Chidem Kurdas
Middle-market lending specialist Ares Capital looks ahead to equity and other offerings that could total $1 billion, to take advantage of opportunities as businesses have to refinance large amounts of debt coming due.
Ares, one of the largest business development companies, managed around $8 billion as of the end of 2009, including the debt funds of a portfolio company, Ivy Hill Asset Management. Ares’ manager, Ares Management LLC, runs a total of $33 billion in leveraged loans, private equity investments, mezzanine debt, high-yield-bonds and other investments.
Demand for refinancing leveraged loans is expected to rise in the coming years, peaking from 2011 to 2014, according to a recent report from Sapient. Meanwhile, banks have cut back on their lending and middle-market firms in particular have trouble getting loans. This means lenders like Ares can get attractive yields and terms.
This January the Ares business development company closed a public offering that raised about $254 million, with BofA Merrill Lynch, JP Morgan, and Wells Fargo Securities among the book-runners. Brokers say the company is prepared to make additional public offerings from time to time, up to a total of $1 billion.
Meanwhile, Ares is merging with another business development company, Allied Capital. But there is opposition to the deal.
HedgeFundSmarts 
July 13, 2011 at 9:40 pm
[…] It plans to raise additional capital in the public market with offerings of up to $2 billion in common stock and other securities. Middle-market firms offer ample opportunity and Ares has been planning public offerings for over a year. […]