FS Specialty Lending fund prepares for listing
summary
On April 22, 2025, the Board of Trustees of FS Specialty Lending Fund (the Fund) approved a plan to prepare for the listing of its common shares on the New York Stock Exchange (NYSE). In advance of the listing, FSSL will be converted from a business development company (BDC) to a closed-end fund registered under the Investment Company Act of 1940 through a reorganization into a newly formed closed-end fund. The closed-end fund (FSSL) will be named “FS Specialty Lending Fund”, and we currently expect its common shares to begin trading on the NYSE under the ticker “FSSL” in mid-November.
The investment management team and board will remain the same and there will be no change in the Fund’s investment objectives or strategy as a result of the conversion or listing.*
Although we are working toward a listing within the targeted time frame, the timing may be subject to change based on a variety of factors.
Note: Subject to market conditions.
*The investment strategy will remain the same except for certain requirements specific to BDCs under the 1940 Act, which won’t apply once the Fund is converted to a closed-end fund. As part of the conversion to a closed-end fund, Future Standard will acquire EIG Asset Management’s interest in the Adviser, make the Adviser an indirect, wholly-owned subsidiary of Future Standard.
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Liquidity plan overview
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FSSL
Conversion to a registered closed-end fund
- The Fund will be converted from a business development company into a closed-end fund registered under the 1940 Act through a reorganization into a newly formed closed-end fund on October 28, 2025.
- FSSL, the closed-end fund, will maintain the same board, investment objectives and strategy as the Fund.*
- The closed-end fund will be renamed "FS Specialty Lending Fund" and it intends to pursue a listing of its shares on the NYSE in mid-November.
*The investment strategy will remain the same except for certain requirements specific to BDCs under the 1940 Act, which won’t apply once the Fund is converted to a closed-end fund. As part of the conversion to a closed-end fund, Future Standard will acquire EIG Asset Management’s interest in the Adviser, making the Adviser an indirect, wholly-owned subsidiary of Future Standard.
Reverse share split
The reverse share split was designed to comply with NYSE listing requirements which mandate a minimum stock price of $4.00 per share at the time of listing.1
- As of March 31, 2025, FSSL’s net asset value (NAV) was $3.37 per share.
- Following the reverse share split on May 15, 2025, FSSL’s NAV was $20.22 per share. As of June 30, 2025, the Fund’s NAV was $19.82 per share.
Quarterly repurchase offer
We expect the quarterly tender offer to remain suspended until the listing, at which point all shares will become freely tradable on the NYSE.
Fee changes
Upon a listing, the base management fee will be reduced from 1.75% to 1.50% of gross assets. The Adviser has agreed to waive 0.15% of the fee, resulting in an effective base management fee of 1.35% on gross assets for as long as FSSL remains a registered closed-end fund.2 The advisor currently may earn incentive fees consisting of two components: (i) a capital gains incentive fee and (ii) a subordinated income incentive fee.
- Following the conversion and reorganization into a closed-end fund, the Adviser will no longer be entitled to a capital gains incentive fee.
- Upon listing and continuing for as long as FSSL remains a registered closed-end fund, the Adviser has agreed to waive a portion of the income incentive fee, reducing it from 20% to 10% subject to an annualized hurdle rate of 6.0%.3
Distributions
- October 20: Q3 2025 quarterly enhanced distribution was paid.
- The Fund’s quarterly enhanced distributions were designed to offer attractive returns to shareholders during the transition period to a diversified credit strategy, with the understanding that they were intended to conclude once the Fund achieves a long-term liquidity event, and a portion of the distributions may represent a return of capital.
- December: We expect to pay a quarterly distribution for Q4 2025 and we are targeting an annualized distribution rate of 9.0%-9.5% of FSSL’s NAV.4
- January 2026: We expect the Fund to begin paying monthly distributions.
- The distribution reinvestment plan (DRP) will be structured as an opt-out program.
- If a registered shareholder prefers to receive distributions in cash, a completed account maintenance form is required.
- Contact 877-628-8575 (General Inquiries) for additional information about the DRP.
The payment of any type of future distributions on FSSL’s common shares is subject to the discretion of FSSL’s board of trustees and applicable legal restrictions and, therefore, there can be no assurance as to the amount or timing of any such future distribution.
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