FS Investment Corp. III Files for Offering of Common Stock Through Institutional Channel
October 6, 2017 | James Sprow | Blue Vault
The company is offering shares of its common stock on a continuous basis up to 106,675,012 shares pursuant to a prospectus filed with the SEC on October 5, 2017. The shares are offered only to investors who purchase through investment advisors whose contracts for investment advisory and related services include a fixed or “wrap” fee or other asset management arrangement, and to certain affiliated investors who purchase through a dealer manager. The company refers to sales of shares of its common stock through advisors as the Institutional Channel.
In February 2016, the BDC closed its continuous public offering to investors who purchase through the IBD Channel. The IBD Channel refers to sales of shares of its common stock through broker-dealers (other than the dealer manager) that are members of the Financial Industry Regulatory Authority, or FINRA, and other properly licensed financial securities firms, whose contracts for services do not include a fixed or “wrap” fee or other asset-based fee arrangement, who it collectively refers to as selected broker dealers. Historically, sales through the IBD Channel have constituted the majority of shares sold in its continuous public offering. It is currently offering shares of common stock pursuant to its prospectus only to investors who purchase through the Institutional Channel and to certain affiliated investors who purchase through the dealer manager.
The current institutional offering price is $8.64 per share, however, to the extent that the net asset value per share increases, the company will set a price necessary to ensure that shares are not sold at a price that is below the net asset value per share.
A specialty finance company that invests primarily in the debt securities of private U.S. middle market companies, FS Investment Corporation III is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC (business development company). Its investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation.
Its investments and activities are managed by FSIC III Advisor, LLC, or FSIC III Advisor, a private investment firm that is registered as an investment adviser with the SEC, and is an affiliate of the BDC. FSIC III Advisor has engaged GSO / Blackstone Debt Funds Management LLC, or GDFM, a wholly-owned subsidiary of GSO Capital Partners LP, to act as its investment sub-adviser.
FS Investment said the offering’s proceeds will likely be used to make investments in private U.S. companies. The remainder of the proceeds will likely be used for working capital and general corporate purposes, including paying any operating expenses.
As of August 1, 2017, the company had raised total gross proceeds of approximately $2.81 billion, including $200,000 of seed capital contributed by the principals of FSIC III Advisor in October 2013 and approximately $11.8 million in proceeds raised in a private placement completed in April 2014 from the principals of FSIC III Advisor, certain members of the board of directors and other individuals and entities affiliated with FSIC III Advisor and GDFM.
Learn more about FS Investments on the Blue Vault Sponsor Focus page.
Best Due Diligence meeting in the industry. No sales pitches, senior level decision makers, meaningful discussions and the Broker Dealer networking sessions were especially useful. Thanks to Blue Vault for raising the bar!