FS Specialty Lending converts to 1940 Act fund; NYSE listing planned
FS Specialty Lending Fund completed its reorganization on October 28, 2025, converting from a business development company into a closed‑end fund registered under the 1940 Act through a merger into a newly formed Delaware statutory trust. Following the merger, the entity assumed the name FS Specialty Lending Fund.
The Fund intends to seek a listing of its common shares on the New York Stock Exchange in mid‑November; this Proposed Listing is subject to market conditions and board approval, and there is no assurance it will occur on that timeline or at all. The Fund entered into an investment advisory agreement, a fee waiver agreement, and an administration agreement with its Adviser.
Before the Proposed Listing, fees include a base management fee of 1.75% of gross assets and a 20% income incentive fee with a 6.5% hurdle and catch‑up to 8.125% of adjusted capital. After the Proposed Listing, the base management fee is 1.50% of gross assets and the income incentive fee remains 20% with a 6.0% hurdle and catch‑up to 7.5% of net assets. Upon the Proposed Listing, the Adviser will waive 0.15% of the base fee and reduce the income incentive fee to 10%. Concurrently, Franklin Square Holdings acquired EIG’s interest in the Adviser, which became an indirect wholly owned subsidiary and was renamed FS Specialty Lending Advisor, LLC.
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Insights
Conversion to a 1940 Act closed-end fund completed; listing targeted.
The fund finalized its conversion from a BDC to a registered closed‑end fund, aligning advisory and administration agreements to mirror prior services. Fee terms shift around the contemplated NYSE listing: base management moves from 1.75% of gross assets pre‑listing to 1.50% post‑listing, while the income incentive fee remains 20% with a lower hurdle after listing.
A contractual Fee Waiver, effective upon the Proposed Listing, reduces the base fee by 0.15% of gross assets and cuts the income incentive fee to 10%. The listing is “subject to” market conditions and board approval, so actual timing and fee reductions depend on that milestone.
Ownership of the Adviser consolidated under Franklin Square Holdings, with continuity of personnel. Near‑term focus is whether the NYSE listing occurs in mid‑November as contemplated; if it does, the waived fees would apply per the agreement.
8-K Event Classification
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
Reorganization Closing
As previously announced, on April 22, 2025, the Board of Trustees (the “Board”) approved the conversion of FS Specialty Lending Fund (the “Predecessor Fund”) from a business development company to a closed-end fund registered under the Investment Company Act of 1940 (the “1940 Act”) through a merger of the Predecessor Fund (the “Reorganization”) with and into New FS Specialty Lending Fund (the “Fund”), a newly organized Delaware statutory trust registered under the 1940 Act as a closed-end fund, pursuant to an Agreement and Plan of Reorganization (the “Reorganization Agreement”), dated as of April 22, 2025, among the Predecessor Fund, the Fund, and, for the limited purposes set forth therein, FS/EIG Advisor, LLC, the investment adviser to the Fund (the “Adviser”).
As previously announced, shareholders of the Predecessor Fund approved the Reorganization and the consummation of the related transactions contemplated by the Reorganization Agreement and certain related matters submitted to shareholders at a special meeting of shareholders held on September 26, 2024 and adjourned to October 14, 2025.
The Reorganization was completed on October 28, 2025. Following the Reorganization, the Fund changed its name to FS Specialty Lending Fund.
The Fund was a newly created shell entity that is registered under the 1940 Act as a closed-end fund, and the Reorganization was intended to effectuate the conversion of the Predecessor Fund from a business development company to closed-end fund registered under the 1940 Act.
The Fund intends to seek to list its common shares on the New York Stock Exchange (the “Proposed Listing”). The Proposed Listing is currently expected to occur in mid-November. However, the Proposed Listing is subject to many factors, including, but not limited to, market conditions and board of trustee approval. There can be no assurance that the Fund will be able to complete the Proposed Listing within the expected time frame or at all. Prior to the completion of the Proposed Listing, the Fund will operate as an unlisted closed-end fund.
Entry into Investment Advisory Agreement, Fee Waiver Agreement and Administration Agreement
In connection with the closing of the Reorganization, on October 28, 2025, the Fund entered into (i) an investment advisory agreement (the “Advisory Agreement”), (ii) a fee waiver agreement (the “Fee Waiver”) and (iii) an administration agreement (the “Administration Agreement.”), each between the Fund and the Adviser. Pursuant to the Advisory Agreement and the Administration Agreement, the Adviser will provide the same services to the Fund that it provided to the Predecessor Fund.
