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TriplePoint Venture Growth BDC Corp (NYSE:TPVG)
Q4 2019 Earnings Call
Mar 4, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the TriplePoint venture Growth Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions]

After the speakers' remarks, there will be an opportunity to ask questions and instructions will follow at that time. This conference call is being recorded and a replay of the call will be available as an audio webcast on the TriplePoint Venture Growth website. Company management is pleased to share with you the results of the company for the fourth quarter and fiscal -- full fiscal year 2019

Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board; Sajal Srivastava, President and Chief Investment Officer; and Chris Mathieu, Chief Financial Officer.

Before I turn the call over to Mr. Labe, I would like to direct your attention to the customary safe harbor disclosure in the company's press release regarding forward-looking statements and remind you that during this call, management will 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.

You're asked to refer to the company's most recent filing with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. The company does not undertake any obligation to update any forward-looking statements or projections unless required by law.

Investors are cautioned not to place undue reliance on any forward-looking statements made during the call, which reflect management's opinions only as of today. To obtain copies of our latest SEC filings, please visit the company's website at www.tpvg.com.

Now, I will turn the call over to Mr. Labe.

James Labe -- Chairman and Chief Executive Officer

Thanks, operator, and good afternoon, everybody. The fourth quarter was strong and helped us achieve a great finish to 2019. We set some new annual records and delivered excellent returns to our shareholders, as our venture lending platform continued to perform well. We're also encouraged by a great start to the New Year, which continues our momentum on a path toward good results in 2020.

Before covering the quarter's result, I'd like to share few highlights from 2019, as well as some notable achievements since our IPO, which was only six short years ago this very month. Our story has been one of continued growth, performance and strong returns for our shareholders.

Since the IPO, we've made cumulative commitments of more than $2.4 billion. We've made cumulative investment fundings of more than $1.5 billion. We increased our investment portfolio fivefold, and we also paid out $8.52 per share in distributions, which provided a cash-on-cash aggregate return of more than 56% on our original $15 per share IPO price.

In 2019, as I mentioned, we also set new annual performance benchmarks for our business, including record investment income, which was also up 13.5% over 2018, record net investment income, record portfolio growth to a level that was up 45% over the prior year, and an all-time record as well in investment funding, which was also up 58% over the prior year. We also over-earned our dividend for the year, resulting in a spillover income for this year.

In addition, in 2019, we had three IPOs occurred within the portfolio: CrowdStrike, Medallia and Fiber, and we had another three companies, which were acquired. We also increased our funding capacity under our credit facility, obtained our first investment-grade rating ever, achieved a return on average equity of more than 12% and made very good progress toward diversification within the portfolio.

Sajal and Chris will be providing more detail, but I'd like to wrap up and quickly turn to a few high-level fourth quarter accomplishments we're especially proud of. These include setting a new quarterly record in portfolio investment fundings. In fact, a doubling over the previous quarter. And new debt and equity commitments, which were up 44% over the previous quarter.

On top of this, TPC ended the quarter with an all-time high in its originations pipeline size, which should translate into new business for our company in 2020. So we're continually asked what makes us special and how do we achieve these results? For sure, it's our experience in our reputation and relationships.

Although TPVG is only six years old, we're not new to venture lending as the senior members of our management team each have decades of experience, and we were among the first to develop the investment class now known as venture lending.

Our sponsor, TriplePoint Capital, was founded more than 15 years ago by the senior team and is a leading global financing provider to venture capital-backed companies across all stages of their development. We believe our direct relationships, both with our leading select venture capital investors and with our companies, provides us with an edge in the marketplace.

As a footnote, we sometimes get asked about today's market conditions and outlook, given current broader global concerns and macroeconomic development. While the venture capital ecosystem in the markets we operate in are not totally isolated or insulated, they are not affected by such global and macro concerns as directly as a broader national and global trading markets might be.

We work with a select group of venture capital investors, who combined, have raised more than $50 billion in the last four years. In fact, several raised more than $20 billion collectively last year, 2019 alone. These firms have considerable dry powder to support their existing companies and make new investments. Overall, the US venture capital market remains healthy and activity continues to be robust.

In 2019 alone, total capital raised for US venture funds as a whole reached $46.3 billion according to the NVCA, which is the National Venture Capital Association. This marks the second highest annual total in the past decade.

In the late-stage venture market segment, which includes our venture growth companies, the deal count surpassed 2,500 for the first time ever in 2019, finishing the year at nearly 2,600 deals, totaling more than $85 billion invested.

While we're proud of TPVG's performance last year and the previous six years, it's only the beginning. We plan to build upon the success in the years to come in, as I mentioned, we're already entering 2020 with the largest originations pipeline in our sponsor's history. That's important, because TPVG's portfolio is driven by the originations pipeline, among other factors, which helps drive earnings growth. We will stay on our path to achieve our 2020 goals and objectives, while this market demand is strong and deal flow continues to increase.

We can continue this performance, while maintaining our underwriting standards, pricing and investment strategy because of the strength and reputation of the TriplePoint's global platform.

We will also continue to run our business by the four Rs, with the first three being reputation, references and relationships. And as we continue to say, if you're doing the first three right, you will get the fourth R, which is returns. I can't overemphasize reputation and its importance in the venture capital community and venture ecosystem. It's at the very heart of our business.

