SecProbe.io

August 18, 2011
     Thomas Friedmann, Esq. Dechert LLP
1775 I Street, N.W. Washington, DC 20006- 2401
  Re:  F S Investment Corporation II (File Nos. 333- 175654 and
        814- 00926)
  Dear Mr. Friedmann :
 We have reviewed the registration statement  on Form N -2 of FS Investment Corporation II (“Fund”),
filed on July  19, 2011.  The registration statement was filed to register common stock for a shelf
offering pursuant to Rule 415 under the Securities Act of 1933 ( “1933 Act ”).  We have used captions
from  the registration statement above our comments to indicate the sections of the registration
statement to which the comments relate.  You also should consider a comment made with respect to
one section applicable to similar disclosure elsewhere in the regis tration statement.  We have the
following comments.

Prospectus

Cover Pages
 1.  Please explain to us why FS
2 Capital Partners, LLC  is referred to as a “dealer manager,” rather than
as a principal underwriter or an underwriter.
 2.  Immediately before the sentence with the cross reference required by Item 1.1.j. of Form N -2,
please include the following :

The securities in which the Fund invests will not be rated  by any rating agency .  If they were ,
they would be rated as below investment grade or “junk.”   Indebtedness  of below investment
grade quality has predominantly speculative characteristics with respect to the issuer’s capacity to pay interest a nd repay principal.

 Thomas Friedmann, Esq. August 18, 2011
Page 2

Prospectus Summary
 1.  The disclosure , in the third bullet on page 1, states that the Fund will seek to meet its investment
objective s by “focusing primarily on debt investments in a broad array of private U.S. companies,
including  small and middle market companies, which we define as companies with annual revenue of
$10 million to $2.5 billion at the time of investment. ”  Please define the term “primarily .”  Please
clarify, where appropriate in the prospectus , the following issues raised by this statement.  To what
extent will the Fund invest in equity securities?  What kinds of equity securities will the Fund invest in?  Will the Fund invest  in public companies?  Will the Fund invest in companies with annual revenue
of less $10 mil lion?

2.  The disclosure , on page 1, states that “ we anticipate that our portfolio will be comprised primarily
of investments in senior secured loans, second lien secured loans and, to a lesser extent, subordinated
loans of private U.S. companies .”  Pleas e define the terms “primarily ” and “ to a lesser extent .”  Is there
a limit on the Fund’s ability to invest in subordinated loans?  If not, disclose this fact.  Please clarify whether the “senior secured loans ” and  “second lien secured loans ” referred to in  this sentence will
also be issued by “ private U.S. companies .”
 3.  The disclosure  in the subsection, “ FS Investment Corporation II ” on page  1, states that “we may
also purchase minority interests …through a co -investment with a financial sponsor.”  Please explain
the meaning of the term “financial sponsor.”

4.  The disclosure in the penultimate paragraph of this subsection, on page 2, states:

We believe that a non -traded structure is more appropriate for the long -term nature of the assets
in which we invest. This structure allows us to operate with a long -term view, similar to that of
other types of private investment funds —instead of managing to quarterly market
expectations —and to pursue our investment objectives without subjecting our investors to the
daily share price volatility associated with the public markets because our shares will not be
listed on a national securities exchange.
 This statement is misleading.  Please delete it.  A BDC that lists its shares can also take “a long -term
view ” becaus e closed -end funds , in general,  are not required to dispose of assets to redeem shares,
unlike open- end funds (that must redeem daily) and “other types of private investment funds”  (that
must redeem on certain dates) .  We fail to see what the Fund can do t hat it could not do if its shares
were listed.  In addition, shareholders of a BDC that lists its shares are subject to “ daily share price
volatility ” only as long as they want to be.  Shareholders of a non- listed BDC , however, will be subject
to NAV volat ility as long as the BDC wants them to be.  This statement seems to suggest that no
market is better than a volatile one.   5.  The subsection “ Market Opportunity ,” on page 4, states “we believe that there are and will continue
to be significant investment opportunities in senior secured and second lien secured loans as well as

