Capital Southwest's subsidiary received SBA licensing as an SBIC, enhancing its financing capacity for middle-market investments.
Quiver AI Summary
Capital Southwest Corporation, a Dallas-based business development company, announced that its subsidiary, Capital Southwest SBIC II, LP, has received a license from the U.S. Small Business Administration to operate as a Small Business Investment Company. This license allows SBIC II to issue SBA-guaranteed debentures for obtaining leverage, potentially borrowing up to $175 million, contributing to a total borrowing capacity of $350 million for Capital Southwest through the SBIC program. The SBIC II will be regulated by the SBA in terms of investment structure and company size, furthering Capital Southwest's strategy to support the growth of middle market businesses through flexible financing solutions. The company currently manages about $1.7 billion in investments.
Potential Positives
- Capital Southwest Corporation's subsidiary, Capital Southwest SBIC II, LP, has received a license from the SBA to operate as a Small Business Investment Company, enhancing its ability to invest in middle market businesses.
- The SBIC license enables SBIC II to access up to $175 million in SBA-guaranteed debentures, significantly increasing Capital Southwest's overall borrowing capacity to a total of $350 million.
- The ability to issue SBA-guaranteed debentures provides Capital Southwest with favorable financing options, including fixed interest rates, supporting its investment strategy in the lower middle market.
- The exemptive relief from the SEC allows for SBA-guaranteed debentures to be excluded from the definition of senior securities, positively impacting Capital Southwest's asset coverage requirements.
Potential Negatives
- The announcement of receiving an SBIC license indicates that Capital Southwest is heavily reliant on government programs for funding, which may raise concerns about financial independence and stability.
- Being subject to SBA regulations and oversight could limit Capital Southwest's investment flexibility and strategic options in the future.
- The need for a leverage commitment from the SBA before issuing debentures suggests potential delays or obstacles in accessing the promised funding, which could impact the company's investment strategy.
FAQ
What is Capital Southwest Corporation?
Capital Southwest Corporation is a Dallas-based business development company focused on financing middle market businesses.
What does the SBIC license allow Capital Southwest SBIC II to do?
The SBIC license enables SBIC II to obtain leverage by issuing SBA-guaranteed debentures, enhancing its investment capacity.
How much can SBIC II borrow through the SBA program?
SBIC II can borrow up to $175 million in SBA-guaranteed debentures, totaling $350 million for Capital Southwest.
What are SBA-guaranteed debentures?
SBA-guaranteed debentures are loans to SBICs with fixed interest rates and a ten-year maturity, issued under SBA oversight.
How does Capital Southwest support middle market businesses?
Capital Southwest provides flexible financing solutions with investments ranging from $5 million to $50 million for business growth.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
$CSWC Insider Trading Activity
$CSWC insiders have traded $CSWC stock on the open market 4 times in the past 6 months. Of those trades, 4 have been purchases and 0 have been sales.
Here’s a breakdown of recent trading of $CSWC stock by insiders over the last 6 months:
- RAMONA LYNN ROGERS-WINDSOR has made 3 purchases buying 1,200 shares for an estimated $27,334 and 0 sales.
- CHRISTINE BATTIST purchased 256 shares for an estimated $5,920
To track insider transactions, check out Quiver Quantitative's insider trading dashboard.
$CSWC Hedge Fund Activity
We have seen 85 institutional investors add shares of $CSWC stock to their portfolio, and 59 decrease their positions in their most recent quarter.
Here are some of the largest recent moves:
- BALYASNY ASSET MANAGEMENT L.P. added 1,001,199 shares (+inf%) to their portfolio in Q4 2024, for an estimated $21,846,162
- SANDERS MORRIS HARRIS LLC added 618,480 shares (+75.9%) to their portfolio in Q1 2025, for an estimated $13,804,473
- BEACON POINTE ADVISORS, LLC added 459,291 shares (+1481.6%) to their portfolio in Q4 2024, for an estimated $10,021,729
- INVESCO LTD. removed 367,856 shares (-92.1%) from their portfolio in Q4 2024, for an estimated $8,026,617
- MILLENNIUM MANAGEMENT LLC added 257,378 shares (+inf%) to their portfolio in Q4 2024, for an estimated $5,615,987
- EPIQ PARTNERS, LLC added 255,400 shares (+inf%) to their portfolio in Q1 2025, for an estimated $5,700,528
- TWO SIGMA INVESTMENTS, LP added 200,060 shares (+42.2%) to their portfolio in Q4 2024, for an estimated $4,365,309
To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.
Full Release
DALLAS, April 21, 2025 (GLOBE NEWSWIRE) -- Capital Southwest Corporation (“Capital Southwest”) (Nasdaq: CSWC), an internally managed business development company focused on providing flexible financing solutions to support the acquisition and growth of middle market businesses, today announced its wholly owned subsidiary, Capital Southwest SBIC II, LP (“SBIC II”), has received a license from the U.S. Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”).
As an SBIC, SBIC II will be subject to a variety of regulations and oversight by the SBA concerning, among other things, the size and nature of the companies in which it may invest as well as the structure of those investments. The SBIC license will allow SBIC II to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a leverage commitment by the SBA. SBA debentures are loans issued to an SBIC which have interest payable semi-annually and a ten-year maturity. The interest rate is fixed shortly after issuance at a market-driven spread over U.S. Treasury Notes with ten-year maturities. Current SBA regulations permit SBIC II to borrow up to $175 million in SBA-guaranteed debentures, bringing Capital Southwest’s aggregate borrowing capacity through the SBIC program to a total of up to $350 million of capital.
The SBA program has played a pivotal role within Capital Southwest’s lower middle market investment strategy since receiving its first SBIC license in April 2021. Capital Southwest received exemptive relief from the Securities and Exchange Commission that allows for the exclusion of SBA-guaranteed debentures from the definition of senior securities in the asset coverage requirement applicable to the Company.
About Capital Southwest
Capital Southwest Corporation (Nasdaq: CSWC) is a Dallas, Texas-based, internally managed business development company with approximately $1.7 billion in investments at fair value as of December 31, 2024. Capital Southwest is a middle market lending firm focused on supporting the acquisition and growth of middle market businesses with $5 million to $50 million investments across the capital structure, including first lien, second lien and non-control equity co-investments. As a public company with a permanent capital base, Capital Southwest has the flexibility to be creative in its financing solutions and to invest to support the growth of its portfolio companies over long periods of time.
Investor Relations Contact:
Michael S. Sarner, President and Chief Executive Officer
214-884-3829
