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

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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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