FS Energy and Power Fund Suspends Share Repurchase Program
March 24, 2020 | Luke Schmidt | Blue Vault
On March 23, 2020, FS Energy and Power Fund (“FSEP”) announced the indefinite suspension of its share repurchase program. This decision comes as a result of the recent market events including the global outbreak of COVID-19 and the ongoing failure of Saudi Arabia, Russia and other oil producing countries to reach an agreement around crude oil production. These events have greatly impacted the financial markets and significantly disrupted U.S. and global economies, including energy markets, as the price of oil has been severely impacted.
As of September 30, 2019, approximately 30.6% of FSEP’s investments were included in the midstream sector of the energy markets. This represents an increase from 22.3% as of December 31, 2018. The only other sector with a larger percentage of the Company’s investment portfolio is the upstream sector, which represented 49.4% of the portfolio as of September 30, 2019, down from 58.9% as of December 31, 2018.
FSEP made the decision to suspend the share repurchase program in an effort to preserve liquidity. Additionally, the Company has not declared regular cash distributions for any period after March 31, 2020, with the expectation that future cash distributions to shareholders will be suspended until a time when FSEP believes the market conditions and financial operations of the Company support the resumption of such distributions.
FSEP, a nontraded business development company, became effective in May of 2011. Since inception and through the closing of its public offering in November of 2016, the Company raised cumulative capital of approximately $4.36 billion. FSEP reported total assets of approximately $3.94 billion and total investments of $3.82 billion as of September 30, 2019. The Company reported a total return through the first nine months of 2019 of 2.00%.
Source: SEC, Blue Vault
