SecProbe.io

CORRESP
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filename1.htm

        1900 K Street, NW

        Washington, DC 20006-1110

        +1 202 261 3300 Main

        +1 202 261 3333 Fax

        www.dechert.com

        William Tuttle

        william.tuttle@dechert.com

        +1 202 261 3352 Direct

        +1 202 261 3009 Fax

November 21, 2016

VIA EDGAR

United States Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, DC 20549

Attn: 	Dominic Minore

    Re:
    Fifth Street Finance Corp.

    Registration Statement on Form N-2

    File No. 333-214129

Ladies and Gentlemen:

Fifth Street Finance Corp., a Delaware
corporation (the “Company”), has today filed with the Securities and Exchange Commission (the “Commission”)
Amendment No. 1 (“Amendment No. 1”) to its Registration Statement on Form N-2 (Registration No. 333-214129)
(the “Registration Statement”). On behalf of the Company, we hereby respond to the comments of the staff (the
“Staff”) of the Commission in a letter dated November 15, 2016 from Dominic Minore of the Staff to William Tuttle
of Dechert LLP, outside counsel to the Company, relating to the Registration Statement. For your convenience, the Staff’s
comments are included in this letter, and each comment is followed by the applicable response. We will also provide courtesy copies
of Amendment No. 1, as filed and marked with the changes from the initial filing of the Registration Statement. Except as provided
in this letter, terms used in this letter have the meanings given to them in Amendment No. 1.

Prospectus

Prospectus Summary (page 1)

 1. Please present the information appearing in this section, and elsewhere throughout the prospectus,
in non-italic type.

Response:

As requested, the Company has revised the
disclosure in Amendment No. 1 to eliminate italicized text where possible.

        Dominic Minore

        November 21, 2016

        Page 2

Fifth Street Finance Corp. (page
2)

 2. Please revise the disclosure appearing in the third paragraph to clarify that below investment
grade securities are often referred to as “high yield” and “junk.”

Response:

As requested, the Company has revised the
disclosure throughout Amendment No. 1 to state that below investment grade securities are often referred to as “high yield”
and “junk”.

Recent Developments (Page 6) and
Legal Proceedings (Page 111)

 3. Please confirm whether the disclosure is current through the most recent date practicable.

Response:

The Company hereby confirms that the disclosure
in Amendment No. 1 is current through the most recent date practicable.

Investment Advisory Fees (page 7)

 4. The disclosure states that the incentive fee payable in respect of the Company’s Pre-Incentive
Fee Net Investment Income is subject to a “catch-up” feature. Briefly expand the disclosure to highlight the goal of
the “catch-up” feature.

Response:

As requested, the Company has expanded
the disclosure on page 7 of Amendment No. 1 to highlight the goal of the “catch-up” feature.

Fees and Expenses (page 12)

 5. We note the absence of the “Acquired Fund Fees & Expenses” line item from the
Company’s fee table. See Instruction 10 to Item 3 of Form N-2. Please confirm to us in your response letter that the
Company does not in the upcoming year intend to make investments in an “Acquired Fund,” as the term is defined in Instruction
10.a. to Item 3.1. of Form N-2, at a level that triggers the need for the additional line item of Acquired Fund Fees & Expenses.
If no such additional line item is required, please indicate in your response letter that any applicable Acquired Fund Fees &
Expenses is nonetheless included in “Other Expenses” or that the Company does not intend to invest in an Acquired Fund.

        Dominic Minore

        November 21, 2016

        Page 3

Response:

As requested, the Company hereby confirms
that it does not in the upcoming year intend to make investments in any “Acquired Fund” at a level that triggers the
need for disclosure of an Acquired Fund Fees & Expenses line item in the fee table. Any applicable Acquired Fund Fees and Expenses
are nonetheless included in the “Other Expenses” line item.

