NexPoint Capital’s tender offer: What does it mean for shareholders?

NexPoint Capital, Inc., a non-traded, publicly registered business development company (BDC) managed by NexPoint Advisors, L.P., has finalized its tender offer to repurchase a portion of its outstanding common stock. The company successfully bought back 149,884.92 shares at $5.21 per share, plus any unpaid dividends accrued through the expiration date. The tender offer, representing up to 2.5% of NexPoint Capital’s outstanding common stock, expired on March 24, 2025, at 4:00 p.m. Eastern Time.

This corporate action, often seen as a strategic move in capital management, offers insights into NexPoint Capital’s approach to shareholder engagement and financial structuring. Understanding why companies initiate tender offers and how they impact investors can provide valuable context for evaluating NexPoint Capital’s latest decision.

Why do companies like NexPoint Capital initiate tender offers?

Tender offers are a common tool used by corporations to buy back shares directly from shareholders at a predetermined price, which is often set at a premium to the prevailing market value. This strategy can serve multiple purposes, including reducing the number of outstanding shares, consolidating ownership, signaling confidence in the company’s financial health, and providing liquidity to shareholders who wish to exit their investment.

For NexPoint Capital, this tender offer aligns with broader trends among business development companies (BDCs) that seek to manage their share capital efficiently. Non-traded BDCs, like NexPoint Capital, do not have their shares listed on a public exchange, which can make liquidity events like tender offers particularly significant for investors. By repurchasing shares, NexPoint Capital aims to optimize its capital structure and reinforce its commitment to shareholder value.

How does NexPoint Capital’s tender offer affect investors?

For shareholders, tender offers present an opportunity to sell their shares at a set price without relying on secondary market transactions. This can be particularly beneficial in the case of non-traded securities, where liquidity options are often limited. Investors who chose to participate in NexPoint Capital’s tender offer were able to sell their shares at $5.21 each, along with any unpaid dividends.

From an investment perspective, share repurchases can sometimes signal that a company believes its stock is undervalued. By reducing the number of outstanding shares, the tender offer could lead to an increase in earnings per share (EPS), potentially making the remaining shares more attractive to investors. However, investors who opted not to sell must consider how NexPoint Capital’s future growth and distribution strategies align with their financial objectives.

What is NexPoint Capital’s investment strategy?

NexPoint Capital specializes in providing investors access to alternative investment opportunities, particularly in sectors influenced by demographic and policy-driven changes in the U.S. economy. As a business development company, it primarily invests in debt instruments issued by middle-market companies, with a strong focus on the healthcare industry. This strategy allows NexPoint Capital to offer investors exposure to private market opportunities while maintaining a structured investment approach.

The healthcare sector, a core focus of NexPoint Capital’s portfolio, continues to experience significant growth, driven by an aging population, increased demand for medical innovations, and evolving regulatory frameworks. By concentrating its investments in this space, NexPoint Capital positions itself to benefit from long-term industry trends while providing investors with access to high-potential assets.

What industry trends are shaping NexPoint Capital’s market strategy?

The business development company sector has seen increased attention in recent years as institutional and retail investors seek alternatives to traditional public market investments. BDCs offer a unique structure that allows them to provide capital to private companies while generating income for investors through dividends and interest payments.

NexPoint Capital’s focus on healthcare aligns with broader market trends that indicate continued investment in the sector. The demand for specialized financing solutions, particularly in areas such as biopharmaceuticals, medical technology, and healthcare services, has been rising. BDCs that cater to these industries often find themselves well-positioned to capitalize on expansion opportunities and regulatory shifts.

Additionally, corporate actions like tender offers suggest a proactive approach to managing shareholder value. Companies engaging in share repurchases often aim to reassure investors of their financial stability, especially in times of market uncertainty. Given NexPoint Capital’s status as a non-traded BDC, the tender offer could be interpreted as a sign of confidence in the company’s underlying portfolio.

What should investors consider before participating in future tender offers?

While tender offers can provide immediate liquidity, investors should carefully assess the offer price in relation to the company’s long-term prospects. In NexPoint Capital’s case, shareholders who tendered their shares at $5.21 each exited their investment at a set price, but those who held onto their shares remain positioned for potential future returns.

Investors evaluating future tender offers should consider factors such as:

• The reason behind the company’s buyback decision
• The premium (if any) offered compared to estimated share value
• The company’s financial health and investment strategy
• The potential impact on remaining shareholders

Given NexPoint Capital’s focus on alternative investments and healthcare sector exposure, investors should also monitor market conditions affecting these industries. Understanding the broader economic landscape can help determine whether holding or selling shares aligns with their financial goals.

NexPoint Capital’s shareholder strategy moving forward

As NexPoint Capital continues to manage its investment portfolio and capital structure, initiatives like share repurchases may remain a key part of its strategy. The company’s focus on healthcare investments provides exposure to an expanding sector, while its capital management approach aims to balance shareholder value with long-term growth opportunities.

For investors, NexPoint Capital’s latest tender offer highlights the importance of staying informed about corporate actions and market trends. Whether they chose to participate in the offer or retain their shares, shareholders should consider how the company’s strategic direction aligns with their investment outlook.