Ares Capital Corporation agreed to purchase MidCap Financial Investment Corporation for $2.6 billion on October 27, 2026. The transaction transfers Apollo Global Management’s middle-market lending arm to Ares Capital, creating a direct lending portfolio containing more than 800 companies. Ares Capital is paying $10.88 per fully diluted share in a cash and stock transaction to absorb the competing business development company. MidCap Financial Investment Corporation stockholders will receive consideration comprising cash and Ares Capital stock.
The transaction advances private credit sector consolidation as business development companies trade below net asset value. Rising loan quality concerns prompt external managers to pursue scale economies rather than organic loan origination. By acquiring a portfolio trading at a discount, Ares Capital eliminates a competitor while deploying its stock valuation to acquire discounted loan assets. The merger allows Ares Capital to increase its exposure to middle-market borrowers across various industries and financial sponsors.
The merger agreement caps the stock exchange ratio at 102.25 percent of the net asset value of Ares Capital, ensuring target stockholders share 50 percent of any share price premium over net asset value up to 104.5 percent. MidCap Financial Investment Corporation plans to pay a special pre-closing dividend distributing undistributed taxable income, which will reduce the Ares Capital stock consideration dollar-for-dollar. Wells Fargo committed $750 million in secured financing to support the transaction, according to the October 27 Ares Capital press release.
Deal terms at a glance
| Buyer | Ares Capital Corporation |
| Target | MidCap Financial Investment Corporation (MFIC) |
| Offer price | $10.88 per fully diluted share |
| Implied enterprise value | $2.6 billion |
| Consideration type | $1.21 in cash and $9.67 in Ares Capital stock per share |
| Premium | 30.1 percent to unaffected closing price of $8.36 |
| Financing | $750 million secured financing from Wells Fargo |
| Conditions | Stockholder approval, regulatory clearances, Nasdaq listing |
| Expected timetable | Closing in the first half of 2027 |
Advisers
Wells Fargo is acting as the exclusive financial adviser to Ares Capital Corporation, according to the October 27 press release from Ares Capital. Moelis & Company LLC is serving as the financial adviser to the Special Committee of MidCap Financial Investment Corporation. Both investment banks provided fairness opinions to their respective clients regarding the transaction valuation.
Kirkland & Ellis LLP and Latham & Watkins LLP are providing legal counsel to Ares Capital. Eversheds Sutherland (US) LLP is advising the independent directors of Ares Capital. Simpson Thacher & Bartlett LLP is acting as legal counsel to MidCap Financial Investment Corporation. Willkie Farr & Gallagher LLP and Stradley Ronon Stevens & Young, LLP are advising the Special Committee of MidCap Financial Investment Corporation.
How the deal came about
Business development companies face pressure to scale their operations as borrowing costs rise and middle-market loan defaults increase. MidCap Financial Investment Corporation shares traded at substantial discounts to net asset value throughout 2026 amid broader concerns over loan quality in the direct lending sector. Ares Capital Management LLC identified the discounted portfolio as an acquisition target.
Ares Capital Corporation and MidCap Financial Investment Corporation negotiated the merger agreement during October 2026. The parties agreed to a two-step merger structure. MidCap Financial Investment Corporation will merge with a dedicated Ares Capital acquisition subsidiary, followed by a second merger into another Ares Capital subsidiary, according to the October 27 Form 8-K filed with the Securities and Exchange Commission.
Apollo Global Management affiliates, including Apollo Principal Holdings A, L.P. and MidCap Financial Trust, signed voting agreements to support the transaction. These entities hold 4,281,394 shares of MidCap Financial Investment Corporation, constituting 5.2 percent of the outstanding common stock. No rival bids emerged prior to the transaction announcement, according to Reuters on October 27.
Valuation and comparables
The $10.88 per share consideration represents a 30.1 percent premium to the unaffected closing price of $8.36 for MidCap Financial Investment Corporation on October 26, 2026. The price represents a 25.8 percent premium to the 30-day volume-weighted average price, according to the October 27 Ares Capital press release. Following the announcement, MidCap Financial Investment Corporation shares increased 23 percent to $10.26, according to Investing.com on October 28.
The transaction implies a price-to-net asset value multiple of 0.81 times, based on the second-quarter 2026 net asset value of $13.37 per share reported by MidCap Financial Investment Corporation, according to Seeking Alpha on October 13, 2026. Traditional enterprise valuation multiples such as enterprise value to earnings before interest, taxes, depreciation and amortization are not disclosed in the transaction filings.
Raymond James downgraded MidCap Financial Investment Corporation from Outperform to Market Perform following the announcement. The analysts stated the stock price increase captured the remaining upside ahead of the transaction completion, according to Investing.com on October 28.
Financing and structure
The acquisition consideration includes a cash component of $1.21 per share and a stock component of $9.67 per share. An Ares Management subsidiary will provide the cash funding for the transaction. Ares Capital Corporation will issue new common stock to satisfy the equity portion of the purchase price.
Wells Fargo committed to provide $750 million in additional secured financing to Ares Capital. The bank will deploy this capital through the existing credit facilities of Ares Capital to support the transaction execution and subsequent portfolio integration, according to the October 27 Ares Capital press release.
The stock exchange ratio is based on the greater of the net asset value per share or the current share price of Ares Capital. MidCap Financial Investment Corporation plans to distribute its undistributed taxable income through a special pre-closing dividend. This dividend payment will reduce the dollar value of the Ares Capital stock consideration on a dollar-for-dollar basis.
Risks, conditions and key dates
- October 26, 2026: Ares Capital Corporation and MidCap Financial Investment Corporation sign the definitive Agreement and Plan of Merger.
- October 27, 2026: Ares Capital files the Form 8-K with the Securities and Exchange Commission detailing the transaction structure and voting agreements.
- July 26, 2027: The initial nine-month drop-dead date specified in the merger agreement occurs. The parties can extend this date by three months if regulatory clearances remain outstanding.
- First half of 2027: The companies expect to close the transaction, subject to common stockholder approval and regulatory clearances.
Where reports disagree
Financial news outlets reported conflicting figures regarding the total enterprise value of the transaction. Ares Capital Corporation stated the total enterprise value is approximately $2.6 billion in its October 27 press release. Reuters also reported the transaction value as $2.6 billion on October 27. The Wall Street Journal cited the transaction value as $2.5 billion in its October 27 coverage.
Publishers also differ slightly on the exact premium calculation. Ares Capital Corporation calculated the offer premium at exactly 30.1 percent above the unaffected closing price in its official press release. Broker commentary and Investing.com rounded this figure down to 30 percent in their October 28 reports.
Sources
Company and regulator filings
- Ares Capital, Ares Capital Corporation Agrees to Acquire Midcap Financial Investment Corporation
- MidCap Financial Investment Corporation, ARCC to Acquire MFIC
Press and analysis
- Markets Media, Ares Capital Acquires Apollos Midcap Financial Investment Corporation
- Investing.com, Raymond James Downgrades Midcap Financial Stock Rating After Ares Deal
Facts as of 28 October 2026.
