Runway Growth Finance Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 7, 2024

There are 10 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Runway Growth Finance 4th Quarter and Fiscal Year Ended 2023 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Quinlan Abel, Assistant Vice President, Investor Relations. Please go ahead.

Speaker 1

Thank you, operator. Good evening, everyone, and welcome to the Runway Growth Finance conference call for the Q4 fiscal year ended December 31, 2023. Joining us on the call today from Runway Growth Finance are Greg Greifeld, Acting Chief Executive Officer of Runway Growth Finance and Deputy Chief Investment Officer and Head of Credit of Runway Growth Capital and Tom Ratterman, Acting President and Chief Financial Officer and Chief Operating Officer. Runway Growth Finance's 4th quarter and fiscal year ended 2023 financial results were released just after today's market close and can be accessed from Runway Growth Finance's Investor Relations website at investors. Runwaygrowth.com.

Speaker 1

We have arranged for a replay of the call at the Runway Growth Finance webpage. During this call, I want to remind you that we may make forward looking statements based on current expectations. The statements on this call that are not purely historical are forward looking statements. These forward looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward looking statements, including and without limitation, market conditions caused by uncertainties surrounding rising interest rates, changing economic conditions and other factors we identified in our filings with the SEC. Although we believe that the assumptions on which these forward looking statements are based are reasonable, any of those assumptions can prove to be inaccurate.

Speaker 1

And as a result, the forward looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward looking statements. The forward looking statements contained on this call are made as of the date hereof, and Runway Growth Finance assumes no obligation to update the forward looking statements or subsequent events. To obtain copies of SEC related filings, please visit our website. With that, I will turn the call over to Greg.

Speaker 2

Thanks, Quinlan, and thanks, everyone, for joining us this evening to discuss our Q4 results. Today, I'll touch on 2023 highlights, provide an overview of the operating environment, discuss our key takeaways from the Q4, 2023 as a whole and share our outlook for the year ahead. In 2023, Runway took a measured approach, which delivered on our strategy and set the stage for us to take advantage of more favorable market conditions in 2024. Throughout 2023, Runway generated strong risk adjusted returns, preserved leading credit quality and reduced our leverage to free up dry powder for new deals in a more lender friendly market in 2024, while also supporting existing portfolio companies. Since the Q4 of 2022, Runway has expanded its return on equity by 33 basis points to 13.1% and annualized dividend yield by 186 basis points to 15.1%.

Speaker 2

These strong returns are underpinned by what we believe to be the least risky portfolio in the venture debt space with 99% senior secured first lien loans. Runway remains committed to driving shareholder value, which is enforced by our strong and consistent base dividend and ongoing supplemental distributions. Turning to investment activity. 2023 was a transitional year as companies and sponsors adjusted to the new normal of higher interest rates, tighter covenants, lower valuations and generally lower amounts of both debt and equity capital. Our actionable pipeline remains strong, but few deals met our underwriting criteria as companies held unrealistic expectations, particularly in the first half of twenty twenty three.

Speaker 2

As a reminder, we aspire to help the best companies access non dilutive capital to fuel growth. We are not a lender of last resort to help fix a troubled situation or give management teams one last chance to swing for the fences. We believe our operating results speak to our focus on preserving industry leading credit quality, while safeguarding our shareholders. I remain proud of the team's diligence in evaluating the influx of deals we've been presented while remaining selective in the pursuit of only the highest quality late stage companies who have demonstrated a clear path to sustainable profitability. To that end, we executed 8 investments in new and existing portfolio companies in Q4, 3 of which were new positions for the BDC.

Speaker 2

Amid the dynamic market environment, our team remains focused on mitigating risk and supporting our existing portfolio companies. In 2023, our strategy was to allow meaningful repayments to occur to reduce our leverage and increase our access to dry powder. Our low leverage ratio and ample dry powder gives us the ability to focus on opportunities that meet our high credit bar without having to worry about the terms and restrictions from our lenders. To summarize, we maintain highly selective due diligence processes and credit selection criteria in Q4, positioning us to originate attractive investments in the year ahead. We will continue to prioritize credit quality and manage our balance sheet defensively.

