Franklin Square Capital Partners announced that its business development company (BDC) direct lending platform committed over $370 million to private deals in the first quarter of 2016, marking the 14th consecutive quarter the platform has provided more than $250 million in direct commitments. New directly originated deals during the quarter were made in support of eight existing portfolio companies headquartered in five different U.S. states.
"Despite credit market volatility this quarter, the flexibility of our funds' structure allowed us to seek out the best risk-adjusted returns for our shareholders by investing where we saw the most compelling opportunities," said Michael C. Forman, Chairman and Chief Executive Officer of Franklin Square. "It was an ideal environment for us to support the growth of our existing portfolio companies and selectively add several attractively priced traded credits."
Newly committed capital was provided by four BDCs managed by affiliates of Franklin Square and sub-advised by GSO Capital Partners LP (GSO) or its affiliate: FS Investment Corporation, FS Investment Corporation II (FSIC II), FS Investment Corporation III (FSIC III) and FS Energy and Power Fund (FSEP). Franklin Square is the largest manager of BDCs.
Franklin Square's directly originated deals, which are unique to its BDCs and not typically accessible elsewhere, included investments in the following companies in the first quarter:
Swift Worldwide Resources
FSIC II, FSIC III and FSEP provided a new senior secured term loan to Swift Worldwide Resources, a Houston, TX-headquartered leading provider of contract personnel resources to the energy sector. The new loan refinances Franklin Square's prior senior secured investment in the company and supports the merger of Swift with Air Energi Group, another leading provider of contract personnel resources to the energy, process and infrastructure industries. Following the merger, the new entity is financially backed by Wellspring Capital Management LLC, a New York, NY-headquartered private equity investment firm, and by LGV Capital Limited, a London, UK-headquartered private equity investment firm.
Industry City TI Lessor, L.P. (dba: the Brooklyn Nets)
FSIC and FSIC II upsized their commitment to the Brooklyn Nets, the Brooklyn, NY-based National Basketball Association franchise. The upsized commitment supports the team's construction of a 70,000 square foot state-of-the-art practice facility in the Industry City section of Brooklyn, NY.
FSIC and FSIC II Successfully Exit Cosentry
In addition to new commitments made during the first quarter, FSIC and FSIC II realized their collective senior secured debt and preferred equity investments in Cosentry, a leading provider of data center services across the Midwest United States. FSIC and FSIC II's collective investments were paid off as a result of TierPoint Capital's acquisition of the company. In connection with the early repayment, FSIC and FSIC II earned a prepayment fee in addition to the return of their principal.
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.