Franklin Square Capital’s BDCs see Q2 rebound with $830m investments

By Daniel Lanyon on Friday 26 August 2016

Alternative Lending

Now rebranded as FS Investments, the leading alternative asset manager has clocked up a strong second quarter.

The five Business Development Companies (BDCs ) owned by Franklin Square Capital have seen a large uptick in capital commitments in the second quarter of 2016, according to regulatory filings.

The alternative investment manager’s BDC direct lending platform committed over $830m to middle-market companies in the second quarter of 2016, compared to $370m in the first quarter, bringing its year-to-date total commitments to more than $1.2bn. Newly originated investments during the quarter were made to a total of 12 portfolio companies headquartered in seven different U.S. states.

BDCs are part of the rapidly expanding alternative credit spectrum that provides capital to small and middle market companies of whom many find traditional bank financing to be unavailable or unattractively priced.

FS Investments was until recently known as Franklin Square Capital Partners but consolidated its business under one new simplified brand.  It currently manages six funds with over $18 billion in assets under management. BDCs have fallen to prey to regualtory pressures that has seen some slowdown in institutional involvement. 

Michael Forman, chairman and chief executive officer of FS Investments said: "Our market-leading scale serves as a great deal sourcing advantage. Our ability to underwrite larger investments provides access to a broad set of investment opportunities for our investors and a flexible source of financing for our portfolio companies and their private equity sponsors."

This included investments in several companies including Four Point Energy , a Denver headquartered private oil and gas exploration and production company. Polymer Additives Holdings, a manufacturer of specialty chemicals, including lubricants, stabilisers and polymer modifiers. This allowed the acquisition of Akcros Holdings Limited, a manufacturer of additives for the processing and manufacturing of polymers.

A.P. Plasman,a  designer and manufacturer of exterior trim products to a variety of industries, also was the beenficary of the FS Investments capital. It funded the acquisition of Plastal Industri, a supplier of exterior painted trim products for the European automotive industry.

Newly committed capital was provided by five BDCs FS Investment Corporation (NYSE: FSIC), FS Investment Corporation II (FSIC II), FS Investment Corporation III (FSIC III), FS Investment Corporation IV (FSIC IV) and FS Energy and Power Fund.

FS Investments’ investors include institutional, advisory and individual retail clients and provides alternative income exposure through a spectrum of structures, including business development companies, closed-end credit funds and operating companies. It was founded in 2007 as Franklin Square Capital Partners and is headquartered in Philadelphia.

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