The chart below shows Ares Capital Corporation’s (ARCC) net asset value (NAV) per share since its IPO.
Ares Capital’s Net Asset Value (NAV)
- Ares Capital got off to a fast start during the booming buyout days of the mid-2000s. From the start of 2006 to the end of 2007, its assets triple, thanks to accretive add-on offerings and borrowed money.
- ARCC’s NAV per share takes a dive in the second quarter of 2008, due in part to the looming Great Financial Crisis and a rights offering to help the company shore up its balance sheet and appease lenders. The company engages in a 1-for-3 rights offering to issue 24.2 million shares at $11 each, just shortly after reporting a net asset value of $15.17 per share. The dilutive offering shores up its balance sheet, but investors who did not participate watch as low-priced shares dilute NAV.
- A second dilutive equity raise in the second quarter of 2009 isn’t apparent from the chart, as it was offset with write-ups in the portfolio. This time, Ares Capital issued stock at about 83% of net asset value per share to fund its acquisition of Allied Capital’s Senior Secured Loan Fund in October 2009. This would be its last dilutive stock offering.
- Ares Capital completes its first stock offering above NAV in March 2010, and in April 2010, the company exchanges its shares at a premium to NAV for Allied Capital stock, which it acquired at a discount to NAV. Immediately, the company books a gain of $1.24 per share related to its acquisition of Allied Capital. Combined with other increases in the value of its portfolio investments, the company’s book value leaps in the second quarter of 2010.
- More gains and more accretive offerings help ARCC’s per-share NAV grow through the early ’10s. The company raises more than $1.5 billion from equity issuance in 2012 and 2013 alone, all at accretive prices.