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 June 30, 2016. FSEP will hold a conference call to discuss these results at 11:30 a.m. Eastern Time on Thursday, August 11, 2016. Information for those interested in participating on the call can be found below.
“We are pleased with our second quarter performance and our ability to invest during periods of market volatility” 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 preserve capital and generate long-term returns for our investors.”
Anticipated Close of the Public Offering
Based on and subject to market conditions and the pace of capital raising, FSEP expects to close its public offering to new investors near the end of the third quarter of 2016.
Financial Highlights For the Quarter Ended June 30, 20161
- Net investment income of $0.14 per share, compared to $0.17 per share for the quarter ended June 30, 2015
- Net increase in net assets resulting from operations of $1.14 per share, compared to $0.20 per share for the quarter ended June 30, 2015
- Net change in unrealized appreciation (depreciation) of $1.04 per share, compared to $0.15 per share for the quarter ended June 30, 2015
- Paid regular cash distributions to shareholders totaling approximately $0.18 per share
Portfolio Highlights as of June 30, 2016
- The fair value of FSEP’s investments was approximately $3.5 billion
- FSEP’s portfolio consisted of investments in 87 portfolio companies
- Committed approximately $177.5 million to direct originations
- Core investment strategies2 represented 82% of the portfolio by fair value, including 62% in direct originations and 20% in opportunistic investments. Broadly syndicated/other investments represented 18% of the portfolio by fair value
- Gross portfolio yield prior to leverage (based on amortized cost and excluding non-income producing assets) was 9.7%, compared to 9.4% as of June 30, 20153
- Non-accruals represented 4.0% of the investment portfolio based on fair value4
Quarterly Shareholder Conference Call
FSEP will host a conference call at 11:30 a.m. (Eastern Time) on Thursday, August 11, 2016, to discuss its second quarter 2016 results. All interested parties are welcome to participate. You can access the conference call by dialing (877) 443-2408 and using conference ID 52257312 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 Capital Partners (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 $84.7 billion in assets under management as of June 30, 2016, is the credit platform of Blackstone. For more information, please visit www.franklinsquare.com.
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 $18.2 billion in assets as of June 30, 2016, and is the largest manager of BDC assets with $16.5 billion in BDC assets under management as of June 30, 2016. 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 June 30, 2016, which FSEP filed with the Securities and Exchange Commission (SEC) on August 8, 2016 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 June 30, 2016 and FSEP’s other reports filed with the SEC can be found under FSEP’s “Literature” page at www.franklinsquare.com and on 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 Holdings, L.P., 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, includingstatements with regard to future events or the 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.
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.
1The per share data was derived by using the weighted average shares of FSEP’s common shares outstanding during the applicable period. Per share numbers may not sum due to rounding.
2The per share data was derived by using the weighted average shares of FSEP’s common shares outstanding during the applicable period. Per share numbers may not sum due to rounding.
3Gross portfolio yield, prior to leverage, represents the expected annualized yield to be generated on the income-producing assets in FSEP’s investment portfolio based on the composition of the portfolio as of the applicable date. Gross portfolio yield, prior to leverage, does not represent an actual investment return to shareholders.
4Interest income is recorded on an accrual basis. See FSEP’s quarterly report on Form 10-Q for the quarter ended June 30, 2016 for a description of FSEP’s revenue recognition policy.