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FS Investments and KKR Close Transaction, Creating Largest BDC Platform

April 09, 2018, 08:00 AM
Filed Under: Lender Finance

FS Investments and KKR announced the closing of their previously announced transaction to create the market's largest business development company (BDC) platform, with $18 billion in combined assets under management.

A new partnership, FS/KKR Advisor, LLC, will serve as the investment adviser to six BDCs:  FS Investment Corporation (NYSE: FSIC), FS Investment Corporation II (FSIC II), FS Investment Corporation III (FSIC III), FS Investment Corporation IV (FSIC IV), Corporate Capital Trust, Inc. (NYSE: CCT) and Corporate Capital Trust II (CCT II).  All of the BDCs are able to participate in the same transactions alongside each other and KKR Credit's institutional funds and accounts.

"We have been working closely with the KKR team over the past several months to prepare for this transition and are now looking forward to realizing the full benefits of our combined platform for investors," said Michael Forman, Chairman and Chief Executive Officer of FS Investments. "Our focus will continue to be on optimizing the platform and enhancing performance as we also evaluate potential mergers of these BDCs to create value."

Todd Builione, President of KKR Credit and Markets, said, "We have enjoyed working with our partners at FS over the past many months.  We firmly believe that through our collective scale and complementary expertise, our combined BDC franchise is positioned to drive superior results for our investors – and holistic financing solutions to our sponsor and corporate clients."

FS Investments and GSO Capital Partners (GSO) have concluded their relationship with respect to all of FS Investments' sponsored funds that were sub-advised by GSO.

Separately, FS Investments (FS) and EIG Global Energy Partners (EIG) announced the closing of their previously announced transaction to manage FS Energy and Power Fund (FSEP), the largest energy-focused BDC in the marketplace with $4.3 billion in assets under management.

A partnership jointly owned by FS and EIG now provides investment advisory services to FSEP, which is able to participate in the same transactions alongside EIG's other institutional funds and accounts.

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