Ares Private-Credit Fund to Buy Competitor From Apollo — WSJ

What happened

A fund managed by Ares Management is buying MidCap Financial Investment Corp., a $2.5 billion business-development company, from Apollo Global Management. Ares Capital Corp. will pay with cash and stock, and MFIC shareholders would own about 5% of the merged funds if the deal closes in the first half of 2027.

Confirmed

Global impact / market context

Apollo auctioned the fund after default fears hit private-credit funds held mostly by individual investors. MFIC shares traded at a nearly 40% discount to the net asset value Apollo ascribes to its loans, so Ares can buy loans cheaply and expand its fund.

Analyst inference

The sale shows how weakness in private-credit funds can push assets from one manager to another. A fund trading well below the value assigned to its loans gives a larger buyer room to profit, while exiting shareholders receive cash and stock rather than a full cash payout.

Analyst inference

What to watch

1. The deal is expected to close in the first half of 2027, so shareholders face a long wait before the merger of the two funds is completed and the 5% ownership share is settled. Confirmed
2. Apollo will keep MidCap Financial, the larger corporate lending business whose loans the fund owns, so the deal transfers the fund's loans but not the lending operation itself. Confirmed
3. Watch whether Ares closes the purchase at the steep discount to the value Apollo ascribes to the loans, since default fears that drove the auction could change loan values before the deal completes. Analyst inference

Evidence

• Original source link unavailable