Ares Attempts To Inject New Money Into BDC Structure

Ares Capital Management's business development corporation (BDC) Ares Capital Corp. is looking to raise $150 million through a secondary stock offering.

  • 14 Jan 2005
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Ares Capital Management's business development corporation (BDC) Ares Capital Corp. is looking to raise $150 million through a secondary stock offering. The move comes as UBS placed a buy rating on rival Apollo Management's BDC Apollo Investment Corp.

Apollo raised $870 million in an IPO last March and following that a plethora of private-equity firms including The Blackstone Group registered offerings. However, a storm of negative publicity over high fees and a drop in Apollo Investment Corp.'s share price from $15 to $13.50 caused almost all the offerings to be pulled. Last October, when obituaries were being written on the structure, Ares succeeded in raising a BDC to invest in middle-market debt selling $165 million of shares to the public.

One of the keys to Ares' success was that it effectively lifted out RBC Capital Market's mezzanine team and bought a $150 million portfolio of senior secured loans, mezzanine debt and equity coinvestments from the Canadian bank. This included debt in Berkline/BenchCraft and Esselte. There were also preferred shares in two RBC CDOs--Foxe Basin CLO 2003 and Hudson Straits CLO 2004 (LMW, 10/11). Michael Arougheti, president of the BDC, declined comment.

Apollo has invested over $400 million of its fund, with over 30% in senior secured bank debt. The latest investments include $95 million in the senior secured debt of Grand Vehicle Works Holding Corp., NES Rentals Holdings, Anthony International, Phillips Health, Ripplewood Phosphorus and United Industries Corp. The share price as LMW went to press was $16.50.

 

  • 14 Jan 2005

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3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
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