Insights on Ares Capital’s Portfolio Companies and Exits in 2Q17



Strong performance and exits

On June 30, 2017, the portfolio companies of Ares Capital Corporation (ARCC) witnessed strong credit performance. The portfolio companies of Ares Capital have also witnessed a rise in their aggregate earnings. 

Weighted average EBITDA[1. earnings before interest, tax, depreciation, and amortization] of the Ares Capital’s portfolio companies witnessed an increase of ~5% on a last-12-months (or LTM) basis.

Coming to the exits made by the Ares Capital in 2Q17, the company made exits valued at $1.8 billion, out of which 28% and 57% constituted exits from the second-lien and first-lien senior secured loans, respectively. Other exits were as follows:

  • preferred equity securities: 4%
  • other equity securities: 5%
  • collateralized loan obligations (or CLOs): 2%
  • senior subordinated debt: 4%
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Return on assets

Ares Capital Corporation (ARCC) delivered a return of ~5.1% on its assets. Other investment management companies (XLF) have delivered following returns on their assets:

  • BlackRock Capital Investment (BKCC): -8.0%
  • Prospect Capital (PSEC): ~1.6%
  • Apollo Investment (AINV): 0.67%

Gross margin

Ares Capital Corporation (ARCC) currently has a gross margin of ~75.9%. Its peers have following gross margins:

  • BlackRock Capital Investment (BKCC): ~27.1%
  • Prospect Capital (PSEC): ~71.4%
  • Apollo Investment (AINV): ~74.9%

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