I'll now turn the call over to Sajal.

Sajal K. Srivastava -- President and Chief Investment Officer

Thank you, Jim, and good afternoon, everyone. During the fourth quarter, we signed $114 million of term sheets with venture growth stage companies at TriplePoint Capital and closed $129 million of debt commitments with 10 companies at TPVG. On a fiscal year basis, we signed $869 million of term sheets and closed $507 million of debt commitments with 29 companies at TPVG.

As Jim mentioned, we achieved the record level for our investment portfolio this quarter, as a result of funding $171 million of debt investments, with a 13.5% weighted average yield to 16 companies. We also invested $200,000 of equity in one company and received the warrants in 15 companies valued at $3 million. On a fiscal year basis, we funded $418 million of debt investments to 33 companies, as compared to $264 million to 24 companies during fiscal year 2018.

During Q4, we had $31 million in portfolio company prepayments, which contributed to our 15.3% overall weighted average quarterly portfolio yield. Without prepayments, our portfolio yield was 13.1%.

During the quarter, we also received $7 million of scheduled amortization and repayments. During 2019, we had $164 million of portfolio company prepays, as compared to $186 million of prepays in 2018.

Core portfolio yield was stable despite the reduction in the US prime rate during 2019. As a reminder, since December 2018, the US prime rate has been reduced from 5.5% to 5% and during Q4 was at 4.75%.

As of Q4, 30% of our funded debt investments were fixed rate loans and 70% of our funded debt investments were floating rate loans. Of those floating rate loans, 83% had prime rate floors set to 4.75% and, in fact, 67% had prime rate floors of 5% or higher. Given the prime rate drop now to 4.25%, I'm pleased to say that 96% of our floating rate loans have a prime floor set to 4.25% or higher. So we are well-positioned in a decreasing rate environment, especially given our warehouse credit facility is based on a variable rate as well.

We further believe we're insulated from declining rates, based on our unfunded commitments. Of our $226 million of unfunded commitments, 59% have prime rate floors set to 4.75% or higher, 62% have prime rate floors set to 4.5% or higher, and 100% have prime rate floors set to 4.25% or higher.

As we originate new loans, we generally focus on total debt return thresholds. So we adjust our target spreads based on the then current prime rate and set it as the floor, so well protected in a decreasing rate environment and increasing when prime goes up.

Moving on to credit quality. The weighted average investment ranking of our debt investment portfolio was $1.94 at the end of Q4, as compared to $1.97 at the end of the prior quarter. Under our rating system, loans are rated from one to five, with one being the strongest credit rating and new loans are initially generally rated two.

During the quarter, three companies were upgraded from White to Clear, one company was downgraded from White to Yellow, and we downgraded one company, Harvest Power, from Orange to Red.

As we mentioned in our equity offering prospectus in January, during Q4, we've reduced the mark on our loan to Harvest Power from $7.5 million to $4.2 million as a result of the company completing an accelerated process to sell and liquidate assets. We received $2.4 million against the $4.2 million recovery value in Q4 and expect to receive the remaining $1.8 million in the first-half of 2020.

During the fourth quarter, we had $1.5 million of the unrealized loss attributed to the continued volatility of our public warrant and equity investments associated with our public portfolio companies, CrowdStrike and Medallia. Having said that, our cost basis in these investments were low to begin with. And even with the public stock price volatility, we have over $14 million of net unrealized gains on the equity warrants from these two companies as of December 31.

In addition, during the quarter, we sold our public holdings at Farfetch Limited, realizing a $1.3 million gain and resulting in the reversal of $1.1 million of prior unrealized gains.

I would like to highlight that despite already covering our dividend through NII as a result of the total return requirement of our best-in-class fee structure, our incentive fee for the quarter was reduced by $1.2 million, resulting in $0.05 additional per share of NII to investors.

We continue to see robust fundraising activity in the portfolio with 10 portfolio companies raising over $1.1 billion of equity in total in private rounds during the quarter, and we see this robust fundraising activity continuing here in Q1.

As of quarter's-end, our top five positions represented 27.4% of the total debt investment portfolio in a fair value basis, down from 34.5% last quarter and from 44.3% in Q4 2018. We continue to make progress in diversifying our portfolio, thanks in part to overall portfolio growth, prepays and utilization of our co-investment capabilities.

Since receiving our exemptive order, TPVG has made 16 co-investments with TPC's proprietary vehicles, and this gives us meaningful financial flexibility as we scale the business. As I look to the goals we set for 2019, we are pleased to have achieved our targets for portfolio growth, while maintaining our portfolio yield, and more importantly, significant portfolio diversification, which culminated in us achieving an investment-grade credit rating, over-earning our dividend and hitting our target leverage ratio, and enabled our equity capital raised here in 2020 to support continued scale and diversification.

Before I hand the call over to Chris, I thought it would be helpful to share some strategic goals and objectives we have for TPVG here in 2020. As Jim mentioned, the industry-leading position of our platform has resulted in significant direct deal flow from our select VCs and strong demand for venture growth stage debt for high-quality companies, which reflects the natural progression of these VCs and their portfolio companies following continued strong equity investment activity and thoughtfulness on how to optimize their capital structures with both debt and equity.

