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Here are 1-2 brief analogies for FS KKR Capital (FSK):

• It's like a REIT for private businesses, but instead of owning properties, it primarily lends money to mid-sized private companies.
• Think of it as a publicly traded private equity firm that focuses on providing debt financing to established, growing private companies.

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• Senior Secured Loans: Providing first and lien debt financing to middle-market companies, prioritized for repayment.
• Junior (Subordinated) Debt: Offering loans that rank below senior debt in repayment priority, typically with higher interest rates.
• Equity Investments: Investing in common or preferred stock, often alongside debt, to gain an ownership stake in target companies.

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FS KKR Capital (FSK) is a Business Development Company (BDC). BDCs primarily provide debt financing (such as senior secured loans, unitranche loans, and subordinated debt) and, to a lesser extent, equity investments to private middle-market companies. Therefore, FSK's "major customers" are the portfolio companies it lends to or invests in.

BDCs typically maintain a diversified portfolio of investments across various industries and companies. As such, there isn't a concentrated list of "major customers" in the traditional sense where a few companies account for a significant portion of product or service sales. Instead, FSK's business involves deploying capital to many different private companies.

The company sells primarily to other companies (its portfolio companies). Most of these are private entities and do not have public stock symbols. Based on recent financial reports (e.g., Q1 2024), some of FSK's largest portfolio investments (representing its "customers" in terms of capital deployed) include:

• Focus Financial Partners (a leading partnership of independent wealth management firms)
• Cisive (a global provider of HR and background screening services)
• Axiom Group (a global legal services provider)
• Acrisure (a global insurance brokerage firm)
• Apex Group (a global financial services provider)
• Mitel Networks (a global provider of business communications and collaboration software)
• Envision Healthcare (a national medical group and healthcare services provider)

These portfolio companies are predominantly private entities, hence no public stock symbols are applicable.

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• Investment Management and Administration:
  • KKR & Co. Inc. (Symbol: KKR)
• Custodial Services:
  • State Street Corporation (Symbol: STT)
• Auditing Services:
  • PricewaterhouseCoopers LLP (Symbol: null)
• Transfer Agent Services:
  • Computershare Limited (Symbol: CPU.AX)

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Michael Forman, Chief Executive Officer

Michael Forman co-founded FS Investments (now Future Standard) in 2007. Prior to this, he had a successful career as a corporate and securities lawyer and serial entrepreneur, beginning in corporate securities law where he focused on mergers and acquisitions.

Daniel Pietrzak, President and Chief Investment Officer

Daniel Pietrzak joined KKR in 2016 and is a Partner, serving as Global Head of Private Credit and a portfolio manager for KKR's private credit funds and portfolios. Before joining KKR, he was a Managing Director and co-head of Deutsche Bank's structured finance business across the Americas and Europe. He also held various roles in the credit businesses of Societe Generale and CIBC World Markets, and began his career at Price Waterhouse in New York as a CPA.

Steven Lilly, Chief Financial Officer

Steven Lilly served for 13 years as Chief Financial Officer of Triangle Capital Corporation, a publicly traded business development company (BDC), which was sold to Benefit Street Partners and Barings, LLC in 2018. During his tenure at Triangle, he was responsible for all corporate mergers and acquisitions and strategic processes. Previously, Mr. Lilly spent seven years as Senior Vice President of Finance & Treasurer at SpectraSite Communications, a publicly traded wireless tower company that was sold to American Tower Corporation in 2005.

Brian Gerson, Co-President

Brian Gerson joined FS Investments in November 2017 as its Head of Private Credit. Prior to FS Investments, he was the Group Head and Managing Director at LStar Capital, the credit affiliate of Lone Star Funds. Mr. Gerson was also a founding member of Solar Capital Partners, which serves as an investment adviser to two BDCs, where he spent seven years in various credit, origination, management, and business development roles. Earlier in his career, he spent 12 years as a Managing Director at CIBC World Markets in its Leveraged Finance and Financial Sponsors Group.

Ryan Wilson, Co-Chief Operating Officer

Ryan Wilson joined KKR Credit in 2006 and currently serves as a Managing Director of KKR. He previously held the role of Chief Operating Officer for Corporate Capital Trust (CCT) before its merger with FSK in 2018. Prior to joining KKR Credit, Mr. Wilson was with PricewaterhouseCoopers.

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The key risks to FS KKR Capital's (FSK) business are primarily centered around its ability to generate sufficient income and maintain the quality of its loan portfolio in a challenging economic landscape.

