DEI_Document
DEI Document | 9 Months Ended | |
Sep. 30, 2014 | Dec. 10, 2014 | |
Document Information [Line Items] | ||
Entity Registrant Name | Fifth Street Asset Management Inc. | |
Entity Central Index Key | 1611988 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | 30-Sep-14 | |
Document Fiscal Year Focus | 2014 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | FALSE | |
Class A Common Stock [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 6,000,033 | |
Class B Common Stock [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 42,856,854 |
Statement_of_Financial_Conditi
Statement of Financial Condition (unaudited) Statement (USD $) | Sep. 30, 2014 |
Assets | |
Total assets | $497,927,345 |
Fifth Street Asset Management Inc. [Member] | |
Assets | |
Cash | 1,000 |
Total assets | 1,000 |
Stockholder's equity | |
Common stock, par value – $0.01 per share; 5,000 shares authorized, 33 shares issued and outstanding | 1 |
Additional paid-in capital | 999 |
Total stockholder's equity | $1,000 |
Statement_of_Financial_Conditi1
Statement of Financial Condition (unaudited) Parenthetical (Fifth Street Asset Management Inc. [Member], USD $) | Sep. 30, 2014 |
Fifth Street Asset Management Inc. [Member] | |
Common stock par value (dollars per share) | $0.01 |
Common stock authorized (in shares) | 5,000 |
Common stock issued (in shares) | 33 |
Common shares outstanding (shares) | 33 |
Combined_Statements_of_Financi
Combined Statements of Financial Condition (unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Assets | ||
Cash and cash equivalents | $344,499 | $4,015,728 |
Management fees receivable (includes Part I Fees of $10,244,392 and $9,054,422 at September 30, 2014 and December 31, 2013, respectively) | 23,091,676 | 21,409,763 |
Performance fees receivable | 54,826 | 0 |
Prepaid expenses | 400,970 | 142,033 |
Due from affiliates | 1,955,882 | 3,848,491 |
Fixed assets, net | 10,307,333 | 1,436,681 |
Other assets | 6,274,707 | 2,652,975 |
Total assets | 497,927,345 | 33,505,671 |
Liabilities | ||
Accounts payable and accrued expenses | 5,323,209 | 1,198,205 |
Accrued compensation and benefits | 7,422,583 | 538,035 |
Due to former member | 1,379,214 | 2,093,437 |
Loan payable | 4,000,000 | 4,000,000 |
Due to affiliates | 143,130 | 2,671,334 |
Deferred rent liability | 3,220,032 | 1,980,146 |
Total liabilities | 355,302,186 | 12,481,157 |
Commitments and contingencies | ||
Equity | ||
Redeemable non-controlling interests in Combined Fund | 50,248,636 | 0 |
Non-controlling interests in Combined Funds | 67,222,460 | 0 |
Members' equity | 25,154,063 | 21,024,514 |
Total equity | 92,376,523 | 21,024,514 |
Total liabilities, redeemable non-controlling interests and equity | 497,927,345 | 33,505,671 |
Combined Funds [Member] | ||
Assets | ||
Cash and cash equivalents | 35,139,719 | 0 |
Investments at fair value | 376,072,358 | 0 |
Derivative assets at fair value | 155,240 | 0 |
Interest and dividends receivable | 626,772 | 0 |
Unsettled trades receivable | 36,392,084 | 0 |
Collateral receivable | 4,570,487 | 0 |
Deferred financing costs | 2,540,792 | 0 |
Liabilities | ||
Accounts payable and accrued expenses | 474,345 | 0 |
Due to former member | 1,379,214 | 2,093,437 |
Payments in advance from portfolio companies | 4,826,501 | 0 |
Securities sold short at fair value | 3,138,808 | 0 |
Unsettled trades payable | 110,464,323 | 0 |
Interest payable | 1,421,607 | 0 |
Notes payable | $213,488,434 | $0 |
Combined_Statements_of_Financi1
Combined Statements of Financial Condition (unaudited) Parenthetical (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Part I fees | $10,244,392 | $9,054,422 |
Combined_Statements_of_Income_
Combined Statements of Income (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues | ||||
Management fees (includes Part I Fees of $10,244,392 and $7,174,961 and $27,983,472 and $21,518,635 for the three and nine months ended September 30, 2014 and 2013, respectively) | $23,091,676 | $16,891,382 | $68,144,517 | $47,049,812 |
Performance fees (includes Part II fees of $54,826 for the three and nine months ended September 30, 2014) | 139,049 | 0 | 139,049 | 0 |
Other fees | 2,187,933 | 753,768 | 4,205,987 | 3,188,954 |
Total revenues | 25,418,658 | 17,645,150 | 72,489,553 | 50,238,766 |
Expenses | ||||
Compensation and benefits | 6,529,830 | 6,377,780 | 25,711,012 | 16,077,114 |
Fund offering and start-up expenses | 909,681 | 5,570,735 | 1,200,434 | 5,663,002 |
Expenses of Combined Funds | 256,273 | 0 | 298,530 | 0 |
General, administrative and other expenses | 3,432,949 | 1,226,437 | 7,491,543 | 3,575,267 |
Depreciation and amortization | 408,541 | 51,664 | 641,449 | 153,592 |
Total expenses | 11,537,274 | 13,226,616 | 35,342,968 | 25,468,975 |
Other income (expense) | ||||
Interest and other income (expense), net | 42,685 | 2,648 | 68,735 | 11,378 |
Total other income, net | 3,655,485 | 2,648 | 6,218,716 | 11,378 |
Net income | 17,536,869 | 4,421,182 | 43,365,301 | 24,781,169 |
Net income attributable to controlling interests in Fifth Street Management Group | 14,555,111 | 4,421,182 | 38,104,084 | 24,781,169 |
Combined Funds [Member] | ||||
Other income (expense) | ||||
Interest and other income of Combined Funds | 3,325,341 | 0 | 5,045,949 | 0 |
Interest expense of Combined Funds | -1,591,675 | 0 | -2,578,659 | 0 |
Net realized gain on investments of Combined Funds | 686,671 | 0 | 1,402,501 | 0 |
Net change in unrealized appreciation (depreciation) on investments of Combined Funds | 974,134 | 0 | 2,061,861 | 0 |
Net realized gain on derivatives of Combined Funds | 63,089 | 63,089 | 0 | |
Net change in unrealized appreciation on derivatives of Combined Funds | 155,240 | 0 | 155,240 | 0 |
Net income attributable to redeemable non-controlling interests in Combined Fund | -1,072,218 | 0 | -2,336,539 | 0 |
Net income attributable to non-controlling interests in Combined Funds | ($1,909,540) | $0 | ($2,924,678) | $0 |
Combined_Statements_of_Income_1
Combined Statements of Income (unaudited) Parenthetical (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Statement [Abstract] | ||||
Part I fees | $10,244,392 | $7,174,961 | $27,983,472 | $21,518,635 |
Part II fees | $54,826 | $0 | $54,826 | $0 |
Combined_Statement_of_Changes_
Combined Statement of Changes in Equity and Redeemable Non-Controlling Interests in Combined Fund (unaudited) (USD $) | Total | SLF I [Member] | SLF II [Member] | Members' Equity [Member] | Non-Controlling Interests in Combined Funds [Member] | Non-Controlling Interests in Combined Funds [Member] | Non-Controlling Interests in Combined Funds [Member] | Redeemable Non-Controlling Interests in Combined Fund [Member] |
SLF I [Member] | SLF II [Member] | |||||||
Balance, December 31, 2013 at Dec. 31, 2013 | $21,024,514 | $21,024,514 | $0 | $0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Capital contributions from members | 2,967,749 | 2,967,749 | ||||||
Amortization of equity-based compensation | 1,487,646 | 1,487,646 | ||||||
Reclassification of distributions to former member | 800,381 | 800,381 | ||||||
Purchase of former member interests | 2,327,548 | 2,327,548 | ||||||
Capital contributions to Fifth Street Opportunities Fund, L.P. | 47,912,097 | |||||||
Capital contributions | 33,857,927 | 30,500,000 | 33,857,927 | 30,500,000 | ||||
Distributions | -41,618,004 | -41,557,859 | -60,145 | |||||
Net Income | 41,028,762 | 38,104,084 | 2,924,678 | 2,336,539 | ||||
Balance, September 30, 2014 at Sep. 30, 2014 | $92,376,523 | $25,154,063 | $67,222,460 | $50,248,636 |
Combined_Statements_of_Cash_Fl
Combined Statements of Cash Flows(unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities | ||
Net income | $43,365,301 | $24,781,169 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 641,449 | 153,592 |
Amortization of equity-based compensation | 3,815,194 | 1,254,961 |
Reclassification of distributions to former member | 800,381 | 0 |
Fair value adjustment b due to former member | 180,863 | -250,772 |
Deferred rent | 1,239,886 | 19,597 |
Changes in operating assets and liabilities: | ||
Management fees receivable | -1,681,913 | -14,082,955 |
Performance fees receivable | -54,826 | 0 |
Prepaid expenses | -258,937 | 58,374 |
Due from affiliates | 1,892,609 | -271,200 |
Other assets | -272,462 | -14,819 |
Accounts payable and accrued expenses | 724,613 | -91,054 |
Accrued compensation and benefits | 6,884,548 | 6,322,544 |
Due to former member | -895,086 | -647,286 |
Due to affiliates | -2,528,204 | 346,333 |
Net cash provided by (used in) operating activities | -243,637,941 | 17,578,484 |
Cash flows from investing activities | ||
Purchases of fixed assets | -9,460,980 | -216,799 |
Net cash used in investing activities | -9,460,980 | -216,799 |
Cash flows from financing activities | ||
Distributions | -38,590,110 | -27,885,614 |
Capital contributions | -2,967,749 | |
Net cash provided by (used in) financing activities | 284,567,411 | -27,885,614 |
Net increase (decrease) in cash and cash equivalents | 31,468,490 | -10,523,929 |
Cash and cash equivalents, beginning of period | 4,015,728 | 16,156,777 |
Cash and cash equivalents, end of period (including Combined Funds) | 35,484,218 | 5,632,848 |
Less: Cash and cash equivalents of the Combined Funds | 35,139,719 | 0 |
Cash and cash equivalents, end of period | 344,499 | 5,632,848 |
Supplemental disclosures of cash flow information | ||
Cash paid during the period for interest | 74,795 | 0 |
Non-cash investing activities | ||
Fixed asset purchases included in accounts payable | 51,121 | 0 |
Non-cash financing activities | ||
Non-cash capital contribution by member | 2,967,749 | 5,680,001 |
Non-cash distribution to member | -2,967,749 | -5,680,001 |
Combined Funds [Member] | ||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Net realized gain on investments of Combined Funds | -1,402,501 | 0 |
Net change in unrealized appreciation on investments of Combined Funds | -2,061,861 | 0 |
Net realized gain on derivatives of Combined Funds | -63,089 | 0 |
Net change in unrealized appreciation on derivatives of Combined Funds | -155,240 | 0 |
Accretion of original issue discount on investments of Combined Funds | -160,000 | 0 |
Changes in operating assets and liabilities: | ||
Other assets | -626,772 | 0 |
Purchases of investments of Combined Funds | -428,151,956 | 0 |
Proceeds from sales of investments of Combined Funds | 129,587,772 | 0 |
Purchases and covers of short positions | -14,935,684 | 0 |
Proceeds from sales of investments sold short | 18,326,008 | 0 |
Receivable from counterparty | -4,570,487 | 0 |
Change in other liabilities of Combined Funds | 6,722,453 | 0 |
Cash flows from financing activities | ||
Issuance of notes payable by Combined Funds | 213,488,434 | 0 |
Deferred financing costs | -2,540,792 | 0 |
Cash and cash equivalents, beginning of period | 0 | |
Cash and cash equivalents, end of period | 35,139,719 | |
Supplemental disclosures of cash flow information | ||
Cash paid during the period for interest | 915,921 | 0 |
Combined Funds [Member] | Redeemable Non-controlling Interest [Member] | ||
Cash flows from financing activities | ||
Capital contributions | 47,912,097 | 0 |
Combined Funds [Member] | Noncontrolling interest [Member] | ||
Cash flows from financing activities | ||
Distributions | -60,145 | 0 |
Capital contributions | $64,357,927 | $0 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 9 Months Ended | |
Sep. 30, 2014 | ||
Related Party Transaction [Line Items] | ||
Organization and Basis of Presentation | Organization and Basis of Presentation | |
Organization | ||
Fifth Street Management Group (the "Company") is an alternative asset management firm headquartered in Greenwich, CT that provides asset management services to its investment funds, primarily consisting of Fifth Street Finance Corp. (formed on January 2, 2008, "FSC") and Fifth Street Senior Floating Rate Corp. (formed on May 22, 2013, "FSFR"), both publicly traded business development companies regulated under the Investment Company Act of 1940 (together, the "BDCs"). | ||
The investment advisory business of the Fifth Street Management Group is presently conducted through the following affiliated entities: | ||
• | Fifth Street Management LLC ("FSM"), a limited liability company organized under the laws of the State of Delaware on March 8, 2007 under its original name of FSC Management LLC to provide asset management services. The Company conducts substantially all of its asset management services through FSM, including those provided to the BDCs. | |
• | FSC CT, Inc. ("FSC CT"), a Connecticut corporation, formed on March 28, 2012 to provide administrative services related primarily to the Company's activities in Connecticut and, effective January 1, 2014, to provide administrative services to the BDCs and FSM. | |
• | FSC, Inc., a New York corporation, formed on January 3, 2007 to provide administrative services to the BDCs and FSM through December 31, 2013. | |
• | Fifth Street Capital LLC, a limited liability company organized under the laws of the State of New York on July 14, 2004 for the purpose of providing administrative and investment advisory services to Fifth Street Mezzanine Partners II, L.P. ("Fund II", an uncombined affiliate) and other entities which may be formed from time to time. Fifth Street Capital LLC is a wholly-owned subsidiary of FSC, Inc. | |
• | FS Transportation LLC ("FS Transportation") is a limited liability company organized under the laws of the State of Connecticut on March 2, 2010 and provides transportation services to the Company's officers and employees. FS Transportation is a wholly-owned subsidiary of FSC, Inc. | |
• | FSC Midwest, Inc., an Illinois corporation, formed on March 28, 2012 to provide administrative services related primarily to the Company's activities in the midwestern United States. | |
• | Fifth Street Capital West, Inc., a California corporation, formed on December 26, 2006 to provide administrative services related primarily to the Company's activities in the western United States. | |
In addition to the above entities, subsequent to December 31, 2013, the Company has included the following entities in the Combined Financial Statements: | ||
• | FSCO GP LLC ("FSCO GP"), a Delaware limited liability company, formed on January 6, 2014 to serve as the general partner of Fifth Street Opportunities Fund, L.P. ("FSOF," formerly Fifth Street Credit Opportunities Fund, L.P.), which primarily invests in yield-oriented corporate credit assets and equities; and | |
• | Fifth Street EIV, LLC ("Fifth Street EIV"), a Delaware limited liability company formed on February 7, 2014 to hold FSM's equity interest in Fifth Street Senior Loan Fund I Operating Entity, LLC ("SLF I"), which primarily invests in senior secured loans to middle-market companies. | |
• | Fifth Street EIV II, LLC ("Fifth Street EIV II"), a Delaware limited liability company formed on July 10, 2014 to hold FSM employees' equity interests in Fifth Street Senior Loan Fund II Operating Entity, LLC ("SLF II"), which primarily invests in senior secured loans to middle-market companies. | |
FSOF, SLF I and SLF II are collectively referred to as the "Combined Funds." See Note 2 for further information on the consolidation of these funds. | ||
The Company's primary sources of revenues are management fees, primarily from the BDCs, which are driven by the amount of the assets under management and quarterly investment performance of the funds it manages. | ||
The Company conducts substantially all of its operations through one reportable segment which provides asset management services to its alternative investment vehicles. The Company generates all of its revenues in the United States. | ||
Basis of Presentation | ||
The unaudited interim combined financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") as set forth in the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in the combined financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair statement of the Company's unaudited interim combined financial statements have been included and are of a normal and recurring nature. The operating results presented for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These combined financial statements should be read in conjunction with the Company's audited combined financial statements as of and for the years ended December 31, 2013 and 2012 and notes thereto included in Fifth Street Asset Management Inc.'s final prospectus dated October 29, 2014 filed with the Securities and Exchange Commission ("SEC") in accordance with Rule 424(b) of the Securities Act of 1933 on October 30, 2014. The December 31, 2013 Combined Statement of Financial Condition data was derived from the audited combined financial statements at that date. All significant intercompany transactions and balances have been eliminated in combination. | ||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting amounts reported in the combined financial statements and accompanying notes. The most significant of these estimates are related to (i) fair value measurements of the assets and liabilities of the Combined Funds; (ii) the valuation of equity-based compensation, and (iii) estimating the fair value of the amount due to a former member. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions and conditions. | ||
The Company has not presented earnings per share amounts in the Combined Statements of Income as they would not be meaningful based on the Company’s ownership structure as of the date of these combined financial statements. Additionally, the subsequent reorganization (as discussed in Note 12) has significantly changed the ownership of the Company, and therefore, has not been presented retroactively. | ||
The combined financial statements include the accounts of the above affiliated entities, all of which are either wholly or substantially owned and/or under the voting control of the managing member, Leonard M. Tannenbaum (collectively, the "Fifth Street Management Group") and do not reflect the effect of the reorganization, the initial public offering and related transactions which occurred after September 30, 2014 (see Note 12). | ||
The "members" refer to the managing member, seven other existing equity members and five other existing non-equity members. | ||
Fifth Street Asset Management Inc. [Member] | ||
Related Party Transaction [Line Items] | ||
Organization and Basis of Presentation | Organization | |
In anticipation of its initial public offering (the "IPO") that closed November 4, 2014, Fifth Street Asset Management Inc. (the "Company" or "FSAM") was incorporated in Delaware on May 8, 2014 as a holding company with its primary asset expected to be a limited partnership interest in Fifth Street Holdings L.P. ("Fifth Street Holdings"). Fifth Street Holdings was formed on June 27, 2014 by Leonard M. Tannenbaum and another member of Fifth Street Management LLC (the "Principals") as a Delaware limited partnership. Prior to the transactions described below, the Principals were the general partners and limited partners of Fifth Street Holdings. Fifth Street Holdings has a single class of limited partnership interests (the "Holdings LP Interests"). Immediately prior to the IPO: | ||
• | The Principals contributed the general partnership interests of Fifth Street Holdings to FSAM in exchange for 100% of the Company's Class B common stock, par value $0.01 per share (the "Class B Common Stock"); | |
• | The members of Fifth Street Management LLC contributed 100% of their membership interests of Fifth Street Management LLC to Fifth Street Holdings in exchange for Holdings LP Interests; and | |
• | The members of FSCO GP LLC ("FSCO GP"), a Delaware limited liability company, formed on January 6, 2014 to serve as the general partner of Fifth Street Opportunities Fund, L.P. (‘‘FSOF,'' formerly Fifth Street Credit Opportunities Fund, L.P.) contributed 100% of their membership interests in FSCO GP to Fifth Street Holdings in exchange for Holdings LP Interests. | |
As a result of the above transactions, FSAM became the general partner of Fifth Street Holdings, which was also organized to be a holding company for Fifth Street Management LLC and FSCO GP. As a holding company, FSAM conducts all of its operations through Fifth Street Management LLC and FSCO GP, wholly-owned subsidiaries of Fifth Street Holdings, including the provision of management services to Fifth Street Finance Corp., Fifth Street Senior Floating Rate Corp. and other affiliated private funds. Fifth Street Management Group is the Company's accounting predecessor prior to the IPO. | ||
In connection with the reorganization, FSAM entered into an exchange agreement (the "Exchange Agreement") with the Fifth Street Holdings Limited Partners that granted each Fifth Street Holdings Limited Partner and certain permitted transferees the right, beginning two years after the closing of the IPO and subject to vesting and minimum retained ownership requirements, on a quarterly basis, to exchange such person's Holdings LP Interests for shares of Class A common stock of FSAM, par value $0.01 per share (the "Class A Common Stock") on a one-for-one basis, subject to customary conversion rate adjustments for splits, unit distributions and reclassifications. As a result, each Fifth Street Holdings Limited Partner, over time, has the ability to convert his or her illiquid ownership interests in Fifth Street Holdings into Class A Common Stock that can more readily be sold in the public markets. | ||
On November 4, 2014, FSAM issued 6,000,000 shares of Class A Common Stock in the IPO at a price of $17.00 per common share. The net proceeds totaled $95.9 million after deducting underwriting commissions of $6.1 million and before offering costs of approximately $3.7 million that were borne by the Company. The net proceeds were used to purchase a 12.0% limited partnership interest of Fifth Street Holdings from its limited partners. For reporting periods subsequent to its IPO, FSAM will consolidate the financial results of Fifth Street Holdings, its consolidated subsidiaries and certain private investment funds for all periods presented. The Company's Statement of Financial Condition as of September 30, 2014 does not reflect the effect of the reorganization, the IPO and the related transactions; which all occurred subsequent to the reporting date. | ||
Our purchase of Holdings LP Interests concurrent with our IPO, and the subsequent and future exchanges by holders of Holdings LP Interests for shares of our Class A common stock pursuant to the Exchange Agreement is expected to result in increases in our share of the tax basis of the tangible and intangible assets of Fifth Street Holdings, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to us. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of cash taxes that we would otherwise be required to pay in the future. We have entered into a tax receivable agreement with the TRA Recipients that requires us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income tax that we actually realize (or, under certain circumstances, are deemed to realize) as a result of the increases in tax basis in connection with exchanges by the TRA Recipients described above and certain other tax benefits attributable to payments under the tax receivable agreement. | ||
Immediately following the reorganization transactions described above and the closing of the IPO on November 4, 2014: | ||
• | the Principals held 42,856,854 shares of Class B Common Stock and 42,856,854 Holdings LP Interests, the Holdings Limited Partners, including the Principals, held 44,000,000 Holdings LP Interests and FSAM held 6,000,000 Holdings LP Interests; and | |
• | through their holdings of Class B Common Stock, the Principals, in the aggregate, had approximately 97.3% of the voting power of FSAM's common stock. | |
As of September 30, 2014, the reorganization and IPO transactions described above had not yet occurred and the Company did not have an ownership interest in Fifth Street Holdings, and thus, did not commence its business operations through Fifth Street Management and FSCO GP. As a result the Company's Statement of Financial Condition does not reflect the operations of our current business. For reporting periods subsequent to the IPO, FSAM will consolidate the financial results of Fifth Street Holdings, its consolidated subsidiaries and certain private investment funds. |
Significant_Accounting_Policie
Significant Accounting Policies | 9 Months Ended | |
Sep. 30, 2014 | ||
Schedule of Accounting Policies [Line Items] | ||
Significant Accounting Policies | Significant Accounting Policies | |
Principles of Consolidation | ||
The combined financial statements include the accounts of the Company and entities in which it, directly or indirectly, is determined to have a controlling financial interest under the following set of guidelines: | ||
• | Variable Interest Entities ("VIEs") — The Company determines whether, if by design, an entity has equity investors who lack the characteristics of a controlling financial interest or does not have sufficient equity at risk to finance its expected activities without additional subordinated financial support from other parties. If an entity has either of these characteristics, it is considered a VIE and must be consolidated by its primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company's involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (for example, management and performance related fees), would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment. Certain VIEs qualify for the deferral under ASU 2010-10, Amendments to Statement 167 for Certain Investment Funds, if the following criteria are met: | |
a. | The entity has all of the attributes of an investment company as defined in the American Institute of Certified Public Accountants Accounting and Auditing Guide, Investment Companies ("Investment Company Guide"), or does not have all the attributes of an investment company but it is an entity for which it is acceptable based on industry practice to apply measurement principles that are consistent with the Investment Company Guide, | |
