FS KKR plans to merge non-listed BDCs and publicly list the vehicle

The combination of four private business development companies, on a pro forma basis, will be larger than its publicly traded counterpart, FS KKR Capital Corporation.

FS Investments and KKR are set to combine their non-traded business development companies with plans to publicly list the merged entity on the New York Stock Exchange in the fourth quarter, the firm said in a statement.

The amalgamated BDCs include FS Investment Corporation (FSIC) II, FSIC III, FSIC IV and Corporate Capital Trust (CCT) II. FS Investments oversaw the first three, while KKR managed the last in the list before their respective firms entered into a partnership. The FS-KKR tie-up managed these BDCs and their publicly traded counterpart, FS KKR Capital Corporation (FSK).

The firm declined to comment.

On a pro forma basis, the combined investment vehicle would have assets of more than $9 billion, which would make it the second largest publicly traded BDC. It would also be more than $7.3 billion FSK oversees. The largest BDC by total assets is Ares Capital Corporation.

Management originally planned to merge the non-traded vehicles with FSK. The firm said on a November earnings call though that it put the plans on hold, citing the trading performance of the BDC.

Under the terms of the agreement, shareholders of FSIC III, FSIC IV and CCT II will receive FSIC II shares equal to the net asset value of those they hold in their respective funds. The company will also issue about $1 billion of 5.5 percent perpetual preferred equity before any public listing takes place.