FS KKR Capital Corp. (FSK): Business Model Canvas [11-2024 Updated]
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FS KKR Capital Corp. (FSK) Bundle
In the competitive landscape of finance, understanding the business model of FS KKR Capital Corp. (FSK) reveals how this investment firm navigates the complexities of capital markets. With a focus on delivering attractive yields to investors through a diversified portfolio, FSK leverages its partnerships, key activities, and resources to capitalize on middle-market investment opportunities. Dive deeper into the intricacies of FSK's business model canvas to discover how it strategically positions itself for success in the world of alternative investments.
FS KKR Capital Corp. (FSK) - Business Model: Key Partnerships
FS/KKR Advisor, LLC for investment management
FS KKR Capital Corp. is externally managed by FS/KKR Advisor, LLC, which provides investment management services. The advisor is entitled to a base management fee of 1.0% on assets financed using leverage over 1.0x debt-to-equity, and an incentive fee based on performance.
Various financial institutions for capital funding
FS KKR Capital Corp. collaborates with several financial institutions to secure capital funding. As of September 30, 2024, total debt (net of deferred financing costs) amounted to $8.06 billion. The company utilizes various borrowing arrangements, including revolving credit facilities and other structured finance products, to enhance capital availability.
Portfolio companies for investment opportunities
FS KKR Capital Corp. maintains a diversified investment portfolio primarily in senior secured loans and equity in various portfolio companies. As of September 30, 2024, the fair value of controlled investments was $3.70 billion, while non-controlled investments held a fair value of $9.41 billion. The company has also actively engaged with portfolio companies for potential growth and exit opportunities.
Regulatory bodies for compliance and governance
As a business development company (BDC), FS KKR Capital Corp. is subject to regulation under the Investment Company Act of 1940. The company adheres to compliance and governance standards set by regulatory bodies, impacting operational and reporting practices. This includes maintaining specific asset coverage ratios and filing regular reports with the SEC to ensure transparency and accountability.
| Partnership Type | Partner | Details |
|---|---|---|
| Investment Management | FS/KKR Advisor, LLC | Base management fee: 1.0% on leveraged assets |
| Capital Funding | Various Financial Institutions | Total debt: $8.06 billion |
| Investment Opportunities | Portfolio Companies | Controlled investments: $3.70 billion; Non-controlled investments: $9.41 billion |
| Compliance and Governance | Regulatory Bodies | Regulated under the Investment Company Act of 1940 |
FS KKR Capital Corp. (FSK) - Business Model: Key Activities
Investing in senior secured and subordinated loans
As of September 30, 2024, FS KKR Capital Corp. reported a total cost of direct originations of $13,985.3 million and a total fair value of $13,479.5 million. The weighted average annual yield on accruing debt investments was 11.9%.
Monitoring and managing investment portfolio
The company had 208 portfolio companies as of September 30, 2024, with only 0.4% of investments on non-accrual status based on fair value. The total net assets at the end of the period were $6,671 million, showing a decrease from $6,849 million at the beginning of the period.
Conducting due diligence on potential investments
For the nine months ending September 30, 2024, FS KKR Capital Corp. reported a net investment income of $642 million and a net realized loss on investments of ($335 million). The net increase in net assets resulting from operations was $438 million.
Reporting financial performance to stakeholders
The total return based on net asset value for the nine months ended September 30, 2024, was 6.38%, while the total return based on market value was 10.19%. The ratio of net investment income to average net assets was 12.48%.
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Cost of Direct Originations | $13,985.3 million | $14,797.5 million |
| Total Fair Value of Direct Originations | $13,479.5 million | $14,176.1 million |
| Number of Portfolio Companies | 208 | 196 |
| % of Investments on Non-Accrual (based on fair value) | 0.4% | 4.5% |
| Weighted Average Annual Yield on Accruing Debt Investments | 11.9% | 12.7% |
| Net Investment Income | $642 million | $692 million |
| Net Realized Gain (Loss) on Investments | ($335 million) | ($327 million) |
| Total Return (Net Asset Value) | 6.38% | 10.12% |
| Total Return (Market Value) | 10.19% | 32.45% |
FS KKR Capital Corp. (FSK) - Business Model: Key Resources
Capital from equity and debt financing
As of September 30, 2024, FS KKR Capital Corp. had total liabilities of $8,478 million and total stockholders’ equity of $6,671 million, resulting in total assets of $15,149 million. The company’s debt commitments comprised $722.2 million in revolving credit facilities and $878.3 million in delayed draw term loans. The weighted average interest rate on borrowings was 5.49% as of September 30, 2024.