Speaker 2

In addition to investment activity, I'd like to mention 2 other achievements. First, we increased liquidity for our shareholders through a secondary offering in the Q4, which Tom will provide additional color on in a moment. 2nd, subsequent to quarter end, we were pleased to announce our joint venture with CADMA Capital Partners, a credit financing platform for the venture ecosystem that was established in 2023 by Apollo. Runway CADMA 1 LLC is an equal partnership between Runway and CADMA. With financing capacity of up to $200,000,000 the joint venture will focus on financing private and sponsor backed late and growth stage companies.

Speaker 2

We're thrilled to enter this partnership and look forward to updating you as appropriate in future quarters. Turning now to a recap of the 2023 operating environment. 2023 was a dynamic year in which we experienced a U. S. Regional banking crisis and the collapse of Silicon Valley Bank, which significantly impacted the venture marketplace.

Speaker 2

This period of financial stress coupled with high inflation led to cautious bank lending standards, prolonged higher for longer rates, fluctuating equity markets and declining valuations, all of which have contributed to a challenging environment for deal making across all stages. During this time, we took decisive action to protect our high quality portfolio of 1st lien loans through constant communication with management teams and the disciplined evaluation of our portfolio throughout the year. Further, as we sought to apply disciplined portfolio management and preserve credit quality, we began to see some green shoots in 2023. According to recent pitch book data, U. S.

Speaker 2

Late stage venture equity deal value was approximately $80,000,000,000 for fiscal 2023, down from record levels in 2021 2022, but still above 2020 and the years proceeding. Further, U. S. Late stage venture equity represented 47% of total deal value and 29% of total deal count, marking the strongest annual figures we've seen historically. This is a continuation of the dynamic we've observed in recent quarters, higher volumes of late stage deals but at smaller values.

Speaker 2

With borrowers seeking capital against the backdrop of a challenging fundraising environment, we believe the opportunity for Runway Growth's value proposition is clear. Companies are continuing to seek minimally dilutive capital to extend runway and supplement equity as that market remains challenged. And with this heightened demand, in 2023, we raised the bar on our rigorous and selective investment criteria. We believe our borrowers are among the highest quality in the late stage venture ecosystem. This is demonstrated by their ability to raise capital.

Speaker 2

Runway portfolio companies raised approximately $450,000,000 in equity or other junior capital relative to our $1,000,000,000 loan portfolio. And we continue to deploy prudent underwriting standards that prioritize quality over quantity. In sum, the market was turbulent in 2023, but our proactive strategy and distinctive portfolio architecture enabled us to deliver value to both our portfolio company management teams and shareholders. Tom will dive deeper into our financial performance, but I want to close with an overview of our outlook for 2024, which is consistent with previous quarters. Companies completed equity funding rounds in 20212022 at historically high valuations, which provided 24 to 36 months of runway.

Speaker 2

These companies will soon need to go to market to raise additional capital and we believe we are well positioned to take advantage of these opportunities. Increasingly, management teams turned to Runway because we are more than just a lender. We offer strategic counsel, financial expertise and an operational network that we believe drives optimal results for our borrowers and shareholders. Our team continues to see a robust pipeline of opportunities. Despite the challenging market and deal activity, our pipeline of qualified actionable deals grew relative to 2022.

Speaker 2

This demonstrates our increased discipline and tighter credit box. In the Q1 of this year, which tends to be our slowest seasonally, we have issued multiple term sheets with new borrowers. 2024 is already off to a fast start between our newly formed joint venture with CADMA and transaction activity. We look forward to sharing more in May. With that, I'll turn it over to Tom.

