Ares Capital Corporation

Overview

• Maryland corporation that operates as a business development company (BDC) regulated under the Investment Company Act of 1940 and treated as a regulated investment company (RIC) for U.S. federal tax purposes.
• Investment objective: generate current income and capital appreciation through debt and equity investments.
• Primary focus: U.S. middle-market companies with EBITDA typically between $10 million and $250 million.
• Primary investment types: first lien senior secured loans (including unitranche loans), second lien senior secured loans, subordinated debt (mezzanine), and preferred equity; occasional common equity investments (usually under $20 million) in conjunction with debt.
• Non-qualifying assets: permitted up to 30% of the portfolio under the Investment Company Act, including certain international or exception-based investments and publicly traded entities with large market caps.

Management and operations

• Investment adviser: Ares Capital Management LLC (a subsidiary of Ares Management Corporation). Responsible for day-to-day portfolio management, origination, structuring, and monitoring.
• Administrator: Ares Operations LLC (a subsidiary of Ares Management). Provides administrative services.
• The company has no direct employees; staffing is provided by the investment adviser and administrator.

Scale and capital structure (as of December 31, 2025)

• Total assets: approximately $31.2 billion; largest publicly traded BDC by market capitalization at that date.
• Asset coverage: 189% (above the 150% statutory requirement for debt capacity).
• Aggregate outstanding debt: about $16.4 billion across various debt instruments.
• Weighted average stated interest rate on outstanding indebtedness: 4.9% as of December 31, 2025.
• Credit facilities: approximately $4.5 billion outstanding under revolving and related facilities.
• Equity and distributions: operates as a RIC and must distribute at least 90% of its investment company taxable income; may pay a portion of distributions in stock.

Debt securitizations (CLOs)

• ADL CLO 1: about $476 million aggregate principal outstanding of April 2036 CLO Notes (plus subordinated notes retained by the company).
• ADL CLO 4: about $544 million aggregate principal outstanding of October 2036 CLO Secured Loans (plus subordinated notes retained by the company).
• ADL CLO 7: about $700 million aggregate principal outstanding of January 2038 CLO Notes (plus subordinated notes retained by the company).

Unsecured notes

• Issuances totaling approximately $9.75 billion across multiple series with various coupon rates and maturities (examples include January 2026 Notes, January 2027 Notes, March 2029 Notes).

Portfolio (as of December 31, 2025)

• Total number of portfolio companies: 603.
• Industry concentrations (portfolio at fair value):
  • Software and Services: 23.8%
  • Financial Services (includes IHAM): 12.4%
  • Health Care Equipment and Services: 11.3%
  • Commercial and Professional Services: 9.4%
  • Consumer Services: 5.6%
  • Insurance: 5.2%
  • Consumer Distribution and Retail: 4.8%
  • Capital Goods: 4.6%
  • Sports, Media and Entertainment: 4.0%
  • Investment Funds and Vehicles: 3.9%
  • Pharmaceuticals, Biotechnology and Life Sciences: 2.7%
  • Materials: 2.2%
  • Independent Power and Renewable Electricity Producers: 2.2%
  • Other: 4.5%
• Geographic distribution (portfolio at fair value):
  • Midwest: 22.9%
  • West: 20.3%
  • Southeast: 18.8%
  • Mid-Atlantic: 16.3%
  • Northeast: 15.1%
  • International: 6.6%
• IHAM (Ivy Hill Asset Management, L.P., a wholly owned portfolio company):
  • Manages 23 vehicles with assets under management (AUM) of about $14.6 billion as of 12/31/2025.
  • Investment in IHAM: amortized cost ~ $2.2 billion; fair value ~ $2.4 billion.
  • IHAM generated about 9.8% of the company’s total investment income in 2025.
• Senior Direct Lending Program (SDLP):
  • Joint venture with Varagon Capital Partners to make first lien senior secured loans (including stretch senior and unitranche loans) to U.S. middle-market companies.
  • Total capital available to SDLP: $6.2 billion, with $1.4 billion contributed by Ares Capital as of 12/31/2025.
  • Ownership of SDLP Certificates: Ares Capital 87.5%; Varagon client 12.5%.
  • SDLP loan portfolio: loans to 39 borrowers as of 12/31/2025.
• Ivy Hill and IHAM vehicles: IHAM manages funds and may transact with the parent company and other IHAM vehicles, including periodic asset purchases and sales.

Operational and expense details

• Administrative and other fees: approximately $15 million for the year ended 12/31/2025; about $6 million of these were unpaid as of 12/31/2025.
• Staffing and outsourcing:
  • No direct employees; staffing provided by Ares Capital Management and Ares Operations.
  • Ares Capital Management had about 230 U.S.-based investment professionals as of 12/31/2025.
  • Ares Management (parent) employed over 1,650 investment professionals and over 2,550 operations management professionals.
• Valuation and liquidity:
  • Most portfolio investments are not publicly traded; fair values are determined quarterly with input from independent valuation providers.
  • The company identifies illiquidity risk and potential impacts on net asset value and distributions.

Regulatory and structural context

• Operates under a Co-Investment Exemptive Order with the SEC, permitting certain co-investments with affiliated Ares entities subject to conditions.
• Asset coverage minimum for senior indebtedness: 150%; asset coverage was 189% as of 12/31/2025.
• Primary leverage and funding sources: credit facilities, CLO structures, and unsecured notes.

Identifiers and relationships

• Investment adviser: Ares Capital Management LLC (affiliate of Ares Management Corporation).
• Administrator: Ares Operations LLC (affiliate of Ares Management).
• License: royalty-free license to use the Ares name while Ares Capital Management remains the investment adviser.

Summary

Ares Capital is a large, externally managed BDC focused on U.S. middle-market debt and equity investments, primarily first- and second-lien senior secured loans and subordinated debt, with selective equity exposure. As of 12/31/2025 it reported about $31.2 billion in total assets, roughly $16.4 billion of outstanding debt (including approximately $9.75 billion of unsecured notes), and a diversified portfolio of 603 companies. The company relies on the Ares platform for origination, underwriting, and oversight and maintains substantial exposure to IHAM and the SDLP joint venture with Varagon. Administrative costs in 2025 were about $15 million, with $6 million unpaid at year-end.