Capital Southwest Corporation Overview
Industry: Asset Management
Sector: Financial Services
Capital Southwest Corporation is a business development company specializing in credit and private equity and venture capital investments in middle market companies, mezzanine, later stage, mature, late venture, emerging growth, buyouts, recapitalizations and growth capital investments. It does not invest in startups, publicly traded companies, real estate developments, project finance opportunities, oil and gas exploration businesses, troubled companies, turnarounds, and companies in which significant senior management is departing. In lower middle market, the firm typically invests in growth financing, bolt-on acquisitions, new platform acquisitions, refinancing, dividend recapitalizations, sponsor-led buyouts, and management buyouts situations. The investment structures are Unitranche debt, subordinated debt, senior debt, first and second lien debt, and preferred and common equity. The firm makes equity co-investments alongside debt investments, up to 20% of total check and only makes non-control investments. It prefers to invest in Industrial manufacturing and services, value-added distribution, healthcare products and services, business services, specialty chemicals, food and beverage, tech-enabled services and SaaS models. The firm seeks to invest in energy services and products, industrial technologies, and specialty chemicals and products. Within energy services and products, the firm seeks to invest in each segment of the industry, including upstream, midstream and downstream, excluding exploration and production with a focus on differentiated products and services, equipment and tool rental, consumable products, and drilling and completion chemicals. Within industrial technologies, it seeks to invest in automation and process controls, handling and packaging equipment, industrial filtration and fluid handling, measurement, monitoring and testing, professional tools, and sensors and instrumentation. Within and specialty chemicals and products, the firm seeks to invest in businesses that develop and manufacture highly differentiated chemicals and products including adhesives, coatings and sealants, catalysts and absorbents, cosmeceuticals, fine chemicals, flavors and fragrances, performance lubricants, polymers, plastics and composites, chemical dispensing and filtration equipment, professional and industrial trade consumables and tools, engineered solutions for HVAC, plumbing, and electrical installations, specified high performance materials for fire protection and oilfield applications. It may also invest in exceptional opportunities in building products. The firm seeks to invest in the United States. The firm seeks to make investments ranging from $5 to $25 million in securities. It seeks to make equity investments ranging from $5 million to $50 million and debt investments between $5 million and $20 million and co-invest in transaction size up to $40 million. It prefers to invest in companies with revenues approaching above $10 million, profitable operations, historical growth rate of at least 15 percent per year. Within the lower middle market, it seeks to invest in with less than $15 million in EBITDA and also opportunistically invests in the upper middle market, generally defined as companies with EBITDA in excess of $50 million. In addition to making direct investments, the firm allocates capital to syndicated first and second lien term loans in the upper middle market. Criteria for Upper Middle Market Syndicated 1st Lien is EBITDA Size more than $30 million, Closing Leverage greater than 4 times, investment hold size between $5 million and $7 million, investment yield greater than 6.5%. Criteria for Upper Middle Market Syndicated 2nd Lien is EBITDA Size more than $50 million, Closing Leverage greater than 6 times, investment hold size between $5 million and $7 million, investment yield greater than 9%. It prefers to take a majority and minority stake. The firm has the flexibility to hold investments for very long period in its portfolio companies. It may also invest through warrants. The firm prefers to take Board participation in its portfolio companies. Capital Southwest Corporation was founded on April 19, 1961 and is based in Dallas, Texas. Capital Southwest Corporation is a business development company specializing in credit and private equity and venture capital investments in middle market companies, mezzanine, later stage, mature, late venture, emerging growth, buyouts, recapitalizations and growth capital investments. It does not Read MoreCapital Southwest Corporation is evaluated based on the investment philosophy and approach to stock market investing developed by renowned investor Warren Buffett. Companies with high ratings typically exhibit growing earnings, a substantial profit margin, conservative leverage, a consistently high return on equity, and a sustained practice of repurchasing their shares over the years.
Capital Southwest Corporation
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Earnings Per Share
Score 3.00/5
Capital Southwest Corporation boasts a high score, as its Earnings Per Share (EPS) has demonstrated consistent growth over the past six years. Notable counterparts in the sector with high scores includes
Axos Financial
Pathward Financial Inc
Value Line Inc
In
Asset Management industry
, BlackRock Inc
, T. Rowe Price Group Inc
, Victory Capital Holdings Inc
are companies with high ratings.
Return on Equity
Score 3.05/5
Capital Southwest Corporation stands out with a superior score in the Return on Equity (ROE) section, surpassing the sector median value and showcasing its strong performance in this metric. The top companies in the same sector include
Axos Financial
Pathward Financial Inc
Value Line Inc
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, BlackRock Inc
, T. Rowe Price Group Inc
, Victory Capital Holdings Inc
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Net Margin
Score 2.48/5
Capital Southwest Corporation
olds a low score as its net margin consistently trails below the sector median value and doesn't exhibit continuous growth over the last six years; notable companies in the sector with commendable scores include
Axos Financial
Pathward Financial Inc
Value Line Inc
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, BlackRock Inc
, T. Rowe Price Group Inc
, Victory Capital Holdings Inc
are companies with high ratings.
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Leverage
Score 3.28/5
Capital Southwest Corporation
attains a commendable score in the category due to its lower leverage ratio over the past six years in comparison to the sector median value. Additionally, other notable companies in the same sector, such as
Axos Financial
Pathward Financial Inc
Value Line Inc
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, BlackRock Inc
, T. Rowe Price Group Inc
, Victory Capital Holdings Inc
are companies with high ratings.
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