Fidus Investment Corporation, et al.; Notice of Application, 32776-32779 [2014-13103]
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32776
Federal Register / Vol. 79, No. 109 / Friday, June 6, 2014 / Notices
of $622,502 incurred in connection with
the reorganizations were allocated
among applicants and the acquiring
fund.
Filing Date: The applications were
filed on April 23, 2014.
Applicants’ Address: 333 West
Wacker Dr., Chicago, IL 60606.
Nuveen Ohio Dividend Advantage
Municipal Fund [File No. 811–9463]
Nuveen Ohio Dividend Advantage
Municipal Fund 2 [File No. 811–10445]
Nuveen Ohio Dividend Advantage
Municipal Fund 3 [File No. 811–10637]
Summary: Each applicant, a closedend investment company, seeks an
order declaring that it has ceased to be
an investment company. Applicants
transferred their assets to Nuveen Ohio
Quality Income Municipal Fund, and on
April 8, 2013, made distributions to
their shareholders based on net asset
value. Aggregate expenses of $666,057
incurred in connection with the
reorganizations were allocated among
applicants and the acquiring fund.
Filing Date: The applications were
filed on April 23, 2014.
Applicants’ Address: 333 West
Wacker Dr., Chicago, IL 60606.
Nuveen New York Investment Quality
Municipal Fund Inc. [File No. 811–
6178]
Nuveen New York Select Quality
Municipal Fund Inc. [File No. 811–
6295]
wreier-aviles on DSK5TPTVN1PROD with NOTICES
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. Applicant
transferred its assets to Aegis Value
Fund, a series of The Aegis Funds, and
on February 28, 2014, made a
distribution to its shareholders based on
net asset value. Expenses of $140,300
incurred in connection with the
reorganization were paid by Aegis
Financial Corporation, investment
adviser to the applicant.
Filing Date: The application was filed
on May 9, 2014.
Applicant’s Address: 6862 Elm St.,
Suite 830, McLean, VA 22101.
Separate Account VA E [File No. 811–
9847]
Nuveen New York Dividend Advantage
Municipal Income Fund [File No. 811–
9473]
Summary: Each applicant, a closedend investment company, seeks an
order declaring that it has ceased to be
an investment company. Applicants
transferred their assets to Nuveen New
York AMT-Free Municipal Income
Fund, and on March 11, 2013, made
distributions to their shareholder based
on net asset value. Aggregate expenses
of $1,928,360 incurred in connection
with the reorganizations were allocated
among applicants and the acquiring
fund.
Filing Date: The applications were
filed on April 23, 2014.
Applicants’ Address: 333 West
Wacker Dr., Chicago, IL 60606.
Jkt 232001
Aegis Value Fund Inc. [File No. 811–
9174]
Separate Account VA D [File No. 811–
9777]
Nuveen New York Premium Income
Municipal Fund Inc. [File No. 811–
6619]
13:59 Jun 05, 2014
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. Applicant
transferred its assets to Nuveen
Municipal High Income Opportunity
Fund, and on July 15, 2013, distributed
its assets to shareholders based on net
asset value. Expenses of $778,536
incurred in connection with the
reorganization were paid by applicant
and the acquiring fund.
Filing Date: The application was filed
on April 23, 2014.
Applicant’s Address: 333 West
Wacker Dr., Chicago, IL 60606.
Separate Account VA A [File No. 811–
9172]
Nuveen New York Quality Income
Municipal Fund Inc. [File No. 811–
6424]
VerDate Mar<15>2010
Nuveen Municipal High Income
Opportunity Fund 2 [File No. 811–
22123]
Separate Account VA F [File No. 811–
10411]
Separate Account VA I [File No. 811–
10147]
Separate Account VA J [File No. 811–
10413]
Separate Account VA K [File No. 811–
10617]
Separate Account VA L [File No. 811–
21087]
Separate Account VA P [File No. 811–
21192]
Separate Account VA R [File No. 811–
21441]
Separate Account VA S [File No. 811–
21453]
Summary: Each applicant, a unit
investment trust, seeks an order
declaring that it has ceased to be an
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investment company. Applicants
transferred their assets to Retirement
Build Variable Annuity Account, and
made distributions to their unit holders
based on net asset value. Each applicant
incurred $10,000 in expenses in
connection with its reorganization,
these expenses were paid by
Transamerica Life Insurance Company,
applicants’ depositor.
Filing Date: The applications were
filed on March 3, 2014.
Applicants’ Address: 4333 Edgewood
Rd. NE., Cedar Rapids, IA 52499.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–13102 Filed 6–5–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31067; 812–14156]
Fidus Investment Corporation, et al.;
Notice of Application
June 2, 2014.
Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice of an application to
amend a prior order issued under
sections 6(c), 12(d)(1)(J), and 57(c) of the
Investment Company Act of 1940
(‘‘Act’’) granting exemptions from
sections 12(d)(1)(A), 18(a), 21(b),
57(a)(1)–(a)(3), and 61(a) of the Act;
under section 57(i) of the Act and rule
17d–1 under the Act to permit certain
joint transactions otherwise prohibited
by section 57(a)(4) of the Act; and under
section 12(h) of the Securities Exchange
Act of 1934 (‘‘Exchange Act’’) granting
an exemption from section 13(a) of the
Exchange Act.
