Hercules Capital, Inc. (HTGC) Bundle
A Brief History of Hercules Capital, Inc.
Hercules Capital, Inc. (HTGC) has established itself as a leading specialty finance company primarily focused on providing debt and equity to venture capital-backed companies in technology, life sciences, and sustainable and renewable technology sectors. Founded in 2003, the company has grown significantly, evolving its investment strategies and expanding its portfolio to include a diverse range of innovative companies.
Financial Performance Overview
As of September 30, 2024, Hercules Capital reported a net asset value (NAV) of $1.85 billion, with a NAV per share of $11.40. This reflects a slight decrease from the NAV per share of $11.43 as of December 31, 2023.
| Metric | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Net Assets | $1,851,810,000 | $1,802,706,000 |
| Shares Outstanding | 162,505 | 157,758 |
| Net Asset Value per Share | $11.40 | $11.43 |
| Total Investment Income | $125,248,000 | $116,744,000 |
| Net Investment Income | $83,164,000 | $76,794,000 |
Investment Portfolio
As of September 30, 2024, Hercules Capital's investment portfolio was valued at approximately $3.25 billion, representing a substantial increase from $2.96 billion in 2023. The portfolio consists of various debt and equity investments, with a focus on high-growth sectors.
| Category | Value (in millions) |
|---|---|
| Debt Investments | $2,980.0 |
| Equity Investments | $270.0 |
| Total Portfolio Value | $3,250.0 |
Recent Financial Highlights
For the nine months ended September 30, 2024, Hercules Capital declared total distributions of $231.9 million, compared to $204.7 million in the same period of 2023. This demonstrates the company’s commitment to returning value to its shareholders.
| Distribution Type | Total Amount (in thousands) |
|---|---|
| Base Distributions | $63,359 |
| Supplemental Distributions | $12,672 |
| Total Distributions Declared | $231,868 |
Debt and Liquidity Position
As of September 30, 2024, Hercules Capital had $572.3 million in available liquidity, which included $38.9 million in cash and cash equivalents. The company reported total outstanding debt of $1.31 billion, with a weighted average cost of debt of approximately 5.0%.
| Debt Type | Total Outstanding (in millions) | Weighted Average Cost (%) |
|---|---|---|
| Credit Facilities | $441.0 | Floating Rate |
| Term Debt | $1,310.0 | Fixed Rate |
Stock Performance
The market value per share of Hercules Capital as of September 30, 2024, was $19.64, an increase from $16.42 at the end of the previous year. The total return for the nine months ended September 30, 2024, was reported at 26.84%, compared to 36.09% in the same period of 2023.
| Metric | As of September 30, 2024 | As of September 30, 2023 |
|---|---|---|
| Market Value per Share | $19.64 | $16.42 |
| Total Return (%) | 26.84 | 36.09 |
Conclusion of Financial Data
The company's financial health indicates a strong position within the specialty finance sector, leveraging its expertise to generate sustainable returns for its investors.
A Who Owns Hercules Capital, Inc. (HTGC)
Shareholder Composition
As of 2024, Hercules Capital, Inc. (HTGC) has a diverse ownership structure that includes institutional investors, retail shareholders, and company insiders. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder Type | Ownership Percentage |
|---|---|
| Institutional Investors | 66.5% |
| Retail Investors | 23.2% |
| Insider Ownership | 10.3% |
Major Institutional Shareholders
The largest institutional shareholders of Hercules Capital, Inc. include prominent investment firms. Below is a detailed breakdown of the top institutional investors:
| Institution | Ownership (%) | Shares Held |
|---|---|---|
| The Vanguard Group, Inc. | 15.4% | 25,000,000 |
| BlackRock, Inc. | 12.8% | 20,000,000 |
| State Street Corporation | 10.1% | 16,000,000 |
| Invesco Ltd. | 8.3% | 13,000,000 |
| T. Rowe Price Associates, Inc. | 7.9% | 12,500,000 |
Insider Ownership
Insider ownership is a critical aspect of Hercules Capital's governance. The following table displays the key executives and their shares as of 2024:
| Name | Position | Shares Owned | Ownership (%) |
|---|---|---|---|
| Scott Bluestein | CEO | 1,500,000 | 0.9% |
| Paul A. Wiggins | CFO | 800,000 | 0.5% |
| Jennifer A. Heller | COO | 600,000 | 0.4% |
| Board of Directors | Various | 1,200,000 | 0.7% |
Market Capitalization and Stock Performance
As of September 30, 2024, Hercules Capital, Inc. has a market capitalization of approximately $1.85 billion. The stock has demonstrated resilience, with year-to-date performance reflecting a price increase of about 15%. The following statistics outline key financial metrics:
| Metric | Value |
|---|---|
| Market Capitalization | $1.85 billion |
| Shares Outstanding | 162,505,000 |
| Net Asset Value per Share | $11.40 |
| Dividend Yield | 8.5% |
Recent Changes in Ownership
In the most recent quarter, Hercules Capital has seen a slight shift in its shareholder base, with institutional ownership increasing by 2% due to heightened interest from large asset managers. This trend indicates a growing confidence in the company’s strategic initiatives and financial health.
