Ares Capital to Purchase Apollo’s MidCap Financial in $2.6B Deal
Ares Capital Corporation, a private middle-market financing provider, will merge with MidCap Financial Investment Corporation, in a $2.6 billion stock-and-cash deal.
The transaction will expand Ares Capital’s portfolio across direct lending to mid-sized businesses, as many consolidations within publicly traded private credit funds are anticipated to increase over the next couple of years.
The deal will also increase Ares Capital’s combined portfolio to more than 800 financial companies across various industries and bring over $31 billion in investments.
MFIC shareholders are expected to receive $10.88 per share, consisting of about $1.21 in cash and $9.67 in Ares Capital’s common stock.
“The MFIC transaction brings a diversified portfolio and valuable borrower and sponsor relationships, which, when combined with our differentiated private credit investment capabilities, we expect will bolster the long-term growth profile of Ares Capital,” said Kort Schnabel, Chief Executive Officer of Ares Capital.
Following the merger, which is expected to close in the first half of next year, Ares Capital’s management is expected to remain in its current position.
MidCap Financial, which was established in 2008, was sold to Apollo Global Management for an undisclosed amount in 2013 by middle-market private equity firm Moelis Capital Partners.
Under its new ownership, MidCap will continue to provide capital to all sectors of the healthcare middle market and will also expand its access to capital and product offerings through its partnership with Apollo.
Specific terms of the transaction were not disclosed.
Separately, Ares Management Corporation acquired a 32.4% stake in the Rover Pipeline from funds managed by Blackstone Energy Transition Partners, to provide Ares with exposure to a natural gas transmission asset, which provides connectivity from the Appalachian Basin to markets across North America.
Ares Management Corporation reported $691 million in total assets for the third quarter, an increase of 16% year-over-year and revenue of $1.51 billion, beating Wall Street consensus estimates of $1.24 billion.