Trinity Capital - Q3 2024

Executive Summary

• Record total investment income of $61.8M (+33.2% YoY) and record NII of $29.4M ($0.54 per share); NAV rose to $756.8M and $13.13 per share, driven by strong originations and accretive ATM activity.
• Originations and fundings surged to record levels (commitments $629.2M; fundings $459.0M), with 145 portfolio companies; floating-rate debt investments were 76.6% and first-lien mix 80%.
• Liquidity improved via unsecured notes (7.875% due 2029, ticker TRINI) and a $142.5M private notes offering; KeyBank facility upsized to $510M and extended to 2029; leverage increased to ~122%.
• Dividend held at $0.51 per share (19th consecutive consistent or increased regular dividend); NII covered dividend by ~105.9%, supporting distribution stability.
• Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable at time of retrieval, limiting formal beat/miss assessment [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

• “Record third-quarter performance… disciplined underwriting and proactive portfolio management,” with five business verticals fueling growth; platform AUM reached $2.0B.
• Credit quality improved: 98.6% performing (FV basis), nonaccrual FV decreased to ~$22.2M (1.4% of debt portfolio); weighted average internal risk rating rose to 2.9.
• Robust capital markets execution: $115M unsecured notes (TRINI) and $142.5M private notes; KeyBank facility increased to $510M and maturity extended to 2029.
• Quote: “We are… an asset management company in a BDC wrapper and it is awesome for investors” (on internal management alignment and off-balance sheet fee streams).

What Went Wrong

• Realized losses of ~$13.9M (primarily one debt position), partially offset by equipment financing gains; NII margin compressed sequentially given higher interest and operating costs.
• Interest expense rose to $16.9M from $10.8M YoY due to increased borrowings and higher base rates; total operating expenses (ex interest) also rose with headcount growth.
• Analysts flagged concern about rapid growth pace and heavy ATM usage; management defended ATM as lower-cost equity versus overnight offerings (1% vs. 6–8% fees).

Transcript

Operator (participant)

Good morning, ladies and gentlemen. My name is Jim, and I will be your conference operator today. At this time, I would like to welcome everyone to Trinity Capital's third quarter 2024 earnings conference call. All participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. All participants have been placed in a listen-only mode, or, pardon me, I just already said that. As I stated, the call will be open for your questions after the prepared remarks. It is now my pleasure to turn the call over to Ben Malcolmson, Head of Investor Relations for Trinity Capital. Please go ahead.

Ben Malcolmson (Head of Investor Relations)

Thank you, and welcome to Trinity Capital's earnings conference call for the third quarter of 2024. Today, we are joined by Kyle Brown, Chief Executive Officer, Michael Testa, Chief Financial Officer, and Gerry Harder, Chief Operating Officer. Also joining us for the Q&A portion of the call are Ron Kundich, Chief Credit Officer, and Sarah Stanton, Chief Compliance Officer and General Counsel. Trinity's financial results were released earlier today and can be accessed on our Investor Relations website at ir.trinitycap.com. Before we begin, I would like to remind everyone that certain statements made during this call may be deemed forward-looking statements under federal securities laws. Because these forward-looking statements involve known and unknown risks and uncertainties, we encourage you to refer to our most recent SEC filings for information on some of these risk factors. Trinity Capital assumes no obligation or responsibility to update any forward-looking statements.

Now, allow me to turn the call over to Trinity Capital's CEO, Kyle Brown.

Kyle Brown (CEO)

Thank you, Ben. Thanks, everyone, for joining us today. In the third quarter, our strategies performed strongly, helping us deliver record results. Top highlights from Q3 include record net investment income of $29 million, a 26% increase versus Q3 of last year. Net asset value grew to $757 million, up 11% from $680 million last quarter. Platform AUM reached a record $2 billion. In Q3, we made a record $459 million in investments, gross fundings, which was largely driven by $406 million of secured loans and included debt investments to 11 new portfolio companies. Trinity paid a cash dividend of $0.51 per share, representing our 19th consecutive quarter of a consistent or increased dividend. We're proud of our performance in Q3 as our five distinct business verticals continue to fuel our growth and take market share.

