Solar Capital Ltd., et al.; Notice of Application, 38601-38605 [2014-15817]
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Federal Register / Vol. 79, No. 130 / Tuesday, July 8, 2014 / Notices
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• NRC’s Agencywide Documents
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The NUREG provides guidance to
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to an applicant in preparing a service
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Dated at Rockville, Maryland, this 27th day
of June, 2014.
For the U.S. Nuclear Regulatory Commission.
Laura A. Dudes,
Director, Division of Materials Safety and
State Agreements, Office of Federal and State
Materials and Environmental Management
Programs.
[FR Doc. 2014–15826 Filed 7–7–14; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–31143; File No. 812–14195]
Solar Capital Ltd., et al.; Notice of
Application
July 1, 2014
Notice of application for an
order under sections 17(d) and 57(i) of
the Investment Company Act of 1940
(the ‘‘Act’’) and rule 17d–1 under the
Act to permit certain joint transactions
otherwise prohibited by sections 17(d)
and 57(a)(4) of the Act and rule 17d–1
under the Act.
ACTION:
Applicants
request an order to permit a business
development company (‘‘BDC’’) and
certain closed-end management
investment companies to co-invest in
portfolio companies with each other and
with affiliated investment funds.
APPLICANTS: Solar Capital Ltd. (‘‘Solar
Capital’’), Solar Senior Capital Ltd.
(‘‘Solar Senior’’, and together with Solar
Capital, the ‘‘Solar Funds’’), and Solar
Capital Partners, LLC (the ‘‘Adviser’’).
FILING DATES: The application was filed
on August 5, 2013, and amended on
December 18, 2013, April 7, 2014, June
12, 2004, and July 1, 2014.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
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
SUMMARY OF APPLICATION:
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38601
should be received by the Commission
by 5:30 p.m. on July 25, 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 St.
NE., Washington, DC 20549–1090.
Applicants: 500 Park Avenue, New
York, NY 10022.
FOR FURTHER INFORMATION CONTACT: Jaea
F. Hahn, Senior Counsel, at (202) 551–
6870 or Dalia Osman Blass, Assistant
Chief Counsel, at (202) 551–6821 (Chief
Counsel’s Office, Division of Investment
Management).
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 for 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 Solar Funds are Maryland
corporations organized as closed-end
management investment companies that
have elected to be regulated as BDCs
under section 54(a) of the Act.1 Both
Solar Funds invest primarily in US
middle market companies. Solar
Capital’s Objectives and Strategies 2 are
to generate both current income and
capital appreciation through debt and
equity investments. Solar Senior’s
Objectives and Strategies are to
maximize current income consistent
with the preservation of capital. A
majority of the directors of each of the
Regulated Funds is or will be persons
who are not ‘‘interested persons’’ as
defined in section 2(a)(19) of the Act
(‘‘Non-Interested Directors’’). Solar
Capital and Solar Senior share a board
of directors (‘‘Board’’) comprised of five
1 Section 2(a)(48) defines a BDC to be any closedend 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.
2 ‘‘Objectives and Strategies’’ means a Regulated
Fund’s investment objectives and strategies, as
described in the Regulated Fund’s registration
statement on Form N–2, other filings the Regulated
Fund has made with the Commission under the
Securities Act of 1933 (the ‘‘Securities Act’’), or
under the Securities Exchange Act of 1934, and the
Regulated Fund’s reports to shareholders.
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directors, three of whom are NonInterested Directors.
2. The Adviser, a privately held
investment adviser registered with the
Commission pursuant to section 203 of
the Investment Advisers Act of 1940
(‘‘Advisers Act’’), was organized as a
limited liability company under the
laws of the state Delaware. The Adviser
serves as the investment adviser to each
Solar Fund.
