Kayne Anderson Energy Development Co. (KED)

Kayne Anderson Energy Development Co. is an investment company which intends to invest primarily in energy companies that are not traded publicly. The company's investment objective is to generate current income and capital appreciation primarily through equity and debt investments. Kayne Anderson Fund Advisors will manage and advise on company's operations. It intends to invest 80% of its assets in securities of energy companies, which include midstream, upstream and other energy companies.

In September 2006, it completed its initial public offering and proceeds worth $233.2 millions were planned to invest in portfolio companies. It will invest only in those energy companies which has stable cash flows, consistent demand, increasing cash flow from internal growth, substantial growth from new projects, limited commodity price risk and good management.

As long as company maintains status of a Regulated Investment Company, it will not be required to pay federal income taxes on any ordinary income or capital gains. Thus it can distribute more to stockholders and offer better investment terms to potential portfolio companies compared to those offered by corporate-taxpaying competitors.

The investment advisory group gives them a competitive edge, as it enables company to identify and develop various investment opportunities in the target markets that may not be readily available with competitors. Its investment adviser’s team includes experienced individuals with extensive technical, industry and reserve engineering expertise and contacts in energy industry, thus enabling them to identify investments that offer superior potential for income and capital appreciation.

Long-term relationship of the group with the management of energy companies facilitates them identify long-term trends in the energy industry, providing it an edge over its competitors. The company is still at a nascent stage and seems as if it is here to stay.