Business development company Ares Capital Corp. (ARCC), Tuesday said one of its affiliate, Ivy Hill Asset Management LP, entered into two agreements that would significantly expand its middle market asset management platform. The deals are also expected to improve both Ivy Hill's and Ares Capital's total committed capital under management.
With the two deals, the Los Angeles, California-based company expects an increase in Ivy Hill's total committed capital under management to over $2.0 billion across 210 companies and an increase in Ares Capital's total committed capital under management - including committed capital managed by Ivy Hill, to over $4.4 billion across more than 250 companies.
The first of the two deals is an agreement relates to the management of approximately $770 million of middle market loan assets in three CLO vehicles managed by affiliates of Wells Fargo & Company, in which Ivy Hill Asset Management has acquired certain equity interests. The company also expects the management of these portfolios to record fee income as well as distributions during the life of the vehicles.
The second deal is an agreement to manage approximately $600 million of the remaining middle market bank loan assets previously managed by Firstlight Financial Corp. The transaction is expected to aid the company with the receipt of a management fee for providing investment advisory and administrative services to Firstlight.
Ares said Ivy Hill's management of Firstlight's assets is expected to enable it improve the return on its existing investment in Firstlight through significant cost savings and more effective portfolio management.
Commenting on the deals, Mitchell Goldstein, Partner of Ares Capital Management LLC and investment adviser, Ares Capital said "In addition to incremental fee income, we believe these transactions will further strengthen Ares Capital's collective knowledge, experience and investment opportunities within the middle market sector as well as provide attractive returns on the incremental capital invested. We hope to continue to increase the value of this strategically important business segment over time both organically and through additional acquisitions."
ARCC closed Tuesday's trading at $7.35, down $0.44 or 5.65%, on a volume of 0.482 million shares on the Nasdaq. In the after hours, the stock lost $0.02 or 0.27%, trading at $7.37.
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