3. Applicants seek an order (‘‘Order’’)
to permit a Regulated Fund 3 and one or
more other Regulated Funds and one or
more Affiliated Funds 4 to (a) co-invest
with each other in securities issued by
issuers in private placement
transactions in which an Adviser
negotiates terms in addition to price; 5
and (b) make additional investments in
securities of such issuers, including
through the exercise of warrants,
conversion privileges, and other rights
to purchase securities of the issuers
(‘‘Follow-On Investments’’) through a
proposed co-investment program (the
‘‘Co-Investment Program’’) where such
participation would otherwise be
prohibited under section 17(d) or
section 57(a)(4) and the rules under the
Act. ‘‘Co-Investment Transaction’’
means any transaction in which a
Regulated Fund (or its ‘‘Wholly-Owned
Investment Sub,’’ as defined below)
participated together with one or more
other Regulated Funds and/or one or
more Affiliated Funds in reliance on the
requested Order. ‘‘Potential CoInvestment Transaction’’ means any
investment opportunity in which a
Regulated Fund (or its Wholly-Owned
Investment Sub) could not participate
together with one or more other
Regulated Funds and/or one or more
Affiliated Funds without obtaining and
relying on the Order.6
4. Applicants state that a Regulated
Fund may, from time to time, form a
Wholly-Owned Investment Sub.7 Such a
subsidiary would be prohibited from
investing in a Co-Investment
Transaction with any other Regulated
Fund or Affiliated Fund because it
would be a company controlled by its
parent Regulated Fund for purposes of
section 57(a)(4) and rule 17d–1.
Applicants request that each WhollyOwned Investment Sub be permitted to
participate in Co-Investment
Transactions in lieu of its parent
Regulated Fund and that the WhollyOwned Investment Sub’s participation
in any such transaction be treated, for
purposes of the Order, as though the
parent Regulated Fund were
participating directly. Applicants
represent that this treatment is justified
because a Wholly-Owned Investment
Sub would have no purpose other than
serving as a holding vehicle for the
Regulated Fund’s investments and,
therefore, no conflicts of interest could
arise between the Regulated Fund and
the Wholly-Owned Investment Sub. The
Regulated Fund’s Board would make all
relevant determinations under the
conditions with regard to a WhollyOwned Investment Sub’s participation
in a Co-Investment Transaction, and the
Regulated Fund’s Board would be
informed of, and take into
consideration, any proposed use of a
Wholly-Owned Investment Sub in the
Regulated Fund’s place. If the Regulated
Fund proposes to participate in the
same Co-Investment Transaction with
any of its Wholly-Owned Investment
Subs, the Board will also be informed
of, and take into consideration, the
relative participation of the Regulated
Fund and the Wholly-Owned
Investment Sub.
5. When considering Potential CoInvestment Transactions for any
Regulated Fund, the Adviser will
consider only the Objectives and
Strategies, investment policies,
3 ‘‘Regulated Fund’’ refers to the Solar Funds and
the Future Regulated Funds. ‘‘Future Regulated
Fund’’ means any closed-end management
investment company (a) that is registered under the
Act or has elected to be regulated as BDC, and (b)
whose investment adviser is the Adviser.
4 An ‘‘Affiliated Fund’’ means an entity (a) whose
investment adviser is the Adviser, and (b) that
would be an investment company but for section
3(c)(1) or 3(c)(7) of the Act. No Affiliated Funds
exist at this time.
5 The term ‘‘private placement transactions’’
means transactions in which the offer and sale of
securities by the issuer are exempt from registration
under the Securities Act.
6 All existing entities that currently intend to rely
upon the requested Order have been named as
applicants. Any other existing or future entity that
subsequently relies on the Order will comply with
the terms and conditions of the application.
7 The term ‘‘Wholly-Owned Investment Sub’’
means an entity (a) whose sole business purpose is
to hold one or more investments on behalf of a
Regulated Fund (and, in the case of an SBIC
Subsidiary (as defined below), maintain a license
under the SBA Act (as defined below) and issue
debentures guaranteed by the SBA (as defined
below)); (b) that is wholly-owned by the Regulated
Fund (with the Regulated Fund at all times holding,
beneficially and of record, 100% of the voting and
economic interests); (c) with respect to which the
Regulated Fund’s Board has the sole authority to
make all determinations with respect to the entity’s
participation under the conditions of the
application; and (d) that would be an investment
company but for section 3(c)(1) or 3(c)(7) of the Act.
All subsidiaries of the Regulated Fund participating
in the Co-Investment Transactions will be WhollyOwned Investment Subs and will have Objectives
and Strategies that are either the same as, or a
subset of, the Regulated Fund’s Objectives and
Strategies. The term ‘‘SBIC Subsidiary’’ means a
Wholly-Owned Investment Sub that is licensed by
the Small Business Administration (the ‘‘SBA’’) to
operate under the Small Business Investment Act of
1958, as amended (the ‘‘SBA Act’’) as a small
business investment company (an ‘‘SBIC’’).
