Apollo Explores Sale of $3 Billion MidCap Fund Amid Rising Defaults

Apollo Global Management is in discussions to sell MidCap Financial Investment Corp. (MFIC), a publicly listed business development company valued at approximately $3 billion, as the fund grapples with deteriorating loan performance and broader sector-wide strain. MFIC's default rate climbed from 3.9% in December 2025 to 5.3% in the first quarter of 2026, and the fund posted a $61 million net loss during that period. With shares trading at roughly 85% of net asset value, management has redirected cash toward share buybacks and debt reduction rather than new lending. A potential buyer would likely be another business development company, with a share-based transaction considered more probable than a cash deal.

The potential sale unfolds against a backdrop of mounting stress across the U.S. private credit sector. Apollo's private BDC received redemption requests totaling 11% of assets last quarter, and Apollo Debt Solutions recently capped payouts at 5% to manage the outflows. Apollo CEO Marc Rowan has publicly dismissed concerns about the firm's scale and ability to handle redemptions, criticizing competitors' struggles to meet similar demands.

Other major investment firms are confronting parallel challenges. BlackRock disclosed markdowns in its private credit funds and reported a 5% decline in NAV for TCP Capital Corp., with CEO Larry Fink defending the use of redemption limits. Blackstone reported a 2.4% fall in the net asset value per share of its Blackstone Secured Lending Fund. Blue Owl Capital cut the NAV per share of two private credit funds and sold $1.4 billion in assets in February to bolster liquidity. Much of the industry pressure has been attributed to loan exposure to enterprise software companies facing disruption from artificial intelligence, while Fitch has noted a deteriorating outlook for the BDC sector regarding liquidity and troubled loans.