 Thomas Friedmann, Esq. August 18, 2011
Page 3
  investments in debt securities of small and middle market companies. ”  (Similar statements appear
elsewhere in the prospectus.)   Please clarify whether the “investment opportunities in senior secured
and second lien secured loans ” referred to in these statements are in “small and middle market
companies.”
 6.  Pleas e expand the risk disclosure  in the subsection “ Characteristics of and Risks Related to
Investments in Private Companie s,” on page 5.  This risk disclosure is inadequate with respect to the
uncertain, if not unreliable, valuations of the  investments  described , their illiquidity, and their
significant credit risks.
 7.  Please delete the “Diversification ” bullet in the s ubsection “Investment Strategy,” on page 6, and
the reference to “diversification of our portfolio” in the subsection “Estimated Use of Proceeds,” on page 9.  The Fund is non -diversified.
 8.  The “Competitive Strengths ” subsection, on page 6, is too long, please condense it.
 9.  The last sentence in the penultimate paragraph of the “Share Repurchase Program” subsection, on page 9, states that  “any periodic repurchase offers will be subject in part to …diversification rules
promulgated…the 1940 Act.”  Wh at diversification rules under the 1940 Act are referred to by this
statement?
 10.  The “Advisory Fees ” subsection , on page 11, states that “the  subordinated incentive fee on income
will be calculated and payable quarterly in arrears based upon our “pre -incentive fee net investment
income” for the immediately preceding quarter and will be subordinated to a preferred return on adjusted capital equal to 1.875%  per quarter, or an annualized rate of 7.5%. ”  We believe that this
disclosure would be easier to understand if more common terms were used, here and throughout the prospectus.  For example, the disclosure could simply refer to an “ incentive fee ” that is subject to a
“performance threshold” or “hurdle rate.”  Please also explain in this subsection the concept of the
“catch -up,” once the hurdle rate is exceeded.
 11.  Please explain to us how the “ subordinated liquidation incentive fee ,” which is also described in
the “Advisory Fees ” subsection on page 11, is consistent with the exception in Section 205(b)(3) of the
Investment Advisers Act of 1940 from the  general prohibition on an investment adviser charging  an
incentive fee based on a share of capital gains .
 12.  Please move the “Risk Factors” subsection, currently on page 13, so that it immediately follows the Investment Strategy subsection, on page 6.  In addition, the disclosure is inadequate with respect to
the risks of the Fund’s investments in the senior secured , second lien , and subordinated debt and equity
investments of private small and midd le market companies .  We note that it consists of just two bullets :
one describing the necessity of fair valuing such securities and the other describing fluctuations in the
collateral, or the lack of collateral, securing these securities.  Please provide complete disclosure about the risks of investing in the senior secured , second lien , and subordinated debt and equity investments

 Thomas Friedmann, Esq. August 18, 2011
Page 4
  of private small and middle market companies.  As we have mentioned, these include a lack of market
prices, illiquidity, and s ignificant credit risks.  In addition, please make this disclosure about the risks
of the Fund’s investments first in the “Risk Factors” subsection .
 13.  Pleas e revise the fo urth bullet  of the  “Risk Factors” subsection , currently on page 13, substantial ly
as follows:
Because there is no public trading market for shares of our common stock and we are not obligated to effectuate a liquidity event by a specified date, it is unlikely that you
will be able
difficult for you to sell your shares.
 14.  Pleas e revise the fifth bullet of the “Risk Factors” subsection to make clear that only a very limited
number of the Fund’s shares will be eligible for repurchase.
 15.  Please revise the sixth bullet of the “Risk Factors” subsection and the  disclos ure in the
“Distributions” subsection, on page 15, to make clear that return -of-capital distributions are more than
just a tax issue.  Please make clear that i nvestors will be receiving back their own money , net of very
substantial fees  and an opportunity cost.   Please disclose whether , and how, the Fund will inform
investors of the amount of any quarterly distributions  that are a return of capital.  Please confirm that
the Fund will not refer to any distributions that include a return of capital as “divide nds,” a term  that
properly describe s only a distribution of earnings and profits.

Fees and Expenses, page 17
 1.  Please delete the phrase, “to a dealer manager,” following the “Sales Load” line item in the fee table.
 2.  Footnote “1” to the fee table  states that the amount of “average net assets attributable to common
stock” is based on the assumptions that:  the Fund will sell $100 million worth of shares of common stock during the following twelve months ; that net offering proceeds from such sales equal $88.5
million ; and that average net assets during such period equal one -half of the net offering proceeds, or
$44.25 million.  Please revise these assumptions so that average net assets are calculated with respect to the average dollar amount of common stock that is expected to be sold during the current fiscal year, which ends on December 31, 2011.  3.  Footnote “5” to the fee table states  that “b ased on our current business plan, we anticipate that we
may have capital gains and interest income that c ould result in the payment of an incentive fee to FSIC
II Advisor in the following twelve months.”  Please include, in the explanatory paragraph following the Example, a second example where the required five percent return results entirely from net realiz ed
capital gains, so that the effect of the incentive fee arrangement can be illustrated.  The incentive fees are potentially significant and it is possibly misleading for the E xample to be calculated without