Expertise from investment management team
FS KKR Capital Corp. operates with an experienced investment management team, which is crucial for identifying and managing its diverse investment portfolio. The team focuses on generating current income and long-term capital appreciation through investments primarily in senior secured loans and second lien secured loans of private middle-market U.S. companies.
Diverse portfolio of investments across industries
As of September 30, 2024, FS KKR Capital Corp. reported total investments at fair value of $13,943 million. The investment composition included:
| Type of Investment | Amortized Cost (in millions) | Fair Value (in millions) | Percentage of Portfolio |
|---|---|---|---|
| Senior Secured Loans—First Lien | $8,626 | $8,355 | 59.9% |
| Senior Secured Loans—Second Lien | $842 | $866 | 6.2% |
| Subordinated Debt | $215 | $221 | 1.6% |
| Asset Based Finance | $1,232 | $1,232 | 8.8% |
| Equity/Other | $603 | $603 | 4.3% |
| Cash and Cash Equivalents | $366 | $366 | 2.6% |
Technology for investment analysis and reporting
FS KKR Capital Corp. employs advanced technology solutions for investment analysis and reporting, enhancing decision-making capabilities. The company utilizes market quotes valuation techniques for its investments, ensuring accurate pricing and performance tracking. Additionally, the organization has integrated various software tools for managing its operations, resulting in improved efficiency and transparency in its reporting processes.
FS KKR Capital Corp. (FSK) - Business Model: Value Propositions
Attractive yields for investors through diversified portfolio
FS KKR Capital Corp. aims to provide attractive yields to its investors, primarily through a diversified portfolio consisting of various asset classes. As of September 30, 2024, the total investments at fair value amounted to $13.943 billion, with an amortized cost of $14.554 billion. The company reported net investment income of $642 million for the nine months ended September 30, 2024, reflecting its commitment to generating returns for shareholders.
Access to middle-market investment opportunities
The company specializes in middle-market investments, focusing on senior secured loans and second lien secured loans of private U.S. companies. Its portfolio is comprised primarily of investments in these areas, which as of September 30, 2024, included $9.697 billion in senior secured loans. This segment allows investors to tap into growth opportunities in less accessible markets, thereby enhancing potential returns.
Expertise in credit markets and asset-based financing
FS KKR Capital Corp. leverages its extensive expertise in credit markets and asset-based financing. As of September 30, 2024, the company reported a net asset-based finance value of $2.081 billion. This expertise enables the company to navigate complex financial landscapes effectively, allowing it to identify and capitalize on lucrative investment opportunities while managing associated risks.
Commitment to regulatory compliance and risk management
The company maintains a strong commitment to regulatory compliance and risk management, ensuring that its operations align with industry standards. This is evident in its structure as a business development company (BDC) regulated under the Investment Company Act of 1940. The company reported total liabilities of $8.478 billion as of September 30, 2024, which reflects its prudent approach to leveraging and managing financial risks.
| Metric | Value (as of Sept 30, 2024) |
|---|---|
| Total Investments at Fair Value | $13.943 billion |
| Amortized Cost of Investments | $14.554 billion |
| Net Investment Income (9 months) | $642 million |
| Net Asset-Based Finance Value | $2.081 billion |
| Total Liabilities | $8.478 billion |
FS KKR Capital Corp. (FSK) - Business Model: Customer Relationships
Strong communication with investors through regular updates
FS KKR Capital Corp. (FSK) maintains a robust communication strategy with its investors. The company provides regular updates through quarterly earnings calls, investor presentations, and annual reports. For the nine months ended September 30, 2024, FSK reported a net increase in net assets resulting from operations of $438 million, or $1.56 per share. This level of transparency helps investors stay informed about the company's performance and strategic direction.
Personalized service for institutional investors
FSK emphasizes personalized service for its institutional investors, which include pension funds, endowments, and family offices. This tailored approach is evident in their dedicated investor relations team that addresses specific queries and investment needs. As of September 30, 2024, FSK's total liabilities stood at $8.478 billion, indicating the scale and complexity of the investment products offered to institutional clients.
Investor education on market trends and performance
FSK invests heavily in educating its investors about market trends and performance metrics. The company regularly publishes insights on macroeconomic factors influencing its investment strategies. For instance, the weighted average annual yield on accruing debt investments was reported at 11.9% for the third quarter of 2024. This educational initiative not only enhances investor understanding but also fosters long-term relationships.
