Stone Point, OTPP cash out of NXT Capital

Stone Point Capital and Ontario Teachers’ Pension Plan have officially exited NXT Capital after eight years.

ORIX Corp said Aug. 29 that it closed its buy of NXT, a provider of commercial financing to middle-market and emerging companies as well as real estate sponsors.

NXT will continue operating out of its Chicago headquarters while Robert Radway will remain chairman and CEO. More than 115 NXT employees are joining ORIX.

With the sale, NXT now has nearly $12 billion of financing available. It is able to provide loans through its corporate finance or real estate finance units.

ORIX USA already provides debt and equity to middle-market companies through its leveraged-finance unit.

ORIX is integrating its leveraged-finance team with NXT, and will offer senior, stretch, unitranche and second-lien loans to companies with Ebitda between $5 million and $75 million.

“ORIX brings further scale and financial strength to NXT Capital with its larger portfolio of products, services and international presence,” Radway said in a statement.

An ORIX spokeswoman added that ORIX USA provides NXT Capital with additional resources to grow. ORIX USA for its part gains additional expertise to bolster its middle-market reputation, she said.

ORIX announced the sale in July. Terms weren’t disclosed but press reports pegged the sale at more than $900 million.

The deal is a long hold for NXT’s largest shareholders. The lender raised nearly $1 billion.

Stone Point capitalized NXT in May 2010, when it was founded by former executives of Merrill Lynch Capital and Heller Financial. It’s unclear how much Stone Point provided.

The buyout shop used its Trident IV and Trident V funds to invest. (Stone Point is investing out of Trident VII, which closed on $5.5 billion in 2017.)

In October 2010, Ontario Teachers’ Pension Plan invested $150 million in NXT.

A year later, in October 2011, NXT said it raised another $318 million in commitments. This brought NXT’s funding to $850 million. The $318 million included a $125 million follow-on from OTPP.

New investors at that time included Credit Suisse’s Customized Fund Investment Group, Oak Hill Investment Management and Teachers’ Retirement System of Illinois.

Aflac Inc, the insurance company, also invested in NXT, providing $50 million in March 2017 and $75 million in January 2018.

All investors have exited now that NXT is a wholly owned subsidiary of ORIX, said Megan O’Brian, an NXT spokeswoman. “Everyone is out,” O’Brien said.

TRS Illinois declined comment. Executives for ORIX, OTPP and Stone Point could not be reached for comment.

Action Item: Contact Robert Radway at +1 312-450-8000