Capital market financing firm Trinity Capital increased its equipment finance portfolio outstandings in the second quarter of 2024 as equipment financings represented the largest funding area for the firm.
STATE OF PLAY:
More than half of Phoenix-based Trinity Capital’s gross funding in the second quarter came in the equipment financing space as the company continued to grow that segment of its expanding operations, Chief Operating Officer Gerry Harder said during today’s earnings call.
Of $231 million in gross funding in Q2, 52% was in the equipment financing segment, 15% in life sciences, 15% in tech lending, 9% in sponsor finance and 6% in warehouse lending, he said.
On a cost basis, Trinity’s total portfolio consisted of approximately 71% secured loans, 23% equipment financing, 4% equity and 2% warrants at the end of the quarter, Harder said.
FLASHBACK: Trinity Capital experienced a jump in equipment financing investments in Q4 when it entered a joint venture with space equipment manufacturer Rocket Lab USA. It remains the company’s largest investment, Harder said in the call.
Rocket Lab represented 3.6% of Trinity’s debt portfolio and 3.4% of its total portfolio on a cost basis as of the end of Q2, he said.
“Our 10 largest debt investments collectively represent 24.7% of our total portfolio on a cost basis,” he said.
BY THE NUMBERS:
Trinity Capital reported that it increased its equipment finance and total portfolio in Q2. Trinity also reported:
- Equipment financing investments landed at $118.3 million in Q2, a rise of 198% year over year;
- Outstandings totaled $332.6 million in aggregate fair value for 2024, up 36.3% YoY;
- Total investment portfolio at aggregate fair value reached $1.4 billion in Q2, up 27.3% YoY;
- Equipment finance represented 23.3% of Trinity’s investment portfolio at the end of Q2, up 200 basis points YoY;
- The total portfolio weighted average risk rating score inched down to 2.7, compared with 2.8 as of June 30, 2023.
With the company’s venture debt division representing its most established operation, other verticals are growing by a larger percentage of the expanding portfolio, Trinity Capital CEO Kyle Brown said.
“Our venture debt business is a little bit more at scale, so it’s growing at a little bit slower on a percentage basis, where sponsor finance, life science, equipment are all growing at a higher percentage as those businesses get up to scale,” Brown said.
MARKET REACTION: Shares of Trinity Capital (NASDAQ: TRIN) were up 2.34% or 33 cents from market open to $14.39 as of market close today. Trinity Capital has a market capitalization of $713.98 million.
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