b. | The reporting entity does not have explicit or implicit obligations to fund any losses of the entity that could potentially be significant to the entity, and | |
c. | The entity is not a securitization or asset-backed financing entity or an entity that was formerly considered a qualifying special purpose entity. | |
Where the VIEs have qualified for the deferral of the current consolidation guidance, the analysis is based on previous consolidation guidance. This guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a variable interest entity and (b) whether the Company's involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (for example, management and performance related fees), would be expected to absorb a majority of the variability of the entity. | ||
Under both guidelines, the Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and reconsiders that conclusion continually. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company and its affiliates or indirectly through employees. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective investment funds could affect an entity's status as a VIE or the determination of the primary beneficiary. At each reporting date, the Company assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly. | ||
The Company has not consolidated any entities into the combined financial statements under the VIE model as it does not have an interest in any VIE. | ||
• | Voting Interest Entities — For entities that are not VIEs, the Company consolidates those entities in which it has an equity investment of greater than 50% and has control over significant operating, financial and investing decisions of the entity. Additionally, the Company consolidates entities in which the Company is a substantive, controlling general partner and the limited partners have no substantive rights to participate in the ongoing governance and operating activities. | |
The Company has determined that FSOF should be consolidated by FSCO GP as the limited partners of FSOF do not have substantive kick-out or participating rights. The Company has included the results of FSCO GP in its combined financial statements as it is under common control of the managing member. | ||
The Company has determined that SLF I should be consolidated by FSM (the manager of SLF I and a combined entity) as the investors of SLF I do not have substantive kick-out or participating rights. | ||
The Company has determined that SLF II should be consolidated by FSM (the manager of SLF II and a combined entity) as the investors of SLF II do not have substantive kick-out or participating rights. | ||
Including the results of the Combined Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows of the Company; however, the Combined Funds results included herein have no direct effect on the net income attributable to controlling interests or on total controlling equity. Instead, economic ownership interests of the investors in the Combined Funds are reflected as redeemable non-controlling interests with respect to FSOF and non-controlling interests with respect to SLF I and SLF II, in the accompanying combined financial statements. | ||
Concentration of Credit Risk and Other Risks and Uncertainties | ||
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. | ||
For the nine months ended September 30, 2014 and 2013, 100% of revenues and receivables were earned or derived from advisory or administrative services provided to the BDCs and other affiliated entities. | ||
The Company is dependent on the managing member for all key decisions and its continued business operations. If for any reason the services of our managing member were to become unavailable, there could be a material adverse effect on the Company's operations, liquidity and profitability. | ||
Fair Values of Financial Instruments | ||
The carrying amounts of cash and cash equivalents, management and performance fees receivable from affiliates, prepaid expenses, due from/to affiliates, accounts payable and accrued expenses and accrued compensation and benefits approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair value of the amount due to a former member was determined using the present value of the expected future payments. The fair value of the loan payable is determined using current applicable rates for similar instruments as of the date of the Combined Statement of Financial Condition and approximates the carrying value of such debt. | ||
Cash and Cash Equivalents | ||
Cash equivalents include short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. The Company and its Combined Funds place its cash and cash equivalents with U.S. financial institutions and, at times, amounts may exceed federally insured limits. The Company and its Combined Funds monitor the credit standing of these financial institutions. | ||
Cash and cash equivalents held at the Combined Funds, which includes amounts held by prime brokers, represent cash that, although not legally restricted, is not available to support the liquidity needs of the Company, as the use of such amounts is limited to the investment activities of the Combined Funds. | ||
Fixed Assets | ||
Fixed assets consist of furniture, fixtures and equipment (including automobiles, computer hardware and software) and leasehold improvements, and are recorded at cost, less accumulated depreciation and amortization. Depreciation of furniture, fixtures and equipment is computed using the straight-line method over the estimated useful lives of the respective assets (three to eight years). Amortization of improvements to leased properties is computed using the straight-line method based upon the initial term of the applicable lease or the estimated useful life of the improvements, whichever is shorter, and ranges from five to 10 years. Routine expenditures for repairs and maintenance are charged to expense when incurred. Major betterments and improvements are capitalized. Upon retirement or disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the Combined Statements of Income. The Company evaluates fixed assets for impairment whenever events or changes in circumstances indicate that an asset's carrying value may not be fully recovered. During the three months ended September 30, 2014, the Company wrote-off leasehold improvements in connection with the lease terminations discussed in Note 9. No other impairments were deemed necessary for the nine months ended September 30, 2014 and 2013. | ||
Deferred Rent | ||
The Company recognizes rent expense on a straight-line basis over the expected lease term. Within the provisions of certain leases, there are free rent periods and escalations in payments over the base lease term. The effects of these items have been reflected in rent expense on a straight-line basis over the expected lease term. Landlord contributions and tenant allowances are included in the straight-line calculations and are being deferred over the lease term and are reflected as a reduction in rent expense. | ||
Redeemable Non-controlling Interests | ||
The Company consolidates a credit-focused hedge fund (FSOF) that it manages, wherein investors are able to redeem their interests, in cash or in kind or both, after an initial lock-up period of one year, without penalty. Amounts relating to these fund investors' interests in FSOF are presented as redeemable non-controlling interests in the Combined Statements of Financial Condition. Allocations of profits and losses to these interests are reflected within net income attributable to redeemable non-controlling interests in the Combined Statements of Income. The allocation of net income or loss to redeemable non-controlling interests in the Combined Fund is based on the relative ownership interests of the limited partners after the consideration of contractual arrangements that govern allocations of income or loss. These interests are adjusted for general partner allocations and by subscriptions and redemptions in funds that occur during the period. | ||
Non-controlling Interests | ||
In addition to the members' interests in the Fifth Street Management Group, the Company also consolidates senior loan funds (SLF I and SLF II) in which non-controlling interests are present. Amounts relating to the fund's investors' interests in SLF I and SLF II are presented as non-controlling interests in the Combined Statements of Financial Condition. Allocations of profits and losses to these interests are reflected within net income attributable to non-controlling interests in the Combined Statements of Income. Investors in this fund presented within non-controlling interests are not able to redeem their interests until the fund liquidates or is otherwise wound-up. | ||
Non-controlling interest holders in SLF I and SLF II owned approximately 72.8% of the Company's combined total equity as of September 30, 2014. | ||
Revenue Recognition | ||
The Company has two principal sources of revenues: management fees and performance fees. These revenues are derived from the Company's agreements with the funds it manages, primarily the BDCs. The advisory agreements, on which revenues are based, are generally renewable on an annual basis by the general partner or the board of directors of the respective funds. | ||
Management Fees | ||
Management fees are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value ("NAV"), net investment income, total assets or par value of the investment portfolios managed by the Company. All management fees are earned from affiliated funds of the Company. The contractual terms of management fees vary by fund structure and investment strategy and range from 0.40% to 2.00% for base management fees, which are asset or capital-based. | ||
Management fees from affiliates also include quarterly incentive fees on the net investment income from the BDCs ("Part I Fees"). Part I Fees are generally equal to 20.0% of the BDCs net investment income (before Part I Fees and performance fees payable based on capital gains), subject to fixed "hurdle rates" as defined in the respective investment advisory agreement. No fees are recognized until the BDCs net investment income exceeds the respective hurdle rate, with a "catch-up" provision that serves to ensure the Company receives 20% of the BDCs net investment income from the first dollar earned. Such fees are classified as management fees as they are paid quarterly, predictable and recurring in nature, not subject to repayment (or clawback) and cash settled each quarter. Management fees from affiliates are recognized as revenue in the period advisory services are rendered, subject to the Company's assessment of collectability. | ||
Performance Fees | ||
Performance fees are earned from the funds managed by the Company based on the performance of the respective funds. The contractual terms of performance fees vary by fund structure and investment strategy and are generally 15.0% to 20.0%. | ||
The Company has elected to adopt Method 2 of ASC 605-20, Revenue Recognition ("ASC 605") for revenue based on a formula. Under this method, the Company records revenue when it is entitled to performance-based fees, subject to certain hurdles or benchmarks. The performance fees for any period are based upon an assumed liquidation of the fund's net assets on the reporting date, and distribution of the net proceeds in accordance with the fund's income allocation provisions. The performance fees may be subject to reversal to the extent that the performance fees recorded exceed the amount due to the general partner or investment manager based on a fund's cumulative investment returns. | ||
Performance fees related to the BDCs ("Part II Fees") are calculated and payable in arrears as of the end of each fiscal year of the BDCs and equal 20% of the BDCs realized capital gains, if any, on a cumulative basis since inception, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. | ||
Other Fees | ||
The Company also provides administrative services to the BDCs that are reported within Revenues — Other fees. These fees are recognized as revenue in the period administrative services are rendered. These fees generally represent the portion of compensation, overhead and other expenses incurred by the Company directly attributable to the funds, but may also be based on a fund's asset value. The Company selects the vendors, incurs the expenses, and is the primary obligor under the related arrangements. The Company is considered the principal under these arrangements and is required to record the expense and related reimbursement revenue on a gross basis. Other fees are recognized in the periods during which the related expenses are incurred and the reimbursements are contractually earned. | ||
Compensation and Benefits | ||
Compensation generally includes salaries, bonuses and equity-based compensation charges. Bonuses are accrued over the service period to which they relate. All payments made to the Company's managing member since inception and all payments made to equity members since December 1, 2012 (see Note 11) related to their granted or purchased interests are accounted for as distributions on the equity held by such members. | ||
Equity-Based Compensation | ||
Compensation expense related to the issuance of equity-based awards is measured at fair value of the award on the grant date, in excess of any amounts paid for the interest, and is recognized on a straight-line basis over the requisite service period, with a corresponding increase in members' equity. Equity-based compensation expense is adjusted, as necessary, for actual forfeitures so as to reflect expenses only for the portion of the award that ultimately vests. Equity-based compensation expense is presented within compensation and benefits in the Combined Statements of Income. Cash settled equity-based awards are classified as liabilities and are re-measured at the end of each reporting period using the intrinsic-value method (that is, current settlement value), as permitted for non-public companies under ASC 718. | ||
Part I Fee-Sharing Arrangements | ||
The Company also has fee-sharing arrangements whereby certain employees or members are entitled to a share of Part I Fees. These fees are typically paid to the Company and are then paid to the participant on a quarterly basis. To the extent that the payments to the employees or non-equity members are probable and reasonably estimable, the Company accrues these payments as compensation expense. | ||
Reimbursable Expenses | ||
In the normal course of business, the Company pays certain expenses on behalf of the BDCs, primarily for professional travel and other costs associated with particular portfolio company holdings of the BDCs, for which it is reimbursed. Such expenses are not an obligation of the Company and are recorded as due from affiliates at the time of disbursement (see Note 10). | ||
Fund Offering and Start-up Expenses | ||
In certain instances, the Company may bear offering costs related to capital raising activities of the BDCs, including underwriting commissions, which are expensed as incurred. In addition, the Company expenses all costs associated with starting a new investment fund. Included in the Statement of Income for the nine months ended September 30, 2014, is approximately $822,000 of expenses associated with a follow-on equity offering of FSC. Included in the Statement of Income for the nine months ended September 30, 2013 is approximately $5,659,000 of expenses associated with the initial public offering of FSFR. | ||
Income Taxes | ||
Substantially all of the Company's earnings flow through to owners of the Company without being subject to entity level income taxes. Accordingly, no provision for income taxes has been recorded in the combined financial statements. | ||
The Company has no unrecognized tax benefits at September 30, 2014 and December 31, 2013. The Company's Federal and state income tax returns prior to fiscal year 2010 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. | ||
The Company recognizes interest and penalties associated with tax matters such as franchise tax liabilities, if applicable, as general and administrative and other expenses. | ||
Market and Other Risk Factors | ||
Due to the nature of the Combined Funds' investment strategy, the Company is subject to market and other risk factors, including, but not limited to the following: | ||
Market Risk | ||
The market price of investments may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions which are not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. | ||
FSOF may sell securities short which allows it to profit from declines in market prices to the extent such decline exceeds the transaction costs and any costs of borrowing. A short sale involves the sale of a security that is not owned in the expectation of purchasing the same security at a later date at a lower price. To make delivery to the buyer, FSOF must borrow the security, and is obligated to pay the lender of the security any dividend or interest payable on the security until it returns the security to the lender. This is accomplished by a later purchase of the security by FSOF. A short sale, which is generally collateralized by the underlying security, involves the risk that the market price of the security will increase as any appreciation in the price of the borrowed assets would result in a loss, which is theoretically unlimited in amount. In addition, the party from whom the security was borrowed to effect the short sale may demand the return of the security before FSOF had planned. In this situation, FSOF may be forced to cover the short position in the market at a higher price than its short sale. | ||
Limited Liquidity of Investments | ||
The Combined Funds intend to invest in investments that may not be readily marketable. Illiquid investments may trade at a discount from comparable, more liquid investments, and at times there may be no market at all for such investments. Subordinate investments may be less marketable, or in some instances illiquid, because of the absence of registration under federal securities laws, contractual restrictions on transfer, the small size of the market and the small size of the issue (relative to issues of comparable interests). As a result, the Combined Funds may encounter difficulty in selling its investments or may, if required to liquidate investments to satisfy redemption requests of its investors or debt service obligations, be compelled to sell such investments at less than fair value. | ||
Counterparty Risk | ||
Some of the markets in which the Combined Funds may effect transactions are "over-the-counter" or "interdealer" markets. The participants in such markets are typically not subject to credit evaluation and regulatory oversight, unlike members of exchange-based markets. This exposes the Combined Funds to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the applicable contract (whether or not such dispute is bona fide) or because of a credit or liquidity problem, causing the Combined Funds to suffer loss. Such "counterparty risk" is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where the Combined Funds have concentrated its transactions with a single or small group of counterparties. | ||
Credit Risk | ||
There are no restrictions on the credit quality of the investments the Combined Funds intend to make. Investments may be deemed by nationally recognized rating agencies to have substantial vulnerability to default in payment of interest and/or principal. Some investments may have low-quality ratings or be unrated. Lower rated and unrated investments have major risk exposure to adverse conditions and are considered to be predominantly speculative. Generally, such investments offer a higher return potential than higher rated investments, but involve greater volatility of price and greater risk of loss of income and principal. | ||
In general, the ratings of nationally recognized rating organizations represent the opinions of agencies as to the quality of the securities they rate. Such ratings, however, are relative and subjective; they are not absolute standards of quality and do not evaluate the market value risk of the relevant securities. It is also possible that a rating agency might not change its rating of a particular issue on a timely basis to reflect subsequent events. The Combined Funds may use these ratings as initial criteria for the selection of portfolio assets but are not required to utilize them. | ||
Interest Rate Risk | ||
Fluctuations in interest rates expose the Company to interest rate risk on certain assets and liabilities of the Combined Funds. These changes may affect the fair value, interest income and interest expense related to certain floating rate assets and liabilities that are indexed to market interest rates. | ||
Accounting Policies of Combined Funds | ||
The Combined Funds, in which the Company has only minor ownership interests, are included in the Company's combined financial statements. The majority ownership interests in these funds are held by the investors in the funds, and these interests are reflected within redeemable non-controlling interests and non-controlling interests in the Combined Statements of Financial Condition. Management fees from the Combined Funds are eliminated in consolidation; however, the controlling interest is increased by the amount of the eliminated management fees. | ||
The Combined Funds are considered investment companies for GAAP purposes. Pursuant to specialized accounting guidance for investment companies and the retention of that guidance in the Company's combined financial statements, the investments held by the Combined Funds are reflected in the combined financial statements at their estimated fair values. | ||
Investments and Derivative Instruments at Fair Value | ||
Investments at fair value include the Combined Funds' investments in securities, investment companies and other investments, including derivative instruments. Securities transactions are recorded on a trade-date basis. Realized gains and losses on sales of investments are determined on a specific identification basis and are included within net realized gains of Combined Funds in the Combined Statements of Income. Premiums and discounts are amortized and accreted, respectively, to income of the Combined Funds in the Combined Statements of Income. | ||
The fair value of investments and derivative instruments held by the Combined Funds is based on observable market prices when available. Such values are generally based on the last reported sales price as of the reporting date. In the absence of readily ascertainable market values, the determination of the fair value of investments held by the Combined Funds may require significant judgment or estimation (see Note 3). Actual results could differ materially from these estimates under different assumptions and conditions. | ||
Deferred Financing Costs | ||
Deferred financing costs consist of fees and expenses paid in connection with the closing or amending of the SLF I and SLF II credit facilities and are capitalized at the time of payment. Deferred financing costs are amortized using the straight line method over the terms of the respective credit facilities and are included in interest expense of the Combined Funds in the Company's Combined Statement of Income. | ||
Securities Sold Short at Fair Value | ||
Securities sold short reflect commitments to deliver specified amounts of securities and thereby create a liability to purchase these securities at a future date. Such amounts are reflected as a liability at the fair value of such securities on September 30, 2014. Subsequent market fluctuations may require FSOF to acquire these securities at prices which differ from the fair value reflected in the Combined Statement of Financial Condition, and such difference could be material. | ||
Interest and Other Income of the Combined Funds | ||
Income of the Combined Funds consists of interest income, dividend income and other miscellaneous items. Interest income is recorded on an accrual basis. The Combined Funds may place debt obligations, including bank debt and other participation interests, on non-accrual status and, when necessary, reduce current interest income by charging off any interest receivable when collection of all or a portion of such accrued interest has become doubtful. As of and for the nine months ended September 30, 2014, no investments were put on non-accrual status. Dividend income is recorded on the ex-dividend date, net of withholding taxes, if applicable. | ||
Expenses of the Combined Funds | ||
Expenses of the Combined Funds consist of other miscellaneous expenses and are recorded on an accrual basis. | ||
Interest Expense of Combined Funds | ||
Interest expense of Combined Funds consists of interest (including unused fees and deferred financing costs) incurred on indebtedness under the SLF I and SLF II credit facilities. Interest expense is recorded on an accrual basis and payable quarterly. | ||
Recent Accounting Pronouncements | ||
In June 2013, the FASB issued ASU 2013-08, Financial Services — Investment Companies ("ASU 2013-08"). ASU 2013-08 provides clarifying guidance to determine if an entity qualifies as an investment company. ASU 2013-08 also requires an investment company to measure non-controlling interests in other investment companies at fair value. The following disclosures are required by ASU 2013-08: (i) whether an entity is an investment company and is applying the accounting and reporting guidance for investment companies; (ii) information about changes, if any, in an entity's status as an investment company; and (iii) information about financial support provided or contractually required to be provided by an investment company to any of its investees. The requirements of ASU 2013-08 were adopted by the Company beginning in the first quarter of 2014. There are no changes to the current requirements relating to the retention of specialized accounting in the financial statements of a non-investment company parent. These updates did not have a material impact on the Company's financial condition or results of operations. | ||
