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About Ares Capital Corporation (ARCC)
Ares Capital Corporation (ARCC) is a leading specialty finance company that focuses on providing customized financing solutions to private middle-market companies across the United States. As a publicly traded Business Development Company (BDC), ARCC operates under a regulatory framework designed to support small and mid-sized businesses, offering a combination of debt and equity investments to meet their unique capital needs. The company’s objective is to generate both current income and capital appreciation for its investors by strategically investing in high-quality borrowers that require capital to achieve their business goals.
Core Business Model and Investment Strategy
At the heart of Ares Capital’s business model is its ability to directly originate and underwrite loans and investments tailored to the needs of middle-market companies. Its portfolio primarily consists of first lien senior secured loans, second lien senior secured loans, and mezzanine debt, often complemented by equity components. These investments are diversified across industries and sectors, reducing risk while maximizing returns. Additionally, ARCC selectively invests in preferred and common equity to further enhance its portfolio’s growth potential. The company generates revenue primarily through interest income on its loans and dividend income from its equity investments.
Market Position and Industry Significance
Ares Capital plays a pivotal role in the U.S. financial ecosystem by addressing the financing gap faced by middle-market companies—businesses that are often underserved by traditional banks and financial institutions. Through its affiliation with Ares Management Corporation, a globally recognized alternative investment manager, ARCC benefits from extensive market insights, direct origination capabilities, and robust risk management practices. This strategic relationship enables ARCC to source high-quality investment opportunities and maintain a competitive edge in the specialty finance sector.
Competitive Advantages
Several factors distinguish Ares Capital from its peers in the BDC space. These include:
- Scale and Diversification: As one of the largest publicly traded BDCs, ARCC has the scale to invest across a wide range of industries and sectors, reducing concentration risk.
- Direct Origination Expertise: The company’s ability to directly source and underwrite loans gives it greater control over deal terms and credit quality.
- Focus on Senior Secured Loans: By prioritizing senior secured loans, ARCC enhances its portfolio’s stability and downside protection.
- Affiliation with Ares Management: Access to the resources and expertise of Ares Management Corporation strengthens ARCC’s market positioning and operational efficiency.
Key Challenges and Risk Management
Operating in the specialty finance sector, Ares Capital faces challenges such as credit risk, interest rate volatility, and competition from other lenders. To mitigate these risks, the company employs rigorous underwriting standards, maintains a diversified portfolio, and focuses on investments with attractive risk-adjusted returns. Its emphasis on senior secured loans further enhances its ability to manage downside risks effectively.
Commitment to Stakeholders
Ares Capital is committed to supporting the growth and success of its portfolio companies while delivering value to its investors. By providing flexible and tailored financing solutions, ARCC not only helps middle-market businesses achieve their objectives but also contributes to broader economic growth and job creation.
Ares Capital Corporation (NASDAQ: ARCC) will report its earnings for the fourth quarter and fiscal year ended December 31, 2021, on February 9, 2022, before the market opens. A conference call is scheduled for 11:00 a.m. ET on the same day to discuss the results. Interested participants can join via telephone or a live webcast available on Ares Capital’s investor website. Ares Capital is a leading specialty finance company that provides loans to private middle-market companies, aiming for attractive income and capital appreciation for its investors.
Ares Capital Corporation (NASDAQ: ARCC) announced that Penni Roll, CFO, will present at the Fitch Ratings BDC Conference on November 16, 2021, at 3:00 PM EDT. A live audio webcast will be accessible in the Investor Resources section of the company’s website at www.arescapitalcorp.com. Ares Capital, the largest BDC by market capitalization as of September 30, 2021, focuses on providing loans to private middle-market companies, aiming for attractive current income and potential capital appreciation for investors.
Ares Capital Corporation (ARCC) has priced a public offering of $700 million in aggregate principal amount of 3.200% notes due 2031. The notes will mature on November 15, 2031 and are redeemable at Ares Capital’s option at any time at par plus a make-whole premium. The offering is expected to close on November 4, 2021. Funds from this offering will be used to repay outstanding debt and for general corporate purposes, including investments in portfolio companies. Major underwriters include BofA Securities and J.P. Morgan.
Ares Capital Corporation (NASDAQ: ARCC) declared a fourth quarter dividend of $0.41 per share, payable on December 30, 2021. The company reported its Q3 2021 financial results, showing a core EPS of $0.47, up from $0.39 in Q3 2020. GAAP net income per share decreased to $0.73 from $1.04 year-over-year. The portfolio's fair value reached $17.7 billion, supported by robust new investments totaling $3.1 billion. Ares Capital maintained a debt/equity ratio of 1.17 and had $1.2 billion in cash as of September 30, 2021, reinforcing its financial flexibility and market position.
Ares Capital Corporation (ARCC) will report its third-quarter earnings for the period ending September 30, 2021, on October 26, 2021, prior to the Nasdaq opening. Following the report, a conference call will be held at 12:00 p.m. ET to discuss the results. Interested parties can join via phone or online. Ares Capital focuses on providing loans to private middle-market companies in the U.S., aiming to generate attractive income and capital appreciation for investors. As of September 30, 2021, it is the largest business development company by market capitalization.
Ares Capital Corporation (NASDAQ: ARCC) announced that CEO Kipp deVeer will present at the Barclays Virtual Global Financial Services Conference on September 14, 2021, at 11:15 am EDT. The presentation will be accessible via a live audio webcast on the company's website, with a replay available until September 14, 2022. Founded in 2004, Ares Capital specializes in direct loans to private middle-market companies in the U.S., focusing on high-quality borrowers. As of June 30, 2021, Ares Capital is the largest BDC by market capitalization.
Ares Capital Corporation (Nasdaq: ARCC) plans to publicly offer 12,500,000 shares of its common stock, with an option for underwriters to purchase an additional 1,875,000 shares. This offering is conducted under a shelf registration statement effective since June 3, 2021. Proceeds will be used to repay existing debts and for general corporate purposes, including investments in portfolio companies. The offering is managed by several leading financial institutions, including Morgan Stanley and BofA Securities.
Ares Capital Corporation (ARCC) has declared a third-quarter dividend of $0.41 per share, up from $0.40 in the prior quarter. This dividend is payable on September 30, 2021, to shareholders of record as of September 15, 2021. For Q2 2021, Ares reported a core EPS of $0.53 and GAAP net income of $478 million, representing an increase from $277 million in Q2 2020. The company achieved record NAV per share and substantial investment activity, committing $4.8 billion during the quarter, with a debt/equity ratio of 1.16.
Ares Capital Corporation (NASDAQ: ARCC) will report its earnings for Q2 2021 on July 28, 2021, before the market opens. A conference call will occur at 12:00 p.m. ET the same day, allowing interested parties to discuss the financial results. The call can be accessed via telephone or live webcast, with instructions provided on Ares Capital's website. Founded in 2004, Ares Capital focuses on lending to private middle market companies in the U.S., aiming to produce income and capital appreciation for investors.
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