NXT hits the road with fourth fund – exclusive

The Chicago-based firm is raising $300m in equity for its NXT Capital Senior Loan Fund IV and expects to top that up with $500m in bank leverage as it did on the predecessor vehicle.

NXT Capital, the Chicago-headquartered lender, has begun raising money for its fourth senior loan fund. The firm is targeting $300 million in equity and is moving towards a first close on about half of the target, said a source close to the firm. The fund will use $500 million in bank leverage, in-line with the predecessor fund.

The previous NXT Capital Senior Loan Fund III closed on $291 million in equity capital commitments and raised the rest through bank leverage for a total of $800 million. That fund held its only close in January.

NXT makes corporate loans from its own balance sheet and pooled funds. The firm also has an asset-based lending business through its equipment and real estate finance units. Robert Radway, NXT’s chief executive, told PDI in a recent interview that the firm is looking to increase its deal size to the $125 million to $250 million range. Its typical hold size was until recently between $50 million and $70 million. 

Earlier this month, NXT provided a $195 million senior secured credit facility to waste transport company Custom Ecology. The loan refinanced the company’s existing debt and supported the acquisition of another waste transport company. Custom Ecology is a portfolio company of private equity firm Kinderhook Industries.

NXT Capital has about $5.5 billion in assets under management, with up to $8.5 billion in available capital through leverage. The firm is headquartered in Chicago and has nine additional offices in major US cities. Connecticut-based private equity firm Stone Point Capital owns the largest stake (slightly below 50 percent) in NXT, while the Ontario Teachers’ Pension Plan (OTPP) also owns a significant equity stake.