Ares Capital (ARCC) can be described with the following analogies:

• A Goldman Sachs for middle-market private companies.
• Like the lending division of a Blackstone or KKR, but exclusively for mid-sized private companies.

Major Products/Services of Ares Capital (ARCC)

• First Lien Loans: Senior secured debt providing priority repayment, typically used for general corporate purposes or acquisitions.
• Unitranche Structures: A comprehensive debt facility that combines senior and junior debt into a single loan instrument.
• Second Lien Loans: Secured debt that ranks behind first lien loans in repayment priority during a liquidation event.
• Mezzanine Debt: A hybrid form of financing that includes both debt and equity characteristics, subordinate to senior debt.
• Subordinated Debt: Junior capital that is repaid only after other more senior debt obligations have been satisfied.
• Revolving Credit Facilities: Flexible lines of credit allowing companies to borrow, repay, and re-borrow funds as needed up to a certain limit.
• Non-Control Preferred Equity: Equity investments that offer preferential rights regarding dividends and asset distribution but do not grant control.
• Non-Control Common Equity: Minority ownership stakes taken in portfolio companies, often in conjunction with debt investments.
• Warrants: Securities that grant the holder the right to purchase a company's stock at a specified price and time.
• Acquisition Financing: Providing capital to middle market companies for the purpose of acquiring other businesses.
• Recapitalization Financing: Funds used to restructure a company's debt and equity capital structure.
• Leveraged Buyout (LBO) Financing: Capital provided to fund the acquisition of companies primarily through the use of borrowed money.
• Growth Capital: Investment specifically aimed at financing the expansion or development initiatives of companies.
• General Refinancing: Offering new debt facilities to replace or consolidate a company's existing debt obligations.
• Restructuring & Rescue Financing: Providing capital to financially challenged companies to support turnarounds or avoid insolvency.
• Distressed Debt Purchases: Opportunistically acquiring debt positions of financially stressed companies at a discount.

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Ares Capital (ARCC) is a business development company (BDC) that provides financing to other companies. Its "customers" are the middle market companies to which it provides debt and equity investments.

The provided background information does not list the specific names of Ares Capital's customer companies. Instead, it describes the characteristics of the companies it invests in:

• Type of Companies: Middle market companies.
• EBITDA Range: Typically between $10 million and $250 million.
• Investment Sectors: Basic and growth manufacturing, business services, consumer products, health care products and services, information technology service sectors, restaurants, retail, oil and gas, and technology sectors.
• Investment Focus: Companies seeking acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, leveraged buyouts, growth capital, and general refinancing.

Since Ares Capital's business model involves investing in a diverse portfolio of private and some public middle market companies, it does not have a few major named customers that would be publicly identifiable from this description. Its customer base is fluid, consisting of the various companies it lends to or takes equity stakes in over time.

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Kort Schnabel, Chief Executive Officer

Kort Schnabel was appointed Chief Executive Officer of Ares Capital Corporation, effective April 30, 2025. Prior to this role, he served as Co-President of the company. Mr. Schnabel is recognized as a long-time leader within Ares.

Scott Lem, Chief Financial Officer and Treasurer

Scott Lem became the Chief Financial Officer and Treasurer of Ares Capital Corporation, effective February 15, 2024. He joined Ares in 2003 and previously held roles as Chief Accounting Officer, Vice President, and Treasurer from 2013 to 2024, and Assistant Treasurer from 2009 to 2013. Before joining Ares, Mr. Lem worked at Ernst & Young LLP and Arthur Andersen LLP. He holds B.S. degrees in Accounting and Business Administration from the University of Southern California and an MBA in Finance from UCLA's Anderson School of Management. He is also a Certified Public Accountant (inactive).

Jim Miller, President

Jim Miller serves as the President of Ares Capital Corporation. He was appointed Co-President in October 2024 and continues as the sole President.

Jana Markowicz, Chief Operating Officer

Jana Markowicz is the Chief Operating Officer of Ares Capital Corporation.

Paul Cho, Chief Accounting Officer

Paul Cho is a Managing Director and Chief Accounting Officer in the Ares Finance and Accounting Department. He also holds the position of Chief Accounting Officer for Ares Strategic Income Fund and serves as Vice President of CION Ares Diversified Credit Fund and Ares Dynamic Credit Allocation Fund, Inc. Before joining Ares in 2008, Mr. Cho was a Senior Assurance Associate at Macias Gini & O'Connell LLP, where his work focused on audits for various governmental and financial entities. He earned a B.A. in Economics from the University of California, Berkeley.

The key risks to Ares Capital's business are primarily tied to its role as a significant provider of debt and equity financing to middle-market companies, making it susceptible to macroeconomic conditions and the financial health of its diverse portfolio companies.

