Ares Capital, Varagon announce launch of Senior Direct Lending Program

By Tali Rackner

Norfolk, Va., Aug. 3– Ares Capital Corp. and Varagon Capital Partners announced the launch of their Senior Direct Lending Program (SDLP) to provide financing solutions to middle-market companies and sponsors without syndication requirements, according to a press release.

The program, which was announced in June 2015, launches with almost $3 billion of investment capacity initially and will make loans with a hold size of up to $300 million.

In addition, Ares Capital and Varagon may invest alongside the program to accommodate larger transactions, the release said.

SDLP recently completed the purchase of more than $900 million of loans from Ares Capital and American International Group, Inc., Varagon’s strategic investment partner. Following the acquisition, SDLP has $194 million of subordinated certificates from Ares Capital and $732 million of notes and subordinated certificates from Varagon clients.

“Over the past year, we have worked seamlessly with our partner Varagon to close the 10 unitranche loans in the initial portfolio of SDLP,” Ares Capital co-president Mitchell Goldstein said in the release.

“As banks continue to retrench from middle-market sponsor lending, SDLP provides an attractive alternative for our financial sponsor clients as they look to finance, or refinance, high quality portfolio companies.”

Ares Capital is a specialty finance company based in New York. Varagon is an asset manager also based in New York.

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