 6. We note the disclosure contained in footnote (6) pertaining to the incentive fee and the corresponding
expanded presentation included under the heading “Incentive Fee” beginning on page 147. The examples appearing on pages
148 & 149 relate to the calculation of the incentive fee on Pre-Incentive Fee Net Investment Income, as well as the interplay
of the quarterly “preferred return” or “hurdle” and the “catch-up” features. Based on these
disclosures, it does not appear that there is an accumulation from quarter to quarter of amounts on either the hurdle rate or the
parameters set by the “catch-up” mechanism. Nor does it appear that there is any clawback of amounts previously paid
to the investment adviser if subsequent quarters are below the quarterly hurdle or the “catch-up” parameters, or any
delay of payment to the investment adviser if prior quarters are below the quarterly hurdle or “catch-up.” Accordingly,
please expand the disclosure contained in footnote (6), and elsewhere throughout the prospectus, to reflect these observations,
if true. Furthermore, assuming that there is, in fact, no accumulation of amounts on either the hurdle rate or the “catch-up”
parameters from quarter to quarter, it would appear that current presentation of these amounts on an “annualized” basis
is inappropriate and should, therefore, be deleted.

Response:

As requested, the Company has modified
the disclosures in Amendment No. 1 to note that there is no accumulation from quarter to quarter of amounts on either the hurdle
rate or the parameters set up by the “catch-up” mechanism and that there is no clawback of any amounts previously paid
to the investment adviser.  The Company respectfully submits that disclosure of the annualized hurdle amount is useful to
investors because it allows for ease of comparison between the fee structures of other business development companies, the vast
majority of which present annualized hurdle amounts.

 7. Please expand the text accompanying footnote (9) to clarify that all fees and expenses of the
Company’s consolidated subsidiaries are included in the “Total annual expenses” line item presentation.

Response:

As requested, the Company has expanded
the text accompanying footnote (9) to the Fees and Expenses table to clarify that all fees and expenses of the Company’s consolidated subsidiaries are included
in the “Total annual expenses” line item.

        Dominic Minore

        November 21, 2016

        Page 4

 8. In the June 30, 2016 10-Q, in the Notes to the Financial Statements, the Company disclosed that
a provision for losses of $19.2 related to the lawsuits has been recorded, offset by the accrual of expected insurance recoveries
of $19.1 million in the accompanying consolidated financial statements as of June 30, 2016. Please explain what the anticipated
impact is on the incentive fee calculations for the recoveries and related expenses due to the shareholder lawsuits.

Response:

The Company respectfully submits that the
expenses of the lawsuits decreased Pre-Incentive Fee Net Investment Income during the periods in which those expenses were incurred,
thereby reducing the amount of the incentive fee paid or payable to the investment adviser. As a result, the receipt of any insurance
recoveries will be included in Pre-Incentive Fee Net Investment Income and therefore the investment adviser will be entitled to
receive an income-based incentive fee on such amounts.

Example (page 14)

 9. Please include an example assuming a 5% annual return resulting entirely from net realized capital
gains.

Response:

As requested, the Company has included
on page 14 of Amendment No. 1 an example assuming a 5% annual return resulting entirely from net realized capital gains.

Risk Factors (page 18)

 10. Expand the disclosure contained in the first paragraph to make clear that this section also
describes the special risks of investing in a business development company, including the risks associated with investing in a
portfolio of small and developing or financially troubled businesses. See Item 8.6.e. of Form N-2. In this regard, add any
additional risk factors as appropriate.

Response:

As requested, the Company has expanded
the disclosure in the first paragraph on page 18 of Amendment No. 1 to make clear that the section describes the special risks of investing in a business development
company.  The Company respectfully submits that the existing risk factors cover all such material risks.

 11. In your response letter, confirm that Company will not engage in reverse repurchase agreements.
In the alternative, provide a description of reverse repurchase agreements, noting that they represent borrowing by the Company
and, if true, that they are subject to the Company’s overall limitation on borrowing. Also highlight the risks pertaining
to reverse repurchase agreements.

        Dominic Minore

        November 21, 2016

        Page 5

Response:

The Company hereby confirms that it currently
does not, and does not expect to, engage in reverse repurchase agreements.

 12. To the extent that the Company may materially invest in derivatives, please refer to the disclosure
considerations set forth in the Letter from Barry D. Miller, Associate Director, Division of Investment Management, SEC to Karrie
McMillan, General Counsel, ICI (July 30, 2010).

Response:

The Company respectfully submits that it
does not intend to materially invest in derivatives.  To the extent it does so in the future, the Company will refer to the
disclosure considerations set forth in the July 30, 2010 letter.

Illustration (page 22)

 13. Please reconfigure the presentation of the information shown in the illustration to conform
to the format prescribed by Item 8.3.b.(3) of Form N-2.