Speaker 3

Thanks, Greg, and good evening, everyone. Reflecting on 2023, we are proud of Runway's performance amidst a challenging operating environment for our portfolio companies and fundraising environment across the venture landscape. We completed 8 investments in the 4th quarter, representing $154,600,000 in funded loans. Our weighted average portfolio risk rating increased to 2.39 in the 4th quarter from 2.24 in the Q3 of 2023. Four portfolio companies moved from Category 2 to Category 3 during the quarter.

Speaker 3

Our rating system is based on a scale of 1 to 5, where one represents the most favorable credit rating. Our portfolio continues to be concentrated in 1st lien senior secured loans focused on the latest stage highest quality companies in the venture debt market. With 99% of our portfolio with a weighted average risk rating of 3 or better, we're focused on maintaining a high bar for evaluating investments. In line with previous quarters, we calculated the loan to value for loans that were in our portfolio at the end of the Q3 and the current quarter. We found that our dollar weighted loan to value slightly increased from 24.7 percent in Q3 to 27.8% in Q4.

Speaker 3

Our total investment portfolio had a fair value of approximately $1,030,000,000 excluding treasury bills, flat from $1,010,000,000 in the Q3 of 2023, but a decrease of 9% from $1,130,000,000 for the comparable prior year period. As of December 31, 2023, Runway had net assets of $547,100,000 decreasing from $570,500,000 at the end of Q3 of 2023. NAV per share was 13.50 4th quarter compared to $14.08 at the end of the Q3 of 2023. Included in our Q4 2023 investor presentation is a detailed NAV bridge. The decline in NAV is primarily a result of an unrealized loss of $7,700,000 on our CareCloud preferred stock holdings, which we are electing to hold as we see an opportunity for equity upside in the future, as well as the realized loss of $17,000,000 on our debt investment in Pivot 3, dollars 6,400,000 of which was reflected as an unrealized loss in our Q3 2023 financial statements.

Speaker 3

As a reminder, our loan portfolio is comprised of 100% floating rate assets. All loans are currently earning interest at or above agreed upon interest rate floors, which generally reflect the base rate plus the credit spread set at the time of closing or signing the term sheet. In the Q4, we received $63,400,000 in principal repayments, a decrease from $126,800,000 in the Q3 of 2023. This is driven primarily by our credit first approach to investing that prioritizes the highest quality late stage companies, which are ideal candidates for refinancing or acquisition in most market environments. Elevated prepayments for the quarter year are an indicator of the strength in our approach to underwriting and health of the overall portfolio.

Speaker 3

We expect additional prepayment activity throughout 2024 with activity building more significantly in the second half of this year. Further, prepayment activity provides runway with liquidity to deploy in a manner that is fully accretive. We generated total investment income of $39,200,000 and net investment income of $18,300,000 in the Q4 of 2023 compared to $43,800,000 $22,000,000 in the Q3 of 2023. Our debt portfolio generated a dollar weighted average annualized yield of 16.9% for the Q4 of 2023 as compared to 18.3% for the Q3 of 2023 and 15.5% for the comparable period last year. We attribute the spike in the yield in the Q3 of 2023 to an acceleration in prepayments.

Speaker 3

Moving to our expenses for the Q4, total operating expenses were 20,900,000 dollars down 4% from $20,700,000 for the Q3 of 2023. Runway recorded a net unrealized loss on investments of $5,900,000 in the 4th quarter compared to a net unrealized loss of $7,200,000 in the Q3 of 2023. We also had a net realized loss of $17,200,000 compared to no realized loss in the prior quarter. The 4th quarter unrealized loss on investments was predominantly due to the loss of $7,700,000 resulting from decreases in the fair value preferred equity position in CareCloud. We remain confident that our highly selective investment process and diligent monitoring of portfolio companies support our track record of maintaining low levels of non accruals coupled with generally healthy credit performance.

