NXT targets up to $1bn for fifth flagship fund – exclusive

The firm’s previous funds have targeted returns of 6-7 percent and 9-11 percent on an unlevered and levered basis, respectively.

NXT Capital is looking to bring its total raised this year to more than $2 billion this year through the next iteration of its flagship fund after closing two managed accounts and a collateralised loan obligation earlier this year. 

The Chicago-based mid-market lender set a target of $800 million to $1 billion for Senior Loan Fund V, according to an investor presentation obtained by Private Debt Investor. The fund series’ previous incarnation, SLF IV, closed in October on $912 million of deployable capital, consisting of $312 million in equity commitments and a $600 million leverage facility. 

The firm also has raised two separately managed accounts so far this year, one which ended up being a $500 million debt portfolio for Aflac Global Investments, the asset management division of insurance company Aflac. A second one for $200 million has closed as well, a source familiar with the situation said.

An NXT spokeswoman could not be reached for comment.

A separate document, a November memorandum soliciting proposals to refinance $350 million in senior secured credit facilities, did not outline return targets for SLF V, but past SLF vehicles have sought returns between 6-7 percent without leverage and 9-11 percent utilising leverage. The funds also have a 0.75 percent management fee levied on the fund’s assets under management. The Teachers’ Retirement System of the State of Illinois committed $125 million last month, according to a media report.

In April, the firm also closed a $406 million CLO, which must consist of at least 95 percent senior secured loans, according to a Standard & Poor’s pre-sale report. In addition, up to 10 percent of the loans can be covenant-lite deals and at least 95 percent of the loan issuers must be based in the US, UK or Canada. The CLO’s non-call period ends in April 2019. The re-investment period and maturity dates are also in April of 2021 and 2029, respectively.

NXT provides financing to mid-market companies and commercial real estate investors. It is a portfolio company of private equity firm Stone Point Capital. It has offices in Atlanta, Georgia; Charlotte, North Carolina; Dallas; Los Angeles; Nashville, Tennessee; New York; Phoenix, Arizona; San Francisco; and Stamford, Connecticut.