TriplePoint Venture Growth BDC - Earnings Call - Q1 2018
May 2, 2018
Transcript
Speaker 0
Good afternoon, and welcome to the TriplePoint Venture Growth First Quarter twenty eighteen Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Andrew Olson, Chief Financial Officer.
Please go ahead.
Speaker 1
Thank you, operator, and thank you, everyone, for joining us today. We are pleased to share with you our results for the first quarter twenty eighteen. Here with me are Jim Leve, Chief Executive Officer and Chairman of the Board and Sajal Srivastava, President and Chief Investment Officer. Before I turn the call over to Jim, I would like to direct your attention to the customary Safe Harbor disclosures in our press release regarding forward looking statements and remind you that during this call, we may make certain statements that relate to future events or the company's future performance or financial condition, which may be considered forward looking statements under federal securities law. We ask that you refer to our most recent filing with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements.
We do not undertake any obligation to update our forward looking statements or projections unless required by law. To obtain copies of our latest SEC filings, please visit the company's website at tpbg.com. And with that, I'll turn it over to Jim.
Speaker 2
Thanks, Andrew, and good afternoon. Consistent with our prior statements and earnings calls, we're rock solid and steady ahead, right on our 2018 course and continue to execute and deliver on the 2018 investment strategy and strategic goals we've previously laid out. We're off to an amazing start for the year. The first quarter was another strong quarter of earnings and performance. We have positive developments at several of our portfolio companies.
As you may recall, we've also had the highest portfolio yield last year among the venture lending BDCs and we were the only venture lending BDC to cover its dividend last year. For the quarter, we had several notable achievements, all of which bodes well for 2018. We saw continued growth in our investment portfolio. Last quarter, it reached its highest level since our IPO. We had 165% increase in the dollar amount of new signed term sheet.
These were at venture growth stage companies versus last quarters. We had a 77% increase in new debt and equity financing commitments over the previous quarter. And at quarter's end, we were back in our target leverage ratio range. All of these will contribute to and serve as a fuel for future growth and earnings this year. The demand we are experiencing for venture growth stage lending also continues unabated during the quarter.
Our originations pipeline for venture growth stage companies again hit a new all time high at the end of the quarter. There is no lack of deal flow nor are we finding any reduced demand for debt financing. The demand in fact has only increased every single quarter since the beginning of 2017. At the same time, we continue on our path to diversify our portfolio and generate attractive portfolio yields on a risk adjusted basis. Our weighted average portfolio yield for the first quarter was 14%.
When you exclude the impact of early prepayments, the core portfolio yield was 13.6%. The portfolio continues to show its strength in high quality. During the quarter, Ring announced its acquisition by Amazon and the transaction subsequently closed here in the second quarter. Our reputation and approach have always differentiated us in the market and this exit of Ring, our single largest investment as of the end of the first quarter demonstrates our access to successful and innovative high growth venture backed companies. Ring represented the very definition of the type of venture growth stage companies which we target.
This includes companies that have meaningful enterprise value, differentiated technology or products, substantial equity dollars, very high growth rates, and most importantly, backing from one or more of our leading investors, which are oftentimes cited among the top venture capital funds in The U. S. We are also well into deploying the cash proceeds we received into more great opportunities in venture growth stage companies this quarter. While we're happy with the outcome of Ring and other recent portfolio successes such as MongoDB, Blue Bottle Coffee and others, only one has to take a look at some of the progress in the publicly announced fundraising activity and valuations of some of our current portfolio companies such as Renway and Revolut as basis for our belief that we will continue to see more successful exits in the future. And this doesn't include unannounced developments at other portfolio companies.
To round out the quarter, we're pleased to announce that we received our exemptive relief order providing us with co investment capabilities, which we will serve which will serve as an aid in continuing our portfolio diversification as well as increased deal size capabilities. We also renewed and expanded our credit facilities during the quarter. Andrew will go into more detail on this development. There continues to be great opportunities for us given the state of the venture capital markets. Twenty seven seventeen turned into a record year for venture capital equity investing.
