- Capital Southwest delivered solid Q3 2025 operating results with pre-tax net investment income (NII) of $0.64 per share, which fully covered the regular quarterly dividend of $0.58 and the supplemental $0.05, with the March quarter dividend mix set at $0.58 regular and a higher supplemental of $0.06 (total $0.64). This underscores management’s commitment to stable, sustainable distributions even as the macro backdrop evolves.
- The portfolio program remained highly active and well-balanced: $317.5 million of capital invested/committed across nine new platform companies and 20 existing portfolio companies, with follow-ons representing approximately 41% of total commitments. Weighted average loan-to-value (LTV) on new deals ranged from 35% to 50%, yielding substantial equity cushions and leverage near 3.5x debt to EBITDA. Equity co-investments totaled 77 positions, fair value $159 million (9% of portfolio), marked at 143% of cost ($0.96 per share of embedded appreciation).
- Balance sheet liquidity and funding flexibility remained robust. The on-balance-sheet credit portfolio reached $1.5 billion (up 31% YoY), with 98% of the portfolio first-lien secured and weighted average exposure per company at 0.9%. Cash and undrawn commitments totaled ~$412 million, equating to roughly 2.1x unfunded commitments. The company also executed a $230 million 5.125% convertible note issuance (due 2029) to redeem the $140 million January 2026 bonds and repay debt facilities, alongside equity ATM activity that raised ~$54 million gross in the quarter.
- NAV per share held steady at $16.59; the near-term outlook reflects continued high-originations potential, ongoing equity exits, and regulatory leverage management. Management reiterated a disciplined approach to leverage, balance-sheet liquidity, and dividend sustainability, while pursuing transformative steps (SBIC license progress) to broaden capital sources. Overall, CSWC remains well-positioned to advance its credit and equity co-investment strategy in a competitive lower-middle-market (LMM) environment.