FS Investment Corporation III

FSIC III (closed)

Pricing:

FSIC III is closed to investors investing through independent broker-dealers but is available for purchase through registered investment advisers.
Consult with your financial advisor for more information.

Investment objectives

Generate current income and, to a lesser extent, long-term capital appreciation

Overview

FSIC III is a business development company (BDC) designed to provide a high level of current income. The fund primarily invests in floating rate, senior secured loans of private U.S. middle market companies.

Adviser

FSIC III Advisor, LLC
An affiliate of FS Investments

Sub-adviser

GSO / Blackstone Debt Funds Management LLC
An affiliate of GSO Capital Partners LP


Pricing

Net asset value (as of 6/30/2016) $8.16
Annualized distribution rate 1 (based on net asset value) 8.58%
Annualized distribution amount 1 (as of 6/30/2016) $0.70
Distribution reinvestment price 2 (as of 9/28/2016) $8.42


View Pricing Disclosure For Footnotes 12
1The annualized distribution rate shown is expressed as a percentage equal to the projected annualized distribution amount per share (which is calculated by annualizing the regular weekly cash distribution per share as of the date indicated, without compounding), divided by FSIC III’s net asset value per share as of the date indicated. The annualized distribution rate shown may be rounded. The payment of future distributions on FSIC III’s shares of common stock is subject to the discretion of FSIC III’s board of directors and applicable legal restrictions and, therefore, there can be no assurance as to the amount or timing of any such future distributions. For the six months ended June 30, 2016, approximately 100% of FSIC III’s distributions were funded through net investment income on a tax basis. No portion of FSIC III’s distributions during the six months ended June 30, 2016, was funded through expense reimbursements from FSIC III’s sponsor. The determination of the tax attributes of FSIC III’s distributions is made annually at the end of FSIC III’s fiscal year, and a determination made on an interim basis may not be representative of the actual tax attributes of FSIC III’s distributions for a full year. The actual tax characteristics of distributions to stockholders are reported to stockholders annually on Form 1099-DIV. FSIC III’s total operating expenses and excise taxes as a percentage of average net assets was 5.89% for the year ended December 31, 2015.
2The distribution reinvestment price is subject to change. The price at which shares of FSIC III’s common stock are issued under its distribution reinvestment plan is equal to the institutional offering price in effect on the date of issuance (which price is equal to 90% of what the public offering price per share in the independent broker-dealer channel would have been on the date of issuance had FSIC III not closed the offering to investors investing through the independent broker-dealer channel in February 2016).

Performance – returns


Stockholder returns 1
Without sales charge, compounded monthly
YTD
6.90%
1 year
0.67%
3 years
Annualized
––
5 years
Annualized
––
Since inception
Annualized
4.47%
Cumulative total return
Since inception
10.72%
Cumulative total return 2
Since inception (with sales charge, compounded monthly)
-0.35%
Cumulative cash distributions per share 3
Since inception
$1.63
Inception date
4/2/2014
As of 7/31/2016, unless otherwise noted. Numbers may be rounded.
Returns shown are historical only and are based on past performance. Past performance is not a guarantee of future results.
View Returns disclosure For Footnotes 123
1

Stockholder returns (without sales charge) are the total returns an investor received for the highlighted period taking into account all distributions paid during such period, compounded monthly. The calculation assumes that the investor purchased shares at FSIC III’s public offering price, excluding selling commissions and dealer manager fees, at the beginning of the applicable period and reinvested all cash distributions pursuant to FSIC III’s distribution reinvestment plan (DRP). Valuation as of the end of each period is the repurchase price pursuant to FSIC III’s share repurchase program on such date. Stockholder returns (without sales charge) do not include selling commissions and dealer manager fees, which could total up to 10% of FSIC III’s public offering price. Had such selling commissions and dealer manager fees been included, performance would be lower. Upon liquidation or repurchase, market conditions may cause the actual values to be more or less than the values shown.

The stockholder returns reflect FSIC III’s expenses for each period shown. FSIC III’s shares are no longer subject to a sales load, but are still subject to offering expenses of up to 1.5% of the gross proceeds received in its offering. FSIC III’s ratio of total operating expenses, together with excise taxes, to average net assets was 5.89% for the year ended December 31, 2015.

2The cumulative total return (with sales charge) is the total return an investor received since inception taking into account all distributions paid during such period, compounded monthly. The calculation assumes that the investor purchased shares at FSIC III’s public offering price, including the maximum selling commissions and dealer manager fees, at inception and reinvested all cash distributions pursuant to FSIC III’s DRP. Valuation as of the end of the period is the repurchase price pursuant to FSIC III’s share repurchase program on such date. Upon liquidation or repurchase, market conditions may cause the actual value to be more or less than the value shown.
3Cumulative cash distributions per share reflect the total regular cash distributions paid since inception on a per share basis as of July 31, 2016. The payment of future distributions on FSIC III’s shares of common stock is subject to the discretion of FSIC III’s board of directors and applicable legal restrictions and, therefore, there can be no assurance as to the amount or timing of any such future distributions.

Portfolio composition1

View Portfolio disclosure For Footnotes 1
1

Asset: As of June 30, 2016. Calculated as a percentage of fair value. Fair value is determined by FSIC III’s board of directors. Includes investments held by FSIC III and the assets underlying FSIC III’s total return swap (TRS) financing arrangement with Citibank, N.A. Excluding investments held under the TRS, floating rate investments comprised 73.5% of FSIC III’s investment portfolio and investment allocations were 66% first lien senior secured loans, 10% second lien senior secured loans, 1% senior secured bonds, 19% subordinated debt, <1% collateralized securities and 4% equity/other.

