Apollo Private Credit Fund Reduces Portfolio Value Due to Troubled Loans

Apollo-Backed Credit Fund Reduces Dividend and Adjusts Asset Values

A private credit fund managed by Apollo Global Management Inc. has lowered its dividend and revised down the value of its holdings, reflecting stress in certain segments of its loan portfolio.

MidCap Financial Investment Corp., which specializes in direct lending as a business development company, decreased its quarterly dividend from 38 cents to 31 cents per share. The company also marked down its portfolio by roughly 3%, attributing the move to underperformance in several older investments and a reassessment of its long-term earning potential amid changing interest rates. Despite these challenges, net investment income rose slightly to 39 cents per share, up from 38 cents in the previous quarter.

To enhance shareholder value, the BDC has approved a $100 million stock buyback program. Shares ended Thursday at $10.53, representing a 26% discount to the fund’s net asset value of $14.18 per share at the end of the quarter.

“At current prices, we believe that repurchasing our own shares offers greater value than making new investments,” said MFIC CEO Tanner Powell.

Business development company performance is under increased scrutiny as private credit managers face investor concerns about their exposure to software firms, especially as artificial intelligence disrupts the sector. With many portfolios heavily weighted toward technology loans, these results provide early insight into growing valuation and credit risks.

Software remains MFIC’s largest industry allocation, making up 11.4% of the portfolio’s fair value as of December 31. However, Chief Investment Officer Ted McNulty noted that MFIC’s exposure to software is lower than that of most peers. He emphasized that the fund is structured to weather potential AI-driven changes, focusing on companies with strong, long-term customer relationships.

In the fourth quarter, MFIC classified its investments in Bird Rides, Banner Solutions, and Renovo as non-accrual, indicating it no longer expects to receive interest payments from these companies.

The company reported that losses from LendingPoint’s restructuring, as well as valuation declines in Amplity, ChyronHego, Bird Rides, and Kauffman, led to approximately $29 million in net unrealized losses for the year. Additionally, MFIC recorded about $47 million in net realized losses on investments during the same period.

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