Hercules' Solid Q3 Origination Boosts Yearly Growth Target - Analyst Blog

Hercules Technology Growth Capital, Inc. (HTGC) released its portfolio update for third-quarter 2014, which reflected robust loan origination performance, supporting its goal to attain around $700–$850 million of annual new commitments for 2014.

The leading specialty finance company's achievement for the stated quarter mainly involved six IPO registrations and three mergers & acquisitions (M&A) to facilitate liquidity requirements as well as eight new commitments.

3Q14 Origination Activities in Detail

As of Sep 29, 2014, Hercules recorded $147.0 million worth of debt commitments origination. Of these, $31.3 million worth of debt and equity commitments as well as renewals were made to existing portfolio companies.

The remaining amount consisted of new commitments made by Hercules to eight other companies:

Other Liquidity Events

Hercules' Q3 portfolio update included several liquidity events such as IPOs and M&A activities undertaken to capitalize on the evolving technology sector. As of Sep 29, 2014, Hercules held warrant and equity positions in six portfolio companies including Box, Inc., Dance Biopharm, Inc., Good Technology and Zosano Pharma, Inc.

Moreover, the three M&As that took place in the third-quarter are as follows:

In Jul 2014, two of Hercules' portfolio companies – Transcept Pharmaceuticals, Inc. (TSPT) and Paratek Pharmaceuticals, Inc. – entered into a definitive merger agreement.

In Aug 2014, another portfolio company of Hercules – IPA, LLC. was acquired by Roper Industries Inc. (ROP), a diversified technology company. This acquisition resulted in a net gain of around $1.5 million for Hercules.

In Sep 2014, AVG Technologies (AVG) entered into a definitive agreement to acquire another portfolio company of Hercules – Location Labs.

Apart from these liquidity activities, Hercules continued the trimming and rebalancing of its investment portfolios. Further, as of Sep 29, 2014, Hercules received roughly $114.2 million in principal repayments comprising around $82.2 million worth of unscheduled, early repayments.

Overall, Hercules' enhanced Q3 portfolio update continued the strong origination activities visible in the previous two quarters of 2014 as well. This commendable development in originations activities will propel the company's top-line growth, which may be reflected in the upcoming quarterly results.