FS KKR Capital Corp.
FS KKR Capital Corp. is a business development company specializing in investments in debt securities. It provides customized credit solutions to private middle market U.S. companies. It invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market U.S. companies. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. It also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated loans, or mezzanine loans. In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seek to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor. Additionally, on an opportunistic basis, the fund may also invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations, or companies with speculative business plans. It seeks to invest in small and middle-market companies based in United States. The fund seeks to invest in firms with annual revenue between $10 million to $2500 million. It focus on providing customized one-stop credit solutions to private upper middle market companies with annual EBITDA of $50 million to $150+ million at the time of investment. It seeks to exit from securities by selling them in a privately negotiated over- the- counter market. For any investments that are not able to be sold within the secondary market, the firm seeks to exit such investments through repayment, an initial public offering of equity securities, merger, sale or recapitalization.
What does it do?
FS KKR Capital Corp. is essentially a private lender for mid-sized American businesses that can't easily borrow from big banks or issue public bonds. Think of companies with $50M–$1B in revenue that need loans to grow, buy a competitor, or fund operations — FSK steps in and provides that cash. In return, FSK collects interest payments, usually at floating rates that move with the broader interest rate environment. It's backed by KKR, one of the world's most well-known private equity and investment firms, which gives it serious credibility and deal flow.
FSK sits at the intersection of two big trends: the rise of private credit (where non-bank lenders are filling the gap left by stricter bank regulations) and the surge in demand for high-income investments. With over $3B in market value and a dividend yield that often exceeds 13%, FSK is one of the largest Business Development Companies (BDCs) in the US — a category that's attracting serious attention as investors hunt for yield in a higher-rate world. As traditional banks pull back from riskier lending, companies like FSK are capturing market share that would have gone to Wall Street a decade ago.
How does it make money?
FSK makes money primarily by charging interest on the loans it makes to private companies — its portfolio is worth roughly $15B and generates around $1.5B in annual revenue, almost entirely from interest and fees. The loans are mostly 'senior secured,' meaning if a borrower can't repay, FSK is first in line to recover assets — it's the safest position in a company's debt stack. FSK borrows money at lower rates and lends it out at higher rates (often 10–14%), keeping the spread as profit. That profit is then largely paid out to shareholders as dividends, which is legally required since FSK is structured as a BDC.
Why do investors care?
The core appeal is the dividend — FSK has been paying a quarterly dividend that translates to a yield well above what you'd get from most stocks or bonds, making it attractive to income-focused investors. The growth story depends on interest rates staying relatively elevated, because FSK's loans are floating-rate, meaning higher rates directly boost what borrowers pay FSK. What has to go right: borrowers need to keep repaying their loans (no wave of defaults), interest rates need to stay high enough to protect margins, and KKR's deal-sourcing machine needs to keep finding quality companies to lend to.
Deep Dive
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