As a result, we see a path to continue to scale and diversify TPVG here in 2020, not only from a portfolio perspective, but from a balance sheet perspective as well. Our expectation this year for portfolio growth is for quarterly fundings to be in the $75 million to $150 million range on a gross basis. For the full-year basis, we expect to see at least $300 million of gross fundings, but really expect to be somewhere between $400 million and $600 million of fundings, given we had $226 million of unfunded commitments as of Q4.

As a reminder, fundings typically occur in the last month of the quarter and don't contribute meaningly from an income perspective until the next quarter. We expect the core yield profile of our portfolio to be stable and we'll continue to be leading the industry in the 12% to 14% range, again, prior to the impact of prepays.

With regards to prepays, they continue to be a part of the business. Looking back, we've had material prepays in 10 of the past 12 quarters. We think this activity could potentially slowdown a bit in 2020. For example, we haven't had a prepay yet in Q1, which will benefit though our ability to scale the portfolio and maintain a higher leverage ratio.

Given our investment-grade credit rating and shareholder approval in 2018 for the lower asset coverage requirement, we intend to take advantage of using leverage to serve as the primary source of funding portfolio growth for us for the rest of 2020, plus we intend to continue to take advantage of our exemptive relief order to co-invest with other entities in the TriplePoint platform and further diversify as we scale, as well as take advantage of some of the other partnerships and origination programs, among us, TriplePoint Capital and our strategic partners.

As stated when we received approval for the lower asset coverage, our goal is to run at our target leverage ratio more consistently with short peaks above and prior to equity capital raises.

With that, let me say that, as we look ahead for 2020, we will continue to be highly disciplined and expect our portfolio to grow in a manner that is accretive to our stockholders and provides them with an attractive yield on their investment, while achieving our goals of scale and diversification.

I'll now turn the call over to Chris to highlight some of the key financial metrics achieved during the quarter and fiscal year.

Christopher M. Mathieu -- Chief Financial Officer

Thank you, Sajal, and good afternoon, everyone. As you've already heard, 2019 was an exceptional year for TriplePoint. Before we get into the quarterly figures, I would like to, again, highlight just a few of the milestones reached for the fiscal year 2019.

We ended the year with record total investment income of $73.4 million; record NII, or net investment income of $38.3 million; NII per share of $1.54; net change in net assets per share of $1.28; and record high ending portfolio at fair value of $653 million. In addition, we paid distributions to our shareholders of $1.44 per share, which was fully covered by net investment income.

Now turning to the fourth quarter results. In Q4 2019, total investment and other income was $21.3 million and our total debt investment portfolio generated a weighted average portfolio yield of 15.3% for the quarter, compared to $17.8 million a year ago, with a yield of 18%. The increase in total investment income was driven by a higher average portfolio balance in 2019 and an increase in prepayment and other income.

Total operating expense for the quarter was $10.2 million, consisting of interest expense of $4 million, base management fee of $2.5 million, income incentive fee of $1.4 million and administrative and general expenses of $2.3 million. The increase in operating expense was primarily related to asset growth, which generated an increase in management fees and higher interest expense from a higher, larger average borrowing balance in 2019.

Net investment income, or NII for the quarter was $11.1 million, or $0.45 per share, compared to $10.2 million, or $0.41 per share in the fourth quarter of 2019. During the fourth quarter, the company recorded $1.2 million, or $0.05 per share of net realized gains on investments, as we sold one equity position in a portfolio company.

Net unrealized losses on investments for the fourth quarter were $6.7 million, or $0.27 per share, resulting primarily from market price-related changes in two of our publicly traded equity and warrant investments, the reversal and recognition of previously recorded net unrealized gains into income and realized gains, and credit-related adjustments affecting fair value estimates on the portfolio.

The credit-related adjustments are primarily the result of developments related to the strategic alternatives process that Sajal mentioned regarding Harvest Power, where we reduced the expected recovery of our debt investment to $4.2 million, of which, we have already received $2.4 million.

Net increase in net assets for the quarter was $5.7 million, or $0.23 per share, compared to $9.3 million, or $0.38 per share for the fourth quarter of 2018. At year-end, total assets were $684 million, including $653 million of investments at fair value.

We ended the year with total land assets, or NAV at $332 million, or $13.34 per share, compared to $335 million, or $13.50 per share in the prior year. We ended the year with total liquidity of $64 million, consisting of cash of $26.4 million and $37.7 million of undrawn availability under our revolving credit facility, subject to borrowing base and other conditions.

Total outstanding borrowing at the end of the year was $337 million, consisting of $75 million of long-term fixed rate retail notes or the baby bonds, which mature in 2022 and $262.3 million drawn under our revolving credit facility. With this level of outstanding borrowing, we reported a leverage ratio of 1.01 times.

We continue to evaluate options to take advantage of our investment-grade ratings from DBRS in order to maintain the higher-end of our target leverage range and seek to lower our overall cost of borrowing and diversify our access to the debt capital markets.

Given we were successful in reaching 2019 target leverage, we successfully completed an underwritten offering of 5 million shares of common stock in January. The offering was at a public offering price of $14.08 per share. And in connection with the offering, the company granted the underwriters an option to purchase an additional 750,000 shares of common stock.

