Thomson Reuters LPC Middle Market Loans Conference The Middle Market Evolution Continues: Once a mystery, now the place to be May 6, 2015

2

Middle Market Capital Providers: The Evolution Continues Moderator Robyn E. Roof Managing Director & Group Head KeyBanc Capital Markets, Inc. rroof@key.com Panelists Frederick D. Buffone Managing Director, Head of Capital Markets Fifth Street Finance fbuffone@fifthstreetfinance.com Kevin F. Burke Senior Managing Director GE Capital Markets, Inc. kevin.burke@ge.com Scott A. Cullerton Director KKR Capital Solutions Group scott.cullerton@kkr.com Devon M. Russell Senior Managing Director Madison Capital devon_russell@mcfllc.com

Alexandra Vidmar KeyBanc Capital Markets 216-689-3323 / avidmar@key.com

Contacts: Robyn E. Roof KeyBanc Capital Markets 212-476-7423 / rroof@key.com

Meghan Curran KeyBanc Capital Markets 212-476-7465 / meghan.curran@key.com

3

Agenda I. Leveraged Middle Market Defined: An Arranger’s Perspective

II. Sources of Capital: Pre-Crisis & Post-Crisis

III. Evolution of Middle Market Capital Providers

IV. Why Middle Market Loans?

V. Recent Strategic Positioning

VI. Outlook for Middle Market Sources of Capital

KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A.. Banking products and services are offered by KeyBank N.A..

4

Leveraged Middle Market Defined: An Arranger’s Perspective

Attribute Lower Traditional Large Deal Size

EBITDA Distribution

< $100 million < $25 million Direct and / or Club

< $150 million < $50 million but > $25 million Prorata Club and Some Institutional

> $150 million > $50 million Institutional

Arrangers & Investors

U.S. Banks Finance Companies BDCs

U.S. Banks & Foreign Banks Finance Companies BDCs Middle Market CLOs

U.S. Banks & Foreign Banks Finance Companies BDCs Middle Market CLOs Broad Market CLOs Loan Funds Hedge or High Yield Funds

(1) Source: Thomson Reuters LPC which defined “Middle Market” as borrowers with sales < $500 million (2) “Traditional” includes both sponsored and non-sponsored volume for deals sized below $100 million, per Thomson Reuters LPC (3) “Large” includes both sponsored and non-sponsored volume for deals sized at or above $100 million, per Thomson Reuters LPC

Traditional Middle Market (2) Large Middle Market (3)

Volume by Market (1)

($ in billions)

$136.1

$47.6

$159.6

$0

$25

$50

$75

$100

$125

$150

$175

2007 2009 2014

$47.1$23.6

$42.4

$0

$25

$50

$75

$100

$125

$150

$175

2007 2009 2014

5

Sources of Capital: Pre-Crisis & Post-Crisis

Source: Standard and Poor’s Leveraged Commentary & Data

2009 2014 2007

2014Institutional Investors 73.7%Finance Companies 11.7%

Foreign Banks 9.1%US Banks 4.4%

Securities Firms 1.1%100.0%

2009Institutional Investors 30.3%Finance Companies 34.8%

Foreign Banks 6.3%US Banks 26.0%

Securities Firms 2.6%100.0%

2007Institutional Investors 67.2%Finance Companies 13.0%

Foreign Banks 6.8%US Banks 7.4%

Securities Firms 5.6%100.0%

Institutional Investors

73.7%

Finance Companies

11.7%

Foreign Banks9.1%

US Banks 4.4%

Securities Firm1.1%

Institutional Investors

30.3%

Finance Companies

34.8%

Foreign Banks6.3%

US Banks26.0%

Securities Firms2.6%

Institutional Investors

67.2%

Finance Companies

13.0%

Foreign Banks6.8%

US Banks7.4%

Securities Firms5.6%

6

Evolution of Middle Market Capital Providers

Sources: The Lead Left, Private Debt Investor Magazine, Investor Websites

Finance Companies

MM CLOs 1.0

Banks

BDCs 1.0 Hedge Funds /

Credit Op Funds Private Equity

Funds Insurance

Companies Mezzanine Funds

7

Traditional BDC

Finance Company

Private Equity

Insurance Company

1998 – 2007 Private Credit Funds

2001 Acquired Heller Financial

2004 – 2008 CLO Manager (HY and Leveraged Loan Focus)

