Topic: How To Invest

Q: What are your thoughts on TriplePoint Venture Growth BDC Corp. (TPVG)? Nice dividend. Regards.

Article Excerpt

A: BDCs, or business development companies, lend to early stage, private and/or often distressed firms that have credit ratings in the “junk” status. BDCs are as close to investing in private equity deals as investors will find on a major stock exchange. Like real estate investment trusts (REITs), business development companies must pass through at least 90% of their profit to shareholders. Most of their borrowers carry the lowest-possible credit ratings, such as BBB-, or are not rated at all. BDCs hold a variety of companies in their portfolios, although some are more diversified than others. Since they can borrow at today’s very low rates and make money on the spread—the difference between those low rates and the above-market rates they charge less creditworthy borrowers—BDCs are doing well as the U.S. economy continues to grow. They provide financing to a wide range of companies typically avoided by mainstream banks. Essentially, they are subprime lenders to small to mid-size companies. TriplePoint Venture Growth BDC…

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