Capital Southwest Corporation and Trinity Capital Inc. have created a new joint venture that will invest $100 million—$50 million from each partner—in first‑out senior secured debt in the lower‑middle‑market segment. The vehicle is owned 50/50, and the partners will seek leverage through a senior‑secured credit facility to fund portfolio investments. The lower‑middle‑market focus aligns with Capital Southwest’s typical investment range of $5 million to $50 million in revenue, a segment that offers attractive risk‑adjusted returns and a growing pipeline of borrowers.
This partnership follows a similar first‑out senior loan joint venture that Capital Southwest launched with another private‑credit asset manager on January 22, 2026. The new deal signals a deliberate strategy to use off‑balance‑sheet structures to increase deal‑making capacity and compete more effectively against larger business‑development companies and banks in the same market segment.
"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," said Michael Sarner, CEO of Capital Southwest. "We expect this joint venture with Trinity Capital to enhance our ability to compete for and win high‑quality lower‑middle‑market opportunities by providing more flexible capital solutions while maintaining portfolio granularity," he added. Kyle Brown, CEO of Trinity Capital, noted, "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."
The joint venture expands Capital Southwest’s capacity to source and fund larger and more diverse platform deals, while Trinity Capital gains access to a well‑established network of borrowers and underwriting expertise. By combining resources, the partners can offer more flexible capital structures, potentially increasing their win rate on first‑out senior debt deals and strengthening their competitive position against larger BDCs and banks.
The joint venture will seek leverage through a senior‑secured credit facility, but the amount and terms of the facility have not been disclosed.
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