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

Investment objective

FSIC II is a publicly registered, non-traded BDC and closed to new investors in March 2014 after raising over $3 billion in equity capital. A BDC allows individual investors, at low investment minimums, to invest in the same type of private companies as do large institutions, endowments and wealthy individuals. FSIC II seeks to generate current income and, to a lesser extent, long-term capital appreciation. 

Investment strategy

FSIC II invests primarily in floating rate, senior secured loans of private U.S. companies and has a flexible investment platform, which diversifies its holdings across multiple industries and geographic locations. FSIC II seeks to invest in a broadly diversified portfolio of companies with:

  • Leading, defensible market positions
  • Positive cash flows
  • Proven management teams
  • Private equity sponsorship
  • Viable exit strategies

While diversification and asset allocation alone cannot guarantee a profit or eliminate the possibility of a loss of principal, this flexibility may help FSIC II provide investors with income and, to a lesser extent, growth while maintaining a focus on capital preservation.

 

    An investment in shares of FSIC II’s common stock involves significant costs and investors should review the information in FSIC II’s filings with the SEC regarding fees and expenses.

    Stockholder Returns

    *FSIC II closed to new investors in March 2014. The final public offering price of $10.60 per share was subject to a sales load of up to 10.0% and offering expenses of up to 1.5%.The distribution reinvestment price is subject to change.

    **The distribution reinvestment price is subject to change. The price at which shares of FSIC II’s common stock are issued under its distribution reinvestment plan is determined by FSIC II’s board of directors, or a committee thereof, at a price per share that is (i) not less than the net asset value per share immediately prior to the payment of the distribution and (ii) not more than 2.5% greater than the net asset value per share as of such date.

    ***The annualized distribution rate based on distribution reinvestment price is expressed as a percentage equal to the projected annualized distribution amount (which is calculated by annualizing the current regular monthly cash distribution per share as of the date indicated above without compounding), divided by the distribution reinvestment price as of the indicated date above. The annualized distribution rate shown may be rounded. The payment of future distributions on FSIC II’s common shares is subject to the discretion of FSIC II’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 nine months ended September 30, 2015, 100% of FSIC II’s distributions were funded through net investment income. The determination of the tax attributes of FSIC II’s distributions is made annually at the end of FSIC II’s fiscal year and a determination made on an interim basis may not be representative of the actual tax attributes of FSIC II’s distributions for a full year. The actual tax characteristics of distributions to stockholders are reported to stockholders annually on Form 1099-DIV. No portion of FSIC II’s distributions during the nine months ended September 30, 2015 was funded through an expense reimbursement from the fund’s sponsor. Click on the the Stockholder Returns link below for a presentation of stockholder returns on an investment in FSIC II's shares.

    FSIC II’s previous distributions to stockholders were funded in significant part by the reimbursement of certain expenses, including the waiver of certain investment advisory fees, that are subject to repayment to its affiliate, Franklin Square Holdings, and its future distributions may be funded from such waivers and reimbursements. Significant portions of these distributions may not be based on FSIC II’s investment performance and such waivers and reimbursements by Franklin Square Holdings may not continue in the future. If Franklin Square Holdings had not agreed to reimburse certain of FSIC II’s expenses, including through the waiver of certain advisory fees, significant portions of these distributions would have come from offering proceeds or borrowings. The repayment of amounts owed to Franklin Square Holdings will reduce the future distributions to which investors would otherwise be entitled.

    Corporate Governance

    © 2016 FS Investment Corporation II