INTRODUCTION

As its shareholders will know, Triple Point Venture Growth (TPVG) in the last three full calendar years has booked huge amounts of realized and unrealized losses, aggregating ($220mn) over the period. Not surprisingly, one of the results has also been – as the chart above demonstrates – a drastic decline in the BDC’s Net Asset Value Per Share (NAVPS) – (38%) over the 12 quarters involved.

Earnings – boosted by higher interest rates – stayed reasonably high, increasing from $1.33 a share in 2021 to peak at $2.07 in 2024 before dropping in 2024 to $1.40, largely due to income lost from realized losses and continuing non-accruals.

As to distributions, those increased from $1.44 per share in 2021 to reach $1.60 in 2023 and dropped to $1.40 in 2024. However, with a (25%) reduction in the quarterly dividend since mid-2024, the annualized dividend rate is currently $1.20 – a (17%) drop over the 2021 level and (25%) down from 2023.

Stock Price Impact

The market being every efficient, TPVG’s stock price has been in constant descent since November 2021 when it peaked intra-day at $19.25.

Resurgent

However – and as you might be able to see from the chart if you look very closely – since April 7, 2025 when TPVG fell intra-day to a price of $5.53 – the stock has been on an upward move. This optimism was given further credence a month later when TPVG – for the first time in a long time – reported a slightly higher NAVPS in the IQ 2025 over the level at the end of 2024. At the close on June 9, 2025, TPVG traded for $7.29 – a 32% increase off its low.

ANALYSIS

Leveling Off

As the NAVPS chart shows, TPVG’s book value has been leveling off of late. That’s – partly – thanks to an increase in the BDC’s investment In Revolut which was valued at $14mn at the end of the IQ 2024 and increased to $37mn by the end of the year and saw the BDC sell a portion in the IQ 2025, which accounts for the realized gain in the quarter.

Furthermore, in the IQ 2025 at least, unrealized losses on the credit portfolio were very modest: ($1.6mn) on $632mn of debt investments.

Also on the positive side, a portfolio company called Outfiterry GMBH was upgraded by the BDC from a rating of 3 – on its own 5 point scale – to a 2.

TPVG explained on its earnings conference that this was:

“Part of its announced merger with Lookiero, where our loans were assumed in full and extended. The combined business, which will continue to focus exclusively on European markets, announced they are projected to generate over $130 million in revenues this year”.

TPVG – IQ 2025 Conference Call Transcript

This reduced the aggregate value of TPVG’s under-performing assets from $116mn to $86mn.

Current Situation

That leaves TPVG – by its reckoning – with 9 under-performing companies out of 44 borrowers.

Of these, 4 are on non-accrual with a cost of $38mn and a FMV of $26mn.

TPVG currently rates its chances of any material loss on these investments as negligible ($56K to be accurate in Synapse Financial Technologies).

A Couple

Speaking of the BDC Credit Reporter… Our sister publication has been reviewing each portfolio company in turn and identified 2 that deserve attention and whose future performance could affect TPVG for good or ill: Flink SE and Hydrow Inc.

One is an online supermarket serving European customers and the other involved with “connected, immersive indoor rowing machines and digital fitness solutions”. These two companies account for about $5.6mn in annual interest income and $44mn of FMV.

For the back stories on both – and the other 9 under-performing TPVG businesses we have identified, check out the BDC Credit Reporter.

Time’s Up

Harder to quantify but also of concern are the many companies whose debt is coming due this year.

We count 10 – not including the companies already on non-accrual.

If new equity and/or debt financing cannot be arranged in, what by general consensus, remains a difficult fund raising market more non-accruals and prospective realized losses could pop up.

We worry especially about borrowers who’ve been paying TPVG all along on a Pay In Kind (PIK) basis.

Should they fail to get new financing both principal and accrued interest could be at risk.

Changing Horses

Most of the problems TPVG has faced – and discussed in this article – have pertained to credit problems past and current.