The initial offering closed on January 13, and the company received net proceeds of $68 million from the sale. And on January 17, the company received an additional $10 million as a result of the underwriters fully exercising their option to purchase the additional 750,000 shares. So in the aggregate, net proceeds to the company was $78.5 million.

While the net proceeds were initially used to pay down our revolving credit facility, this accretive offering will support our liquidity needs in 2020 and expect these proceeds will be deployed over the next few quarters.

During the fourth quarter, we distributed $0.36 per share, consisting of our regular quarterly dividend. And for the year, we distributed $1.44 per share and ended the year with estimated spillover income of $7.3 million, or $0.29 per share.

I'm pleased to also announce that for the first quarter of 2020, our Board of Directors has declared a distribution of $0.36 per share payable on March 30 to stockholders of record on March 16. This marks the 24th consecutive quarter we have increased and maintained our quarterly distribution.

At this time, we would be happy to take your questions, and I'd ask the operator to please open the line for participants.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Finian O'Shea with Wells Fargo.

Finian O'Shea -- Wells Fargo Securities -- Analyst

Hi, good afternoon. Thanks for taking my question. Congratulations on the quarter. I guess, Sajal, let's start with a higher-level question on a lot of the continued headlines we're seeing on venture capital investment. I guess, I'll say, through our discussions on the asset class outside of idiosyncratic risk for a company, one of the major risks to your position as the venture lender is when funding for a sector dries up. So would you say that any of the major VC sectors are seeing a withdrawal in venture capital investment in real-time today?

Sajal K. Srivastava -- President and Chief Investment Officer

Yeah. Fin, great question. So I would say, generally speaking, yes, there is an element of sectors going in and out of favor. Historically, clean tech is -- was a sector that was popular that went out of favor, telecommunications sector that was popular that went out of favor. And I'd say, broadly speaking, capital intensive sectors, in general, are out of favor, not necessarily just in the VC world, but in the private equity world as well.

I'd say, an area for concern for us -- or not concern, but keeping an eye on is obviously consumer and e-commerce as we look to just the nature of spending and disposable income. And so not a sector that's out of favor, but it's a sector we want to be mindful of. And I would say that generally speaking, our portfolio companies in those sectors are well-positioned.

I think we did the analysis almost all of our consumer e-commerce portfolio companies have raised fresh equity in the last 12 to 18 months. So giving them a significant amount of equity runway, plus our company, since they're backed by these top tier VCs, have been ahead of the curve in terms of focusing on driving strong unit economics and path to profitability, rather than growth at all costs. So we feel like our portfolio companies are ahead of the curve from that perspective.

Finian O'Shea -- Wells Fargo Securities -- Analyst

Okay. Thanks for the color. And you mentioned co-investments across platform on your private BDC, there was a filing, where you've raised a pretty meaningful amount $300 million from Goldman Sachs. Can you tell us in the sense of that amount, your equity amount raised post-quarter in the BDC and perhaps elsewhere in the platform, how you feel position to hit these deployment targets that you outlined for 2020, given there's a lot of capital alongside you hear?

Sajal K. Srivastava -- President and Chief Investment Officer

Fin, thanks for the question. So maybe just high-level. With regards to the private BDC, since that was conducted in a private offering and it's still an ongoing offering, we're not allowed to discuss specifics of that vehicle.

But more broadly speaking, I would say, overall, we're seeing strong, or at least for the last several years, we've been talking about strong portfolio demand, strong growth potential, but wanting to balance that with diversification and balancing the size and scale. And so we've done a fantastic job on the TPVG side of using our co-investment capabilities to continue to originate transactions that meet the needs of our borrowers, but to allocate and diversify across our funding vehicles as they grow.

And so we would expect any new vehicle, be it -- that the platform raises to benefit from the pipeline and the ability to allocate across the vehicle. So, I think, one very thoughtful thought leader in the BDC asset class use this -- the word win, win, win for vehicles like this. And so we think it's a similar opportunity for TPVG shareholders from that perspective.

Finian O'Shea -- Wells Fargo Securities -- Analyst

Was that me or -- I forgot that. I'm kidding.

Sajal K. Srivastava -- President and Chief Investment Officer

We don't name names here.

Finian O'Shea -- Wells Fargo Securities -- Analyst

Okay. No, I think I know who it was. That's all for me. Thanks so much.

Operator

Our next question comes from Casey Alexander with Compass Point.

Casey Alexander -- Compass Point Research -- Analyst

Hi, good afternoon. Before I start, could you restate the origination targets that you mentioned?

Christopher M. Mathieu -- Chief Financial Officer

Sure, Casey, those were funding targets. So our funding targets on a quarterly basis is $75 million to $150 million for each quarter. So on a full-year basis at the low-end, $300 million. But given the backlog we have from the existing unfunded commitments, it's -- I mean, we have line of sight of $200-plus million right there. So we don't want to be a completely sandbagging on the low-end, but we think, again, the number will be likely between $400 million and $600 million before the impact of prepays.

Casey Alexander -- Compass Point Research -- Analyst

Okay. And are -- generally, when stuff goes up to clear, which is $122 million or so right now, that generally is a foreshadowing of some repayments. Are you surprised that you don't have any prepayments thus far in the quarter, given that you've moved $121 million worth of loans up into Clear?