AGENCY:
Applicants: Fidus Investment
Corporation (‘‘Company’’), Fidus
Mezzanine Capital, L.P., (‘‘Fidus SBIC’’),
Fidus Investment GP, LLC (‘‘New
General Partner’’), Fidus Investment
Advisors, LLC (‘‘Fidus Advisors’’), and
Fidus Mezzanine Capital II, L.P. (‘‘Fidus
SBIC II’’) (collectively, the
‘‘Applicants’’).
SUMMARY: Summary of Application:
Applicants request an order (‘‘Amended
Order’’) that would amend, and in part
supersede, a prior order permitting a
parent business development company
(‘‘BDC’’) and its wholly-owned small
business investment company (‘‘SBIC’’)
subsidiary to engage in certain
transactions that otherwise would be
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permitted if such parent BDC and such
SBIC subsidiary were one company and
to file certain reports on a consolidated
basis, and permitting such parent BDC
to adhere to a modified asset coverage
requirement (‘‘Prior Order’’).1
Applicants seek to amend the Prior
Order in order to permit such SBIC
subsidiary, which is also a BDC, and a
newly formed SBIC subsidiary or any
future subsidiary to engage in certain
transactions that otherwise would be
permitted if such parent BDC and the
subsidiaries were one company and to
permit such parent BDC to adhere to a
modified asset coverage requirement.
Applicants’ Representations
1. The Company, a Maryland
corporation, is an externally-managed,
non-diversified, closed-end investment
company that has elected to be
regulated as a BDC under the Act.2 The
Company provides customized
mezzanine debt and equity financing
solutions to lower middle-market
companies located throughout the
United States that have revenues
between $10 million and $150 million.
The Company’s investment objective is
to provide attractive risk-adjusted
returns by generating both current
income from debt investments and
capital appreciation from equity related
DATES: Filing Dates: The application
investments. The Company’s board of
was filed on May 15, 2013, and
amended on December 6, 2013, April 2, directors (the ‘‘Board’’) consists of five
members, three of whom are not
2014, and May 30, 2014.
Hearing or Notification of Hearing: An ‘‘interested persons’’ of the Company
within the meaning of section 2(a)(19) of
order granting the application will be
the Act.
issued unless the Commission orders a
2. Fidus SBIC, a Delaware limited
hearing. Interested persons may request
partnership, received its license from
a hearing by writing to the
the Small Business Administration
Commission’s Secretary and serving
(‘‘SBA’’) to operate as a SBIC under the
applicants with a copy of the request,
Small Business Investment Act of 1958
personally or by mail. Hearing requests
(‘‘SBA Act’’). Fidus SBIC has elected to
should be received by the Commission
be regulated as a BDC under the Act.
by 5:30 p.m. on June 27, 2014 and
Fidus SBIC has the same investment
should be accompanied by proof of
objectives and strategies as the
service on applicants, in the form of an
Company. The Company owns a 99.99%
affidavit or, for lawyers, a certificate of
limited partnership interest in Fidus
service. Hearing requests should state
SBIC, and the New General Partner, a
the nature of the writer’s interest, the
Delaware limited liability company and
reason for the request, and the issues
a wholly-owned subsidiary of the
contested. Persons who wish to be
Company, owns a 0.01% general
notified of a hearing may request
partnership interest in Fidus SBIC.
notification by writing to the
Fidus SBIC is a wholly owned
Commission’s Secretary.
subsidiary of the Company because the
ADDRESSES: Secretary, U.S. Securities
Company and the New General Partner
and Exchange Commission, 100 F Street own all of the partnership and voting
NE., Washington, DC 20549–1090.
interests in Fidus SBIC. Fidus SBIC is
Applicants, c/o Edward H. Ross, Fidus
and will remain, at all times, a
Investment Corporation, 1603 Orrington Subsidiary 3 of the Company and
Avenue, Suite 1005, Evanston, Illinois
consolidated with the Company for
60201.
financial reporting purposes. Fidus
SBIC has a board of directors (‘‘Fidus
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Attorney, at SBIC Board’’) consisting of three
persons who are not interested persons
(202) 551–6990, or MaryKay Frech,
of Fidus SBIC within the meaning of
Branch Chief, at (202) 551–6821
section 2(a)(19) of the Act and two
(Division of Investment Management,
persons who are interested persons of
Chief Counsel’s Office).
Fidus SBIC.
SUPPLEMENTARY INFORMATION: The
following is a summary of the
2 Section 2(a)(48) of the Act defines a BDC to be
any closed-end investment company that operates
application. The complete application
for the purpose of making investments in securities
may be obtained via the Commission’s
described in sections 55(a)(1) through 55(a)(3) of the
Web site by searching for the file
Act and makes available significant managerial
number, or an applicant using the
assistance with respect to the issuers of such
securities.
Company name box, at https://
3 For purposes of this application, references to
www.sec.gov/search/search.htm or by
‘‘Subsidiaries’’ include Fidus SBIC and Fidus SBIC
calling (202) 551–8090.
1 Fidus Investment Corporation, et al., Investment
Company Act Release Nos. 29974 (Mar. 1, 2012)
(notice) and 30012 (Mar. 27, 2012) (order).
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II, which are the Company’s only Subsidiaries
currently in existence, as well as any future direct
or indirect wholly-owned subsidiaries of the
Company (collectively, the ‘‘Subsidiaries’’ and each
a ‘‘Subsidiary’’).
