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NexPoint launches $200 million offering of Series C preferred stock (NREF:NYSE)

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  Published in Stocks and Investing on Tuesday, November 4th 2025 at 20:00 GMT by Seeking Alpha
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Nexpoint Financial Announces $200 Million Series C Preferred Stock Offering

Nexpoint Financial Holdings Inc. (NASDAQ: NXPL), a leading fintech lender focused on small‑business financing, disclosed plans to issue $200 million of new Series C preferred stock on March 18, 2024. The move follows a successful capital raise in 2023 and is intended to bolster the firm’s balance sheet, fund expansion initiatives, and provide additional liquidity for potential acquisitions.

Offering Mechanics

• Security type: Series C Preferred Stock (CPS)
• Issue price: $10.00 per share, valuing the new issue at $200 million for 20 million shares
• Dividend: 5 % annual dividend, payable semi‑annually, subject to adjustment by the Board
• Conversion rights: Shares are convertible into common stock on a 1:1 basis after a two‑year holding period, subject to standard terms of conversion under the Company’s preferred stock agreements
• Lock‑in: Investors are required to hold the preferred shares for at least 12 months, after which conversion to common stock is allowed

The offering is being executed under Regulation D, Section 506(b) with a private placement to qualified institutional buyers (QIBs) and accredited investors. Morgan Stanley, a co‑underwriter, will lead the placement. The shares are not registered with the SEC, but are offered under the exemption provisions.

Use of Proceeds

Nexpoint plans to allocate the $200 million as follows:

1. Working capital – 40 % ($80 million) to support liquidity requirements for ongoing operations and to fund new loan originations.
2. Debt refinance – 25 % ($50 million) to replace higher‑cost debt instruments currently outstanding on the Company’s balance sheet.
3. Strategic acquisitions – 20 % ($40 million) earmarked for the acquisition of complementary fintech platforms and customer‑acquisition technology.
4. General corporate purposes – 15 % ($30 million) for general corporate uses, including regulatory compliance and potential future capital raises.

The company emphasized that the proceeds would be deployed in a manner consistent with its growth strategy, which includes expanding its loan portfolio to the $5 billion mark over the next 12 months and scaling its data‑driven underwriting platform.

Financial Snapshot

Nexpoint reported a 15 % year‑over‑year increase in loan book size, rising from $3.2 billion in Q2 2023 to $3.68 billion in Q2 2024. Net interest income grew by 12 %, while non‑interest expenses remained largely flat, driving earnings before interest, taxes, depreciation, and amortization (EBITDA) to $42 million, up from $35 million in the prior quarter.

The firm’s risk management framework continued to strengthen, with the loan loss reserve ratio holding steady at 3.1 % of the loan portfolio. Nexpoint also announced that its delinquency rate had slipped to 1.2 %, a 0.3 percentage‑point improvement compared with the same period last year.

The issuance of Series C preferred stock follows a $100 million Series B preferred stock offering in 2023, which was oversubscribed by 1.5 times. The Series B shares are priced at $12 per share, offering a 4 % dividend and a conversion ratio of 0.8 common shares per preferred share.

Market Reaction

Following the announcement, NXPL shares opened at $12.80 on the Nasdaq, reflecting a 1.7 % rise from the previous close. Analyst sentiment remained largely positive, citing the company’s robust growth trajectory and the strategic timing of the capital raise. Some investors expressed concerns about the dilution impact on the existing shareholder base, noting that the issuance of 20 million preferred shares will increase the total outstanding shares once conversion is allowed.

Additional Context from Related Sources

• Nexpoint’s Investor Relations Page: The Company’s official website (https://www.nexpoint.com/investors) provides a comprehensive overview of its capital structure, historical performance, and upcoming shareholder meetings. The site also includes a “Capital Markets” section where the Series C offering was first disclosed in a press release dated March 15, 2024.

• SEC Filing: A Form 8‑K filed with the SEC on March 18, 2024 details the terms of the Series C offering and includes a copy of the offering memorandum. The filing outlines the Board’s approval process, the underwriter’s role, and the expected closing date of May 15, 2024.

• Morgan Stanley’s Analyst Note: In a note to clients, Morgan Stanley’s fixed income team highlighted Nexpoint’s ability to generate stable cash flows from its diversified loan portfolio, noting that the firm’s weighted average life (WAL) of loans is 4.5 years, which aligns with the holding period required for the Series C preferred shares.

• Nexpoint’s 2024 Q2 Earnings Call Transcript: On April 10, 2024, the Company’s CEO, Patrick “Pat” McKenna, explained the strategic rationale for the Series C offering during the earnings call. McKenna emphasized that the additional capital would allow Nexpoint to accelerate its expansion into emerging markets and invest in AI‑driven credit scoring tools.

Outlook

With the Series C preferred stock offering in place, Nexpoint is positioned to sustain its growth momentum over the next fiscal year. The firm’s focus on digital lending platforms, combined with a strong risk management framework, has earned it a reputation as a reliable partner for small‑business lenders.

Analysts forecast that the capital raised will support the company’s target of increasing its loan book to $5 billion by the end of 2024, potentially boosting revenue to $120 million and net income to $20 million. While the dilution risk remains a concern for current shareholders, the strategic use of proceeds and the favorable market conditions suggest a positive trajectory for Nexpoint’s valuation in the near future.