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.

    *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 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 monthly cash distribution per share as of the date indicated, without compounding), divided by FSIC II’s net asset value (NAV) per share as of the date indicated. The annualized distribution rate shown may be rounded. The payment of future distributions on FSIC II’s shares of common stock 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 quarter ended March 31, 2016, 100% of FSIC II’s distributions were funded through net investment income. No portion of FSIC II’s distributions during the quarter ended March 31, 2016 was funded through expense reimbursements from FSIC II’s sponsor. 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. FSIC II's net operating expenses and excise taxes as a percentage of average net assets was 2.14% for the quarter ended March 31, 2016.

Corporate Governance

© 2016 FS Investment Corporation II