Capital Southwest Corporation (NASDAQ: CSWC) and Trinity Capital Inc. (NASDAQ: TRIN) announced the formation of a joint venture to invest in first-out senior secured debt opportunities in the lower middle market.

Each business development company will commit $50 million and hold a 50% equity interest in the venture. Investment and operational decisions will be managed by a board with equal representation from both partners. The joint venture plans to obtain leverage through a senior secured credit facility to fund portfolio investments.

"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, Chief Executive Officer of Capital Southwest. He stated the joint venture is expected to enhance the company's ability to compete for lower middle market opportunities by providing more flexible capital solutions while maintaining portfolio granularity.

Kyle Brown, Chief Executive Officer of Trinity Capital, said the joint venture enhances Trinity Capital's ability to diversify its portfolio into the lower middle market and expands its managed funds business. "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," Brown stated.

Capital Southwest is a Dallas-based business development company with approximately $2.0 billion in investments at fair value as of December 31, 2025. The company focuses on middle market lending with investments ranging from $5 million to $50 million across the capital structure.

Trinity Capital is a Phoenix-based alternative asset manager that operates across five lending verticals: Sponsor Finance, Equipment Finance, Tech Lending, Asset Based Lending, and Life Sciences, with teams located across the United States and Europe.