Speaker 3

As of December 31, 2023, we had no loans on non accrual status. Subsequent to quarter end, we placed our loan to Mingle Healthcare on non accrual status representing an outstanding principal balance of $4,300,000 at a fair market value of 3,800,000 dollars The loan comprised 0.37 percent of the total fair value of the investment portfolio excluding treasury bills as of December 31, 2023. In the Q4 of 2023, our leverage ratio and asset coverage were 0.95 and 2.05 times respectively compared to 0.79 and 2.27 times at the end of Q3 of 2023. All investments in the Q4 were funded with leverage as part of our strategy to generate non dilutive portfolio growth. Turning to our liquidity.

Speaker 3

At December 31, 2023, our total available liquidity was 281,000,000 dollars including unrestricted cash and cash equivalents and we had borrowing capacity of $278,000,000 as compared to $312,000,000 $297,000,000 respectively on September 30, 2023. We were pleased with the completion of a secondary offering of approximately 3,700,000 shares of common stock owned by Oaktree in November 2023. It's important to note that Oaktree has been a great partner to Runway since 2016 and this is just part of the natural investment lifecycle. Ultimately, we view this as a positive for the liquidity of our stock and over the long term we expect a larger public flow to attract high quality investors that understand the runway value proposition. At quarter end, we had unfunded loan commitments to portfolio companies of $201,500,000 the majority of which were subject to specific performance milestones.

Speaker 3

$42,000,000 of these commitments are currently eligible to be funded. During the quarter, we experienced 2 prepayments totaling $63,400,000 and scheduled amortization of $300,000 The prepayments include a full principal repayment of our senior secured term loan to Vero Biotech for 40,000,000 dollars and a partial principal repayment of our senior secured term loan to Brevo for $23,400,000 As mentioned on our Q3 earnings call, our Board of Directors approved a stock repurchase program giving us the ability to acquire up to $25,000,000 of Runaways common stock. To date, the company has not repurchased any shares under the stock repurchase program, which expires on November 1, 2024. Separately, during Q4, through its long term incentive plan, management of the external advisor purchased 39,473 shares of the company. Finally, on February 1, 2024, our Board declared a regular distribution for the first quarter of $0.40 per share as well as a supplemental dividend of $0.07 per share payable with the regular dividend.

Speaker 3

Looking ahead, we expect the venture market to remain challenged as ongoing uncertainty surrounding fiscal policy weighs on the U. S. Economic trajectory. While the macro environment will continue to impact our portfolio companies, we remain focused on delivering superior credit performance and preserving capital to maximize risk adjusted returns for our shareholders. With that, operator, please open the line for questions.

Operator

Thank And our first question for today will be coming from Fayon O'Shea of Wells Fargo. Your line is open.

Speaker 4

Hey, everyone. Good afternoon. Just a question, sort of higher level on the investment style and non accruals. So you've always described this strategy as growth debt, where you're lending to more so profitable companies that are transitioning or pivoting into something, but which makes them unprofitable, but that there's a core business with franchise value that mostly covers you. So in the sort of cases that are going wrong, can you touch on is it more related to the new venture or the core business that sort of falls off from your underwriting?

Speaker 4

Thank you.

Speaker 2

Yes. Hey, this is Greg. Thanks for the question. And specifically this quarter, we now have the one name on non accrual Mingle Health, as Tom spoke about on the call. That is a position that has been in our portfolio for quite some time.

Speaker 2

It is a smaller portfolio to a smaller company, which was in line with our strategy as we were originally building the book. This one has had some bumps along the road, as you can imagine, not only in terms of regulatory headwinds dealing with COVID, but also some just operational issues. We do believe that there is material value here in excess of what we are owed. The situation is very fluid right now, but we are working with them to make sure that we get the right security on this company for them to maximize the value.

Speaker 4

Okay. Thank you. Very helpful. And then also, we're seeing a lot of broadly challenging ventures. This can you talk about the sort of high level backdrop?

Speaker 4

Is there sort of a headwind on VC fundraising that's finally working its way through and impacting companies that way or just more of what we're seeing here is more run of the mill or idiosyncratic?

