Conferencia de resultados del T3 de 2026 de Trinity Capital (TRIN): El NII cubre el dividendo, el NAV alcanza los 1.300 millones de dólares

Conclusiones clave

• Los ingresos totales por inversiones aumentaron un 30% interanual hasta alcanzar los 98 millones de dólares. Los ingresos netos por inversiones alcanzaron los 50 millones de dólares, o 0,52 dólares por acción, lo que cubre el 103% de la distribución trimestral de 0,51 dólares.
• Los activos netos totales aumentaron un 5% intertrimestral y un 33% interanual hasta alcanzar la cifra récord de 1.300 millones de dólares. El NAV por acción subió 0,14 dólares hasta los 13,61 dólares, debido principalmente a emisiones acrecentadoras a través del programa ATM.
• Los AUM de la plataforma crecieron un 31% interanual hasta los 3.400 millones de dólares. Los fondos gestionados y las empresas conjuntas aportaron 0,05 dólares por acción al NII trimestral.
• Trinity Capital financió 614 millones de dólares durante el tercer trimestre y añadió 880 millones de dólares en nuevos compromisos. Los compromisos no desembolsados totalizaron 1.400 millones de dólares, aunque el 91% sigue sujeto a la debida diligencia y a la aprobación del comité de inversiones.
• Las métricas de crédito mejoraron, y las inversiones en mora disminuyeron al 0,7% de la cartera a valor razonable. Las posiciones de primer rango (first-lien) representaron el 89% del principal, mientras que los préstamos respaldados por empresas presentaron un promedio ponderado de relación préstamo-valor (LTV) del 22%.
• La dirección señaló que la cartera de oportunidades (pipeline) de originación es la mayor en la historia de Trinity Capital y prevé que los diferenciales en 2027 se mantengan estables o al alza, sujetos a la liquidez del mercado y a las condiciones competitivas.

Datos financieros principales

Rendimiento empresarial y operativo

Las cinco verticales de préstamo de Trinity Capital respaldaron un amplio despliegue durante el trimestre. La financiación de equipos representó el 26% de los fondos otorgados en el tercer trimestre, seguida de los préstamos al sector tecnológico con un 18%, la financiación a patrocinadores con un 17%, salud y ciencias de la vida con un 15%, y los préstamos basados en activos con un 14%. El 10% restante se destinó a entidades fuera de balance.

La cartera abarcó 24 sectores, sin que ningún prestatario representara más del 3% de la exposición total. La tecnología financiera fue el mayor sector, con un 15% del coste de la cartera repartido entre 18 prestatarios. La exposición relacionada con la IA se dividió entre plataformas de infraestructura y de automatización, representando cada una menos del 7% del coste de la cartera.

La rotación de la cartera continuó. Aproximadamente el 78% de los activos al coste se originaron desde principios de 2025, mientras que las añadas anteriores a 2024 representaron menos del 7%. La duración media de los préstamos vencidos fue de 30 meses.

Los fondos gestionados y las empresas conjuntas aportaron casi 1.000 millones de dólares en capacidad. El fondo SBIC cerró más de 75 millones de dólares en compromisos de capital y, utilizando apalancamiento federal con una ratio deuda-capital de 2:1, la dirección prevé que cree más de 300 millones de dólares en capacidad para la plataforma a plena escala.

Trinity Capital también lanzó una segunda empresa conjunta con Capital Southwest. El vehículo se enfoca en activos de financiación a patrocinadores y cuenta con una capacidad potencial de 500 millones de dólares. La primera empresa conjunta con Capital Southwest poseía 132 millones de dólares en activos repartidos en 14 empresas de la cartera al cierre del trimestre.

Posición de capital y de crédito

La empresa reembolsó 125 millones de dólares en bonos no garantizados que vencieron en agosto. También anunció una oferta de 350 millones de dólares en bonos sénior no garantizados a un plazo superior a cinco años el último día del trimestre; la transacción se cerró tras el cierre del trimestre.

Trinity Capital captó 58 millones de dólares a través de su programa ATM con una prima promedio del 32% sobre el NAV. La dirección señaló que la emisión tuvo un efecto acrecentador para los accionistas actuales.

La calidad crediticia se mantuvo estable. Alrededor del 99,3% de las inversiones en deuda a valor razonable estaban al corriente de pago, y la calificación crediticia interna media mejoró ligeramente a 3,1 en una escala de cinco puntos. Tres empresas de la cartera se encontraban en mora, tras liquidarse dos pequeñas inversiones en mora y sin que se añadieran nuevos créditos durante el tercer trimestre.

El trimestre incluyó 7,5 millones de dólares en pérdidas netas realizadas, compensadas en parte por 4,4 millones de dólares en revalorizaciones netas no realizadas.

