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Fifth Street Finance Corp. is a specialty finance company that lends to and invests in small and mid-sized companies in connection with an investment by private equity sponsors. Our investment objective is to maximize our portfolio’s total return by generating current income from our debt investments and capital appreciation from our equity investments. We strive to achieve this objective by capitalizing on our existing relationships with private equity sponsors and developing new partnerships.
Our investment strategy is focused on the needs of our clients. We work with our sponsors to create a complete financing solution that achieves the goals of the transaction and builds a foundation for a lasting partnership. Target investments have the following characteristics:
• Established companies with a history of positive operating cash flow.
We seek to invest in established companies with sound historical financial performance. We typically focus on companies with a history of profitability on an operating cash flow basis. We do not intend to invest in start-up companies or companies with speculative business plans.
• Ability to exert meaningful influence. We target investment opportunities in which we will be the lead/sole investor in our tranche and in which we can add value through active participation, often through advisory positions.
• Private equity sponsorship. We generally seek to invest in companies in conjunction with private equity sponsors who have proven capabilities in building value. We believe that a private equity sponsor can serve as a committed partner and adviser that will actively work with the company and its management team to meet company goals and create value. We assess a private equity sponsor’s commitment to a portfolio company by, among other things, the capital contribution it has made or will make in the portfolio company.
• Seasoned management team. We generally will require that our portfolio companies have a seasoned management team, with strong corporate governance. We also seek to invest in companies that have proper incentives in place, including having significant equity interests, to motivate management to act in accordance with our interests as investors.
• Defensible and sustainable business. We seek to invest in companies with proven products and/or services and strong regional or national operations.
Custom Tailored Financing Solutions
We provide custom tailored financing solutions to support expansions, acquisitions, recapitalizations, and management buyouts. Our investments generally range in size from $5 million to $40 million and are principally in the form of first and second lien debt investments, which may include an equity component. We seek to invest in established companies with sound historical financial performance. Our vast network of high net worth investors, former portfolio companies, and management teams allows us to assist our sponsor partners in their due diligence efforts, and to grow and improve their portfolio companies.
Fifth Street Finance Corp. is organized as an externally-managed, non-diversified closed-end management investment company and has elected to be regulated as a Business Development Company (BDC) under the Investment Company Act of 1940.
Our investment adviser is Fifth Street Management LLC, a registered investment adviser under the Investment Advisers Act of 1940. Services necessary for our business are provided by individuals who are employees of our investment adviser or administrator. References in this website to “investment team,” “Investment Committee” and our staff refer respectively to the investment team, Investment Committee and employees of our investment adviser and administrator that perform such functions on our behalf.