book accounting yield this quarter, so maybe some more of that was spread. I know there were low other fees as well, but what we could sort of think of as a first quarter rate given the portfolio movement and the decline in base rates.

David Spreng (Chairman and CEO)

Yeah, thanks, Finn. Certainly, a big chunk of the decline was a result of the decline in interest rates. We think that's pretty stable, at least in the short term. The other change in the book accounting yield is a result of just fewer accelerations as a result of prepayments. As deals take a little longer to prepay, there may be a smaller prepayment fee, and there's less end-of-term payment and the like to accelerate. As you see the variation in our portfolio yield over time, it typically spikes when we have a significant number of early terminations.

Finian O'Shea (Director of WFS Research)

Is the pref in Snagajob accruing interest, or will it? Was that happen somewhere in the quarter?

Greg Greifeld (Chief Investment Officer)

The Snagajob pref is a non-interest-bearing instrument.

Finian O'Shea (Director of WFS Research)

Okay. One more on the dividend. It looks like you guys just sort of thought about that. Earnings were sort of straddling it. I think you had some announcements, but were expanded a new board of directors roster. Can you talk about sort of what the changes were if it goes beyond the base rates and new spreads? This was more about, I think you talked about capital allocation. Does this mean lower leverage? Is that sort of in the outlook? A base dividend cut that's fairly substantial, sort of second question, is always a time when there's a discussion of a look-back, a credit look-back. Seeing your thoughts on that as well. Thanks.

David Spreng (Chairman and CEO)

Yeah. Finn, so has the board of directors looked at the dividend? Keep in mind, we have a new board of directors coming in. They certainly recognize the importance of a stable, consistent, and predictable dividend. As they looked at it, they adopted, wanted to adopt a base dividend like many on the BDCs on the BC Partners platform, that was clearly sustainable and was not necessarily going to be interrupted by fluctuations in interest rates, variability of prepayment fees, and other income from early terminations, and then continue to maintain a payout with that target of 50% of the delta over NII. There is nothing in terms of a change of outlook with respect to lowering leverage. Our leverage target still remains at 1.2-1.3. What will drive that is originations.

I do think we have, the board has a little bit of a preference to build NAV, but that does not trump the desire for consistent and stable and predictable dividend.

Casey Alexander (Managing Director and Senior Equity Analyst)

Okay. The look-back?

David Spreng (Chairman and CEO)

The shareholders and the board just approved the investment management agreement in January with the change of control. They are confident that the current arrangement is market and no changes.

Casey Alexander (Managing Director and Senior Equity Analyst)

Thanks so much.

Operator (participant)

Thank you. Please stand by for our next question. Our next question comes from the line of Melissa Wedel with JPMorgan. Your line is open.

Melissa Wedel (VP of U.S. Equities Research)

Good afternoon. Thanks for taking my questions. Wanted to start with maybe just a broader understanding of the origination opportunity set now as part of BC Partners. Can you put some sort of framework around that for us? I know you gave the example of VertexOne as being something that was sourced through that platform. Going forward, how much broader do you expect the funnel to be for you? What type of asset yield should we be expecting versus your sort of legacy historical origination?

Greg Greifeld (Chief Investment Officer)

Yeah. No, definitely. I think this is a topic that we're really excited to talk about and to fill folks in on. VertexOne, I think, is one example of us bringing a legacy portfolio company and something from our pipeline and allowing us to access a broader set of products than we previously had the expertise to underwrite, where historically we had been exclusively first lien senior secured loans. As you'll see as you pour through our SOI, the new $131 million facility, of which we took $41 million, is bifurcated between a first lien deal as well as a second lien PIK instrument with a convertible feature above a certain MOIC.

We will, for the most part, lean in more heavily towards the first lien portion of a deal like that, but we think that it allows us to appropriately price risk and potentially participate in some greater upside for other opportunities that we previously had been able to. I would say there's two parts of where the BC combination is really going to change our funnel. The first of which is being part of, as David said, a now greater than $10 billion platform, just has more eyes out there looking at opportunities and brings more things across our desk, which we're greatly appreciative of. The second part about it is being part of a large, diversified credit firm. It also provides us the expertise to help underwrite some different structures than we previously would have done.

