Oaktree Specialty Lending Corporation · NASDAQ:OCSL
Oaktree Specialty Lending — Fifth Street Finance — Investor Presentation (October 2008)
20 slides from Oaktree Specialty Lending's investor presentation, Oct 14, 2008
Slide 1: Fifth Street Finance Corp. October 2008
Fifth Street Finance Corp. October 2008
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements. These statements include, without limitation, information with respect to future events or our future financial performance, results of operations, and on our financial condition. These forward looking statements are n
Slide 3: Fifth Street Overview
Fifth Street Overview Specialty finance company providing financing for small and mid-sized companies $141 million IPO in June 2008 led by Goldman Sachs, UBS and Wachovia; listed on the NYSE as ticker "FSC" Invest in conjunction with private equity sponsors Shareholders include Genworth Financial an
Slide 4: Key Investment Highlights
Key Investment Highlights Why Fifth Street Today Superior Portfolio - Business model allows us to capture Alpha Inefficient Market - Opportunity to invest at premium rates Built-in Earnings - High yielding existing portfolio, 100% originated in house How Fifth Street will continue to Deliver Team -
Slide 5: Strong Value Proposition: Stock Trading Below NAV, Growing Dividends
Conservative Portfolio Accounting Strong Value Proposition Stock Trading Below NAV Growing Dividends Value Net unrealized depreciation of $12.4 million since inception on total investment portfolio of $282.8 million1 Primarily due to general economic conditions 100% performing loans Stock trading at
Slide 6: Investment Highlights
Investment Highlights High-quality debt investments with substantial cash yields1 Weighted average debt yield of 16.5%; cash yield of 13.5%2 100% 1st and 2nd lien debt securities 100% performing loans 83% of this portfolio originated after July 1, 20073 92% fixed rate debt securities; 100% of floati
Slide 7: High-Quality Investments with Substantial Cash Yields
PennantPark Gladstone Capital ACAS MCG Capital BlackRock Kelso Ares Capital Apollo Investment Patriot Capital Allied Capital Triangle Capital Fifth Street East 0.095 0.101 0.108 0.109 0.113 0.113 0.12 0.123 0.127 0.14 0.135 0.03 High-Quality Investments with Substantial Cash Yields Higher Weighted A
Slide 8: Predominantly Secured Portfolio with Low Leverage
High-Quality Investments with Substantial Cash Yields Predominantly Secured Portfolio with Low Leverage Predominantly Secured Portfolio1 Total Debt to EBITDA2 Investment Portfolio: $217.7 Million1 1 At June 30, 2008. 2 At loan inception for Middle Market LBO Leveraged Loans. Total debt to EBITDA of
Slide 9: Strong Relationships
Strong Relationships "Lender of choice" for sponsors that invest in small and mid-sized companies Significant benefits of strategic partnerships including: Incremental due diligence Additional layer of monitoring Additional source of operating expertise Significant opportunity to increase market pen
Slide 10: Growing Target Market
'00 LTM 6/30/08 Goldman Sachs 98 305.627 '02 LTM 6/30/08 Goldman Sachs 259.1 465.854 Company A 30.6 38.6 Company B 45.9 46.9 Growing Target Market Large pool of private equity capital focused on investments in small and mid-sized companies These private equity firms have less access to capital Small
Slide 11: Executive Team
Executive Title Title Relevant Experience Prior Experience Leonard M. Tannenbaum Managing Partner of Investment Adviser Leonard M. Tannenbaum Managing Partner of Investment Adviser President and CEO 12+ Led the investment of over $450 million since 1998 Served on the board of 5 public companies Form
Slide 12: Executive Team (continued)
Executive Title Title Relevant Experience Prior Experience Juan E. Alva Partner of Investment Adviser Juan E. Alva Partner of Investment Adviser Head of Origination 14+ Formerly a senior investment banker at Trinity Capital Previously an investment banker at Goldman Sachs Jonathan S. Miller Jonathan
Slide 13: Direct Origination Platform
Direct Origination Platform Direct origination of portfolio loans Focus on private equity sponsor relationships Recurring investment opportunities from add-on sponsor investments Divide the country geographically We are currently seeing more attractive investment opportunities and less competition t
Slide 14: Intense Focus on Managing Credit Risk
Intense Focus on Managing Credit Risk Conservative Underwriting Criteria Structuring Methodology Target Transaction Characteristics Substantial excess enterprise value Significant investment by private equity sponsor Predictable positive operating cash flow On-going and available liquidity First or
Slide 15: Comprehensive Investment Process
Intense Focus on Managing Credit Risk Comprehensive Investment Process Origination Underwriting Portfolio Management Partners originate investments Written investment summary Scoring using proprietary model Preliminary due diligence On-going Investment Committee ("IC") review Draft term sheet Term s
Slide 16: Diversified Portfolio
Diversified Portfolio As of June 30, 2008 $ in millions 1 At fair value as of June 30, 2008 plus interim draws. 2 At cost. Portfolio Fair Value at 6/30/08 $217.7 Originations (4Q 2008) 65.12
Slide 17: Asset Quality
Asset Quality1 No loan delinquencies Portfolio is performing well 91.7% of portfolio valued by an outside valuation firm Portfolio loans are assessed and rated quarterly on a scale from 1 to 5 based on underlying credit and performance statistics Loan Ratings as of June 30, 2008 Investment Rating De
Slide 18: Summary Financials
Summary Financials $ in thousands 1 As of June 30, 2008.
Slide 19: Corporate Governance
Corporate Governance Independent (5) Byron J. Haney, CPA (Chair of the Audit Committee) - 20+ years of business experience, including serving as chief financial officer of a private retail store chain. Currently serves on the Board of Directors of Sterling Chemicals, Inc. (public company) Frank C. M
Slide 20: Summary Investment Highlights
Summary Investment Highlights Yield High-quality investments with substantial cash yields Safety Intense focus on managing credit risk Relationships Strong relationships with private equity sponsors focused on small and mid-sized companies Experienced management team that is aligned with investors R
Fifth Street Finance — Investor Presentation (October 2008) on 6ix