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1. Company Snapshot

1.a. Company Description

Apollo Investment Corporation is business development company and a closed-end, externally managed, non-diversified management investment company.It is elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies.It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans.


It also seeks to invest in PIPES transactions.The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products.It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments.


It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded.It also focuses on other investments such as collateralized loan obligations (“CLOs”) and credit-linked notes (“CLNs”).The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy – oil & gas, electricity and utilities.


The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media – diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution.It primarily invests in United States.It primarily invests between $20 million and $250 million in its portfolio companies.


The fund seeks to make investments with stated maturities of five to 10 years.

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1.b. Last Insights on MFIC

MidCap Financial Investment Corporation's recent performance was negatively impacted by a decrease in net asset value per share, which fell 1.2% to $14.75 as of June 30, 2025. Despite a slight increase in net investment income per share to $0.39, the company's leverage ratio stood at 1.44x. Although KBRA affirmed the company's BBB- rating with a Positive Outlook, the appointment of a new CFO and Treasurer may indicate some management uncertainty. Additionally, the company's exposure to Merx Aviation Finance, LLC, is set to decrease.

1.c. Company Highlights

2. MidCap Financial Investment Corporation's Q3 Earnings: A Closer Look

MidCap Financial Investment Corporation reported a net investment income per share of $0.38 for the September quarter, corresponding to an annualized return on equity of 10.3%. The company's GAAP net income per share was $0.38, matching analyst estimates. Total investment income for the quarter was approximately $82.6 million, up 1.6% compared to the prior quarter. Net expenses for the quarter were $47.3 million, up from $44.9 million in the prior quarter. The company's net investment income was supported by a portfolio with a fair value of $3.18 billion, invested across 246 companies.

Publication Date: Nov -20

📋 Highlights
  • Net Investment Income: $0.38/share (10.3% ROE), GAAP $0.29/share (8% ROE) for Q3 2023.
  • Merx Repayment: Portfolio company returned $97M to MFIC, reducing exposure to 3.3% of the portfolio ($105M at fair value).
  • New Commitments: $138M across 21 transactions, with 3.8x net leverage and 521 bps weighted average spread in Q3.
  • Financing Costs: Debt cost reduced to 6.37% (down 19 bps), but $1.5M one-time credit facility amendment fee expected in Q4.
  • Rate Sensitivity: 100 bps rate drop would cut annual NII by $0.10/share, prompting initiatives to offset base rate declines.

Portfolio Performance

The company's portfolio had a few notable developments during the quarter. A portfolio company repaid approximately $97 million to MFIC, and the company's investment in Merx, an aircraft leasing company, totaled $105 million at fair value, representing 3.3% of the portfolio. The company's non-accruals increased, but there is no common theme among the affected companies, with one being impacted by tariffs and another by weakened consumer sentiment.

New Commitments and Financing Activities

MFIC made $138 million of new commitments across 21 transactions during the quarter, with a weighted average spread of 521 basis points. The company also amended its revolving credit facility, extending the final maturity to October 2030, and reducing the funded spread by 10 basis points to 187.5 basis points. Additionally, the company upsized and repriced MFIC Bethesda 1 CLO, generating $456 million of secured debt with a blended advance rate of 76% and a blended cost of 161 basis points.

Valuation and Dividend

With a Price-to-Book Ratio of 0.78, the company's shares appear to be undervalued relative to its book value. The Dividend Yield is 13.19%, indicating an attractive income stream for investors. The company's Board of Directors declared a quarterly dividend of $0.38 per share, which is expected to be supported by proceeds from Merx, remarking liabilities, and working through non-accrual positions. A 100 basis point decline in rates would result in a $0.10 decline in annual NII, which may put pressure on the company's ability to maintain its dividend.

Outlook

The company expects M&A activity to be sustainable through 2026, driven by private equity companies and dry powder. The company's target leverage is unchanged at 1.4, and they plan to get back to this level in a measured way. The recent liability amendments have made room to address the upcoming bond maturity, but this does not change the company's interest in potentially repurchasing shares. The company believes share repurchases are a compelling tool for driving shareholder value, but they need to be weighed against liquidity, leverage, and deployment opportunities.

