Apollo plans to sell its troubled private credit fund for $3 billion - WSJ
With defaults jumping to 5.3% and quarterly losses of $61 million at its fund, Apollo is looking for a buyer for it
Apollo bought MFIC in 2013; in the first three months of 2026, the fund recorded a net loss of $61 million / Photo: Poetra.RH/Shuttersctock
Investment giant Apollo Global Management is in talks to sell MidCap Financial Investment Corp. (MFIC), its publicly traded business development company (BDC), which is a type of private credit fund. The Wall Street Journal (WSJ) reported on Apollo's plans, citing sources familiar with the situation.
Details
Negotiations on the sale of the MFIC fund along with its investments, which Apollo values at $3 bln, are ongoing, and there are no guarantees of a deal, WSJ notes, citing unnamed interlocutors. The buyer of MFIC is likely to be another business development company, which may use shares of its own organization to acquire the fund, one of the sources told WSJ.
Why Apollo is selling its private credit fund
The default rate at MFIC jumped from 3.9% in December to 5.3% in the first quarter of 2026, the newspaper notes. As a result, last week the fund reported a net loss of $61 million in the first three months of 2026 due to the revaluation of loans. At the moment, MFIC has virtually stopped making new loans. Management is now spending cash to buy back shares as they were trading well below the real net asset value, the WSJ adds.
Apollo and MFIC did not respond to Reuters' requests for comment. In trading on May 11, MFIC securities fall by 0.94%, Apollo - by 1.62%.
What is known about the foundation
Apollo bought MFIC in 2013 to strengthen its direct lending platform. MFIC invests in loans made by MidCap Financial, Apollo's middle-market lending arm. MidCap receives no fee income from the loans it sells to MFIC, the WSJ adds.
Context
Shares of companies in the private credit sector have been under pressure since the fall of 2025 due to fears of losses, especially on their loans to software developers, the WSJ recalls. Credit rating agency Fitch said in April that the sector faces a "deteriorating" outlook as increased investor buybacks and above-average bad loans could limit the liquidity of some companies, Reuters writes.
In private (non-public) funds, investors have the right to withdraw money once a quarter. Recently, managers have been hit with a "flurry" of withdrawal requests. Last quarter, investors in private credit funds managed by Apollo demanded 11% of their capital back, the publication points out.
However, MFIC is not Apollo's first troubled asset. In January, the investment firm already had to sell a $9 billion mortgage portfolio of its real estate fund (REIT) to its own insurance company, Athene. And in March, Apollo restricted withdrawals from one of its flagship private credit funds ($25 billion Apollo Debt Solutions) to retail investors.
This article was AI-translated and verified by a human editor
