FS Specialty Lending Fund to Execute 6-for-1 Reverse Share Split With Plan to List on NYSE
The board of trustees of FS Specialty Lending Fund, a non-traded business development company sponsored by FS Investments and formerly known as FS Energy and Power Fund, has approved a plan to list the fund’s common shares on a national securities exchange, likely the New York Stock Exchange, before the end of 2025.
In conjunction with the listing plan, the board determined to convert the BDC into a registered closed-end fund under the Investment Company Act of 1940. This conversion will be structured as a merger, or reorganization, of the current fund into a newly formed entity: New FS Specialty Lending Fund. Shareholders will vote on this reorganization agreement at a special meeting anticipated later this year.
Post-reorganization, the successor fund plans to adopt the FS Specialty Lending Fund name and seek listing under the ticker symbol “FSSL.” According to the filing made with the U.S. Securities and Exchange Commission, the successor fund will maintain the same investment objectives, policies, board members, and investment adviser as the current fund, excluding regulations specific to BDCs. Shareholders are expected to receive shares in the successor fund equivalent in aggregate net asset value to their current holdings, likely on a one-for-one basis, i.e., one share of the successor fund for each share of the fund held as of the closing date (and a fractional share of the successor fund for each fractional share of the fund held).
To facilitate the listing and meet exchange requirements, the board approved a 6-for-1 reverse share split, expected to be effective around May 15, 2025. This action will increase the NAV per share, aiming to meet NYSE rules which mandate a minimum listing price of $4.00 per share, and align the share price with peers without changing shareholders’ aggregate investment value or ownership percentage. The reverse split is generally not expected to be a taxable event.
In other BDC activity, FS Specialty Lending declared second quarter distributions of $0.1053, payable April 23, 2025.
As of Dec. 31, 2024, the BDC’s most recently reported NAV per share was $3.30, reflecting a decrease from $3.43 at the end of 2023.
The listing is subject to final board and shareholder approvals, as well as market conditions.
When FS Specialty Lending Fund changed its name in May 2023, it also changed its investment focus. Per reporting by AltsWire, the BDC began investing primarily in a portfolio of secured and unsecured floating and fixed rate loans, bonds, and other types of credit instruments. Its aim was to invest 80% of the fund’s total assets this way instead of its prior 80% focus on securities of energy and/or energy and power-related companies.
If the BDC 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 earlier this month. 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.
AR Global’s Healthcare Trust, now known as National Healthcare Properties Inc., has also declared its intention to pursue a listing. In October 2024, National Healthcare internalized management and also completed a reverse stock split in preparation for such an event.
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