As a reminder, our verticals are tech lending, equipment finance, life sciences, warehouse financing, and sponsor finance, which focuses on private equity-backed businesses. Each of our business verticals has its own experienced team to lead originations, credit, and portfolio management functions, giving them the ability to scale efficiently. Our strategic growth initiatives have generated extraordinary momentum, highlighting our commitment to expanding the platform. Trinity Capital is first an alternative asset management company as well as a direct lender. We continue to see efficiencies in scaling our balance sheet at the public company level, and we're now hyper-focused on building out our asset management business to invest in our various business verticals. We're different than externally managed BDCs in that when you buy our stock, you're buying into a pool of diversified assets, yes, but you're also buying into a management company.

We are not like externally managed BDCs that are simply a pool of assets. It's also important to note that because we're an internally managed BDC, our employees, management, and board all own the same shares as our investors. This maintains 100% alignment with our shareholders and a focus on delivering growing returns for our investors. Earlier this year, we expanded into Europe, giving us increased global exposure and better access to an active tech landscape, which in turn allows us to support high-growth companies across multiple continents. We intend to replicate the success that we've had here in the U.S. with our complementary lending businesses in Europe and beyond. Regarding deployment, we maintain a strong investment pipeline, including $650 million in unfunded commitments, leaving us well-positioned for our continued growth.

As a reminder, a vast majority of Trinity's unfunded commitments are subject to ongoing diligence and approval by our investment committee. Credit and underwriting, portfolio management are all fundamental to our success over the long term. We have a unique structure characterized by collaboration between originations, credit, and portfolio teams to manage our inbound opportunities and active portfolio companies. We remain very selective and adhere to a rigorous diligence process. Only a small percentage of inbound deals reach the underwriting stage. This proactive approach greatly mitigates risk and positions us to excel in all macroeconomic cycles. At Trinity, we pride ourselves on three core principles: exhibiting uncommon care for our employees, customers, and stakeholders, two, serving our clients by being partners rather than just money, and three, by providing outsized returns for our shareholders.

Investing in our teams and systems is key to our growth and enabling us to further diversify our investments to create a best-in-class direct lending platform. We are excited about the future and look forward to continuing to capitalize on our momentum as we continue to maximize value for our shareholders. And with that, I'll turn the call over to Michael Testa, our CFO, to discuss financial results in more detail. Michael.

Michael Testa (CFO)

Thank you, Kyle. In the third quarter, we achieved a record total investment income of $61.8 million, resulting in a 33% increase over the same period in 2023. Our effective yield on the portfolio for Q3 was once again an industry-leading 16.1%, and our core yield, which excludes fee income, was strong at 14.9%. Net investment income for the third quarter was $29 million, or $0.54 per basic share, compared to $23 million, or $0.58 per basic share in the same period of the prior year. The increase of $6 million, or 26% year-over-year net investment income growth, is primarily attributable to the continued earnings power of Trinity's growing platform, while the decrease in net investment income per share is mostly attributable to the shares issued over the past year. Our net investment income per share represents 106% coverage of our quarterly distribution.

Our estimated undistributed taxable income is approximately $64.5 million, or $1.12 per share. We continue to reinvest this capital for the benefit of our investors while maintaining a consistent and meaningful distribution. Our platform continues to generate strong returns for our BDC shareholders, with ROAE of 16.2% based on net investment income over the average equity and ROAA of 7.1% based on net investment income over average total assets. As of September 30, 2024, our NAV was $757 million, up from $680 million as of June 30, 2024, and our corresponding NAV per share was $13.13 at the end of Q3, an increase from $13.12 as of June 30, 2024. The increase in net assets per share was primarily due to the net investment income exceeding the declared dividend and a creative ATM offering, partially offset by the portfolio activity and new RSA issuance in September.

During the quarter, we continued to strengthen our balance sheet and enhance liquidity through a variety of capital markets activities. We expanded our ATM program, and in Q3, we raised $80 million in gross proceeds and added an attractive premium to NAV to fund our ongoing portfolio growth. We further upsized our credit facility to $510 million in total commitments, which is diversified across a total of 13 banks. We raised $115 million through the issuance of investment-grade unsecured notes maturing in 2029. And these notes are callable after two years and trade under ticker TRIN. And subsequent to the end of the quarter, we further enhanced our liquidity position by raising $142.5 million of unsecured private placement notes, with maturities ranging from 2027 to 2029. Our reliance on unsecured debt continues to be at a conservative level, and adjusted for the recent private placement issuance is under 30%.