2001 - 2008 Product / Services

Expansion

2013 NasdaqGS:FSFR

(Senior) Public BDC

2007 Established Senior

Secured Loan Program

2013 – 2015 Integrated Capital

Markets & Private Credit Origination,

Mid-Market B/D JV

Evolution of Middle Market Capital Providers

2014 Senior Credit Funds,

CLOs & JVs

2008 NasdaqGS:FSC

Public BDC

2005 Acquired Antares Capital

2009 -2012 Private Credit (Mezz, Direct Lending, Spec

Sits), Private BDC

2009 – 2014 Funding Sources Expansion and

Developed Investment Management Capabilities

2008 Acquired Merrill Lynch

Capital

2015 Funding Sources &

Capabilities Expansion

8

Size of Market

Favorable Pricing

Capital Structure Seniority

Lower Risk Profile

More Conservative

Structures

Less Volatility / Increased Liquidity

"Skin in the Game"

Lower Defaults / Higher

Recoveries

Shorter Duration

Diverse Investor Base

MIDDLE MARKET INCLUDES 200,000

BUSINESSES IN ALL INDUSTRY

SEGMENTS AND GEOGRAPHIES

Why Middle Market Loans?

Sources: GE Capital, Fifth Street Management, The National Center for the Middle Market – 2014 Annual Report

9

New BDCs

New Direct Platforms / Participants

New JVs & Mergers

New Middle Market Funds & CLOs

(Ivy Hill)

Recent Strategic Positioning (LTM)

Note: Each category organized top down, from newest to oldest Sources: SEC filings, Thomson Reuters’ LPC Loan Connector, Standard & Poor’s Leveraged Commentary & Data (“LCD”), Bloomberg & individual investor websites

Churchill Asset Management (Apr-15)

10

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

2013 Survey 2014 Survey 2015 Survey

% o

f res

pond

ents

Banks Banks - modest impact

Banks

Banks

Non-Banks

Non-Banks

Outlook for Middle Market Sources of Capital Proposed Regulation Effect on Banks Effect on CLOs Effect on BDCs

Leveraged Lending Guidance Negative Positive Positive

Basel III Negative Positive Positive

Volcker Rule Negative Negative Positive

Sources: Fifth Street Management, Thomson Reuters LPC

How will Leveraged Lending Guidance impact banks’ ability to invest in leveraged loans?

Appendix

12

Evolution of Middle Market Capital Providers

:

BDC 1.0 Equus Total Return American Capital Partners MVC Capital PennantPark Floating Rate Gladstone Capital Corp MCG Capital Harris & Harris Ameritrans Capital Corp. TICC Capital Corp. Apollo Investment Corp. Ares Capital Corp. Prospect Capital Corp. NGP Capital Resources Hercules Technology Growth Capital Gladstone Investment Corp. Middle Market CLO 1.0 Jefferies Finance Company CIT Capital Source Madison Capital Heller Financial - acquired by GE FirstLight Financial - acquired by Ares Transamerica - acquired by GE Freeport Antares Capital - acquired by GE Private Equity & Asset Manager 1.0 New York Life (Madison Capital Funding) Och-Ziff, Northwestern Mutual Life & Shawmut Capital (NewStar Financial) Unitranche 1.0 Golub