Dollars 84,000,000,000 of venture capital was invested last year, 400,000,000 in the previous four years. The VC asset class continues to attract significant amounts of venture capital and the venture capital funds themselves are actively deploying that capital into new and current investments. In fact, venture capital funds invested more than I'm sorry. Venture capital funds invested more in that first quarter, that's of 2018, than the entire 2009 as a whole, simply for comparison sake. The first quarter also marked the fourth consecutive quarter that venture capitalists invested more than $20,000,000,000 in any one quarter.
To wrap up, I'm going to leave it at our performance, our leading yield profile, our strong credit quality, the size of our pipeline, the activity and progress among our portfolio companies, with our forecast for this year of once again achieving earnings in excess of our dividend speaks for itself. We continue to see great growth opportunities and plan to capitalize on these in a big way in 2018. With that, let me turn the call over to you, Sajal.
Speaker 3
Thank you, Jim, and good afternoon, everyone. During the first quarter, we closed $115,000,000 of debt commitments with four companies and added two new companies to the portfolio. The first was Toast, which offers a mobile, cloud based point of sale and management system that helps restaurants improve operations, increase sales and create a better guest experience. The company has raised over $130,000,000 of equity capital from Vestmoor Venture Partners, GV, the venture capital arm of Google, Generation Investment, which is Algor's investment firm, and others. The second was Quantcast, which is machine learning and artificial intelligence driven direct audience insights and measurement platform.
Quadcast has raised over $60,000,000 of equity capital from Founders Fund, Revolution Partners, Polaris Ventures, Cisco and others. As Jim mentioned, we achieved a record level for our investment portfolio this quarter as a result of funding $38,000,000 of investments with a 13.8% weighted yield to six companies and increased our leverage ratio to 0.73. The majority of the fundings occurred in the last month of the quarter, so they didn't contribute meaningfully to income in Q1. However, at this portfolio level, yield profile and leverage ratio, we cover our dividend from the portfolio without the need for any prepayment related income. Also during the quarter, HP prepaid a £3,300,000 lease tranche for SimpliVity, a mature investment that was roughly eight months away from its scheduled maturity date, which contributed an incremental 0.4% to our core portfolio yield of 13.6% for the quarter, bringing total portfolio yield to 14%, up from 13.5% last quarter.
Moving on to credit quality, there were no changes to the ratings of companies on our watch list during the quarter, and the weighted average internal credit rating of the debt investment portfolio was 2.03. As a reminder, under our rating system, loans are rated from one to five, with one being the strongest credit quality and all new loans are initially generally rated two. So far in Q2, we've signed $80,000,000 of term sheets, closed $70,000,000 of debt commitments and funded $16,000,000 of investments. We expect to deploy all the Ring repayment proceeds into investments this quarter and to reach even higher levels for our investment portfolio. Although as usual, we expect the majority of fundings to occur at the end of the quarter.
Before I hand the call over to Andrew, I'd like to share some thoughts regarding our Board's approval of the modified asset coverage requirements, enabling our asset coverage ratio to change from 200% to 150% effective April 2439, and our intent to submit a proposal to shareholders to approve the application of the reduced asset coverage requirements earlier than April 2439. In particular, the Board approved the modified asset coverage requirement based on the company's strategic objectives, business opportunities, operating requirements, history of prudently using leverage, anticipated leverage utilization and the benefits to stockholders while balancing the risks and other considerations. With regards to strategic objectives, as we articulated on last quarter's call, our highest priority in 2018 is to capitalize on the strong demand for venture growth stage lending and grow the company from an exceptional but small cap BDC to a larger and more diversified BDC. We discussed our plans to achieve this by growing our investment portfolio, using our recently obtained exemptive order to co invest with other funds our sponsor manages and raising more capital both publicly and privately. We believe that having the flexibility to incur additional leverage assists with these objectives by serving as another source of capital to fund the portfolio, especially when equity capital may not be readily available or when it may make sense to delay an equity capital raise until we believe conditions are optimal for one.
