Ares Capital to buy MidCap Financial for $2.6 billion, could spark BDC merger wave
Ares Capital's deal for MidCap Financial at a 30% premium to market may become a template for consolidating BDCs trading at steep discounts to NAV.
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what happened
Ares Capital has agreed to buy MidCap Financial Investment, which is run by an affiliate of Apollo Global Management, in a deal worth $2.6 billion including debt. Ares is paying $10.88 a share, mostly in its own stock, a 30% premium to MidCap's Monday close of $8.37. MidCap shares rose 23% to $10.29 on Tuesday.
Even so, Ares is buying the company at a 15% discount to its September 30 net asset value of about $12.86 a share. Barron's reports that this split-the-difference structure could become a template for other BDC mergers and take-privates, since most companies in the sector trade at a discount of 30% or more to NAV.
why it matters
The deal is seen as a sign that valuations of BDCs investing in private credit may be too low. The VanEck BDC Income ETF, a sector proxy, still trades close to its recent 52-week low.
market impact
BDCs and private credit: the deal supports the sector through expectations of consolidation
- BDC sector pressure up — expected mergers and take-privates at a premium to market support company valuations
tags
instruments
sources
- Ares Capital's Buyout of Apollo's MidCap Could Spark Wave of BDC Mergers — Barrons.com, 27 October 2026 at 15:33 UTC
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