Rand Capital Corporation Reports $8.8 Million Net Increase in Assets for Fiscal Year 2024

Rand Capital Corporation reported a net increase in net assets from operations of $8.8 million for the fiscal year ending December 31, 2024, compared to $6.5 million in the previous year. This increase was driven by a significant rise in investment income, which totaled $8.6 million, marking a 16.6% increase from $7.3 million in 2023. The growth in investment income was primarily attributed to a 29.2% increase in interest from portfolio companies, which reached $7.7 million, as the company shifted its investment strategy towards higher-yielding debt instruments. The net asset value per share rose to $25.31, up from $23.56 a year earlier.

The company experienced a notable change in its investment portfolio, with total investments at fair value decreasing by 8.2% to $70.8 million from $77.1 million in 2023. The number of active portfolio companies also declined from 30 to 22. This reduction was influenced by the monetization of select equity investments and the exit from publicly traded securities, which generated approximately $27 million in cash proceeds. Rand strategically allocated these funds, using $15.7 million to reduce outstanding borrowings under its senior secured revolving credit facility and investing $13.9 million into income-producing investments.

Operationally, Rand Capital's focus on debt investments has intensified, with 75% of its portfolio consisting of interest-yielding debt instruments by the end of 2024, compared to 64% at the end of 2023. This shift has contributed to an improved portfolio yield, with the annualized weighted average portfolio yield increasing to 13.8% from 13.6% in the prior year. The company also declared a dividend of $4.20 per share in December 2024, which was paid in a combination of cash and newly issued shares, reflecting a 278% increase in total dividends compared to 2023.

Looking ahead, Rand Capital is well-positioned to continue its strategy of expanding its portfolio and increasing investment income. The company has approximately $835,000 in cash and $24.4 million in available capacity under its credit facility to support future investments. The management anticipates that the demand for capital among lower middle-market businesses will remain resilient, providing opportunities for growth. However, the company remains cautious of market risks, particularly in a rising interest rate environment, as its debt investments carry fixed interest rates while borrowings under its credit facility are subject to variable rates.

In summary, Rand Capital Corporation's financial performance in 2024 reflects a strategic shift towards higher-yielding debt investments, resulting in increased income and a solid dividend payout. The company is focused on leveraging its liquidity and investment capacity to capitalize on future opportunities while managing the risks associated with its investment portfolio.