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investment positions, capital available
for investment, and other pertinent
factors applicable to that Regulated
Fund. The Adviser expects that any
portfolio company that is an appropriate
investment for a Regulated Fund should
also be an appropriate investment for
one or more other Regulated Funds and/
or one or more Affiliated Funds, with
certain exceptions based on available
capital or diversification.8
6. Other than pro rata dispositions
and Follow-On Investments as provided
in conditions 7 and 8, and after making
the determinations required in
conditions 1 and 2(a), the Adviser will
present each Potential Co-Investment
Transaction and the proposed allocation
to the directors of the Board eligible to
vote under section 57(o) of the Act
(‘‘Eligible Directors’’), and the ‘‘required
majority,’’ as defined in section 57(o) of
the Act (‘‘Required Majority’’) 9 will
approve each Co-Investment
Transaction prior to any investment by
the participating Regulated Fund.
7. With respect to the pro rata
dispositions and Follow-On Investments
provided in conditions 7 and 8, a
Regulated Fund may participate in a pro
rata disposition or Follow-On
Investment without obtaining prior
approval of the Required Majority if,
among other things: (i) The proposed
participation of each Regulated Fund
and each Affiliated Fund in such
disposition is proportionate to its
outstanding investments in the issuer
immediately preceding the disposition
or Follow-On Investment, as the case
may be; and (ii) the Board of the
Regulated Fund has approved that
Regulated Fund’s participation in pro
rata dispositions and Follow-On
Investments as being in the best
interests of the Regulated Fund. If the
Board does not so approve, any such
disposition or Follow-On Investment
will be submitted to the Regulated
Fund’s Eligible Directors. The Board of
any Regulated Fund may at any time
rescind, suspend or qualify its approval
of pro rata dispositions and Follow-On
Investments with the result that all
dispositions and/or Follow-On
Investments must be submitted to the
Eligible Directors.
8. No Non-Interested Director of a
Regulated Fund will have a direct or
indirect financial interest in any CoInvestment Transaction (other than
8 The Regulated Funds, however, will not be
obligated to invest, or co-invest, when investment
opportunities are referred to them.
9 In the case of a Regulated Fund that is a
registered closed-end fund, the Board members that
make up the Required Majority will be determined
as if the Regulated Fund were a BDC subject to
Section 57(o).
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indirectly through share ownership in
one of the Regulated Funds), including
any interest in any company whose
securities would be acquired in a CoInvestment Transaction.
Applicants’ Legal Analysis
1. Section 57(a)(4) of the Act prohibits
certain affiliated persons of a BDC from
participating in joint transactions with
the BDC or a company controlled by a
BDC in contravention of rules as
prescribed by the Commission. Under
section 57(b)(2) of the Act, any person
who is directly or indirectly controlling,
controlled by, or under common control
with a BDC is subject to section 57(a)(4).
Applicants submit that each of the
Regulated Funds and Affiliated Funds
could be deemed to be a person related
to each Regulated Fund in a manner
described by section 57(b) by virtue of
being under common control. Section
57(i) of the Act provides that, until the
Commission prescribes rules under
section 57(a)(4), the Commission’s rules
under section 17(d) of the Act
applicable to registered closed-end
investment companies will be deemed
to apply to transactions subject to
section 57(a)(4). Because the
Commission has not adopted any rules
under section 57(a)(4), rule 17d–1 also
applies to joint transactions with
Regulated Funds that are BDCs. Section
17(d) of the Act and rule 17d–1 under
the Act are applicable to Regulated
Funds that are registered closed-end
investment companies.
2. Section 17(d) of the Act and rule
17d–1 under the Act prohibit affiliated
persons of a registered investment
company from participating in joint
transactions with the company unless
the Commission has granted an order
permitting such transactions. In passing
upon applications under rule 17d–1, the
Commission considers whether the
company’s participation 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.
3. Applicants state that in the absence
of the requested relief, the Regulated
Funds would be, in some
circumstances, limited in their ability to
participate in attractive and appropriate
investment opportunities. Applicants
believe that the proposed terms and
conditions will ensure that the CoInvestment Transactions are consistent
with the protection of each Regulated
Fund’s shareholders and with the
purposes intended by the policies and
provisions of the Act. Applicants state
that the Regulated Funds’ participation
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in the Co-Investment Transactions will
be consistent with the provisions,
policies, and purposes of the Act and on
a basis that is not different from or less
advantageous than that of other
participants.
Applicants’ Conditions
Applicants agree that the Order will
be subject to the following conditions:
1. Each time the Adviser considers a
Potential Co-Investment Transaction for
another Regulated Fund or an Affiliated
Fund that falls within a Regulated
Fund’s then-current Objectives and
Strategies, the Adviser will make an
independent determination of the
appropriateness of the investment for
the Regulated Fund in light of the
Regulated Fund’s then-current
circumstances.
