Shareholders of Prospect Flexible Income Fund Inc., a non-traded business development company formerly known as TP Flexible Income Fund Inc., have approved a new investment advisory agreement between the fund and Prospect Capital Management L.P., replacing the previous agreement with Prospect Flexible Income Management LLC, an affiliate of Triton Pacific.
The investment adviser is responsible for the fund’s overall investment strategy and its implementation, under board supervision. Prospect Flexible Income Fund indicated that the new advisory agreement is identical to the previous one in all material respects except for the date of effectiveness, the term, and Prospect Capital Management serving as the investment adviser.
At a special meeting of shareholders held on March 31st, approximately 1.2 million shares voted in favor of the proposal, 26,600 shares voted against it, and 45,500 shares abstained.
According to the March 2020 proxy statement, during the fund’s fiscal year ended June 30, 2020, Prospect Flexible Income Management earned base management fees totaling $708,464 and no incentive fees. The base management fees were waived, in accordance with the former expense limitation agreement, dated March 31, 2019
During the quarter ended December 31, 2020, Prospect Flexible Income Management earned base management fees totaling $184,345 and no incentive fees. According to the company, the base management fees were not waived in accordance with the former expense limitation agreement due to a non-waiver election made by Triton Pacific Adviser LLC.
In February 2021, as a result of the non-waiver election, the board terminated the former expense limitation agreement.
“The fund did not pay any fees and has no obligation to pay any fees to [Prospect Flexible Income Management] in connection with the termination of the former [expense limitation agreement],” the proxy states. “Because fee waivers were voluntary under the former expense limitation agreement, and because the board believes that Triton Pacific Adviser, LLC would continue to make a non-waiver election, the board does not believe that the termination of the former [expense limitation agreement] will have any impact on the fund’s expenses.
Prospect Flexible Income Fund invests primarily in senior and secured credit of privately-owned U.S. middle market companies. As of December 31, 2020, the fair value of the fund’s investments totaled $38.8 million, and the fund had raised $23.8 million. The BDC was created by the merger of Pathway Capital Opportunity Fund and Triton Pacific Investment Corporation and changed its name from TP Flexible Income Fund in August 2020.