As I said, we will look at some on a selected basis, more junior things, but also it allows us to look at things like revolvers. We very frequently have gotten the question from folks, "Are we able to provide a revolver?" That is not something that we have been able to do, which has led those situations to provide other providers who are able to do both. We believe that now with this expertise, it is going to help us convert a greater amount of deals. Regarding your questions for returns, we do not expect there to be any material change to our return target. We expect it to be in line with where it has been historically.

Melissa Wedel (VP of U.S. Equities Research)

Okay. Thanks for that. Just on size of the funnel?

Greg Greifeld (Chief Investment Officer)

Yeah, I do think the funnel will expand as we just are able to leverage a larger network of professionals who are out there in the market, meeting with companies, meeting with sponsors, meeting with brokers.

Melissa Wedel (VP of U.S. Equities Research)

Okay. The follow-up question for you is the, I believe it was in the press release, there was a reference to expected sales of some equity and warrant positions in the first quarter. I'm curious if there are any gains or losses associated with that, and are those currently reflected in marks? Thank you.

David Spreng (Chairman and CEO)

Yeah. Thanks, Melissa. It's public that the Gynesonics, there was a merger of Gynesonics. It was acquired by another entity. We had a preferred equity position that did have a gain on it, and so there will be a gain. That gain was, for the most part, reflected in the fair value at 12/31.

Melissa Wedel (VP of U.S. Equities Research)

Thank you.

Tom Raterman (CFO and COO)

Thank you. Please stand by for our next question. Our next question comes from the line of Doug Harder with UBS. Your line is open.

Cory Johnson (Analyst)

Hi. This is actually Cory Johnson on for Doug Harder. Just was trying to understand, I guess, given the cut in dividend, do you expect maybe to give any capital return back in the form of share repurchases? I think you have the current plan might be coming towards the end of its life. Is there any discussion in regards to possibly starting up a new plan?

David Spreng (Chairman and CEO)

Yeah. So we repurchased close to $25 million in shares during 2024, and the current plan, as you accurately stated, is nearing its expiration. It's something that the management team and the board certainly frequently discuss, and it's always a matter of which creates the better return, building the portfolio and increasing the leverage and potentially enhancing the supplemental or the base dividend or using share repurchases. We'll have to see where the equity trades, whether we repurchase shares or not. We think we're significantly undervalued at this point. So we'll have to look at our bank availability in the pipeline and make an assessment as to what's best in terms of building long-term value.

Cory Johnson (Analyst)

Thanks. This is my last question. Just in regards to what you're seeing out there in the venture market and in regards to capital markets activity and such, I guess, what are you kind of seeing currently? Maybe how has that, how is what you're seeing now versus what you expected possibly a quarter ago?

Greg Greifeld (Chief Investment Officer)

Yeah. I think we are seeing, for selective companies, activity continue. I think that, in general, exits have remained slower than folks might have hoped or anticipated, which is seeing, I think, both a slowdown in recycling of capital as firms are not getting back maybe some of the dry powder to deploy that they might have expected. Similarly, that's leading to less M&A, which for some of the larger later-stage companies such as ours is leading to less upside opportunities than we might have otherwise seen. There is an expectation that at some point in the next quarters that will revert, and you will see an uptick in not only new fundings but also M&A volume.

Cory Johnson (Analyst)

Great. Thank you.

Tom Raterman (CFO and COO)

Thank you. Please stand by for our next question. Our next question comes from the line of Erik Zwick with Lucid Capital Markets. Your line is open.

Erik Zwick (Managing Director of Equity Research)

Thanks. Good afternoon, everyone. Most of my questions have been answered, but maybe one or two more I can squeeze in here. The equity portfolio at fair value is now to about 10% of the total portfolio. I assume some of the quarter-over-quarter increase is due to the Snagajob sale. Just curious how you think about the appropriate size for that and kind of maybe building a little bit on the last question. If M&A does pick up, that may give you some opportunity to realize some gains or sell some of those. Just curious how you think about the appropriate size and how large you would let that get before you got maybe you took a more proactive stance to managing that.

