Ares Capital hailed a “solid” second quarter despite earnings ticking down year-on-year, amid strong fundraising over the period.
Ares Capital, an Ares business development company focused on mid-market financing solutions, reported core earnings per share of $0.50 for the quarter to 30 June, down from $0.61 year-on-year.
Net investment income was $342m (£256.5m) in the quarter, compared to $386m a year earlier.
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Ares Capital said its board of directors had declared a third quarter 2025 dividend of $0.48 per share, in line with its second quarter dividend.
According to chief financial officer Scott Lem, Ares Capital has raised more than $2bn of new debt capital since the end of the last quarter, “to further strengthen our capital and liquidity position”.
“With approximately $6.5bn of available liquidity, pro-forma for our post-quarter end financing activities, our balance sheet continues to support the growth of our existing portfolio companies and enables us to be proactive across the direct lending market,” he said.
Investments were down year on year, with $2.6bn of gross commitments made, compared to $3.9bn in the second quarter of 2024.
However, investment exits rose, totalling approximately $1.9bn in the second quarter of 2025, up from $1.4bn a year earlier.
Of the $2.6bn in new investment commitments made during the second quarter, approximately $2bn were funded.
New investment commitments included 15 new portfolio companies and 42 existing portfolio companies, with 247 separate private equity sponsors represented in Ares Capital’s portfolio at the end of the quarter.
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Of the new commitments made, 82 per cent were in first lien senior secured loans, with the remainder in subordinated certificates of the senior direct lending program (SDLP), senior subordinated loans, and preferred equity, while six per cent were in Ares Capital’s subordinated loan to Ivy Hill Asset Management (IHAM) and six per cent were in other equity.
Ares Capital reported that of the approximately $2.6bn in new commitments, 92 per cent were in floating rate debt securities, of which 98 per cent contained interest rate floors and 1 per cent were in the subordinated certificates of the SDLP.
The weighted average yield of debt and other income producing securities funded during the period at amortized cost was 9.9 per cent, according to Ares Capital, while the weighted average yield on total investments funded during the period at amortized cost was 9.4 per cent.
During the second quarter, Ares Capital exited approximately $2bn of investment commitments, including approximately $577m of loans sold to IHAM or vehicles managed by IHAM.
“We reported another solid quarter with strong levels of core earnings and growth in our net asset value reflecting the positioning and performance of our investment portfolio,” said Kort Schnabel, chief executive of Ares Capital.
“Looking forward, we are seeing a pickup in market transaction activity, and we believe we are well positioned to benefit due to our deep relationships and extensive market coverage.”
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