Capital Southwest Corporation (CSWC) reported its financial results for the quarter ending June 30, 2025, revealing a total investment income of $55.9 million, an increase of 8.9% from $51.4 million in the same period last year. The growth in investment income was primarily driven by a rise in interest income, which reached $44.4 million, up from $41.5 million in the prior year. Net investment income for the quarter was $31.9 million, reflecting a 10.5% increase compared to $28.9 million in the previous year. The company also reported a net increase in net assets from operations of $27.0 million, a significant rise of 92.4% from $14.0 million in the same quarter of 2024.
In terms of asset management, CSWC's total investments at fair value stood at $1.78 billion as of June 30, 2025, slightly down from $1.79 billion at the end of March 2025. The company held investments in 122 portfolio companies, with an aggregate cost of $1.80 billion. The fair value of first lien loans constituted 89.6% of the total portfolio, indicating a strong focus on secured debt investments. The weighted average annual effective yield on debt investments was reported at 11.8%, a slight decrease from 13.3% year-over-year, attributed to a rise in the average monthly cost basis of debt investments.
During the quarter, CSWC made new debt investments totaling $83.2 million and equity investments of $2.0 million. The company also received approximately $75.2 million in principal repayments and $31.7 million from sales of debt and equity investments. The company’s operational efficiency is reflected in its operating expenses, which increased to $23.2 million from $20.1 million, primarily due to higher interest expenses and employee compensation costs.
CSWC's financial position remains strong, with cash and cash equivalents of approximately $46.9 million and $397.2 million in unused capacity under its credit facilities as of June 30, 2025. The company’s asset coverage ratio was reported at 220%, well above the regulatory requirement. Looking ahead, CSWC anticipates continued growth in its investment activities, supported by its robust liquidity position and strategic focus on middle-market companies. The company has also declared a quarterly dividend of $0.64 per share, consistent with its commitment to return capital to shareholders while maintaining compliance with its regulated investment company status.
About CAPITAL SOUTHWEST CORP
Capital Southwest Corporation is an internally managed, non-diversified closed-end business development company (BDC) specializing in customized debt and equity financing for lower middle market U.S. companies. It primarily invests in first lien debt securities and equity interests in established companies with positive cash flow and proven management. The company targets flexible financing solutions across capital structures, leveraging deep industry expertise and long-standing relationships to generate attractive risk-adjusted returns.
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