We do not plan to change our investment strategy, product mix, security profile or the targeted yield profile and investments we will make as a result of the availability of additional leverage. We see this as enabling us to continue to meet the strong demand and pipeline we have today and we expect to continue to see. Our revolving warehouse credit facility lenders are supportive of reducing our asset coverage ratio below 200 as our credit facility allows us to reduce our coverage ratio to match the statutory limit. And our publicly traded 5.75% notes due 2022, which we raised in July 2017, do not include any restrictions on our ability to reduce our asset coverage ratio. With regards to actual leverage utilization guidelines, we intend to use the additional leverage in a focused and balanced way, and in particular, are expanding our target leverage ratio range to point six to point to one point zero.
So again, point six to one point zero. Given that our debt investments are initially structured as unfunded commitments and once funded, typically have short term durations with amortization and often prepay, we believe there may be periods when we may be below or above this target leverage ratio. We expect to use, however, proceeds from prepayments and repayments as well as proceeds from equity capital raises to reduce our leverage outstanding, but may also maintain liquidity and borrowing capacity in anticipation of new unfunded commitments and investment fundings. We believe that with this approach, we are not changing the risk profile for our shareholders while increasing the potential to drive higher returns on equity through higher net investment income. In closing, I'm pleased to say that we're on track with the game plan we articulated to investors for 2018 and our brand, reputation, relationships and track record continue to differentiate us in the market and with prospective portfolio companies.
I'll now turn the call over to Andrew to highlight some of the key financial metrics achieved during the quarter.
Speaker 1
Thank you, Sergio. And I'm pleased to report our first quarter results. As discussed by Jim and Sajal, we had another quarter of measured investment fundings coupled with continued income growth. We ended the quarter with long investments of $4.00 $1,000,000 up nearly $30,000,000 or 8% from the prior quarter. At quarter end, we held 116 investments in 44 companies with a cost and fair value of approximately $4.00 1,000,000 The company's debt portfolio ended the quarter with a cost of $382,000,000 and generated a weighted average portfolio yield of 14%, including prepayments.
Our core portfolio yield, excluding the impact of prepayments and other activity, was 13.6% or up slightly relative to the prior quarter. At quarter end, 64% of our debt investments carried floating rates, and we project that every 25 basis point increase in prime will generate approximately $03 of additional investment income per share annually. As previously mentioned, we continue to see strong demand and have a robust pipeline of near term opportunities. Our unfunded commitments totaled $124,000,000 to 11 companies, of which $33,000,000 is dependent upon the companies reaching milestones. Overall, our balance sheet is well positioned to meet the demand.
During the quarter, we amended and renewed our revolving credit facility, which included an increase in the total commitment, extended the maturity and improved the economics. Our liquidity as of quarter end consisted of total cash of 18,000,113 million dollars of undrawn availability under a $210,000,000 revolving credit facility. Total outstanding borrowings as of quarter end were approximately $170,000,000 consisting of $75,000,000 of long term fixed rate notes and $97,000,000 outstanding under our credit facility. This put us at a leverage of 0.73, which is within our target range. Given the closing of the Ring transaction here in Q2 and projected fundings to date, we anticipate redeploying the proceeds during the quarter.
Overall, we ended the quarter with $237,000,000 of equity capital or $13.34 per share, up $09 from $13.25 per share in the prior quarter. At NAV, our annualized dividend yield generates nearly an 11% return. Looking at the income statement, total investment and other income was $12,600,000 or $0.71 per share for the 2018 compared to $11,100,000 or $0.64 per share in the 2017. The increase was driven by continued portfolio growth. Our expenses this quarter were $6,700,000 consisting of interest and fee expense of $2,500,000 base management fee of 1,500,000.0 income incentive fee of $1,500,000 and administrative and general expenses of $1,100,000 Overall total expenses increased from $6,000,000 in Q4 twenty seventeen due to higher weighted average borrowing on our credit facility used to fund the portfolio growth.
