Capitala Finance Corp. (Nasdaq: CPTA) is forming a joint venture with Cion/Investment Corp. that will invest in middle-market loans.  

The JV, a senior loan fund called Cion/Capitala Senior Loan Fund I LLC, will invest in senior secured loans to broadly syndicated and large middle-market companies. Capitala is contributing up to $10 million to the new fund, and Cion is providing up to $40 million.

Capitala is a business development company (BDC) that invests in mezzanine, senior subordinated and unitranche debt, as well as senior and second-lien loans and sometimes equity securities.

Cion, a loan fund, is a non-traded BDC that is sub-advised by Apollo Investment Management LLC, a subsidiary of investment giant Apollo Global Management LLC (NYSE: APO). Cion has about $1.1 billion in assets under management.

Over the past few years, BDC's have emerged in the middle-market lending space vacated by banks. For more, see More BDCs Mean More Competition for Loans and BDCs Provide Capital

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