Executive Summary

Q1 2025 delivered positive NAV and earnings momentum: NAV rose to $3.37 per share (+2.1% QoQ) and net investment income was $27.1M, or $0.08 per share, while total investment income was $48.5M .
The Board approved a liquidity plan to convert to a closed‑end fund and pursue an NYSE listing under ticker “FSSL” before end of Q4 2025 (subject to approvals); a 6‑for‑1 reverse split took effect May 15, 2025 to meet listing requirements .
The quarterly cash distribution was raised to $0.1053 per share for Q1 2025 (12.5% annualized on Q1 NAV), a material increase versus Q4 2024’s $0.0068; management also introduced a 15% of NAV cap on enhanced distributions in 2026 and beyond until long‑term liquidity is achieved .
Portfolio transition accelerated: diversified credit reached 88.0% of fair value (vs. 85.5% in Q4); energy exposure fell to 12.0%; non‑accruals declined to 0.4% of fair value (from 1.1% in Q4) .

What Went Well and What Went Wrong

NAV total return of 2.29% in Q1 2025, outpacing HY and loan indexes (0.94% and 0.48% respectively), driven by “strong earnings” and “NAV appreciation” per management commentary .
Strategic progress: “We made continued progress transitioning the portfolio to diversified credit investments during the first quarter… energy investments represented just 12.0%” of fair value as of March 31, 2025 .
Non‑accrual reduction: “three investments were on non‑accrual… 0.4% of fair value and ~1.4% based on amortized cost,” down from 1.1%/2.3% in Q4 and 13.6%/13.8% in Q1 2024 .

YoY pressure on investment income: total investment income fell to $48.5M from $69.3M in Q1 2024, reflecting lower interest/dividend streams as legacy exposures were reduced .
NII compressed YoY: net investment income declined to $27.1M vs. $46.4M in Q1 2024; NII margin fell given lower income and steady operating costs .
Ongoing risks: management flagged listing execution, market conditions, bank relationship dependencies, and potential return of capital in distributions as risk factors tied to the liquidity plan and enhanced payouts .

Metric	Q1 2024	Q4 2024	Q1 2025
Total Investment Income ($USD Millions)	$69.25	$50.82*	$48.54
Net Investment Income ($USD Millions)	$46.42	—	$27.12
EPS – Net increase in net assets from operations ($/share)	$0.04	—	$0.08
NAV per share ($)	—	$3.30	$3.37
Quarterly Distribution per share ($)	—	$0.0068	$0.1053

Values marked with an asterisk (*) retrieved from S&P Global.

Segment/Exposure mix

Metric	Q4 2024	Q1 2025
Diversified Credit (% of fair value)	85.5%	88.0%
Energy Exposure (% of fair value)	14.5%	12.0%
Senior Secured Debt (% of portfolio)	87%	87%
Equity/Other (% of fair value)	9%	8%

KPIs

KPI	Q4 2024	Q1 2025
Non‑accruals (% of fair value)	1.1%	0.4%
Non‑accruals (% of amortized cost)	2.3%	1.4%
Purchases ($USD Millions)	—	$357
Sales & Repayments ($USD Millions)	—	$385

Distribution trend across recent quarters

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly cash distribution	Q1 2025	$0.0068 (Q4 2024)	$0.1053	Raised
Enhanced distributions cap	2026+	N/A	Capped at annualized 15% of then‑current NAV until long‑term liquidity event	Introduced
Liquidity plan (conversion + NYSE listing)	Target by Q4 2025	N/A	Convert to closed‑end fund and pursue NYSE listing under “FSSL” before end of Q4 2025 (subject to approvals/conditions)	Initiated
Reverse share split	Effective May 15, 2025	N/A	6‑for‑1 split effective 5:00 PM ET; intended to meet $4.00 minimum price and typical CEF trading ranges	Announced

No Q1 2025 earnings call transcript was filed; themes derived from management’s Q1 commentary and quarterly update.

Topic	Previous Mentions (Q3/Q4 2024)	Current Period (Q1 2025)	Trend
Liquidity/Listing plan	Distribution announcements; no listing plan disclosed	Conversion to closed‑end fund and NYSE listing targeted by Q4 2025; reverse split executed	New catalyst; progressing
Portfolio transition to diversified credit	Energy 14.5% of fair value in Q4 2024	Diversified credit 88.0%; energy down to 12.0%	Improving mix
Non‑accruals	1.1% FV / 2.3% cost (Q4 2024)	0.4% FV / 1.4% cost; down meaningfully YoY	Improving credit quality
Distributions	$0.0853 (Q3 2024) and $0.0068 (Q4 2024)	$0.1053 (Q1 2025), 12.5% annualized on NAV	Elevated payouts with cap guidance

Liquidity strategy: “The listing is intended to offer a balanced liquidity solution by providing existing shareholders with near‑term access to liquidity while preserving the opportunity for long‑term value appreciation…” .
Portfolio repositioning: “We made continued progress transitioning the portfolio to diversified credit investments… energy investments represented just 12.0%… compared to 14.5% as of December 31, 2024 and 94.9% during Q2 2023” .
Credit quality: “As of March 31, 2025, three investments were on non‑accrual, representing just 0.4% of the portfolio’s fair value… compared to 1.1%… as of December 31, 2024” .
Activity: “Purchases totaled $357 million… 57.2% private credit… 89% co‑investments… Sales and repayments totaled approximately $385 million” .

No earnings call transcript was filed; management provided written commentary via Exhibit 99.1 (Fund Commentary) and Exhibit 99.2 (Quarterly Update). Clarifications included: the conversion/listing pathway, reverse split mechanics, distribution policy (including future cap), and portfolio transition priorities .

Wall Street consensus (S&P Global) coverage for FSEN’s EPS and revenue was unavailable; comparisons to consensus estimates are not possible at this time.
Actual total investment income (proxy for “revenue”) was $48.54M in Q1 2025 and $50.82M in Q4 2024; Q1 2024 was $69.25M. Where marked with an asterisk in tables, values are retrieved from S&P Global.

The announced conversion/listing plan and executed reverse split create a tangible near‑term liquidity pathway; monitor proxy process, approvals, and market conditions as catalysts into H2/H4 2025 .
Portfolio risk normalization is progressing: diversified credit now 88% of fair value and non‑accruals sharply reduced—supportive for earnings stability and potential NII recovery over time .
Elevated Q1 distribution ($0.1053) signals confidence, but management flagged a future cap (15% of NAV) and potential return‑of‑capital components—incorporate distribution quality into valuation and yield assessments .
Earnings mix and income trajectory merit attention: YoY declines in investment income and NII reflect transition effects; upside depends on deployment into higher‑yielding private credit and co‑investment flow‑through .
Trading implications: ahead of listing, discount/premium dynamics may shift versus NAV; watch for re‑rating catalysts tied to exchange trading, advisor structure changes, and energy exit execution .
Risk lens: execution risk on conversion/listing, market liquidity, bank counterparties, and distribution funding mechanics (including offsets/repayments) remain non‑trivial—position sizing should reflect these disclosures .

S&P Global disclaimer: Values marked with an asterisk (*) are retrieved from S&P Global.