FS Specialty Lending Fund Completes Conversion, Aims for November Listing

FS Specialty Lending Fund – previously a non-traded business development company sponsored by Future Standard and formerly known as FS Energy and Power Fund – has completed its reorganization and is now a registered closed-end fund under the Investment Company Act of 1940.

The conversion was structured as a merger of the fund into a newly formed entity: New FS Specialty Lending Fund. Promptly and as previously laid out, the successor fund was renamed FS Specialty Lending Fund.

Concurrently, the converted fund continues to move forward with its previously stated goal to list on a national securities exchange. It will seek listing under the ticker symbol “FSSL” and has updated its timeline for listing on the New York Stock Exchange as mid-November.

The fund reiterated that the listing is subject to many factors, including market conditions and board of trustee approval, and there is no assurance that the fund will be able to list on a public exchange or at all. Prior to listing, the fund will operate as an unlisted closed-end fund.

Also, in connection with the reorganization/conversion, the fund entered into: 1) an investment advisory agreement; and 2) a fee waiver agreement, as well as an administrative agreement. Under the advisory agreement and administration agreement, the adviser will continue to provide the same services to the fund that it previously furnished to the predecessor fund.

1. The fund’s management fee structure is divided into two phases:prior to and after the proposed listing. Before the listing, the fee consists of a base management fee of 1.75% annually of the fund’s gross assets and an income incentive fee calculated quarterly. This incentive fee is 20% of “pre-incentive fee net investment income” but is subject to a 6.5% hurdle rate on the fund’s “adjusted capital.” A “catch-up” provision ensures the adviser receives all income above the hurdle rate until the pre-incentive fee net investment income reaches 2.031% (8.125% annually) of adjusted capital, after which the fee reverts to 20% of the income.

Following a listing, the base management fee will decrease to an annual rate of 1.5% of the fund’s gross assets. The income incentive fee remains at 20% of “pre-incentive fee net investment income,” but the hurdle rate will be lowered to 6% of the fund’s net assets. Similarly, the catch-up provision will apply until the quarterly pre-incentive fee net investment income equals 1.875% (7.5% annually) of net assets, after which the 20% rate applies. The base management fee is payable quarterly in arrears and will be appropriately pro-rated for any partial quarter.

2. The fee waiver takes effect upon listing. Under this agreement, the adviser has contractually agreed to waive a portion of both the base management fee and the income incentive fee. Specifically, the waiver reduces the base management fee by 0.15% of the fund’s gross assets and lowers the income incentive fee to 10% of “pre-incentive fee net investment income.” This waiver will remain in effect until the fund ceases to be registered under the 1940 Act, unless terminated earlier.

Further, the administration agreement acknowledges that the adviser receives no separate fee for administration services but will be reimbursed by the fund for related expenses.

As previously reported by AltsWire, the fund approved a 6-for-1 reverse share split, which took effect on May 15. The split was based on the fund’s net asset value of $3.37 per share as of March 31, resulting in a post-split NAV of $20.22 per share. The split was implemented to meet NYSE rules which mandate a minimum listing price of $4.00 per share. The split also aligned the fund’s share price with the typical range of closed-end funds.

If a listing occurs in Q4 2025, the fund has previously said it expects to pay a full quarterly enhanced distribution for the third quarter of 2025. In Q4 2025, it would target a monthly or quarterly distribution representing an annualized distribution rate of approximately 9% to 9.5% of the fund’s NAV.

By January 2026, it expects the listing to have occurred and FSSL to declare and pay distributions on a monthly basis.

The fund anticipates that its quarterly repurchase offer will remain suspended until the listing, at which point all shares will become freely tradeable on the NYSE.

If the fund succeeds in listing on the NYSE, it would join other formerly non-traded entities that have gone public in the last few years. SmartStop Self Storage REIT (NYSE: SMA) debuted on the NYSE in April of this year. American Healthcare REIT (NYSE: AHR) and Sila Realty Trust (NYSE: SILA) – two formerly non-traded real estate investment trusts – listed on the NYSE in 2024.

National Healthcare Properties Inc., formerly known as Healthcare Trust and externally managed by AR Global, has also declared its intention to pursue a listing. In August 2025, it announced financial results for Q2 2025, reporting an 11.8% increase in same store revenue. The company said it is well-positioned for listing on a national securities exchange in the future.

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