Industry: As of June 30, 2016. Calculated as a percentage of fair value. Fair value is determined by FSIC III’s board of directors. Does not include assets underlying FSIC III's total return swap (TRS) financing arrangement with Citibank, N.A.

Top 10 holdings: As of June 30, 2016. Calculated as a percentage of fair value. Fair value is determined by FSIC III’s board of directors. Securities may be an obligation of one or more entities affiliated with the named company. Percentages shown are net of unfunded commitment amounts. Does not include assets underlying FSIC III’s total return swap (TRS) financing arrangement with Citibank, N.A.

Key facts*

Inception date April 2, 2014
Total AUM (as of 6/30/2016) $3.47 billion
Number of portfolio companies 123
Sponsor commitment 1 $17.20 million
Floating rate assets 2 76% of portfolio
Distribution frequency 3 Monthly
Liquidity 4 Quarterly tender offers
Tax reporting Form 1099-DIV
*As of 6/30/2016 unless otherwise noted.

Core investment strategies 5

Direct originations
67%
Opportunistic
24%

Total
91%
View key facts and core investment strategies disclosure For Footnotes 12345
1Sponsor commitment means proceeds from investors affiliated with FSIC III Advisor, LLC and GSO / Blackstone Debt Funds Management LLC, including members of FSIC III’s board of directors.
2Calculated as a percentage of fair value. Fair value is determined by FSIC III’s board of directors. Includes investments held by FSIC III and the assets underlying FSIC III’s total return swap (TRS) financing arrangement with Citibank, N.A. Excluding investments held under the TRS, floating rate investments comprised 73.5% of FSIC III’s investment portfolio.
3The payment of future distributions on FSIC III’s shares of common stock is subject to the discretion of FSIC III’s board of directors and applicable legal restrictions and, therefore, there can be no assurance as to the amount or timing of any such future distributions.
4FSIC III intends to repurchase a limited number of shares pursuant to its share repurchase program. FSIC III may amend, suspend or terminate its share repurchase program at any time. In addition, any such repurchases will be at the institutional offering price on the date of repurchase. See FSIC III’s prospectus for more information.
5Calculated as a percentage of fair value. Fair value is determined by FSIC III’s board of directors. FSIC III defines core investment strategies as any investment that is a direct origination or an opportunistic investment. Broadly syndicated/other investments comprised 9% of FSIC III’s portfolio as of June 30, 2016.
View risk factors disclosure

Investing in FSIC III may be considered speculative and involves a high level of risk, including the risk of a substantial loss of investment. The following are some of the risks an investment in FSIC III’s common stock involves; however, you should carefully consider all of the information found in the section of FSIC III’s prospectus entitled “Risk Factors” before deciding to invest in shares of FSIC III’s common stock.

  • Because there is no public trading market for shares of FSIC III’s common stock and FSIC III is not obligated to effectuate a liquidity event by a specified date, if at all, it is unlikely that you will be able to sell your shares. If you are able to sell your shares before FSIC III completes a liquidity event, it is likely that you will receive less than you paid for them. While FSIC III intends to conduct quarterly tender offers for FSIC III’s shares, only a limited number of shares will be eligible for repurchase and FSIC III may amend, suspend or terminate the share repurchase program at any time. In addition, any such repurchases will be at the current institutional offering price on the date of repurchase.
  • FSIC III intends to invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be difficult to value and illiquid.
  • FSIC III’s distributions may be funded from unlimited amounts of offering proceeds or borrowings, which may constitute a return of capital and reduce the amount of capital available to FSIC III for investment. Any capital returned to stockholders through distributions will be distributed after payment of fees and expenses.
  • An investment strategy focused primarily on privately held companies presents certain challenges, including lack of available information about these companies.
  • Investing in middle market companies involves a number of significant risks, any one of which could have a material adverse effect on FSIC III’s operating results.
  • A lack of liquidity in certain of FSIC III’s investments may adversely affect its business.
  • FSIC III is subject to financial market risks, including changes in interest rates, which may have a substantial negative impact on its investments.
  • FSIC III has borrowed funds to make investments, which increases the volatility of its investments and may increase the risks of investing in its securities.
  • FSIC III has limited operating history and is subject to the business risks and uncertainties associated with any new business.
  • If FSIC III is unable to raise substantial funds in its ongoing, continuous “best efforts” public offering, then FSIC III will be more limited in the number and type of investments it may make.
  • FSIC III is a long-term investment for persons of adequate financial means who have no need for liquidity in their investment. To invest in FSIC III, an investor must have either (i) a net worth of at least $70,000 and an annual gross income of at least $70,000, or (ii) a net worth of at least $250,000. Some states impose higher suitability standards. Please consult the prospectus for a detailed description of the suitability standards imposed on investors, including heightened standards required by certain states. 
  • FSIC III’s previous distributions to stockholders were funded in significant part from the reimbursement of certain expenses, including through the waiver of certain investment advisory fees that are subject to repayment to its afiliate, FS Investments, and FSIC III’s future distributions may be funded from such waivers and reimbursements. Significant portions of these
    distributions may not be based on FSIC III’s investment performance, and such waivers and reimbursements by FS Investments may not continue in the future. If FS Investments were not to reimburse certain of FSIC III’s expenses, including through the waiver of certain of its advisory fees, significant portions of these distributions may come from offering proceeds or
    borrowings. The repayment of any amount owed to FS Investments will reduce the future distributions to which you would otherwise be entitled. 
  • Please see FSIC III’s prospectus for a more complete list of risks associated with investing in syndicated loans.

FSIC III is only available for new investment through the RIA channel. 

FSIC III Q3 2016 tender documents

Corporate governance

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