8-K: Runway Growth Capital to be Acquired by BC Partners Credit, Expanding Investment Capabilities

Runway Growth Capital has entered into a definitive agreement to be acquired by BC Partners Credit, aiming to enhance its investment solutions and expand its origination channels.

Summary

• Runway Growth Capital LLC will be acquired by BC Partners Credit, the credit arm of BC Partners.
• Runway will continue to operate independently as the external investment advisor to Runway Growth Finance Corp.
• The current leadership and investment teams at Runway will remain in place.
• The transaction is expected to close in the fourth quarter of 2024, subject to customary closing conditions.
• A key condition is the approval of a new investment advisory agreement by Runway Growth Finance Corp.'s stockholders, with terms expected to remain the same as the existing agreement.
• The acquisition aims to expand Runway's origination channels and enhance its investment solutions.
• Runway's target investment range is $30 million to $150 million.
• The deal will introduce structured equity preferred investments, asset-based lending, and equipment leasing capabilities.
• BC Partners Credit has $8 billion in assets under management, while BC Partners has approximately $40 billion AUM.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook with the acquisition expected to enhance Runway's capabilities and deliver value to investors and borrowers. The language used is optimistic and forward-looking.

Positives

• The acquisition is expected to deliver increased value for both investors and borrowers.
• Runway will have access to BC Partners' origination capabilities and expansive platform.
• The transaction will expand Runway's offerings to include structured equity, asset-based lending, and equipment leasing.
• Investors will benefit from increased exposure and access to a greater number of investment opportunities.
• The deal is expected to accelerate Runway's growth trajectory.

Risks

• The transaction is subject to customary closing conditions, including stockholder approval of a new investment advisory agreement.
• There is a risk that the transaction may not close if the conditions are not met.
• The integration of Runway into BC Partners Credit could present unforeseen challenges.

Future Outlook

The transaction is expected to deliver increased value for both investors and borrowers in the nearand long-term, with Runway accelerating originations and expanding its offerings. The combined entity will offer more comprehensive financing solutions for a wider range of companies.

Management Comments

• David Spreng, Runway Founder and CEO, stated that the transaction is expected to deliver increased value for both investors and borrowers.
• Ted Goldthorpe, Head of BC Partners Credit, noted that Runway has built one of the most well-respected platforms across growth and venture lending.
• Runway's management team has agreed to vote their shares in favor of the transaction.

Industry Context

This acquisition reflects a trend of consolidation and strategic partnerships in the private credit and alternative investment space, as firms seek to expand their capabilities and market reach. It also highlights the growing importance of venture lending as an alternative to traditional equity financing.

Comparison to Industry Standards

• The acquisition of Runway by BC Partners Credit is similar to other strategic acquisitions in the alternative investment space, where larger firms acquire specialized platforms to expand their offerings.
• BC Partners Credit's $8 billion AUM is a significant player in the private credit market, but smaller than some of the largest global credit funds.
• Runway's focus on growth loans between $30 million and $150 million is a common target range for many middle-market lenders.
• The expansion into structured equity, asset-based lending, and equipment leasing is a common strategy for credit firms looking to diversify their offerings.

Stakeholder Impact

• Shareholders of Runway Growth Finance Corp. will need to approve the new investment advisory agreement.
• Investors are expected to benefit from increased exposure and access to a greater number of investment opportunities.
• Borrowers are expected to benefit from more comprehensive financing solutions.
• Employees of Runway are expected to remain in their current roles.

Next Steps

• Runway Growth Finance Corp. will file a proxy statement with the SEC.
• Stockholders of Runway Growth Finance Corp. will vote on the new investment advisory agreement.
• The transaction is expected to close in the fourth quarter of 2024.

Key Dates

Keywords

acquisition, BC Partners Credit, Runway Growth Capital, investment advisor, venture lending, business development company, private credit, capital formation, origination, structured equity, asset-based lending