We also continue to realize the benefits of a co-investment in a joint venture and vehicles under the RIA subsidiary, which in Q3 provided approximately $1.6 million, or $0.03 per share, of incremental income to the BDC. During Q3, we syndicated $41 million to these vehicles. As of September 30, we had more than $250 million of assets under management in these private vehicles, providing incremental capital for growth and accretive returns to our shareholders. Our net leverage ratio, which represents principal debt outstanding plus cash on hand, was 1.2 times as of September 30, 2024. Our strong liquidity position, with diverse capital sources both from capital raised by the BDC and through our wholly owned RIA subsidiary, provides Trinity with the flexibility to manage a strong pipeline and be opportunistic in the marketplace.

I'll now turn the call over to our COO, Gerry Harder, to discuss our portfolio performance and platform in more detail. Gerry.

Gerry Harder (COO)

Thank you, Michael. Since our last earnings call, Trinity has continued to focus on executing across our five business verticals, which strengthen and diversify our platform while enhancing our ability to offer customized financing solutions to our evolving client base of growth-oriented companies. We remain dedicated to supporting companies at every stage of their growth journey. At the end of the third quarter, on a cost basis, our total portfolio consisted of approximately 76% secured loans, 18% equipment financing, 4% equity, and 2% warrants. The composition of our portfolio remained consistent with prior quarters, with diversification across investment type, transaction size, industry, and geography. Our portfolio is segmented across 22 industry categories, with our largest industry exposure, finance and insurance, representing 18.1% of the portfolio at cost. This exposure is spread across 15 borrowers and includes both term loans and asset-backed warehouse facilities.

Our next largest industry concentrations are medical devices and space technology, representing 11.4% and 9.8% of the portfolio at cost, respectively. Life sciences-related industries collectively made up 26.3% of our total portfolio on a cost basis. Among our five business verticals, the detailed breakdown of our fundings in Q3 was as follows: 39.8% to tech lending, 29.4% to life sciences, 15.7% to warehouse financing, 9.1% to equipment financing, and 5.4% to sponsor finance. As of the end of Q3, our largest debt financing is to Sierra Space Corporation, which represents 3% of our debt portfolio and 2.8% of our total portfolio on a cost basis. Our 10 largest debt investments collectively represent 22.4% of our total portfolio on a cost basis. Now turning our focus to credit. The credit quality of our portfolio improved quarter over quarter, with approximately 98.6% of our portfolio performing on a fair value basis.

Our average internal credit rating for the third quarter stood at 2.9 based on our 1 to 5 rating system, with 5 indicating very strong performance. This rating is an increase from the average credit rating in each of the last four quarters and is attributable to a combination of credit upgrades to existing portfolio companies as well as strong originations of new credits within the third quarter. As a percentage of the debt portfolio on a cost basis, credits within the lowest two tiers remain virtually unchanged from Q2. Quarter over quarter, while the number of portfolio companies on non-accrual increased from 4 to 5, our non-accrual credits decreased on both a cost and fair value basis. Our portfolio company Nexii was removed from non-accrual as a transaction was fully realized in Q3 at a very slight decrease versus our Q2 net asset value.

Two smaller credits, Sunbasket and FormLogic, were placed on non-accrual within the quarter. At the end of Q3, our non-accrual credits had a total fair value of approximately $22.2 million, representing 1.4% of the total debt portfolio, a slight decrease from Q2. At quarter end, 80% of our total principal outstanding was backed by first-position liens on enterprise, equipment, or both. For our financings covered by all asset liens, the weighted average loan-to-value sits at 22.1%, while over two-thirds of these companies have a loan-to-value of less than 15%. These statistics demonstrate that our portfolio companies are generally not over-levered and are in a healthy position to service the debt, even in instances when our loan may not be in first position. Year-to-date, through September 30, our portfolio companies have collectively raised $2.9 billion of equity, already surpassing the total amount our portfolio raised in all of 2023.