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32777
3. Fidus SBIC II, a Delaware limited
partnership, is a Subsidiary of the
Company. Fidus SBIC II received its
license from the SBA to operate as a
SBIC under the SBA Act. Unlike Fidus
SBIC, Fidus SBIC II will not be
registered under the Act and will rely
on the exclusion from the definition of
investment company contained in
section 3(c)(7) of the Act. The Company
directly owns a 99.99% limited
partnership interest in Fidus SBIC II.
The New General Partner owns a 0.01%
general partnership interest in Fidus
SBIC II. Therefore, Fidus SBIC II is a
Subsidiary of the Company because the
Company and the New General Partner
own all of the equity and voting
interests in Fidus SBIC II. Fidus SBIC II
is consolidated with the Company for
financial reporting purposes.
4. Fidus Advisors, a Delaware limited
liability company, is registered as an
investment adviser under the
Investment Advisers Act of 1940. Fidus
Advisors serves as the investment
adviser to the Company, Fidus SBIC,
and Fidus SBIC II and manages the
consolidated assets of the Company,
including those of Fidus SBIC and Fidus
SBIC II. Fidus Advisors does not
currently provide management and
advisory services to any other
Subsidiary. It is anticipated that Fidus
Advisors will also provide management
and advisory services to future
Subsidiaries.
5. The Prior Order permits the
Company and Fidus SBIC to operate
effectively as one company. At the time
of the Prior Order, Fidus SBIC was the
Company’s only wholly-owned SBIC
subsidiary. Subsequent to the Prior
Order, the Company has formed Fidus
SBIC II and may in the future create
other Subsidiaries. The Subsidiaries
may also be licensed by the SBA to
operate as SBICs (collectively, the ‘‘SBIC
Subsidiaries,’’ and each an ‘‘SBIC
Subsidiary’’) or in some cases may not
be SBICs.4
6. Applicants seek the Amended
Order to request the same exemptive
relief for Fidus SBIC II and any future
Subsidiary that was granted under the
Prior Order with respect to Fidus SBIC,
except to the extent that such relief is
not necessary due to the fact that Fidus
SBIC II is not (and no future Subsidiary
will be) a BDC or a registered
investment company under the Act.
4 Any existing entities that currently intend to
rely on the Amended Order have been named as
Applicants, and any other existing or future entities
that may rely on the Amended Order in the future
will comply with its terms and conditions.
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Applicants’ Legal Analysis
1. Applicants request the Amended
Order under sections 6(c), 57(c) and
57(i) of the Act and rule 17d–1 under
the Act to permit Fidus SBIC and one
or more other Subsidiaries to engage in
certain transactions that otherwise
would be permitted if the Company and
its Subsidiaries were one company and
to permit the Company to adhere to
modified asset coverage requirements.
2. Section 18(a) prohibits a registered
closed-end investment company from
issuing any class of senior security or
selling any such security of which it is
the issuer, unless the company complies
with the asset coverage requirements set
forth in that section. Section 61(a) of the
Act makes section 18 applicable to
BDCs, with certain modifications.
Section 18(k) provides an exemption
from section 18(a)(1)(A) and (B) (relating
to senior securities representing
indebtedness) for SBICs.
3. Applicants state that a question
exists as to whether the Company must
comply with the asset coverage
requirements of section 18(a) (as
modified by section 61(a) for BDCs)
solely on an individual basis or whether
it must also comply with the asset
coverage requirements on a
consolidated basis because the
Company may be deemed to be an
indirect issuer of any class of senior
securities issued by any SBIC
Subsidiary. Applicants state that they
wish to treat Fidus SBIC II (and any
future SBIC Subsidiary) as if it were a
BDC subject to sections 18 and 61 of the
Act. Applicants state that companies
operating under the SBA Act, such as
Fidus SBIC II (and other SBIC
Subsidiaries), are subject to the SBA’s
substantial regulation of permissible
leverage in their capital structure.
4. The Prior Order granted relief
under section 6(c) from sections 18(a)
and 61(a) to permit the Company to
exclude from its consolidated asset
coverage ratio any senior security
representing indebtedness issued by
Fidus SBIC (not any future SBIC
Subsidiary). Accordingly, Applicants
request relief under section 6(c) of the
Act from sections 18(a) and 61(a) of the
Act to permit the Company to exclude
from its consolidated asset coverage
ratio any senior security representing
indebtedness issued by any SBIC
Subsidiary.
5. Section 6(c) of the Act, in relevant
part, permits the Commission to exempt
any transaction or class of transactions
from any provision of the Act if, and to
the extent that such exemption is
necessary or appropriate in the public
interest and consistent with the
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13:59 Jun 05, 2014
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protection of investors and the purposes
fairly intended by the policy and
provisions of the Act. Applicants state
that the requested relief satisfies the
section 6(c) standard. Applicants
contend that, since Fidus SBIC is
entitled to rely on section 18(k) and
since Fidus SBIC II (or any future SBIC
Subsidiary) would be entitled to rely on
section 18(k) if it were a BDC itself,
there is no policy reason to deny the
benefit of such exemptions to the
Company.
6. Sections 57(a)(1) and (2) of the Act
generally prohibit, with certain
exceptions, sales or purchases of any
security or other property between BDCs
and certain of their affiliates as
described in section 57(b) of the Act.