Speaker 2

Yes. I think there definitely are overall segment headwinds in terms of funds having less dry powder than they might have anticipated, having to take longer to raise that next fund than they may have anticipated. And as we said in our prepared remarks, 2023 really was a transitional year as the funds and the companies realize that new normal of less plentiful and smaller dollar amounts available for them, which has led to a lot of internal work, making sure that cost structures have been changed to meet the new normal in terms of actual available to liquidity, as well as making sure that they're engaging in R and D and other look forward projects that they actually will have the ability to fund through to fruition. So in long and short, there definitely are some market headwinds in terms of capital having been less available. However, on the whole, we think that that leads companies to be stronger having to face this and ramp down their burn.

Speaker 4

Awesome. All for me. Thanks so much.

Operator

Thank And our next question today will be coming from Melissa Witty of JPMorgan. Your line is open.

Speaker 5

Thanks for taking my questions today. Wanted to start with PIVOT3 in particular. I know this one has been on non accrual for a while or had been on non accrual for a while. But even as a quarter ago, I think you guys had that marked at like 65% about of cost. Trying to understand how that so quickly unraveled to a full write down in the Q4?

Speaker 2

Yes. So, speaking specifically about that name, as we had mentioned, we are exploring an IP monetization strategy with them, which we believe still has viability and we believe still has the chance for success. However, just looking at the timeframe and potential additional capital required, we realized that, we have less confidence in that capital being raised in the near term. We've been clear from the beginning that we're not in the business of funding risk capital for IP litigation. We're in the business of recovering capital.

Speaker 2

So just feedback around the timeframe, not the viability of that has led us to revisit the mark as we have transitioned through a credit bid away from the loan.

Speaker 5

Okay. I also wanted to try to reconcile some of the comments that you're making about expecting elevated prepayment activity, particularly in the back half of 'twenty four, but also noting that there were a lot of investments that weren't sort of meeting your threshold to make it into the portfolio. Should we be thinking about 2024 as a flat to maybe deleveraging year for the portfolio?

Speaker 3

Sure. So I think thanks for the question, Melissa. Nice to hear from you. As we think about the pattern and we look forward, the pattern of prepayments and we look forward, we have a sense as to what will come. The theme for this year really for us is sticking to our knitting, not changing the standards, focusing on the portfolio that we have in place.

Speaker 3

There's obviously a significant number of deals in the pipeline that we could do. We always ask should we do them. So I think in terms of the portfolio, we'd like it to be flat, at least flat, if not slightly up. We'd like to see our leverage over slightly over 1 by the end of the year, but we're not going to compromise our credit standards in this environment to get there.

Speaker 2

Yes. And the only thing I would add to that completely agree to add another idiom of beyond sticking to our knitting. We really view the portfolio as a marathon, not a sprint. Our view is to and goal is to have liquidity and access to capital to make loans, the best loans to the best companies as the market has the availability for it.

Speaker 5

Thank you.

Operator

Thank you. One moment for the next question. Our next question today will be coming from Bryce Roe of B. Riley. Your line is open.

Speaker 6

Thanks so much. Good afternoon. Wanted to maybe start around the unrealized depreciation in the quarter beyond what you saw from CareCloud. I think, Greg, you mentioned or maybe it was Saum, you mentioned 4 companies that went from an internal rating of 2 to 3 and assume that there might have been some fair value mark associated with that. Can you maybe talk about some of that fair value mark process in the quarter again away from CareCloud and I guess the reversal of the unrealized depreciation that you already had on Pivot 3?

Speaker 3

Sure. Thanks, Bryce. Well, by far the 2 largest components were CareCloud and Pivot3. There was also a marked change in the equity portfolio that was roughly $1,000,000 on our warrant position in ARIA. And the rest were really nothing significant, frankly, even in the names that went from 2 to 3.

Speaker 3

I would say as a whole we probably adjusted our discount rates up just a bit, which had that impact. But there was nothing that was really monumental or alarming. It was just kind of natural drift outside those 3 that we talked about adding the equity piece in our end.

