Capital Southwest
Capital Southwest is an internally-managed Business Development Company specializing in lower middle market lending and providing capital across various industries and structures.
Company Overview
Capital Southwest is an internally-managed, credit-focused Business Development Company (BDC) specializing in lower middle market lending. The company provides capital across the capital structure to lower middle market companies, emphasizing relationship-building and responsiveness. Headquartered at 8333 Douglas Avenue, Suite 1100, Dallas, TX 75225, Capital Southwest focuses on delivering consistent risk-adjusted returns and growing shareholder value.
Lending and Investment Focus
Capital Southwest offers a range of investment structures including unitranche debt, first lien debt, second lien debt, subordinated debt, and preferred and common equity. The company targets financings ranging from $5 to $70 million, with target holds of $5 to $45 million, and requires a minimum EBITDA of $3 million for direct borrowers. Capital Southwest also invests in syndicated first and second lien term loans in the upper middle market and co-manages a senior loan fund, I-45 SLF LLC, with Main Street Capital.
Industry Diversification
Capital Southwest invests in a variety of industries, such as business services, consumer products and retail, energy services, financial services, healthcare products and services, industrial products and services, software and IT services, and aerospace and defense. This diversified investment approach allows the company to create value across a wide range of sectors, mitigating risk and capitalizing on emerging trends and opportunities in the market.
Investment Types and Strategies
Capital Southwest provides debt and equity capital for new platform acquisitions, dividend recapitalizations, refinancings, bolt-on acquisitions, and growth financings. The company invests in both control and non-control positions across various securities and structures. Its permanent capital base as a public company enables long-term investment capabilities, supporting over 285 companies with acquisition and growth capital since its inception.
Shareholder Value and Dividends
Capital Southwest pays regular and supplemental dividends on a quarterly basis. The company's team is dedicated to delivering consistent risk-adjusted returns and growing shareholder value. A balanced approach to investment decisions focuses on building long-term relationships with financial sponsors, investment banks, other lenders, and company management teams, ensuring quick and constructive feedback on investment opportunities.