In May 2014, the FASB issued ASU No. 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its combined financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of this standard on its combined financial statements and its ongoing financial reporting. | ||
In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the requisite service period, which clarifies the recognition of stock-based compensation over the required service period, if it is probable that the performance condition will be achieved. This guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and should be applied prospectively. The Company is currently evaluating the effect that this guidance will have on its combined financial statements and its ongoing financial reporting. | ||
In August 2014, the FASB issued ASU No. 2014-13, Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing Entity ("CFE"). This new guidance requires reporting entities to use the more observable of the fair value of the financial assets or the financial liabilities to measure the financial assets and the financial liabilities of a CFE when a CFE is initially consolidated. It permits entities to make an accounting policy election to apply this same measurement approach after initial consolidation or to apply other GAAP to account for the consolidated CFE's financial assets and financial liabilities. It also prohibits all entities from electing to use the fair value option in ASC 825 to measure either the financial assets or financial liabilities of a consolidated CFE that is within the scope of this issue. This guidance is effective for fiscal years beginning after December 15, 2015, and interim periods therein. Early adoption is permitted using a modified retrospective transition approach as described in the pronouncement. The Company is currently evaluating the effect that this guidance will have on its combined financial statements and its ongoing financial reporting. | ||
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern," which requires management to evaluate, at each annual and interim reporting period, the company's ability to continue as a going concern within one year of the date the financial statements are issued and provide related disclosures. This accounting guidance is effective for the Company on a prospective basis beginning in the first quarter of fiscal 2016 and is not expected to have a material effect on the Consolidated Financial Statements. | ||
Fifth Street Asset Management Inc. [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Significant Accounting Policies | Summary of Significant Accounting Policies | |
Basis of Accounting — The Statement of Financial Condition has been prepared in accordance with accounting principles generally accepted in the United States of America. Separate statements of operations, changes in stockholder's equity and cash flows have not been presented in the financial statements because there has been no activity that would impact those statements other than the reorganization transactions and reverse stock split. | ||
Basis of Presentation — The unaudited Statement of Financial Condition and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") as set forth in the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair statement of the Company's unaudited interim financial statement has been included and is of a normal and recurring nature. |
Stockholders_Equity
Stockholders' Equity (Fifth Street Asset Management Inc. [Member]) | 9 Months Ended |
Sep. 30, 2014 | |
Fifth Street Asset Management Inc. [Member] | |
Schedule of Capitalization, Equity [Line Items] | |
Stockholders' Equity | Stockholder's Equity |
As of September 30, 2014, the Company was authorized to issue 5,000 shares of common stock, par value $0.01 per share. In exchange for $1,000, the Company has issued 100 shares of common stock, all of which were held by Leonard M. Tannenbaum, as of September 30, 2014. |
Investments_Derivative_Instrum
Investments, Derivative Instruments and Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||
Investments, Derivative Instruments and Fair Value Measurements | Investments, Derivative Instruments and Fair Value Measurements | ||||||||||||||||||||
Investments of the Combined Funds | |||||||||||||||||||||
As of September 30, 2014, the following table presents a summary of the investments held by the Combined Funds and as a percentage of total investments of Combined Funds as of September 30, 2014: | |||||||||||||||||||||
Fair Value | Percentage of Investments of Combined Funds | ||||||||||||||||||||
Geographic Region/Investment/Industry | |||||||||||||||||||||
North America | |||||||||||||||||||||
Senior secured debt investments: | |||||||||||||||||||||
Aerospace and Defense | $ | 3,361,845 | 0.9 | % | |||||||||||||||||
Automotive | 13,860,000 | 3.69 | % | ||||||||||||||||||
Banking, Finance, Insurance & Real Estate | 14,925,000 | 3.97 | % | ||||||||||||||||||
Beverage, Food & Tobacco | 498,750 | 0.13 | % | ||||||||||||||||||
Capital Equipment | 5,914,117 | 1.57 | % | ||||||||||||||||||
Construction & Building | 10,875,643 | 2.89 | % | ||||||||||||||||||
Consumer goods: Non-durable | 5,913,055 | 1.57 | % | ||||||||||||||||||
Energy: Oil & Gas | 16,956,391 | 4.51 | % | ||||||||||||||||||
Environmental Industries | 6,059,094 | 1.61 | % | ||||||||||||||||||
Healthcare & Pharmaceuticals | 43,899,075 | 11.67 | % | ||||||||||||||||||
High Tech Industries | 51,033,531 | 13.57 | % | ||||||||||||||||||
Hotel, Gaming & Leisure | 33,467,540 | 8.9 | % | ||||||||||||||||||
Media: Advertising, Printing & Publishing | 43,812,544 | 11.65 | % | ||||||||||||||||||
Media: Diversified & Production | 6,275,083 | 1.67 | % | ||||||||||||||||||
Metal & Mining | 2,700,000 | 0.72 | % | ||||||||||||||||||
Retail | 14,450,450 | 3.84 | % | ||||||||||||||||||
Services: Business | 39,208,006 | 10.43 | % | ||||||||||||||||||
Services: Consumer | 21,489,590 | 5.71 | % | ||||||||||||||||||
Telecommunications | 22,419,108 | 5.96 | % | ||||||||||||||||||
Transportation: Consumer | 10,121,982 | 2.69 | % | ||||||||||||||||||
Total senior secured debt investments, North America (cost of $364,986,122) | 367,240,804 | 97.65 | % | ||||||||||||||||||
Corporate bonds: | |||||||||||||||||||||
Banking, Finance, Insurance & Real Estate | 3,017,403 | 0.8 | % | ||||||||||||||||||
Total corporate bonds, North America (cost $2,997,150) | 3,017,403 | 0.8 | % | ||||||||||||||||||
Common stocks: | |||||||||||||||||||||
Banking, Finance, Insurance & Real Estate | 1,980,821 | 0.53 | % | ||||||||||||||||||
Total common stocks, North America (cost of $2,135,263) | 1,980,821 | 0.53 | % | ||||||||||||||||||
Europe | |||||||||||||||||||||
Senior secured debt investments: | |||||||||||||||||||||
Media: Broadcasting & Subscription | 1,851,660 | 0.49 | % | ||||||||||||||||||
Total senior secured debt investments, Europe (cost of $1,841,598) | 1,851,660 | 0.49 | % | ||||||||||||||||||
Australia | |||||||||||||||||||||
Senior secured debt investments: | |||||||||||||||||||||
Hotel, Gaming & Leisure | 1,981,670 | 0.53 | % | ||||||||||||||||||
Total senior secured debt investments, Australia (cost of $1,980,000) | 1,981,670 | 0.53 | % | ||||||||||||||||||
Total investments of Combined Funds (cost of $373,940,133) | $ | 376,072,358 | 100 | % | |||||||||||||||||
In addition to the above senior secured and unsecured debt and equity investments, as of September 30, 2014 the Combined Funds have open short positions on equities in the amount of $3,138,808, all of which are in companies located in North America in the banking and finance industry. | |||||||||||||||||||||
Derivative Instruments of Combined Funds | |||||||||||||||||||||
In the normal course of business, FSOF utilizes derivative instruments in addition to its investments in debt and equity securities in connection with its proprietary trading. Derivative instruments derive their value based upon an underlying asset, index or reference rate. The derivative instruments held by FSOF do not qualify for hedge accounting under the accounting standards for derivatives and hedging. To date, FSOF derivative activities have been limited to total return swaps and total derivative assets at fair value at September 30, 2014 were $155,240. | |||||||||||||||||||||
Total return swaps expose FSOF to credit risk that is not shown within the Combined Statements of Financial Condition. A total return swap is an agreement between two parties in which one party pays the total positive return on an underlying asset while the other party pays a fixed or variable rate payment plus any negative total returns on the referenced asset. As of September 30, 2014, FSOF is party to total return swaps indexed to five senior secured debt investments. | |||||||||||||||||||||
All derivative positions are reported in the Combined Statements of Financial Condition at fair value and any change in fair value is reflected in net change in unrealized appreciation (depreciation) of derivative instruments of Combined Funds. The fair value of total return swaps is derived using third party data, if such data is available, or the estimated fair value of the underlying securities. Investments in derivative contracts are recognized on a gross basis in the Combined Statements of Financial Condition. | |||||||||||||||||||||
As of September 30, 2014, FSOF had $11,600,000 of notional exposure under its total return swaps and had posted collateral in the amount of $4,570,487 which represents the maximum exposure for loss related to the total return swaps as of September 30, 2014. FSOF pays a fixed rate in exchange for the total return (interest and capital gains and losses) of five referenced assets. For the three and nine months ended September 30, 2014, FSOF recorded unrealized appreciation and realized gains of $155,240 and $63,089, respectively, in connection with all total return swaps. | |||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||
ASC 820 – Fair Value Measurements and Disclosures ("ASC 820") – defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity. | |||||||||||||||||||||
Assets and liabilities recorded at fair value in the Company's combined financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. | |||||||||||||||||||||
Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: | |||||||||||||||||||||
• | Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | ||||||||||||||||||||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities. | ||||||||||||||||||||
• | Level 3 — Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. | ||||||||||||||||||||
The Company's capital markets group obtains and analyzes readily available market quotations provided by independent pricing services for all of the Combined Funds' senior secured debt investments and derivatives. In determining the fair value of a particular investment, pricing services use observable market information, including both binding and non-binding indicative quotations. In order to validate market quotations, the capital markets group looks at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. If the quotation provided by the pricing service is based on only one market source, the Company corroborates such information by comparing the value to a third party broker quotation that makes a market in the asset. The value obtained from the pricing service is used to measure fair value unless the difference in price between the two sources is in excess of the Company's established tolerance level, in which case the third party broker quotation is used. If neither the pricing services nor the third party brokers are able to obtain any quoted prices, the Company may utilize independent third party valuation specialists. As of September 30, 2014, the fair values of senior secured debt investments and derivatives were measured using unadjusted quotations from pricing services. When determining the fair value of publicly traded equity securities, the Company uses the unadjusted closing price as of the valuation date on the primary market or exchange on which they trade. | |||||||||||||||||||||
The following table presents the financial instruments carried at fair value as of September 30, 2014, by caption on the Company's Combined Statement of Financial Condition for each of the levels of hierarchy established by ASC 820: | |||||||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Senior secured debt investments held by Combined Funds | $ | — | $ | — | $ | 371,074,134 | $ | 371,074,134 | |||||||||||||
Common stock | 1,980,821 | — | — | 1,980,821 | |||||||||||||||||
Corporate bonds | — | 3,017,403 | — | 3,017,403 | |||||||||||||||||
Derivative instruments - Total return swaps | — | — | 155,240 | 155,240 | |||||||||||||||||
$ | 1,980,821 | $ | 3,017,403 | $ | 371,229,374 | $ | 376,227,598 | ||||||||||||||
Liabilities | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Due to former members | $ | — | $ | — | $ | 1,379,214 | $ | 1,379,214 | |||||||||||||
Securities sold short by Combined Funds | 3,138,808 | — | — | 3,138,808 | |||||||||||||||||
$ | 3,138,808 | $ | — | $ | 1,379,214 | $ | 4,518,022 | ||||||||||||||
The following table presents the financial instruments carried at fair value as of December 31, 2013, by caption on the Company's Combined Statement of Financial Condition for each of the levels of hierarchy established by ASC 820: | |||||||||||||||||||||
Liability | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Due to former member | $ | — | $ | — | $ | 2,093,437 | $ | 2,093,437 | |||||||||||||
When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the fact that the unobservable factors are the most significant to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable or Level 3 components, observable components (that is, components that are actively quoted and can be validated by external sources). Accordingly, the appreciation (depreciation) in the tables below includes changes in fair value due in part to observable factors that are part of the valuation methodology. | |||||||||||||||||||||
The following tables provide a roll-forward in the changes in fair value for all financial instruments for which the Company determines fair value using unobservable (Level 3) factors for the three months ended September 30, 2014: | |||||||||||||||||||||
Senior Secured Debt Investments of Combined Funds | Derivative Instruments - Total Return Swaps | Total | |||||||||||||||||||
Fair value at June 30, 2014 | $ | 159,854,778 | $ | — | $ | 159,854,778 | |||||||||||||||
Purchases of investments | 278,152,312 | — | 278,152,312 | ||||||||||||||||||
Sales of investments | (64,145,182 | ) | — | (64,145,182 | ) | ||||||||||||||||
Principal payments on debt investments | (4,343,448 | ) | — | (4,343,448 | ) | ||||||||||||||||
Accretion of original issue discount on debt investments | 104,728 | — | 104,728 | ||||||||||||||||||
Net realized gain on investments of Combined Funds | 506,148 | — | 506,148 | ||||||||||||||||||
Net change in unrealized appreciation on investments and derivative | 944,798 | 155,240 | 1,100,038 | ||||||||||||||||||
instruments of Combined Funds | |||||||||||||||||||||
Fair value at September 30, 2014 | $ | 371,074,134 | $ | 155,240 | $ | 371,229,374 | |||||||||||||||
Net unrealized appreciation/depreciation relating to Level 3 assets and | $ | 1,154,659 | $ | 155,240 | $ | 1,309,899 | |||||||||||||||
liabilities still held at September 30, 2014 and reported within net | |||||||||||||||||||||
unrealized appreciation/depreciation in the Combined Statements of | |||||||||||||||||||||
Income for the three months ended September 30, 2014 | |||||||||||||||||||||
The following tables provide a roll-forward in the changes in fair value for all financial instruments for which the Company determines fair value using unobservable (Level 3) factors for the nine months ended September 30, 2014: | |||||||||||||||||||||
Senior Secured Debt Investments of Combined Funds | Derivative Instruments - Total Return Swaps | Total | |||||||||||||||||||
Fair value at December 31, 2013 | $ | — | $ | — | $ | — | |||||||||||||||
Purchases of investments | 522,311,586 | — | 522,311,586 | ||||||||||||||||||
Sales of investments | (149,438,830 | ) | — | (149,438,830 | ) | ||||||||||||||||
Principal payments on debt investments | (5,282,244 | ) | — | (5,282,244 | ) | ||||||||||||||||
Accretion of original issue discount on debt investments | 160,000 | — | 160,000 | ||||||||||||||||||
Net realized gain on investments of Combined Funds | 1,158,120 | — | 1,158,120 | ||||||||||||||||||
Net change in unrealized appreciation on investments and derivative | 2,165,502 | 155,240 | 2,320,742 | ||||||||||||||||||
instruments of Combined Funds | |||||||||||||||||||||
Fair value at September 30, 2014 | $ | 371,074,134 | $ | 155,240 | $ | 371,229,374 | |||||||||||||||
Net unrealized appreciation/depreciation relating to Level 3 assets and | $ | 2,266,414 | $ | 155,240 | $ | 2,421,654 | |||||||||||||||
liabilities still held at September 30, 2014 and reported within net | |||||||||||||||||||||
unrealized appreciation/depreciation in the Combined Statements of | |||||||||||||||||||||
Income for the nine months ended September 30, 2014 | |||||||||||||||||||||
Due to Former Members | |||||||||||||||||||||
30-Sep-14 | 30-Sep-13 | ||||||||||||||||||||
Fair value at beginning of period | $ | 2,093,437 | $ | 3,079,431 | |||||||||||||||||
Current period additions | 1,799,423 | — | |||||||||||||||||||
Current period payments | (2,694,509 | ) | (647,286 | ) | |||||||||||||||||
Fair value adjustments | 180,863 | (250,772 | ) | ||||||||||||||||||
Fair value at end of period | $ | 1,379,214 | $ | 2,181,373 | |||||||||||||||||
Significant Unobservable Inputs for Level 3 Financial Instruments | |||||||||||||||||||||
The following table provides quantitative information related to the significant unobservable inputs for Level 3 financial instruments, which are carried at fair value as of September 30, 2014: | |||||||||||||||||||||
Assets | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||||
Senior secured debt investments held by Combined Funds | $ | 371,074,134 | Independent | N/A | N/A | N/A | |||||||||||||||
pricing services | |||||||||||||||||||||
and/or broker quotes | |||||||||||||||||||||
Derivative instruments - Total return swaps | 155,240 | Independent | N/A | N/A | N/A | ||||||||||||||||
pricing services | |||||||||||||||||||||
and/or broker quotes | |||||||||||||||||||||
Total | $ | 371,229,374 | |||||||||||||||||||
Liability | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||||
Due to former member | $ | 1,379,214 | Discounted cash | Discount rate | 10% | 10% | |||||||||||||||
flow approach | |||||||||||||||||||||
Part I Fee estimated | $1,502,274 - | $ | 1,502,274 | ||||||||||||||||||
future payments | $1,502,274 | ||||||||||||||||||||
Total | $ | 1,379,214 | |||||||||||||||||||
The following tables provide quantitative information related to the significant unobservable inputs for Level 3 liabilities, which were carried at fair value as of December 31, 2013: | |||||||||||||||||||||
Liability | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||||
Due to former member | $ | 2,093,437 | Discounted cash | Discount rate | 10% | 10% | |||||||||||||||
flow approach | |||||||||||||||||||||
Part I Fee estimated | $2,269,621 - | $ | 2,269,621 | ||||||||||||||||||
future payments | $2,269,621 | ||||||||||||||||||||
Total | $ | 2,093,437 | |||||||||||||||||||
Under the discounted cash flow approach the significant unobservable inputs is the Part I Fee estimated future payments. Significant increases or decreases in this input in isolation may result in a significantly higher or lower fair value measurement, respectively. The discount rate is fixed by contract and not subject to change. | |||||||||||||||||||||
Financial Instruments Disclosed, But Not Carried At Fair Value | |||||||||||||||||||||
The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of September 30, 2014 and the level of each financial liability within the fair value hierarchy: | |||||||||||||||||||||
Carrying | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | |||||||||||||||||||||
Loan payable | $ | 4,000,000 | $ | 4,147,144 | $ | — | $ | — | $ | 4,147,144 | |||||||||||
Notes payable of Combined Funds | 213,488,434 | 213,488,434 | — | — | 213,488,434 | ||||||||||||||||
Total | $ | 217,488,434 | $ | 217,635,578 | $ | — | $ | — | $ | 217,635,578 | |||||||||||
The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of December 31, 2013 and the level of each financial liability within the fair value hierarchy: | |||||||||||||||||||||
Carrying | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | |||||||||||||||||||||
Loan payable | $ | 4,000,000 | $ | 4,000,000 | $ | — | $ | — | $ | 4,000,000 | |||||||||||
The Company utilizes a bond yield approach to estimate the fair values of its loan payable, which are included in Level 3 of the hierarchy. Under the bond yield approach, the Company uses its incremental borrowing rate to determine the present value of the future cash flows streams related to the liability. The carrying values of notes payable of the Combined Funds approximates their fair values and are included in Level 3 of the hierarchy. |
Due_from_Affiliates
Due from Affiliates | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | |
Due from Affiliates | Due from Affiliates |
In the normal course of business, the Company pays certain expenses on behalf of the BDCs, primarily for travel and other costs associated with particular portfolio company holdings of the BDCs, for which it is reimbursed. Such expenses, in the amounts of $1,922,102 and $2,060,367 at September 30, 2014 and December 31, 2013, respectively, are not an obligation of the Company and are recorded as due from affiliates at the time of disbursement (see Note 10). Also included in due from affiliates at December 31, 2013 is $1,760,000 from the landlord (a related party — see Note 10) of the Company's new corporate headquarters. Such amount was received in June 2014. |
Fixed_Assets
Fixed Assets | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Fixed Assets | Fixed Assets | ||||||||
Fixed assets consist of the following: | |||||||||
30-Sep-14 | December 31, 2013 | ||||||||
Furniture, fixtures and equipment | $ | 3,882,054 | $ | 1,568,550 | |||||
Leasehold improvements | 7,836,243 | 111,779 | |||||||
Construction in progress | — | 698,568 | |||||||
11,718,297 | 2,378,897 | ||||||||
Less: accumulated depreciation and amortization | (1,410,964 | ) | (942,216 | ) | |||||
$ | 10,307,333 | $ | 1,436,681 | ||||||
Construction in progress relates to the Company's new corporate headquarters located in Greenwich, CT which was completed in July 2014, at which time the Company took possession of the premises. In connection with the related lease, the landlord (a related party — see Note 10) contributed $1,760,000 towards the construction, which totaled approximately $7,700,000. | |||||||||
Depreciation and amortization expense related to fixed assets for the three and nine months ended September 30, 2014 was $350,342 and $468,749, respectively. Depreciation and amortization expense related to fixed assets for the three and nine months ended September 30, 2013 was $51,664 and $153,592, respectively. |
Other_Assets
Other Assets | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Other Assets | Other Assets | ||||||||
Other assets consist of the following: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Security deposits | $ | 953,375 | $ | 953,375 | |||||
Deferred offering costs (see Note 12) (a) | 3,704,720 | — | |||||||
Fractional interest in aircraft (b) | 1,368,200 | 1,540,900 | |||||||
Other | 248,412 | 158,700 | |||||||
$ | 6,274,707 | $ | 2,652,975 | ||||||
__________________ | |||||||||
(a) | Included in this amount is $3,349,270 which represents unpaid deferred offering costs as of September 30, 2014 and recorded within accounts payable and accrued expenses. | ||||||||
(b) | In November 2013, the Company entered into an agreement that entitled it to the use of a corporate aircraft for five years. The amount paid, less the estimated trade-in value, is being amortized on a straight-line basis over the expected five-year term of the agreement. Amortization expense for the three and nine months ended September 30, 2014 was $58,199 and $172,700, respectively. |
Due_to_Former_Members
Due to Former Members | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | |
Due to Former Members | Due to Former Members |
On November 5, 2010, the Company entered into a separation agreement with a member that provides for (i) the repurchase of the member's pro rata share of Part I Fees based on a formula, as defined in the agreement, over a five year period ending on September 30, 2015, and (ii) upon the closing of a sale transaction of the Company, the allocation by the managing member to the former member of any proceeds from the sale up to a maximum of $6,000,000. Accordingly, the Company recorded a liability for the present value of the expected future payments of the member's pro rata share of Part I Fees as of the date of the agreement and has adjusted this liability to fair value at each reporting date. Included in compensation expense for the three and nine months ended September 30, 2014 and 2013 are fair value adjustments related to this liability that increased/(decreased) compensation expense in the amounts of $44,291 and $180,863 and ($197,314) and ($250,772), respectively. Amounts due to this former member totaled $1,379,214 and $2,093,437 at September 30, 2014 and December 31, 2013, respectively. | |