 Thomas Friedmann, Esq. August 18, 2011
Page 5
  including any of them simply  because the E xampl e is premised on a return below the “preferred return
on adjusted capital ” of 7.5%  annually.  In addition, because footnote “ 5” states that the F und
anticipates that it may have capital gains in the next twelve months , please explain to us why the
Example does not assume that at least some of the Fund’s income is capital gains  (which are not
subject to “ the necessary performance targets ”).
 4.  Please explain to us the assumptions on which the  “annual interest rate on the amount borrowed ” of
“3.0% ,” refer red to in Footnote “6,” is based.
 5.  Footnote “7” states that the amount of “other expenses…estimates the amounts we expect to pay during the twelve months following the commencement of our operations.  Please revise the calculation of “other expenses” so that it is based on the amounts the Fund expects to pay during the current fiscal year.
 6.  Footnote “7” also states that the amounts that the Fund expects to pay “does not include preferred pricing arrangements we may receive from certain parties as a newly -formed entity .”  Please explain
this statement.

Questions and Answers About This Offering , page 23
 1.  The answer to the question, “ How do I subscribe for shares of common stock,” on page 25 states:

We reserve the right to reject any subscriptio n in whole or in part. Subscriptions will be
accepted or rejected by us within 15 days of receipt by us and, if rejected, all funds will be returned to subscribers without deduction for any expenses within ten business days from the date the subscription i s rejected.
 Funds received as part of a rejected subscription apparently could be held by the Fund for up to 25 days.  Please disclose whether such funds will be held in an escrow account and whether rejected subscribers will be paid interest on their ret urned funds.
 2.  Please revise, substantially as indicated, the answer to the question: “W ill I be able to sell my shares
of common stock in a secondary market ,” on page 26.

Because of the lack of a trading market for our shares, it is unlikely that stockholders may not
will be able to sell their shares  promptly or at a desired price . If you are able to sell your shares,
it is likely that you will may have to sell them at a significant discount to the purchase price of
your shares.

 Thomas Friedmann, Esq. August 18, 2011
Page 6

Risks R elating  to an Investment in Our Common Stock, page 28
 The following subsection , which appears on page 29, should be revised consistently with the revisions
shown.  These revisions are intended to clarify the risks or to eliminate statements that do not describe risks.

Our shares will not be listed on an exchange or quoted through a quotation system for the foreseeable future, if ever. Therefore, if you purchase shares in this offering, it is unlikely that
you will be able to sell them and, if you  are able to do s o, it is unlikely that you will have
limited liquidity and may not receive a full return of your  invested capital  upon selling shares .
Our shares are illiquid assets for which there is not expected to be any secondary
market, nor is it expected that any w ill develop in the foreseeable future. We intend to seek to
complete a liquidity event for our stockholders within five years following the completion of our offering stage. However, there can be no assurance that we will complete a liquidity event within such time or at all. We expect that our board of directors, in the exercise of its fiduciary
duty to our stockholders, will determine to pursue a liquidity event when it believes that then -
current market conditions are favorable for a liquidity event and t hat such an event is in the best
interests of our stockholders. A liquidity event could include: (1)  a listing of our shares on a
national securities exchange, (2)  the sale of all or substantially all of our assets either on a
complete portfolio basis or i ndividually followed by a liquidation, or (3)  a merger or another
transaction approved by our board of directors in which our stockholders will receive cash or shares of a publicly traded company.
Prior to the completion of a liquidity event, our share re purchase program may provide
a limited opportunity for investors to achieve liquidity, subject to certain restrictions and limitations, at a price which will
may reflect a discount from the purchase price you paid for the
shares being repurchased. See “Shar e Repurchase Program” for a detailed description of our
share repurchase program.

In making the decision to apply for listing of our shares, our directors will try to
determine whether listing our shares or liquidating our assets will result in greater v alue for our
stockholders. In making a determination of what type of liquidity event is in the best interest of
our stockholders, our board of directors, including our independent directors, may consider a
variety of criteria, including, but not limited to , market conditions, portfolio diversification,
portfolio performance, our financial condition, potential access