Apollo Global Management has held talks to sell ​MidCap Financial ⁠Investment, its publicly listed business development company focused on private credit, ‌the Wall Street Journal reported on Sunday, citing people familiar with the ​matter.

Apollo values the fund, known as MFIC, and its portfolio at about $3 ​billion, the report ​added.

Here are some details from the report:

* MFIC invests in loans made by Apollo’s giant MidCap Financial, which ⁠lends to midsize companies. MidCap does not receive fee income from the loans it sells to MFIC, the WSJ report said.

* Apollo bought MidCap in 2013 to strengthen its direct-lending platform.

* According ​to the ‌report, default ⁠in the fund ⁠jumped to 5.3% in the first quarter from 3.9% in December, and ​management has been using cash to repurchase ‌shares this year because they traded at ⁠deep discounts to net asset value.

* The buyer for the fund would likely be another business development company (BDC), the report added, and said the buyer could use shares in its own fund to purchase MFIC.

* Apollo and MidCap Financial Investment did not immediately respond to Reuters' request for comment.

* The news of the deal comes amid a difficult time ‌for U.S. private credit lenders, also known as BDCs, ⁠as weaker investor demand and rising redemption pressure ​continue to weigh on the sector.

* Credit ratings agency Fitch said last month the BDC sector faces a "deteriorating" outlook as elevated investor ​redemptions and above-average ‌troubled loans could constrain the liquidity of some ⁠BDCs. (Reporting by Akanksha Khushi ​in Bengaluru; Editing by Sumana Nandy and Rashmi Aich)