2. (a) If the Adviser deems a Regulated
Fund’s participation in any Potential
Co-Investment Transaction to be
appropriate for the Regulated Fund, the
Adviser will then determine an
appropriate level of investment for the
Regulated Fund.
(b) If the aggregate amount
recommended by the Adviser to be
invested by the applicable Regulated
Fund in the Potential Co-Investment
Transaction together with the amount
proposed to be invested by the other
participating Regulated Funds and
Affiliated Funds, collectively, in the
same transaction, exceeds the amount of
the investment opportunity, the
investment opportunity will be
allocated among them pro rata based on
each participant’s capital available for
investment in the asset class being
allocated, up to the amount proposed to
be invested by each. The Adviser will
provide the Eligible Directors of each
participating Regulated Fund with
information concerning each
participating party’s available capital to
assist the Eligible Directors with their
review of the Regulated Fund’s
investments for compliance with these
allocation procedures.
(c) After making the determinations
required in conditions 1 and 2(a), the
Adviser will distribute written
information concerning the Potential
Co-Investment Transaction (including
the amount proposed to be invested by
each Regulated Fund and each
Affiliated Fund) to the Eligible Directors
of each participating Regulated Fund for
their consideration. A Regulated Fund
will co-invest with another Regulated
Fund or an Affiliated Fund only if, prior
to the Regulated Fund’s participation in
the Potential Co-Investment
Transaction, a Required Majority
concludes that:
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(i) The terms of the Potential CoInvestment Transaction, including the
consideration to be paid, are reasonable
and fair to the Regulated Fund and its
shareholders and do not involve
overreaching in respect of the Regulated
Fund or its shareholders on the part of
any person concerned;
(ii) the Potential Co-Investment
Transaction is consistent with:
(A) the interests of the Regulated
Fund’s shareholders; and
(B) the Regulated Fund’s then-current
Objectives and Strategies;
(iii) the investment by any other
Regulated Funds or any Affiliated
Funds would not disadvantage the
Regulated Fund, and participation by
the Regulated Fund would not be on a
basis different from or less advantageous
than that of any other Regulated Funds
or any Affiliated Funds; provided that,
if any other Regulated Fund or any
Affiliated Fund, but not the Regulated
Fund itself, gains the right to nominate
a director for election to a portfolio
company’s board of directors or the
right to have a board observer or any
similar right to participate in the
governance or management of the
portfolio company, such event shall not
be interpreted to prohibit the Required
Majority from reaching the conclusions
required by this condition (2)(c)(iii), if:
(A) the Eligible Directors will have the
right to ratify the selection of such
director or board observer, if any; and
(B) the Adviser agrees to, and does,
provide periodic reports to the Board of
the Regulated Fund with respect to the
actions of such director or the
information received by such board
observer or obtained through the
exercise of any similar right to
participate in the governance or
management of the portfolio company;
and
(C) any fees or other compensation
that any Regulated Fund or any
Affiliated Fund or any affiliated person
of any Regulated Fund or any Affiliated
Fund receives in connection with the
right of a Regulated Fund or an
Affiliated Fund to nominate a director
or appoint a board observer or otherwise
to participate in the governance or
management of the portfolio company
will be shared proportionately among
the participating Affiliated Funds (who
may each, in turn, share its portion with
its affiliated persons) and the
participating Regulated Funds in
accordance with the amount of each
party’s investment; and
(iv) the proposed investment by the
Regulated Fund will not benefit the
Adviser, the other Regulated Funds, the
Affiliated Funds or any affiliated person
of any of them (other than the parties to
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the Co-Investment Transaction), except
(A) to the extent permitted by condition
13, (B) to the extent permitted by
section 17(e) or 57(k) of the Act, as
applicable, (C) indirectly, as a result of
an interest in the securities issued by
one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or
other compensation described in
condition 2(c)(iii)(C).
3. Each Regulated Fund has the right
to decline to participate in any Potential
Co-Investment Transaction or to invest
less than the amount proposed.
4. The Adviser will present to the
Board of each Regulated Fund, on a
quarterly basis, a record of all
investments in Potential Co-Investment
Transactions made by any of the other
Regulated Funds or Affiliated Funds
during the preceding quarter that fell
within the Regulated Fund’s thencurrent Objectives and Strategies that
were not made available to the
Regulated Fund, and an explanation of
why the investment opportunities were
not offered to the Regulated Fund. All
information presented to the Board
pursuant to this condition will be kept
for the life of the Regulated Fund and
at least two years thereafter, and will be
subject to examination by the
Commission and its staff.