32 of Trinity's portfolio companies raised equity in Q3, versus 26 in Q2 and 22 in Q1. These encouraging stats speak to our portfolio's quality and ability to secure funding in an evolving market. In closing, we want to emphasize that our credit quality and portfolio management are of the utmost importance to Trinity. One of Trinity's hallmarks is that our staff members think and operate like shareholders, and we always strive for resolutions that benefit both our investors and our partners. At this time, we'd like to open the line for questions. Operator?

Operator (participant)

Thank you. Ladies and gentlemen, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is the star and one to ask a question. We'll hear first today from Casey Alexander at Compass Point.

Casey Jay Alexander (Managing Director and Senior Equity Analyst)

Good afternoon. I guess it's still morning here, so good morning. And thank you for taking my question. I think this is sort of a multi-part question, but it's an extraordinary amount of originations during the quarter. And investors have sort of been trained to be somewhat wary of growth that comes at that kind of pace. And so I'm curious how you feel about growing at that kind of pace and still making sure that credit quality stays really pristine. You did have a couple of new non-accruals in this quarter, one of them which is an equipment finance company. And so I think it's just something that investors are always going to keep an eye on when you're growing at that pace. And we'd really like to hear from you how you intend to keep that credit quality pristine when you're growing at such a rapid pace.

Gerry Harder (COO)

Hey, Casey. Good to talk to you this morning. This is Gerry. I'll start out with that one on the multi-part. So we are aware of that sentiment from investors, that wariness. But the way we think about it is the diversification across our business verticals. And we've got extremely experienced individuals who are focusing on these verticals, both leading the vertical market and also leading the credit within the vertical market. So we built Trinity intentionally to scale. And our credit quality is going to show itself over time as it has throughout our track record. So we very much want our investors to believe that, that we've built this to scale, and we're going to show folks that we have.

Casey Jay Alexander (Managing Director and Senior Equity Analyst)

All right. My next question relates to that. Because of the large amount of originations that you had in this quarter, you also sold a considerable amount of stock through the equity ATM program. It actually increased shares outstanding by more than 10% quarter over quarter. If you think about that, that seems like an amount that maybe might be more appropriate for a syndicated stock offering as opposed to being out in the market every day with an ATM program of that size. How do you balance the scales of where you raise equity and the manner in which you raise equity relative to that rate of growth?

Kyle Brown (CEO)

Yeah. Casey, this is Kyle. We're being opportunistic, raising both equity and debt. We're looking at the opportunities in front of us, and we're taking advantage of them. This is a really efficient way to raise equity. We're doing it on balance sheet at the public company level. We're doing it off balance sheet under the RIA. And we're doing it in a way that's accretive to investors. So we'll continue to deploy capital if the opportunity is there. We'll continue to raise equity and debt when the opportunity is there. And we're going to do it in the most efficient manner in a way that's good for investors, which I think we've shown.

Casey Jay Alexander (Managing Director and Senior Equity Analyst)

I'm not sure that entirely answers my question. Because the question was, how do you balance between an ATM versus a syndicated equity offering, knowing that when you're raising equity to that extent, being out in the market every day has some impact on the valuation of the stock?

Kyle Brown (CEO)

You're talking about doing an overnight opposed to an ATM, Casey?

Casey Jay Alexander (Managing Director and Senior Equity Analyst)

Correct. Correct.

Kyle Brown (CEO)

Yeah. I mean, we've done a fair bit of that. I mean, we've been doing it for five years now, and I guess every time we do an ATM, every time we do an overnight, the stock has been affected in a big way. That's probably affected shareholders in a more negative way, and it's more costly. I mean, we use the ATM. It's a 1% fee, 1%, to raise equity. We do an overnight. It's at a cost of 6%-8%. So if we can access the ATM, it costs a lot less. It saves money for shareholders.

Casey Jay Alexander (Managing Director and Senior Equity Analyst)

All right. Thank you for taking my questions.

Kyle Brown (CEO)

Yeah, you bet. Thank you.

Operator (participant)

Our next question comes from Christopher Nolan at Ladenburg Thalmann. Go ahead, please.