1. Declining Net Investment Income and Dividend Sustainability: FS KKR Capital has experienced significant pressure on its net investment income (NII), which is crucial for covering its shareholder distributions. For instance, in Q3 2025, FSK's Adjusted NII was $0.57 per share, while the declared distribution was $0.70 per share, resulting in a dividend coverage of approximately 81%. The dividend payout ratio against net income reached an alarming 288.30%, signaling that the dividend is not fully covered by earnings and posing a near-term risk to its sustainability. This pressure led to a "major dividend reset," with the base dividend projected to drop by 30% to $0.45 in Q1 2026, with an uncertain supplemental component tied to future loan performance. The decline in NII per share is attributed to lower weighted average portfolio yields and the rising cost of debt.
2. Deteriorating Credit Quality and Non-Accrual Loans: A significant and growing concern for FSK is the deterioration of its loan portfolio's credit quality, evidenced by an increase in non-accrual investments. Non-accrual loans, which are those no longer generating income, represented 2.9% of the portfolio at fair value as of September 30, 2025, and had increased to 3.0% by June 30, 2025. More critically, FSK's cost-based non-accrual ratio surged above 5%, significantly exceeding that of its peers and indicating a substantial decline in portfolio quality. This trend directly impacts cash flow from operations and contributes to the challenges in dividend coverage. There are also specific issues within sectors like consumer durables and industrials, leading to asset impairments, and approximately 8% of FSK's portfolio is exposed to potential tariff-related risks. Furthermore, concerns persist regarding FSK's legacy portfolio (10-12% of total investments), which is considered vulnerable to economic downturns.
3. Interest Rate Sensitivity and Macroeconomic Environment: As a business development company (BDC), FS KKR Capital's financial performance is highly sensitive to changes in interest rates and broader U.S. economic conditions. Approximately 88% of its debt investments have a floating rate exposure, meaning that while rising rates can increase interest income, falling base rates, as seen leading into Q3 2025, can lead to a decline in revenue. The company's total investment income fell from $441 million to $373 million in Q3 2025, largely due to lower base rates. If the U.S. economy weakens and interest rate cuts accelerate, FSK could face increased pressure on its net investment income and coverage ratios. The macroeconomic environment, characterized by potential trade tensions and rate uncertainty, poses challenges to FSK's high-yield, middle-market credit strategy.

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Expected Drivers of Future Revenue Growth for FS KKR Capital (FSK)

Over the next 2-3 years, FS KKR Capital (FSK) is expected to drive revenue growth through several key initiatives and market dynamics:

• Growth in Investment Originations: FSK has demonstrated a consistent ability to originate new investments, with approximately $1.1 billion in new investments originated in Q3 2025 and roughly $2 billion in Q1 2025. This robust investment activity, particularly in U.S.-based direct lending, is a primary driver for increasing interest and dividend income. The company also anticipates continued mergers and acquisitions (M&A) activity, which should provide further investment opportunities.
• Improvement in Portfolio Quality and Reduction in Non-Accruals: FSK has been actively working on improving its portfolio quality, evidenced by a decrease in non-accrual rates to 5% of the portfolio on a cost basis and 2.9% on a fair value basis as of Q3 2025. Further improvements are anticipated following restructuring efforts, which should reduce income drag and contribute positively to revenue.
• Strategic Focus on Direct Lending to Middle-Market Companies: FSK continues to emphasize its core strategy of providing credit solutions to private U.S. middle-market companies. This specialized focus allows FSK to target a market segment that often has limited access to traditional financing, potentially leading to attractive yields on its debt investments. The weighted average yield on its accruing debt investments was 10.5% as of September 30, 2025, a critical component of its revenue generation.
• Diverse Revenue Streams from Fees and Equity Investments: Beyond interest income from debt securities, FSK also generates revenue from various fee income (including structuring, commitment, and amendment fees) and dividend income from its equity investments. The company's diverse portfolio across 224 companies and 23 industries helps maintain these varied income streams.

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1. Share Repurchases

• In June 2021, FS KKR Capital (FSK) announced a share repurchase program authorizing up to $100 million in repurchases of its common stock at prices below the net asset value per share.
• This $100 million program, initially approved in November 2020 and effective in September 2021 following a merger, expired and was terminated in September 2022.
• On October 31, 2022, FSK's board renewed the Stock Repurchase Program for the remaining aggregate amount of $54 million from the initial $100 million authorization, which has since been fully expended. Significant repurchase activity was recorded, including approximately $108 million in 2020, $114.6 million in 2021, $123.97 million in 2022, and $31.45 million in Q1 2023.

2. Share Issuance

• In June 2021, FS KKR Capital completed a merger with FS KKR Capital Corp. II (FSKR), where FSKR shareholders received 0.9498 FSK shares for each FSKR share, creating a combined entity with approximately $15 billion in assets.

3. Inbound Investments

• The merger of FS KKR Capital Corp. II into FS KKR Capital Corp. in June 2021 effectively brought FSKR's assets into FSK, creating a combined business development company with approximately $15 billion in assets.
• In September 2021, affiliates of FS/KKR Advisor committed $100 million to a $350 million investment vehicle, which may invest in FSK shares.

4. Outbound Investments

• As of September 30, 2025, FSK's investment portfolio had a fair value of $13.4 billion, comprising investments in 224 portfolio companies across 23 industries.
• In the third quarter of 2025, FSK originated approximately $1.1 billion in new investments, with net investment activity (including sales to Credit Opportunities Partners JV, LLC) resulting in a net portfolio increase of $109 million.
• During the second quarter of 2025, the company originated approximately $1.4 billion of new investments, with about 72% focused on add-on financings to existing portfolio companies. In the first quarter of 2025, total purchases were $1,998 million against $1,407 million in sales and repayments.

5. Capital Expenditures

• As a business development company (BDC), FSK's primary capital allocation is through its outbound investments in other companies, and it does not typically report significant traditional capital expenditures for property, plant, and equipment.