In addition, the Company will recognize compensation expense in the amount of approximately $144,000 upon the closing of a sale transaction representing the fair value of vested equity-based awards. Any amounts paid to the former member in excess of fair value of the award will be accounted for as a distribution with a corresponding offset to members' equity. | |
On May 17, 2014, the Company entered into a separation agreement with a member that provides for (i) the repurchase of the member's pro rata share of Part I Fees for $1,713,802, and (ii) upon the closing of a sale transaction of the Company, the allocation by the managing member to the former member of a portion of net proceeds from the sale. In connection with the agreement to repurchase the former member's interest, the Company recognized compensation expense in the amount of $2,599,803, representing the amount paid and the reclassification of amounts previously recorded as distributions since December 1, 2012, as the award was forfeited prior to vesting. In addition, the Company recognized compensation expense in the amount of approximately $2,327,548 in connection with the reallocation to the managing member of the former member's forfeited interest. Such amount represents the fair value of the interest in the amount of $4,035,926, as determined by an independent third party appraisal, net of the cash paid on July 3, 2014 in the amount of $1,713,802. |
Debt
Debt | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Debt Disclosure [Abstract] | ||||
Debt | Debt | |||
Loan Payable — Debt Obligation of the Company | ||||
On October 7, 2013, the Company borrowed $4,000,000 from the Department of Economic and Community Development (the "DECD") of the State of Connecticut. Proceeds from the loan are being utilized to fund the build-out costs of the Company's new headquarters in Greenwich, CT. The loan bears interest at a fixed rate of 2.5% per annum and matures on November 21, 2023 and requires interest-only payments through November 1, 2017, at which point monthly payments of principal and interest are required until maturity or such time that the loan is repaid in full. As security for the loan, the Company has granted the State of Connecticut a blanket interest in the Company's personal property, subject only to prior security interests permitted by the State of Connecticut. For the three and nine months ended September 30, 2014, interest expense related to this loan in the amounts of $25,206 and $74,795 are included in interest and other income (expense), net in the Combined Statements of Income. | ||||
Outstanding principal amounts related to this loan maturing over the next five years are as follows: | ||||
2014 | $ | — | ||
2015 | — | |||
2016 | — | |||
2017 | 51,551 | |||
2018 | 627,050 | |||
Under the terms of the agreement, the Company may be eligible for forgiveness of up to $3,000,000 of the principal amount of the loan based on certain job creation milestones within four years of the execution of the loan documents, as mutually agreed to by the Company and the DECD. If the Company is unable to meet these job creation milestones within the allotted timeframe, the DECD may impose a penalty upon the Company in an amount equal to $78,125 per job below the required amount. To date, no penalties have been assessed by the DECD. | ||||
In addition, as part of the agreement with the DECD, the Company is eligible to receive up to $500,000 to fund job training programs that are jointly developed based on the Company's training needs, as well as up to $500,000 for the installation of a fuel cell, wind or solar powered energy system at the Company's Connecticut headquarters. The Company applied for and received both grants as of September 30, 2014. | ||||
Notes Payable of Combined Funds | ||||
SLF I | ||||
On February 18, 2014, SLF I, included in the Fifth Street Management Group, entered into a Loan and Security Agreement ("SLF I Agreement") with respect to a five year credit facility ("SLF I Facility") with Wells Fargo Bank, as Class A Lender and Collateral Agent, Deutsche Bank AG, as Class B Lender, and Wells Fargo Securities, LLC, as administrative agent. | ||||
The facility extended by the Class A Lender ("Class A Facility") permits up to $141.8 million of borrowings (subject to collateral and other requirements) that bear interest at a rate of LIBOR plus 2.40% per annum. The maturity date of the Class A facility is February 18, 2019. | ||||
The facility extended by the Class B Lender ("Class B Facility") permits up to $30.0 million of borrowings (subject to collateral and other requirements) that bear interest at a fixed rate of 7.5% per annum until August 18, 2014, a variable interest rate equal to LIBOR plus 7.5% per annum from that date until February 18, 2015 and a variable interest rate of LIBOR plus 12% per annum thereafter. The maturity date of the Class B facility is February 18, 2019. | ||||
As collateral manager under the SLF I Facility, the Company earns a senior collateral management fee at a rate equal to 0.25% per annum and a subordinated collateral management fee at a rate equal to 0.15% per annum, calculated based on the average principal balance of loans originated during the applicable period. | ||||
As of September 30, 2014, $116,109,577 was outstanding under the Class A Facility and $21,500,000 was outstanding under the Class B Facility, which are included in notes payable of the Combined Funds in the Combined Statements of Financial Condition. For the three and nine months ended September 30, 2014, interest expense related to the SLF I Facility was $1,110,686 and $2,060,861, respectively. | ||||
SLF II | ||||
On August 19, 2014, SLF II, included in the Fifth Street Management Group, entered into a Loan and Security Agreement ("SLF II Agreement") with respect to an eight year credit facility ("SLF II Facility") with Natixis, New York Branch, as Administrative Agent, U.S. Bank National Association as collateral agent. | ||||
The facility extended by the Class A Lender ("Class A Facility") permits up to $200.0 million of borrowings (subject to collateral and other requirements) that bear interest at a rate of fixed rate of 1.90% per annum. The maturity date of the Class A facility is August 19, 2022. | ||||
The facility extended by the Class B Lender ("Class B Facility") permits up to $42.1 million of borrowings (subject to collateral and other requirements) that bear interest at a rate of Libor plus 5.0% per annum. The maturity date of the Class B facility is August 19, 2022. | ||||
The facility extended by the Class C Lender ("Class C Facility") permits up to $12.2 million of borrowings (subject to collateral and other requirements) that bear interest at a rate of Libor plus 6.5% per annum. The maturity date of the Class C facility is August 19, 2022. | ||||
As collateral manager under the SLF II Facility, the Company earns a senior collateral management fee at a rate equal to 0.25% per annum and a subordinated collateral management fee at a rate equal to 0.175% per annum, calculated based on the average principal balance of loans originated during the applicable period. | ||||
As of September 30, 2014, $43,878,857 was outstanding under the Class A Facility, $24,796,613 was outstanding under the Class B Facility, and $7,203,387 was outstanding under the Class C Facility which are included in notes payable of the Combined Funds in the Combined Statements of Financial Condition. For the three months ended September 30, 2014, interest expense related to the SLF II Facility was $480,376. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies |
Leases | |
The Company leases office space in various locations throughout the United States and maintains its headquarters in Greenwich, CT. On July 22, 2013, the Company entered into a lease agreement with a related party (see Note 10) for office space in Greenwich, CT that expires on September 30, 2024. Other non-cancelable office leases in other locations expire through 2019. The Company's rental lease agreements are generally subject to escalation provisions on base rental payments, as well as certain costs incurred by the property owner and are recognized on a straight-line basis over the term of the lease agreements. | |
In July 2014, the Company terminated the non-cancelable operating lease for its White Plains, NY office. Under the terms of the agreement with the landlord, the Company paid an early termination fee of $617,000 and is obligated to pay rent through November 30, 2015. Accordingly, the Company has recognized an additional expense in the amount of $459,000 representing the fair value of the remaining lease obligation. | |
In August 2014, the Company sublet its former office in Greenwich, CT. In connection therewith, the Company has recognized an expense in the amount of $197,000 representing the fair value of the remaining lease obligation. | |
Guarantee | |
On August 1, 2013, the Company entered into an agreement whereby FSC, Inc. and FSC CT guaranteed a commercial mortgage loan in the amount of $26,000,000 issued by a financial institution to an entity owned by the managing member. The loan matures on August 1, 2023 and requires monthly interest payments throughout the term with monthly principal payments beginning on September 2, 2014 through the maturity date. Interest on the loan accrues at a rate of LIBOR plus 1.85% per annum. This guarantee was terminated on September 24, 2014. | |
Capital Commitments | |
As of September 30, 2014, the Company had aggregate unfunded capital commitments of approximately $150,000 related to its equity investment in SLF I. | |
Unfunded Commitments of Combined Funds | |
As of September 30, 2014, the Combined Funds had approximately $5,343,000 in unfunded commitments related to the senior secured debt investments. | |
Litigation | |
From time to time, the Company may be involved in litigation and claims incidental to the conduct of the Company's business. The Company may also be subject, from time to time, to reviews, inquiries and investigations by regulatory agencies that have regulatory authority over the Company's business activities. The Company is currently not subject to any pending judicial, administrative or arbitration proceedings that are expected to have a material impact on the Company's combined results of operations or financial condition. |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Related Party Transactions [Abstract] | |||||||||
Related Party Transactions | Related Party Transactions | ||||||||
All of the Company's revenue is earned from its affiliates, including management fees, performance fees and other fees. | |||||||||
For the three months ended September 30, 2014 and 2013, the Company earned $23,091,676 and $16,861,209, respectively, in management fees relating to services provided to the BDCs. For the nine months ended September 30, 2014 and 2013, the Company earned $68,340,333 and $46,959,938, respectively in management fees relating to services provided to the BDCs. As of September 30, 2014 and December 31, 2013, management fees receivable in the amounts of $23,091,676 and $21,409,763, are due from the BDCs. During the three months ended September 30, 2014 and 2013, the Company voluntarily waived $378,890 and $0 of management fees to the BDCs, respectively. During the nine months ended September 30, 2014 and 2013, the Company voluntarily waived $841,715 and $2,321,986 of management fees to the BDCs, respectively. | |||||||||
During the nine months ended September 30, 2014, the Company recorded a reduction of management fees in the amount of $195,816 relating to an adjustment to appropriately reflect cumulative management fees charged to Fund II. During the three and nine months ended September 30, 2013, the Company earned $30,173 and $89,874, respectively, in management fees relating to services provided to Fund II. As of September 30, 2014 and December 31, 2013, there were no management fees receivable from Fund II. | |||||||||
Performance fees earned for the three and nine months ended September 30, 2014 totaled $139,049. No performance fees were earned during the three and nine months ended September 30, 2013. | |||||||||
Receivables for reimbursable expenses are included within due from affiliates and totaled $1,922,102 and $2,060,367 at September 30, 2014 and December 31, 2013, respectively. | |||||||||
The Company also has entered into administration agreements with the BDCs under which the Company provides administrative services for the BDCs, including office facilities and equipment, and clerical, bookkeeping and recordkeeping services at such facilities. Under the administration agreement, the Company also performs or oversees the performance of the BDCs required administrative services, which includes being responsible for the financial records which the BDCs are required to maintain and preparing reports to the BDCs' stockholders and reports filed with the Securities and Exchange Commission. In addition, the Company assists each of the BDCs in determining and publishing its net asset value, overseeing the preparation and filing of its tax returns and the printing and dissemination of reports to the each of the BDC's stockholders, and generally overseeing the payment of each of the BDC's expenses and the performance of administrative and professional services rendered to such BDC by others. For providing these services, facilities and personnel, the BDCs reimburse the Company the allocable portion of overhead and other expenses incurred by the Company in performing its obligations under the administration agreement, including rent and such BDC's allocable portion of the costs of compensation and related expenses of such BDC's chief financial officer and chief compliance officer and their staffs. Such reimbursement is at cost with no profit to, or markup by, the Company. Included in Revenues — other fees in the Combined Statements of Income for the three and nine months ended September 30, 2014 and 2013 were $2,187,933 and $4,205,987 and $753,768 and $3,188,954, respectively, related to amounts charged for the above services provided to the BDCs. The Company may also provide, on the BDCs' behalf, managerial assistance to such BDC's portfolio companies. Each of the administration agreements may be terminated by either the Company or the BDC without penalty upon 60 days' written notice to the other party. | |||||||||
On July 22, 2013, the Company entered into a lease agreement for office space for its headquarters in Greenwich, CT. The landlord is an entity controlled by the managing member. The lease agreement requires monthly rental payments at market rates, expires on September 30, 2024 and can be renewed at the request of the Company for two additional five year periods. Rental payments under this lease of approximately $2,000,000 per year began on October 11, 2014. | |||||||||
The Company's fractional interest in a corporate aircraft is used primarily for business purposes. Occasionally, certain of the members have used the aircraft for personal use. The Company charges these members for such personal use based on market rates. Such charges were not material for the three and nine months ended September 30, 2014 and 2013. | |||||||||
Included in due to affiliates at December 31, 2013 is $2,542,333 related to cash held by the Company in connection with a liability of an uncombined affiliate. Such amount was returned to the affiliate in June 2014. Also included in due to affiliates at September 30, 2014 and December 31, 2013 is $143,130 and $129,001, respectively, related to purchased interests of non-equity members (see Note 11). | |||||||||
As of September 30, 2014 and December 31, 2013, amounts due to and from affiliates were comprised of the following: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Management fees receivable: | |||||||||
Base management fees receivable - BDCs | $ | 12,847,284 | $ | 12,355,341 | |||||
Part I Fees receivable - BDCs | 10,244,392 | 9,054,422 | |||||||
$ | 23,091,676 | $ | 21,409,763 | ||||||
Performance fees receivable: | |||||||||
Part II Fees receivable - BDCs | $ | 54,826 | $ | — | |||||
$ | 54,826 | $ | — | ||||||
Due from affiliates: | |||||||||
Reimbursed expenses due from the BDCs | $ | 1,922,102 | $ | 2,060,367 | |||||
Due from members for personal use of corporate aircraft | — | 11,359 | |||||||
Due from employees | 23,493 | 14,672 | |||||||
Due from landlord for construction costs | — | 1,760,000 | |||||||
Other amounts due from affiliated entities | 10,287 | 2,093 | |||||||
$ | 1,955,882 | $ | 3,848,491 | ||||||
Due to affiliates: | |||||||||
Cash held on behalf of Fund II | $ | — | $ | 2,542,333 | |||||
Due to non-equity members for purchase of interests | 143,130 | 129,001 | |||||||
$ | 143,130 | $ | 2,671,334 | ||||||
Members_Equity_and_EquityBased
Members' Equity and Equity-Based Compensation | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Equity [Abstract] | ||||
Members' Equity and Equity-Based Compensation | Members' Equity and Equity-Based Compensation | |||
Prior to December 1, 2012, interests in the Company's Part I Fees that were granted and/or sold to members (other than the managing member) were accounted for as liabilities using the intrinsic-value method as these interests are subject to repurchase in the event of the member's termination of employment, at a formula-based price (as defined in the then existing operating agreement) determined by the member's pro rata share of Part I Fees. In addition, the redemption amounts were exclusive of any accumulated undistributed earnings associated with the member's interests, which were also required to be paid to a former member. | ||||
Effective December 1, 2012, the operating agreement was amended to include a retirement eligibility vesting clause for then existing members ("equity members"). Members admitted after December 1, 2012, are considered non-equity members as their interests do not include the retirement eligibility clause and will be accounted for as liabilities using the intrinsic-value method consistent with the above. The previous amounts paid by the equity members prior to December 1, 2012 for these interests, totaling $2,065,664, which had been accounted for as a liability, were reclassified to members' equity with payments subsequent to December 1, 2012 accounted for as distributions from equity. The fair value of these awards at that date in the amount of $15,187,787, net of cash paid for the awards, as determined by an independent third party appraisal, is being amortized on a straight-line basis over the period to retirement eligibility. | ||||
During the period January 1, 2013 through September 30, 2014 the following transactions were consummated: | ||||
• | On January 1, 2013, the managing member sold a portion of his Part I Fee to an employee for $82,141. Such interest did not include the retirement eligibility clause and was accounted for as a liability as discussed above and the employee is now considered a "non-equity member." The amount paid by the non-equity member, which is refundable upon termination of employment after completing six years of service, is included in due to affiliates with a corresponding distribution to the managing member. On April 1, 2013, the managing member granted an additional Part I Fee to this same non-equity member. Such interest did not include the retirement eligibility clause and is being accounted for as a liability as discussed above. Accordingly, distributions for the three and nine months ended September 30, 2014 in the amounts of $24,659 and $68,070, respectively, and for the three and nine months ended September 30, 2013 in the amounts of $17,843 and $55,989, respectively, are included in compensation expense. | |||
• | On April 1, 2013, the managing member granted a Part I Fee to an employee. Such interest did not include the retirement eligibility clause and is being accounted for as a liability as discussed above and the employee is considered a non-equity member. Accordingly, distributions for the three and nine months ended September 30, 2014 in the amounts of $33,784 and $101,866, respectively, and for the three and nine months ended September 30, 2013 in the amounts of $30,171 and $64,234, respectively, are included in compensation expense. | |||
• | On April 1, 2013, the managing member granted additional Part I Fees to two equity members. As the interests include the retirement eligibility clause, they have been accounted for as equity awards. The fair value of the awards at that date in the amount of $184,213, net of cash paid for the awards, as determined by an independent third party appraisal, is being amortized on a straight-line basis over the period to retirement eligibility. Included in compensation expense for the three and nine months ended September 30, 2014 in the amounts of $2,980 and $8,938, respectively, and for the three and nine months ended September 30, 2013 in the amounts of $3,972 and $7,944 of amortization relating to these equity-classified awards. As of September 30, 2014, unrecognized compensation cost in the amount of $163,359 relating to these equity-classified awards is expected to be recognized over a period of approximately 14 years. | |||
• | On July 17, 2013, the Company sold additional Part I Fees to seven equity members for a total of $505,597. As the interests include the retirement eligibility clause, they have been accounted for as equity awards. The fair value of the awards at that date in the amount of $3,639,150 (net of subsequent forfeitures in the amount of $325,587), net of cash paid for the awards, as determined by an independent third party appraisal, is being amortized on a straight-line basis over the period to retirement eligibility. Included in compensation expense for the three and nine months ended September 30, 2014 in the amounts of $96,900 and $290,796, respectively, and for the three and nine months ended September 30, 2013 in the amounts of $65,299 of amortization relating to these equity-classified awards. As of September 30, 2014, unrecognized compensation cost in the amount of $3,195,307 relating to these equity-classified awards is expected to be recognized over a period of approximately 12 years. | |||
• | On July 17, 2013, the Company sold additional Part I Fees to two non-equity members and two employees for a total of $46,860. Such interests did not include the retirement eligibility clause and have been accounted for as liabilities as discussed above. Accordingly, distributions for the three and nine months ended September 30, 2014 in the amounts of $21,100 and $49,814, respectively, and for the three and nine months ended September 30, 2013 in the amounts of $10,491, respectively, are included in compensation expense. The amounts paid, which are refundable upon termination of employment after completing six years of service, are included in due to affiliates. | |||
• | On December 31, 2013, the managing member sold a portion of his Part I Fees to an equity member for $350,000. As the interest includes the retirement eligibility clause, it has been accounted for as an equity award. The amount paid has been accounted for as a capital contribution with a corresponding distribution to the managing member. The fair value of the award at that date, net of cash paid for the award, in the amount of $40,726, as determined by an independent appraisal, is being amortized on a straight-line basis over the period to retirement eligibility which is expected to be approximately 12 years. | |||
• | On December 31, 2013, the managing member and another member sold a portion of their Part I Fees to an equity member for $56,800. As the interest includes the retirement eligibility clause, it has been accounted for as an equity award. The amount paid by the equity member has been accounted for as a capital contribution with corresponding distributions to the managing member and the equity member. The fair value of the award at that date in the amount of $735,800, net of cash paid for the award, as determined by an independent third party appraisal, is being amortized on a straight-line basis over the period to retirement eligibility which is expected to be approximately 12 years. Included in compensation expense for the three and nine months ended September 30, 2014 in the amounts of $16,621 and $49,863, respectively, of amortization relating to these equity-classified awards. As of September 30, 2014, unrecognized compensation cost in the amount of $685,937 relating to these equity-classified awards is expected to be recognized over a period of approximately 12 years. | |||
• | On January 1, 2014, the members, on a pro rata basis, sold a portion of their Part I Fees to an employee for $14,129. Such interest did not include the retirement eligibility clause and has been accounted for as a liability as discussed above. Accordingly, distributions for the three and nine months ended September 30, 2014 in the amounts of $5,250 and $8,391, respectively, are included in compensation expense. The amount paid, which is refundable upon termination of employment after completing six years of service, is included in Due to Affiliates. | |||
The following table summarizes activity for the nine months ended September 30, 2014 and 2013 with respect to the Company's equity classified awards: | ||||
Balance at December 31, 2012 | $ | 15,057,283 | ||
Amortization of granted and purchased interests | (1,254,961 | ) | ||
Balance at September 30, 2013 | $ | 13,802,322 | ||
Balance at December 31, 2013 | $ | 18,243,398 | ||
Fair value of purchased interest | 4,035,926 | |||
Cash received for purchased interest | (1,708,378 | ) | ||
Amortization of granted and purchased interests | (3,815,194 | ) | ||
Balance at September 30, 2014 | $ | 16,755,752 | ||
