Benefit Street Partners LLC and its parent company, Franklin Templeton, announced the launch of Franklin BSP Private Credit Fund (FBSPX), a new interval fund that will invest in private credit investments in middle market companies in the United States.
Class A and Advisor Class shares are each priced at $10 per share, with a minimum investment of $2,500 per Class A share and $1 million for the Advisor Class shares. Class A shares include a sales load of 2.0 percent. Class A shares may be charged an annual distribution and shareholder servicing fee of up to 0.5 percent per year, payable quarterly of the average daily net assets attributable to those shares.
BSP, the fund’s advisor, is entitled to a fee that consists of two components – a base management fee and an incentive fee. The management fee is calculated and payable quarterly in arrears at an annual rate of 1.25 percent of the average daily value of the fund’s net assets. The incentive fee is calculated and payable quarterly in arrears based upon the fund’s “pre-incentive fee net investment income” for the immediately preceding quarter, and is subject to a hurdle rate, expressed as a rate of return of the fund’s net assets, equal to 1.5 percent per quarter (or an annualized rate of 6.0 percent), subject to a “catch-up feature,” which is intended to provide BSP with an incentive fee of 12.5 percent on all of the fund’s pre-incentive fee net investment income when the fund’s pre-incentive fee net investment income reaches 1.71425 percent of net assets in any calendar quarter.
“With inflation and interest rates on the rise, diversifying with private credit can reduce portfolio volatility while providing consistently high risk-adjusted returns. Combining BSP’s diverse credit strategies, this fund offers investors the ability to invest in high conviction ideas across the credit spectrum and the capital structure,” said Richard Byrne, president of BSP. “We take a flexible but disciplined approach to investing and seek to capitalize on attractive risk-adjusted returns throughout the credit cycle with a focus on proprietary deals.”
Led by BSP managing directors Anant Kumar and Saahil Mahajan, the fund will invest primarily in US private debt, including a combination of traditional direct lending, opportunistic or rescue lending, high-yield, liquid loans and real estate debt. The portfolio managers intend to adjust allocations dynamically to reflect changes in relative value across the credit spectrum.
BSP is part of the Alternatives by Franklin Templeton platform.
“With this new platform, we’re making our proven institutional managers including BSP, Clarion, Lexington Partners and K2 accessible to wealth managers across the country, enabling more investors to benefit from the diversification of private markets and alternative strategies,” said Jeff Masom, Franklin Templeton’s head of US Distribution. “Franklin BSP Private Credit Fund presents an exciting opportunity to bring BSP’s experience and capabilities in private lending to a broader range of investors through the interval fund structure.”
The Alternatives by Franklin Templeton platform comprises more than $260 billion in assets under management as of June 30, 2022, on a pro forma basis, after giving effect to Franklin Templeton’s pending acquisition of BNY Alcentra Group Holdings, Inc. (together with its subsidiaries, “Alcentra”), a leading European alternative credit manager.
Benefit Street Partners L.L.C. is a credit-focused alternative asset management firm with approximately $41 billion in assets under management as of July 31, 2022. BSP is a wholly owned subsidiary of Franklin Resources, Inc. Franklin Resources, Inc. [NYSE:BEN] is an international global investment management organization with subsidiaries operating as Franklin Templeton. The company has approximately $1.4 trillion in assets under management as of August 31, 2022.