5. Except for Follow-On Investments
made in accordance with condition 8, a
Regulated Fund will not invest in
reliance on the Order in any issuer in
which another Regulated Fund,
Affiliated Fund, or any affiliated person
of another Regulated Fund or Affiliated
Fund is an existing investor.
6. A Regulated Fund will not
participate in any Potential CoInvestment Transaction unless the
terms, conditions, price, class of
securities to be purchased, settlement
date, and registration rights will be the
same for each participating Regulated
Fund and Affiliated Fund. The grant to
another Regulated Fund or an Affiliated
Fund, but not the Regulated Fund, of
the right to nominate a director for
election to a portfolio company’s board
of directors, the right to have an
observer on the board of directors or
similar rights to participate in the
governance or management of the
portfolio company will not be
interpreted so as to violate this
condition 6, if conditions 2(c)(iii)(A), (B)
and (C) are met.
7. (a) If any Regulated Fund or an
Affiliated Fund elects to sell, exchange
or otherwise dispose of an interest in a
security that was acquired in a CoInvestment Transaction, the Adviser
will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
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Transaction of the proposed disposition
at the earliest practical time; and
(ii) formulate a recommendation as to
participation by each Regulated Fund in
the disposition.
(b) Each Regulated Fund will have the
right to participate in such disposition
on a proportionate basis, at the same
price and on the same terms and
conditions as those applicable to the
participating Regulated Funds and
Affiliated Funds.
(c) A Regulated Fund may participate
in such disposition without obtaining
prior approval of the Required Majority
if: (i) The proposed participation of each
Regulated Fund and each Affiliated
Fund in such disposition is
proportionate to its outstanding
investments in the issuer immediately
preceding the disposition; (ii) the Board
of the Regulated Fund has approved as
being in the best interests of the
Regulated Fund the ability to participate
in such dispositions on a pro rata basis
(as described in greater detail in the
application); and (iii) the Board of the
Regulated Fund is provided on a
quarterly basis with a list of all
dispositions made in accordance with
this condition. In all other cases, the
Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Regulated
Fund’s Eligible Directors, and the
Regulated Fund will participate in such
disposition solely to the extent that a
Required Majority determines that it is
in the Regulated Fund’s best interests.
(d) Each Regulated Fund and each
Affiliated Fund will bear its own
expenses in connection with any such
disposition.
8. (a) If a Regulated Fund or an
Affiliated Fund desires to make a
Follow-On Investment in a portfolio
company whose securities were
acquired in a Co-Investment
Transaction, the Adviser will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed transaction
at the earliest practical time; and
(ii) formulate a recommendation as to
the proposed participation, including
the amount of the proposed Follow-On
Investment, by each Regulated Fund.
(b) A Regulated Fund may participate
in such Follow-On Investment without
obtaining prior approval of the Required
Majority if: (i) The proposed
participation of each Regulated Fund
and each Affiliated Fund in such
investment is proportionate to its
outstanding investments in the issuer
immediately preceding the Follow-On
Investment; and (ii) the Board of the
Regulated Fund has approved as being
in the best interests of the Regulated
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Fund the ability to participate in
Follow-On Investments on a pro rata
basis (as described in greater detail in
the application). In all other cases, the
Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Eligible
Directors, and the Regulated Fund will
participate in such Follow-On
Investment solely to the extent that a
Required Majority determines that it is
in the Regulated Fund’s best interests.
(c) If, with respect to any Follow-On
Investment:
(i) The amount of a Follow-On
Investment is not based on the
Regulated Funds’ and the Affiliated
Funds’ outstanding investments
immediately preceding the Follow-On
Investment; and
(ii) the aggregate amount
recommended by the Adviser to be
invested by each Regulated Fund in the
Follow-On Investment, together with
the amount proposed to be invested by
the participating Affiliated Funds in the
same transaction, exceeds the amount of
the opportunity; then the amount
invested by each such party will be
allocated among them pro rata based on
each party’s capital available for
investment in the asset class being
allocated, up to the amount proposed to
be invested by each.
(d) The acquisition of Follow-On
Investments as permitted by this
condition will be considered a CoInvestment Transaction for all purposes
and subject to the other conditions set
forth in the application.