Included in compensation expense for the nine months ended September 30, 2014 and 2013 is $3,815,194 and $1,254,961, respectively, of amortization relating to the above equity-classified awards. Included in compensation expense for the three months ended September 30, 2014 and 2013 is $450,223 and $467,968, respectively, of amortization relating to the above equity-classified awards. | ||||
As of September 30, 2014, unrecognized compensation cost in the amount of $16,755,752 relating to these equity-based awards is expected to be recognized over a period of approximately 12 – 14 years. | ||||
The following table summarizes activity for the nine months ended September 30, 2014 and 2013 with respect to the Company's liability classified awards: | ||||
Balance at December 31, 2012 | $ | — | ||
Cash received for purchased interests | 129,001 | |||
Compensation expense | 130,714 | |||
Payment of liabilities | (130,714 | ) | ||
Balance at September 30, 2013 | $ | 129,001 | ||
Balance at December 31, 2013 | $ | 129,001 | ||
Cash received for purchased interests | 14,129 | |||
Compensation expense | 228,140 | |||
Payment of liabilities | (228,140 | ) | ||
Balance at September 30, 2014 | $ | 143,130 | ||
Certain member interests are subject to repurchase in the event of the member's termination of employment, at a formula-based price (as defined) determined by the member's pro rata share of Part I Fees. In addition, the Company will recognize compensation expense in the amount of approximately $450,000 upon the closing of a sale transaction representing the fair value of vested equity-based awards. Any amounts paid in excess of fair value of the award will be accounted for as a distribution with a corresponding offset to members' equity. |
Subsequent_Events
Subsequent Events | 9 Months Ended | |
Sep. 30, 2014 | ||
Subsequent Event [Line Items] | ||
Subsequent Events | Subsequent Events | |
The Company has evaluated subsequent events through the date of issuance of these combined financial statements and has determined the following events require disclosure: | ||
Reorganization and Initial Public Offering | ||
In connection with the initial public offering (the "IPO") of shares of Class A common stock of Fifth Street Asset Management Inc. ("FSAM"), the Company reorganized its capital structure and equity interests. As part of the reorganization, the existing members of the Company exchanged their equity interests for limited partner interests in a new entity, Fifth Street Holdings L.P., ("Fifth Street Holdings") which became the sole owner of the reorganized Fifth Street Management Group. As discussed below, substantially all of the proceeds from the IPO were used by FSAM to purchase a 12.0% interest in Fifth Street Holdings L.P. from its limited partners and FSAM is subject to corporate-level income taxes. The reorganization, which occurred immediately prior to the IPO, was effectuated as follows: | ||
• | FSC CT, FSC, Inc. and its subsidiaries FSC LLC and FS Transportation, FSC Midwest and FSC West, all wholly-owned by LMT, were converted into limited liability companies and contributed to FSM; | |
• | The members of FSCO GP contributed 100% of their membership interests to Fifth Street Holdings in exchange for Holdings LP Interests; | |
• | The members of FSM contributed 100% of their membership interests to Fifth Street Holdings in exchange for Holdings LP Interests; and | |
• | The Principals contributed the general partnership interests of Fifth Street Holdings to the FSAM in exchange for 100% of FSAM Class B common stock. | |
As a result of the above, FSAM became the general partner of Fifth Street Holdings, which was also organized to be a holding company for FSM and FSCO GP. As a holding company, the FSAM will conduct all of its operations through FSM and FSCO GP, wholly-owned subsidiaries of Fifth Street Holdings. FSM and FSCO GP will continue to conduct all of the Company's business activities (formerly conducted by the Fifth Street Management Group), including the provision of management services to FSC, FSFR and other affiliated funds. | ||
In connection with the reorganization, FSAM entered into an exchange agreement with the Fifth Street Holdings Limited Partners that grants each Fifth Street Holdings Limited Partner and certain permitted transferees the right, beginning two years after the closing of the IPO and subject to vesting and minimum retained ownership requirements, on a quarterly basis, to exchange such person's limited partnership interests for shares of Class A common stock of FSAM, par value $0.01 per share (the "Class A Common Stock") on a one-for-one basis, subject to customary conversion rate adjustments for splits, unit distributions and reclassifications. As a result, each Fifth Street Holdings Limited Partner, over time, has the ability to convert his or her illiquid ownership interests in Fifth Street Holdings into FSAM Class A Common Stock that can more readily be sold in the public markets. | ||
On November 4, 2014, FSAM issued 6,000,000 shares of Class A Common Stock in the IPO at a price of $17.00 per share. Total proceeds from the IPO, net of underwriting discounts, were $95.9 million before offering expenses of $3.7 million payable by FSAM and were used to purchase a 12.0% limited partnership interest of Fifth Street Holdings from its limited partners. Following the IPO, the FSAM will consolidate the financial results of Fifth Street Holdings, its consolidated subsidiaries and certain Combined Funds. | ||
Our purchase of Holdings LP Interests concurrent with our IPO, and the subsequent and future exchanges by holders of Holdings LP Interests for shares of our Class A common stock pursuant to the Exchange Agreement is expected to result in increases in our share of the tax basis of the tangible and intangible assets of Fifth Street Holdings, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to us. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of cash taxes that we would otherwise be required to pay in the future. We have entered into a tax receivable agreement with the TRA Recipients that requires us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income tax that we actually realize (or, under certain circumstances, are deemed to realize) as a result of the increases in tax basis in connection with exchanges by the TRA Recipients described above and certain other tax benefits attributable to payments under the tax receivable agreement. | ||
On October 29, 2014, FSM issued notes payable to certain of its previous members in satisfaction of remaining undistributed earnings from inception through the date of the IPO in an aggregate amount of approximately $14.0 million, subject to finalization in connection with its year-end audit and the year-end audits of FSC and FSFR, as well as the completion of the associated tax returns. The Company intends to use the Credit Facility to repay all amounts owed under these notes payable in the fourth quarter of 2014 and first quarter of 2015. | ||
Credit Facility | ||
On November 4, 2014, Fifth Street Holdings entered into an unsecured revolving credit facility which matures on November 4, 2019 with certain lenders party thereto from time to time and Sumitomo Mitsui Banking Corporation, as administrative agent and joint lead arranger, and Morgan Stanley Senior Funding, Inc, as syndication agent and joint lead arranger. The revolving credit facility provides for $176 million of borrowing capacity, with a $100 million accordion feature, and bears interest at a variable rate based on either LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change based on a total leverage ratio. Borrowings under the new revolving credit facility will initially accrue interest at an annual rate of LIBOR plus 2.00% and that the unused commitment fee under the facility will be 0.30% per annum. The new revolving credit facility contains customary affirmative and negative covenants for agreements of this type, including financial maintenance requirements, delivery of financial and other information, compliance with laws, further assurances and limitations with respect to indebtedness, liens, fundamental changes, restrictive agreements, dispositions of assets, acquisitions and other investments, conduct of business and transactions with affiliates. The new revolving credit facility has a term of five years. | ||
Fifth Street Asset Management Inc. [Member] | ||
Subsequent Event [Line Items] | ||
Subsequent Events | Subsequent Events | |
The Company has evaluated subsequent events through the date of issuance of the Statement of Financial Condition and has determined the following event requires disclosure, in addition to the reorganization and the IPO transactions discussed above: | ||
On October 13, 2014, the Company effectuated a one-for-three reverse stock split and amended its certificate of incorporation to allow for the issuance of 500,000,000 shares of Class A common stock, 50,000,000 shares of Class B common stock and 5,000,000 shares of preferred stock, all with a par value of $0.01 per share. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 9 Months Ended | |
Sep. 30, 2014 | ||
Schedule of Accounting Policies [Line Items] | ||
Basis of Presentation | Basis of Presentation | |
The unaudited interim combined financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") as set forth in the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in the combined financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair statement of the Company's unaudited interim combined financial statements have been included and are of a normal and recurring nature. The operating results presented for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These combined financial statements should be read in conjunction with the Company's audited combined financial statements as of and for the years ended December 31, 2013 and 2012 and notes thereto included in Fifth Street Asset Management Inc.'s final prospectus dated October 29, 2014 filed with the Securities and Exchange Commission ("SEC") in accordance with Rule 424(b) of the Securities Act of 1933 on October 30, 2014. The December 31, 2013 Combined Statement of Financial Condition data was derived from the audited combined financial statements at that date. All significant intercompany transactions and balances have been eliminated in combination. | ||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions affecting amounts reported in the combined financial statements and accompanying notes. The most significant of these estimates are related to (i) fair value measurements of the assets and liabilities of the Combined Funds; (ii) the valuation of equity-based compensation, and (iii) estimating the fair value of the amount due to a former member. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions and conditions. | ||
The Company has not presented earnings per share amounts in the Combined Statements of Income as they would not be meaningful based on the Company’s ownership structure as of the date of these combined financial statements. Additionally, the subsequent reorganization (as discussed in Note 12) has significantly changed the ownership of the Company, and therefore, has not been presented retroactively. | ||
The combined financial statements include the accounts of the above affiliated entities, all of which are either wholly or substantially owned and/or under the voting control of the managing member, Leonard M. Tannenbaum (collectively, the "Fifth Street Management Group") and do not reflect the effect of the reorganization, the initial public offering and related transactions which occurred after September 30, 2014 (see Note 12). | ||
The "members" refer to the managing member, seven other existing equity members and five other existing non-equity members. | ||
Variable Interest Entities | Variable Interest Entities ("VIEs") — The Company determines whether, if by design, an entity has equity investors who lack the characteristics of a controlling financial interest or does not have sufficient equity at risk to finance its expected activities without additional subordinated financial support from other parties. If an entity has either of these characteristics, it is considered a VIE and must be consolidated by its primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company's involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (for example, management and performance related fees), would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment. Certain VIEs qualify for the deferral under ASU 2010-10, Amendments to Statement 167 for Certain Investment Funds, if the following criteria are met: | |
a. | The entity has all of the attributes of an investment company as defined in the American Institute of Certified Public Accountants Accounting and Auditing Guide, Investment Companies ("Investment Company Guide"), or does not have all the attributes of an investment company but it is an entity for which it is acceptable based on industry practice to apply measurement principles that are consistent with the Investment Company Guide, | |
b. | The reporting entity does not have explicit or implicit obligations to fund any losses of the entity that could potentially be significant to the entity, and | |
c. | The entity is not a securitization or asset-backed financing entity or an entity that was formerly considered a qualifying special purpose entity. | |
Where the VIEs have qualified for the deferral of the current consolidation guidance, the analysis is based on previous consolidation guidance. This guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a variable interest entity and (b) whether the Company's involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (for example, management and performance related fees), would be expected to absorb a majority of the variability of the entity. | ||
Under both guidelines, the Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and reconsiders that conclusion continually. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company and its affiliates or indirectly through employees. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective investment funds could affect an entity's status as a VIE or the determination of the primary beneficiary. At each reporting date, the Company assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly. | ||
The Company has not consolidated any entities into the combined financial statements under the VIE model as it does not have an interest in any VIE. | ||
• | Voting Interest Entities — For entities that are not VIEs, the Company consolidates those entities in which it has an equity investment of greater than 50% and has control over significant operating, financial and investing decisions of the entity. Additionally, the Company consolidates entities in which the Company is a substantive, controlling general partner and the limited partners have no substantive rights to participate in the ongoing governance and operating activities. | |
The Company has determined that FSOF should be consolidated by FSCO GP as the limited partners of FSOF do not have substantive kick-out or participating rights. The Company has included the results of FSCO GP in its combined financial statements as it is under common control of the managing member. | ||
The Company has determined that SLF I should be consolidated by FSM (the manager of SLF I and a combined entity) as the investors of SLF I do not have substantive kick-out or participating rights. | ||
The Company has determined that SLF II should be consolidated by FSM (the manager of SLF II and a combined entity) as the investors of SLF II do not have substantive kick-out or participating rights. | ||
Including the results of the Combined Funds significantly increases the reported amounts of the assets, liabilities, revenues, expenses and cash flows of the Company; however, the Combined Funds results included herein have no direct effect on the net income attributable to controlling interests or on total controlling equity. Instead, economic ownership interests of the investors in the Combined Funds are reflected as redeemable non-controlling interests with respect to FSOF and non-controlling interests with respect to SLF I and SLF II, in the accompanying combined financial statements. | ||
Concentration of Credit Risk and Other Risks and Uncertainties | Concentration of Credit Risk and Other Risks and Uncertainties | |
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. | ||
For the nine months ended September 30, 2014 and 2013, 100% of revenues and receivables were earned or derived from advisory or administrative services provided to the BDCs and other affiliated entities. | ||
The Company is dependent on the managing member for all key decisions and its continued business operations. If for any reason the services of our managing member were to become unavailable, there could be a material adverse effect on the Company's operations, liquidity and profitability. | ||
Fair Values of Financial Instruments | Fair Values of Financial Instruments | |
The carrying amounts of cash and cash equivalents, management and performance fees receivable from affiliates, prepaid expenses, due from/to affiliates, accounts payable and accrued expenses and accrued compensation and benefits approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair value of the amount due to a former member was determined using the present value of the expected future payments. The fair value of the loan payable is determined using current applicable rates for similar instruments as of the date of the Combined Statement of Financial Condition and approximates the carrying value of such debt. | ||
Cash and Cash Equivalents | Cash and Cash Equivalents | |
Cash equivalents include short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. The Company and its Combined Funds place its cash and cash equivalents with U.S. financial institutions and, at times, amounts may exceed federally insured limits. The Company and its Combined Funds monitor the credit standing of these financial institutions. | ||
Cash and cash equivalents held at the Combined Funds, which includes amounts held by prime brokers, represent cash that, although not legally restricted, is not available to support the liquidity needs of the Company, as the use of such amounts is limited to the investment activities of the Combined Funds. | ||
Fixed Assets | Fixed Assets | |
Fixed assets consist of furniture, fixtures and equipment (including automobiles, computer hardware and software) and leasehold improvements, and are recorded at cost, less accumulated depreciation and amortization. Depreciation of furniture, fixtures and equipment is computed using the straight-line method over the estimated useful lives of the respective assets (three to eight years). Amortization of improvements to leased properties is computed using the straight-line method based upon the initial term of the applicable lease or the estimated useful life of the improvements, whichever is shorter, and ranges from five to 10 years. Routine expenditures for repairs and maintenance are charged to expense when incurred. Major betterments and improvements are capitalized. Upon retirement or disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the Combined Statements of Income. The Company evaluates fixed assets for impairment whenever events or changes in circumstances indicate that an asset's carrying value may not be fully recovered. During the three months ended September 30, 2014, the Company wrote-off leasehold improvements in connection with the lease terminations discussed in Note 9. No other impairments were deemed necessary for the nine months ended September 30, 2014 and 2013. | ||
Deferred Rent | Deferred Rent | |
The Company recognizes rent expense on a straight-line basis over the expected lease term. Within the provisions of certain leases, there are free rent periods and escalations in payments over the base lease term. The effects of these items have been reflected in rent expense on a straight-line basis over the expected lease term. Landlord contributions and tenant allowances are included in the straight-line calculations and are being deferred over the lease term and are reflected as a reduction in rent expense. | ||
Redeemable Non-controlling Interests | Redeemable Non-controlling Interests | |
The Company consolidates a credit-focused hedge fund (FSOF) that it manages, wherein investors are able to redeem their interests, in cash or in kind or both, after an initial lock-up period of one year, without penalty. Amounts relating to these fund investors' interests in FSOF are presented as redeemable non-controlling interests in the Combined Statements of Financial Condition. Allocations of profits and losses to these interests are reflected within net income attributable to redeemable non-controlling interests in the Combined Statements of Income. The allocation of net income or loss to redeemable non-controlling interests in the Combined Fund is based on the relative ownership interests of the limited partners after the consideration of contractual arrangements that govern allocations of income or loss. These interests are adjusted for general partner allocations and by subscriptions and redemptions in funds that occur during the period. | ||
Non-controlling Interests | Non-controlling Interests | |
In addition to the members' interests in the Fifth Street Management Group, the Company also consolidates senior loan funds (SLF I and SLF II) in which non-controlling interests are present. Amounts relating to the fund's investors' interests in SLF I and SLF II are presented as non-controlling interests in the Combined Statements of Financial Condition. Allocations of profits and losses to these interests are reflected within net income attributable to non-controlling interests in the Combined Statements of Income. Investors in this fund presented within non-controlling interests are not able to redeem their interests until the fund liquidates or is otherwise wound-up. | ||
Non-controlling interest holders in SLF I and SLF II owned approximately 72.8% of the Company's combined total equity as of September 30, 2014. | ||
Revenue Recognition | Revenue Recognition | |
The Company has two principal sources of revenues: management fees and performance fees. These revenues are derived from the Company's agreements with the funds it manages, primarily the BDCs. The advisory agreements, on which revenues are based, are generally renewable on an annual basis by the general partner or the board of directors of the respective funds. | ||
Management Fees | ||
Management fees are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value ("NAV"), net investment income, total assets or par value of the investment portfolios managed by the Company. All management fees are earned from affiliated funds of the Company. The contractual terms of management fees vary by fund structure and investment strategy and range from 0.40% to 2.00% for base management fees, which are asset or capital-based. | ||
Management fees from affiliates also include quarterly incentive fees on the net investment income from the BDCs ("Part I Fees"). Part I Fees are generally equal to 20.0% of the BDCs net investment income (before Part I Fees and performance fees payable based on capital gains), subject to fixed "hurdle rates" as defined in the respective investment advisory agreement. No fees are recognized until the BDCs net investment income exceeds the respective hurdle rate, with a "catch-up" provision that serves to ensure the Company receives 20% of the BDCs net investment income from the first dollar earned. Such fees are classified as management fees as they are paid quarterly, predictable and recurring in nature, not subject to repayment (or clawback) and cash settled each quarter. Management fees from affiliates are recognized as revenue in the period advisory services are rendered, subject to the Company's assessment of collectability. | ||
Performance Fees | ||
Performance fees are earned from the funds managed by the Company based on the performance of the respective funds. The contractual terms of performance fees vary by fund structure and investment strategy and are generally 15.0% to 20.0%. | ||
The Company has elected to adopt Method 2 of ASC 605-20, Revenue Recognition ("ASC 605") for revenue based on a formula. Under this method, the Company records revenue when it is entitled to performance-based fees, subject to certain hurdles or benchmarks. The performance fees for any period are based upon an assumed liquidation of the fund's net assets on the reporting date, and distribution of the net proceeds in accordance with the fund's income allocation provisions. The performance fees may be subject to reversal to the extent that the performance fees recorded exceed the amount due to the general partner or investment manager based on a fund's cumulative investment returns. | ||
Performance fees related to the BDCs ("Part II Fees") are calculated and payable in arrears as of the end of each fiscal year of the BDCs and equal 20% of the BDCs realized capital gains, if any, on a cumulative basis since inception, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. | ||
Other Fees | ||
The Company also provides administrative services to the BDCs that are reported within Revenues — Other fees. These fees are recognized as revenue in the period administrative services are rendered. These fees generally represent the portion of compensation, overhead and other expenses incurred by the Company directly attributable to the funds, but may also be based on a fund's asset value. The Company selects the vendors, incurs the expenses, and is the primary obligor under the related arrangements. The Company is considered the principal under these arrangements and is required to record the expense and related reimbursement revenue on a gross basis. Other fees are recognized in the periods during which the related expenses are incurred and the reimbursements are contractually earned. | ||