Section 57(b) includes a person, directly
or indirectly, either controlling,
controlled by or under common control
with the BDC. Applicants state that the
Company directly owns all of the
limited partnership interests in Fidus
SBIC and Fidus SBIC II and indirectly
owns all of the general partnership
interests in Fidus SBIC and Fidus SBIC
II through its 100% ownership of the
New General Partner. Accordingly,
Fidus SBIC and Fidus SBIC II would
each be a person related to each other
in a manner described in section 57(b)
because each is deemed to be under the
control of the Company and thus under
common control. In addition, each of
Fidus SBIC and Fidus SBIC II and each
other Subsidiary would also be a person
related to each other Subsidiary in a
manner described in section 57(b).
7. Applicants state that there may be
circumstances when one or more of the
Company, Fidus SBIC, Fidus SBIC II or
any future Subsidiary would purchase
all or a portion of the portfolio
investments held by one of the others in
order to enhance the liquidity of the
selling company or for other reasons,
subject in each case to the requirements
of the SBA and the regulations
thereunder, as applicable. In addition,
there may be circumstances when it is
in the interest of the Company, Fidus
SBIC and/or Fidus SBIC II for Fidus
SBIC II, or for any future Subsidiaries,
to invest in securities of an issuer that
may be deemed to be a person related
to either the Company or Fidus SBIC in
a manner described in section 57(b), or
for the Company to invest in securities
of an issuer that may be deemed to be
a person related to a Subsidiary in a
manner described in section 57(b).
8. The Prior Order only extends relief
from sections 57(a)(1) and (2) to
transactions between the Company and
Fidus SBIC. Applicants therefore
request an exemption from sections
57(a)(1) and 57(a)(2) of the Act to permit
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any transaction between Fidus SBIC (as
a BDC) and any other Subsidiary with
respect to the purchase or sale of
securities or other property. Applicants
also seek an exemption from these
provisions to allow any transaction
between Fidus SBIC and a controlled
portfolio affiliate of another Subsidiary.
Applicants state that the requested relief
is intended only to permit the Company
and its Subsidiaries to do that which
they otherwise would be permitted to
do if they were one company.
9. Section 57(c) provides that the
Commission will exempt a proposed
transaction from the provisions of
section 57(a)(1) and (2) of the Act if the
terms of the proposed transaction,
including the consideration to be paid
or received, are reasonable and fair and
do not involve overreaching of any
person concerned, and the proposed
transaction is consistent with the policy
of the BDC concerned and the general
purposes of the Act.
10. Applicants submit that the
requested relief from section 57(a)(1)
and (2) meets this standard. Applicants
represent that the proposed operations
as one company will enhance efficient
operations of the Company and its
Subsidiaries, including Fidus SBIC, and
allow them to deal with portfolio
companies as if the Company and such
Subsidiaries were one company.
Applicants contend that the terms of the
proposed transactions, including the
consideration to be paid or received, are
reasonable and fair and do not involve
overreaching of the Company or Fidus
SBIC (the BDC) by any person, and that
the requested order would permit the
Company and the Subsidiaries to carry
out more effectively their purposes and
objectives of investing primarily in
small business concerns. Finally,
Applicants note that the proposed
transactions are consistent with the
policies of the Company and Fidus SBIC
as specified in filings with the
Commission and the Company’s reports
to stockholders, as well as consistent
with the policies and provisions of the
Act.
11. Section 17(d) of the Act and rule
17d–1 under the Act (made applicable
to BDCs by section 57(i)) prohibit
affiliated persons of a registered
investment company, or an affiliated
person of such person, acting as
principal, from participating in any joint
transaction or arrangement in which the
registered company or a company it
controls is a participant, unless the
Commission has issued an order
authorizing the arrangement. Section
57(a)(4) of the Act imposes substantially
the same prohibitions on joint
transactions involving any BDC and an
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affiliated person of such BDC, or an
affiliated person of such affiliated
person, as specified in section 57(b) of
the Act. Section 57(i) of the Act
provides that rules and regulations
under section 17(d) of the Act will
apply to transactions subject to section
57(a)(4) in the absence of rules under
that section. The Commission has not
adopted rules under section 57(a)(4)
with respect to joint transactions and,
accordingly, the standards set forth in
rule 17d–1 govern Applicants’ request
for relief.
12. The Prior Order only extends
relief from section 57(a)(4) and rule
17d–1 for joint transactions between the
Company and Fidus SBIC. Accordingly,
the Applicants request relief under
section 57(i) and rule 17d–1 to permit
any joint transaction that would
otherwise be prohibited by section
57(a)(4), in which Fidus SBIC (as a BDC)
and another Subsidiary participate, but
only to the extent that the transaction
would not be prohibited if the
Subsidiaries participating were deemed
to be part of the Company, and not
separate companies.
13. In determining whether to grant
an order under section 57(i) and rule
17d–1, the Commission considers
whether the participation of the BDC in
the joint transaction is consistent with
the provisions, policies, and purposes of
the Act, and the extent to which such
participation is on a basis different from
or less advantageous than that of other
participants. Applicants note that the
proposed transactions are consistent
with the policy and provisions of the
Act and will enhance the interests of the
Company, Fidus SBIC and other
Subsidiaries, while retaining the
important protections afforded by the
Act. In addition, because the joint
participants will conduct their
operations as though they comprise one
company, the participation of one will
not be on a basis different from or less
advantageous than the others.
Accordingly, Applicants believe that the
standard for relief under section 57(i)
and rule 17d–1 is satisfied.