Christopher M. Mathieu -- Chief Financial Officer

It's a function of not only strong liquidity position, but also companies having cash runway in excess of the maturity date of our own. So yes, it's interesting comment or point, I think, our portfolio companies and I think we mentioned this when we said, we expect potentially prepays to slowdown a bit. I think, everyone is just being more thoughtful of maintaining significant liquidity. And then the second-half of the year, we'll see if those -- that kind of strategy changes.

Casey Alexander -- Compass Point Research -- Analyst

Right. Okay. Now, even while -- subsequent to the offering, that's kind of not the leverage ratio back below the target. As you continue to build the balance sheet, you seem to be, what I would say is a little light with unsecured debt. Should we expect or suspect that there would be more gearing toward the next round of capital raising come from the unsecured debt arena?

Sajal K. Srivastava -- President and Chief Investment Officer

Chris, do you want to take that question?

Christopher M. Mathieu -- Chief Financial Officer

Yeah, sure. Yeah, I -- Casey, I think that's a fair assumption. We have our credit facility. It's an accordion and we've moved that up to $300 million, and that gives us the ebbing and flowing of our our debt as companies are funded and then prepay. But with only $75 million of unsecured debt on the balance sheet now, it would make sense to think about other unsecured or additional percentages, if you will, of unsecured debt at the parent level.

Casey Alexander -- Compass Point Research -- Analyst

Okay.

Sajal K. Srivastava -- President and Chief Investment Officer

Especially in light of our investment-grade credit rating. So we have not raised leverage since that, and so we expect to take advantage of that.

Casey Alexander -- Compass Point Research -- Analyst

Okay. And I appreciate your discussion about your contractual floors on your loans. That's very helpful. One that you did discuss, because you did discuss some individual credits was Roli was on non-accrual. What's the status of Roli? And am I -- did you guys -- it looks like you issued an additional $4 million loan to Roli. So is that still on non-accrual?

James Labe -- Chairman and Chief Executive Officer

Correct. So Roli is an ongoing credit situation. We did fund more companies -- sorry, more money to the company during the quarter as they work through that process.

Casey Alexander -- Compass Point Research -- Analyst

But is it still on non-accrual?

James Labe -- Chairman and Chief Executive Officer

Correct.

Casey Alexander -- Compass Point Research -- Analyst

Okay. All right. And then I would say, finally, Outdoor Voices, the Founder has left the company and a number of people have been laid off. And this is a name that A, fits in retail; and B, fits in the terror apparel, which many apparel companies do source from China. So I think it would be helpful if you had any color on the situation at Outdoor Voices?

Christopher M. Mathieu -- Chief Financial Officer

Yeah. I mean, obviously, we're going to comment specifically on the company. But I'd say in general, as I mentioned earlier during the prior question, the good news is, particularly our consumer and e-commerce companies being ahead of the curve with regards to fundraising activities, which doesn't always make it out to the press. And then focusing on driving unit economics, path to profitability or living within the funding means that they have, as well as focusing on using less expensive forms of customer acquisition other than Facebook and Instagram, whom they call omni-channel establishing physical presence.

So, I would say, our companies and potentially -- or including Outdoor Voices ahead of the curve in terms of potentially taking the accelerator off, non-profitable growth for growth's sake and focusing on driving profitable growth through strong unit economics, and then having sufficient runway to or raising additional capital to ensure they have time and the path to do it.

Casey Alexander -- Compass Point Research -- Analyst

Okay. And just very quickly, if I can roll back to -- this is not a pun. If I can roll back to Roli, issuing a $4 million loan to a company on non-accrual and essentially feels very much like it's a bridge transaction to some sort of additional transactions that you guys seeing taking place. I mean, I don't just see you sending $4 million over there for the fun of it. Should we expect a further transaction on Roli that could bring that to some sort of conclusion?

Christopher M. Mathieu -- Chief Financial Officer

Yeah. I'd say, we're a credit manager, working through credit situations. We make the decision to either commit more capital to preserve and protect our interest when we know that we have line of sight or confidence about full recovery. So very general term, Casey, because obviously, we don't talk specifics, but we wouldn't deploy more capital if we didn't think it was beneficial with the bigger goal of getting all of our capital back.

Casey Alexander -- Compass Point Research -- Analyst

Okay, great. Thank you for taking my questions. I appreciate it.

Operator

Our next question comes from Chris York with JMP Securities.

Chris York -- JMP Securities -- Analyst

Good afternoon, guys. And thanks for taking my questions. Forgive me if I missed this, but can you help me reconcile the event or maybe even events that transpired to cause your net investment income per share to be above your pre-released range?

Sajal K. Srivastava -- President and Chief Investment Officer

So Chris, would you like to handle that, please?

Christopher M. Mathieu -- Chief Financial Officer

Yeah, absolutely. Yes. So really, it's two main drivers. One, Sajal referred to it in his comments was the fee cap relative to the incentive fee. So there was a $0.05 per share that was directly related to the incentive fee calculation that due to the NAV change resulted in a $0.05 given back.

And then the additional piece was, at the end of the year, we go through a process of looking at unfunded commitments. And to the extent that we have unfunded commitments that expire, there are fees that accelerate. And given the timing of the offering, we had not completed the closing of the books and records, as you can imagine, it's a process at the end of the year.

