Franklin BSP Lending Fund Files Initial Registration With SEC

The Franklin BSP Lending Fund has filed its initial registration statement with the U.S. Securities and Exchange Commission. If declared effective, the fund will represent Franklin Templeton’s fourth interval fund.

Franklin Templeton, the fund’s adviser, is an asset manager with $1.6 trillion in assets under management. BSP, i.e., Benefit Street Partners, the fund’s sub-adviser, is a credit focused alternative asset manager with $76 billion in AUM and a subsidiary of Franklin Templeton.

As described in the fund’s SEC filing, the new interval fund will pursue debt investment opportunities in U.S. middle market companies – which it generally defines as companies with $25 million and $100 million earnings before interest, taxes, depreciation, and amortization – by investing in a portfolio of privately offered secured debt (including senior secured, unitranche, and second-lien debt) and unsecured debt (including senior unsecured and subordinated debt) across directly originated corporate loans and, to a lesser extent, broadly syndicated corporate loans, collateralized loan obligations, and high-yield corporate bonds.

BSP believes that there are large, persistent and attractive market opportunities created by an imbalance between middle market companies’ demand for credit and the ability of middle market companies to obtain credit and intends to target investments for the fund in this area. This imbalance in part, as described in the filing, has been driven by substantial long-term changes in the debt capital markets following the credit crisis in 2008. Middle market companies often have specialized requirements that limit their ability to employ conventional loan structures and their access to broader capital markets. Their ability to raise capital has been further restricted as banks retreated from middle market lending due to changes in the regulatory landscape over the last decade. As a result, alternative lenders have stepped in to fill the void and provide capital.

BSP believes that private debt represents a large opportunity set for the fund, which will be able to benefit from the BSP’s scaled platform, deep credit markets experience, knowledge, and proprietary sourcing networks.

The fund’s net asset value frequency will be daily, and it is offering five share classes: Class S, Class D, Class M, Class I, and Class R6.

To participate, individuals or entities must invest at least an initial investment of $2,500 for Class S, D, and M shares. A higher tier, Class I and R6 shares, require a minimum initial investment of $1 million. Subsequent investments are set at a minimum of $500 for Class S, D, and M shares, and $10,000 for Class I and R6 shares.

The interval fund will offer quarterly repurchases from 5% to 25% and will be sold without suitability restrictions.

The fund’s management fee, as a percent of net assets, has yet to be disclosed. The fund indicated that it would not have acquired fund fees and expenses nor income incentive/performance fees.

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