Christopher Whitbread Patrick Nolan (Managing Director and Senior Equity Research Analyst)

Hey, guys.

Kyle Brown (CEO)

Hey, Chris.

Christopher Whitbread Patrick Nolan (Managing Director and Senior Equity Research Analyst)

What was the driver of the realized loss in the quarter?

Kyle Brown (CEO)

Yeah. That was one of the positions we noted Gerry's remarks. That was Nexii. That was realized this quarter. Again, we had marked that down, fair value in the past quarters. So from a NAV perspective, it was neutral on that realization. You saw an unrealized flip. So yeah, that was the big driver there.

Christopher Whitbread Patrick Nolan (Managing Director and Senior Equity Research Analyst)

Right. Next question is operating expenses. It seems to be growing. Where are you guys making your investments, and what's the run rate we should expect for coming quarters?

Kyle Brown (CEO)

Yeah. I think Q3, you saw that tick up. Again, we've been making hires throughout the first half of the year and into this quarter, as Gerry said, building out the five different verticals and each of the teams underneath that. So I think Q3 is probably a good run rate you'll see for the next quarter or so.

Christopher Whitbread Patrick Nolan (Managing Director and Senior Equity Research Analyst)

Great. Final question. For these off-balance sheet vehicles, what's your threshold in terms of an IRR? I know you're looking at various strategies, but I'm trying to see what's the minimum IRR that you seek from them?

Kyle Brown (CEO)

I mean, right now, since it's a co-investment vehicle, the return should be very similar to the return on an investment in TRIN stock. So I think the profile, again, we expect having fees also to increase the IRR in these off-balance sheet vehicles. But yeah, I think overall, to the investor of that off-balance sheet vehicle, it would be very similar to TRIN.

Christopher Whitbread Patrick Nolan (Managing Director and Senior Equity Research Analyst)

For me. Thank you.

Kyle Brown (CEO)

Thanks.

Thanks, Chris.

Operator (participant)

Bryce Rowe with B. Riley. You have our next question.

Bryce Rowe (Analyst)

Awesome. Thank you. Good morning. A couple of questions here, maybe just to piggyback on Chris's question about expenses. Obviously, in growth mode, you've been growing the expense base. One advantage that internally managed BDCs have, and you can see it with Main, Hercules, Capital Southwest, is a much lower kind of operating leverage ratio, expense ratio, well below 2% in at least two of those three cases. You all are maybe a little earlier in your stage of growth at this point. Kyle, maybe you can just comment on when you think you might see the inflection point in terms of your leverage ratio or expense ratio from a 3% to maybe 3%-4% level right now and maybe working its way down. At what point will we start to see that inflect?

Kyle Brown (CEO)

Yeah. I think, listen, I mean, it's apples and oranges when you're comparing us to even a Capital Southwest. I mean, we've got 100 employees, nearly 100 employees, and they've got 30. We have fundamentally just different businesses. And so we're building this business right now. We are hiring. Our expenses, we're not optimizing for lowering our expenses right now for earnings. We're growing earnings. And so you will see that as we continue to scale. You'll see that number come down. But we've been able to continue to build a team hire in advance and grow earnings for investors at the same time. And I think you're going to continue to see that. There will be economies of scale. You will see, like Main Street, they have a thriving off-balance sheet management business now. And they've been able to downstream some of their expenses there.

You'll see that with us as well. And so I think over the next 12 months, you'll see that number probably from a ratio percentage come down. But we are growing this business. If opportunity is there for us to continue growing, we're going to keep doing it. We're going to keep hiring ahead of that, like we've done historically, while also increasing returns for investors at the same time. We've been able to do that.

Bryce Rowe (Analyst)

Yep. Understood. Not trying to say that I get the apples to oranges, but just thinking about holistically the benefit of internally managed and why internally managed BDCs trade at a premium, and I think that's part of it, the fact that you can capture operating leverage as you grow, so appreciate the insight.

Kyle Brown (CEO)

Yeah. You'll see that with us. And you'll see that leverage. You'll also see that as we continue to manage more money off-balance sheet and generate more management fees and incentive fees. You'll see that benefit as being an internally managed business as well there.

