Ares Capital Corporation Announces Pricing of $1 Billion Public Offering of 5.800% Unsecured Notes Due 2032
Ares Capital Corporation (Nasdaq: ARCC), a leading specialty finance company, has officially priced an underwritten public offering of $1 billion in aggregate principal amount of unsecured notes. These notes carry an interest rate of 5.800% and will mature on March 8, 2032. The company has structured the offering to allow for flexibility, enabling it to redeem the notes in whole or in part at any time, with the redemption price set at par plus a “make-whole” premium, if applicable. This strategic move is aimed at enhancing the company’s financial positioning and supporting its ongoing investment activities.
The notes are set to be underwritten by a consortium of major financial institutions, with BofA Securities, Inc., J.P. Morgan Securities LLC, SMBC Nikko Securities America, Inc., Wells Fargo Securities, LLC, MUFG Securities Americas Inc., Mizuho Securities USA LLC, RBC Capital Markets, LLC, and Truist Securities, Inc. serving as the joint book-running managers for the offering. Ares Capital has also enlisted an array of joint lead managers, including BNP Paribas Securities Corp., CIBC World Markets Corp., Morgan Stanley & Co. LLC, SG Americas Securities, LLC, Regions Securities LLC, Barclays Capital Inc., BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Goldman Sachs & Co. LLC, ICBC Standard Bank Plc, Natixis Securities Americas LLC, and U.S. Bancorp Investments, Inc.
Additionally, the offering involves the participation of a series of co-managers, including Ares Management Capital Markets LLC, ING Financial Markets LLC, R. Seelaus & Co., LLC, Citigroup Global Markets Inc., Comerica Securities, Inc., Deutsche Bank Securities Inc., Keefe, Bruyette & Woods, Inc., Academy Securities, Inc., Loop Capital Markets LLC, Samuel A. Ramirez & Company, Inc., and Siebert Williams Shank & Co., LLC. The collective effort of these financial institutions reflects the significance of this transaction in the capital markets.
The closing of this offering is expected to occur on January 8, 2025, pending customary closing conditions. The company plans to utilize the net proceeds from this offering primarily to repay certain outstanding indebtedness under its debt facilities. These repayments will help streamline Ares Capital’s balance sheet and reduce its overall debt load. The company also has the flexibility to reborrow under its debt facilities, which will allow it to deploy capital for general corporate purposes, including investing in portfolio companies in line with its investment objectives.
Investor Considerations
Investors are advised to carefully consider the investment objective, risks, charges, and expenses associated with Ares Capital before making an investment decision. The preliminary prospectus supplement, which is dated January 2, 2025, along with the accompanying prospectus dated May 1, 2024, contains essential details regarding Ares Capital’s financial position, risk factors, and other relevant information that investors should review. These documents have been filed with the Securities and Exchange Commission (SEC) and should be examined thoroughly before making any investment decisions.
It is important to note that the information provided in the pricing term sheet, the preliminary prospectus supplement, the accompanying prospectus, and this press release is not complete and may be subject to changes. These documents are not offers to sell any securities of Ares Capital, nor are they soliciting offers to buy such securities in jurisdictions where such transactions are not permitted.
The offering is made exclusively by means of a preliminary prospectus supplement and an accompanying prospectus. Copies of these documents are available upon request from any of the joint book-running managers. Specifically, investors may obtain copies from BofA Securities, Inc. at 201 North Tryon Street, Charlotte, NC, from J.P. Morgan Securities LLC at 383 Madison Avenue, New York, NY, from SMBC Nikko Securities America, Inc. at 277 Park Avenue, New York, NY, or from Wells Fargo Securities, LLC at their toll-free number.
About Ares Capital Corporation
Founded in 2004, Ares Capital Corporation is a premier player in the specialty finance space, primarily focusing on providing direct loans and other investments to private middle-market companies across the United States. The company’s investment approach is designed to help these companies secure the capital needed to achieve their business goals, fostering economic growth and creating job opportunities in the process.
Ares Capital’s investment strategy centers around identifying high-quality borrowers in need of capital and offering them a range of financing solutions. This approach not only supports the growth of these portfolio companies but also aims to generate attractive levels of current income and potential capital appreciation for its investors.
Through its investment manager, Ares Capital taps into its broad, direct origination capabilities and robust relationships with borrowers to source and underwrite a mix of predominantly senior secured loans, subordinated debt, and equity investments. This strategy enables Ares Capital to maintain a diverse portfolio and minimize risk exposure, while also pursuing opportunities for substantial returns.
As a business development company (BDC), Ares Capital has become a significant player in the capital markets, particularly in the realm of private equity and debt financing. The company was the largest publicly traded BDC by market capitalization as of December 31, 2024, reflecting the growing confidence in its management team and investment strategy. Ares Capital is externally managed by a subsidiary of Ares Management Corporation (NYSE: ARES), a global leader in alternative investments, known for its expertise in a variety of asset classes, including private equity, real estate, credit, and hedge funds.
Ares Capital’s operations are primarily focused on middle-market companies, which represent a critical segment of the U.S. economy. These businesses often require tailored financing solutions to support growth initiatives such as mergers and acquisitions, capital expenditures, or working capital needs. By providing flexible, customized financing options, Ares Capital plays a crucial role in enabling the continued growth and success of these companies.
In addition to its primary business of direct lending, Ares Capital is also involved in other investment opportunities, such as mezzanine financing, equity investments, and structured finance transactions. This diverse approach allows the company to adapt to changing market conditions and seek out opportunities that offer attractive risk-adjusted returns.
As a BDC, Ares Capital is required to adhere to certain regulatory requirements, including distributing a significant portion of its taxable income as dividends to shareholders. This regulatory structure, combined with the company’s proven ability to source and manage high-quality investments, has helped establish Ares Capital as one of the leading firms in the specialty finance sectorZ
The $1 billion public offering of 5.800% notes due 2032 marks a significant milestone for Ares Capital Corporation, providing the company with the financial flexibility to reduce debt and enhance its investment capacity. This offering reflects the company’s continued commitment to generating value for its investors and supporting the growth of middle-market companies across the United States. As Ares Capital moves forward with this offering, it will continue to focus on its strategic objective of delivering attractive returns through high-quality investments in the private equity and debt markets.