Unfortunately, though, the BDC in the next 3 years is likely to see its profitability shrink for reasons outside of credit and which have not materially impacted results, but are likely to.

Challenge Number One

Like many BDCs, TPVG borrowed heavily in the fixed income market in the low interest years. Virtually all of its borrowing ($375mn out of $380mn) is in the form of unsecured notes that come due in 2026-2028.

Going by what the BDC recently paid for its Revolver and unsecured notes, the $320mn debt maturing in 2026 and 2027 is likely to cost TPVG a good deal more than the 4.5% and 5.0% they are currently paying.

As recently as February of 2025 TPVG issued new unsecured debt at a rate of 8.1% for just 3 years out. We’d guess that the current interest rate TPVG might have to pay to refinance its 2026 debt might be 8.5% – 4.0% more than the existing interest rate.

The debt maturing in 2027 yields 5.0%.

We calculate that the refinancing of these two notes could result in ($12mn) a year in higher borrowing costs by 2027.

To put that into perspective, the BDC’s NII in 2024 was $55mmn.

It Could Happen

The other risk to its P&L that TPVG faces is – ironically enough – is a lower SOFR rate.

The 10-Q shows that if rates drop 50 basis points, the annual impact would be ($1.1mn) of lower NII and ($2mn) if the decrease is 100 basis points.

That translates to a per share drop of 3 cents for a modest Fed reduction and 5 cents per share on a bigger reduction.

As of the latest quarter, TPVG’s Net Investment Income Per Share (NIIPS) was $0.27.

BTW

For the moment, management is relying on its reserves of undistributed taxable income, but at some point those will run out and TPVG may have to cut its dividend again.

The Return

Finally, TPVG’s external manager is not currently receiving an Incentive Fee due to the terms of the compensation arrangement and also due to a fee waiver that applies through the end of 2025.

At some point starting in 2026, though, the Incentive Fee will – one assumes – get charged again.

Going by the IQ 2025 P&L annualized, the external manager would be able to charge ($0.20) per share of Incentive Fee in a year.

Analyst Projections

The analyst consensus is that TPVG will earn $1.17 in 2025 and $1.04 in 2026.

Our analysis suggests the numbers could be materially lower if we get some combination of further credit problems; higher borrowing cost and the re-introduction of Incentive Fees.

A back of the envelope calculation suggests that by the end of 2026, the BDC’s running rate of annual NIIPS could feasibly drop to $0.55-$0.80.

VIEWS

Maybe

There is an argument to be made that TPVG’s long streak of losses and NAVPS decline might be at an end.

The likely unrealized write-back of Outfittery in the IIQ 2025 could be helpful in this regard.

Known Unknowns

However, what happens at Flink SE, Hydrow and the remaining values of 8 other underperformers could spoil the party.

Then there’s always the risk at TPVG – and for every other BDC – that previously performing portfolio companies could deteriorate.

Those 10 companies with debt coming due in 2025 are a real concern, although TPVG has the liquidity to support many of them if deemed necessary.

Main Risk

As we’ve noted, though, the BDC’s earnings could be headed south regardless as higher borrowing costs and renewed Incentive Fees roll in over the next two to three years.

Up to a point, management can for a time soften the Incentive Fee blow by continuing to waive its compensation in whole or in part.

However, there’s little to be done about the higher interest expense burden that began this quarter with the rewpayment of TPVG’s 2025 notes and which will be compounded in 2026 and 2027.

For most BDCs lower interest rates from the Fed ae both blessing and curse as investment income drops but is partly offset by lower rates paid on floating rate borrowings.

However, TPVG will feel the impact of lower rates but benefit only a little for some time to come.

Bottom Line

All in all, whatever happens to TPVG’s book value, the BDC’s earnings power – and the sustainability of its just reduced dividend – is in question.

We may not see the impact in the next quarter but within a year or so all the chickens we’ve written about could have be roosting.