FS Investments joins with KKR to build $18 billion lending platform

By Sarah Lizee

Olympia, Wash., Dec. 11 – FS Investments agreed to enter a partnership with KKR to manage FS’ funds and create the largest business development company platform, with $18 billion in combined assets under management, according to a press release.

FS said the platform will offer differentiated origination capabilities and expertise in capital markets that provides sponsors and corporates with broad product solutions and delivers value to investors through enhanced deal flow and expanded proprietary investment opportunities.

Under the terms of the agreement, FS and KKR will seek stockholder approval for the partnership to provide investment advisory services to the business development companies that FS and KKR sponsor. The FS funds will be able to co-invest with KKR’s other funds and accounts.

The funds currently intend to begin soliciting stockholder approval of the new investment advisory agreements in January. KKR will provide non-advisory services to FS through a sourcing and administrative services agreement until stockholder approvals are obtained.

As part of this transaction, FS Investments and GSO Capital Partners entered into an agreement to conclude their relationship with respect to all of FS’ sponsored funds sub-advised by GSO.

“While our partnership with GSO has created significant value for our investors and borrowers, we’ve concluded that today’s markets require a change in our management approach to the funds,” Forman said.

FS also announced that it hired Andrew Beckman as head of liquid credit and portfolio manager. He will lead FS’ investment team primarily responsible for providing investment advisory services to FS Global Credit Opportunities Fund, a $2 billion closed-end fund.

FS Global Advisor, LLC, a subsidiary of FS Investments, will serve as the sole investment adviser to the fund.

Beckman joins FS from DW Partners, a $3 billion alternative credit manager, where he was a partner and head of corporate credit and special situations. Prior to that, he built and managed Magnetar Capital’s event-driven credit business and was the head of its Event Credit and Credit Opportunities Fund, managing over $2 billion.

Earlier in his career, Beckman was co-head of Goldman Sachs’ special situations multi-strategy investing group.

Additionally, FS said it entered into an agreement to create a joint venture with EIG Global Energy Partners to provide investment advisory services to the FS Energy and Power Fund.

FS Investments is an alternative asset manager based in Philadelphia. KKR is a New York-based global investment firm that manages multiple alternative asset classes.

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