Bryce Rowe (Analyst)

Yeah. Okay. The hiring and the focus on growth has certainly paid off in terms of originations picking up, and especially here in the third quarter. Just kind of how should we, as I guess investors and analysts, think about the pace of originations? Can you sustain this level of originations over the foreseeable future, or will it be kind of more ebbs and flows in terms of what the overall number looks like?

Kyle Brown (CEO)

If you break down the originations between our different business verticals, you'll see it's pretty balanced. Each of those verticals is growing at a nice clip right now. We do think the originations is sustainable. We are a little bit ahead of plan, but it's really not. We don't feel like we're over our skis from an origination standpoint. Most of those deals, our credit and our underwriting is as focused as ever. And we're not seeing some increased percentage of deals get across the finish line. This is exactly how we've done things historically. The amount of deals that are crossing the finish line, that percentage has not changed. And so we're seeing a larger top of funnel because we've expanded the business verticals. And so as we continue to build out these businesses, we think the originations is sustainable for us.

Bryce Rowe (Analyst)

Okay. Last one for me. When you look at maybe the breakdown of the portfolio, it looks like the warrant portfolio saw a nice uptick both from a cost basis and fair value basis perspective. Is that just purely a function of getting warrants with some of the new originations?

Kyle Brown (CEO)

Yeah. I mean, yeah, a lot of that has to do with the venture debt business. And you see we have a large warrant portfolio. As the market improves, that can go up. And so we're seeing some of the benefits of that there.

Bryce Rowe (Analyst)

Yeah. Okay. All right. Thanks so much.

Kyle Brown (CEO)

You bet.

Operator (participant)

Matthew Hurwitz at Jefferies. Please go ahead and.

Matthew Hurwitz (Equity Research Analyst)

Hi, guys. Just wondering if we could have a bit more detail on the puts and takes from the non-accruals decreasing quarter on quarter? I know you mentioned Nexii and then two companies that were added, but it might be good to have some detail on those two companies and any other puts and takes.

Ron Kundich (Chief Credit Officer)

Sure. Hey, Matthew. This is Ron Kundich, Chief Credit Officer. Thanks for the question. The two companies that were added to the non-accrual last quarter, one of them was a small equipment financing, and the other one was an aged term loan in our venture debt practice. I'd call it a "normal transition," right? Nothing abnormal about those two credits. They just got to a point where we prudently put them on non-accrual. Of course, Nexii rolled off as a result of recognizing that transaction during the quarter. The most important note is, as we look at our non-accruals, that credit bucket decreased on both a cost and a fair market value basis, Q3 versus Q2. So consistent with the other things you've heard in the Q&A here, the underwriting rigor remains strong at the top of the funnel or at the top of the portfolio, if you will.

Important to note that each vertical, as Gerry alluded to, has its own distinct team. Included in that team is a portfolio management team that manages each portfolio and their experts in their respective verticals.

Matthew Hurwitz (Equity Research Analyst)

Okay. Great. Thanks. And then could you just provide what the timeline typically is to get from a signed term sheet to a commitment, and then from a commitment to a funded loan? I can see that they've all grown nicely, but yeah, if you could provide some color there.

Kyle Brown (CEO)

Yeah. It really depends on the business. But I think, generally speaking, 90-120 days from start to finish. Yeah.

Matthew Hurwitz (Equity Research Analyst)

I see. So from signed term sheet to funding. Okay. And then.

Kyle Brown (CEO)

Oh, signed term sheet to funding. Yeah, 45 days.

Matthew Hurwitz (Equity Research Analyst)

Okay. Okay. Great. And then last, if I could just ask how you think about the dividend and when to increase it? There's some discussion of rates impacting earnings. So just your thoughts there.

Kyle Brown (CEO)

Yeah. I think we've kept the dividend steady. We certainly could have increased it, but we're really focused on just keeping it stable, building earnings per share, seeing some of that NAV growth, and then we'll, with the board, decide on when to increase it. So our goal as an internally managed BDC with managed funds now is to grow earnings over time and grow the dividend over time. So that is our stated goal. We'll decide on a quarterly basis when to bring that up as we see earnings continue to drive forward.

