Capital Southwest Corporation and Trinity Capital Inc., two internally managed business development companies, announced that they have formed a joint venture that will invest primarily in first-out senior secured debt opportunities in the lower middle market.
The joint venture will be owned equally by Capital Southwest and Trinity Capital, with each firm committing $50 million and holding a 50% equity interest. Investment and operational decisions will be overseen by the joint venture’s board of managers, which will include equal representation from both partners. The joint venture is expected to obtain leverage through a senior-secured credit facility, with borrowings used to fund portfolio investments.
Michael Sarner, Chief Executive Officer of Capital Southwest, said: “We’re excited about the opportunity to partner with Trinity Capital and believe this vehicle will enable Capital Southwest to compete across a broader spectrum of investment opportunities. We expect this joint venture with Trinity Capital to enhance CSWC’s ability to compete for and win high-quality lower middle market opportunities by providing more flexible capital solutions, all while maintaining portfolio granularity and expanding the range of platform companies we can pursue.”
Kyle Brown, Chief Executive Officer of Trinity Capital, said: “We believe this joint venture meaningfully enhances Trinity Capital’s ability to diversify our portfolio into the lower middle market and further expands our managed funds business, all for the benefit of our shareholders. We are excited to partner with a highly credible firm like Capital Southwest, and we believe this JV positions both firms to be very competitive across a broader opportunity set in the lower middle market by combining disciplined credit underwriting with flexible capital solutions.”
