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Highlights

  • Monroe Capital Corporation will sell substantially all investment assets to Monroe Capital Income Plus Corporation before merging with HRZN.
  • MRCC shareholders will receive HRZN shares in a NAV-for-NAV exchange, owning about 37% of the combined entity.
  • The merger is expected to close in Q4 2025, pending shareholder and regulatory approvals.

Monroe Capital Corporation (NASDAQ: MRCC) and Horizon Technology Finance Corporation (NASDAQ: HRZN) have entered into a definitive merger agreement under which MRCC will merge into HRZN, subject to shareholder and regulatory approvals. Prior to the merger, MRCC will complete an asset sale to Monroe Capital Income Plus Corporation (MCIP), a privately offered BDC affiliated with Monroe Capital.

Under the asset purchase agreement, MCIP will acquire substantially all of MRCC’s investment assets at fair value for cash. After repayment of liabilities, transaction costs, and distribution of any undistributed net investment income, MRCC will hold only the net cash proceeds. These proceeds will be factored into the merger exchange calculation.

Following the asset sale, MRCC shareholders will receive newly issued HRZN shares based on a net asset value (NAV)-for-NAV exchange ratio determined shortly before closing. Upon completion, former MRCC shareholders are expected to hold approximately 37% of the combined HRZN entity, which will continue to trade on the NASDAQ under the HRZN ticker.

The combined company is projected to have a current combined NAV of approximately USD 446 million based on June 30, 2025 financials, after estimated merger-related adjustments and expenses. The merger is expected to provide HRZN with additional equity capital of around USD 165 million before leverage, expand its shareholder base, and potentially reduce per-share operating expenses.

Management indicated that the merger is anticipated to be neutral to net investment income in the first year, with accretion expected over time due to operational efficiencies, portfolio optimization, and cost savings. HRZN’s investment focus will remain on venture debt to sponsor-backed companies in technology, healthcare, life sciences, and sustainability, with an expanded scope to include lending to public small-cap growth companies.

The transaction is structured as a tax-free reorganization for MRCC shareholders under Section 368(a) of the Internal Revenue Code, though the asset sale portion will be taxable. As part of the merger terms, Horizon Technology Finance Management LLC has agreed to waive up to USD 4 million in base management and incentive fees over the first year following the merger’s closing.