Income Producing Alternatives: Understanding Business Development Companies (BDCs)
WEDNESDAY, SEPTEMBER 9, 2015, 11:00 AM ET
4:00 PM LONDON | 5:00 PM PARIS | 6:00 PM ATHENS | 11:00 PM HONG KONG
DURATION: 40 MINUTES FOLLOWED BY Q&A SESSION
LISTEN TO OUR EXPERT PRESENTER LIVE FROM YOUR OWN DESK
This webinar has been approved by the CFP Board and IMCA for 1.00 CFP/CIMA/CPWA CE credit.
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Overview Are your clients tired of searching for yield in today’s low interest rate environment? The answer may lie in Business Development Companies, or BDCs – an income producing alternative asset class that has generally flown under investors’ radars – until now.
BDCs were created by Congress in 1980 to help stimulate lending in the U.S. and enable public investors to invest in private, growing businesses. Today, this growing industry is a powerful force in middle market lending with a market capitalization of ~$33 billion.1
Governed by the Investment Company Act of 1940, BDCs are pass-through entities, similar to REITs, that can bypass corporate income taxes as long as they distribute at least 90% of taxable annual net income as dividends to shareholders. BDCs are known for their dividend yields that can reach double-digits – a rare commodity these days well-suited for retirees and other income-seeking investors. In fact, the industry is currently trading at a discount, below net asset value (NAV),1 allowing for an attractive buying opportunity.
However, not all BDCs are the same or offer the same quality of investments. In fact, BDCs can adopt very different approaches, depending on each management’s philosophy. Register now for our live fireside chat webinar to learn more about this emerging asset class and what to look for when evaluating these alternatives. Selectivity counts – and certain BDCs can allow clients to receive:
• Attractive, recurring dividends
• Access to risk-averse portfolios of private, middle market credits
• Diversification across many industries
• Floating rate exposure (helping to position for rising interest rates)
Fifth Street Finance Corp. (NASDAQ: FSC), one of the largest publicly-traded BDCs in the country by market capitalization,1 provides custom-tailored financing solutions to small and mid-sized companies, primarily in connection with investments with private equity sponsors. As of June 30, 2015, FSC’s $2.3 billion portfolio had 132 portfolio companies across 36 industries and 78% of the portfolio consisted of senior secured loans. FSC has a current dividend yield of 11.8%.1,2
For more information, please visit fifthstreetfinance.com/fa.
1) As of 7/31/15.
2) Based on the annualized monthly dividend of $0.06 per share declared by FSC’s Board of Directors through November 2015.
Todd G. Owens
Chief Executive Officer
Fifth Street Finance Corp.
Todd G. Owens is Chief Executive Officer of Fifth Street Finance Corp. (NASDAQ:FSC), as well as President of Fifth Street Senior Floating Rate Corp. (NASDAQ:FSFR). In addition, he serves on the Board of Directors of Fifth Street Finance Corp. Mr. Owens joined Fifth Street in September 2014 and is responsible for driving growth by evaluating and executing strategic initiatives, as well as managing institutional marketing efforts, investor relations and distribution channels. Previously, Mr. Owens spent 24 years at Goldman, Sachs & Co, where he became a Managing Director in 2001 and a partner in 2008. He also served as Head of the West Coast Financial Institutions Group (FIG) for 15 years, Head of the Specialty Finance Group for nearly 10 years and was a senior member of the Bank Group. Mr. Owens brings with him experience in a broad range of industries including commercial finance, asset management, alternative asset management, commercial banking and business development companies. Mr. Owens received his B.A. in History and Political Economy from Williams College.
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