Building trust through transparency and accountability
FSK builds trust with its investors through a commitment to transparency and accountability. The company regularly discloses its financial results, including a net asset value per share of $23.82 as of September 30, 2024. Furthermore, the total return based on net asset value was 6.38% for the nine months ended September 30, 2024, reflecting the company's dedication to delivering value to its shareholders.
| Metric | Value |
|---|---|
| Net increase in net assets (Q3 2024) | $438 million |
| Earnings per share (Q3 2024) | $1.56 |
| Total liabilities (as of Sept 30, 2024) | $8.478 billion |
| Weighted average annual yield on accruing debt investments (Q3 2024) | 11.9% |
| Net asset value per share (as of Sept 30, 2024) | $23.82 |
| Total return based on net asset value (Q3 2024) | 6.38% |
FS KKR Capital Corp. (FSK) - Business Model: Channels
Direct sales to institutional investors
FS KKR Capital Corp. primarily engages in direct sales to institutional investors, which constitute a significant portion of its investor base. As of September 30, 2024, the company reported net assets of $6.671 billion, with total investments at fair value of $13.943 billion. The company focuses on providing tailored investment solutions to institutional clients, including pension funds, insurance companies, and family offices.
Investor presentations and conferences
FS KKR Capital Corp. actively participates in investor presentations and conferences throughout the year. In 2024, the company has scheduled several key presentations at prominent investment conferences, which enhance its visibility among potential investors. These events are critical for communicating the company's investment strategies and performance metrics. For instance, during the nine months ended September 30, 2024, the company generated net investment income of $642 million.
Digital platforms for investor relations
FS KKR utilizes digital platforms to enhance its investor relations efforts. The company's website provides comprehensive information regarding its investment strategy, performance reports, and regulatory filings. As of September 30, 2024, the company had 280,066,433 shares outstanding. Furthermore, FS KKR leverages social media and online investor webinars to engage with its audience effectively, promoting transparency and accessibility to its financial data.
Regulatory filings and reports
Compliance with regulatory requirements is a cornerstone of FS KKR's communication strategy. The company regularly files reports with the Securities and Exchange Commission (SEC), including quarterly and annual reports. As of September 30, 2024, FS KKR reported a total liabilities amounting to $8.478 billion, which includes debt net of deferred financing costs of $8.060 billion. These filings provide critical financial data that investors use to assess the company's performance and financial health.
| Channel | Description | Key Metrics |
|---|---|---|
| Direct Sales | Engagement with institutional investors for tailored investment solutions. | Net Assets: $6.671 billion |
| Investor Presentations | Participation in conferences to communicate strategies and performance. | Net Investment Income: $642 million |
| Digital Platforms | Use of website and social media for investor engagement. | Shares Outstanding: 280,066,433 |
| Regulatory Filings | Compliance with SEC regulations for transparency. | Total Liabilities: $8.478 billion |
FS KKR Capital Corp. (FSK) - Business Model: Customer Segments
Institutional investors seeking yield on investments
FS KKR Capital Corp. primarily targets institutional investors who are looking for yield on their investments. As of September 30, 2024, the company's net assets totaled $6.671 billion, reflecting a decrease from $6.849 billion as of the same date in 2023. The company has a diverse investment portfolio, with a significant portion consisting of senior secured loans and debt securities, which typically offer higher yields compared to traditional fixed-income investments.
High net-worth individuals looking for alternative investments
High net-worth individuals represent another critical customer segment for FS KKR. The firm offers alternative investment opportunities that appeal to this demographic, particularly those interested in private credit and equity. For the nine months ended September 30, 2024, FS KKR reported net investment income of $642 million, which reflects its ability to generate attractive returns for high net-worth clients.
Private equity firms and financial institutions
FS KKR also serves private equity firms and other financial institutions. These entities often seek to leverage FS KKR's expertise in managing complex financial instruments and accessing unique investment opportunities. The company’s total investments at fair value stood at approximately $13.943 billion as of September 30, 2024. This significant asset base allows FS KKR to engage in substantial transactions, making it an attractive partner for private equity firms.