14. Applicants state that the
conditions in the Prior Order will be
replaced by the conditions set forth
below.
Applicants’ Conditions
Applicants agree that the Amended
Order will be subject to the following
conditions:
1. The Company will at all times own
and hold, beneficially and of record, all
of the outstanding limited partnership
interests in any Subsidiary and all of the
outstanding membership interests in the
New General Partner, or otherwise own
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and hold beneficially, all of the
outstanding voting securities and equity
interests of such Subsidiary.
2. The Subsidiaries will have
investment policies not inconsistent
with those of the Company, as set forth
in the Company’s registration statement.
3. No person shall serve as a member
of any board of directors of any
Subsidiary, including any manager
under a different form of legal
organization that might perform the
function of a director, unless such
person shall also be a member of the
Company’s Board. The board of
directors or the managers, as applicable,
of any Subsidiary will be appointed by
the equity owners of such Subsidiary.
4. The Company will not itself issue
or sell any senior security and the
Company will not cause or permit any
SBIC Subsidiary to issue or sell any
senior security of which the Company
or such SBIC Subsidiary is the issuer
except to the extent permitted by
section 18 (as modified for BDCs by
section 61); provided that immediately
after the issuance or sale of any such
senior security by either the Company
or any SBIC Subsidiary, the Company
individually and on a consolidated basis
shall have the asset coverage required
by section 18(a) (as modified by section
61(a)), except that, in determining
whether the Company and any SBIC
Subsidiary on a consolidated basis have
the asset coverage required by section
61(a), any senior securities representing
indebtedness of a SBIC Subsidiary if
that SBIC Subsidiary has issued
indebtedness that is held or guaranteed
by the SBA shall not be considered
senior securities and, for purposes of the
definition of ‘‘asset coverage’’ in section
18(h), shall be treated as indebtedness
not represented by senior securities.
5. The Company will acquire
securities of any SBIC Subsidiary
representing indebtedness only if, in
each case, the prior approval of the SBA
has been obtained. In addition, the
Company and any SBIC Subsidiary will
purchase and sell portfolio securities
between themselves only if, in each
case, the prior approval of the SBA has
been obtained.
6. No person will serve or act as
investment adviser to Fidus SBIC II or
any future Subsidiary unless the Board
and the stockholders of the Company
will have taken such action with respect
thereto that is required to be taken
under the Act by the functional
equivalent of the board of directors of
Fidus SBIC II or any future Subsidiary
and the stockholders of Fidus SBIC II or
any future Subsidiary including as if
Fidus SBIC II or such future Subsidiary
were a BDC.
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32779
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–13103 Filed 6–5–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31068; File No. 812–14216]
Ivy Funds, et al.; Notice of Application
June 2, 2014.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order pursuant to section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) granting an exemption from
sections 18(f) and 21(b) of the Act;
pursuant to section 12(d)(1)(J) of the Act
granting an exemption from section
12(d)(1) of the Act; pursuant to sections
6(c) and 17(b) of the Act granting an
exemption from sections 17(a)(1),
17(a)(2) and 17(a)(3) of the Act; and
pursuant to section 17(d) of the Act and
rule 17d-1 under the Act to permit
certain joint arrangements.
AGENCY:
Summary of the Application:
Applicants request an order that would
permit certain registered open-end
management investment companies to
participate in a joint lending and
borrowing facility.
Applicants: Ivy Funds, Ivy Funds
Variable Insurance Portfolios, InvestEd
Portfolios, Waddell & Reed Advisors
Funds (each a ‘‘Fund’’ and collectively
the ‘‘Funds’’), Ivy Investment
Management Company (‘‘IICO’’),
Waddell & Reed Investment
Management Company (‘‘WRIMCO’’).
DATES: Filing Dates: The application
was filed on September 25, 2013, and
amended on March 12, 2014.
Hearing or Notification of Hearing: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on June 27, 2014, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
E:\FR\FM\06JNN1.SGM
06JNN1
Agencies
[Federal Register Volume 79, Number 109 (Friday, June 6, 2014)]
[Notices]
[Pages 32776-32779]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13103]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31067; 812-14156]
Fidus Investment Corporation, et al.; Notice of Application
June 2, 2014.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of an application to amend a prior order issued under
sections 6(c), 12(d)(1)(J), and 57(c) of the Investment Company Act of
1940 (``Act'') granting exemptions from sections 12(d)(1)(A), 18(a),
21(b), 57(a)(1)-(a)(3), and 61(a) of the Act; under section 57(i) of
the Act and rule 17d-1 under the Act to permit certain joint
transactions otherwise prohibited by section 57(a)(4) of the Act; and
under section 12(h) of the Securities Exchange Act of 1934 (``Exchange
Act'') granting an exemption from section 13(a) of the Exchange Act.
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Applicants: Fidus Investment Corporation (``Company''), Fidus
Mezzanine Capital, L.P., (``Fidus SBIC''), Fidus Investment GP, LLC
(``New General Partner''), Fidus Investment Advisors, LLC (``Fidus
Advisors''), and Fidus Mezzanine Capital II, L.P. (``Fidus SBIC II'')
(collectively, the ``Applicants'').