BDC 1.0 Capital Southwest Corp. Kayne Anderson Energy KCAP Financial Triange Capital Corp. Saratoga Investment Corp. PennantPark Investment Corp. Blackrock Kelso Capital Corp. Main Street Capital Corp. Fifth Street Finance Corp. New Mountain Finance FS Investment Corp THL Credit Inc. Keating Capital Middle Market CLO 1.0 Golub, Jefferies & NewStar Finance Company Merrill Lynch Capital - acquired by GE Unitranche & JV 2.0 GE Capital & Allied Capital GE Capital & Ares Capital GE Capital & Mubadala JV

BDC & Unitranche 2.0 Solar Capital Ltd. Golub Capital BDC Corporate Capital Trust TPG Specialty Lending Firsthand Technology Full Circle Capital Corp. Horizon Technology Medley Capital Corp. Solar Senior Capital Ltd. Fidus Investment Corp. GSV Capital Corp. FSIC II FSEP II BDCA HMS Income Funds TCP Capital Corp. Sierra Income Fund Monroe Capital Corp. Goldman Sachs BDC Stellus Capital OFS Capital Corp. Whitehorse Finance LLC CION Investments Garrison Capital Carlyle GMS Harvest Capital Credit FSIC III Fifth Street Floating

Private Equity & Asset Manager 2.0 StonePoint (NXT) Carlyle (Churchill Financial) Blackrock & BlueMountain (Alliance Partners) Crescent Capital (Crescent Direct Lending) MassMutual / Babson (Babson Middle Market) Apollo (Madison Capital) KKR & Stone Point (KKR - Merchant Advisors) Highbridge – Middle Market fund Cyrus Capital (Stifel) AllianceBernstein (direct lending platform) (‘14) Varagon Capital Partners / AIG JV (‘14) Trinity Universal Insurance (Fifth Street) (‘14) Angelo Gordon (direct lending platform) (‘14) Voya (Solar) – direct lending fund (‘14) PIMCO (Solar) – unitranche JV (‘14) American Capital – middle market loan fund (‘14) Credit Value Partners – middle market loan fund (‘14) THL Credit (Perspecta Trust) JV (‘14) NewStar (GSO & Franklin Square) (‘14) MGG Investment Group – McCourt) (‘15) Apollo (Midcap Financial) JV (’15) Koch Industries & Eaglehill Capital (’15) TIAA-Cref (Churchill Asset Mgmt) (’15)

Cumulative # of BDCs Cumulative # of CLOs

(1) Sources: SEC filings, Thomson Reuters’ LPC Loan Connector, Standard & Poor’s Leveraged Commentary & Data (“LCD”), Bloomberg & individual investor websites (2) Table above reflects all middle market CLO managers, but a sample of select BDCs, asset manager, and private equity entrants intro the middle market

NF Investment Corp. Capitala Finance Corp. American Capital Senior Floating (‘14) CM Finance (‘14) TriplePoint Venture Growth (‘14) Alcentra Capital Corp. (‘14) TCW Direct Lending (‘14) Griffin-Benefit Street (‘14) BDCA II (‘14) NexPoint Capital (‘14) Carey Credit Income Series-15 (‘14) Carey Credit Income Series-17 (‘14) Credit Suisse Park View BDC (‘14) Champion Investments Inc. (‘14) Golub Capital Investment Corp. (‘14) Crescent Capital BDC (‘15) Freedom Capital Corp. (‘15)

Middle Market CLO 2.0 Arrowpoint, BMO, Cerberus, Fortress, Fifth Street, Garrison, Golub, Ivy Hill, Jefferies, Madison, MCF Capital, Monroe, NewStar, NXT Capital, Oak Hill, Tennenbaum & TICC Finance Company Monroe Capital – middle market loan fund NewStar – middle market loan fund NXT (Stone Point) CIT & OneWest - merger (’14) NXT Capital – middle market loan fund (’15)

913 15

1823 25

28

35

43

51

58

71 73

1 16 6 6 6 8

19

31

4853

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 5/1/15