Speaker 6

Okay. That's helpful, Tom. And maybe just a question or 2 around the joint venture. The can you talk about maybe the type of investment that will go into the joint venture? Is it similar to what you would put in your own portfolio?

Speaker 6

And then what type of kind of equity debt do you expect to I guess as a capital structure for that joint venture?

Speaker 3

Sure. Well, first of all, I just want to say we are delighted to have the strength venture with CADMA. CADMA is run by some Silicon Valley veterans who really know the ecosystem and the venture lending market very well. And then of course, being part of Apollo, one of the world's largest all investment managers, that's quite significant. In terms of amount that we're putting in, initially we're each putting in $35,000,000 in equity and then we've arranged financing to take it up potentially to 200 or even more.

Speaker 3

So that's the initial cap structure that we're thinking about. And in terms of the focus, it's really largely what we're doing. We view this as an opportunity, particularly in a situation where we can't, won't go to the equity markets is an opportunity to continue for us to stay in the market with those late stage companies where the deals tend to be larger, diversify the portfolio through that JV, through our interest in the JV and add a new earnings stream.

Speaker 6

Great. And Tom, in terms of kind of helping us think about how that could ramp, I mean, like you said, you all will typically underwrite maybe larger deals, dollar volume deals. And so it theoretically wouldn't take, but a few to really ramp that thing off your mind. Am I thinking about that the right way?

Speaker 3

To some extent, I think our view is also to build diversification and Cadmium's view too is to build diversification within the JV. So I think you should think of it as an equity ramp through the balance of this year. We don't intend to sell any loans from our book into that joint venture at this point. And I don't think that's going to change. So I would view it as a steady ramp through the year, but keeping diversification in that JV relative to the size as it grows.

Speaker 3

Okay.

Speaker 6

All right. That's great. Appreciate the answers.

Speaker 3

Sure thing.

Operator

Thank you. You. The next question is coming from Eric Zwick of Hovde Group. Your line is open.

Speaker 7

Good afternoon. Maybe just start with a follow-up on kind of Bryson's question on the JV. Just curious if the partnership with Padma and you mentioned kind of relationship with Apollo as well. Does that broaden the kind of sourcing funnel at all? Any benefits from that partnership as well?

Speaker 3

Yes. I mean, it's certainly a strategic expanding sources of capital.

Speaker 7

Thanks. And then just with regard to the current pipeline, can you provide any color in terms of the mix as it kind of pertains to new investments versus add ons? And are there any particular industries that you're seeing are more active today in the pipeline?

Speaker 2

Yes. I'd say the pipeline is definitely weighted more towards new investments. We always are mining the portfolio to see opportunities to give more money to the best companies outside of our already scheduled delayed draws. In terms of sector, I think we're seeing a lot of opportunity across the gamut of the 3 legs of our investing universe, technology, life sciences as well as consumer and expect the split to remain consistent throughout this year.

Speaker 7

Thanks, Greg. And last one for me, just curious about your appetite to use the repurchase authorization kind of in 2024 at all?

Speaker 8

I think that's really a function

Speaker 3

of where the stock trades. I mean there are 2 ways to return capital to shareholders. 1 is to build the book and continue to grow the dividend. And the other is to repurchase shares. Ultimately, we'd like to get to the point where we can raise equity.

Speaker 3

So if we get trading closer to NAV or at some point, hopefully, above NAV here, I would expect to see usage under that program to be less significant.

Speaker 7

Appreciate that. Thanks for taking my questions today.

Speaker 3

Sure thing, Eric.

Operator

Thank you. One moment for the next question. Our next question will be coming from Mickey Schleien of Lindenberg. Your line is open.

Speaker 9

Hi, yes. Good afternoon, everyone. Not to beat

Speaker 2

a dead horse, but I have

Speaker 9

a few more questions on the JV. First, Tom, could you repeat what you said was the debt to equity target for the JV?

