Ares and Varagon JV provides $390m in loans Q4

SDLP has financed 14 borrowers with senior debt since its launch in mid-2015. 

 

The Ares Capital Corporation and Varagon Capital Partners joint venture, providing senior debt to mid-market companies, completed a total of $390 million in new financing commitments last quarter, the firm said on Monday.

The Senior Direct Lending Program provided the two senior secured financings to a water treatment technology company Triwater and motor vehicle supplier Arrowhead Electrical Products, according to a statement.

Neither Ares nor Varagon was immediately available to comment.

These transactions in part raised SDLP's portfolio to a total of $1.28 billion including loans to 14 different borrowers as of 31 December, the Ares Capital Corporation earnings document shows.

The portfolio’s average leverage multiple for the underlying borrowers was 5.3x with an average EBITDA of $31.2 million for the joint venture’s underlying borrowers at the end of fourth quarter.

A filing with the Securities and Exchange Commission showed first lien senior secured loans comprised all of SDLP's portfolio at the end of last year,  despite the partnership’s ability to do stretch senior and unitranche loans as well. SDLP can commit and hold individual loans of up to $300 million.

Ares and Varagon announced the launch of the senior lending platform in June 2015, as Private Debt Investor reported. SDLP succeeded a previous partnership that Ares had managed alongside GE Capital, which was called the Senior Secured Loan Program.

The two firms completed the initial funding for the joint venture the following July, the SEC filing also shows.

Ares is one of the largest BDCs by total assets and market capitalization as of 31 December, 2016.

Varagon is a direct lender with $2.6 billion of assets under management as of 31 December, according to the statement. The company was formed in 2013 by the insurer American International Group and other partners.