SUMMARY: Summary of Application: Applicants request an order (``Amended
Order'') that would amend, and in part supersede, a prior order
permitting a parent business development company (``BDC'') and its
wholly-owned small business investment company (``SBIC'') subsidiary to
engage in certain transactions that otherwise would be
[[Page 32777]]
permitted if such parent BDC and such SBIC subsidiary were one company
and to file certain reports on a consolidated basis, and permitting
such parent BDC to adhere to a modified asset coverage requirement
(``Prior Order'').\1\ Applicants seek to amend the Prior Order in order
to permit such SBIC subsidiary, which is also a BDC, and a newly formed
SBIC subsidiary or any future subsidiary to engage in certain
transactions that otherwise would be permitted if such parent BDC and
the subsidiaries were one company and to permit such parent BDC to
adhere to a modified asset coverage requirement.
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\1\ Fidus Investment Corporation, et al., Investment Company Act
Release Nos. 29974 (Mar. 1, 2012) (notice) and 30012 (Mar. 27, 2012)
(order).
DATES: Filing Dates: The application was filed on May 15, 2013, and
amended on December 6, 2013, April 2, 2014, and May 30, 2014.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on June 27, 2014 and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants, c/o Edward H. Ross,
Fidus Investment Corporation, 1603 Orrington Avenue, Suite 1005,
Evanston, Illinois 60201.
FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Attorney,
at (202) 551-6990, or MaryKay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. The Company, a Maryland corporation, is an externally-managed,
non-diversified, closed-end investment company that has elected to be
regulated as a BDC under the Act.\2\ The Company provides customized
mezzanine debt and equity financing solutions to lower middle-market
companies located throughout the United States that have revenues
between $10 million and $150 million. The Company's investment
objective is to provide attractive risk-adjusted returns by generating
both current income from debt investments and capital appreciation from
equity related investments. The Company's board of directors (the
``Board'') consists of five members, three of whom are not ``interested
persons'' of the Company within the meaning of section 2(a)(19) of the
Act.
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\2\ Section 2(a)(48) of the Act defines a BDC to be any closed-
end investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
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2. Fidus SBIC, a Delaware limited partnership, received its license
from the Small Business Administration (``SBA'') to operate as a SBIC
under the Small Business Investment Act of 1958 (``SBA Act''). Fidus
SBIC has elected to be regulated as a BDC under the Act. Fidus SBIC has
the same investment objectives and strategies as the Company. The
Company owns a 99.99% limited partnership interest in Fidus SBIC, and
the New General Partner, a Delaware limited liability company and a
wholly-owned subsidiary of the Company, owns a 0.01% general
partnership interest in Fidus SBIC. Fidus SBIC is a wholly owned
subsidiary of the Company because the Company and the New General
Partner own all of the partnership and voting interests in Fidus SBIC.
Fidus SBIC is and will remain, at all times, a Subsidiary \3\ of the
Company and consolidated with the Company for financial reporting
purposes. Fidus SBIC has a board of directors (``Fidus SBIC Board'')
consisting of three persons who are not interested persons of Fidus
SBIC within the meaning of section 2(a)(19) of the Act and two persons
who are interested persons of Fidus SBIC.
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\3\ For purposes of this application, references to
``Subsidiaries'' include Fidus SBIC and Fidus SBIC II, which are the
Company's only Subsidiaries currently in existence, as well as any
future direct or indirect wholly-owned subsidiaries of the Company
(collectively, the ``Subsidiaries'' and each a ``Subsidiary'').
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3. Fidus SBIC II, a Delaware limited partnership, is a Subsidiary
of the Company. Fidus SBIC II received its license from the SBA to
operate as a SBIC under the SBA Act. Unlike Fidus SBIC, Fidus SBIC II
will not be registered under the Act and will rely on the exclusion
from the definition of investment company contained in section 3(c)(7)
of the Act. The Company directly owns a 99.99% limited partnership
interest in Fidus SBIC II. The New General Partner owns a 0.01% general
partnership interest in Fidus SBIC II. Therefore, Fidus SBIC II is a
Subsidiary of the Company because the Company and the New General
Partner own all of the equity and voting interests in Fidus SBIC II.
Fidus SBIC II is consolidated with the Company for financial reporting
purposes.
4. Fidus Advisors, a Delaware limited liability company, is
registered as an investment adviser under the Investment Advisers Act
of 1940. Fidus Advisors serves as the investment adviser to the
Company, Fidus SBIC, and Fidus SBIC II and manages the consolidated
assets of the Company, including those of Fidus SBIC and Fidus SBIC II.
Fidus Advisors does not currently provide management and advisory
services to any other Subsidiary. It is anticipated that Fidus Advisors
will also provide management and advisory services to future
Subsidiaries.
5. The Prior Order permits the Company and Fidus SBIC to operate
effectively as one company. At the time of the Prior Order, Fidus SBIC
was the Company's only wholly-owned SBIC subsidiary. Subsequent to the
Prior Order, the Company has formed Fidus SBIC II and may in the future
create other Subsidiaries. The Subsidiaries may also be licensed by the
SBA to operate as SBICs (collectively, the ``SBIC Subsidiaries,'' and
each an ``SBIC Subsidiary'') or in some cases may not be SBICs.\4\
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\4\ Any existing entities that currently intend to rely on the
Amended Order have been named as Applicants, and any other existing
or future entities that may rely on the Amended Order in the future
will comply with its terms and conditions.