Perspectivas de la dirección

La dirección declaró que la cartera de oportunidades actual es la mayor en la historia de la empresa. Se prevé que la financiación de equipos se mantenga comparativamente sólida, impulsada por la demanda nacional de equipos y fabricación, incluida la actividad relacionada con la infraestructura de IA.

De cara a 2027, la dirección prevé que los diferenciales se mantengan estables o al alza a medida que la liquidez crediticia se vuelva más restringida. Se trata de una visión de la dirección y no de una guía financiera cuantificada.

La empresa prevé que los fondos gestionados se conviertan con el tiempo en una contribución más significativa a los beneficios. La dirección indicó que la asignación trimestral de gastos de aproximadamente 2 millones de dólares al asesor de inversiones registrado es un ritmo de ejecución (run rate) razonable a corto plazo si no se lanzan nuevos vehículos y los fondos existentes crecen de manera uniforme.

Para la nueva empresa conjunta de financiación a patrocinadores con Capital Southwest, la dirección tiene la intención de aumentar el apalancamiento de aproximadamente 1:1 hacia 2:1. La línea de crédito revolvente subyacente ofrece actualmente un porcentaje de anticipo de aproximadamente el 60% al 70%.

Riesgos y aspectos a vigilar

• De los 1.400 millones de dólares en compromisos no desembolsados, el 91% sigue condicionado a la continuidad de la debida diligencia y a la aprobación del comité de inversiones. Por lo tanto, el despliegue futuro no está garantizado.
• Los ingresos por comisiones se beneficiaron de comisiones de originación, agente, pago anticipado y salida. Estas partidas dependen de las transacciones y pueden fluctuar con las originaciones y las amortizaciones.
• La dirección señaló que las amortizaciones varían de manera natural en cada trimestre y no identificó el nivel de amortización más elevado del tercer trimestre como una tendencia continuada.
• Unos tipos de interés más altos pueden incrementar los ingresos actuales debido a que la mayoría de las líneas cuentan con suelos pero no con techos. Sin embargo, también pueden acelerar las refinanciaciones y las amortizaciones.
• La dirección está evaluando la incertidumbre regulatoria y política que afecta a la construcción de centros de datos y al despliegue de GPUs antes de comprometer capital adicional.
• La suscripción de riesgos en el sector del software incorpora la potencial disrupción de la IA, lo que incluye evaluar si los prestatarios cuentan con productos defensibles, una tracción de clientes consolidada y sistemas profundamente integrados.

Lo más destacado del turno de preguntas y respuestas de los analistas

Empresa conjunta de financiación a patrocinadores: El nuevo vehículo con Capital Southwest coinvertirá en transacciones de financiación a patrocinadores originadas por Trinity. Los prestatarios objetivo son generalmente empresas maduras con EBITDA positivo del segmento medio-bajo del mercado, en particular negocios de software integrado y compañías de servicios seleccionadas.

Mix de originación: Los compromisos no desembolsados ofrecen una indicación de la cartera de oportunidades. Aproximadamente un tercio se refiere a salud y ciencias de la vida, alrededor de un cuarto a financiación de equipos y aproximadamente un 20% a préstamos tecnológicos, correspondiendo el resto a préstamos basados en activos y financiación a patrocinadores.

Ingresos por comisiones: La financiación de equipos suele generar comisiones de cierre y estructuración del 2% al 3%. El tercer trimestre también se benefició de comisiones por pago anticipado en préstamos tecnológicos y ciencias de la vida, junto con comisiones de originación y de agente.

Emisión del programa ATM: La dirección atribuyó el ritmo más lento de emisión del programa ATM en el tercer trimestre a un mayor nivel de amortizaciones y sindicaciones. La empresa planea seguir utilizando el programa cuando la emisión tenga un efecto acrecentador para el NII o el NAV y se ajuste a las necesidades de financiación.

Apalancamiento operativo: La dirección prevé que los gastos aumenten a medida que crezca la plataforma, pero señaló que los ingresos deberían incrementarse a mayor ritmo con el tiempo. Los costes de suscripción crediticia y gestión de cartera se comparten entre los vehículos de coinversión, mientras que los gastos contables y administrativos específicos de cada vehículo son asumidos por el vehículo correspondiente.

Transcripción completa de la llamada de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Good morning, everyone. My name is Bo, and I will be your conference operator today. At this time, I would like to welcome everyone to Trinity Capital's Third Quarter 2026 Earnings Conference Call, which is being held on November 4, 2026. [Operator Instructions]

It is now my pleasure to turn the call over to Trinity Capital's Head of Investor Relations, Mr. Ben Malcolmson. Please go ahead, sir.

