Ares, Apollo Among Bidders For American Capital Assets

Apr 28 2016 | 9:56pm ET

Ares Management and Apollo Investment Corp, the business development company of Apollo Global Management, are reportedly among the bidders for the assets of business development company American Capital.

Fortress Investment Group and Blackstone have also expressed interest, according to a Reuters article citing unidentified individuals familiar with the matter. 

American Capital, which originates, underwrites and manages investments in middle-market private equity, leveraged finance, real estate and structured products, revealed in January that it would seek offers for the business and its various assets. The firm will reportedly await another round of bidders before determining what, if any, next steps will be undertaken, according to Reuters, although details of the sales process are confidential.  

Based in Bethesda, Maryland, the firm manages approximately $73 billion in assets. It has been under pressure from Paul Singer’s well-known activist hedge fund Elliott Management, which disclosed an 8.4% equity stake in American Capital late last year and took great issue with the company’s performance.  

American Capital is publicly traded and currently has a market capitalization of only around $3.75 billion at a current share price near $15. Elliott also pressured the firm not to pursue a plan to spin out certain assets into a separate BDC. At the time, Elliott pegged the value of American Capital to be in the $18-$23 range. 

Perhaps due to its heavily institutional shareholder base, American Capital did not resist Elliott’s maneuvers. The firm reportedly hired investment bankers within a week or two of Elliott’s disclosures, and immediately began to consider a sale. 

American Capital was founded in 1986 by Malon Wilkus, who rapidly grew the firm through investments in debt and equity securities of small businesses. The firm went public as a BDC in 1997 at $15 per share, but was slammed by the financial crisis in 2008. Despite defaulting on its debt and suspending its dividend, the company’s stock price remains far below pre-crisis levels. 

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