Compensation and Benefits | Compensation and Benefits | |
Compensation generally includes salaries, bonuses and equity-based compensation charges. Bonuses are accrued over the service period to which they relate. All payments made to the Company's managing member since inception and all payments made to equity members since December 1, 2012 (see Note 11) related to their granted or purchased interests are accounted for as distributions on the equity held by such members. | ||
Equity-Based Compensation | ||
Compensation expense related to the issuance of equity-based awards is measured at fair value of the award on the grant date, in excess of any amounts paid for the interest, and is recognized on a straight-line basis over the requisite service period, with a corresponding increase in members' equity. Equity-based compensation expense is adjusted, as necessary, for actual forfeitures so as to reflect expenses only for the portion of the award that ultimately vests. Equity-based compensation expense is presented within compensation and benefits in the Combined Statements of Income. Cash settled equity-based awards are classified as liabilities and are re-measured at the end of each reporting period using the intrinsic-value method (that is, current settlement value), as permitted for non-public companies under ASC 718. | ||
Part I Fee-Sharing Arrangements | ||
The Company also has fee-sharing arrangements whereby certain employees or members are entitled to a share of Part I Fees. These fees are typically paid to the Company and are then paid to the participant on a quarterly basis. To the extent that the payments to the employees or non-equity members are probable and reasonably estimable, the Company accrues these payments as compensation expense. | ||
Reimbursable Expenses | Reimbursable Expenses | |
In the normal course of business, the Company pays certain expenses on behalf of the BDCs, primarily for professional travel and other costs associated with particular portfolio company holdings of the BDCs, for which it is reimbursed. Such expenses are not an obligation of the Company and are recorded as due from affiliates at the time of disbursement (see Note 10). | ||
Fund Offering and Start-up Expenses | Fund Offering and Start-up Expenses | |
In certain instances, the Company may bear offering costs related to capital raising activities of the BDCs, including underwriting commissions, which are expensed as incurred. In addition, the Company expenses all costs associated with starting a new investment fund. Included in the Statement of Income for the nine months ended September 30, 2014, is approximately $822,000 of expenses associated with a follow-on equity offering of FSC. Included in the Statement of Income for the nine months ended September 30, 2013 is approximately $5,659,000 of expenses associated with the initial public offering of FSFR. | ||
Income Taxes | Income Taxes | |
Substantially all of the Company's earnings flow through to owners of the Company without being subject to entity level income taxes. Accordingly, no provision for income taxes has been recorded in the combined financial statements. | ||
The Company has no unrecognized tax benefits at September 30, 2014 and December 31, 2013. The Company's Federal and state income tax returns prior to fiscal year 2010 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. | ||
The Company recognizes interest and penalties associated with tax matters such as franchise tax liabilities, if applicable, as general and administrative and other expenses. | ||
Market and Other Risk Factors | Market and Other Risk Factors | |
Due to the nature of the Combined Funds' investment strategy, the Company is subject to market and other risk factors, including, but not limited to the following: | ||
Market Risk | ||
The market price of investments may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions which are not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. | ||
FSOF may sell securities short which allows it to profit from declines in market prices to the extent such decline exceeds the transaction costs and any costs of borrowing. A short sale involves the sale of a security that is not owned in the expectation of purchasing the same security at a later date at a lower price. To make delivery to the buyer, FSOF must borrow the security, and is obligated to pay the lender of the security any dividend or interest payable on the security until it returns the security to the lender. This is accomplished by a later purchase of the security by FSOF. A short sale, which is generally collateralized by the underlying security, involves the risk that the market price of the security will increase as any appreciation in the price of the borrowed assets would result in a loss, which is theoretically unlimited in amount. In addition, the party from whom the security was borrowed to effect the short sale may demand the return of the security before FSOF had planned. In this situation, FSOF may be forced to cover the short position in the market at a higher price than its short sale. | ||
Limited Liquidity of Investments | ||
The Combined Funds intend to invest in investments that may not be readily marketable. Illiquid investments may trade at a discount from comparable, more liquid investments, and at times there may be no market at all for such investments. Subordinate investments may be less marketable, or in some instances illiquid, because of the absence of registration under federal securities laws, contractual restrictions on transfer, the small size of the market and the small size of the issue (relative to issues of comparable interests). As a result, the Combined Funds may encounter difficulty in selling its investments or may, if required to liquidate investments to satisfy redemption requests of its investors or debt service obligations, be compelled to sell such investments at less than fair value. | ||
Counterparty Risk | ||
Some of the markets in which the Combined Funds may effect transactions are "over-the-counter" or "interdealer" markets. The participants in such markets are typically not subject to credit evaluation and regulatory oversight, unlike members of exchange-based markets. This exposes the Combined Funds to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the applicable contract (whether or not such dispute is bona fide) or because of a credit or liquidity problem, causing the Combined Funds to suffer loss. Such "counterparty risk" is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where the Combined Funds have concentrated its transactions with a single or small group of counterparties. | ||
Credit Risk | ||
There are no restrictions on the credit quality of the investments the Combined Funds intend to make. Investments may be deemed by nationally recognized rating agencies to have substantial vulnerability to default in payment of interest and/or principal. Some investments may have low-quality ratings or be unrated. Lower rated and unrated investments have major risk exposure to adverse conditions and are considered to be predominantly speculative. Generally, such investments offer a higher return potential than higher rated investments, but involve greater volatility of price and greater risk of loss of income and principal. | ||
In general, the ratings of nationally recognized rating organizations represent the opinions of agencies as to the quality of the securities they rate. Such ratings, however, are relative and subjective; they are not absolute standards of quality and do not evaluate the market value risk of the relevant securities. It is also possible that a rating agency might not change its rating of a particular issue on a timely basis to reflect subsequent events. The Combined Funds may use these ratings as initial criteria for the selection of portfolio assets but are not required to utilize them. | ||
Interest Rate Risk | ||
Fluctuations in interest rates expose the Company to interest rate risk on certain assets and liabilities of the Combined Funds. These changes may affect the fair value, interest income and interest expense related to certain floating rate assets and liabilities that are indexed to market interest rates. | ||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | |
In June 2013, the FASB issued ASU 2013-08, Financial Services — Investment Companies ("ASU 2013-08"). ASU 2013-08 provides clarifying guidance to determine if an entity qualifies as an investment company. ASU 2013-08 also requires an investment company to measure non-controlling interests in other investment companies at fair value. The following disclosures are required by ASU 2013-08: (i) whether an entity is an investment company and is applying the accounting and reporting guidance for investment companies; (ii) information about changes, if any, in an entity's status as an investment company; and (iii) information about financial support provided or contractually required to be provided by an investment company to any of its investees. The requirements of ASU 2013-08 were adopted by the Company beginning in the first quarter of 2014. There are no changes to the current requirements relating to the retention of specialized accounting in the financial statements of a non-investment company parent. These updates did not have a material impact on the Company's financial condition or results of operations. | ||
In May 2014, the FASB issued ASU No. 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its combined financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of this standard on its combined financial statements and its ongoing financial reporting. | ||
In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the requisite service period, which clarifies the recognition of stock-based compensation over the required service period, if it is probable that the performance condition will be achieved. This guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and should be applied prospectively. The Company is currently evaluating the effect that this guidance will have on its combined financial statements and its ongoing financial reporting. | ||
In August 2014, the FASB issued ASU No. 2014-13, Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing Entity ("CFE"). This new guidance requires reporting entities to use the more observable of the fair value of the financial assets or the financial liabilities to measure the financial assets and the financial liabilities of a CFE when a CFE is initially consolidated. It permits entities to make an accounting policy election to apply this same measurement approach after initial consolidation or to apply other GAAP to account for the consolidated CFE's financial assets and financial liabilities. It also prohibits all entities from electing to use the fair value option in ASC 825 to measure either the financial assets or financial liabilities of a consolidated CFE that is within the scope of this issue. This guidance is effective for fiscal years beginning after December 15, 2015, and interim periods therein. Early adoption is permitted using a modified retrospective transition approach as described in the pronouncement. The Company is currently evaluating the effect that this guidance will have on its combined financial statements and its ongoing financial reporting. | ||
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements - Going Concern," which requires management to evaluate, at each annual and interim reporting period, the company's ability to continue as a going concern within one year of the date the financial statements are issued and provide related disclosures. This accounting guidance is effective for the Company on a prospective basis beginning in the first quarter of fiscal 2016 and is not expected to have a material effect on the Consolidated Financial Statements. | ||
Fifth Street Asset Management Inc. [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Basis of Presentation | Basis of Accounting — The Statement of Financial Condition has been prepared in accordance with accounting principles generally accepted in the United States of America. Separate statements of operations, changes in stockholder's equity and cash flows have not been presented in the financial statements because there has been no activity that would impact those statements other than the reorganization transactions and reverse stock split. | |
Basis of Presentation — The unaudited Statement of Financial Condition and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") as set forth in the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in the financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair statement of the Company's unaudited interim financial statement has been included and is of a normal and recurring nature. | ||
Combined Funds [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Investments and Derivative Instruments at Fair Value | Investments and Derivative Instruments at Fair Value | |
Investments at fair value include the Combined Funds' investments in securities, investment companies and other investments, including derivative instruments. Securities transactions are recorded on a trade-date basis. Realized gains and losses on sales of investments are determined on a specific identification basis and are included within net realized gains of Combined Funds in the Combined Statements of Income. Premiums and discounts are amortized and accreted, respectively, to income of the Combined Funds in the Combined Statements of Income. | ||
The fair value of investments and derivative instruments held by the Combined Funds is based on observable market prices when available. Such values are generally based on the last reported sales price as of the reporting date. In the absence of readily ascertainable market values, the determination of the fair value of investments held by the Combined Funds may require significant judgment or estimation (see Note 3). Actual results could differ materially from these estimates under different assumptions and conditions. | ||
Deferred Financing Costs | Deferred Financing Costs | |
Deferred financing costs consist of fees and expenses paid in connection with the closing or amending of the SLF I and SLF II credit facilities and are capitalized at the time of payment. Deferred financing costs are amortized using the straight line method over the terms of the respective credit facilities and are included in interest expense of the Combined Funds in the Company's Combined Statement of Income. | ||
Securities Sold Short at Fair Value | Securities Sold Short at Fair Value | |
Securities sold short reflect commitments to deliver specified amounts of securities and thereby create a liability to purchase these securities at a future date. Such amounts are reflected as a liability at the fair value of such securities on September 30, 2014. Subsequent market fluctuations may require FSOF to acquire these securities at prices which differ from the fair value reflected in the Combined Statement of Financial Condition, and such difference could be material. | ||
Interest and Other Income of the Combined Funds | Interest and Other Income of the Combined Funds | |
Income of the Combined Funds consists of interest income, dividend income and other miscellaneous items. Interest income is recorded on an accrual basis. The Combined Funds may place debt obligations, including bank debt and other participation interests, on non-accrual status and, when necessary, reduce current interest income by charging off any interest receivable when collection of all or a portion of such accrued interest has become doubtful. As of and for the nine months ended September 30, 2014, no investments were put on non-accrual status. Dividend income is recorded on the ex-dividend date, net of withholding taxes, if applicable. | ||
Expenses of the Combined Funds | Expenses of the Combined Funds | |
Expenses of the Combined Funds consist of other miscellaneous expenses and are recorded on an accrual basis. | ||
Interest Expense of Combined Funds | Interest Expense of Combined Funds | |
Interest expense of Combined Funds consists of interest (including unused fees and deferred financing costs) incurred on indebtedness under the SLF I and SLF II credit facilities. Interest expense is recorded on an accrual basis and payable quarterly. |
Investments_Derivative_Instrum1
Investments, Derivative Instruments and Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||
Schedule of Investments by Geographic Location | As of September 30, 2014, the following table presents a summary of the investments held by the Combined Funds and as a percentage of total investments of Combined Funds as of September 30, 2014: | ||||||||||||||||||||
Fair Value | Percentage of Investments of Combined Funds | ||||||||||||||||||||
Geographic Region/Investment/Industry | |||||||||||||||||||||
North America | |||||||||||||||||||||
Senior secured debt investments: | |||||||||||||||||||||
Aerospace and Defense | $ | 3,361,845 | 0.9 | % | |||||||||||||||||
Automotive | 13,860,000 | 3.69 | % | ||||||||||||||||||
Banking, Finance, Insurance & Real Estate | 14,925,000 | 3.97 | % | ||||||||||||||||||
Beverage, Food & Tobacco | 498,750 | 0.13 | % | ||||||||||||||||||
Capital Equipment | 5,914,117 | 1.57 | % | ||||||||||||||||||
Construction & Building | 10,875,643 | 2.89 | % | ||||||||||||||||||
Consumer goods: Non-durable | 5,913,055 | 1.57 | % | ||||||||||||||||||
Energy: Oil & Gas | 16,956,391 | 4.51 | % | ||||||||||||||||||
Environmental Industries | 6,059,094 | 1.61 | % | ||||||||||||||||||
Healthcare & Pharmaceuticals | 43,899,075 | 11.67 | % | ||||||||||||||||||
High Tech Industries | 51,033,531 | 13.57 | % | ||||||||||||||||||
Hotel, Gaming & Leisure | 33,467,540 | 8.9 | % | ||||||||||||||||||
Media: Advertising, Printing & Publishing | 43,812,544 | 11.65 | % | ||||||||||||||||||
Media: Diversified & Production | 6,275,083 | 1.67 | % | ||||||||||||||||||
Metal & Mining | 2,700,000 | 0.72 | % | ||||||||||||||||||
Retail | 14,450,450 | 3.84 | % | ||||||||||||||||||
Services: Business | 39,208,006 | 10.43 | % | ||||||||||||||||||
Services: Consumer | 21,489,590 | 5.71 | % | ||||||||||||||||||
Telecommunications | 22,419,108 | 5.96 | % | ||||||||||||||||||
Transportation: Consumer | 10,121,982 | 2.69 | % | ||||||||||||||||||
Total senior secured debt investments, North America (cost of $364,986,122) | 367,240,804 | 97.65 | % | ||||||||||||||||||
Corporate bonds: | |||||||||||||||||||||
Banking, Finance, Insurance & Real Estate | 3,017,403 | 0.8 | % | ||||||||||||||||||
Total corporate bonds, North America (cost $2,997,150) | 3,017,403 | 0.8 | % | ||||||||||||||||||
Common stocks: | |||||||||||||||||||||
Banking, Finance, Insurance & Real Estate | 1,980,821 | 0.53 | % | ||||||||||||||||||
Total common stocks, North America (cost of $2,135,263) | 1,980,821 | 0.53 | % | ||||||||||||||||||
Europe | |||||||||||||||||||||
Senior secured debt investments: | |||||||||||||||||||||
Media: Broadcasting & Subscription | 1,851,660 | 0.49 | % | ||||||||||||||||||
Total senior secured debt investments, Europe (cost of $1,841,598) | 1,851,660 | 0.49 | % | ||||||||||||||||||
Australia | |||||||||||||||||||||
Senior secured debt investments: | |||||||||||||||||||||
Hotel, Gaming & Leisure | 1,981,670 | 0.53 | % | ||||||||||||||||||
Total senior secured debt investments, Australia (cost of $1,980,000) | 1,981,670 | 0.53 | % | ||||||||||||||||||
Total investments of Combined Funds (cost of $373,940,133) | $ | 376,072,358 | 100 | % | |||||||||||||||||
Fair Value, by Balance Sheet Grouping | The following table presents the financial instruments carried at fair value as of September 30, 2014, by caption on the Company's Combined Statement of Financial Condition for each of the levels of hierarchy established by ASC 820: | ||||||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Senior secured debt investments held by Combined Funds | $ | — | $ | — | $ | 371,074,134 | $ | 371,074,134 | |||||||||||||
Common stock | 1,980,821 | — | — | 1,980,821 | |||||||||||||||||
Corporate bonds | — | 3,017,403 | — | 3,017,403 | |||||||||||||||||
Derivative instruments - Total return swaps | — | — | 155,240 | 155,240 | |||||||||||||||||
$ | 1,980,821 | $ | 3,017,403 | $ | 371,229,374 | $ | 376,227,598 | ||||||||||||||
Liabilities | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Due to former members | $ | — | $ | — | $ | 1,379,214 | $ | 1,379,214 | |||||||||||||
Securities sold short by Combined Funds | 3,138,808 | — | — | 3,138,808 | |||||||||||||||||
$ | 3,138,808 | $ | — | $ | 1,379,214 | $ | 4,518,022 | ||||||||||||||
The following table presents the financial instruments carried at fair value as of December 31, 2013, by caption on the Company's Combined Statement of Financial Condition for each of the levels of hierarchy established by ASC 820: | |||||||||||||||||||||
Liability | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Due to former member | $ | — | $ | — | $ | 2,093,437 | $ | 2,093,437 | |||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables provide a roll-forward in the changes in fair value for all financial instruments for which the Company determines fair value using unobservable (Level 3) factors for the three months ended September 30, 2014: | ||||||||||||||||||||
Senior Secured Debt Investments of Combined Funds | Derivative Instruments - Total Return Swaps | Total | |||||||||||||||||||
Fair value at June 30, 2014 | $ | 159,854,778 | $ | — | $ | 159,854,778 | |||||||||||||||
Purchases of investments | 278,152,312 | — | 278,152,312 | ||||||||||||||||||
Sales of investments | (64,145,182 | ) | — | (64,145,182 | ) | ||||||||||||||||
Principal payments on debt investments | (4,343,448 | ) | — | (4,343,448 | ) | ||||||||||||||||
Accretion of original issue discount on debt investments | 104,728 | — | 104,728 | ||||||||||||||||||
Net realized gain on investments of Combined Funds | 506,148 | — | 506,148 | ||||||||||||||||||
Net change in unrealized appreciation on investments and derivative | 944,798 | 155,240 | 1,100,038 | ||||||||||||||||||
instruments of Combined Funds | |||||||||||||||||||||
Fair value at September 30, 2014 | $ | 371,074,134 | $ | 155,240 | $ | 371,229,374 | |||||||||||||||
Net unrealized appreciation/depreciation relating to Level 3 assets and | $ | 1,154,659 | $ | 155,240 | $ | 1,309,899 | |||||||||||||||
liabilities still held at September 30, 2014 and reported within net | |||||||||||||||||||||
unrealized appreciation/depreciation in the Combined Statements of | |||||||||||||||||||||
Income for the three months ended September 30, 2014 | |||||||||||||||||||||
The following tables provide a roll-forward in the changes in fair value for all financial instruments for which the Company determines fair value using unobservable (Level 3) factors for the nine months ended September 30, 2014: | |||||||||||||||||||||
Senior Secured Debt Investments of Combined Funds | Derivative Instruments - Total Return Swaps | Total | |||||||||||||||||||
Fair value at December 31, 2013 | $ | — | $ | — | $ | — | |||||||||||||||
Purchases of investments | 522,311,586 | — | 522,311,586 | ||||||||||||||||||
Sales of investments | (149,438,830 | ) | — | (149,438,830 | ) | ||||||||||||||||
Principal payments on debt investments | (5,282,244 | ) | — | (5,282,244 | ) | ||||||||||||||||
Accretion of original issue discount on debt investments | 160,000 | — | 160,000 | ||||||||||||||||||
Net realized gain on investments of Combined Funds | 1,158,120 | — | 1,158,120 | ||||||||||||||||||
Net change in unrealized appreciation on investments and derivative | 2,165,502 | 155,240 | 2,320,742 | ||||||||||||||||||
instruments of Combined Funds | |||||||||||||||||||||
Fair value at September 30, 2014 | $ | 371,074,134 | $ | 155,240 | $ | 371,229,374 | |||||||||||||||
Net unrealized appreciation/depreciation relating to Level 3 assets and | $ | 2,266,414 | $ | 155,240 | $ | 2,421,654 | |||||||||||||||
liabilities still held at September 30, 2014 and reported within net | |||||||||||||||||||||
unrealized appreciation/depreciation in the Combined Statements of | |||||||||||||||||||||
Income for the nine months ended September 30, 2014 | |||||||||||||||||||||
Due to Former Members | |||||||||||||||||||||
30-Sep-14 | 30-Sep-13 | ||||||||||||||||||||
Fair value at beginning of period | $ | 2,093,437 | $ | 3,079,431 | |||||||||||||||||
Current period additions | 1,799,423 | — | |||||||||||||||||||
Current period payments | (2,694,509 | ) | (647,286 | ) | |||||||||||||||||
Fair value adjustments | 180,863 | (250,772 | ) | ||||||||||||||||||
Fair value at end of period | $ | 1,379,214 | $ | 2,181,373 | |||||||||||||||||
Fair Value Inputs, Assets, Quantitative Information | The following table provides quantitative information related to the significant unobservable inputs for Level 3 financial instruments, which are carried at fair value as of September 30, 2014: | ||||||||||||||||||||
Assets | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||||
Senior secured debt investments held by Combined Funds | $ | 371,074,134 | Independent | N/A | N/A | N/A | |||||||||||||||
pricing services | |||||||||||||||||||||
and/or broker quotes | |||||||||||||||||||||
Derivative instruments - Total return swaps | 155,240 | Independent | N/A | N/A | N/A | ||||||||||||||||
pricing services | |||||||||||||||||||||
and/or broker quotes | |||||||||||||||||||||
Total | $ | 371,229,374 | |||||||||||||||||||
Fair Value Inputs, Liabilities, Quantitative Information | |||||||||||||||||||||
Liability | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||||
Due to former member | $ | 1,379,214 | Discounted cash | Discount rate | 10% | 10% | |||||||||||||||
flow approach | |||||||||||||||||||||
Part I Fee estimated | $1,502,274 - | $ | 1,502,274 | ||||||||||||||||||
future payments | $1,502,274 | ||||||||||||||||||||