Ben Malcolmson

Thank you, and welcome to Trinity Capital's Third Quarter 2026 Earnings Conference Call. Speaking on today's call are Kyle Brown, Chief Executive Officer; Sarah Stanton, General Counsel and Chief Compliance Officer; Michael Testa, Chief Financial Officer; and Gerry Harder, Chief Operating Officer. Also joining us for the Q&A portion of the call is Ron Kundich, Chief Credit Officer.

Earlier today, we released our third quarter 2026 financial results, which are available on our website at ir.trinitycapital.com. As a reminder, certain statements on this call may be considered forward-looking under federal securities laws. For a full discussion of the risks and uncertainties related to these statements, please refer to our most recent SEC filings.

With that, allow me to turn the call over to Trinity Capital's CEO, Kyle Brown.

Kyle Brown

Thanks, Ben. Trinity Capital had a strong quarter across the board, and TRIN's stock year-to-date total return of 31% remains first in BDC space as of the end of Q3. We believe 3 key aspects are driving that: a diversified lending enterprise with 5 verticals spread across 24 industries, a growing managed funds platform which generated $0.05 per share of NII benefit in Q3, and an internally managed structure that keeps our interests aligned with our investors.

Let's start off with some shareholder-friendly news for Q3. As of September 30, TRIN's total shareholder return is the best in the BDC space over the past 1, 3 and 5 years. From our IPO in 2021 to the end of Q3, TRIN's stock has produced a total return of 177%, outperforming the S&P 500's 119% and the S&P BDC Index's 61% over the same time period. We're paying a $0.17 monthly dividend through the end of Q4, and TRIN shareholders have now been the recipients of consistent distribution for 7 consecutive years.

Looking forward, we have warrant positions in 128 portfolio companies, which have the potential to provide incremental upside to our shareholders. Here are some highlights from TRIN's performance during the third quarter. Net investment income increased to $0.52 per share, exceeded our $0.51 distribution during the quarter, driven in part by our best-in-class ROAE of 15.5%. Our credit remains strong, with nonaccruals improving to 0.7% of the portfolio at fair market value.

Our net asset value grew 5% quarter-over-quarter and 33% year-over-year to a record $1.3 billion. Also, NAV per share increased 1% from $13.47 to $13.61 quarter-over-quarter. It was a quarter defined by outperformance across NAV, originations and credit quality. Platform AUM increased to $3.4 billion, up 31% year-over-year, as we continue to grow thoughtfully and strategically. We funded $614 million in Q3, and our pipeline is thriving, with $880 million of new commitments in Q3 and $1.4 billion in total unfunded commitments as of September 30. As a point of emphasis, 91% of our unfunded commitments remain subject to ongoing diligence and investment committee approval, with just 9% unconditional, a structure that preserves underwriting discipline for future deployments.

Our originations activity is only possible because of our strong underwriting culture. Both leading and lagging indicators of credit are positive, including sub-1% nonaccruals, improved watch list movement and best-in-class PIK of 1%. Driven by an experienced team and proprietary pipeline, our consistency in originations and underwriting reflect a strong performance across Trinity's 5 lending verticals: tech lending, equipment finance, health care and life sciences, sponsor finance and ABL. Our 5 verticals provide meaningful diversification while keeping us directly within our core competencies.

Each vertical is staffed by world-class originators, underwriters and portfolio managers, creating a scalable model that drives results without sacrificing focus. For example, our tech lending vertical is one of the top most 2 active players in the venture debt space, while our equipment finance unit has deployed more than $1.7 billion in its history and currently has a portfolio approaching $600 million. And as a direct lender, we originate our own deals, we're the agent on almost all deals, and have immaterial overlap with other BDCs, giving our investors access to a genuinely differentiated portfolio.

Our goal since day 1 hasn't changed: outearn the dividend, grow the business and do it the right way. That means owning our own pipeline, underwriting our own deals to our standards and making decisions as one aligned team. That alignment starts with structure. As an internally managed BDC, there's no external manager collecting fees. Our employees, management and Board, we all own the same shares. We operate like shareholders because we are shareholders. Insiders own approximately 5% of TRIN shares as of the end of Q3. So our commitment to consistent dividends and long-term value creation is more than just a talking point. It's a reality. And the fees generated through our managed funds flow back to the public BDC, creating incremental income that benefits shareholders directly rather than flowing to a third party.

What we're building is a platform with unique diversification, growing scale and a managed funds business that's delivering meaningful income above our loans. This architecture is the product of a consistent strategic decisions made quarter-over-quarter, year after year. Q3 proved once again that the model is working. Our pipeline is active, underwriting discipline is strong, and our capitalization strategy has been constructed to grow earnings power over time. Trinity is built for now and for what's next.