1. Credit Risk and Portfolio Company Defaults: Ares Capital's core business involves extending various forms of debt (e.g., first lien, second lien, mezzanine debt) and, to a lesser extent, equity to private middle-market companies. The primary risk is that these portfolio companies may default on their obligations or experience a decline in value, leading to impairment or loss of principal on Ares Capital's investments. Middle-market companies, by their nature, can be more susceptible to financial distress than larger, publicly traded entities, and Ares Capital's focus across various industries means that sector-specific downturns or company-specific operational issues can directly impact its asset quality and profitability.
2. Economic Downturns and Market Disruptions: Ares Capital's performance is highly sensitive to the overall economic environment. During periods of economic contraction, recessions, or significant market disruptions, the financial health of its portfolio companies is likely to deteriorate. This can result in increased default rates, lower demand for new financing (reducing Ares Capital's origination opportunities), reduced valuations for existing equity investments, and greater difficulty in exiting investments. A broad economic downturn would amplify credit risk across its entire portfolio, potentially leading to widespread losses and reduced investment income.
3. Interest Rate Risk: As a lender, Ares Capital's profitability is affected by fluctuations in interest rates. While a significant portion of its debt investments may be floating-rate, potentially benefiting from rising rates, an increase in benchmark interest rates can also elevate the borrowing costs for its portfolio companies, thereby increasing their risk of default. Furthermore, Ares Capital itself uses leverage to fund its investments, and an increase in its own borrowing costs without a commensurate increase in asset yield could compress its net interest margin and negatively impact its profitability. Conversely, a significant decline in interest rates could reduce the income generated from its floating-rate assets.

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Ares Capital Corporation (ARCC) primarily operates within the U.S. middle-market private credit and direct lending sectors. The addressable market for its main products and services, which involve providing debt and equity financing to middle-market companies, is substantial within the United States. The U.S. private credit market, which encompasses direct loans made to mid-market businesses by non-bank lenders, has shown significant growth. As of June 2023, the assets under management (AUM) in the U.S. private credit market surpassed $1.7 trillion. More broadly, industry-led research indicates that the global private credit market has exceeded $3 trillion in AUM, with approximately three-quarters of this market located in the United States, suggesting a U.S. market size of around $2.25 trillion in early 2025. Specifically for direct lending, a core segment of Ares Capital's activities, the U.S. market reached $1 trillion by early 2025, having more than doubled since 2019. The overall U.S. direct lending market was estimated to be $1.0 trillion as of March 31, 2022. McKinsey & Company has estimated the total addressable market for private credit in the United States could potentially exceed $30 trillion, indicating significant long-term growth potential. Ares Capital's target middle-market companies typically have EBITDA between $10 million and $250 million. This segment of the U.S. economy comprises an estimated 200,000 to 300,000 businesses, collectively generating over $10 trillion in annual revenue.

Ares Capital Corporation (ARCC) is expected to drive future revenue growth over the next 2-3 years through several key strategies:

1. Continued Portfolio Expansion and Investment Commitments: Ares Capital has demonstrated a strong ability to grow its investment portfolio through new commitments. The company reported record annual gross originations of $15.8 billion in new commitments in 2025, leading to its portfolio investments reaching $29.5 billion at fair value by the end of 2025, a 10% increase year-over-year. This expansion is expected to continue, generating higher interest income from a larger asset base.
2. Growth in the Number of Portfolio Companies and Market Share Gains: The company has been actively expanding its base of borrowers, adding over 100 new companies in 2025, reaching a total of 603 portfolio companies. This increase reflects successful market share gains amid heightened transaction activity in the middle-market lending space, broadening the revenue-generating base.
3. Strong Organic EBITDA Growth and Credit Performance of Portfolio Companies: The healthy financial performance of Ares Capital's portfolio companies is a significant driver. These companies exhibited a weighted average organic EBITDA growth rate of approximately 9% year-over-year in 2025, significantly outpacing broader market averages. This strong performance ensures consistent interest payments on existing debt investments and can lead to larger follow-on investment opportunities or higher returns on equity co-investments.
4. Increased Capital Structuring Service Fees and Other Income: Beyond traditional interest income from loans, Ares Capital generates revenue from capital structuring service fees and other miscellaneous income streams. In the fourth quarter of 2025, total investment income increased year-over-year, partly driven by higher capital structuring service fees, indicating this component will continue to contribute to overall revenue growth.
5. Realized Gains from Equity Co-Investments: Ares Capital strategically makes equity co-investments alongside its debt financings. In 2025, the company realized over $470 million in gross gains from its equity co-investments, with exits generating an average internal rate of return exceeding 25%. The successful realization of these gains from its equity portfolio adds a significant, albeit more variable, component to its total revenue.

Share Repurchases

• Ares Capital Corporation's board authorized a stock repurchase program allowing for the repurchase of up to $1.0 billion of its outstanding common stock.
• This authorization was extended in February 2025 until February 15, 2026, with the entire $1.0 billion remaining available as of September 30, 2025.
• In February 2026, the equity buyback plan was further extended until February 15, 2027.

Share Issuance

• In January 2026, Ares Capital priced an underwritten public offering of $750 million aggregate principal amount of 5.250% unsecured notes due April 12, 2031.
• The company priced a $750 million public offering of 5.500% unsecured notes due September 1, 2030, in June 2025.
• In September 2025, Ares Capital priced a $650 million public offering of 5.100% unsecured notes due January 15, 2031.
• Shareholders authorized the board to issue common stock at a price below the net asset value per share, limited to 25% of outstanding common shares, for a 12-month period expiring August 8, 2026.

Outbound Investments

• Ares Capital made a record $15.8 billion in gross investment commitments in 2025, while exiting $12.1 billion of investments.
• As of December 31, 2025, Ares Capital's investment portfolio had a fair value of approximately $29.5 billion, comprising investments in 603 portfolio companies.
• The company originated $10 billion in gross investment commitments during the first nine months of 2025.
• Major investment areas as of September 30, 2025, included software & services (23.2%), healthcare equipment & services (11.9%), commercial & professional services (11.4%), financial services (10.5%), and insurance services (5.9%).