Trinity Capital equipment finance portfolio up 37%

Capital market financing firm Trinity Capital increased its equipment finance portfolio outstandings in 2023 as it experienced record portfolio growth. 

BY THE NUMBERS: Phoenix-based Trinity Capital grew its equipment finance and total portfolio in the fourth quarter and for the year amid the company’s expansion, according to its 10-K report filed March 6 with the Securities and Exchange Commission. 

• Equipment financing investments totaled $136.9 million in Q4, up 372.1% year over year; 
• Outstandings landed at $336.8 million in aggregate fair value for 2023, an increase of 36.9% YoY; 
• Total investment portfolio at aggregate fair value totaled $1.3 billion in Q4, up 19.3% YoY; 
• Equipment financings and loans to five portfolio companies were on non-accrual status with a total fair value of approximately $43.2 million, or 3.5% of the total portfolio, at the end of Q4, up 142.7% YoY or 1.8 percentage points; 
• Equipment finance represented 26.4% of Trinity’s investment portfolio at year-end, an increase of 390 basis points YoY;  
• Total gross investments for the full year increased 1.7% YoY to $641.8 million; 
• Total portfolio weighted average risk rating score ticked down to 2.7, compared with 2.8 at year-end 2022.   

STATE OF PLAY:  

Trinity Capital’s significant jump in equipment financing investments in Q4 came in large part to its investment in space equipment manufacturer Rocket Lab, Chief Operating Officer Gerry Harder said during the company’s March 6 earnings call. 

“We recently announced the commitment of $120 million in aggregate equipment financing to Rocket Lab, a leading provider of space launch services and advanced satellite technology,” he said. “This deal closed just prior to year-end and shows on our year-end schedule of investments for the cost and fair value of $108.4 million for the equipment financing.”

FLASHBACK:  In December 2022, Trinity Capital invested in a joint venture with an unnamed specialized credit manager to provide equipment financing and loans to growth-stage companies, according to a previous company release.  

Trinity Capital had a 12.5% stake in the joint venture at yearend 2023, according to the company’s 10-K. In addition, Trinity Capital received $41 million in scheduled repayments and $25 million of proceeds from sales to the joint venture, Harder said. 

NOTEWORTHY:

While Trinity Capital’s non-accrual loans represented 3.5% of its total portfolio at year-end, the company settled with its largest debtor, Core Scientific, following Core Scientific’s bankruptcy, Harder said. 

“Subsequent to year-end, we removed our investment in Core Scientific from non-accrual status after its January 2024 exit from Chapter 11 bankruptcy and our election to receive shares of its common stock in lieu of our debt investment,” he said. “As we have communicated in the past, in general, we are not equity investors and would anticipate making an orderly sale of our equity position for the benefit of our shareholders.” 

The remaining four non-accrual companies represent 1.5% of the company’s portfolio at fair value. 

MARKET REACTION: Shares of Trinity Capital (NASDAQ: TRIN) were up 1.28% from market open to $15.08 as of market close today. Trinity Capital has a market capitalization of $700.27 million.  

Registration is now open for Equipment Finance Connect, the nation’s only dealer-centric equipment lending and leasing event, which will take place May 5-7 in Nashville, Tenn. Learn about the event and free dealer registration at EquipmentFinanceConnect.com.