9. The Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds and the
Affiliated Funds that the Regulated
Fund considered but declined to
participate in, so that the Non-Interested
Directors may determine whether all
investments made during the preceding
quarter, including those investments
which the Regulated Fund considered
but declined to participate in, comply
with the conditions of the Order. In
addition, the Non-Interested Directors
will consider at least annually the
continued appropriateness for the
Regulated Fund of participating in new
and existing Co-Investment
Transactions.
10. Each Regulated Fund will
maintain the records required by section
57(f)(3) of the Act as if each of the
Regulated Funds were a business
development company and each of the
investments permitted under these
conditions were approved by the
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tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 130 / Tuesday, July 8, 2014 / Notices
Required Majority under section 57(f) of
the Act.
11. No Non-Interested Director of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act) of an
Affiliated Fund.
12. The expenses, if any, associated
with acquiring, holding or disposing of
any securities acquired in a CoInvestment Transaction (including,
without limitation, the expenses of the
distribution of any such securities
registered for sale under the Securities
Act) will, to the extent not payable by
the Adviser under the investment
advisory agreements with the Regulated
Funds and the Affiliated Funds, be
shared by the Affiliated Funds and the
Regulated Funds in proportion to the
relative amounts of the securities held
or to be acquired or disposed of, as the
case may be.
13. Any transaction fee (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k) of the Act, as
applicable), received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by the Adviser pending
consummation of the transaction, the
fee will be deposited into an account
maintained by the Adviser at a bank or
banks having the qualifications
prescribed in section 26(a)(1) of the Act,
and the account will earn a competitive
rate of interest that will also be divided
pro rata among the participating
Regulated Funds and Affiliated Funds
based on the amounts they invest in
such Co-Investment Transaction. None
of the Affiliated Funds, the Adviser, the
other Regulated Funds or any affiliated
person of the Regulated Funds or
Affiliated Funds will receive additional
compensation or remuneration of any
kind as a result of or in connection with
a Co-Investment Transaction (other than
(a) in the case of the Regulated Funds
and the Affiliated Funds, the pro rata
transaction fees described above and
fees or other compensation described in
condition 2(c)(iii)(C); and (b) in the case
of the Adviser, investment advisory fees
paid in accordance with the agreements
between the Adviser and the Regulated
Funds or the Affiliated Funds.
VerDate Mar<15>2010
16:48 Jul 07, 2014
Jkt 232001
For the Commission, by the Division of
Investment Management, under delegated
authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014–15817 Filed 7–7–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72509; File No. SR–
NYSEArca–2014–58]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to Listing and
Trading of Shares of PIMCO ShortTerm Exchange-Traded Fund and
PIMCO Municipal Bond ExchangeTraded Fund Under NYSE Arca
Equities Rule 8.600
July 1, 2014.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on June 25,
2014, NYSE Arca, Inc. (the ‘‘Exchange’’
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to list and
trade shares of the following under
NYSE Arca Equities Rule 8.600
(‘‘Managed Fund Shares’’): PIMCO
Short-Term Exchange-Traded Fund and
PIMCO Municipal Bond ExchangeTraded Fund. The text of the proposed
rule change is available on the
Exchange’s Web site at www.nyse.com,
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
PO 00000
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
Frm 00124
Fmt 4703
Sfmt 4703
38605
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the following
under NYSE Arca Equities Rule 8.600,4
which governs the listing and trading of
Managed Fund Shares: 5 PIMCO ShortTerm Exchange-Traded Fund (‘‘ShortTerm Fund’’) and PIMCO Municipal
Bond Exchange-Traded Fund
(‘‘Municipal Bond Fund’’), each also
referred to as a ‘‘Fund’’ and collectively
referred to as the ‘‘Funds.’’ The Shares
will be offered by PIMCO ETF Trust (the
‘‘Trust’’), a statutory trust organized
under the laws of the State of Delaware
and registered with the Commission as
an open-end management investment
company.6
The investment manager to the Funds
will be Pacific Investment Management
4 The Commission has previously approved the
listing and trading on the Exchange of other actively
managed funds under Rule 8.600. See, e.g.,
Securities Exchange Act Release Nos. 60981
(November 10, 2009), 74 FR 59594 (November 18,
2009) (SR–NYSEArca–2009–79) (order approving
Exchange listing and trading of five fixed income
funds of the PIMCO ETF Trust); 66321 (February 3,
2012), 77 FR 6850 (February 9, 2012) (SR–
NYSEArca–2011–95) (order approving listing and
trading of PIMCO Total Return Exchange Traded
Fund); 66670 (March 28, 2012), 77 FR 20087 (April
3, 2012) (SR–NYSEArca–2012–09) (order approving
listing and trading of PIMCO Global Advantage
Inflation-Linked Bond Strategy Fund).