Net investment income for the quarter was $5,900,000 or $0.34 per share compared to $5,100,000 or $0.30 per share in the 2017. We recognized net realized gains of $8,000 due to foreign currency transaction in the first quarter compared to net realized gains of $2,200,000 or $0.13 per share from the sale of investments in the 2017. We had net change in unrealized depreciation during the quarter of $2,000,000 or $0.11 per share, primarily related to the appreciation of our investment in Ring, Inc, which announced its acquisition by Amazon and slightly offset by mark to market activity on the remaining investment portfolio. This is compared to $3,500,000 of net unrealized depreciation in the 2017 from the recognition of realized gains and mark to market activity. The above activity resulted in a net increase in net assets of $7,900,000 or $0.45 per share compared to $3,900,000 or $0.22 per share during the 2017.
On an annualized return basis, we generated a return on equity of 13.6% based on net income and 10.2% based on net investment income during the quarter ended March 3138. With that, I'm pleased to announce our Board of Directors declared a distribution of $0.36 per share payable on June 15 to stockholders of record as of May 31. This marks the seventeenth consecutive quarter we have increased or maintained our quarterly distribution rate. And now I'll turn it back over to Jim.
Speaker 2
Thanks again, Andrew. At this point, we'll be happy to take your questions. Operator, can you please open the line?
Speaker 0
We will now begin the question and answer session. And our first question comes from Jonathan Bach with Wells Fargo. Please go ahead.
Speaker 4
Good afternoon. Joe Mazzoli filling in for Jonathan. So the first question, so you received co exemptive relief with your private funds, which of course is great news and allocating across the platform provides a path for smaller hold sizes and less concentration within TPVG. So the question is how big are the private funds? And then how much of that can is actually mandated to invest in similar, deal flow as TPVG?
Speaker 3
Yeah. Hey, Joe. This is Sadhul here. So the beauty, I guess, of our private funds is they have a significant appetite for, venture growth stage assets. So we think it's actually a a strength for us in order to, enter into even larger or potentially potentially large transactions and smooth over and diversify investments for TPVG.
We don't comment publicly on the the size of the funds, but we have several 100,000,000, funding capacity available for venture growth stage assets.
Speaker 4
Okay. Got it. Thank you for that. So and then now to the two to one leverage and you provide color there and that was helpful. But you mentioned that you would not change the type of assets that you'd be investing in with higher leverage.
So I'm curious kind of what the financing would look like for this. I mean, you have the baby bond now as well as the revolving credit facility, not a lot drawn under the revolving credit. Is part of the reason the revolver is not used more because of the asset concentration, maybe more diversification would allow for higher If you could just provide some thoughts there broadly.
Speaker 1
Yes. I mean, I think, overall, yes. I mean, currently, the balance sheet gives us ample room to kind of maintain or within our target leverage ratio. But, you know, between co investment and increased leverage, we'll continue to be able to utilize the facility to to its max rate.
Speaker 3
Yeah. I I think at this time, Joe, I think we're we're we think, as we said in some of our filings, it's we see a combination of long term and short term debt is the way to to lever the business up. And so I think we're gonna be opportunistic and thoughtful about optimizing cost and term and tenure. And so the good news is our warehouse facility lenders are not only supportive with the asset coverage allowing us to lower, but they also have some creative ideas to allow us to modify our existing facility to get excess funding capacity plus there are obviously other forms of long term debt that we can explore as well.
Speaker 4
Okay. That's great. Thank you for that. And just one final question. As we think about higher leverage within the BDC, even the leverage targets that you outlined really aren't that different than the initial targets, right?
It sounds like you kind of would just be using it for more headroom, right? But still, the cap that you gave was about one point zero times debt to equity. What is the leverage of the private funds? And, you know, I'm just curious how how how you manage capital privately and, you know, what is kind of the maximum leverage that you think is appropriate for this type of asset?