And so that was additional income relative to expirations at 12/31 that we had not previously gone through as part of the normal accounting close for the year-end cycle.

Chris York -- JMP Securities -- Analyst

Got it. Very helpful. Thanks, Chris. So yes, I wanted to focus on unfunded commitments. It did decline meaningfully sequentially and it seems like it's kind of at the lowest level that we've been in a couple of years as a percentage of assets. Is this decline a deliberate strategy, or is it more a product of just simple expiration of 2019 commitments?

Sajal K. Srivastava -- President and Chief Investment Officer

This is Sajal here, I would say, Chris, it's a function, one of high utilization. So, again, in Q4, it was $170 million of funded investments, so robust activity from that perspective. And then as Chris mentioned, we do have a fair amount that burns off at the end of every fiscal year. So I wouldn't say, there's any change strategically other than if we look over the past couple of years. We have seen higher utilization from new commitments as they're made during the course of the fiscal year. And so that was something strategically we made a change many years ago.

But I would say that there has been no difference in strategy or our approach to unfunded commitments, other than our capital is precious and we want to earn our returns on them. And so we're being mindful and thoughtful to our portfolio companies as we committed.

James Labe -- Chairman and Chief Executive Officer

Yeah. And I would concur with that, and we do not want to be out here with supersized amounts of unfunded commitments. That's not a plus either.

Chris York -- JMP Securities -- Analyst

Yep, makes sense. And then maybe following up a little bit on utilization. So has the recent focus from later stage VC-backed companies on profitability, maybe over the last couple of months, as opposed to growth at all costs, change the demand for your debt capital, or the use of unfunded commitments?

Sajal K. Srivastava -- President and Chief Investment Officer

A thoughtful question. Jim, I'll start and maybe you can jump in. So I would say that, again, profitability, I'd say, profitable unit economics. So I'd say, it's a small percentage of companies that shoot for overall profitability, because fundamentally with technology-focused companies, the primary metric for success are related to revenue growth or product growth or market opportunity growth.

And so -- but I would say, focusing on being more efficient from a cost structure, from a customer acquisition perspective, from an R&D spend is -- has been a benefit to us and to our VC investors and to the portfolio companies themselves. And then I would say, the volatility of the IPO markets and whether or not they're opened or closed and the fact that it's still a seven to 10-year journey for a venture-backed company to the exit event, causes companies to be mindful of having multiple financing partners on both sides of the balance sheet and to maintaining ample liquidity.

And so I think we benefit when times are good from just the overall demand and people wanted to run and grow faster. And then during times when the exit or IPO market are volatile, we benefit from demand as those companies prepare for longer time between exits. And so, I'd say, that that's generally what we're seeing and, again, our -- we think our approach to focusing on these select venture capital funds is a way for additional credit enhancement and to outperform during more volatile times.

Chris York -- JMP Securities -- Analyst

That's great color and very thoughtful color. I appreciate that, Sajal, that helps. Last question is on undistributed income increased sequentially, set a nice level here. In addition to that sizable on distributed income pool, you could be exiting your gain in CrowdStrike. So how should investors think about the likelihood to distribute special dividends in 2020?

Christopher M. Mathieu -- Chief Financial Officer

Yeah. I'll...

James Labe -- Chairman and Chief Executive Officer

Yes, Chris -- yes, why don't you tackle that, Chris?

Christopher M. Mathieu -- Chief Financial Officer

Yeah. I think the point about spillover is, we did have spillover in 2018, that was effectively used in the first quarter of 2019. And given that we over-earned our dividend this year, not only did we carryover spillover, but we actually increased it. I think your point is not only do we have spillover income that is largely or substantially all ordinary income spillover, we also have potential realized capital gains.

The realized capital gains measurement date would be the end of October. So that is something that we would have to think about prior to the end of the year in 2020. To the extent, we had realized gains that exceeded any realized adjustments on the credit side.

Chris York -- JMP Securities -- Analyst

Great. That's it for me. Thanks for taking my questions.

Operator

Our next question comes from Ryan Lynch with KBW.

Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst

Hey, good afternoon. And thanks for taking my questions. First one, I just noticed this quarter, your guidance of G&A expense was about double what you guys have historically run at. So was there any one-time items that impacted that number this quarter?

Christopher M. Mathieu -- Chief Financial Officer

Yeah. I think the -- that was a good observation. I would say that the largest impact to the G&A line was the full implementation of SOX compliance. We were -- we ended last year as the last of the five-year period, where we were exempt from full 404 internal control compliance and through internal audit function that we now have, as well as the external auditors. There was a substantial additional costs relative to the audit cycle and internal control compliance process.

So I would not say that this is the new standard. A lot of that could be considered one-time for 2019. And I think that, directionally G&A will come back down to a more normalized level, but certainly not at the levels we experienced this year.

Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst

And Chris, didn't we have the excise tax in Q4 as well?

Christopher M. Mathieu -- Chief Financial Officer

We did, yes. Yes, so there's a little bit of noise in the G&A from excise tax relative to our calculation at the end of the year. Remember that, to the extent, you have excise or carryover spillover income, you have a 4% expense that is part of the process.

Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst

Got it. And then do you guys mentioned a couple of times in your prepared comments, it's also in your press release about looking to potentially look at the -- use your recent investment-grade rating to potentially build out the right side of your balance sheet. I'm just wondering, have you guys had any preliminary discussions on pricing? Just because I look at it today, I mean, the risk-free rates have come down to historical lows the five-year at less than 80 basis points, the 10-year treasury at around 1%.

I'm just curious if you guys had any preliminary discussions, because it feels like if credit spreads haven't blown out much wider, you guys could potentially be tapping at very historical rates, but I'm not sure, if the credit spreads have widened out as far as the pricing goes from like a BDC bond size? So any thoughts on that would be very helpful?

Sajal K. Srivastava -- President and Chief Investment Officer

Yes. Ryan, we can't comment on any activity, specifically, but obviously, we continue to have conversations with lenders and investment bankers to understand the market dynamic. I think it's been an interesting week in the public markets. And so I think we look to see and get feedback from those folks in terms of what market rates and spread will look like in the upcoming weeks and months of the quarter.

Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst

Okay, it's fair enough. Your guidance on quarterly funding, $75 million to $100 million -- or $150 million, I feel like that that's pretty similar to what you guys have sort of guided to in the past. So I'm just wondering, given the uncertainty surrounding the coronavirus and the potential economic ramifications that it could have and that changes on a week-to-week or even day-to-day basis.

I'm just wondering when you put out numbers like that, how are you evaluating the ever-changing impacts, potential impacts of the coronavirus in the U.S. economy? Do you have any sort of like baseline case that you guys are using when you guys are evaluating a bottoms-up approach to a specific portfolio company to potentially fund? Or what is kind of just your high-level thought process as you guys are looking to deploy new capital today in just a very, very uncertain and ever-changing environment?

Christopher M. Mathieu -- Chief Financial Officer

Yes. Ryan, great question. So I'd say, the first is, so you are correct. That is actually the similar range or guidance that we gave last year with regards to our outlook for 2019. And so I think one of the takeaways from a high-level or messaging perspective is, given things going on in the world, given election years, things of that nature, a lot more volatility.

And so from our perspective, we're not singling at this stage, now is the time to capitalize on it. We'd like to see again how the cards kind of turnover over the next couple of quarters and see the impact to the various markets.

So I'd say, that's generally -- the message from that perspective, from the other aspect is with $220 or so million of contractual unfunded commitments. We're well on our way for the low-end or close to the low-end, plus the signed term sheets and commitments we've closed here in Q1 so far, as disclosed in our earnings release.

So we're still very busy. We're still being very thoughtful and we're still being very disciplined. But you're right, I don't think we all know where the impact globally to the -- of the coronavirus. The good news, though, is our companies are innovating. They're creating things that solve problems. And so people use technology to take advantage or to more technology. When they can't meet, they use video conferencing technology or the other products. And so -- or if they don't want to go to a bank, they'll use their FinTech card or app.

So, again, it's hard to say anything this early. Jim, I don't know if you want to comment here.

James Labe -- Chairman and Chief Executive Officer

No, I would just add, I think uncertainty, Chris, was a correct word. And it's very hard obviously to put -- to figure out the future in. But we're approaching this very conservative. We're thinking of this as last year, but I think you did here. We have an incredible pipeline, the largest ever, extremely strong demand. And I don't think we would mind now performing our funding predictions, but we absolutely want to play this rather safe as opposed to sorry. So we'll stick by our numbers now for 2020. And, as Sajal says, we'll see how the quarters go.

Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst

Okay. And then, because you mentioned one of the other ways to hit those funding targets is just the fun, your large level unfunded commitments today. Do you guys, by chance, have on hand of rough estimate of historically and cumulatively, what percentage of your unfunded commitments have historically turned into funded commitments at some point in the future?

Sajal K. Srivastava -- President and Chief Investment Officer

Yes, great question. It's generally between 50% and 75%, depending on the profile of the company. But on a blended basis, it's between 50% and 75%.

Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst

Okay. Those are all my questions. I appreciate the time this afternoon.

James Labe -- Chairman and Chief Executive Officer

Right. Thanks, Ryan.

Operator

Our next question comes from Matthew Howlett with Nomura.

Matthew Howlett -- Nomura Instinet -- Analyst

Hey, guys, thanks. Congrats on a solid quarter. Just first question on, sort of everyone obsesses with dividends here now. You guys have said in the past that you'd get to -- you'd like to get to a point where you have enough scale, you can cover the dividend without prepayments. We'll run our models, obviously following the strong quarter. But we're at a point now, given the new sort of leverage guidance that you think sort of the NII can be above that rate without prepays at some point this year?

Sajal K. Srivastava -- President and Chief Investment Officer

Chris, do you want to take that question first?

Christopher M. Mathieu -- Chief Financial Officer

Yes, sure. So I think that generally speaking, where we are with our current leverage at kind of 1 times gets us to where we need to be to cover our dividend, primarily without prepayments. Certainly, you get the additional benefit that we saw in this quarter from the additional prepayment income. But I think that, 1 time to 1.01 in that kind of ranges is sustainable based on the current yields that we're seeing in the market.