Total | $ | 1,379,214 | |||||||||||||||||||
The following tables provide quantitative information related to the significant unobservable inputs for Level 3 liabilities, which were carried at fair value as of December 31, 2013: | |||||||||||||||||||||
Liability | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||||
Due to former member | $ | 2,093,437 | Discounted cash | Discount rate | 10% | 10% | |||||||||||||||
flow approach | |||||||||||||||||||||
Part I Fee estimated | $2,269,621 - | $ | 2,269,621 | ||||||||||||||||||
future payments | $2,269,621 | ||||||||||||||||||||
Total | $ | 2,093,437 | |||||||||||||||||||
Financial Instruments Disclosed, But Not Carried at Fair Value | The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of September 30, 2014 and the level of each financial liability within the fair value hierarchy: | ||||||||||||||||||||
Carrying | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | |||||||||||||||||||||
Loan payable | $ | 4,000,000 | $ | 4,147,144 | $ | — | $ | — | $ | 4,147,144 | |||||||||||
Notes payable of Combined Funds | 213,488,434 | 213,488,434 | — | — | 213,488,434 | ||||||||||||||||
Total | $ | 217,488,434 | $ | 217,635,578 | $ | — | $ | — | $ | 217,635,578 | |||||||||||
The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of December 31, 2013 and the level of each financial liability within the fair value hierarchy: | |||||||||||||||||||||
Carrying | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | |||||||||||||||||||||
Loan payable | $ | 4,000,000 | $ | 4,000,000 | $ | — | $ | — | $ | 4,000,000 | |||||||||||
Fixed_Assets_Tables
Fixed Assets (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of Fixed Assets | Fixed assets consist of the following: | ||||||||
30-Sep-14 | December 31, 2013 | ||||||||
Furniture, fixtures and equipment | $ | 3,882,054 | $ | 1,568,550 | |||||
Leasehold improvements | 7,836,243 | 111,779 | |||||||
Construction in progress | — | 698,568 | |||||||
11,718,297 | 2,378,897 | ||||||||
Less: accumulated depreciation and amortization | (1,410,964 | ) | (942,216 | ) | |||||
$ | 10,307,333 | $ | 1,436,681 | ||||||
Other_Assets_Tables
Other Assets (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Schedule of Other Assets | Other assets consist of the following: | ||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Security deposits | $ | 953,375 | $ | 953,375 | |||||
Deferred offering costs (see Note 12) (a) | 3,704,720 | — | |||||||
Fractional interest in aircraft (b) | 1,368,200 | 1,540,900 | |||||||
Other | 248,412 | 158,700 | |||||||
$ | 6,274,707 | $ | 2,652,975 | ||||||
__________________ | |||||||||
(a) | Included in this amount is $3,349,270 which represents unpaid deferred offering costs as of September 30, 2014 and recorded within accounts payable and accrued expenses. | ||||||||
(b) | In November 2013, the Company entered into an agreement that entitled it to the use of a corporate aircraft for five years. The amount paid, less the estimated trade-in value, is being amortized on a straight-line basis over the expected five-year term of the agreement. Amortization expense for the three and nine months ended September 30, 2014 was $58,199 and $172,700, respectively. |
Debt_Tables
Debt (Tables) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Debt Disclosure [Abstract] | ||||
Schedule of Debt Maturing Over the Next Five Years | Outstanding principal amounts related to this loan maturing over the next five years are as follows: | |||
2014 | $ | — | ||
2015 | — | |||
2016 | — | |||
2017 | 51,551 | |||
2018 | 627,050 | |||
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Related Party Transactions [Abstract] | |||||||||
Schedule of Amounts Due to and From Affiliates | As of September 30, 2014 and December 31, 2013, amounts due to and from affiliates were comprised of the following: | ||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Management fees receivable: | |||||||||
Base management fees receivable - BDCs | $ | 12,847,284 | $ | 12,355,341 | |||||
Part I Fees receivable - BDCs | 10,244,392 | 9,054,422 | |||||||
$ | 23,091,676 | $ | 21,409,763 | ||||||
Performance fees receivable: | |||||||||
Part II Fees receivable - BDCs | $ | 54,826 | $ | — | |||||
$ | 54,826 | $ | — | ||||||
Due from affiliates: | |||||||||
Reimbursed expenses due from the BDCs | $ | 1,922,102 | $ | 2,060,367 | |||||
Due from members for personal use of corporate aircraft | — | 11,359 | |||||||
Due from employees | 23,493 | 14,672 | |||||||
Due from landlord for construction costs | — | 1,760,000 | |||||||
Other amounts due from affiliated entities | 10,287 | 2,093 | |||||||
$ | 1,955,882 | $ | 3,848,491 | ||||||
Due to affiliates: | |||||||||
Cash held on behalf of Fund II | $ | — | $ | 2,542,333 | |||||
Due to non-equity members for purchase of interests | 143,130 | 129,001 | |||||||
$ | 143,130 | $ | 2,671,334 | ||||||
Members_Equity_and_EquityBased1
Members' Equity and Equity-Based Compensation (Tables) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Equity [Abstract] | ||||
Schedule of Equity Classified Awards | The following table summarizes activity for the nine months ended September 30, 2014 and 2013 with respect to the Company's equity classified awards: | |||
Balance at December 31, 2012 | $ | 15,057,283 | ||
Amortization of granted and purchased interests | (1,254,961 | ) | ||
Balance at September 30, 2013 | $ | 13,802,322 | ||
Balance at December 31, 2013 | $ | 18,243,398 | ||
Fair value of purchased interest | 4,035,926 | |||
Cash received for purchased interest | (1,708,378 | ) | ||
Amortization of granted and purchased interests | (3,815,194 | ) | ||
Balance at September 30, 2014 | $ | 16,755,752 | ||
Schedule of Liability Classified Awards | The following table summarizes activity for the nine months ended September 30, 2014 and 2013 with respect to the Company's liability classified awards: | |||
Balance at December 31, 2012 | $ | — | ||
Cash received for purchased interests | 129,001 | |||
Compensation expense | 130,714 | |||
Payment of liabilities | (130,714 | ) | ||
Balance at September 30, 2013 | $ | 129,001 | ||
Balance at December 31, 2013 | $ | 129,001 | ||
Cash received for purchased interests | 14,129 | |||
Compensation expense | 228,140 | |||
Payment of liabilities | (228,140 | ) | ||
Balance at September 30, 2014 | $ | 143,130 | ||
Organization_and_Basis_of_Pres1
Organization and Basis of Presentation - Narrative (Details) (USD $) | 0 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Nov. 04, 2014 | Sep. 30, 2014 | Jun. 27, 2014 | Oct. 13, 2014 |
Fifth Street Asset Management Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 100.00% | |||
Common stock par value (dollars per share) | $0.01 | |||
Common shares outstanding (shares) | 33 | |||
Fifth Street Management LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage contributed | 100.00% | |||
FSCO GP LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage contributed | 100.00% | |||
Class B Common Stock [Member] | Fifth Street Asset Management Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock par value (dollars per share) | 0.01 | |||
Class A Common Stock [Member] | Fifth Street Asset Management Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock par value (dollars per share) | $0.01 | |||
Subsequent Event [Member] | ||||
Related Party Transaction [Line Items] | ||||
Cash savings payable to TRA Recipients under tax receivable agreement, percent | 85.00% | |||
Subsequent Event [Member] | Class B Common Stock [Member] | Fifth Street Asset Management Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock par value (dollars per share) | $0.01 | |||
Subsequent Event [Member] | Class A Common Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock par value (dollars per share) | 0.01 | |||
Subsequent Event [Member] | Class A Common Stock [Member] | Fifth Street Asset Management Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock par value (dollars per share) | $0.01 | |||
Shares issued in the IPO (shares) | 6,000,000 | |||
IPO share price (per share) | 17 | |||
Proceeds from Initial Public Offering | 95.9 | |||
Underwriting commissions | 6.1 | |||
Offering expenses of Initial Public Offering | 3.7 | |||
Subsequent Event [Member] | Fifth Street Holdings L.P. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest in Fifth Street Holdings L.P., percent | 12.00% | |||
Subsequent Event [Member] | Fifth Street Holdings L.P. [Member] | Fifth Street Asset Management Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest in Fifth Street Holdings L.P., percent | 12.00% | |||
Subsequent Event [Member] | Principals of Fifth Street Holdings, L.P. [Member] | Class B Common Stock [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common shares outstanding (shares) | 42,856,854 | |||
Subsequent Event [Member] | Holdings LP Interests [Member] | Fifth Street Asset Management Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Holdings LP Interests (shares) | 6,000,000 | |||
Subsequent Event [Member] | Holdings LP Interests [Member] | Principals of Fifth Street Holdings, L.P. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Holdings LP Interests (shares) | 42,856,854 | |||
Subsequent Event [Member] | Holdings LP Interests [Member] | Limited Partners of Fifth Street Holdings, L.P. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Holdings LP Interests (shares) | 44,000,000 | |||
Subsequent Event [Member] | Common Stock [Member] | Principals of Fifth Street Holdings, L.P. [Member] | Fifth Street Asset Management Inc. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Voting power of FSAM's common stock, percent | 97.30% |
Significant_Accounting_Policie2
Significant Accounting Policies - Narrative (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Schedule of Accounting Policies [Line Items] | ||
Advisory and administrative services revenue as a percent of total revenue | 100.00% | 100.00% |
Ownership percentage by noncontrolling owners | 72.80% | |
Part I fees percentage | 20.00% | |
Catch-up provision, Percentage of BDC revenue | 20.00% | |
BDCC performance fee percentage | 20.00% | |
Minimum [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Management fee percentage charged to funds | 0.40% | |
Fund performance fee percentage | 15.00% | |
Maximum [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Management fee percentage charged to funds | 2.00% | |
Fund performance fee percentage | 20.00% | |
Leasehold Improvements [Member] | Minimum [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Useful life | 5 years | |
Leasehold Improvements [Member] | Maximum [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Useful life | 10 years | |
Fifth Street Finance Corp. [Member] | Follow-on Equity Offering [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Noninterest expense offering costs | 822,000 | |
Fifth Street Floating Rate Corp. [Member] | IPO [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Noninterest expense offering costs | 5,659,000 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (Fifth Street Asset Management Inc. [Member], USD $) | 0 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2014 | |
Class of Stock [Line Items] | ||
Common stock authorized (in shares) | 5,000 | 5,000 |
Common stock par value (dollars per share) | $0.01 | $0.01 |
Proceeds from issuance of common stock | $1,000 | |
Common stock issued (in shares) | 33 | 33 |
Leonard M. Tannenbaum [Member] | ||
Class of Stock [Line Items] | ||
Common stock issued (in shares) | 100 | 100 |
Investments_Derivative_Instrum2
Investments, Derivative Instruments and Fair Value Measurements - Investments of the Combined Funds (Details) (Combined Funds [Member], USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | $376,072,358 | $0 |
Investments at cost | 373,940,133 | |
Investments at fair value, percent | 100.00% | |
Senior Secured Debt Investments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 371,074,134 | |
Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 367,240,804 | |
Investments at cost | 364,986,122 | |
Investments at fair value, percent | 97.65% | |
Senior Secured Debt Investments [Member] | Europe [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 1,851,660 | |
Investments at cost | 1,841,598 | |
Investments at fair value, percent | 0.49% | |
Senior Secured Debt Investments [Member] | Australia | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 1,981,670 | |
Investments at cost | 1,980,000 | |
Investments at fair value, percent | 0.53% | |
Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 3,017,403 | |
Corporate Bonds [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 3,017,403 | |
Investments at cost | 2,997,150 | |
Investments at fair value, percent | 0.80% | |
Common Stocks [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 1,980,821 | |
Common Stocks [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 1,980,821 | |
Investments at cost | 2,135,263 | |
Investments at fair value, percent | 0.53% | |
Transportation - Consumer Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 10,121,982 | |
Investments at fair value, percent | 2.69% | |
Telecommunications Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 22,419,108 | |
Investments at fair value, percent | 5.96% | |
Services - Consumer Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 21,489,590 | |
Investments at fair value, percent | 5.71% | |
Services - Business Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 39,208,006 | |
Investments at fair value, percent | 10.43% | |
Retail Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 14,450,450 | |
Investments at fair value, percent | 3.84% | |
Metal and Mining Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 2,700,000 | |
Investments at fair value, percent | 0.72% | |
Media - Diversification and Production Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 6,275,083 | |
Investments at fair value, percent | 1.67% | |
Media - Advertising, Printing and Publishing Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 43,812,544 | |
Investments at fair value, percent | 11.65% | |
Hotel, Gaming and Leisure Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 33,467,540 | |
Investments at fair value, percent | 8.90% | |
Hotel, Gaming and Leisure Debt Securities [Member] | Senior Secured Debt Investments [Member] | Australia | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 1,981,670 | |
Investments at fair value, percent | 0.53% | |
High Tech Industries Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 51,033,531 | |
Investments at fair value, percent | 13.57% | |
Healthcare and Pharmaceuticals Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 43,899,075 | |
Investments at fair value, percent | 11.67% | |
Environmental Industries Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 6,059,094 | |
Investments at fair value, percent | 1.61% | |
Energy - Oil and Gas Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 16,956,391 | |
Investments at fair value, percent | 4.51% | |
Consumer Goods - Non-durable Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 5,913,055 | |
Investments at fair value, percent | 1.57% | |
Construction and Building Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 10,875,643 | |
Investments at fair value, percent | 2.89% | |
Capital Equipment Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 5,914,117 | |
Investments at fair value, percent | 1.57% | |
Beverage, Food and Tobacco Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 498,750 | |
Investments at fair value, percent | 0.13% | |
Banking, Finance, Insurance and Real Estate Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 14,925,000 | |
Investments at fair value, percent | 3.97% | |
Banking, Finance, Insurance and Real Estate Debt Securities [Member] | Corporate Bonds [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 3,017,403 | |
Investments at fair value, percent | 0.80% | |
Banking, Finance, Insurance and Real Estate Debt Securities [Member] | Common Stocks [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 1,980,821 | |
Investments at fair value, percent | 0.53% | |
Automotive Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 13,860,000 | |
Investments at fair value, percent | 3.69% | |
Aerospace and Defense Debt Securities [Member] | Senior Secured Debt Investments [Member] | North America [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | 3,361,845 | |
Investments at fair value, percent | 0.90% | |
Media - Broadcasting and Subscription Debt Securities [Member] | Senior Secured Debt Investments [Member] | Europe [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments at fair value | $1,851,660 | |
Investments at fair value, percent | 0.49% |
Investments_Derivative_Instrum3
Investments, Derivative Instruments and Fair Value Measurements - Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Combined Funds [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Securities sold short at fair value | $3,138,808 | $3,138,808 | $0 | ||
Derivative assets at fair value | 155,240 | 155,240 | 0 | ||
Collateral receivable | 4,570,487 | 4,570,487 | 0 | ||
Net change in unrealized appreciation on derivatives of Combined Funds | 155,240 | 0 | 155,240 | 0 | |
Net realized gain on derivatives of Combined Funds | 63,089 | 63,089 | 0 | ||
Fifth Street Opportunities Fund, L.P. [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Derivative assets at fair value | 155,240 | 155,240 | |||
Total Return Swaps Indexed to Senior Secured Debt Investments [Member] | Fifth Street Opportunities Fund, L.P. [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Number of Credit Risk Derivatives Held | 5 | 5 | |||
Notional exposure | 11,600,000 | 11,600,000 | |||
Collateral receivable | 4,570,487 | 4,570,487 | |||
Net change in unrealized appreciation on derivatives of Combined Funds | 155,240 | 155,240 | |||
Net realized gain on derivatives of Combined Funds | 63,089 | 63,089 | |||
North America [Member] | Combined Funds [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Securities sold short at fair value | $3,138,808 | $3,138,808 |
Investments_Derivative_Instrum4
Investments, Derivative Instruments and Fair Value Measurements - Financial Instruments Carried at Fair Value (Details) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2012 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Due to former member | $1,379,214 | $2,093,437 | |||
Combined Funds [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 376,072,358 | 0 | |||
Derivative assets at fair value | 155,240 | 0 | |||
Debt and equity investments and derivatives at fair value | 376,227,598 | ||||
Due to former member | 1,379,214 | 2,093,437 | |||
Securities sold short at fair value | 3,138,808 | 0 | |||
Liabilities at fair value | 4,518,022 | ||||
Combined Funds [Member] | Senior Secured Debt Investments [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 371,074,134 | ||||
Combined Funds [Member] | Common Stocks [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 1,980,821 | ||||
Combined Funds [Member] | Corporate Bonds [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 3,017,403 | ||||
Level 1 [Member] | Combined Funds [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Derivative assets at fair value | 0 | ||||
Debt and equity investments and derivatives at fair value | 1,980,821 | ||||
Due to former member | 0 | 0 | |||
Securities sold short at fair value | 3,138,808 | ||||
Liabilities at fair value | 3,138,808 | ||||
Level 1 [Member] | Combined Funds [Member] | Senior Secured Debt Investments [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 0 | ||||
Level 1 [Member] | Combined Funds [Member] | Common Stocks [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 1,980,821 | ||||
Level 1 [Member] | Combined Funds [Member] | Corporate Bonds [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 0 | ||||
Level 2 [Member] | Combined Funds [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Derivative assets at fair value | 0 | ||||
Debt and equity investments and derivatives at fair value | 3,017,403 | ||||
Due to former member | 0 | 0 | |||
Securities sold short at fair value | 0 | ||||
Liabilities at fair value | 0 | ||||
Level 2 [Member] | Combined Funds [Member] | Senior Secured Debt Investments [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 0 | ||||
Level 2 [Member] | Combined Funds [Member] | Common Stocks [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 0 | ||||
Level 2 [Member] | Combined Funds [Member] | Corporate Bonds [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 3,017,403 | ||||
Level 3 [Member] | Combined Funds [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Derivative assets at fair value | 155,240 | 0 | 0 | ||
Debt and equity investments and derivatives at fair value | 371,229,374 | 159,854,778 | 0 | ||
Due to former member | 1,379,214 | 2,093,437 | 2,181,373 | 3,079,431 | |
Securities sold short at fair value | 0 | ||||
Liabilities at fair value | 1,379,214 | 2,093,437 | |||
Level 3 [Member] | Combined Funds [Member] | Senior Secured Debt Investments [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 371,074,134 | 159,854,778 | 0 | ||
Level 3 [Member] | Combined Funds [Member] | Common Stocks [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | 0 | ||||
Level 3 [Member] | Combined Funds [Member] | Corporate Bonds [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Investments at fair value | $0 |
Investments_Derivative_Instrum5
Investments, Derivative Instruments and Fair Value Measurements - Rollforward of Fair Value, Assets (Details) (Combined Funds [Member], USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Investments at fair value, beginning | $0 | ||
Investments at fair value, ending | 376,072,358 | 376,072,358 | 0 |
Debt and equity investments and derivatives at fair value, ending | 376,227,598 | 376,227,598 | |
Derivative assets at fair value, beginning | 0 | ||
Derivative assets at fair value, ending | 155,240 | 155,240 | 0 |
Senior Secured Debt Investments [Member] | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Investments at fair value, ending | 371,074,134 | 371,074,134 | |
Level 3 [Member] | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Debt and equity investments and derivatives at fair value, beginning | 159,854,778 | 0 | |
Purchases of investments | 278,152,312 | 522,311,586 | |
Sales of investments | -64,145,182 | -149,438,830 | |
Principal payments on debt investments | -4,343,448 | -5,282,244 | |
Accretion of original issue discount on debt investments | 104,728 | 160,000 | |
Net realized gain on investments of Combined Funds | 506,148 | 1,158,120 | |
Net change in unrealized appreciation on investments and derivative instruments of Combined Funds | 1,100,038 | 2,320,742 | |
Debt and equity investments and derivatives at fair value, ending | 371,229,374 | 371,229,374 | |
Derivative assets at fair value, beginning | 0 | 0 | |
Net change in unrealized appreciation on investments and derivative instruments of Combined Funds | 155,240 | 155,240 | |
Derivative assets at fair value, ending | 155,240 | 155,240 | |
Level 3 [Member] | Net Unrealized Appreciation/Depreciation [Member] | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Net change in unrealized appreciation on investments and derivative instruments of Combined Funds | 1,309,899 | 2,421,654 | |
Net change in unrealized appreciation on investments and derivative instruments of Combined Funds | 155,240 | 155,240 | |
Level 3 [Member] | Senior Secured Debt Investments [Member] | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Investments at fair value, beginning | 159,854,778 | 0 | |
Purchases of investments | 278,152,312 | 522,311,586 | |
Sales of investments | -64,145,182 | -149,438,830 | |
Principal payments on debt investments | -4,343,448 | -5,282,244 | |
Accretion of original issue discount on debt investments | 104,728 | 160,000 | |
Net realized gain on investments of Combined Funds | 506,148 | 1,158,120 | |
Net change in unrealized appreciation on investments and derivative instruments of Combined Funds | 944,798 | 2,165,502 | |
Investments at fair value, ending | 371,074,134 | 371,074,134 | |
Level 3 [Member] | Senior Secured Debt Investments [Member] | Net Unrealized Appreciation/Depreciation [Member] | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Net change in unrealized appreciation on investments and derivative instruments of Combined Funds | $1,154,659 | $2,266,414 |
Investments_Derivative_Instrum6
Investments, Derivative Instruments and Fair Value Measurements - Rollforward of Fair Value, Liabilities (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Due to Former Member, Fair Value, beginning | $2,093,437 | ||
Fair value adjustments | -180,863 | 250,772 | |
Due to Former Member, Fair Value, ending | 1,379,214 | ||
Combined Funds [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Due to Former Member, Fair Value, beginning | 2,093,437 | ||
Due to Former Member, Fair Value, ending | 1,379,214 | 2,093,437 | |
Level 3 [Member] | Combined Funds [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Due to Former Member, Fair Value, beginning | 2,093,437 | 3,079,431 | |
Current period additions | 1,799,423 | 0 | |
Current period payments | -2,694,509 | -647,286 | |
Fair value adjustments | 180,863 | -250,772 | |
Due to Former Member, Fair Value, ending | $1,379,214 | $2,181,373 |
Investments_Derivative_Instrum7
Investments, Derivative Instruments and Fair Value Measurements - Fair Value, Assets, Quantitative Information (Details) (Combined Funds [Member], Level 3 [Member], USD $) | Sep. 30, 2014 |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Assets at fair value | $371,229,374 |
Total Return Swap [Member] | Independent Pricing Services and/or Broker Quotes [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Assets at fair value | 155,240 |
Senior Secured Debt Investments [Member] | Independent Pricing Services and/or Broker Quotes [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Assets at fair value | $371,074,134 |