From here, General Counsel, Sarah Stanton, who spearheads our corporate development efforts, will walk through updates on our managed funds platform. Sarah?

Sarah Stanton

Thank you, Kyle. Our managed funds and joint ventures continue to scale meaningfully, with nearly $1 billion of capacity across these strategies. The managed funds platform contributed $0.05 per share of NII benefit in Q3, enhancing returns for TRIN beyond the income generated by our BDC portfolio. We'd like to highlight 2 recent developments in our managed funds platform.

First, our SBIC fund has now closed more than $75 million in equity commitments and is already being deployed. At a 2:1 debt-to-equity ratio with low-cost leverage from the federal government, the SBIC fund is expected to create more than $300 million of incremental platform capacity at full scale. Meanwhile, we recently closed a second JV with Capital Southwest. This latest JV serves as a co-investment vehicle for deals in our sponsor finance vertical and has a potential total capacity of $500 million. We believe this new joint venture provides an optimal capitalization strategy for these assets and is consistent with our previously discussed plans to use our managed funds platform to maximize capital efficiency for each of our 5 verticals.

This new JV is in addition to the first joint venture we announced with Capital Southwest earlier this year, which, as of the end of Q3, comprises $132 million of assets and 14 portfolio companies. A co-investment vehicle focusing on first-out senior secured loans in the lower middle market, this strategic partnership has allowed us to diversify into a complementary segment of the lower middle market with a proven partner while minimizing risk and providing stable income for our investors.

As a reminder, it features 50-50 decision-making. We are encouraged by our growing partnership with a highly respected firm like Capital Southwest. The managed funds platform is doing exactly what it was designed to do: generate incremental returns beyond our interest income, increase our originations capacity and widen our pool of available capital, all without diluting shareholders. The foundation is in place, and we expect this platform to become an increasingly meaningful contributor to earnings over time.

With that, I'll pass it off to CFO, Michael Testa, for a closer look at our financial results. Michael?

Michael Testa

Thanks, Sarah. Our financial performance remained steady and strong in Q3. We generated $98 million in total investment income, a 30% year-over-year increase, and $50 million in net investment income or $0.52 per share, representing 103% coverage of our quarterly distribution. Total net assets grew 5% to a record $1.3 billion, up 33% year-over-year. NAV per share increased $0.14 to $13.61, driven primarily by accretive ATM issuances.

On the capital markets front, we continue to strengthen our balance sheet. We repaid $125 million of unsecured notes that matured in August. And on the last day of the quarter, we announced our second investment-grade public bond offering of $350 million of long 5-year senior unsecured notes, which closed post quarter end. The offering extends our maturity profile, increases our liquidity. We also raised $58 million through our equity ATM at an average 32% premium to NAV, which is directly accretive to our existing shareholders. Net leverage was 1.17x at quarter end, consistent with our target range, and total platform liquidity stands at $847 million.

And lastly, a few other metrics worth highlighting. Estimated undistributed taxable income stands at approximately $67 million or $0.69 per share, equivalent to more than 4 months of distributions. Our 15.5% return on average equity and 15.2% effective portfolio yield are among the highest in the BDC sector, and PIK remains immaterial at 1% of income. As we finish out the year and look towards 2027, we're confident in the earnings power of the platform and our ability to generate an industry-leading return on equity.

And now our COO, Gerry Harder, will walk you through our portfolio performance from here. Gerry?

Gerald Harder

Thank you, Michael. Portfolio quality stayed strong in Q3, with 99.3% of debt investments at fair value performing, and our average internal credit rating improving slightly to 3.1 on our 1 to 5 scale. The number of companies on nonaccrual decreased to 3, with realizations of 2 small nonaccruals and no additional credits added to nonaccrual within the quarter. First lien coverage remained strong, with 89% of total principal secured by first position liens on enterprise value, equipment or both. For enterprise-backed loans, the weighted average loan-to-value was 22%.

Our portfolio spans 24 industries, and no single borrower exceeds 3% of total exposure. Our largest sector concentration, financial technology, represents 15% of our total portfolio at cost and is spread across 18 borrowers. Regarding our AI exposure, it is diversified across both infrastructure and automation platforms, with each classification comprising less than 7% of our portfolio at cost.

Q3 included $7.5 million of net realized losses, partially offset by $4.4 million of net unrealized appreciation. Asset valuations are set by our internal valuations team, corroborated by independent third-party valuation firms, reviewed by our auditors and approved by our Board of Directors, a multilayered process designed to give investors confidence in the marks on our balance sheet.