Matthew Hurwitz (Equity Research Analyst)

Okay. Thanks.

Kyle Brown (CEO)

You bet.

Operator (participant)

Finian O'Shea with Wells Fargo Securities. Please go ahead. Your line is open.

Finian O'Shea (Managing Director and Senior Equity Analyst)

Hey, everyone. Good morning. A lot of discussion on internal today, but seeing you're only getting maybe a touch of credit for that in your stock price. We're seeing if there's any appetite to flip over to external and how you would look at that sort of debate? Thank you.

Kyle Brown (CEO)

No. We're not doing it. We're not thinking about it. This internal structure is ideal for what we do. We have done a great job of raising capital through the public markets, through the capital markets. We've delivered a best-in-class return to investors. We have delivered over $8 per share since we went public. We've raised over $1 billion of equity and debt. We're now raising money off-balance sheet. All of the management fees and incentive fees 100% go to investors. We can drive up earnings per share. We can drive up and be best-in-class ROE. We are an asset management company in a BDC wrapper, and it is awesome for investors. We are not ever going to do that. We're not thinking about it. And we are this growth story with a really consistent and great dividend, Ben. So that's what shareholders need to know.

That's what they need to understand. And hopefully, over time, we'll get the price that we deserve, which is much higher than where it is right now. And I think our shareholders are pretty excited about what we're doing.

Finian O'Shea (Managing Director and Senior Equity Analyst)

Very good. Thanks so much. That's all for me.

Operator (participant)

Our next question will come from Paul Johnson at KBW.

Paul Conrad Johnson (VP and Equity Research)

Yeah. Good morning. Thanks for taking my questions. Just wanted to ask, and I'm sorry if you said it on the call, I just didn't catch it, but how are just the AUM collectively and the JV and the RIA? How's that been scaling? I think it was close to about $500 million last quarter. Is there any growth there this quarter versus last?

Michael Testa (CFO)

Yeah. Paul, this is Mike, we did syndicate close to $40 million this quarter. Our off-balance sheet just continues to ramp. So I think you'll see that. Again, in the joint venture, there is a bit of seasoning that goes on. So a lot of the prior quarter fundings get syndicated the following quarter. So you'll see that next quarter from this quarter in the joint venture. But then also the vehicle, the private vehicle under the RIA subsidiary, that's just going to continue to ramp. We are looking to obtain leverage and a bank facility for that. So building up capacity in that vehicle as well.

Paul Conrad Johnson (VP and Equity Research)

Great. Thanks for that and then one question on the improvement in the credit rating. I think Bryce may have asked this question, but so the improvement of 2.9 versus 2.7, is that primarily just due to the strong growth this quarter, or were there meaningful upgrades in credit ratings, and my second question to that would be, can you just remind us for any new investments, I guess, for a new company, new platform investment, where do those get placed in terms of the sort of default credit rating initially when it's placed into the portfolio?

Gerry Harder (COO)

Hey, that's a great question. This is Gerry. I can take that. So yeah, we did see improvements this quarter. Now, some of it is a little bit of rounding, right? So it was 2.7 something now to 2.8 high something. So it looks maybe a one decimal place, like a bigger jump than it is. But nonetheless, we did have. We spoke in our prepared remarks about the amount of capital that our portfolio companies raised. They had a great quarter, right, in terms of capital raising. And so the two biggest factors within our credit rating system are cash runway and performance to plan. And so you can imagine cash runway improving for a number of credits that did raise capital. When we bring in new credits, they will generally land around that high end of what we call performing.

So in that 2.9, 3.0 range, we like our new credits to show us for a bit before we place them in one of the upper tiers. But I think we did bring in a very strong cohort this quarter. So I think the uptick was a function of capital raising, portfolio companies performing well, and strong originations, kind of in equal parts.

Paul Conrad Johnson (VP and Equity Research)

Got it. Thanks. That's very helpful. And then just a quick question on the European expansion. I guess, how is the foreign exposure? How would that affect the non-qualified assets in the portfolio? I don't think it's a very big piece of the portfolio, but would that require any kind of second credit facility or any sort of multi-currency facility to be able to expand that business? And how would that flow through, I guess, the income statement? Because I think I may have seen that some of those loans pay in dollars, but if you could expand on that, that'd be helpful.

