Ares Capital Corp. (ARCC.US) announced it has agreed to acquire private credit fund MidCap Financial Investment Corp. (MFIC.US) from Apollo Global Management Inc. in a cash-and-stock deal with an enterprise value of $2.6 billion.
The two companies said in a statement on Tuesday that under the terms of the transaction, MFIC shareholders will receive $10.88 per share, comprising approximately $1.21 in cash and $9.67 in Ares Capital common stock. The price represents a premium of about 30% over MFIC's closing price on Monday.
Since the start of this year, private credit managers have been seeking to sell underperforming funds against a backdrop of broader market turbulence and investor redemptions, while attracting competitors to snap up assets at bargain prices in the $1.8 trillion market. According to prior reports, publicly listed funds including BlackRock Inc.'s TCP Capital Corp., WhiteHorse Finance Inc. and Investcorp Credit Management BDC Inc. have indicated they are weighing strategic options that could include a sale.
MFIC is a publicly listed business development company (BDC). As of press time, its shares were up more than 20%, while Ares Capital edged slightly higher.
For Apollo, the sale of MFIC represents a strategic retreat from a "legacy asset." MidCap Financial was originally a direct lending platform acquired by Apollo in 2013, with MFIC serving as its publicly listed vehicle, formerly known as Apollo Investment Corporation. But this vehicle has been bleeding continuously in recent years: its default rate jumped from 3.9% at the end of 2025 to 5.3% in the first quarter of 2026, with a net loss of $61 million for the quarter, and its stock has long traded at a significant discount to net asset value (NAV).
For Ares Capital, the appeal of this deal lies in "buying cheap assets with strong currency." Ares Capital is the world's largest publicly listed BDC, and its parent company Ares Management manages approximately $484 billion in assets, with its credit platform itself being one of the largest self-originated lenders in the U.S. middle-market direct lending space. Using its own stock as the primary form of consideration means Ares is leveraging the market's valuation of its platform to exchange for an asset pool trading at a discount.
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