Ares Capital’s Pending Investment Pipeline Reaches $2.5 Billion as Expansion Looms Through Acquisition
Key Facts
Ares Capital said its pending investment pipeline stood at about $2.5 billion on October 22, 2026, alongside its third-quarter results and a separate agreement to acquire MidCap Financial Investment Corporation. The pipeline includes transactions approved by its investment committee or covered by formal authorizations, letters of intent or signed commitments. The company describes these transactions as likely to close under its criteria, but they remain subject to conditions and the company does not guarantee their completion. The figure came after the end of the fiscal quarter, while the company said its new investment commitments from October 1 to 22 totaled about $1.1 billion. About $855 million of those commitments were funded during the same period.
On results, core earnings per share fell to $0.46 in the third quarter of 2026, from $0.50 in the corresponding period of 2025. Net investment income declined to $328 million, compared with $338 million a year earlier. New investment commitments during the quarter also fell to $2.109 billion from $3.924 billion in the third quarter of 2025. Exits totaled $2.473 billion, versus $2.625 billion in the corresponding period. These figures place October’s commitment growth alongside a year-over-year decline in activity and results during the quarter ended in September.
The weighted average yield on debt and income-generating securities funded by the company during the quarter was 10.4%, on an amortized-cost basis. Floating-rate debt accounted for 85% of new investment commitments in the quarter, and 74% of those commitments had interest-rate floors. Meanwhile, non-accrual loans rose to 2.4% of total investments at amortized cost on September 30, from 1.8% on December 31, 2025. Net asset value was $19.31 per share at the end of September, down from $19.94 at the end of last year. These indicators show financing yields and commitment composition alongside changes in credit quality and asset value.
Ares Capital declared a fourth-quarter distribution of $0.48 per share, payable on December 29, 2026, to shareholders of record on December 15. The company said it had $722 million in cash and cash equivalents on September 30, along with about $6.9 billion available for additional borrowing under its existing credit facilities, subject to restrictions. The chief financial officer said the company issued $750 million of seven-year unsecured notes during the quarter, adding: "We have approximately $7 billion of available liquidity." The figures provide a picture of the declared distributions, funding sources and liquidity disclosed by the company. The open official disclosure did not substantiate the figure in the initial draft that earnings per share would increase by $0.02 for each 1% rise in interest rates.
In a separate deal announced on October 27, Ares Capital agreed to acquire MFIC, with expected total consideration of $10.88 per diluted share of the target company. The consideration consists of about $1.21 in cash and about $9.67 in Ares Capital shares, with adjustments related to MFIC’s special distribution. MFIC’s preliminary estimate of net asset value was about $12.86 per share on September 30. Ares expects the combination to increase its initial portfolio to more than 800 companies and more than $31 billion in investments at fair value, based on data as of the same date. Wells Fargo also agreed, subject to customary terms, to provide an additional $750 million in secured financing that could be used to support the deal.
Ares said the deal is expected to add modestly to core earnings per share and support future distributions, an estimate from the company that depends on completion of the acquisition. MFIC shares rose more than 23%, while Ares Capital shares were roughly unchanged in trading on October 27, according to Reuters. The companies expect to complete the deal in the first half of 2027, subject to MFIC shareholder approval, regulatory approvals and customary closing conditions. Until then, the portfolio expansion and expected contribution to earnings and distributions remain contingent on completion of the deal. The expected timing comes after the announcement of the fourth-quarter cash distribution payable in December.