Speaker 3
Yeah. Well, I I guess maybe the first point is we think the returns speak for themselves. Right? So 14% portfolio yield, 13.6% core yield of of the just the investments on a standalone basis. So as we look at it, we don't need aggressive amounts of leverage or any leverage to to make those returns compelling on a standalone basis to our shareholders.
I think as the the message that we conveyed is we see so much quality demand because of our great relationships with our sponsors, our brand name recognition. And so, you know, there's the potential of of missing out for TBBG to the extent that we approach, you know, the higher end of the older leverage ratio and and, you know, are essentially kind of at capacity and and then have to allocate capital to our private funds, which TPVG would miss out on. So we think, again, the beauty here is the leverage the additional leverage is not intended to, again, to focus on a different segment or lower yielding assets. It's just to help grow TPVG and take on more of these high quality more rings and more revolutes, I guess, is how we describe it. But maybe to answer the other part of your question, yes, we historically have run with higher leverage on our private capital.
And as we have a history of using leverage, using it prudently at the platform, you know, a fifteen year relationship with Deutsche Bank. And so, yeah, we we know how to to use it thoughtfully, and we plan to continue to do so.
Speaker 4
Thank you for that, and and completely appreciate the healthy returns at the asset level. Thank you very much for taking my questions.
Speaker 1
Great.
Speaker 0
Our next question comes from Christopher Nolan with Ladenburg Thalmann. Please go ahead.
Speaker 5
Hi. You mentioned in your prepared comments that you expect with the increased leverage that you'll have higher equity returns. And obviously, you have some data backing that up. Can you give us an indication as to where you think equity returns will improve to?
Speaker 1
I I think overall, just the function of leverage, obviously, it increases the overall returns. Right? So I think given our current targets, you know, we're not we're not fundamentally changing the overall business performance. We're just looking into, in periods where we see opportunities, we'll continue to add those assets to the portfolio. And to the extent we're at the higher end of that, the leverage ratio, we would be able to meet or exceed our dividend.
And in any period where we're at the higher end or above the higher end, we would be in excess of our current dividend rate.
Speaker 5
Okay. As a follow-up to that, assuming higher leverage return brings higher equity returns, is that assuming that your cost of debt doesn't really change or your returns on assets don't really change either?
Speaker 1
Yeah. That's right. I mean, based on based on the returns of the current assets and and fundamentally, we've said we're targeting the same profile of investments with even with or without increased up increased leverage. They generate sufficient return to to be accretive to shareholders immediately.
Speaker 5
Okay. So it's fair to say that you don't expect your debt cost or cost of debt to increase as a function of the higher leverage?
Speaker 1
No. I mean, based on our balance sheet today, we have ample room, headroom within our credit facility to meet our target leverage ratios that we've outlined today. So there's no incremental cost that we're looking at at this point in time. So our cost of capital that we have on our balance sheet today is consistent with what we would expect under the leverage ratio.
Speaker 3
And we'll opportunistic when it comes to other forms of financing, be it long term debt or others. But Chris, to your point, absolutely, I don't think we expect to see any material movement in the cost of the capital, the debt capital.
Speaker 5
The idea on that assumption that you're correct, then we should see the interest rate sensitivity increase?
Speaker 1
I mean, I think right leverage are up. Sure. Sure.
Speaker 5
I mean, I guess,
Speaker 1
right now, like, as I mentioned, about two thirds of our portfolio is floating rate. And to the extent and we we continue to add investments, and primarily, are gonna be floating rate investments. The debt that we'd be drawing to fund those investments is is from our credit facility, which is also floating rate. So it'd be match funding for the most part.
Speaker 5
Okay. Alright. Thank you for taking my questions.
Speaker 0
And our next question is from Casey Alexander with Compass Point.
Speaker 6
I'm looking for a little bit of a clarification of something that you said regarding your credit facility that the sort of the covenants of your credit facility anticipate being good up to the statutory limit. By that, do you mean that assuming when the if the shareholder vote goes through or the year is up on the additional leverage that then your credit facility would support a leverage ratio of 1.5 at that time?