Overall, we're encouraged by our portfolio turnover, as our loan book continues to refresh in a beneficial way. 78% of the portfolio at cost has been originated since the start of 2025, with pre-2024 vintages now below 7%. And the average duration of our realized loans currently stands at 30 months. Q3 fundings broke down across our 5 verticals as follows: 26% to equipment finance, 18% to tech lending, 17% to sponsor finance, 15% to health care and life sciences and 14% to asset-based lending, with the remaining 10% invested in off-balance sheet entities. At 89% first lien and 22% loan-to-value, the portfolio is built to hold up across cycles, which supports our dividend and NAV stability as we close out 2026 and look toward 2027.

With that, we'll open the line for questions. Operator, please go ahead.

Operator

[Operator Instructions] We'll go first this morning to Mickey Schleien with Clear Street.

Preguntas y respuestas

Mickey Schleien

I wanted to start with a question about the new JV with Capital Southwest, Desert Star. Could you expand on the type of investments you're putting in that JV versus CapTrin?

Sarah Stanton

Mickey, this is Sarah. Thanks for the question. Yes, happy to expand on that. So the first JV that we closed with Capital Southwest, that is -- that relates to first-out senior secured loans that primarily Capital Southwest is originating. So that kind of was a strategic and risk-mitigated way for us to expand our reach into a segment of the lower middle market that we were not currently active in.

Our latest joint venture with Capital Southwest relates to deals in our sponsor finance vertical. So those are our kind of more mature EBITDA-positive borrowers. And the real purpose of launching that joint venture is really just to get a better cost of capital for those assets. We have a credit facility for that entity that is really optimized for those types of credits, which are, again, more mature, very creditworthy borrowers.

Mickey Schleien

Are those borrowers concentrated in any particular sectors?

Kyle Brown

Those are primarily going to be lower middle market, fully kind of integrated software companies. We'll see some service-oriented as well. But the focus for us are going to be kind of the more mature software companies, senior secured facilities.

Mickey Schleien

And so when you underwrite those, given everything that's been discussed about AI over the last few quarters and your target of the lower middle market, how do you approach underwriting for those companies? I mean, they clearly need to have some sort of very meaningful competitive advantage for you to even consider them, I would assume. But what else are you looking for in those issuers before you dive in?

Kyle Brown

Yes. I mean, we launched that business with all these things in mind. We don't carry some long legacy portfolio of software deals from 5, 10 years ago. These are all -- these are mostly kind of newly established facilities with that underwriting in mind, meaning what AI tools have they either developed, are developing, what's the road map, what traction have they had selling those products? And so that goes into our underwriting.

And what we have been looking for are really mature software companies that are highly integrated within an organization that are not easy to rip out or can't rip out, who are selling and using these tools already. And so our portfolio was really built with that whole concept in mind, meaning there are going to be winners and losers. Let's identify who the winners are. And let's use this kind of period of volatility here to get in and really lock down some great credits.

Gerald Harder

One more note on the JV is that's also co-investing, right? So these are investments, Desert Star. I mean, these are assets originated by TRIN. Portions are held on the TRIN balance sheet, but also syndicated to Desert Star.

Mickey Schleien

Understand. And just one follow-up question. From our -- from the analyst chair, it's hard to forecast the allocated expenses to the RIA, which they more than doubled to $2 million, but platform AUM clearly didn't double. It grew from $3.2 billion to $3.4 billion. How should we think about the trend in the allocation of expenses to the RIA over the coming quarter as these managed fund businesses and joint ventures continue to grow?

Michael Testa

Yes, it should be actually pro rata based on the size and growth of the managed funds business. So this quarter, we did launch the Desert Star JV. There was a seed portfolio that we syndicated down there, $130 million. So that in and of itself grew the managed fund platform in a onetime launch. Overall, like syndications, we -- those vehicles that are co-investing, it's anywhere from 15% to 20% to 30% of our deals that are funded in the quarter are going to be syndicated to those vehicles.

Mickey Schleien

So is $2 million a decent run rate assumption for the next few quarters?

Michael Testa

Yes. To the extent that there's no new vehicles. We're obviously continuously focusing on capital raising in the private and the managed funds businesses. But to the extent that those are just continue to scale evenly. Periodically, you'll see those -- that pro rata allocation be consistent.

Operator

We'll go next now to Paul Johnson with KBW.

Paul Johnson

Yes. I was just -- I had a few questions. In terms of like repayment activity this quarter, higher level of repayments, I just ask, was that surprising or expected by you guys? And is there anything, I guess, that you would see on your radar for that to potentially kind of elevate it into next year?