Response:

As requested, the Company has modified
the presentation of the information shown in the illustration on page 22 of Amendment No. 1 to conform to the formal prescribed by Item 8.3(b)(3)
of Form N-2.

If we default on our obligations
to pay our other indebtedness, we may not be able to make payments on the Notes. (page 43)

 14. The disclosure states that the ING facility, the Sumitomo facility and the Notes have, and any
future credit facilities will likely have, customary cross-default provisions, and that if the indebtedness thereunder or under
any future credit facility is accelerated, the Company may be unable to repay or finance the amounts due. Please expand the disclosure
to highlight, in plain English, the consequent effect on the holders of debt securities issued by the Company where cross-default
provisions are triggered and subsequently enforced by the Company’s creditors.

Response:

As requested, the Company has expanded
the disclosure on page 44 of Amendment No. 1 to highlight in plain English the consequent effect on the holders of debt securities issued
by the Company where cross-default provisions are triggered and subsequently enforced by the Company’s creditors.

        Dominic Minore

        November 21, 2016

        Page 6

Price Range of Common Stock and Distributions
(page 48)

 15. The disclosure states that since the Company’s initial public offering in June 2008, shares
of common stock of the Company have at times traded at prices significantly less than net asset value. It also appears from the
price range information included on page 48, as well as the recent price information disclosed on the prospectus outside front
cover, that shares of the Company’s common stock typically have traded at a discount to its per share NAV over the past two
fiscal years. If the Company intends to sell shares of its common stock a price below per share NAV then, in most instances, it
must receive shareholder approval prior to doing so. Please expand the disclosure to indicate the Company’s plans to seek
this authority from the holders of its common shares. The disclosure should also clarify that any sales of shares of the Company’s
common stock at below its NAV per share requiring shareholder approval must occur, if at all, within one year after receiving such
shareholder approval.

Response:

The Company respectfully submits that it
does not currently intend to seek authority from its common stockholders to issues shares of common stock at a price per share
below NAV.  However, the Company has expanded the disclosure in Amendment No. 1 to state that any sale or other issuance of
the Company’s common stock at a price below the then-current net asset value per share requiring stockholder approval must
occur within the 12 months following such stockholder approval.

Business – General (page 101)

 16. The disclosure states that, at June 30, 2016, the Company’s portfolio included 17 investments
in private equity funds which represented less than 1% of the fair value of the Company’s assets. Please expand the disclosure
to state that the Company will limit its investments in entities that are excluded from the definition of “investment company”
under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act of 1940 (typically private equity funds and hedge funds)
to no more than 15% of its net assets.

Response:

The Company respectfully submits that it
is not aware of any formal rule or other written SEC guidance that limits the Company’s investments in entities that are
excluded from the definition of “investment company” under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act to 15%
of its net assets although the Company is subject to the requirements of Section 55 of the 1940 Act.  Notwithstanding the
foregoing, however, the Company confirms that it has no current intention of investing more than 15% of its net assets in entities
(excluding Senior Loan Fund JV I, LLC) that are excluded from the definition of “investment company” under Section
3(c)(1) or Section 3(c)(7) of the 1940 Act.

        Dominic Minore

        November 21, 2016

        Page 7

Indemnification (page 151)

 17. On page F-87 of the N-2 and in the June 30, 2016 10-Q, the notes to the financial statements
state the following: “The investment advisory agreement provides that, absent willful misfeasance, bad faith or gross negligence
in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations,
the Investment Adviser and its officers, managers, partners, members (and their members, including the owners of their members),
agents, employees, controlling persons and any other person or entity affiliated with it, are entitled to indemnification from
the Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid
in settlement) arising from the rendering of the Investment Adviser's services under the investment advisory agreement or otherwise
as the Investment Adviser. In this regard, FSAM has indicated that it intends to seek indemnification under the investment advisory
agreement with respect to any losses and expenses it may incur in connection with active lawsuits (see Note 16). To date, no amounts
have been recorded in the consolidated financial statements related to these potential claims.” Please include disclosure
of a range of reasonably possible losses for the litigation matters.

Response:

The Company respectfully submits that it
is currently unable to estimate the reasonably possible losses for the litigation matters.  Once the Company is able to make such
an estimate, appropriate information will be included in the Company’s filings under the Exchange Act and in any prospectus
supplement used in connection with an offering of the securities registered under the Registration Statement. Until such time, the Company undertakes to clarify in future financial statements that the amount