Updated version 2 - As industry consolidation continues, Ares Capital finalizes a $2.6 billion acquisition deal for MFIC from Apollo.

Supplemented in paragraph 4 with executive remarks, transaction details and industry background information

Reuters, October 27 - Ares Capital (ARCC.O) said on Tuesday it will acquire Apollo’s MidCap Financial Investment Corp (MFIC.O) in a $2.6 billion cash and stock deal, further intensifying the trend of consolidation among publicly listed private credit funds.

This acquisition will strengthen Ares Capital’s position in direct lending to middle-market companies, expanding its portfolio to cover over 800 companies across a wider range of industries and financial sponsors.

MidCap shareholders will receive a total consideration of $10.88 per fully diluted share, including about $1.21 in cash and $9.67 in Ares Capital stock.

This offer represents a premium of over 30% to MidCap’s closing price on Monday. MidCap shares surged more than 24%.

BlackRock TCP Capital (TCPC.O), Investcorp Credit Management BDC (ICMB.O), and WhiteHorse Finance (WHF.O) have all indicated this year that they are weighing strategic options, suggesting that the pace of private credit fund consolidation among listed companies may accelerate.

Due to investor concerns about the quality of these funds’ lending portfolios, these funds have traded at significant discounts (link) to their net asset value.

Kort Schnabel, CEO of Ares Capital, said that with this acquisition, Ares Capital will have acquired three of the largest business development companies (BDCs) that were still operating at its 2004 IPO, and added that the company is well positioned to capture new opportunities as they arise.

“We have consistently taken advantage of periods of market volatility and turmoil to create differentiated investment opportunities for shareholders while expanding our scale,” Schnabel added.

By market capitalization, Ares Capital is the largest publicly traded BDC—these investment vehicles give investors access to a diversified portfolio of private credit assets.

“ARCC has a track record of acquiring distressed BDC portfolios at prices below net asset value (NAV), such as Allied Capital and American Capital, and the MFIC transaction appears similar to us,” said RBC analyst Kenneth Lee.

For Apollo, this transaction marks another significant step in streamlining its portfolio of publicly listed investment vehicles.

The deal is expected to close in the first half of 2027 and will be accretive to Ares Capital’s core earnings per share.

Wells Fargo is serving as advisor to Ares Capital and is providing $750 million of financing for the deal. Moelis & Company is serving as advisor to MidCap’s special committee.

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