Kyle Brown

Paul, it's Kyle. We -- those repayments are consistent, but they ebb and flow. And so we saw a little bit more last quarter. I don't believe that's any kind of trend that we can point to going forward. It's going to continue to ebb and flow. It'll be consistent every quarter. We saw a little bit more in life science and tech, but it'll just continue to be steady as it's always been. No trends to point to.

Paul Johnson

Got it. And my next question is more of a higher-level question. But as the origination funnel has expanded quite a bit over the years and the lending verticals have evolved as well, I mean, you now have conceivably kind of an overlaying, like, allocation decision on top of just kind of the individual credit reviews within your business, with all the vehicles managed underneath the adviser and conceivably just a higher volume of deals, I would think that you would have to review. So I guess I'm wondering how has or how would you expect the investment committee or anything with the review process, I guess, to change over time to reflect that?

Kyle Brown

Yes. I mean, it's actually a little more simple than it sounds, but we've got 5 different businesses that all operate independent of one another. They're executing on an annual operating plan, meaning October of last year and November of last year, we sat down, we said, what are we going to achieve in 2026? And how much are we going to deploy and when, over what period of time? And those various teams are just executing exactly to that plan. And for the last 3 years, we've actually hit that plan pretty much right on the head or exceeded it.

And so allocation to capital is really decided a year in advance. So everything we're doing right now, the dollars we're deploying and the capital that we're raising, both on and off balance sheet, it's all per plan. And I would tell you that internally, we already have 2027 figured out. And we have a plan for '28 and '29. And maybe some of that is going to be -- we're going to continue to iterate on it. But we are creating goals, and we have a vision for the future, and then we just execute on the plan, and we build a system around it, and we let that system carry the burden, and we execute.

And so that's -- I mean, that's what we have been doing for years now. It isn't going to change going forward. We've created multiple layers of personnel and very senior personnel within each vertical from an underwriting perspective and portfolio management perspective, so that has to go through many filters before it gets to the eventual investment committee. And so we have those buy boxes set. We have those underwriting standards and principles set. All the work is done and then presented to the investment committee in a very clear, concise and consistent manner. So we're good at building plans and executing them. That's just what we're going to keep doing.

Operator

We'll go next now to Erik Zwick with Lucid Capital Markets.

Erik Zwick

Maybe just a quick follow-up on the kind of the pipeline since we are just discussing that. In terms of -- you had 2 really strong quarters in a row of production. So just curious where the pipeline stands today versus, say, 90 days ago? And what does the mix look like from a verticals perspective?

Kyle Brown

We continue to see -- thanks, Erik. This is Kyle. The pipeline has continued to build. We have, I would tell you, the largest pipeline that we've had in our history right now. And we're executing on those term sheets. We continue to push on pricing. We continue to see more and more equipment and manufacturing here domestically. That's -- and with some of the AI boom going on, I just -- I continue to see equipment being a bit of an outlier.

But as you can see last quarter, it was pretty distributed amongst the verticals. And I guess I'd go back to the previous comment, which is each of our verticals has an annual operating plan that they're executing to. And they have an allocation of capital to go out and deploy capital and execute on that plan, and that's what they're doing. So that's how we think about it. There's going to continue to be some outperform on the equipment side, but more or less, we're just executing on that plan, which is starting to look more and more diversified across the verticals.

Gerald Harder

I would say also you can get a glimpse of that from the unfunded commitments, which we always remind our investors, we -- these are subject to our investment committee approval 9/10 of the time, right? But about 1/3 of that is within health care and life sciences, about 1/4 of it in equipment and about 20% in tech lending, with ABL and sponsor making up the rest. So that's kind of a good proxy for the pipeline because those are deals that we've already won term sheets and these are subsequent tranches.

Erik Zwick

That's very helpful. Next question, maybe for Michael. Just looking at the income statement, there was a noticeable quarter-over-quarter increase in the non-control, non-affiliate fee income line. I guess anything in particular that drove that number higher? And is that a kind of onetime increase or nonrecurring? Or we expect some of that strength to continue?

Michael Testa

Yes. I mean, I think this quarter, you saw fee income increase. I think there hasn't been a whole lot of change between noncontrol and affiliate in our portfolio. But this quarter, we did see the spike of fee income, a combination of prepayment exit fees as well as origination fees, agent fees that we get that are somewhat transactional based.

Erik Zwick

Okay. And I guess were those kind of transaction fees more on new kind of origination activity or repayments? Just trying to figure out, I guess, you're obviously originating more, so you may see more of those on the front end. So just trying to understand here how much of the increase we saw is sustainable in future quarters?

