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Who We Are

Fifth Street is an alternative lender designed to invest in private small and mid-sized U.S. businesses. At times, we may also take an equity stake in these businesses.

Each of our investment vehicles maintains a portfolio of a diverse range of companies in a tax-favored structure called a Business Development Company ("BDC"). BDCs were created in 1980 by the U.S. Congress to stimulate lending in the U.S. and enable public investors to invest in private, growing businesses—companies that might otherwise find it difficult to access capital.

Qualifications

In order to qualify as a BDC, a number of conditions must be met. Three main ones include:

Income Distribution:

Generally speaking, BDCs elect to be taxed as Regulated Investment Companies ("RICs") and are thus "pass-through" vehicles that do not pay corporate income taxes on the income distributed to shareholders (so long as they distribute at least 90%). This structure enables BDCs to pay shareholders dividends that are only taxed once instead of twice.

Diversification:

Congress requires BDCs that are RICs to remain sufficiently diversified. For example, more than half of a BDC's portfolio must be in investments that each represent less than 5% of total assets.

Hands-on Management:

BDCs must make significant managerial assistance available to their portfolio companies. This could mean advising management on finances, hiring and/or strategy.

The BDC Cycle

The BDC structure allows Fifth Street to help small and mid-sized businesses grow while providing tax advantages and recurring dividends to our investors. Here's how:

1.

An investor buys a share of a Fifth Street BDC, which represents a piece of a diverse portfolio of private companies.

2.

Fifth Street seeks to make investments in small and mid-sized companies to help them expand and reach the next level. Many of these companies may have outgrown their local community bank, but may still be overlooked by larger lending institutions or the capital markets. This creates inefficiencies that enable Fifth Street to lend at relatively higher interest rates.

3.

Fifth Street can earn structuring fees, interest income on the loans, or potential capital gains in the case of equity investments. After interest expenses and fees, Fifth Street aims to pass a majority of its earnings back to shareholders in the form of dividends.

4.

BDCs are required to distribute at least 90% of taxable annual net income to shareholders, which can result in attractive dividends. These dividends may also reflect the higher rates of interest that middle market companies often pay because they are an underserved market segment—not necessarily because they have a lower likelihood of repaying their loans.

Small and mid-sized businesses receive expansion capital and managerial assistance is made available, while investors enjoy the potential for high-yielding dividends and access to an attractive asset class with liquidity and diversification.

An Important Word About Risk

Business Development Companies ("BDCs") invest in private companies and thinly traded securities of public companies, including debt instruments of such companies. Generally, less public information exists for private and thinly traded companies and thus, there is a risk that investors may not be able to make fully informed investment decisions. Less mature and smaller private companies generally involve greater risk than well-established and larger publicly-traded companies. Investing in debt involves risk that the issuer may default on its payments or declare bankruptcy, and debt may not be rated by a credit rating agency. BDCs may not generate income at all times. Additionally, limitations on asset mix and leverage may prohibit the way that BDCs raise capital.

Investing involves substantial risks such as high volatility and/or potential loss of principal. An investor should consider the investment objectives, risks, charges and expenses carefully before investing.

This site may contain certain forward-looking statements, including statements with regard to the future performance of Fifth Street Asset Management Inc. ("FSAM"), Fifth Street Finance Corp. ("FSC") and/or Fifth Street Senior Floating Rate Corp. ("FSFR"). Words such as "believes," "expects," "projects," "anticipates," "estimates," and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, and such factors are identified from time to time in FSAM's, FSC's and FSFR's filings with the Securities and Exchange Commission. Neither FSAM, FSC nor FSFR undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This site is neither an offer to sell nor a solicitation of an offer to purchase securities of FSAM, FSC and/or FSFR. Such an offer or solicitation can only be made by way of an applicable company prospectus and otherwise in accordance with applicable securities laws.

The summary descriptions and other information included herein and any other materials provided to you by FSAM, FSC, FSFR or their representatives are intended only for informational purposes and convenient reference. The information contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. Before making an investment decision with respect to the applicable company, investors are advised to carefully review an applicable prospectus to review the risk factors described therein, and to consult with their tax, financial, investment and legal advisors. These materials do not purport to be complete, and are qualified in their entirety by reference to the more detailed disclosures contained in an applicable prospectus and the applicable company's related documentation.

No representation or warranty, express or implied, is made as to the accuracy or completeness of the information contained herein, and nothing shall be relied upon as a promise or representation as to the future performance of FSAM, FSC or FSFR.