Pursuant to the Advisory Agreement, prior to the Proposed Listing, the Fund will pay a management fee consisting of a base management fee and an income incentive fee as follows:
| · | a base management fee calculated at an annual rate of 1.75% of the Fund’s gross assets; and | |
| · | an income incentive fee, calculated quarterly in arrears, equal to 20% of “pre-incentive fee net investment income” for the immediately preceding quarter, subject to a hurdle rate of 6.5%, calculated as a rate of return on the Fund’s “adjusted capital,” defined as cumulative gross proceeds generated from sales of common shares of the Fund (including proceeds from the Fund’s distribution reinvestment plan), reduced for distributions from non-liquidating dispositions of the Fund’s investments paid to shareholders and amounts paid for share repurchases pursuant to the Fund’s share repurchase program. Additionally, once the Fund’s pre-incentive fee net investment income in any quarter exceeds the hurdle rate of 1.625% (6.5% annualized), the Adviser will be entitled to a “catch-up” fee equal to the amount of the Fund’s pre-incentive fee net investment income in excess of the hurdle rate, until the Fund’s pre-incentive fee net investment income for such quarter equals 2.031%, or 8.125% annually, of adjusted capital. Thereafter, the Adviser will be entitled to receive 20.0% of the Fund’s pre-incentive fee net investment income. |
Pursuant to the Advisory Agreement, after the Proposed Listing, the Fund will pay a management fee consisting of a base management fee and an income incentive fee as follows:
| · | a base management fee calculated at an annual rate of 1.50% of the Fund’s gross assets; and | |
| · | an income incentive fee, calculated quarterly in arrears, equal to 20% of “pre-incentive fee net investment income,” subject to a lower hurdle rate of 6.0%, calculated as a rate of return on the Fund’s net assets. Additionally, once the Fund’s pre-incentive fee net investment income in any quarter exceeds the hurdle rate, the Adviser will be entitled to a “catch-up” fee equal to the amount of the Fund’s pre-incentive fee net investment income in excess of the hurdle rate, until the Fund’s pre-incentive fee net investment income for such quarter equals 1.875%, or 7.5% annually, of net assets. Thereafter, the Adviser will be entitled to receive 20.0% of the Fund’s pre-incentive fee net investment income. |
The base management fee will be payable quarterly in arrears. The base management fee for any partial quarter will be appropriately pro-rated.
Pursuant to the Fee Waiver, the Adviser has contractually agreed to (i) waive a portion of the base management fee equal to 0.15% of the Fund’s gross assets and (ii) waive a portion of the income incentive fee, such that the Fund’s income incentive fee will be equal to 10% of “pre-incentive fee net investment income.” The Fee Waiver becomes effective upon the Proposed Listing and will remain in effect until the Fund ceases to be registered under the 1940 Act, unless sooner terminated with the written consent of the Board, including a majority of the Trustees who are not “interested persons” of the Fund or the Adviser, as defined in section 2(a)(19) of the 1940 Act.
Pursuant to the Administration Agreement, the Adviser will perform, or oversee the performance of, the Fund’s corporate operations and required administrative services, which includes being responsible for the financial records that the Fund is required to maintain and preparing shareholder reports and regulatory filings. In addition, the Adviser will assist the Fund in calculating its net asset value, oversee the preparation and filing of tax returns and the printing and dissemination of reports to Fund shareholders, and oversee the payment of Fund expenses and the performance of administrative and professional services rendered to the Fund by others. No separate fee is payable to Adviser pursuant to the Administration Agreement; however, the Fund will reimburse the Adviser for expenses related to the provision of administrative and operational services to the Fund.
Fund Name Change
Following the Reorganization, the Fund changed its name to FS Specialty Lending Fund.
Adviser Transaction
Concurrently with the closing of the Reorganization, Franklin Square Holdings, L.P. (“FS”) acquired EIG Asset Management, LLC’s interest in the Adviser (the “Adviser Transaction”). As a result of the closing of the Adviser Transaction on October 28, 2025, the Adviser became an indirect wholly-owned subsidiary of FS, and the Adviser changed its name to FS Specialty Lending Advisor, LLC. The Adviser personnel from FS who provided services to the Fund prior to the closing of the Adviser Transaction will continue to provide services to the Fund.
| Item 8.01 | Other Items. |
The information in Item 1.01 of this Current Report on Form 8-K that is responsive to Item 8.01 is incorporated by reference into this Item 8.01.
| Item 9.01 | Exhibits. |
| (d) | Exhibits |
| Exhibit No. | Description |
| 10.1 | Investment Advisory Agreement between the Fund and the Adviser |
| 10.2 | Fee Waiver Agreement between the Fund and the Adviser |
| 10.3 | Administration Agreement between the Fund and the Adviser |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FS SPECIALTY LENDING FUND (formerly, NEW FS SPECIALTY LENDING FUND) as successor by merger to FS SPECIALTY LENDING FUND | ||
| Date: October 28, 2025 | By: | /s/ Stephen S. Sypherd |
| Name: | Stephen S. Sypherd | |
| Title: | General Counsel | |