Michael Testa

Yes. I mean, a lot of this is driven from our equipment financing vertical. So we get anywhere from 2% to 3% closing structuring fees on those assets. So if you have a portfolio that continues to grow and has more origination activity, you'll see the benefit there. This quarter, again, like Kyle mentioned, prepayment fees came through. Those were split between tech and life sciences, but it's been elevated. Those continue to -- we saw that last quarter. We saw that the previous quarter. So we continue to see that. As these companies are healthy, they're meeting their milestones. It's a combination of M&A activity, refinancing us out with cheaper debts, but continue to grow.

Erik Zwick

And last one for me. Just looking at the pace of ATM share issuance in 3Q, it was lower than it had been in the past, maybe 4 or 5 quarters. Any particular reason that it was lower in 3Q? And what should we kind of expect for your desire to kind of utilize the ATM going forward?

Michael Testa

Yes. I mean, we love the ATM program. It's an efficient optimal way of raising capital when just in time. As we see deployments in the pipeline grow, we're able to manage the ATM program effectively to meet those funding requirements. But we had higher repayments and higher syndications, so you're able to manage the amount of equity -- new equity we raise. At the end of day, we're constantly looking at raising capital if it's accretive to net investment income or on a NAV basis.

Operator

We'll go next now to Jason Stewart with Compass Point.

Jason Stewart

You guys have been pretty thoughtful about your approach to the infrastructure, equipment, GPU compute finance space. Wondering if you could share some high-level thoughts on the election impact and maybe any change in the near-term landscape to that business and how you're positioned vis-a-vis that change?

Kyle Brown

Yes. I mean, I think first and foremost, when you remove some uncertainty, that typically helps or hurts markets, but at least that clarity gives investors the ability to make decisions based on what they think they know, right? So I'd say, first and foremost, that's probably a good thing because we at least have an understanding as to where different politicians sit on the topic. The business that we've done to date, assuming it is more difficult to get data centers up and going and GPUs deployed, will just simply benefit, I think, from some of that volatility.

So if I'm taking kind of the optimistic standpoints, what we've done so far is now a little bit more valuable than it was before. And if it is more difficult to get GPUs online in data centers across the country, that cost of those units is going to go up. And so I think for what we've done already, it means it's a positive impact to us. What we do going forward, I think we'll do what we always do, which is sit back, make sure we understand the playing field, understand the new risks, see if it's changed and then start to step into the opportunity if it makes sense to. So I think that's how I see it.

Jason Stewart

Yes. It strikes me as creative financing solutions will still be a necessary part of the puzzle.

Operator

We'll go next now to Chris Muller with Citizens Capital Markets.

Christopher Muller

So I guess looking at your 5 verticals and the prospects for higher rates, is there a particular area that you guys expect to outperform in a rising rate environment that you might lean in on a little more if the forward curve is realized?

Kyle Brown

Yes. I mean, it's a great question. I think we're already leaning into that kind of lower middle market space. We have been now for a couple years, with a lot of private credit moving upstream, focusing on middle and upper middle markets. Higher rates mean better returns there. But I would say that all of them are really going to benefit. I mean, we provide this analysis to shareholders, which really shows pretty limited impact to TRIN on rates going down.

But with rates going up, that really increases our income because our facilities, the majority of them, they have floors, which is great if rates are going down, but they don't have ceilings. And so that can drive new payoffs, right, like we saw before when rates went up, which can increase fee income or that can just create more and higher current income as well. So I think we set the portfolio up to do really well in a rate-declining environment, knowing that if rates went up, we happen to benefit from that. So feel pretty good about our position relative to rates and rate sensitivity.

Christopher Muller

Got it. And rising rates are an obvious tailwind for the bottom line, but maybe thinking about some secondary effects, do you guys expect your fundraising efforts to also benefit from improving sentiment?

Kyle Brown

Yes, it's a good question. Fundraising is always hard. I think that our track record and consistency in a raising rate environments, a declining rate environment, 5 different administrations, all of that has been very consistent. And when we're talking to investors, that's really what we're pointing to is our consistency throughout different markets, our ability to gauge what's going on, understand the new risks, pivot. We like to say we're scrappy around here. I know Gerry hates that word.

Gerald Harder

Some of us like it.

Kyle Brown

But we are. And so we're going to assess what's going on. We're going to assess where the new maybe veins or pockets of investment and opportunities are. And then we're not going to be afraid to jump in there and figure it out. So fundraising is going well. It's always hard, but I would say it's going really well, and it's a big part of our future, providing liquidity through our managed funds business, which gives TRIN unlimited upside to our stock, earnings per share, NAV, et cetera.

So we're really going to focus on building out our verticals and making sure they're best-in-class. And then we're going to align that with capital through our managed funds business to make sure that we have the liquidity necessary to keep building those businesses.

Operator

We'll go next now to Christopher Nolan with Ladenburg Thalmann.

