Fifth Street Finance Funds $156.5MM Portfolio
Fifth Street Finance announced that Senior Loan Fund JV 1 initially invested $156.5 million out of its anticipated investment capacity of approximately $300 million in a diversified portfolio of senior secured loans.
The initial portfolio of assets, sourced through Fifth Street’s platform, is funded with leverage of $101.5 million provided by Deutsche Bank AG, New York Branch and equity of $55 million, where FSC contributed 87.5% and Kemper contributed 12.5%.SLF JV 1 closed on a $200 million revolving credit facility with Deutsche Bank, which should allow the joint venture to utilize leverage up to a ratio of approximately 2x debt-to-equity.
The joint venture should be accretive to earnings and expands FSC’s investment capacity to originate and underwrite middle market loans. FSC believes that funding this initial portfolio of assets will generate a mid-teens return on our investment, which is higher than FSC’s current portfolio. FSC expects to continue funding SLF JV 1 to its target size of $300 million through the September quarter.
FSC has ample capacity to grow SLV JV 1 and are in active discussions with several other third parties about additional senior loan fund partnerships.
“We are pleased that SLF JV I has funded its initial portfolio in a timely manner, further demonstrating the value of the joint venture’s affiliation with Fifth Street’s leading middle market origination platform,” stated FSC CEO Leonard M. Tannenbaum, adding, “Funding the initial portfolio and continuing to ramp SLF JV 1 should generate a mid-teens return on our investment and is a key component in driving future earnings growth.”