5 A Managed Fund Share is a security that
represents an interest in an investment company
registered under the Investment Company Act of
1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as
an open-end investment company or similar entity
that invests in a portfolio of securities selected by
its investment adviser consistent with its
investment objectives and policies. In contrast, an
open-end investment company that issues
Investment Company Units, listed and traded on
the Exchange under NYSE Arca Equities Rule
5.2(j)(3), seeks to provide investment results that
correspond generally to the price and yield
performance of a specific foreign or domestic stock
index, fixed income securities index or combination
thereof.
6 The Trust is registered under the 1940 Act. On
January 27, 2014, the Trust filed an amendment to
its registration statement on Form N–1A under the
Securities Act of 1933 (15 U.S.C. 77a) (‘‘1933 Act’’)
and the 1940 Act relating to the Funds (File Nos.
333–155395 and 811–22250) (the ‘‘Registration
Statement’’). The description of the operation of the
Trust and the Funds herein is based, in part, on the
Registration Statement. In addition, the
Commission has issued an order granting certain
exemptive relief to the Trust under the 1940 Act.
See Investment Company Act Release No. 28993
(November 10, 2009) (File No. 812–13571)
(‘‘Exemptive Order’’).
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]]>Agencies
[Federal Register Volume 79, Number 130 (Tuesday, July 8, 2014)]
[Notices]
[Pages 38601-38605]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15817]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-31143; File No. 812-14195]
Solar Capital Ltd., et al.; Notice of Application
July 1, 2014
ACTION: Notice of application for an order under sections 17(d) and
57(i) of the Investment Company Act of 1940 (the ``Act'') and rule 17d-
1 under the Act to permit certain joint transactions otherwise
prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1
under the Act.
-----------------------------------------------------------------------
SUMMARY OF APPLICATION: Applicants request an order to permit a
business development company (``BDC'') and certain closed-end
management investment companies to co-invest in portfolio companies
with each other and with affiliated investment funds.
APPLICANTS: Solar Capital Ltd. (``Solar Capital''), Solar Senior
Capital Ltd. (``Solar Senior'', and together with Solar Capital, the
``Solar Funds''), and Solar Capital Partners, LLC (the ``Adviser'').
FILING DATES: The application was filed on August 5, 2013, and amended
on December 18, 2013, April 7, 2014, June 12, 2004, and July 1, 2014.
HEARING OR NOTIFICATION OF HEARING: An order granting the requested
relief 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 July 25, 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
St. NE., Washington, DC 20549-1090. Applicants: 500 Park Avenue, New
York, NY 10022.
FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202)
551-6870 or Dalia Osman Blass, Assistant Chief Counsel, at (202) 551-
6821 (Chief Counsel's Office, Division of Investment Management).
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 for 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 Solar Funds are Maryland corporations organized as closed-
end management investment companies that have elected to be regulated
as BDCs under section 54(a) of the Act.\1\ Both Solar Funds invest
primarily in US middle market companies. Solar Capital's Objectives and
Strategies \2\ are to generate both current income and capital
appreciation through debt and equity investments. Solar Senior's
Objectives and Strategies are to maximize current income consistent
with the preservation of capital. A majority of the directors of each
of the Regulated Funds is or will be persons who are not ``interested
persons'' as defined in section 2(a)(19) of the Act (``Non-Interested
Directors''). Solar Capital and Solar Senior share a board of directors
(``Board'') comprised of five
[[Page 38602]]
directors, three of whom are Non-Interested Directors.
---------------------------------------------------------------------------
\1\ Section 2(a)(48) 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.
\2\ ``Objectives and Strategies'' means a Regulated Fund's
investment objectives and strategies, as described in the Regulated
Fund's registration statement on Form N-2, other filings the
Regulated Fund has made with the Commission under the Securities Act
of 1933 (the ``Securities Act''), or under the Securities Exchange
Act of 1934, and the Regulated Fund's reports to shareholders.
---------------------------------------------------------------------------
2. The Adviser, a privately held investment adviser registered with
the Commission pursuant to section 203 of the Investment Advisers Act
of 1940 (``Advisers Act''), was organized as a limited liability
company under the laws of the state Delaware. The Adviser serves as the
investment adviser to each Solar Fund.