Kyle Brown (CEO)

Yeah, Paul. I'll start, and then the rest of the team will chime in. From a non-qualified bucket, as you mentioned, European or foreign investments would fall under there. Right now, that bucket is overall, all the non-qualified assets are about 13%. So plenty of room in that bucket to continue to fund those assets that are foreign. Right now, the majority of our loans and financings are all in U.S. dollars. As you mentioned, we do have the ability to lend in a foreign-denominated currency, which we could utilize a credit facility in that foreign currency to minimize the FX risk. Yeah. Our goal there is just to repeat what we've done here over there. And with the RIA, it gives us the ability to raise capital.

So when we do start having some issues maybe with growth there, with the size of that bucket, we have the ability to raise capital in a vehicle that's dedicated just to that purpose. So we have a really great opportunity to grow it. We have a great opportunity to raise additional capital dedicated to those investments.

Paul Conrad Johnson (VP and Equity Research)

Got it. Thanks for that. And then I would imagine that you're looking at a lot of new sponsors for that market. I guess if that's true, I mean, what is kind of the threshold for a new deal, a new sponsor? Is there a deeper diligence process just because it's a new market? How does that work?

Kyle Brown (CEO)

Yeah. I mean, Ron, you can jump in as well here, but we're not doing anything that we haven't done historically, so we've been doing business in Europe at a smaller scale for 10 years, and so deals have to go through the same exact process.

Ron Kundich (Chief Credit Officer)

This is Ron. It's the same underwriting rigor that we use here in the States. The gentleman we've brought on to lead that effort is a venture debt pro who's been lending to venture-backed companies out there for over a decade. And he's a known quantity. He's known to us. We didn't hire a stranger, right? We hired someone that we have some track record with on a personal level as well. So the question's a good one, but for now, it's same marching orders, same underwriting criteria. Gerry mentioned a couple of the portfolio criteria earlier in an earlier answer. So same process.

Gerry Harder (COO)

Yeah. And as we build out that team, we're going to bring in individuals who are experienced doing business in that geography, right? We're not looking to send over from Phoenix or the Bay Area. We're going to grow that team with folks that are in markets in the U.K.

Paul Conrad Johnson (VP and Equity Research)

Got it. Appreciate that. It's helpful. That's all for me. Thanks.

Gerry Harder (COO)

Thank you.

Operator (participant)

Our next question comes from Doug Harter with UBS.

Doug Harter (Director and Senior Equity Research Analyst)

Thanks. Hoping you could talk about your outlook to continue to grow the RIA channel and kind of how we should think about the operating leverage for that to fall to the bottom line for TRIN shareholders?

Gerry Harder (COO)

Hey, Doug. Yeah, we're really focused on raising capital for the RIA, both as a kind of co-investment vehicle across the platform and then also raising capital specifically for our different verticals and getting the appropriate leverage for the different risks that each of those businesses take. And so that's a big focus for us now and into next year. Our goal there is to raise capital where we can charge management fees and incentive fees, all of which will flow to our investors. It's going to be a big part of our future. I can't give you specific numbers. I hope to give you more detailed information in the not-so-distant future. But raising capital is a slog. It's difficult. It's hard. It takes a long time to raise capital privately. And we have been at it for a while. We've seen some success.

We hope to see more of it in the not-so-distant future.

Doug Harter (Director and Senior Equity Research Analyst)

Great. Thank you.

Gerry Harder (COO)

Bye.

Operator (participant)

That concludes our Q&A portion for today's conference. I'm pleased to turn the floor back to CEO Kyle Brown for any additional or closing remarks.

Kyle Brown (CEO)

Thank you. We're proud of the third-quarter results and look forward to updating you on our 2024 results during our next call in February. Also, we look forward to seeing many of you at our investor event in Manhattan on November 19th. If you'd like to attend, please contact our head of investor relations, Ben Malcolmson. I'd like to thank everybody for participating in our call today. We appreciate your interest and investment in Trinity Capital. Have a great rest of your day. Thanks.