Nontraded BDC to pursue listing on national exchange

If successful, Corporate Capital Trust would be the second nontraded BDC to have a liquidity event and list on an exchange

Apr 6, 2017 @ 2:22 pm

By Bruce Kelly

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woman's hand with pen signing document, close up

Corporate Capital Trust Inc., a $4.4 billion nontraded business development company sponsored by CNL Financial Group, said Wednesday in a filing with the Securities and Exchange Commission that it would pursue a potential listing on a national securities exchange.

The move could take place in the next 12 months, according to the company.

If successful, Corporate Capital Trust would be the second nontraded BDC to have a liquidity event and list on an exchange. The first was FS Investment Corp., which was launched in 2009 as a nontraded company and then listed on the NYSE in 2014.

Corporate Capital Trust was launched in 2011 and was sold at $10 per share. The net asset value at the end of last year was $8.93 per share. Investors who bought the BDC when it launched in June 2011 have seen an annualized return of 8.3%, according to the company's annual report.

The company's board approved a number of steps to take in connection with exploring the potential listing. The board also approved and will recommend to its Corporate Capital Trust shareholders changes to its charter to conform to publicly listed BDCs as well as a new investment advisory agreement with its sub-advisor, KKR Credit Advisors.

Among those changes in the advisory agreement are a reduction in the management fee to 1.5% of the company average gross assets as opposed to the current fee of 2% of assets, according to a preliminary proxy statement filed Thursday morning. Also, if a listing occurs, Thomas Sittema, CEO of CNL Financial Group and chairman of the board and director of Corporate Capital Trust, will resign from the BDC's board, according to the proxy statement.

"We are reviewing this option primarily because we think it is in the best interests of our shareholders," said Neil Menard, president of CNL Securities. "It's been a very positive experience for us and advisers who invested in the fund."

CNL is the sponsor of a second nontraded BDC, Corporate Capital Trust II.

BDCs are typically closed-end investment companies that invest primarily in debt and equity of private companies. Yields can be attractive due to the BDC's exposure to high credit risks amplified by leverage.

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