Shareholders of Business Development Corporation of America, a non-traded business development company, have approved a new investment advisory agreement in connection with last year’s announcement that Franklin Templeton Investments plans to purchase Benefit Street Partners, an affiliate of the company’s advisor.
The new agreement will take effect once the transaction with Franklin Templeton is completed, and the terms will remain unchanged from the current one.
Late last year, Franklin Resources Inc. [NYSE: BEN], a global investment management organization operating as Franklin Templeton Investments, agreed to purchase Benefit Street, an alternative credit manager with approximately $26 billion in assets under management. The transaction is expected to close in the first quarter of 2019.
In connection with the transaction, Franklin Templeton plans to acquire Benefit Street’s 100 percent ownership interest in BDCA Adviser LLC. Franklin Templeton and Benefit Street plan to purchase $90 million of newly issued common stock in BDCA at the net asset value per share.
Shareholders voted on the new agreement at the special meeting held on January 11, 2019, where nearly 108 million shares, or approximately 56.8 percent, were present. Approximately 99.6 million voted in favor of the new investment advisory agreement, 2.3 million voted against, and nearly 6.1 million abstained.
Benefit Street affiliates serve as the adviser to Business Development Corporation of America, as well as to non-traded real estate investment trust, Benefit Street Partners Realty Trust (formerly Realty Finance Trust), both formerly managed by AR Global.
All investment professionals currently managing BDCA and its investments, and all members of the Benefit Street investment committee, are expected to maintain their current responsibilities. Benefit Street acquired all of the outstanding interests of BDCA’s adviser in November 2016 by purchasing $10 million of company common stock.
BDCA primarily invests in senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of private middle-market companies. The company commenced its initial public offering in January 2011 and raised $1.9 billion before closing the offering in April 2015. As of the third quarter of 2018, BDCA held investments in loans it made to investee companies with total principal amounts of $2.3 billion. The company’s advisor is an affiliate of Benefit Street Partners, the credit investment arm of Providence Equity Partners.