NexPoint Capital Adjusts Share Valuation

The investment company sets a new per-share valuation under its reinvestment plan, reflecting NAV changes.

January 30, 2025

NexPoint Updates Share Valuation for DRP

NexPoint Capital, Inc., a non-traded business development company, has adjusted its share valuation under its distribution reinvestment plan (DRP) to $5.56 per share as of November 30, 2024. This change follows valuation policies established by the company's investment adviser and approved by its board of directors.

The updated per-share price applies to investors who elect to reinvest dividends rather than receive cash payouts. The company states that share pricing under the DRP is determined by its adviser and is set within a 2.5% range above the net asset value (NAV) per share.

Price Calculation Based on NAV

The pricing of shares within the DRP follows a structured process in compliance with Rule 2a-5 of the Investment Company Act of 1940. NexPoint’s adviser has discretion over setting the per-share price but ensures it aligns with the most recent NAV determination. The adviser must use good faith valuation practices to establish a fair pricing model.

This valuation methodology is standard in non-traded investment vehicles, ensuring that reinvested distributions reflect the latest financial conditions of the company. By maintaining a link to NAV, NexPoint aims to offer shareholders a transparent reinvestment structure.

Market and Strategic Context

NexPoint operates in the alternative investment space, specializing in credit and equity investments. As a non-traded entity, it does not have a public stock listing, making NAV-based valuations particularly crucial for investors.

The update to its DRP valuation reflects broader market trends in private credit and equity investments. Non-traded business development companies (BDCs) like NexPoint focus on generating yield through debt and equity stakes in private companies, a sector that has seen growing institutional interest amid rising interest rates and economic shifts.

Forward-Looking Considerations

While the company did not announce operational changes or financial performance updates, its filing included standard forward-looking statement disclaimers. NexPoint acknowledged that various market factors could impact future valuations and that investors should consider inherent risks associated with private capital markets.

NexPoint Capital continues to navigate the evolving investment landscape, adjusting its valuation strategy in line with market dynamics. The company's ability to manage its NAV effectively will remain a key factor for existing and prospective investors.