David Spreng (Chairman and CEO)

Yeah. Thanks, Erik. We are debt investors. Our job is not to be long-term equity investors. In both the cases that we saw the tick up, it was above kind of that normal core of 2-4% that would arise from warrants or success fees that come attached to many of our deals. It was driven largely by the Gynesonics restructure a number of years ago. We split our loan into two pieces so that the company could raise fresh capital. It was a very successful approach. We did follow on preferred investment because the company was performing. The other area where they will arise is in the event of a troubled situation or suboptimal performance. That is the case of Snagajob, where the sale that we were able to help facilitate with the company was executed as an equity sale.

The goal there was for us to protect the value of the asset. We expect that there'll be cash return on that at some point, not in the short term. That is what drives fluctuations over the normal course. We're always looking at opportunities to realize on that equity portfolio where there's a liquid investment. Last year, we had a warrant position in a portfolio company. We went back to the existing investors. They had just done a new round, and we were able to sell our position out and take a gain. We're always on the lookout for opportunities like that. There may be opportunities going forward with BC Partners to look at some kind of structured equity pieces, but that's not going to move the needle in a significant way on what our core equity portfolio is intended to be.

Erik Zwick (Managing Director of Equity Research)

I appreciate the color there. In terms of the unrealized gain in the quarter, I think it was $16.5 million. Was Gynesonics the primary driver of that, or were there other factors as well?

David Spreng (Chairman and CEO)

There were a mix, but the single largest was definitely Gynesonics.

Erik Zwick (Managing Director of Equity Research)

Last one for me. Are you able to update us on the amount of spillover you have now currently, just in dollar terms or per share value?

David Spreng (Chairman and CEO)

It's not something we've published, but our goal is to maintain at least one quarter of spillover and over the course of this new dividend policy to grow that in the coming quarters.

Erik Zwick (Managing Director of Equity Research)

Thanks for taking my questions this afternoon. Appreciate it.

David Spreng (Chairman and CEO)

Thanks, Erik.

Tom Raterman (CFO and COO)

Please stand by for our next question. We have a follow-up question from the line of Finian O'Shea with Wells Fargo. Your line is open.

Finian O'Shea (Director of WFS Research)

Oh, hey, everyone. Thanks for the follow-up. I was interested in some of the conversation on the BC Partners platform integration. How much is the global deal flow expected to reshape your portfolio? I think in an earlier question, you talked about a lot, the ability to do revolvers, and then on the last question, less so. If you could give us guidance there on sort of the run rate or future split between yours and theirs. I was also a second, a bonus one, interested in the last question on spillover. Were you guiding that you're going to ramp that from one quarter to all the way, like three quarters? Thanks.

Greg Greifeld (Chief Investment Officer)

Yeah. I'll take the first one about the combination. I definitely don't want to give the impression that this will be any sort of wholesale change or anything like that.

If anything, this is more a benefit in terms of it being additive to the pipeline and potential future portfolio rather than us saying, "Hey, we're going to get a meaningful portion of our flow and of our sourcing from BC going forward." I do think that the ability for us to invest in the size loans that we like, the larger loans to later-stage companies, while being confident that we can give a more appropriate allocation to the BDC such that we can drive further diversification is one of the key points and takeaways that I hope you get from this, rather than saying that we expect this to be just a wholesale change or acceleration of our origination efforts.

In terms of things like adding in revolvers or second liens or other types of things that differ from the traditional first-lien senior secured that we've done, I expect that to be additive and for things to help us win opportunities that we otherwise wouldn't have, rather than to go out and say, "Hey, this is a completely different strategy than what we've had historically.

David Spreng (Chairman and CEO)

On this spillover question, Finn, I didn't intend to signal that we were going to grow to some specific number, rather than just say, with the math, the way the target of up to 50% of the delta between the base dividend and NII works is it's likely to build. I don't want you to read anything into that negative or positive in terms of our anticipated earnings. It's just a strategy.

Finian O'Shea (Director of WFS Research)

Thank you.

Operator (participant)

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Tom for closing remarks.

Tom Raterman (CFO and COO)

Thank you, operator. We're proud of the progress we achieved in 2024 that has laid the groundwork for the BDC to execute in 2025. Thank you all for joining us today, and we look forward to speaking with you again in May to review our first-quarter performance.

Operator (participant)

Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may now disconnect.