About this episode:
In this Leaders Series episode, Managing Director, Marketing, Bernadette Bridy sits down with FS Investments CEO Michael Forman and KKR Co-President and Chief Investment Officer, Daniel Pietrzak to reflect on the recent merger of FSK and FSKR to create one of the largest BDCs in the market, what it was like working towards this goal in the middle of a global pandemic, and take a step back to look at the BDC market as a whole.
Bernadette Bridy (00:04):
Welcome back to FireSide, a podcast from FS Investments. This is Bernadette Bridy, Head of Marketing here at FS Investments. Today on FireSide, we’re featuring a conversation with FS Investments CEO, Michael Forman, and KKR’s, Dan Pietrzak. Dan is Co-President and Chief Investment Officer of FS KKR Capital Corp., as well as a partner at KKR and the Co-Head of Private Credit. Dan and Michael will be discussing the recent merger of FSK and FSKR, as well as market trends in the BDC space. We hope you enjoy today’s conversation. Michael and Dan, thanks so much for joining us today and welcome to FireSide.
Michael Forman (00:40):
Dan Pietrzak (00:42):
Thank you, Bernadette.
Bernadette Bridy (00:43):
Michael, we’re going to start with you. For those of us who are not familiar with the BDC industry, can you just provide a little bit of background on BDCs and the role they play in financing markets?
Michael Forman (00:53):
Sure. BDCs are a creature of statute. They were created by Congress back in the 1980s to foster the flow of capital to small and mid-sized businesses. And it was a fairly sleepy industry for a long time. In 2009, we launched the first non-traded BDC and really started generation of new BDCs, new non-traded BDCs, and today it’s an asset class that probably has over a hundred billion dollars of assets under management. We’re one of the largest players in the marketplace. We have a wonderful partnership with KKR and we invest in credit. We invest in private credit. We provide loans to middle market businesses to help them grow, to help them provide jobs, to help them satisfy their needs for capital, and it’s a space that continues to grow and continues to be important in the formation of capital in the markets.
Bernadette Bridy (02:00):
And you talked a little bit, you mentioned the partnership with KKR. Can you describe that a little bit further when it started and just anything on that one?
Michael Forman (02:10):
Sure. We originally launched with a partnership with Blackstone. So we launched our first BDC then known as FSIC. The BDC franchise is now known as FS KKR, trading under the symbol FSK on the New York Stock Exchange. We entered our partnership with KKR and exited the partnership with Blackstone in 2018. So we’ve been doing this together for a little bit over three years.
Michael Forman (02:40):
And it’s just been a terrific partnership with the KKR folks.
Dan Pietrzak (02:44):
Yeah. And maybe Bernadette, just even add one additional point to what Michael said there, I mean, the partnership has formerly been three plus years, but we’ve had a lot of conversations obviously in advance of that, a lot of conversations for it starting. So it was probably almost approaching that four-year mark. It’s been a really good partnership on both sides. I think we’re two firms with very good cultures bringing very complimentary skills to bear, and we’ve been fortunate that we’ve done a lot over this time.