Speaker 1
The answer is on the covenants, yes. The the ultimate underlying borrowing that or the advance rate on the facility is would remain unchanged.
Speaker 3
Yeah. Just to clarify, we don't have a financial covenant restricting or requiring the 200% asset coverage. We the covenant, it matches our asset coverage requirement to the statutory limit.
Speaker 6
Okay.
Speaker 0
Understand
Speaker 6
that once you have access to the additional leverage, you expect a target ratio of 0.6 times to one point zero times. Why wouldn't you raise the bottom side of that and and shoot to maintain something more like point eight to one point o?
Speaker 3
Yeah. Great question, Casey. As you know, these these assets are short term and and prepay, and so we we wanna be mindful of, again, of the the fact that we will have prepayments and we may end up at the lower end or below the lower end for short periods of time. And so I guess we wanted to make sure that folks continue to be aware of that.
Speaker 6
Well, I mean, you've been below the target leverage ratio as it exists now for some period of time. It would seem to make sense that if your strategy is to attach additional leverage to the platform that your target leverage ratio would be higher even on the lower end. Let me ask you a different question. Assuming that there's no shareholder vote and you have to wait the year, would you press above the top end of the existing target leverage ratio, up to 0.85 or 0.9 times, knowing that eventually you're gonna have access to higher leverage regardless of whichever way the vote goes?
Speaker 3
Yeah. Yeah. Well, I guess we run the business as as we're to be thoughtful. And so to the extent that let's ignore the shareholder vote. If we don't have it, it would not make sense for us to run at a higher leverage ratio.
I I think that wouldn't be thoughtful or prudent. It we would not take the target leverage ratio up in the period beforehand. But given, as Andrew mentioned, some of the dynamics, if we had a wave of portfolio fundings and we didn't have prepayments, we would naturally take up the actual leverage by virtue of the fact that we've draw on more of our lines to fund our unfunded commitments.
Speaker 6
Yep. Okay. Great. Thanks for taking my questions.
Speaker 0
Your next question is from Ryan Lynch with KBW. Please go ahead.
Speaker 7
Hey, good afternoon. First one is on leverage. So as you kind of outline your strategy, I can definitely appreciate the strategy. It didn't look like it changed too much, but a little more flexibility maybe on the upside, maybe drive a little bit higher returns. Can you just walk me through the thought process you guys had of why you guys chose not to pursue maybe more balance sheet leverage as well as derisking the portfolio into some more higher quality, lower yielding loans?
That seems like a strategy that some other BDCs have at least discussed pursuing, so just the thought process behind not pursuing that strategy and pursuing the strategy you guys outlined here, which I think is a good one as well.
Speaker 1
Hey, Ryan. Hey, this is Andrew. I'll answer the first part and I'll let Jim Masajo answer the second part of that question. The first part is, overall, our target leverage range has typically it's designed to meet or exceed our dividend from an NII perspective. The low end of the range, we've always said, we will we will meet our dividend coverage level at the low end of the range with prepayments.
The high end of the range, we would cover our dividend absent any prepayments in the portfolio. So really the range itself is designed as a mechanism to ensure that we're being prudent in generating the right amount of returns for our shareholders. Now we increased the top end of that range, a, give us flexibility, but also we see a lot of demand. And so we think there's opportunity to help. There's a benefit to shareholders from a return perspective, from a diversification perspective, and also just from a portfolio scale perspective.
And I'll let Jim answer the second part of the question.
Speaker 3
Yeah. Again, I I think the the pipeline is so strong. The demand is so big. I guess, we that was the strategy we articulated to our shareholders. That's the target yield profile.
That that's what we've, you know, we've been, articulating. So I guess we would view, we don't see any benefit to changing that strategy, and and we don't think we don't find lower yielding, assets as attractive nor do we necessarily believe that there are lower risk given the the growth stage of of the portfolios that we lend to or the companies that we lend to. And, again, I just say we have plenty of demand. We're not desperate for assets, which I'd argue why some may may may need to do that. But, again, I think a 14% yielding portfolio, I don't see why shareholders wouldn't wanna see more of assets like that, assuming it's we stick to our knitting, which we are of, you know, the the select group of top tier VC investors.