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6. Applicants seek the Amended Order to request the same exemptive
relief for Fidus SBIC II and any future Subsidiary that was granted
under the Prior Order with respect to Fidus SBIC, except to the extent
that such relief is not necessary due to the fact that Fidus SBIC II is
not (and no future Subsidiary will be) a BDC or a registered investment
company under the Act.
[[Page 32778]]
Applicants' Legal Analysis
1. Applicants request the Amended Order under sections 6(c), 57(c)
and 57(i) of the Act and rule 17d-1 under the Act to permit Fidus SBIC
and one or more other Subsidiaries to engage in certain transactions
that otherwise would be permitted if the Company and its Subsidiaries
were one company and to permit the Company to adhere to modified asset
coverage requirements.
2. Section 18(a) prohibits a registered closed-end investment
company from issuing any class of senior security or selling any such
security of which it is the issuer, unless the company complies with
the asset coverage requirements set forth in that section. Section
61(a) of the Act makes section 18 applicable to BDCs, with certain
modifications. Section 18(k) provides an exemption from section
18(a)(1)(A) and (B) (relating to senior securities representing
indebtedness) for SBICs.
3. Applicants state that a question exists as to whether the
Company must comply with the asset coverage requirements of section
18(a) (as modified by section 61(a) for BDCs) solely on an individual
basis or whether it must also comply with the asset coverage
requirements on a consolidated basis because the Company may be deemed
to be an indirect issuer of any class of senior securities issued by
any SBIC Subsidiary. Applicants state that they wish to treat Fidus
SBIC II (and any future SBIC Subsidiary) as if it were a BDC subject to
sections 18 and 61 of the Act. Applicants state that companies
operating under the SBA Act, such as Fidus SBIC II (and other SBIC
Subsidiaries), are subject to the SBA's substantial regulation of
permissible leverage in their capital structure.
4. The Prior Order granted relief under section 6(c) from sections
18(a) and 61(a) to permit the Company to exclude from its consolidated
asset coverage ratio any senior security representing indebtedness
issued by Fidus SBIC (not any future SBIC Subsidiary). Accordingly,
Applicants request relief under section 6(c) of the Act from sections
18(a) and 61(a) of the Act to permit the Company to exclude from its
consolidated asset coverage ratio any senior security representing
indebtedness issued by any SBIC Subsidiary.
5. Section 6(c) of the Act, in relevant part, permits the
Commission to exempt any transaction or class of transactions from any
provision of the Act if, and to the extent that such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act. Applicants state that the requested relief
satisfies the section 6(c) standard. Applicants contend that, since
Fidus SBIC is entitled to rely on section 18(k) and since Fidus SBIC II
(or any future SBIC Subsidiary) would be entitled to rely on section
18(k) if it were a BDC itself, there is no policy reason to deny the
benefit of such exemptions to the Company.
6. Sections 57(a)(1) and (2) of the Act generally prohibit, with
certain exceptions, sales or purchases of any security or other
property between BDCs and certain of their affiliates as described in
section 57(b) of the Act. Section 57(b) includes a person, directly or
indirectly, either controlling, controlled by or under common control
with the BDC. Applicants state that the Company directly owns all of
the limited partnership interests in Fidus SBIC and Fidus SBIC II and
indirectly owns all of the general partnership interests in Fidus SBIC
and Fidus SBIC II through its 100% ownership of the New General
Partner. Accordingly, Fidus SBIC and Fidus SBIC II would each be a
person related to each other in a manner described in section 57(b)
because each is deemed to be under the control of the Company and thus
under common control. In addition, each of Fidus SBIC and Fidus SBIC II
and each other Subsidiary would also be a person related to each other
Subsidiary in a manner described in section 57(b).
7. Applicants state that there may be circumstances when one or
more of the Company, Fidus SBIC, Fidus SBIC II or any future Subsidiary
would purchase all or a portion of the portfolio investments held by
one of the others in order to enhance the liquidity of the selling
company or for other reasons, subject in each case to the requirements
of the SBA and the regulations thereunder, as applicable. In addition,
there may be circumstances when it is in the interest of the Company,
Fidus SBIC and/or Fidus SBIC II for Fidus SBIC II, or for any future
Subsidiaries, to invest in securities of an issuer that may be deemed
to be a person related to either the Company or Fidus SBIC in a manner
described in section 57(b), or for the Company to invest in securities
of an issuer that may be deemed to be a person related to a Subsidiary
in a manner described in section 57(b).
8. The Prior Order only extends relief from sections 57(a)(1) and
(2) to transactions between the Company and Fidus SBIC. Applicants
therefore request an exemption from sections 57(a)(1) and 57(a)(2) of
the Act to permit any transaction between Fidus SBIC (as a BDC) and any
other Subsidiary with respect to the purchase or sale of securities or
other property. Applicants also seek an exemption from these provisions
to allow any transaction between Fidus SBIC and a controlled portfolio
affiliate of another Subsidiary. Applicants state that the requested
relief is intended only to permit the Company and its Subsidiaries to
do that which they otherwise would be permitted to do if they were one
company.
9. Section 57(c) provides that the Commission will exempt a
proposed transaction from the provisions of section 57(a)(1) and (2) of
the Act if the terms of the proposed transaction, including the
consideration to be paid or received, are reasonable and fair and do
not involve overreaching of any person concerned, and the proposed
transaction is consistent with the policy of the BDC concerned and the
general purposes of the Act.
