Oaktree Capital Group is Taking Over Fifth Street Finance and Fifth Street Floating Rate

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Oaktree Capital Group is taking over Fifth Street Finance (FSC) and Fifth Street Floating Rate (FSFR). It will buy the management contracts from Fifth Street Asset Management for $320 million.

This occurs just weeks after TCG BDC IPO, marking another entry of a highly-respected asset manager into the public BDC industry.

Fifth Street Finance will be renamed to Oaktree Specialty Lending Corp. (OCSL). Fifth Street Floating Rate will become Oaktree Strategic Income Corp. (OCSI).

What’s changing?

  • Fees. FSC and FSFR’s incentive fees will fall to 17.5% from 20%. FSC’s management fee will drop to 1.5% of assets, down from 1.75%.
  • Board of directors. Oaktree is almost completely replacing the boards of both BDCs.
  • Performance? That’s what everyone hopes. Fifth Street’s BDCs have poor historical performance. Oaktree’s funds have been almost universal successes.

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