Assessing Ares Capital’s Portfolio Investments in 3Q17
Ares Capital Corporation (ARCC) saw a significant increase in its portfolio investments at fair value from $8.8 billion in 3Q16 to $11.5 billion in 3Q17. This trend reflects a substantial YoY rise.
In 3Q17, portfolio investments at fair value also include investments of $1.8 billion on the back of the acquisition of American Capital (ACAS).
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The breakdown of the company’s portfolio investments at fair value in 3Q17 follow:
- first lien senior secured loans: $4.7 billion
- subordinated certificates of the SDLP: $437.0 million
- second lien senior secured loans: ~$4.1 billion
- collateralized loan obligations: $158.0 million
- senior subordinated loans: $922.0 million
- preferred equity securities: $435.0 million
- other equity securities: $765.0 million
On an LTM (last-12-months) basis, Ares Capital has reported a net income margin of ~45.4%. Among its peers (XLF), Hercules Capital (HTGC), BlackRock Capital Investment (BKCC), and Apollo Investment (AINV) reported net income margin of ~39.1%, ~18.3%, and ~29.9%, respectively, on an LTM basis.
October 2017 commitments
From October 1, 2017, to October 26, 2017, Ares Capital entered into new investment commitments of ~$294 million. These commitments follow:
- first lien senior secured loans: 81.0%
- second lien senior secured loans: 19.0%
These investment commitments may be sold at the company’s discretion, in full or in part, although the company does not guarantee the same. ARCC had total assets of ~$12.0 billion on September 30, 2017, compared to ~$9.1 billion on September 30, 2016.