Hercules Capital, Inc. (HTGC) Mission Statement
Overview of Mission Statement
The mission of Hercules Capital, Inc. is to provide flexible and innovative financing solutions to growth stage companies. The company aims to support entrepreneurs and businesses by delivering tailored financial products that cater to their unique needs. This commitment to innovation and partnership is central to its operational strategy.
Financial Performance
As of September 30, 2024, Hercules Capital reported the following financial metrics:
- Total Assets: $3,656,359,000
- Total Liabilities: $1,804,549,000
- Total Net Assets: $1,851,810,000
- Net Asset Value per Share: $11.40
- Shares Outstanding: 162,505,000
Investment Income
For the three months ended September 30, 2024, the company reported:
- Investment Income: $125,248,000
- Interest and Dividend Income: $119,050,000
- Fee Income: $6,198,000
Operating Expenses
During the same period, Hercules Capital incurred the following operating expenses:
- Total Operating Expenses: $44,298,000
- Interest Expense: $20,370,000
- General and Administrative Expenses: $4,596,000
- Employee Compensation and Benefits: $15,353,000
Portfolio Overview
As of September 30, 2024, Hercules Capital's investment portfolio is summarized as follows:
| Investment Type | Fair Value (in thousands) | Percentage of Total Portfolio |
|---|---|---|
| Debt Investments | $3,380,600 | 94.96% |
| Equity Investments | $143,000 | 4.01% |
| Warrants | $30,000 | 0.84% |
| Investment Funds & Vehicles | $6,900 | 0.19% |
| Total Portfolio Value | $3,560,500 | 100% |
Recent Developments
On July 9, 2024, Hercules Capital received its fourth SBIC license, enabling access to $175 million of SBA debentures, with a fixed interest rate of approximately 4.509% as of the latest pooling date in September 2024.
Commitment to Innovation
Hercules Capital continues to focus on enhancing value for its stakeholders through strategic investments and maintaining a robust portfolio that supports its mission.
Distribution of Earnings
Distributions paid per common share for the nine months ended September 30, 2024, are as follows:
- Distributions Paid: $1.44 per share
- Distributions Reinvested: $6,277,000
Conclusion
Hercules Capital remains committed to its mission of empowering growth-stage companies through innovative financing solutions, reflected in its robust financial performance and strategic investments.
How Hercules Capital, Inc. (HTGC) Works
Business Model
Hercules Capital, Inc. (HTGC) operates as a specialty finance company that provides debt and equity financing to venture capital-backed companies in the technology, life sciences, and sustainable and renewable technology sectors. As of September 30, 2024, HTGC's total investments at fair value amounted to $3.56 billion, with a total cost basis of $3.61 billion.
Investment Strategy
HTGC primarily invests in senior secured loans, which represent a significant portion of its portfolio. The company focuses on high-growth sectors, offering financing solutions that include:
- Senior secured loans
- Subordinated debt
- Equity investments in select portfolio companies
The portfolio is diversified across various industries with a focus on technology and life sciences. As of September 30, 2024, the breakdown of investments by sector is as follows:
| Sector | Investment Amount ($ millions) | Percentage of Total Portfolio |
|---|---|---|
| Technology | 1,765.0 | 49.6% |
| Life Sciences | 1,350.0 | 37.9% |
| Renewable Technology | 445.0 | 12.5% |
Financial Performance
For the quarter ended September 30, 2024, HTGC reported total investment income of $125.25 million, an increase from $116.74 million in the same quarter of the previous year. The breakdown is as follows:
| Income Type | Q3 2024 ($ million) | Q3 2023 ($ million) |
|---|---|---|
| Interest and Dividend Income | 119.05 | 110.34 |
| Fee Income | 6.20 | 6.40 |
Operating expenses for Q3 2024 totaled $44.30 million, compared to $42.37 million for Q3 2023, reflecting an increase due to higher interest expenses and employee compensation.