Speaker 3

Sure. So and Mickey, thanks for joining today. Initially, it's going to be $70,000,000 in equity, which will be comprised of 50%, so $35,000,000 from each of us. And then we'll grow to at least with that equity base up to $200,000,000 so another $130,000,000 in debt.

Speaker 9

I understand. And Tom, what is your target return on invested capital on the JV?

Speaker 3

Yes. So the asset level returns are really going to be the same as what we're looking at in the core portfolio. They shouldn't vary significantly. So you just apply the leverage and we would think that we get very similar return on equity, if not a little greater on that because it's more leverage.

Speaker 9

I understand. And just want to confirm, Cadmium is 100% owned by Apollo, is that right?

Speaker 3

That's a question for Apollo, really so, but CADMA is definitely part of Apollo.

Speaker 9

And how does Oaktree feel about runway working with Apollo given Oaktree and Apollo obviously are competitors?

Speaker 3

Oaktree continues to be a very supportive partner and they understand that we're going to do things to expand our footprint, our access to capital and they embrace it. Obviously, Oaktree is on our board and they were fully supportive of the program. And it's something that we've talked about and has had a fairly meaningful gestation period.

Speaker 9

I understand. And the JV is not going to be competing with any other part of Apollo, is that correct?

Speaker 3

That's our objective, yes.

Speaker 9

Okay. And how will you allocate deal flow between the BDC and the JV?

Speaker 3

So our goal in the BDC is really to increase our diversification in the portfolio. There are certain limitations under our lending agreements that where it drops out. So there's a series of limitations deals over a certain dollar amount. We lose in our borrowing base for the key bank revolver to the extent we hit concentrations in various industries or maturities, things like that. But those the JV will pick those up first and allow us to maximize the availability under our revolver and effectively utilize our leverage there.

Speaker 3

So that's really the focus on the allocation is making sure that we're using our leverage effectively and using the assets effectively to gain leverage.

Speaker 9

Understand. And just lastly, last quarter, you gave us a little bit of an update on David's the expectation for David's Renga return to day to day involvement with the company. Anything you can say on that at this time?

Speaker 3

Yes, really no change. We expect David to be back later this year. I know he certainly appreciates all the well wishes he's received. And Greg and I speak with David quite frequently.

Speaker 9

Okay. Thanks for that. Those are all my questions. Appreciate it.

Operator

Thank you. Our next question will be coming from Casey Alexander of Compass. Your line is open.

Speaker 8

Yes. Sorry, I missed quite a bit of this call because I had another conference call that started at 4:45. So I apologize for that. I do want to confirm that if I read the release correctly, in the Q4, you did not repurchase any shares?

Speaker 3

That's correct.

Speaker 8

And I'm curious why after the Oaktree offering in November when the stock was quite weak, how come you chose not to repurchase some shares in that window?

Speaker 3

Well, Casey, we looked at how the stock traded. We looked at the opportunities for us to deploy capital. And the stock really moved back in our opinion into a trading range where we felt it could stand on its own and decided to reserve that dry powder that either in the program itself or the dry powder from on our balance sheet for a period where there was a greater need.

Speaker 8

Okay. All right. Well, I'll get the rest of this from the transcript. I'm sorry, I got here late and I don't want to ask you to repeat anything that you've already said.

Speaker 3

Casey, we're glad to have you.

Speaker 9

Glad to have you, Casey.

Operator

Thank you. And at this time, there are no more questions in the queue. And I would like to turn the call back over to Greg Grafel for closing remarks. Please go ahead, sir.

Speaker 2

Thank you, operator. We see immense opportunity for growth in the year ahead and believe we are well positioned to provide essential support for high quality late stage companies that are faced with a variety of nuanced funding challenges. Thank you all for joining us today. We look forward to updating you on our Q1 2024 financial results in May.

Operator

This concludes today's conference call. Thank you for participating. You may all disconnect.

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Runway Growth Finance Q4 2023
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