Retail investors through fund offerings
Additionally, FS KKR offers investment products aimed at retail investors, allowing them to participate in the alternative investment space. The company’s market value per share was reported at $19.73 as of September 30, 2024. By providing accessible fund offerings, FS KKR caters to a broader audience, enabling retail investors to benefit from the company's investment strategies.
| Customer Segment | Target Characteristics | Financial Data | Investment Offerings |
|---|---|---|---|
| Institutional Investors | Seeking yield on large investments | Net assets: $6.671 billion (Sept 30, 2024) | Senior secured loans, debt securities |
| High Net-Worth Individuals | Looking for alternative investments | Net investment income: $642 million (9M 2024) | Private credit, equity investments |
| Private Equity Firms | Engaging in complex transactions | Total investments: $13.943 billion (Sept 30, 2024) | Managed financial instruments |
| Retail Investors | Interested in accessible fund offerings | Market value per share: $19.73 (Sept 30, 2024) | Investment funds |
FS KKR Capital Corp. (FSK) - Business Model: Cost Structure
Management fees paid to FS/KKR Advisor
Management fees for the nine months ended September 30, 2024, amounted to $163 million, compared to $170 million for the same period in 2023. For the third quarter of 2024, the management fee was $54 million, slightly down from $56 million in the same quarter of 2023.
Operating expenses for portfolio management
Total operating expenses for the nine months ended September 30, 2024, were $672 million, a decrease from $691 million in 2023. This includes:
- Subordinated income incentive fees: $132 million in 2024, down from $140 million in 2023.
- Administrative services expenses: $7 million in 2024, compared to $10 million in 2023.
- Interest expense: $349 million for both years, reflecting stable financing costs.
| Expense Type | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Management Fees | $163 million | $170 million |
| Subordinated Income Incentive Fees | $132 million | $140 million |
| Administrative Services Expenses | $7 million | $10 million |
| Interest Expense | $349 million | $349 million |
| Total Operating Expenses | $672 million | $691 million |
Costs related to regulatory compliance
Regulatory compliance costs are embedded within the broader administrative services expenses, which totaled $7 million for the nine months ended September 30, 2024. This reflects a focus on maintaining compliance with the Investment Company Act of 1940 and other regulatory frameworks, which are critical for the operational legitimacy of FS KKR Capital Corp.
Interest expenses on debt financing
Interest expenses on debt financing stood at $349 million for the nine months ending September 30, 2024, consistent with the previous year's figures. The average borrowings during this period were reported at $8.149 billion, with a weighted average interest rate of 5.48%.
| Debt Financing Metrics | 2024 | 2023 |
|---|---|---|
| Interest Expense | $349 million | $349 million |
| Average Borrowings | $8.149 billion | $8.609 billion |
| Weighted Average Interest Rate | 5.48% | 5.22% |
FS KKR Capital Corp. (FSK) - Business Model: Revenue Streams
Interest income from loans and investments
For the nine months ended September 30, 2024, FS KKR Capital Corp. reported interest income from non-controlled/unaffiliated investments totaling $838 million, compared to $886 million for the same period in 2023. The breakdown of this income includes:
- Interest income: $274 million (2024) vs. $290 million (2023)
- Paid-in-kind interest income: $53 million (2024) vs. $94 million (2023)
- Fee income: $46 million (2024) vs. $17 million (2023)
Fees from portfolio management and advisory services
In addition to interest income, FS KKR Capital Corp. generates revenue through fees from portfolio management. For the nine months ended September 30, 2024, total management fees amounted to $163 million, a slight decrease from $170 million in the same period of the previous year. Additionally, subordinated income incentive fees were reported at $132 million, down from $140 million for the same period in 2023.
Dividends from equity investments
FS KKR Capital Corp. also earns dividends from its equity investments. For the nine months ended September 30, 2024, the total dividend and other income from non-controlled/unaffiliated investments was $20 million, compared to $52 million in the same period of 2023. The revenues from controlled/affiliated investments included:
- Dividend and other income: $167 million (2024) vs. $189 million (2023)
Realized gains from asset sales and repayments
Realized gains from asset sales and repayments contribute significantly to FSK's revenue streams. For the nine months ended September 30, 2024, the company recognized a net realized gain of $350 million from investments, which was a slight increase from $338 million in the same period in 2023. The proceeds from sales and repayments of investments totaled $4.512 billion in 2024, compared to $1.906 billion in 2023.
| Revenue Stream | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Interest income from loans | $838 | $886 |
| Management fees | $163 | $170 |
| Subordinated income incentive fees | $132 | $140 |
| Dividends from equity investments | $20 | $52 |
| Realized gains from asset sales | $350 | $338 |
| Proceeds from sales and repayments | $4,512 | $1,906 |
Updated on 16 Nov 2024
Resources:
- FS KKR Capital Corp. (FSK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of FS KKR Capital Corp. (FSK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View FS KKR Capital Corp. (FSK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.