NexPoint Asks SEC to Add Affiliated Life Insurer to Co-Investment Pool
NexPoint Capital Inc. and four affiliated funds asked the U.S. Securities and Exchange Commission for an order that would let The Ohio State Life Insurance Company, a life insurer under common ownership, co-invest alongside them in the same deals.
The application, filed under Sections 17(d) and 57(i) of the Investment Company Act and Rule 17d-1, would supersede an existing exemptive order the SEC granted the group in April 2016. That earlier order already permitted co-investment among NexPoint Capital, a nontraded business development company, and its sister closed-end funds. The new application adds The Ohio State Life Insurance Company, known as OSLI, as a permitted participant, meaning the insurer’s general account assets could be invested side by side with the funds in the same transactions, subject to standard co-investment safeguards such as independent-director approval.
The other applicants – NexPoint Real Estate Strategies Fund, Highland Opportunities and Income Fund, and Highland Global Allocation Fund – are closed-end funds advised by NexPoint Advisors L.P. or its affiliate NexPoint Asset Management L.P. All of the applicants, including OSLI, are indirectly owned or controlled by James Dondero, the founder of NexPoint and a co-founder of Highland Capital Management.
OSLI is a Texas-domiciled life insurer that issues life insurance policies and annuity contracts and invests its general account assets across a diversified portfolio, including private investment funds.
NexPoint Capital’s investment objective is current income and capital appreciation through middle-market healthcare and non-healthcare lending, syndicated floating-rate debt, and collateralized loan obligations, the company said.
The application is one of a small but recurring category of requests in which an insurance company under common control with a registered fund’s adviser seeks permission to co-invest alongside that fund – a structure that has drawn broader industry attention as asset managers with affiliated insurers, including Apollo and KKR, have expanded balance-sheet co-investment between their insurance subsidiaries and their registered and private vehicles.
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