Runway Growth Credit Fund, a lender of growth capital to both venture and non-venture backed companies seeking an alternative to raising equity, provided a portfolio update for the third quarter. The company’s primary investor and strategic partner is Oaktree Capital Management.
“During the third quarter, we originated $40 million in new loans as well as $1.5 million in advances to existing portfolio companies for a total of $41.5 million of funded commitments. In a challenging environment, we were able to successfully close one new investment and increase our pipeline, with additional investments expected to close during the fourth quarter of 2020,” David Spreng, CEO of Runway Growth, said. “We are especially pleased to support the growth of new and existing portfolio companies. In our previous Portfolio Updates, we stated we were open for business, with substantial dry powder that we intend to deploy judiciously. We continue to actively review new investment opportunities and provide capital solutions to high-quality, growing companies.”
Total new loan commitments for Q2/20 equaled $40 million, bringing the total loan and other investment originations for the fund to $685 million since launch.
Liquidity and Capital Resources: At Sept. 30, available liquidity and capital resources exceeded $163 million, consisting of cash, $62.5 million in undrawn availability under a $100 million revolving credit facility with KeyBank and CIBC Bank, and approximately $100 million in undrawn equity capital commitments from investors in a second private offering.
Portfolio Construction and Management: At Sept. 30, the company’s portfolio included 22 portfolio company debt investments and 27 equity investments (which includes warrants received in conjunction with debt financings) to a group of companies in technology, life sciences, healthcare information and services, consumer and business services, and internet retail. The portfolio is diversified by industry, region and sponsor. The company has added to the frequency of communications as recent macro and micro economic factors have dictated.
Growth Debt Market and New Investment Activity: While the pace of new investment activity has moderated in comparison with 2019, the company continues to evaluate new transactions, albeit with more restrictive credit standards given continued economic uncertainty. During Q3/20, new opportunities in the life sciences market presented themselves that other verticals would have been served by other sectors of the private credit market prior to the COVID-19 pandemic and associated market upheaval. According to Runway Growth, the market is active and remains competitive.
Runway Growth funded three loans and other investments during the third quarter ended Sept. 30, 2020, including one investment in a new portfolio company and two follow-on investments in existing portfolio companies, as follows:
- $40 million senior secured term loan commitment to new portfolio company, Porch.com, the entirety of which was funded during Q3/20. Founded in 2013, Porch.com is a vertical SaaS company that provides software and services to companies that serve home buyers, homeowners and renters
- $1.5 million advances in total to two existing portfolio companies
During the third quarter ended Sept. 30, 2020, Runway Growth experienced a combination of full and partial liquidity events totaling $21.6 million, including:
- In September, in conjunction with its sale to Royal Phillips, Intact Vascular prepaid its outstanding principal balance of $15.3 million, including interest and associated fees.
- In August, in conjunction with a partial prepayment, Ouster prepaid $3.2 million, including interest and associated fees.
- In July, in conjunction with the sale of certain public equity securities, the fund received $3.1 million in proceeds.
“It is more important than ever to support passionate entrepreneurs not only in growing their businesses, but also in helping them to achieve their visions. We will continue to make prudent growth and venture debt investments as companies seek our financing solutions. We believe that we have a conservative balance sheet with substantial liquidity in the form of cash, unutilized revolving credit capacity and undrawn equity capital commitments. Our strategic and business relationships with our partners remain very strong, including with our largest investor and strategic partner Oaktree Capital Management,” Spreng said.
Runway Growth Capital is the investment advisor to Runway Growth Credit Fund, a lender of growth capital to companies seeking an alternative to raising equity.