Private Credit Portfolio Analysis | Ares Capital Reports Q3 Growth in Assets and Net Income
- Editor
- Oct 30, 2024
- 2 min read
What's New: Ares Capital Corporation reported significant growth in Q3 2024, with total assets increasing to $27.1 billion as of September 30, 2024, up from $23.8 billion at the end of 2023. Net income for the quarter reached $394 million, while net asset value per share rose to $19.77, compared to $19.24 at year-end 2023.
Portfolio Dynamics:
Total investments at fair value grew to $25.92 billion as of September 30, 2024, an increase from $22.87 billion at December 31, 2023.
The fund's portfolio included investments in Ivy Hill Asset Management LP, which contributed $66 million to net income in Q3 2024.
Interest receivable increased to $269 million from $245 million at the end of 2023, indicating growth in interest-generating assets.
Investment Activity :
Investment activity was robust, with $9.47 billion in payments for purchases of investments during the first nine months of 2024.
The fund realized $6.74 billion from the disposition of investments in the same period, suggesting active portfolio management.
Net cash used in operating activities was $1.86 billion for the nine months ended September 30, 2024, reflecting significant investment outflows.
Capital Structure:
Long-term debt increased to $13.5 billion as of September 30, 2024, up from $11.88 billion at the end of 2023.
The fund raised $10.65 billion from issuance of long-term debt and repaid $8.68 billion during the first nine months of 2024.
Stockholders' equity grew to $12.77 billion, compared to $11.20 billion at December 31, 2023, partly due to $836 million in proceeds from issuance of common stock.
Performance Profile:
Net income for Q3 2024 was $394 million, a decrease from $500 million in Q3 2023.
Year-to-date net income as of September 30, 2024, was $1.17 billion, slightly higher than $1.11 billion for the same period in 2023.
The fund paid $836 million in dividends during the first nine months of 2024, up from $768 million in the same period of 2023.
Risk & Quality:
Unrealized gains on investments were $57 million for Q3 2024, compared to $287 million in Q3 2023, indicating potential market value fluctuations.
The fund reported $24 million in realized losses on investments for Q3 2024, an improvement from $76 million in losses for Q3 2023.
Interest paid on debt increased to $513 million for the nine months ended September 30, 2024, from $412 million in the same period of 2023, reflecting higher debt levels and potentially increased interest rates.
The Wrap: Ares Capital Corporation demonstrated strong growth in Q3 2024, with increases in total assets, investments at fair value, and stockholders' equity. While net income for the quarter decreased year-over-year, year-to-date performance showed improvement. The fund's active investment strategy and capital raising activities supported portfolio expansion, but also led to increased debt levels and interest expenses. The rise in net asset value per share suggests overall positive performance for shareholders.
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