Tetragon Financial H2 Earnings Call Highlights

Tetragon Financial (LON:TFG) reported a strong 2025 as management highlighted double-digit NAV growth, an above-target return on equity, and a portfolio whose results were driven by a handful of large, idiosyncratic positions rather than credit markets. On the company’s annual report investor call, principals Paddy Dear and Stephen Prince and CFO/COO Paul Gannon also addressed shareholder questions on the persistent discount to NAV, buybacks, and the post-year-end monetization of BentallGreenOak (BGO).

Key 2025 metrics: NAV per share up to $41.88, ROE above target

Gannon said management continues to focus on three key metrics: NAV per share total return, return on equity (ROE), and shareholder distributions. Fully diluted NAV per share was $41.88 at Dec. 31, 2025, and NAV per share total return was 19.6% for the year. Since the 2007 IPO, Tetragon’s annualized NAV per share total return was 11.2%.

For 2025, the company posted an ROE of 23.4% net of all fees and expenses. Management noted this was an outlier on the positive side versus the firm’s long-term target of 10% to 15%, with an average annual ROE since IPO of 12.1%.

On capital returns, Tetragon declared a $0.12 dividend for the fourth quarter of 2025, up from $0.11 in the third quarter. Full-year dividends totaled $0.45 per share, which management said equated to a yield of about 2.6% based on the year-end share price of $17.35.

NAV bridge: investment income offset by fees, interest, and dilution

Gannon walked through a NAV bridge showing fully diluted NAV per share rising from $35.43 at the end of 2024 to $41.88 at the end of 2025. He said investment income increased NAV per share by $11.24.

Offsets included operating expenses, management fees, and incentive fees, which reduced NAV per share by $2.78, and interest expense on the revolving credit facility, which reduced NAV per share by $0.29. Dividends reduced NAV per share by $0.44, and “other share dilution” reduced NAV per share by $1.28, which management said primarily reflected dilution from stock dividends and recognition of equity-based compensation shares.

Portfolio mix shifts further away from CLOs

Dear emphasized how far Tetragon’s portfolio has evolved from its early years. He said that while the company was roughly 96% in CLOs around the time of the IPO nearly 20 years ago, bank loans as an asset class are now “down to less than 5% of the portfolio.”

Management also discussed a reporting reorganization of asset classes to reflect underlying assets and fund structures, including reclassifications across equity funds, credit funds, and other categories. By year-end 2025, Dear highlighted several allocation changes:

• Private equity stakes in asset management companies (Tetragon Partners): 42% of NAV, down from 45%, mainly due to a partial sale of Equitix.
• Private equity and venture capital: 21%, up from 17%, mainly driven by gains in Ripple.
• Equity funds: 22%, up from 20%, driven primarily by gains in Hawke’s Point.
• Credit funds: 5%, down from 9%, driven predominantly by declines in CLOs and a redemption in Acasta.

What drove performance: Equitix, Ripple, and Hawke’s Point

Dear said 2025 investment performance was again “mainly driven” by three investments that were also the strongest contributors in 2024: Equitix, Ripple Labs, and Hawke’s Point-managed funds.

Equitix, described as a leading international infrastructure investor, developer, and fund manager, was the largest positive contributor with a $432 million gain in 2025. Management said Hunter Point Capital acquired a 16.1% stake in Equitix at an implied enterprise value of GBP 1.3 billion excluding net debt, and Equitix remained Tetragon’s largest position after the transaction.

Ripple Labs generated $333 million of gains in 2025, with management citing tailwinds including the final resolution of the SEC lawsuit, platform expansion, U.S. cryptocurrency policy developments, and multiple tender offers. Prince later added that Ripple’s private-market share price used for valuation increased from $64.50 at the end of 2024 to $150 by the end of 2025. He said Ripple conducted three tender offers during 2025 at $125, $175, and $250 per share, and Tetragon received $65.7 million in cash receipts by participating.

Hawke’s Point funds produced gains of $260 million, led by the largest strategic investment, Ora Banda Mining Limited. Dear said a partial liquidation of Ora Banda produced $108.4 million of distributions in 2025. He also noted Ora Banda’s shares were added to several indexes, including the ASX 300 and ASX 200.

On the negative side, management said bank loan exposure via CLOs led losses in 2025, including a $117 million decline in the valuation of LCM (the CLO manager owned within Tetragon Partners) amid falling AUM. Separately, older-vintage CLO equity exposures contributed additional losses.

Discount to NAV, buybacks, and BGO monetization update

In Q&A, Dear said most shareholder questions fell into three themes: the discount to NAV, buybacks, and the sale of BGO. On the discount, he said there is “no silver bullet” and characterized it as a market-wide issue in the U.K. closed-end fund space. He argued the “single most important objective” is long-term performance and building investor confidence in the company’s repeatable “engine” for idea sourcing, underwriting, and risk management, alongside improved transparency and market education.

On capital allocation, Dear said buybacks can be accretive when the shares trade at a large discount, but they do not necessarily resolve a persistent discount. He noted Tetragon has spent $860 million on buybacks historically (excluding the newly announced program) and “just under $1 billion” on dividends, yet the discount has seen minimal impact.

Dear also provided a detailed post-year-end update on BGO. He said Sun Life exercised its call option on Feb. 27, with settlement expected in March. Tetragon will no longer have any financial interest in the equity of the BGO management companies or associated ongoing rights, though it will retain carried interest participation in existing GreenOak and BGO funds and remain an LP in several BGO funds.

As part of the transaction, Dear said Tetragon agreed to relinquish ongoing rights for a payment of $155 million, which he said is accretive to year-end NAV and expected to be reflected in the February NAV. He added that call proceeds net of tax are expected to be in line to slightly above what was reflected in December NAV.

In terms of liquidity, Prince said year-end cash at the bank was $27.1 million, but with $350 million drawn on the revolving credit facility and other net items, the company had a net cash position of negative $316.4 million. Dear later said the end-of-January cash position was negative $413 million, funded by the revolver and prime broker lending on liquid securities. He said the company expects to receive roughly $475 million gross cash proceeds in March from the BGO-related transactions, with proceeds intended first for taxes, then a newly announced $50 million share buyback, and then paying down existing debt.

Gannon also addressed a specific question on Ripple valuation, saying Tetragon holds about $3.4 million of Series A and B preferred stock that trades on private platforms. He said the Dec. 31 valuation of $150 per share was based on multiple sources, including private platforms and broker relationships, and was within a fair value range determined by an independent valuation agent.

About Tetragon Financial (LON:TFG)

Tetragon is a Guernsey closed-ended investment company. Its non-voting shares are listed on Euronext in Amsterdam, a regulated market of Euronext Amsterdam N.V., and also traded on the Specialist Fund Segment of the Main Market of the London Stock Exchange. Our investment manager is Tetragon Financial Management LP. Find out more at www.tetragoninv.com.