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FS Investment III raises funds for private middle-market loans via IPO
By Toni Weeks
San Luis Obispo, Calif., Feb. 6 – FS Investment Corp. III will raise funds for its investment activities through its initial public offering of common stock, according to a 497 filing with the Securities and Exchange Commission.
The externally managed, non-diversified, closed-end management investment company seeks to generate current income and, to a lesser extent, long-term capital appreciation by investing primarily in debt investments in a broad array of private U.S. companies. The portfolio is comprised primarily of senior secured loans and second-lien secured loans of private U.S. middle-market companies and, to a lesser extent, subordinated loans of private U.S. companies. Although there is no limit on the maturity or duration of the securities, the expected average life is generally between three and seven years. Debt investments will typically carry a rating below investment grade.
The portfolio management team is led by chief executive of FSIC III Advisor Michael C. Forman and includes Gerald F. Stahlecker, Zachary Klehr and Sean Coleman.
The company is offering 400 million shares, initially at $9.85 per share, on a continuous basis through dealer manager FS2 Capital Partners, LLC.
Proceeds will be used to make investment primarily in private U.S. companies in accordance with the company’s investment objectives and strategies.
The sales load of $0.985 per share, or 10%, includes selling commissions of 7% and dealer manager fees of 3%. Including a base management fee of 2.33%, total annual expenses are expected to be 2.93%.
Philadelphia-based FSIC III Advisor, LLC is the investment manager. GSO/Blackstone Debt Funds Management LLC will serve as the subadviser.
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