3. NewsRoom

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MidCap Financial Investment Corporation (MFIC) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

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MidCap Financial Investment (MFIC) Q3 Earnings Match Estimates

Nov -07

Source: zacks.com

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MidCap Financial Investment Corporation Reports Financial Results for the Quarter Ended September 30, 2025

Nov -06

Source: globenewswire.com

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Analyzing MidCap Financial Investment (NASDAQ:MFIC) and Resolute Holdings Management (NYSE:RHLD)

Nov -03

Source: defenseworld.net

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Resolute Holdings Management (NYSE:RHLD) and MidCap Financial Investment (NASDAQ:MFIC) Critical Contrast

Oct -22

Source: defenseworld.net

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MidCap Financial Investment Corporation Schedules Earnings Release and Conference Call for Quarter Ended September 30, 2025

Oct -06

Source: globenewswire.com

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MidCap Financial Investment Corporation Amends and Extends Its Senior Secured Revolving Credit Facility

Oct -02

Source: globenewswire.com

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Dividend Power Dogs: 12 Ideal 'Safer' September Stars

Sep -18

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Investment and Related Activities

Expected Growth: 10.2%

MidCap Financial Investment Corporation's Investment and Related Activities segment is poised for growth driven by increasing demand for financing solutions among middle-market companies, expansion into new markets, and a strong pipeline of investment opportunities.

7. Detailed Products

Senior Debt Financing

MidCap Financial Investment Corporation provides senior debt financing to middle-market companies, offering flexible and customized financing solutions to meet their unique needs.

Unitranche Debt Financing

MidCap Financial offers unitranche debt financing, a hybrid of senior and subordinated debt, providing a single, integrated financing solution for middle-market companies.

Second Lien Debt Financing

MidCap Financial provides second lien debt financing, offering subordinated debt financing solutions to middle-market companies, providing additional capital for growth and expansion.

Equity Co-Investments

MidCap Financial makes equity co-investments alongside private equity sponsors, providing additional capital and support for middle-market companies.

Asset-Based Financing

MidCap Financial offers asset-based financing solutions, providing financing secured by a company's assets, such as accounts receivable, inventory, and equipment.

8. MidCap Financial Investment Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

MidCap Financial Investment Corporation operates in a niche market, providing specialized financial services. While there are some substitutes available, they are not as comprehensive as the services offered by MidCap. Therefore, the threat of substitutes is moderate.

Bargaining Power Of Customers

MidCap Financial Investment Corporation's customers are primarily institutional investors and high net worth individuals. They have limited bargaining power due to the specialized nature of MidCap's services and the lack of alternative providers.

Bargaining Power Of Suppliers

MidCap Financial Investment Corporation's suppliers are primarily financial institutions and other service providers. They have limited bargaining power due to the competitive nature of the financial services industry and the availability of alternative suppliers.

Threat Of New Entrants

The financial services industry is highly regulated, and new entrants face significant barriers to entry. MidCap Financial Investment Corporation's specialized services and established reputation also make it difficult for new entrants to compete.

Intensity Of Rivalry

The financial services industry is highly competitive, and MidCap Financial Investment Corporation faces competition from other financial institutions and investment firms. However, MidCap's specialized services and strong reputation help to differentiate it from its competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.26%
Debt Cost 7.13%
Equity Weight 40.74%
Equity Cost 11.37%
WACC 8.86%
Leverage 145.45%

11. Quality Control: MidCap Financial Investment Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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SLR Investment

A-Score: 7.7/10

Value: 6.9

Growth: 6.6

Quality: 7.8

Yield: 10.0

Momentum: 5.0

Volatility: 10.0

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Tortoise Energy Infrastructure

A-Score: 7.6/10

Value: 4.3

Growth: 6.6

Quality: 9.0

Yield: 10.0

Momentum: 6.0

Volatility: 9.7

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MidCap Financial

A-Score: 7.1/10

Value: 6.7

Growth: 5.8

Quality: 7.8

Yield: 10.0

Momentum: 3.0

Volatility: 9.7

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PennantPark Floating Rate Capital

A-Score: 7.0/10

Value: 7.5

Growth: 4.4

Quality: 8.3

Yield: 10.0

Momentum: 1.5

Volatility: 10.0

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WhiteHorse Finance

A-Score: 5.6/10

Value: 5.9

Growth: 3.6

Quality: 5.2

Yield: 10.0

Momentum: 0.5

Volatility: 8.3

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Eagle Point Credit Company

A-Score: 5.5/10

Value: 4.2

Growth: 3.8

Quality: 6.9

Yield: 10.0

Momentum: 0.5

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.26$

Current Price

12.26$

Potential

-0.00%

Expected Cash-Flows