Capital Southwest Corporation (CSWC) reported significant financial performance for the three and nine months ended December 31, 2025, with total investment income reaching $61.4 million, an increase of 18.2% from $52.0 million in the same period last year. For the nine-month period, total investment income was $174.3 million, up 14.7% from $152.0 million. The company’s net investment income for the quarter was $37.0 million, reflecting a 22.0% increase compared to $30.3 million in the prior year. The net increase in net assets from operations was $32.9 million for the quarter, a substantial rise of 102.2% from $16.3 million in the previous year.
The company’s total assets increased to $2.1 billion as of December 31, 2025, compared to $1.9 billion as of March 31, 2025. This growth was primarily driven by a rise in the fair value of investments, which reached $2.0 billion, up from $1.8 billion. CSWC's investment portfolio included 132 portfolio companies, with a total cost of $2.0 billion, compared to 121 companies and a cost of $1.8 billion in the previous period. The company’s net asset value per share increased slightly to $16.75 from $16.70.
In terms of operational developments, CSWC made debt investments totaling $516.1 million during the nine months ended December 31, 2025, alongside equity investments of $8.5 million. The company also received $245.9 million in principal repayments and $65.5 million from sales of debt and equity investments. The weighted average yield on debt investments was reported at 11.3%, with approximately 95% of the debt portfolio bearing floating rates.
Strategically, CSWC has been active in managing its capital structure, including the redemption of several notes. The company redeemed $150 million of its October 2026 Notes and $71.9 million of its August 2028 Notes during the quarter, resulting in a realized loss on extinguishment of debt of $2.2 million. Additionally, CSWC has established an at-the-market offering program, raising $134.6 million in gross proceeds through the issuance of common stock. The company also announced the formation of a joint venture with another private credit asset manager, aimed at investing in first-out senior secured debt opportunities in the lower middle market.
Looking ahead, CSWC remains focused on its investment strategy targeting lower middle market companies, with a commitment to providing customized financing solutions. The company’s management believes that its current liquidity position, supported by cash and cash equivalents of approximately $42.6 million and $395.2 million of unused capacity under its credit facilities, will adequately meet its operational and investment needs in the near term.
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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