Growth tends to dominate investment discussions. Revenue is increasing, EBITDA is expanding, new capacity is being added and acquisitions are creating scale. Yet growth does not determine investor returns on its own.
A business also has to finance that growth. The combination of debt, equity and internally generated cash used to fund operations and expansion determines how much financial risk the company carries, how much cash remains available after financing costs and how much flexibility management retains when conditions change.
A transaction announced by ONEOK on 30 August 2026 provides a useful current example.
The US energy infrastructure company agreed to acquire Brazos Midstream’s Permian Midland Basin assets for $4.425 billion. The acquired platform comes with approximately 600,000 dedicated acres under long term fixed fee contracts with a weighted average remaining term of more than 12 years. ONEOK expects the acquisition to be immediately accretive to earnings and free cash flow per share.
Those are attractive growth characteristics. The financing structure tells another important part of the story.
Apollo managed funds are making a $9 billion non voting minority equity investment in ONEOK’s existing business. ONEOK plans to use around $5 billion of the proceeds to extinguish existing debt, bringing expected pro forma 2027 leverage down to approximately 3.25x debt to EBITDA. The company expects to achieve this without issuing common shares.
The transaction therefore combines expansion with deleveraging rather than allowing acquisition growth to increase balance sheet pressure.
Consider two companies generating identical operating growth.
The first funds expansion largely from retained cash and long dated financing at manageable rates. The second continually borrows to finance new projects, faces large refinancing requirements and spends an increasing proportion of operating cash on interest.
Their income statements may initially show similar growth. Their economics for investors can be very different.
Debt holders have claims on cash before equity holders receive distributions. Interest payments reduce available cash every year, while debt maturities create future refinancing requirements. If financing costs rise, a project that appeared attractive when it was approved can become substantially less profitable.
Equity financing avoids mandatory interest payments, although issuing additional shares can dilute existing owners. Capital structure is therefore a question of trade offs rather than finding one universally superior source of funding.
The objective is to fund the business in a way that supports profitable investment while preserving enough flexibility to withstand weaker conditions and return surplus capital to owners.
This matters particularly in the current credit environment.
S&P Global Ratings estimates that annual global corporate debt maturities will rise to $2.98 trillion in 2028. Speculative grade non financial companies account for $851 billion of that amount, more than three times their scheduled maturities in 2026. S&P also notes that many borrowers refinancing debt through 2028 face higher funding costs than on the obligations being replaced.
The US market shows a similar pattern. S&P’s midyear 2026 credit outlook places the peak in US non financial corporate maturities at approximately $1.02 trillion in 2029, with refinancing pressure particularly concentrated among weaker borrowers.
A healthy business can therefore encounter financial pressure even when customer demand remains intact. If a large amount of debt matures at the wrong time, management may have to refinance at an unattractive rate, reduce investment, sell assets or retain cash that might otherwise have been distributed.
The maturity profile becomes part of the investment case.
For investors focused on cash generating projects, this relationship is particularly important.
Operating cash has several potential destinations. The business needs to fund maintenance, working capital and necessary investment. Interest and principal obligations have to be met. Growth projects may compete for additional capital.
Only after those requirements are covered does management have genuine flexibility over distributions. A company can therefore report strong EBITDA while producing relatively little cash for its owners.
This is one reason leverage ratios alone provide an incomplete picture. Investors also need to understand the cost of the debt, when it matures, whether rates are fixed or floating and which restrictions lenders have placed on the business.
A modest amount of poorly structured debt can create more pressure than a larger amount of long term financing supported comfortably by predictable cash flows.
The structure of the ONEOK transaction illustrates how financing can be designed around the characteristics of the underlying business.
Apollo’s $9 billion investment carries a return capped at a 7% internal rate of return for the first nine years. The investment sits below ONEOK’s senior debt and is expected to receive distributions linked to operating cash flows. Payments above the capped return reduce Apollo’s capital balance over time.
ONEOK says the structure allows it to accelerate deleveraging while retaining the upside created by the acquisition and its wider business. The company also expects the stronger balance sheet to create greater flexibility for organic investment, potential dividend increases and share buybacks.
The point is broader than the specific transaction. Companies increasingly have access to a wider range of financing structures between conventional senior debt and ordinary equity. Minority capital, preferred instruments, asset backed finance and other hybrid structures can potentially align financing more closely with the economics of the asset.
Complexity itself creates no value. The financing still needs to cost less than the economic value it enables the business to generate.
Investors naturally prefer a business capable of growing.
Problems emerge when every additional unit of growth requires disproportionate amounts of new capital.
A company can expand sales rapidly while consuming cash through inventory, receivables, new equipment and acquisitions. If internally generated cash cannot support those requirements, the company becomes increasingly dependent on lenders or new shareholders.
Growth then increases financial exposure. This is why the relationship between incremental investment and incremental cash generation deserves close attention.
The strongest projects can often fund a meaningful portion of expansion from their own operations. External capital can then accelerate a sound economic model instead of keeping an uneconomic one alive. For cash generating businesses, that distinction is fundamental.
The wider private equity market provides another indication of the shift.
McKinsey’s 2026 Global Private Markets Report found that debt represented around 37% of entry multiples in 2025, down from 44% in 2016. Its analysis also found that leverage and multiple expansion accounted for 59% of returns on deals completed between 2010 and 2022. With both sources becoming less dependable, managers increasingly need underlying businesses to produce more of the return through revenue growth, margin improvement, debt reduction and cash generation.
KKR reaches a similar conclusion in its 2026 outlook. The firm argues for ‘high grading’ portfolios, capital structures and counterparties as the credit cycle matures, with a greater emphasis on resilience, quality and capital efficiency.
This does not suggest that debt has become undesirable. It means financing needs to support the business rather than dictate its decisions.
A growing company with a strong capital structure has options.
It can invest when attractive opportunities appear. It can continue operating through temporary weakness without being forced to raise capital. It can refinance from a position of strength rather than urgency. When excess cash accumulates, it can return capital to investors.
A highly leveraged company has fewer choices. This is why analysis of growth should sit alongside analysis of how that growth is financed. Revenue forecasts and EBITDA targets explain what management hopes the company will become. The balance sheet helps show how much risk investors must take to get there.
For cash generating projects, several questions become particularly useful: how much debt is required to support the business, how much of operating cash is absorbed by financing costs, when the debt matures, how sensitive those costs are to interest rates and whether future growth can increasingly be funded internally.
The answers can change the investment conclusion even when the growth outlook remains exactly the same.
Growth creates opportunity. Capital structure determines how much of that opportunity can ultimately become durable value for investors.
Sources
☑️ ONEOK, August 2026: ONEOK to Acquire Brazos Midstream’s Permian Midland Basin Assets for $4.425 Billion
☑️ Apollo, August 2026: ONEOK and Apollo Announce Strategic Transaction
☑️ S&P Global Ratings: Global Refinancing: Steep Maturities
☑️ McKinsey: Global Private Markets Report 2026: Private Equity
☑️ KKR: 2026 Outlook: High Grading
