Private Credit Portfolio Analysis | Hercules Capital Reports Q3 2024 Results with Increased Assets and Stockholders' Equity
- Editor
- Oct 25, 2024
- 2 min read
What's New: Hercules Capital, Inc. reported its financial results for the third quarter ended September 30, 2024. The fund saw an increase in total assets to $3.66 billion from $3.42 billion at the end of 2023. Stockholders' equity also rose to $1.85 billion from $1.80 billion over the same period, indicating growth in the fund's capital base.
Portfolio Dynamics:
Total investment portfolio at fair value increased to $3.56 billion as of September 30, 2024, up from $3.25 billion at December 31, 2023.
Cash and cash equivalents decreased to $38.9 million from $98.9 million at the end of 2023, suggesting increased deployment of capital into investments.
Net Asset Value (NAV) per share slightly decreased to $11.40 as of September 30, 2024, compared to $11.43 at December 31, 2023.
Investment Activity :
The fund made new investment purchases of $1.18 billion in the first nine months of 2024.
Proceeds from investment dispositions totaled $721.9 million during the same period.
Net investment activity resulted in a $312.5 million increase in the investment portfolio for the first three quarters of 2024.
Capital Structure:
Long-term debt increased to $1.74 billion as of September 30, 2024, from $1.55 billion at the end of 2023.
The fund raised $67.3 million from issuance of common stock in the first nine months of 2024.
Total liabilities grew to $1.80 billion from $1.61 billion at the end of 2023, primarily due to increased debt.
Performance Profile:
Net income for the third quarter of 2024 was $68.7 million, compared to $28.0 million in the same quarter of 2023.
Year-to-date net income as of September 30, 2024, was $201.5 million, lower than the $217.3 million reported for the same period in 2023.
Interest income paid-in-kind increased to $37.9 million for the first nine months of 2024, up from $18.0 million in the same period of 2023.
Risk & Quality:
The fund reported unrealized losses on investments of $45.0 million for the first nine months of 2024, compared to $6.3 million in the same period of 2023.
Realized gains on investments were $1.8 million for the first nine months of 2024, down from $5.6 million in the same period of 2023.
Operating lease right-of-use assets increased to $17.2 million from $4.8 million at the end of 2023, potentially indicating expansion of operations.
The Wrap: Hercules Capital demonstrated growth in its investment portfolio and total assets in the third quarter of 2024, while maintaining a stable NAV per share. The fund increased its leverage through additional long-term debt, which contributed to the expansion of its investment activities. Despite lower year-to-date net income compared to the previous year, the fund saw a significant increase in quarterly net income. The increase in paid-in-kind interest income and unrealized losses on investments suggests potential shifts in the risk profile of the portfolio.
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