Ares Capital Corporation reported core earnings of $0.47 per share for the second quarter of 2026, unchanged from the prior period. The company said its portfolio continued to generate healthy organic EBITDA growth of 8%, aligning with its 10-year average.
During the quarter, Ares Capital observed a temporary dip in market-wide deal closures, which the company attributed to macroeconomic uncertainty. Internal review activity rose 25% over the prior quarter, and 75% of new transactions came from existing borrowers.
Less than 4% of Ares Capital's total portfolio carries medium or higher AI-related risk, per an independent assessment.
Ares Capital maintained a closing ratio of approximately 5%, moderately below its historical average. Management expressed optimism for the second half of 2026, citing a 50% month-over-month increase in transaction reviews in June.
The company's dividend outlook remains stable, supported by spillover income of $1.38 per share. Ares Capital plans to use a new $1 billion commercial paper program to reduce funding costs by 50 to 100 basis points relative to average secured borrowings.
Net Asset Value (NAV) declined to $19.35 per share, driven by mark-to-market adjustments. Non-accruals at cost increased to 2.4% from 2.1%, still below the historical average of approximately 3% since the global financial crisis. The company successfully reset a $476 million debt securitization, reducing the weighted average spread by 35 basis points.
Ares Capital's liquidity stands at approximately $6 billion. The number of borrowers in its SDLP increased from 28 to 72 in a single quarter.
Ares Management Reports Record Fundraising
Ares Management (NYSE:ARES) reported record fundraising in Q2 2026. CEO Michael Arougheti said the company raised approximately $36 billion of gross capital during the quarter, bringing first-half fundraising to about $66 billion. Total AUM rose 17% year over year to approximately $671 billion, with fee-paying AUM up 17% to about $410 billion.
The company ended the quarter with $170 billion of dry powder and $114 billion of AUM not yet paying fees. Arougheti noted that approximately 70% of capital raised so far in 2026 came from outside Ares' four largest credit fund families.
CFO Jarrod Phillips said total revenue increased 17% in the second quarter. Fee-related earnings reached approximately $491 million, up 20% year over year. Realized income totaled approximately $522 million, up 31%, while after-tax realized income rose 27% to about $468 million and increased 25% per share to $1.29. Realized net performance income came to approximately $51 million, with Phillips expecting about $10 million in the third quarter.
The year-to-date fee-related earnings margin stood at 42.3%. Ares declared a quarterly dividend of $1.35 per Class A and non-voting common share.
Fundraising highlights included the Ares Pathfinder Fund III completing with approximately $8.5 billion of equity commitments, more than $12 billion raised across U.S. and European direct-lending vehicles, and $1.9 billion for its open-ended core infrastructure fund. The sixth infrastructure debt fund raised about $500 million, the fifth Japan industrial development fund approximately $1.8 billion, and the wealth-management platform about $3.9 billion. Wealth-product AUM exceeded $76 billion at quarter-end.
CEO Arougheti said the company raised approximately $1.5 billion in July. U.S. direct lending deployed about $12.4 billion of gross commitments during the quarter.
Performance and Outlook
In terms of returns, alternative credit generated a gross return of 16.4%, U.S. senior direct lending returned 11.2%, and APAC credit returned 19%. U.S. direct-lending non-accruals were below 2% and flat sequentially. Portfolio companies recorded 9% year-over-year organic EBITDA growth.
The Ada Infrastructure platform is executing seven large data-center campuses representing approximately one gigawatt of compute capacity. Co-President Blair Jacobson said the digital infrastructure business is expected to contribute $50 million to $100 million of fee-related earnings in 2027 and beyond.
In the non-traded BDC, roughly 95% of investor accounts elected to remain in the fund. Requests from the core U.S. individual investor base totaled approximately 2.5% of net asset value. Arougheti noted the remaining regional redemption queue declined from about $1.2 billion to a little over $600 million.
Ares Management reiterated long-term compound annual growth targets of 16% to 20% for fee-related earnings and more than 20% for realized income and dividend growth.