Speaker 7
Sure. That makes sense. And I can definitely appreciate you guys sticking the strategy that you guys outlined when you went public and not changing it now just because the leverage changed. You talked about over the really having a robust investment pipeline and really a strong demand for venture debt in the marketplace. We've really seen that come through in your commitments and originations have really been pretty strong over the last twelve months.
Can you just talk about why we've seen an increase in, I guess, investor demand for venture debt over the last several quarters?
Speaker 2
Well, I I guess as I think about it, we we've talked about what what's happening in the venture capital markets and, the robust activity in the growth, in terms of, the fundraising. But recall, we work with just the select group of what we consider leading venture capital investors and they have been raising very, very large funds. There is, a great deal of activity. And to be honest, you know, when you couple our reputation, our references, our relationships, the deals that we have done, the successes we've had, and again, gotta go back to those three r's. I don't wanna say the phone is ringing off the hook, but as you heard I said, we are at an all time high for our pipeline.
So I I like to think as as as I can determine that this is unique to us, unique to the TriplePoint story. I can't speak for others, but we we have been expanding and we plan to continue growing. And again, it's all based on the reputation and relationships that that this pipeline is what it is, the least that we're experiencing.
Speaker 7
Okay. Fair enough. And then just one last one on Rigging. I'm not sure if you guys said this, if I missed it. But as far as you guys realizing or exiting that debt investment in the second quarter, to me, it looks like from our calculations, you guys should realize about $2,500,000 of kind of onetime fees.
Is that in the ballpark?
Speaker 1
Yes. Mean, I think during the quarter during Q1, we marked the position to what we thought the exit value was, and we took a markup of $2,400,000 on just the debt position during the quarter. And then on the warrant position, there was also about $600,000 markup during the quarter.
Speaker 7
Thanks. Those are all my questions.
Speaker 0
Our next question is from excuse me, is a follow-up from Christopher Nolan with Ladenburg Thalmann. Please go ahead.
Speaker 5
Hi. Given that you're limiting your leverage at this point to one point o, is that any sort of consideration for discussions you might have, even long term discussions with the rating agencies?
Speaker 3
Just to clarify, we're not necessarily limiting our our high end. We're just saying our target leverage ratio, again, is point six to to one point o. I'd say, you know, we have not had any conversations recently with ratings agencies. I think we're probably a little too small at this stage for some of the larger ratings agencies. But we're interested to see how it plays out with ratings agencies over time and how that impacts some of the other BDCs out there.
Speaker 5
Okay. Well, understanding that the conversation for with these guys tend to take years, just thinking whether or not does that play into your strategy in terms of not really going above what the rating agencies currently want for their current investment grade rated name? Yeah. I mean, I
Speaker 1
think we we have dialogue with the rating agencies. I think given, you know, our our portfolio size and and our our business today, you know, we don't see the advantage of going out and getting a rating rating agency based on what we what our needs as they sit today.
Speaker 3
I guess maybe more Chris, it wasn't because of that, but it's a benefit of it, I guess, is how I'd answer it.
Speaker 5
Okay. Thank you for taking my follow-up.
Speaker 0
And at this time, I'm showing no further questions. So I would like to turn the conference back over to Jim Labe for any closing remarks.
Speaker 2
Okay, great. Thanks. I think there's been some good questions here on leverage and we certainly love the flexibility from this new legislation. But I want to go right back to what we've said consistently in these calls, which is we plan to continue to stick to our knitting and the quality of the companies that we deal with. And we're really excited in terms of the market and the pipeline we see for the growth outlook here for 2018.
So I'll close by expressing my appreciation everyone for your continued interest and also your support in TriplePoint Venture growth. Thanks and we hope to speak to you again soon.
Speaker 0
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