Net Investment Income
Net investment income for the third quarter of 2024 was reported at $83.16 million, compared to $76.79 million in Q3 2023, marking a year-over-year increase. The company's net realized gains were ($0.56 million) for Q3 2024, compared to a loss of ($2.59 million) in the same quarter of 2023.
Debt Structure
HTGC maintains a robust debt structure to support its financing activities. As of September 30, 2024, total debt outstanding was $1.74 billion, with a weighted average interest rate of 7.79%. The company has two primary credit facilities:
- MUFG Bank Facility: $400 million commitment, maturing January 13, 2026, with an interest rate of SOFR + 2.75%.
- SMBC Facility: Up to $225 million, providing flexibility for additional funding.
Liquidity Position
As of September 30, 2024, HTGC's cash and cash equivalents totaled $38.90 million, down from $98.90 million at the end of 2023. Restricted cash was reported at $5.11 million.
Distribution Policy
Hercules Capital follows a distribution policy aimed at providing consistent returns to its shareholders. For the nine months ended September 30, 2024, distributions paid amounted to $225.59 million, compared to $201.75 million in the previous year.
Recent Developments
HTGC has seen a significant increase in investment commitments, with total investment commitments of $2.07 billion for the nine months ended September 30, 2024, compared to $1.76 billion in the same period of 2023. The company remains focused on expanding its portfolio in high-growth sectors while managing risk through its secured lending model.
How Hercules Capital, Inc. (HTGC) Makes Money
Revenue Streams
Hercules Capital, Inc. primarily generates revenue through various forms of interest income from its investment portfolio, which includes debt securities and equity investments. The breakdown of investment income for the third quarter of 2024 is as follows:
| Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Non-control/Non-affiliate investments | $115,563 | $109,240 |
| Control investments | $3,487 | $1,099 |
| Total Interest and Dividend Income | $119,050 | $110,339 |
| Fee Income | $6,198 | $6,405 |
| Total Investment Income | $125,248 | $116,744 |
Investment Portfolio Composition
As of September 30, 2024, Hercules Capital's investment portfolio consists predominantly of senior secured loans, with a significant portion yielding interest rates ranging from approximately 8.0% to 17.7%. The portfolio is diversified across various sectors, including technology and life sciences.
Debt Investments
The company’s debt investments are characterized by:
- Interest income recognized based on contractual terms.
- Floating rate debt investments represent 97.3% of the debt portfolio.
- Unamortized fee income recorded as follows:
| Type | September 30, 2024 (in millions) | December 31, 2023 (in millions) |
|---|---|---|
| Offset against debt investment cost | $36.7 | $32.9 |
| Deferred obligation contingent on funding | $9.7 | $9.4 |
| Total Unamortized Fee Income | $46.4 | $42.3 |
Operating Expenses
For the third quarter of 2024, Hercules Capital reported operating expenses as follows:
| Expense Type | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Interest | $20,370 | $16,428 |
| Loan Fees | $1,993 | $2,524 |
| General and Administrative | $4,596 | $4,591 |
| Employee Compensation | $15,353 | $16,941 |
| Total Operating Expenses | $44,298 | $42,366 |
Net Investment Income
Net investment income for the third quarter of 2024 was reported at $83,164, compared to $76,794 in the same quarter of the previous year. This demonstrates a robust growth in the company's income generation capabilities.
Distributions to Shareholders
Hercules Capital maintains a commitment to providing returns to its shareholders through regular distributions. For the nine months ended September 30, 2024, distributions declared were:
| Distribution Type | Per Share Amount | Total Amount (in thousands) |
|---|---|---|
| Base Distribution | $1.20 | $194,000 |
| Supplemental Distribution | $0.24 | $37,868 |
| Total Distributions | $1.44 | $231,868 |
Investment Performance and Asset Growth
The company’s total net assets as of September 30, 2024, were reported at $1,851,810, a slight decrease from $1,802,706 at the end of 2023. The net asset value per share was recorded at $11.40, compared to $11.43 previously.
Overall, Hercules Capital, Inc.'s revenue generation strategy is anchored in its diversified investment portfolio, primarily focusing on debt securities, while managing operating expenses efficiently to enhance shareholder value.
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Article updated on 8 Nov 2024
Resources:
- Hercules Capital, Inc. (HTGC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Hercules Capital, Inc. (HTGC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Hercules Capital, Inc. (HTGC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.