FS Energy and Power Fund (FSEP), a business development company (BDC) focused primarily on investing in the debt and income-oriented equity securities of privately-held U.S. companies in the energy and power industry, announced its operating results for the quarter ended September 30, 2015.
“While renewed commodity price volatility placed downward pressure on energy credit prices during the quarter, FSEP provided our investors with a high level of consistent income,” commented Michael C. Forman, Chairman & CEO of FSEP. “We believe FSEP’s focus on investing in a diverse set of energy assets and senior secured debt should help the fund manage through continuing market uncertainty.”
Financial Highlights For the Quarter Ended September 30, 2015
- Net investment income of $0.17 per share, compared to $0.21 per share for the quarter ended September 30, 20141
- Net decrease in net assets resulting from operations of $0.81 per share, compared to $0.01 per share for the quarter ended September 30, 20141
- Paid regular cash distributions to shareholders totaling approximately $0.18 per share
- Committed approximately $164.5 million to direct originations
- Net asset value of $7.62 per share, compared to $8.57 per share as of December 31, 2014
Portfolio Highlights as of September 30, 2015
- The fair value of FSEP’s investments was approximately $3.6 billion
- FSEP’s portfolio consisted of investments in 103 portfolio companies
- Core investment strategies represented 79% of the portfolio by fair value (57% in direct originations and 22% in opportunistic investments). Broadly syndicated/other investments represented 21% of the portfolio by fair value
- FSEP’s estimated gross annual portfolio yield prior to leverage (based on amortized cost and excluding non-income producing assets) was 9.6%, compared to 8.9% as of September 30, 20142
- Since commencing operations through October 27, 2015, FSEP raised approximately $3.7 billion in total gross proceeds from the issuance of common shares of beneficial interest, including approximately $39.3 million raised from investors affiliated with its sponsor, Franklin Square Capital Partners (Franklin Square), and its investment sub-adviser, GSO Capital Partners LP (GSO)
Quarterly Shareholder Conference Call
FSEP will host a conference call at 1:30 p.m. (Eastern Time) on Monday, November 16, 2015, to discuss its third quarter 2015 results. All interested parties are welcome to participate. You can access the conference call by dialing 1 (866) 436-9172 and using conference ID 41066707 approximately 10 minutes prior to the call.
A replay of the call will be available beginning shortly after the end of the call for a period of 30 days following the call by visiting FSEP’s “Literature” page at www.franklinsquare.com.
FSEP is a publicly registered, non-traded BDC sponsored by Franklin Square. FSEP focuses primarily on investing in the debt and income-oriented equity securities of privately-held U.S. companies in the energy and power industry. FSEP’s investment objectives are to generate current income and long-term capital appreciation. FSEP is advised by FS Investment Advisor, LLC, an affiliate of Franklin Square, and is sub-advised by GSO. GSO, with approximately $81 billion in assets under management as of September 30, 2015, is the credit platform of Blackstone.
About Franklin Square
Franklin Square is a leading manager of alternative investment funds designed to enhance investors’ portfolios by providing access to asset classes, strategies and asset managers that typically have been available to only the largest institutional investors. The firm’s funds offer “endowment-style” investment strategies that help construct diversified portfolios and manage risk. Franklin Square strives not only to maximize investment returns but also to set the industry standard for best practices by focusing on transparency, investor protection and education for investment professionals and their clients.
Founded in Philadelphia in 2007, Franklin Square quickly established itself as a leader in the world of alternative investments by introducing innovative credit-based income funds, including the industry’s first non-traded BDC. The firm managed approximately $17.0 billion in assets as of September 30, 2015, and is the largest manager of BDC assets with $15.7 billion in BDC assets under management as of September 30, 2015. Franklin Square distributes its non-traded funds through its affiliated broker-dealer, FS2 Capital Partners, LLC. For more information, please visit www.franklinsquare.com.
The information in this announcement is summary information only and should be read in conjunction with FSEP’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, which FSEP filed with the U.S. Securities and Exchange Commission (“SEC”) on November 13, 2015, as well as FSEP’s other reports filed with the SEC. A copy of FSEP’s quarterly report on Form 10-Q for the quarter ended September 30, 2015 and FSEP’s other reports filed with the SEC can be found on FSEP’s “Literature” page at www.franklinsquare.com and the SEC’s website at www.sec.gov.
Please note that certain financial figures may have been rounded.
Certain Information About Distributions
The determination of the tax attributes of FSEP’s distributions is made annually as of the end of its fiscal year based upon its taxable income and distributions paid, in each case, for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of FSEP’s distributions for a full year. FSEP intends to update shareholders quarterly with an estimated percentage of its distributions that resulted from taxable ordinary income. The actual tax characteristics of distributions to shareholders will be reported to shareholders annually on Form 1099-DIV.
The payment of future distributions on FSEP’s common shares is subject to the discretion of its board of trustees and applicable legal restrictions, and therefore, there can be no assurance as to the amount or timing of any such future distributions.
FSEP may fund its cash distributions to shareholders from any sources of funds legally available to it, including expense reimbursements from Franklin Square, as well as offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets and dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies. FSEP has not established limits on the amount of funds it may use from available sources to make distributions. There can be no assurance that FSEP will be able to pay distributions at a specific rate or at all.
Forward-Looking Statements and Important Disclosure Notices
This announcement may contain certain forward-looking statements, including statements with regard to future performance or operations of FSEP. Words such as “believes,” “expects,” “projects,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and some of these factors are enumerated in the filings FSEP makes with the SEC. FSEP undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
This announcement contains summaries of certain financial and statistical information about FSEP. The information contained in this announcement is summary information that is intended to be considered in the context of FSEP’s SEC filings and other public announcements that FSEP may make, by press release or otherwise, from time to time. FSEP undertakes no duty or obligation to update or revise the information contained in this announcement. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. Investors should not view the past performance of FSEP, or information about the market, as indicative of FSEP’s future results.
Individual investors and endowments may have different investment horizons, liquidity needs and risk tolerances. In addition, fees that may be incurred by an investor in a fund sponsored by Franklin Square may be different than fees incurred by an endowment investing in similar assets as those in which the funds invest.
1 The per share data was derived by using the weighted average number of FSEP’s common shares outstanding during the applicable period.
2 Estimated gross annual portfolio yield represents the expected annual yield to be generated on FSEP’s investment portfolio based on the composition of the portfolio as of the applicable date. The estimated gross annual portfolio yield does not represent an actual investment return to shareholders.