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Posts & Investments - #goldilocks

Invested in Ares Capital
$ARCC is a publicly traded #BDC (Business Development Company) that operates like a #privateequityfirm (where investors can pool their resources & capitalize on targeted opportunities) by utilizing “Unitranche” structured investments. Basically they partake in acquisitions of mid-size companies, or #goldilocks companies. (they also engage in restructuring, “rescue-financing” and recapitalizations) Traditionally #aquisitionfinancing involves the borrower getting multiple loans from various lenders, including senior debt (usually prioritized for repayments, more secure / likely to be paid back) and junior debt (less prioritized for repayments / riskier/less likely to be paid back) these loans operate separately with their own credit agreements, securities, etc. #Unitranche financing simplifies this by combining all the senior/junior levels of into a single term loan - so the borrower is presented with one☝️“blended” interest rate, paired with a predictable repayment schedule. So this allows $ARCC to go “all in” on these companies to be the first and only lender, giving them more control in ensuring the loans are eventually paid, along with other negotiations with management. And with #interestrates rising - $ARCC could command higher interest returns for the loans they offer. Also they offer quarterly dividend of roughly 8% which is a sign they want to share their success with their public stakeholders.
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