FS Investments (FSIC) and KKR (KKR) announced that they have entered into an agreement to create the largest business development company platform, with $18B in combined assets under management. 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 Investments and KKR will seek stockholder approval for the partnership to provide investment advisory services to the BDCs that FS Investments sponsors, FS Investment Corporation (FSIC), FS Investment Corporation II, FS Investment Corporation III, and FS Investment Corporation IV , and to the BDC currently advised by KKR, Corporate Capital Trust (CCT). Corporate Capital Trust II, currently advised by CNL and sub-advised by KKR, will also be offered the opportunity to be included subject to board and shareholder approval. The FSIC funds will be able to co-invest with KKR's other funds and accounts. The board of directors or trustees have approved the new investment advisory agreements for each FSIC fund and CCT, and each fund will seek stockholder approval. The funds currently intend to begin soliciting stockholder approval of the new investment advisory agreements, as applicable, in January 2018. KKR will provide non-advisory services to FS Investments through a sourcing and administrative services agreement until stockholder approvals for the new investment advisory agreements are obtained. As part of this transaction, FS Investments and GSO Capital Partners have entered into an agreement to conclude their relationship with respect to all of FS Investments' sponsored funds sub-advised by GSO. FS, GSO and KKR will work together to facilitate a smooth transition.
Catch up on today's top five analyst initiations with this list compiled by The Fly: 1. Spirit Airlines (SAVE) was initiated with an Overweight at Stephens, while JetBlue (JBLU) initiated with an Equal Weight. 2. Consol Energy (CEIX) was initiated with a Buy at Seaport Global and Stifel. 3. Evoqua Water (AQUA) initiated with a Neutral at JPMorgan. 4. Accuray (ARAY) initiated with a Buy at Lake Street. 5. Capstone (CCT) initiated with a Buy at SunTrust. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.
Capstone initiated with a Buy at SunTrust. SunTrust analyst Douglas Mewhirter initiated Capstone with a Buy rating and a price target of $21 on valuation. Mewhirter says that normally the 10-15% discount relative to net asset value for the company type implies expectations of large credit losses or a dividend cut. However, the analyst notes that Capstone credit conditions are stable and 2018 earnings should be able to cover the dividend payout.