Matthew Howlett -- Nomura Instinet -- Analyst

Got it. That makes a lot of sense. And we'll -- certainly, I'll update that, that's certainly what it looks like and congrats if you get to that point. I think, a huge achievement. And on that note, I mean, I know, following up on the question on the tapping the secured debt markets. First, can you call that that 22 baby bond? I mean, can you -- is there any penalty to do that early? Just seems like there's a huge opportunity here to take advantage of these low rates, given your new investment-grade rating?

Christopher M. Mathieu -- Chief Financial Officer

Yes. The way that we're thinking about it now is to the extent that we would seek either private or public unsecured debt. It would be additive to what we have. So we're not currently thinking about prepaying or refinancing the existing financing. I think what's more important is to think about vintage and having multiple sources of capital, given the growth in the equity base that we have.

The baby bonds we have now do have -- there was banker fees and legal fees and filing fees associated with that, that are being amortized over the life. And so in the period that you prepay or pay off those, you would have a hit to NII. And I think, from a cost of capital perspective, it's better to layer in additional debt on top of that and have an overall lower cost of capital over time as opposed to accelerating and paying off the hard work that was done a couple of years ago on that facility.

Sajal K. Srivastava -- President and Chief Investment Officer

Yes. And I'd only add that based on the feedback from our existing rating agency and others that they want to see diversification on the right side of the balance sheet. So lowest cost is always the best option. As Chris mentioned, there's the acceleration of fees and income, but we again think of having the ladder concept of multiple sources showing diversification from the structure, the maturity, the duration and financing provider, plus fixed verses floating is strategically in our best interest with long-term.

Matthew Howlett -- Nomura Instinet -- Analyst

Got it. And that's two years away from return, right? So is that not too far away. Okay, got that. And Chris, why have -- you had the Casper Sleep. I mean, can you give us an update on anything that's in registration, in the pipeline from terms of an IPO in the portfolio? And any update there?

Christopher M. Mathieu -- Chief Financial Officer

So Casper did go public, as I think, that's what you're referring to. They did raise $100 -- little over $100 million in the first quarter. So that's good for us as it relates to yet another company raising a good amount of capital, and now they can access the public markets going forward.

Sajal K. Srivastava -- President and Chief Investment Officer

Yes. If I may add, so Matt, in terms of public disclosure, so there has been no other of our existing portfolio companies that have come out of confidentiality or announced that they are in confidentiality. There have been though a number of portfolio companies that have announced equity rounds here in Q1, in particular, Toast and ClassPass are two that come to top of mind.

Matthew Howlett -- Nomura Instinet -- Analyst

Got it. Okay, good. Well, we'll look forward to more details on that. Last question, guys, with the co-investment opportunity, I mean, how does this change the game for you? We do bigger deals now, potentially, that you can co-invest across the platform. They are hold sizes. What are your sponsors telling you? Just strategically, does this offer new opportunity, if this gets done?

Sajal K. Srivastava -- President and Chief Investment Officer

Yes. Great question. So I'd say, generally speaking, we've always -- our platform, again, the TriplePoint Capital platform is particularly large. It's been around since Jim and I founded it 15-plus years. So we've always had the opportunity and ability to underwrite large transactions. So the co-investment helps TPVG, but it's never prevented the platform as a whole from meeting the demands of its portfolio companies for large transactions.

So I'd say, this is not changing how the platform originates new loans and new transactions since we've always had the opportunity to digest the large transactions. I think, again, is to quote this thought leader, the benefit to TPVG is the win-win approach to growth, right? So, as we look to TPVG and its journey, there isn't -- it's just another means for it to grow in addition to leveraging up periodically raising equity capital, yes, potentially acquiring portfolios, I think.

And so, this is just very few managers have the ability based on their track record and their -- against the prestige and brand to raise alternative forms of financing that can be accretive to publicly traded BDCs. And so we think that is the potential, generally speaking, benefit to TPVG shareholders.

James Labe -- Chairman and Chief Executive Officer

No doubt. While it certainly will allow the capability to do larger sizes, I think, in our minds, diversification is more critical underlying an important thing and a driver toward co-investment.

Matthew Howlett -- Nomura Instinet -- Analyst

Got it. Thanks. A way more and more information on that. Congrats, again. Thank you.

Operator

Our next question comes from Christopher Nolan with Ladenburg Thalmann.

Christopher Nolan -- Ladenburg Thalmann -- Analyst

Hey, guys. My questions have been answered. Thank you.

James Labe -- Chairman and Chief Executive Officer

Great. Thanks, Chris.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Labe for any closing remarks.

James Labe -- Chairman and Chief Executive Officer

Thank you, operator. We'd like to thank, everyone, for participating in our quarterly call today and for your continuing support. Hopefully, you can tell we're very pleased with the 2019 results and excited here as we head deeper into 2020. We look forward to talking with you and, in some cases, seeing you all soon. Have a good evening.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

James Labe -- Chairman and Chief Executive Officer

Sajal K. Srivastava -- President and Chief Investment Officer

Christopher M. Mathieu -- Chief Financial Officer

Finian O'Shea -- Wells Fargo Securities -- Analyst

Casey Alexander -- Compass Point Research -- Analyst

Chris York -- JMP Securities -- Analyst

Ryan Lynch -- Keefe, Bruyette & Woods -- Analyst

Matthew Howlett -- Nomura Instinet -- Analyst

Christopher Nolan -- Ladenburg Thalmann -- Analyst

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