10. Applicants submit that the requested relief from section
57(a)(1) and (2) meets this standard. Applicants represent that the
proposed operations as one company will enhance efficient operations of
the Company and its Subsidiaries, including Fidus SBIC, and allow them
to deal with portfolio companies as if the Company and such
Subsidiaries were one company. Applicants contend that the terms of the
proposed transactions, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching of
the Company or Fidus SBIC (the BDC) by any person, and that the
requested order would permit the Company and the Subsidiaries to carry
out more effectively their purposes and objectives of investing
primarily in small business concerns. Finally, Applicants note that the
proposed transactions are consistent with the policies of the Company
and Fidus SBIC as specified in filings with the Commission and the
Company's reports to stockholders, as well as consistent with the
policies and provisions of the Act.
11. Section 17(d) of the Act and rule 17d-1 under the Act (made
applicable to BDCs by section 57(i)) prohibit affiliated persons of a
registered investment company, or an affiliated person of such person,
acting as principal, from participating in any joint transaction or
arrangement in which the registered company or a company it controls is
a participant, unless the Commission has issued an order authorizing
the arrangement. Section 57(a)(4) of the Act imposes substantially the
same prohibitions on joint transactions involving any BDC and an
[[Page 32779]]
affiliated person of such BDC, or an affiliated person of such
affiliated person, as specified in section 57(b) of the Act. Section
57(i) of the Act provides that rules and regulations under section
17(d) of the Act will apply to transactions subject to section 57(a)(4)
in the absence of rules under that section. The Commission has not
adopted rules under section 57(a)(4) with respect to joint transactions
and, accordingly, the standards set forth in rule 17d-1 govern
Applicants' request for relief.
12. The Prior Order only extends relief from section 57(a)(4) and
rule 17d-1 for joint transactions between the Company and Fidus SBIC.
Accordingly, the Applicants request relief under section 57(i) and rule
17d-1 to permit any joint transaction that would otherwise be
prohibited by section 57(a)(4), in which Fidus SBIC (as a BDC) and
another Subsidiary participate, but only to the extent that the
transaction would not be prohibited if the Subsidiaries participating
were deemed to be part of the Company, and not separate companies.
13. In determining whether to grant an order under section 57(i)
and rule 17d-1, the Commission considers whether the participation of
the BDC in the joint transaction is consistent with the provisions,
policies, and purposes of the Act, and the extent to which such
participation is on a basis different from or less advantageous than
that of other participants. Applicants note that the proposed
transactions are consistent with the policy and provisions of the Act
and will enhance the interests of the Company, Fidus SBIC and other
Subsidiaries, while retaining the important protections afforded by the
Act. In addition, because the joint participants will conduct their
operations as though they comprise one company, the participation of
one will not be on a basis different from or less advantageous than the
others. Accordingly, Applicants believe that the standard for relief
under section 57(i) and rule 17d-1 is satisfied.
14. Applicants state that the conditions in the Prior Order will be
replaced by the conditions set forth below.
Applicants' Conditions
Applicants agree that the Amended Order will be subject to the
following conditions:
1. The Company will at all times own and hold, beneficially and of
record, all of the outstanding limited partnership interests in any
Subsidiary and all of the outstanding membership interests in the New
General Partner, or otherwise own and hold beneficially, all of the
outstanding voting securities and equity interests of such Subsidiary.
2. The Subsidiaries will have investment policies not inconsistent
with those of the Company, as set forth in the Company's registration
statement.
3. No person shall serve as a member of any board of directors of
any Subsidiary, including any manager under a different form of legal
organization that might perform the function of a director, unless such
person shall also be a member of the Company's Board. The board of
directors or the managers, as applicable, of any Subsidiary will be
appointed by the equity owners of such Subsidiary.
4. The Company will not itself issue or sell any senior security
and the Company will not cause or permit any SBIC Subsidiary to issue
or sell any senior security of which the Company or such SBIC
Subsidiary is the issuer except to the extent permitted by section 18
(as modified for BDCs by section 61); provided that immediately after
the issuance or sale of any such senior security by either the Company
or any SBIC Subsidiary, the Company individually and on a consolidated
basis shall have the asset coverage required by section 18(a) (as
modified by section 61(a)), except that, in determining whether the
Company and any SBIC Subsidiary on a consolidated basis have the asset
coverage required by section 61(a), any senior securities representing
indebtedness of a SBIC Subsidiary if that SBIC Subsidiary has issued
indebtedness that is held or guaranteed by the SBA shall not be
considered senior securities and, for purposes of the definition of
``asset coverage'' in section 18(h), shall be treated as indebtedness
not represented by senior securities.
5. The Company will acquire securities of any SBIC Subsidiary
representing indebtedness only if, in each case, the prior approval of
the SBA has been obtained. In addition, the Company and any SBIC
Subsidiary will purchase and sell portfolio securities between
themselves only if, in each case, the prior approval of the SBA has
been obtained.
6. No person will serve or act as investment adviser to Fidus SBIC
II or any future Subsidiary unless the Board and the stockholders of
the Company will have taken such action with respect thereto that is
required to be taken under the Act by the functional equivalent of the
board of directors of Fidus SBIC II or any future Subsidiary and the
stockholders of Fidus SBIC II or any future Subsidiary including as if
Fidus SBIC II or such future Subsidiary were a BDC.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13103 Filed 6-5-14; 8:45 am]
BILLING CODE 8011-01-P