Apollo Global Management is in discussions to potentially sell its listed private credit vehicle MidCap Financial Investment Corporation (MFIC), in a transaction that could value the business and its underlying assets at around $3bn, according to a report by the Wall Street Journal.
The reports sites in unnamed people familiar with the matter as highlighting that the talks remain ongoing and no agreement is guaranteed. Any transaction is expected to involve another business development company (BDC) potentially using its own shares as consideration rather than an all-cash payment, the sources said. Market participants noted that achieving full net asset value (NAV) in cash is considered unlikely given current trading conditions across the sector.
MFIC, which invests in loans originated through Apollo’s MidCap Financial platform, has come under increased pressure in recent quarters amid rising credit stress. Defaults in the portfolio increased to 5.3% in the first quarter, up from 3.9% at year-end, contributing to a reported $61 million net loss.
The fund has also been actively repurchasing its own shares, which have been trading at a discount of roughly 15% to NAV, reflecting investor concerns about future credit performance and mark-to-market losses in underlying loan assets.
MFIC has largely halted new lending activity this year and has instead directed cash inflows from loan repayments toward share buybacks and debt reduction. The strategy follows broader volatility in the listed BDC sector, where vehicles have been trading at persistent discounts due to concerns around exposure to higher-risk credit, particularly in software and mid-market lending portfolios.
The situation highlights broader structural challenges in public private credit vehicles, as sponsors including Apollo, Blackstone and Blue Owl Capital have increasingly shifted toward private fund structures to reduce mark-to-market volatility and manage investor redemptions more flexibly.
Apollo has previously undertaken portfolio restructurings across its public investment platforms. Earlier this year, it transferred approximately $9bn of commercial mortgage assets from a listed real estate investment trust into its insurance arm Athene, leaving the listed vehicle with a significantly smaller equity base.
Investor sentiment across the listed BDC universe has weakened since late last year, with concerns focused on rising defaults and exposure to technology-linked borrowers. In parallel, private BDC structures have seen increased redemption pressure, with Apollo’s private vehicle reportedly facing redemption requests for more than 10% of capital in the prior quarter.
MFIC chief executive Tanner Powell reiterated that the firm remains focused on value maximisation for shareholders while managing the portfolio through a more defensive posture, including reduced origination and capital return through buybacks and debt repayment.
