Scott Bluestein: Yeah. Pretty typical quarter for us where we have funding activity in each of the three months of the quarter, but the vast majority did come once again in the last month of the quarter.
John Hecht: Okay. And then the core yield guidance, is that a function of bigger, later stage companies or is it just market rates or how do we think about that?
Scott Bluestein: Yeah you’re thinking about it the right way, as far as larger later stage deals that we’re concluding John. And as I had mentioned it in my commentary it was the decrease in the core yield was largely related to those new originations and that’s what causes us to die down a little bit looking forward.
John Hecht: Okay. And then how do we, like — the fee — kind of fees as a percentage of call it activity, which would be both originations and then prepayments. I guess, it’s more prepayment or repayment fees. Is there anything changing there, anything we should be cognizant about in terms of what’s going on in the New Deal market?
Scott Bluestein: No, no, pretty consistent, John. So we’re not seeing a change. Quarter-to-quarter, we do have a variety of outcomes based on the specific transactions that pay-off — pre-pay, on whether they do have back-end fees, what the size of the back-end fee is, how old the deal is. And so while we typically give the guidance of either 3% to 4% on the acceleration, it could be much less or it can actually be higher in some instances. So it really depends on the specific deals, what the arrangements were, and the age of that deal, whether it’s fully or nearly fully amortized. So that changes, but as far as the agreements that we’re putting in place and the fees that we’re arranging on new business, there’s no trend difference there.
John Hecht: Okay. That’s helpful. Thanks.
Operator: Thank you for your question. Our next question comes from the line of Vilas Abraham of UBS. The floor is yours.
Vilas Abraham: Hey, everybody. Thanks for the question. Just one from me. You know, given the strong origination outlook that you’re discussing on the call. Can you just talk a little bit about Hercules capacity right now, ability to support that just from a people and a technology perspective and any areas you might be thinking about doing further investment in? Thank you.
Scott Bluestein: Sure. Thanks, Vilas. If you look at what we did in 2021 and in 2022, we made significant investments in the business. Our full-time employee account now is up over 110. Throughout the course of the last 24 months, we’ve added to all groups and at all levels of the company. We made some very strategic intentional additions to the investment team over the course of the last 12 months. We have boosted our back office and credit team. We have improved our operations team and our finance team. We’ve added to our legal team. So we feel very good about where we are right now from a headcount perspective and the fact that we have the ability to support some pretty extensive growth over the next year or so. In terms of the balance sheet, the balance sheet as we’ve mentioned several times is very well positioned.
We have nearly $500 million of liquidity in the BDC, nearly $850 million of liquidity across the platform. We are under-levered relative to our historical targets from a GAAP perspective and from a regulatory perspective. And so we think we’re very well positioned to be able to take advantage of growth. I think the key caveat and comment that I’ll make is we’re going to take advantage of the growth if it’s quality growth, right? We’re not interested in growing the business just for the sake of putting assets on the books. Every deal that we do has to meet our credit screens and it has to be a deal that we think is in the long-term best interest of our shareholders and stakeholders.
Vilas Abraham: Got it. Thank you.
Operator: Thank you for your question. Our next question comes from the line of Christopher Nolan. The floor is yours.
Christopher Nolan: Hey guys, congratulations on a really good quarter. Last week Moody’s gave a downgrade the outlook or gave caution to the outlook for direct lenders, while Hercules was not specifically listed among the ones that did. Have you guys had any direct conversations with the Moody’s related to this at all?
Scott Bluestein: We are in [constant contact] (ph) with all the rating agencies in which we work with. There’s no indication that they have any concern about our business. In fact, their guidance they shared with us was just trying to be cautious about the sector, the outlook, the performance of our competitors, as you know, Chris has not been stellar. So I think that we stand out a little bit differently than them and that’s basically the conversation that they have with us as well.
Christopher Nolan: Okay, and have they been expressing any concerns or outlook or anything related to the venture ecosystem, which — because you guys do send a little bit apart from the other guys.
Scott Bluestein: Not that they shared with us, but I would definitely discuss that with them and see what their view is on that.
Christopher Nolan: Finally, you have some debt maturing in 2024. Is the idea to just use the credit facility to refinance that?