Investments_Derivative_Instrum8
Investments, Derivative Instruments and Fair Value Measurements - Fair Value, Liabilities, Quantitative Information (Details) (Combined Funds [Member], USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Liabilities at fair value | $4,518,022 | |
Level 3 [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Liabilities at fair value | 1,379,214 | 2,093,437 |
Due to Former Member [Member] | Discounted Cash Flow Approach [Member] | Level 3 [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Liabilities at fair value | 1,379,214 | 2,093,437 |
Due to Former Member [Member] | Weighted Average [Member] | Discounted Cash Flow Approach [Member] | Level 3 [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Discount Rate | 10.00% | 10.00% |
Part I Fee, Estimated Future Payments | $1,502,274 | $2,269,621 |
Investments_Derivative_Instrum9
Investments, Derivative Instruments and Fair Value Measurements - Financial Instruments Disclosed but not Carried at Fair Value (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Carrying Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Loans Payable, Fair Value Disclosure | $4,000,000 | $4,000,000 |
Notes Payable, Fair Value Disclosure | 213,488,434 | |
Debt Instrument, Fair Value Disclosure | 217,488,434 | |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Loans Payable, Fair Value Disclosure | 4,147,144 | 4,000,000 |
Notes Payable, Fair Value Disclosure | 213,488,434 | |
Debt Instrument, Fair Value Disclosure | 217,635,578 | |
Fair Value [Member] | Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Loans Payable, Fair Value Disclosure | 0 | 0 |
Notes Payable, Fair Value Disclosure | 0 | |
Debt Instrument, Fair Value Disclosure | 0 | |
Fair Value [Member] | Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Loans Payable, Fair Value Disclosure | 0 | 0 |
Notes Payable, Fair Value Disclosure | 0 | |
Debt Instrument, Fair Value Disclosure | 0 | |
Fair Value [Member] | Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Loans Payable, Fair Value Disclosure | 4,147,144 | 4,000,000 |
Notes Payable, Fair Value Disclosure | 213,488,434 | |
Debt Instrument, Fair Value Disclosure | $217,635,578 |
Due_from_Affiliates_Narrative_
Due from Affiliates - Narrative (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Related Party Transaction [Line Items] | ||
Due from affiliates | $1,955,882 | $3,848,491 |
BDCs [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 1,922,102 | 2,060,367 |
Landlord [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | $1,760,000 |
Fixed_Assets_Details
Fixed Assets (Details) (USD $) | 9 Months Ended | 3 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | |||||
Fixed assets | $11,718,297 | $11,718,297 | $2,378,897 | ||
Less: accumulated depreciation and amortization | -1,410,964 | -1,410,964 | -942,216 | ||
Fixed assets, net | 10,307,333 | 10,307,333 | 1,436,681 | ||
Depreciation and amortization | 641,449 | 153,592 | |||
Building Improvements [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Improvements to corporate headquarters | 7,700,000 | 7,700,000 | |||
Furniture, Fixtures and Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Fixed assets | 3,882,054 | 3,882,054 | 1,568,550 | ||
Leasehold Improvements [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Fixed assets | 7,836,243 | 7,836,243 | 111,779 | ||
Construction in Progress [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Fixed assets | 0 | 0 | 698,568 | ||
Fixed Assets [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization | 468,749 | 153,592 | 350,342 | 51,664 | |
Landlord [Member] | Building Improvements [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Improvements to corporate headquarters | $1,760,000 | $1,760,000 |
Other_Assets_Details
Other Assets (Details) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Nov. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | ||||
Other Assets [Line Items] | |||||||
Security deposits | $953,375 | $953,375 | $953,375 | ||||
Deferred offering costs | 3,704,720 | [1] | 3,704,720 | [1] | 0 | [1] | |
Fractional interest in aircraft | 1,368,200 | [2] | 1,368,200 | [2] | 1,540,900 | [2] | |
Other | 248,412 | 248,412 | 158,700 | ||||
Other Assets | 6,274,707 | 6,274,707 | 2,652,975 | ||||
Corporate Aircraft Agreement, Term | 5 years | ||||||
Amortization of Aircraft Usage | 58,199 | 172,700 | |||||
Accounts Payable and Accrued Expenses [Member] | |||||||
Other Assets [Line Items] | |||||||
Deferred offering costs | $3,349,270 | $3,349,270 | |||||
[1] | Included in this amount is $3,349,270 which represents unpaid deferred offering costs as of September 30, 2014 and recorded within accounts payable and accrued expenses. | ||||||
[2] | In November 2013, the Company entered into an agreement that entitled it to the use of a corporate aircraft for five years. The amount paid, less the estimated trade-in value, is being amortized on a straight-line basis over the expected five-year term of the agreement. Amortization expense for the three and nine months ended SeptemberB 30, 2014 was $58,199 and $172,700, respectively. |
Due_to_Former_Members_Details
Due to Former Members (Details) (USD $) | 0 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jul. 03, 2014 | 17-May-14 | Nov. 05, 2010 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | |
Related Party Transaction [Line Items] | ||||||||
Repurchase of member's pro rata share of Part I fees, term of agreement | 5 years | |||||||
Maximum allocation by the managing member to the former member of proceeds from the sale | $6,000,000 | |||||||
Due to former member | 1,379,214 | 1,379,214 | 2,093,437 | |||||
Expected compensation expense to former member upon vesting of equity-based awards | 144,000 | 144,000 | ||||||
Repurchase amount of member's pro rata share of Part I fees included in separation agreement | 1,713,802 | |||||||
Compensation expense recognized in connection with the agreement to repurchase the former member's interest | 2,599,803 | |||||||
Compensation expense recognized in connection with the reallocation to the managing member of the former member's forfeited interest | 2,327,548 | |||||||
Fair value of the repurchase of former member's pro rata share of Part I fees and reallocation of former member's forfeited interest to managing member, net | 4,035,926 | |||||||
Cash payments for repurchase of former member's pro rata share of Part I fees and reallocation of former member's forfeited interest to managing member | 1,713,802 | 2,327,548 | ||||||
Compensation Expense [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Fair value adjustment to the liability for compensation expense | $180,863 | $44,291 | ($197,314) | ($250,772) |
Debt_Debt_Maturities_Details
Debt - Debt Maturities (Details) (Connecticut Department of Economic and Community Development [Member], Loans Payable [Member], Fixed Rate Secured Loan [Member], USD $) | Sep. 30, 2014 |
Connecticut Department of Economic and Community Development [Member] | Loans Payable [Member] | Fixed Rate Secured Loan [Member] | |
Debt Instrument [Line Items] | |
2014 | $0 |
2015 | 0 |
2016 | 0 |
2017 | 51,551 |
2018 | $627,050 |
Debt_Loans_Payable_Details
Debt - Loans Payable (Details) (Loans Payable [Member], Fixed Rate Secured Loan [Member], Connecticut Department of Economic and Community Development [Member], USD $) | 9 Months Ended | 3 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2014 | Oct. 07, 2013 | |
Debt Instrument [Line Items] | |||
Long-term debt | $4,000,000 | ||
Stated interest rate, percentage | 2.50% | ||
Maximum amount of conditional forgiveness of debt | 3,000,000 | 3,000,000 | |
Period for job creation milestones | 4 years | ||
Penalty, per job, for missed milestones | 78,125 | ||
Job training program grant | 500,000 | ||
Alternative energy system installation grant | 500,000 | ||
Interest and Other Income (Expense) [Member] | |||
Debt Instrument [Line Items] | |||
Interest Expense | $74,795 | $25,206 |
Debt_Notes_Payable_Details
Debt - Notes Payable (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | |
Feb. 18, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Aug. 19, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | |
Revolving Credit Facility [Member] | SLF I Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit agreement, term | 5 years | ||||||
Senior collateral management fee earned by the Company, percent | 0.25% | ||||||
Subordinated collateral management fee earned by the Company, percent | 0.15% | ||||||
Interest Expense | $1,110,686 | $2,060,861 | |||||
Revolving Credit Facility [Member] | SLF II Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit agreement, term | 8 years | ||||||
Senior collateral management fee earned by the Company, percent | 0.25% | ||||||
Subordinated collateral management fee earned by the Company, percent | 0.18% | ||||||
Interest Expense | 480,376 | ||||||
Revolving Credit Facility [Member] | SLF II Facility, Class A Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility borrowing capacity | 200,000,000 | ||||||
Stated interest rate, percentage | 1.90% | ||||||
Revolving Credit Facility [Member] | SLF II Facility, Class B Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility borrowing capacity | 42,100,000 | ||||||
Revolving Credit Facility [Member] | SLF II Facility, Class B Facility [Member] | LIBOR [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on LIBOR, percent | 5.00% | ||||||
Revolving Credit Facility [Member] | SLF II Facility, Class C Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility borrowing capacity | 12,200,000 | ||||||
Revolving Credit Facility [Member] | SLF II Facility, Class C Facility [Member] | LIBOR [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on LIBOR, percent | 6.50% | ||||||
Combined Funds [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable | 213,488,434 | 213,488,434 | 0 | ||||
Interest Expense | 1,591,675 | 2,578,659 | 0 | 0 | |||
Combined Funds [Member] | Revolving Credit Facility [Member] | SLF II Facility, Class A Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable | 43,878,857 | 43,878,857 | |||||
Combined Funds [Member] | Revolving Credit Facility [Member] | SLF II Facility, Class B Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable | 24,796,613 | 24,796,613 | |||||
Combined Funds [Member] | Revolving Credit Facility [Member] | SLF II Facility, Class C Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable | 7,203,387 | 7,203,387 | |||||
Wells Fargo Bank [Member] | Revolving Credit Facility [Member] | SLF I Facility, Class A Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility borrowing capacity | 141,800,000 | ||||||
Wells Fargo Bank [Member] | Revolving Credit Facility [Member] | SLF I Facility, Class A Facility [Member] | LIBOR [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on LIBOR, percent | 2.40% | ||||||
Wells Fargo Bank [Member] | Combined Funds [Member] | Revolving Credit Facility [Member] | SLF I Facility, Class A Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable | 116,109,577 | 116,109,577 | |||||
Deutsche Bank AG [Member] | Revolving Credit Facility [Member] | SLF I Facility, Class B Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility borrowing capacity | 30,000,000 | ||||||
Deutsche Bank AG [Member] | February 18, 2014 to August 18, 2014 [Member] | Revolving Credit Facility [Member] | SLF I Facility, Class B Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Stated interest rate, percentage | 7.50% | ||||||
Deutsche Bank AG [Member] | August 19, 2014 to February 18, 2015 [Member] | Revolving Credit Facility [Member] | SLF I Facility, Class B Facility [Member] | LIBOR [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on LIBOR, percent | 7.50% | ||||||
Deutsche Bank AG [Member] | February 19, 2014 to February 18, 2019 [Member] | Revolving Credit Facility [Member] | SLF I Facility, Class B Facility [Member] | LIBOR [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on LIBOR, percent | 12.00% | ||||||
Deutsche Bank AG [Member] | Combined Funds [Member] | Revolving Credit Facility [Member] | SLF I Facility, Class B Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Notes payable | $21,500,000 | $21,500,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 1 Months Ended | ||||
Jul. 31, 2014 | Aug. 31, 2014 | Sep. 24, 2014 | Aug. 01, 2013 | Sep. 30, 2014 | |
Terminated Lease Agreement for White Plains, NY Office [Member] | |||||
Loss Contingencies [Line Items] | |||||
Early termination fee | $617,000 | ||||
Additional rent expense representing fair value of remaining lease obligation | 459,000 | ||||
Sublease Agreement for Greenwich, CT Office [Member] | |||||
Loss Contingencies [Line Items] | |||||
Additional rent expense representing fair value of remaining lease obligation | 197,000 | ||||
Managing Member [Member] | Commercial Mortgage [Member] | |||||
Loss Contingencies [Line Items] | |||||
Guarantor obligation | 26,000,000 | ||||
LIBOR [Member] | Managing Member [Member] | Commercial Mortgage [Member] | |||||
Loss Contingencies [Line Items] | |||||
Basis spread on LIBOR, percent | 1.85% | ||||
SLF I [Member] | |||||
Loss Contingencies [Line Items] | |||||
Unfunded commitments | 150,000 | ||||
Combined Funds [Member] | |||||
Loss Contingencies [Line Items] | |||||
Unfunded commitments | $5,343,000 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jul. 22, 2013 | Oct. 11, 2014 | Dec. 31, 2013 | |
renewal_term | |||||||
Performance Fees [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue from related parties | $139,049 | $0 | $139,049 | $0 | |||
Business Development Companies [Member] | Management Fees [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue from related parties | 23,091,676 | 16,861,209 | 68,340,333 | 46,959,938 | |||
Accounts receivable, related parties | 23,091,676 | 23,091,676 | 21,409,763 | ||||
Related party transactions, asset management fees waived | 378,890 | 0 | 841,715 | 2,321,986 | |||
Fund II [Member] | Management Fees [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenue from related parties | 30,173 | -195,816 | 89,874 | ||||
Accounts receivable, related parties | 0 | 0 | 0 | ||||
Entity Controlled by Managing Member [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Number of lease renewal periods | 2 | ||||||
Lease renewal term (years) | 5 years | ||||||
Due From Affiliates [Member] | Reimbursable Expenses [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Accounts receivable, related parties | 1,922,102 | 1,922,102 | 2,060,367 | ||||
Revenues - Other Fees [Member] | Business Development Companies [Member] | Administration Agreement Fees [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Related party transaction, other fees | 2,187,933 | 753,768 | 4,205,987 | 3,188,954 | |||
Subsequent Event [Member] | Entity Controlled by Managing Member [Member] | Lease Agreements [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Rental payments, per year | $2,000,000 |
Related_Party_Transactions_Amo
Related Party Transactions - Amounts Due and From Affiliates (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Related Party Transaction [Line Items] | ||
Management fees receivable | $23,091,676 | $21,409,763 |
Performance fees receivable | 54,826 | 0 |
Due from affiliates | 1,955,882 | 3,848,491 |
Due to affiliates | 143,130 | 2,671,334 |
Reimbursed Expenses Due From Business Development Companies [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 1,922,102 | 2,060,367 |
Due From Members For Personal Use of Aircraft [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 0 | 11,359 |
Due From Employees [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 23,493 | 14,672 |
Due From Landlord For Construction Costs [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 0 | 1,760,000 |
Other Amounts Due From Affiliated Entities [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 10,287 | 2,093 |
Cash Held on Behalf of Fund II [Member] | ||
Related Party Transaction [Line Items] | ||
Due to affiliates | 0 | 2,542,333 |
Due to Non-equity Members For Purchase of Interests [Member] | ||
Related Party Transaction [Line Items] | ||
Due to affiliates | 143,130 | 129,001 |
Business Development Companies [Member] | Base Management Fees Receivable [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | 12,847,284 | 12,355,341 |
Business Development Companies [Member] | Part I Fees Receivable [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | 10,244,392 | 9,054,422 |
Business Development Companies [Member] | Part II Fees Receivable [Member] | ||
Related Party Transaction [Line Items] | ||
Performance fees receivable | $54,826 | $0 |
Members_Equity_and_EquityBased2
Members' Equity and Equity-Based Compensation (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 15 Months Ended | 0 Months Ended | |||||||
Jan. 01, 2014 | Jan. 01, 2013 | Jul. 17, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Apr. 01, 2013 | |
equity_member | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Retirement eligibility liability reclassified to member's equity | $2,065,664 | |||||||||||
Fair value of equity classified awards | 16,755,752 | 13,802,322 | 16,755,752 | 13,802,322 | 16,755,752 | 18,243,398 | 15,057,283 | 15,187,787 | ||||
Expected compensation expense upon vesting of equity-based awards | 450,000 | 450,000 | 450,000 | |||||||||
Non-Equity Member [Member] | Due to Affiliates [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Sale of all or a portion of Part I fee | 14,129 | 82,141 | ||||||||||
Equity Members [Member] | Members' Equity [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Sale of all or a portion of Part I fee | 505,597 | |||||||||||
Non-equity Members and Employees [Member] | Due to Affiliates [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Sale of all or a portion of Part I fee | 46,860 | |||||||||||
January 1, 2013 [Member] | Due to Affiliates [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Distributions included in compensation expense, Part I fees | 24,659 | 17,843 | 68,070 | 55,989 | ||||||||
July 17, 2013 [Member] | Due to Affiliates [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Distributions included in compensation expense, Part I fees | 21,100 | 10,491 | 49,814 | 10,491 | ||||||||
Number of non-equity members | 2 | |||||||||||
Number of employees | 2 | |||||||||||
Period of service for Part I fees accounted for as liabilities | 6 years | |||||||||||
January 1, 2014 [Member] | Due to Affiliates [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Distributions included in compensation expense, Part I fees | 5,250 | 8,391 | ||||||||||
Period of service for Part I fees accounted for as liabilities | 6 years | |||||||||||
April 1, 2013 [Member] | Non-Equity Member [Member] | Due to Affiliates [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Distributions included in compensation expense, Part I fees | 33,784 | 30,171 | 101,866 | 64,234 | ||||||||
Equity Classified Awards [Member] | July 17, 2013 [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Fair value of equity classified awards | 3,639,150 | |||||||||||
Compensation expense, Part I fees | 96,900 | 65,299 | 290,796 | |||||||||
Number of equity members | 7 | |||||||||||
Unrecognized compensation costs | 3,195,307 | 3,195,307 | 3,195,307 | |||||||||
Period for recognition of unrecognized compensation costs | 12 years | |||||||||||
Subsequent forfeitures | 325,587 | |||||||||||
Equity Classified Awards [Member] | April 1, 2013 [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Fair value of equity classified awards | 184,213 | |||||||||||
Compensation expense, Part I fees | 2,980 | 3,972 | 8,938 | 7,944 | ||||||||
Number of equity members | 2 | |||||||||||
Unrecognized compensation costs | 163,359 | 163,359 | 163,359 | |||||||||
Period for recognition of unrecognized compensation costs | 14 years | |||||||||||
Equity Classified Awards [Member] | July 17, 2013 [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Compensation expense, Part I fees | 65,299 | |||||||||||
Managing Member [Member] | Equity Members [Member] | Members' Equity [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Sale of all or a portion of Part I fee | 350,000 | |||||||||||
Managing Member [Member] | Equity Classified Awards [Member] | December 31, 2013 [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Fair value of equity classified awards | 40,726 | |||||||||||
Period to retirement eligibility | 12 years | |||||||||||
Managing Member and Another Member [Member] | Equity Members [Member] | Members' Equity [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Sale of all or a portion of Part I fee | 56,800 | |||||||||||
Managing Member and Another Member [Member] | Equity Classified Awards [Member] | December 31, 2013 [Member] | ||||||||||||
Member's Equity [Line Items] | ||||||||||||
Fair value of equity classified awards | 735,800 | |||||||||||
Compensation expense, Part I fees | 16,621 | 49,863 | ||||||||||
Unrecognized compensation costs | $685,937 | $685,937 | $685,937 | |||||||||
Period for recognition of unrecognized compensation costs | 12 years | |||||||||||
Period to retirement eligibility | 12 years |
Members_Equity_and_EquityBased3
Members' Equity and Equity-Based Compensation - Equity Classified Awards (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Nov. 30, 2012 | |
Equity Classified Award [Roll Forward] | |||||
Equity classified awards, beginning | $18,243,398 | $15,057,283 | $15,187,787 | ||
Fair value of purchased interest | 4,035,926 | ||||
Cash received for purchased interest | -1,708,378 | ||||
Amortization of granted and purchased interests | 450,223 | 467,968 | -3,815,194 | -1,254,961 | |
Equity classified awards, ending | $16,755,752 | $13,802,322 | $16,755,752 | $13,802,322 | $15,187,787 |
Minimum period for recognition of compensation | 12 years | ||||
Maximum period for recognition of compensation | 14 years |
Members_Equity_and_EquityBased4
Members' Equity and Equity-Based Compensation - Liability Classified Awards (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Liability Classified Awards [Roll Forward] | ||
Liability classified awards, beginning | $129,001 | $0 |
Cash received for purchased interests | 14,129 | 129,001 |
Compensation expense | 228,140 | 130,714 |
Payment of liabilities | -228,140 | -130,714 |
Liability classified awards, ending | $143,130 | $129,001 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 0 Months Ended | ||||
Nov. 04, 2014 | Oct. 13, 2014 | Sep. 30, 2014 | Oct. 29, 2014 | Jun. 27, 2014 | |
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Exchange agreement, period before transfers are permitted | 2 years | ||||
Cash savings payable to TRA Recipients under tax receivable agreement, percent | 85.00% | ||||
FSAM [Member] | |||||
Subsequent Event [Line Items] | |||||
Common stock authorized (in shares) | 5,000 | ||||
Common stock par value (dollars per share) | $0.01 | ||||
FSAM [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Preferred stock authorized (in shares) | 5,000,000 | ||||
Preferred stock par value (dollars per share) | 0.01 | ||||
FSM [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Notes payable to previous members of FSM | $14,000,000 | ||||
Fifth Street Holdings L.P. [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Ownership interest in Fifth Street Holdings L.P., percent | 12.00% | ||||
Fifth Street Holdings L.P. [Member] | FSAM [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Ownership interest in Fifth Street Holdings L.P., percent | 12.00% | ||||
Members of FSCO GP [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Ownership interest in Fifth Street Holdings exchanged, percent | 100.00% | ||||
Members of FSM [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Ownership interest in Fifth Street Holdings exchanged, percent | 100.00% | ||||
Principals of Fifth Street Holdings, L.P. [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Ownership interest in Fifth Street Holdings exchanged, percent | 100.00% | ||||
Class A Common Stock [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Common stock par value (dollars per share) | 0.01 | ||||
Shares issued in one-to-one stock conversion | 1 | ||||
Class A Common Stock [Member] | FSAM [Member] | |||||
Subsequent Event [Line Items] | |||||
Common stock par value (dollars per share) | $0.01 | ||||
Class A Common Stock [Member] | FSAM [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Common stock authorized (in shares) | 500,000,000 | ||||
Common stock par value (dollars per share) | 0.01 | ||||
Shares issued in the IPO (shares) | 6,000,000 | ||||
IPO share price (per share) | 17 | ||||
Proceeds from Initial Public Offering | 95,900,000 | ||||
Offering expenses of Initial Public Offering | 3,700,000 | ||||
Class B Common Stock [Member] | FSAM [Member] | |||||
Subsequent Event [Line Items] | |||||
Common stock par value (dollars per share) | $0.01 | ||||
Class B Common Stock [Member] | FSAM [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Common stock authorized (in shares) | 50,000,000 | ||||
Common stock par value (dollars per share) | 0.01 | ||||
Unsecured Revolving Credit Facility Maturing in 2019 [Member] | Revolving Credit Facility [Member] | Fifth Street Holdings L.P. [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Revolving credit facility borrowing capacity | 176,000,000 | ||||
Revolving credit facility, accordion feature, borrowing capacity | 100,000,000 | ||||
Unused commitment fee under the revolving credit facility, percent | 0.30% | ||||
Revolving credit agreement, term | 5 years | ||||
LIBOR [Member] | Unsecured Revolving Credit Facility Maturing in 2019 [Member] | Revolving Credit Facility [Member] | Fifth Street Holdings L.P. [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Basis spread on LIBOR, percent | 2.00% | ||||
Common Stock [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Reverse stock split conversion ratio (shares) | 0.3333 |