Fifth Street Asset Management Inc’s (FSAM) Q3 2014 Earnings Call Transcript

Todd G. Owens:

Let me just amplify a little bit on what Glenn just said. In this environment, it’s really hard to anticipate raising equity capital at the BDCs and so what that means is, the growth in those vehicles is really gonna be driven by growing and developing additional JVs. So there will be some asset growth in those off-balance sheet JVs as well as operating those vehicles at an appropriate amount of leverage and when we get to a point of we are able to raise equity capital, then, we will do that if the investment opportunities are there for those vehicles. As we sit here today, we’re seeing lots of investment opportunities for both vehicles. We’re most excited really about the senior secured opportunities which are most appropriate for FSFR but again neither vehicle today is in a position to raise at equity capital.

Question: Got it and I just have one follow-up on Tokyo: Can you layout the potential timeline you have for building out this business? I just wanna see what big events or key events we should be expecting in the next six months or so?  And when shall we actually see meaningful kind of asset growth coming from that business or is that maybe more of a 2016 event?

Todd G. Owens:

It’s Todd again. As Glenn I think mentioned we don’t expect there to be a meaningful contribution to FSAM until 2016 but even to get a contribution in 2016, there are a lot of things that would have to happen this year. Glenn mentioned that we were in Tokyo all of last week. We had 25 or 27 meetings and we came away from that feeling more optimistic that there’s a real opportunity there. I think what you’re gonna see from us by the middle of the year, we hope, is to open up an office in Tokyo, to make some hiring decisions in Tokyo again by midyear, to be in process or perhaps to have achieved some of the licenses we need to operate in Tokyo and we’re hoping that we would be in a position to watch at least one vehicle to raise capital there before the end of the year. But really any material capital raising are likely to be a 2016 event.

Tia:

Thank you for joining us on today’s call. The next question comes from the line of Christopher Nolan with MLV and company. Please proceed.

Christopher Nolan:

Glenn, in your comments you mentioned that you thought that annualyzing the current 30 cents/quarter dividend in 2015 would deliver a pay-out ratio north to 90%, so that sort of indicates defacto EPS guidance in the range of a dollar 20 to a dollar 33, is that a fair way to look at it?

Glenn:

I won’t answer that again (laughs).