Overview: Public BDC Discounts vs. Secondary Purchases

Case Example: Ares Capital (ARCC) vs. Ares Private Funds

ARCC, Ares' flagship public BDC, has historically traded near NAV but has periodically moved into 10–15% discounts during market volatility.

Investors purchasing during these windows gain exposure to Ares' origination pipeline with a built-in margin of safety. The portfolio could decline by the amount of the discount before impairing investor capital relative to purchase price, while dividend yields are enhanced.

This dynamic mirrors secondary fund purchases, where investors acquire seasoned portfolios at discounts, mitigating the J-curve while benefiting from both income and potential re-rating. Both structures embed convexity and downside protection, though one reflects public market pricing and the other private market negotiation.