Monroe Capital, a speciality finance investor, and Horizon Technology Finance (HRZN), a venture debt provider, have agreed to merge their operations under a single publicly traded entity.
Both firms are based in the US.
Facilitated by Monroe Capital LLC, this transaction will result in Horizon Technology Finance becoming the continuing entity listed on Nasdaq.
The merger is contingent upon obtaining necessary shareholder approvals and meeting other closing conditions.
Under the agreement, Horizon Technology Finance will continue under the management of Horizon Technology Finance Management and maintain its trading symbol “HRZN” on Nasdaq.
Horizon Technology Finance specialises in providing secured loans to companies in sectors such as technology, life sciences, healthcare information, and sustainability. In contrast, Monroe Capital primarily invests in senior and junior secured debt within middle-market companies.
Before the merger, Monroe Capital Income Plus will acquire most of Monroe Capital’s assets for cash. This asset sale is subject to various closing conditions.
Following this transaction, Monroe Capital’s remaining assets will be the net cash proceeds after liabilities and transaction costs are addressed.
Subsequently, Monroe Capital will merge into Horizon Technology Finance.
Shareholders of Monroe Capital will receive Horizon Technology Finance’s shares reflecting an equivalent net asset value to their current holdings. This is expected to result in them owning approximately 37% of the new entity.
Monroe Capital chairman and CEO Theodore Koenig said: “This transaction is expected to be accretive to both shareholders of MRCC and HRZN, while also offering compelling synergies and cost-savings that will allow us to continue to deliver attractive, sustainable risk-adjusted returns to our investors for years to come.
“To accelerate its next phase of growth, HRZN will have the full support and backing of Monroe Capital, an approximately $22bn assets under management (AUM), premier asset manager.”
The merger aims to enhance Horizon Technology Finance’s scale by incorporating additional equity capital, reducing per-share operating expenses for shareholders.
The combined company anticipates improved trading liquidity due to a broader investor base. It also expects operational efficiencies to make the net investment income neutral in the first year post-merger but accretive over time.
Structured as a tax-free reorganisation, the transaction allows Monroe Capital’s shareholders to avoid immediate tax consequences on their exchange of shares.
Additionally, Horizon Technology Finance Management has committed to waiving up to $4m in management fees over four fiscal quarters following the merger’s completion.
Horizon Technology Finance CEO Michael Balkin said: “This transaction provides HRZN with significant incremental leverageable capital, and a larger shareholder base to execute on its strategy of being a leading lender in providing both venture debt and also growth capital in the public small cap company space.
“We are confident that the enhanced earnings power and expanded investing opportunity set will translate into stronger long-term total returns for our shareholders.”
Both companies’ boards have unanimously approved the merger, recommending that shareholders vote in favour of it. The finalisation of these transactions is anticipated in Q4 2025, pending regulatory and shareholder approvals.