Christopher Nolan

Sarah, what's going to be the leverage level for this new JV once it's fully deployed?

Sarah Stanton

Leverage levels for the new JV? Where is it at right now, Mike?

Michael Testa

Yes. Right now, it's close to 1:1. We're going to -- it's going to be consistent with the BDC, slightly higher, trying to get up to 2:1. So moderate leverage, but it's optimal, right? You're setting it up a separate vehicle that is -- has the structure of the underlying secured facility aligned to those assets. So it's a better advance rate and you're able to manage it in a better cost of capital there.

Christopher Nolan

Okay. Is that really just bank facility type financing?

Michael Testa

That's right. A revolving facility launched it, continue to grow, expect to syndicate it further as it goes.

Christopher Nolan

What sort of advance rate are you getting?

Michael Testa

Yes. I mean, I think, again, this is a similar advance rate that our current BDC has. But again, you get better way to manage it with specific those type assets, those type of deals. So anywhere from 60% to 70%.

Christopher Nolan

Great. And I guess as a follow-up, with all these JVs going on, and you actually have a lot of outside entities that want to work with you and tap your deal flow. How -- I mean, should we expect a material increase in your operating expenses or operating efficiencies going forward? Or is there some operating leverage where you can basically scale up with incremental -- minimal incremental growth in expenses?

Kyle Brown

Yes. So I think the first thing to think about is we are -- these are all the same deals, right, with these various JVs. We're just tapping into different pockets of liquidity for them, right? So there is some scaling leverage there. But you've got to remember, we are not just a stagnant pool of assets, but a management company, an operating company, right? And so if we're growing at a 20% to 30% annual growth rate, which we have been for 5 years, that means expenses have to go up.

Now income should go up and exceed that, which it has been and will continue to over time, as our expense ratios have continued to come down to the point now where we're one of the -- we're right in line with our BDC peers. And over time, as we continue to raise more capital and grow the business, that'll just continue to improve. But we're not trying to optimize for -- that's not the -- that is a lever that externally managed BDCs use because they have no other levers. That's not what we're focused on. We are building the business. We are hiring a lot of folks. And our income and our earnings per share will increase above and beyond those additional expenses.

Sarah Stanton

And Chris, just to put a finer point on that. So like Kyle said, these are co-invest vehicles. So like the credit underwriting, the portfolio management, that's already being done. There's no incremental cost there. And then any cost directly associated with a particular vehicle, whether it's accounting costs, funded admin, those are borne by the specific vehicle, not by the BDC.

Operator

[Operator Instructions] We'll go next now to Alexander Villalobos with Jefferies.

Alexander Villalobos-Morsink

A little bit more detail on originations, just on the environment. What are you guys seeing with the spreads, covenants and leverage? Just a little more detail there and color would be great.

Kyle Brown

Yes. I think we've seen spreads -- well, it depends on the vertical. But I'd say more often than not over the last few years, spreads have tightened up in some of our verticals. Some not as much, but in some of them, they have been declining over the last few years with competition and a lot of liquidity out there. We've seen that trend start to really hold up. And in some ways, we're pushing pricing. And so I think 2027 should probably look like a spread flat to up year.

And we are certainly testing that right now, as I believe there is a lack of liquidity. As I think bank leverage and fundraising has become more difficult, supply and demand is going to start kicking in. And so when you're thinking about the broadly syndicated market and spreads there, that's just not the market we play in, right? We are originating directly with these companies. The value that we're providing to them and working directly with them means we're going to end up with a higher spread, generally.

And dealing in the market we deal in, which is this kind of growth stage to lower middle market, we just have different companies, different competition, and there are different spreads. And so we haven't seen the spread compression that the rest of the private credit market has seen over the last 5 years. It's been smaller. And now it's kind of knee-jerking back the opposite direction.

Operator

Thank you. And ladies and gentlemen, it appears we have no further questions this morning. Mr. Brown, I'll turn things back to you, sir, for any closing comments.

Kyle Brown

Great. Thank you. Well, on behalf of the Trinity Capital team, thank you for joining us today. Q3 was a strong quarter by all measures, and Trinity Capital is experiencing tremendous momentum right now. We're enthusiastic about where we're headed. We're excited to host many of you at our investor event next Thursday at the New York Stock Exchange before we have the honor of ringing the closing bell that afternoon with our team. We look forward to sharing our Q4 results in February. In the meantime, please don't hesitate to reach out to the IR desk with further questions. Have a great day. Thanks.

Operator

Thank you very much, Mr. Brown. Again, ladies and gentlemen, that will conclude Trinity Capital's third quarter earnings call. We'd like to thank you all so much for joining us. Wish you all a great afternoon. Goodbye.