A360
Key Takeaways✦ Atlas AI
01
Apollo seeks to sell $3 billion private credit fund.
02
Fund defaults increased to 5.3% in Q1.
03
Private credit sector faces deteriorating outlook.
Atlas AI
Apollo Global Management has held talks about selling MidCap Financial Investment (MFIC), its publicly listed business development company focused on private credit, the reported Sunday, citing people familiar with the matter. The repoSources said Apollo values MFIC and its portfolio at about $3 billion.
Apollo and MidCap Financial Investment did not immediately respond to requests for comment.
MFIC invests in loans originated by Apollo’s
MFIC invests in loans originated by Apollo’s MidCap Financial, which lends to midsize companies. The Sources said MidCap does not receive fee income from the loans it sells to MFIC.
The discussions come as parts of the U. S.
private credit market face a tougher backdrop, with weaker investor demand and rising redemption pressure weighing on business development companies, according to the report.
MFIC’s default rate increased to 5
MFIC’s default rate increased to 5. 3% in the first quarter from 3.9% in December, the reported. Management has also been using cash for share repurchases this year as the stock traded at deep discounts to net asset value, the repoSources said.
A likely buyer would be another business development company, and the purchaser could use shares in its own fund as consideration, the reported.
Fitch Ratings said last month that the BDC sector faces a “deteriorating” outlook, citing elevated investor redemptions and above-average troubled loans that could constrain liquidity at some firms.
Any transaction would depend on whether Apollo reaches terms with a potential buyer and secures required approvals, and investors will be watching for updates from the companies involved.
