Manuel Henriquez Has Been Dealing With A Few Things, Ok?

FOR MANUEL HENRIQUEZ, the founder and chief executive officer of Hercules Capital Inc., if ever there were a year to remember—or maybe forget—this would be it.

- Jon Asmundsson

Before May, things had been going pretty well for Hercules, the largest nonbank venture-debt provider. Its shares had risen almost 27 percent in the previous 12 months. Total return, including dividends of $1.24 per share paid out over the same period, was running about 39 percent—more than twice that of the S&P 500 index.

And then the press release went out. It was 5:04 p.m. Eastern Daylight Time on Wednesday, May 3, so markets were closed. The reaction from investors came the next day, when shares of Hercules plunged 12 percent.

The release said the company had filed proxy materials seeking approval from shareholders for a newly proposed advisory agreement. No longer would an in-house team of 33 investment professionals originate and oversee Hercules’ investments. The plan was to move those people into a newly created entity—called Hamilton Advisers LLC for the street in Palo Alto where Hercules has its headquarters—and charge fees to the now externally managed business development company, or BDC.