3. Applicants seek an order (``Order'') to permit a Regulated Fund
\3\ and one or more other Regulated Funds and one or more Affiliated
Funds \4\ to (a) co-invest with each other in securities issued by
issuers in private placement transactions in which an Adviser
negotiates terms in addition to price; \5\ and (b) make additional
investments in securities of such issuers, including through the
exercise of warrants, conversion privileges, and other rights to
purchase securities of the issuers (``Follow-On Investments'') through
a proposed co-investment program (the ``Co-Investment Program'') where
such participation would otherwise be prohibited under section 17(d) or
section 57(a)(4) and the rules under the Act. ``Co-Investment
Transaction'' means any transaction in which a Regulated Fund (or its
``Wholly-Owned Investment Sub,'' as defined below) participated
together with one or more other Regulated Funds and/or one or more
Affiliated Funds in reliance on the requested Order. ``Potential Co-
Investment Transaction'' means any investment opportunity in which a
Regulated Fund (or its Wholly-Owned Investment Sub) could not
participate together with one or more other Regulated Funds and/or one
or more Affiliated Funds without obtaining and relying on the Order.\6\
---------------------------------------------------------------------------
\3\ ``Regulated Fund'' refers to the Solar Funds and the Future
Regulated Funds. ``Future Regulated Fund'' means any closed-end
management investment company (a) that is registered under the Act
or has elected to be regulated as BDC, and (b) whose investment
adviser is the Adviser.
\4\ An ``Affiliated Fund'' means an entity (a) whose investment
adviser is the Adviser, and (b) that would be an investment company
but for section 3(c)(1) or 3(c)(7) of the Act. No Affiliated Funds
exist at this time.
\5\ The term ``private placement transactions'' means
transactions in which the offer and sale of securities by the issuer
are exempt from registration under the Securities Act.
\6\ All existing entities that currently intend to rely upon the
requested Order have been named as applicants. Any other existing or
future entity that subsequently relies on the Order will comply with
the terms and conditions of the application.
---------------------------------------------------------------------------
4. Applicants state that a Regulated Fund may, from time to time,
form a Wholly-Owned Investment Sub.\7\ Such a subsidiary would be
prohibited from investing in a Co-Investment Transaction with any other
Regulated Fund or Affiliated Fund because it would be a company
controlled by its parent Regulated Fund for purposes of section
57(a)(4) and rule 17d-1. Applicants request that each Wholly-Owned
Investment Sub be permitted to participate in Co-Investment
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub's participation in any such transaction be
treated, for purposes of the Order, as though the parent Regulated Fund
were participating directly. Applicants represent that this treatment
is justified because a Wholly-Owned Investment Sub would have no
purpose other than serving as a holding vehicle for the Regulated
Fund's investments and, therefore, no conflicts of interest could arise
between the Regulated Fund and the Wholly-Owned Investment Sub. The
Regulated Fund's Board would make all relevant determinations under the
conditions with regard to a Wholly-Owned Investment Sub's participation
in a Co-Investment Transaction, and the Regulated Fund's Board would be
informed of, and take into consideration, any proposed use of a Wholly-
Owned Investment Sub in the Regulated Fund's place. If the Regulated
Fund proposes to participate in the same Co-Investment Transaction with
any of its Wholly-Owned Investment Subs, the Board will also be
informed of, and take into consideration, the relative participation of
the Regulated Fund and the Wholly-Owned Investment Sub.
---------------------------------------------------------------------------
\7\ The term ``Wholly-Owned Investment Sub'' means an entity (a)
whose sole business purpose is to hold one or more investments on
behalf of a Regulated Fund (and, in the case of an SBIC Subsidiary
(as defined below), maintain a license under the SBA Act (as defined
below) and issue debentures guaranteed by the SBA (as defined
below)); (b) that is wholly-owned by the Regulated Fund (with the
Regulated Fund at all times holding, beneficially and of record,
100% of the voting and economic interests); (c) with respect to
which the Regulated Fund's Board has the sole authority to make all
determinations with respect to the entity's participation under the
conditions of the application; and (d) that would be an investment
company but for section 3(c)(1) or 3(c)(7) of the Act. All
subsidiaries of the Regulated Fund participating in the Co-
Investment Transactions will be Wholly-Owned Investment Subs and
will have Objectives and Strategies that are either the same as, or
a subset of, the Regulated Fund's Objectives and Strategies. The
term ``SBIC Subsidiary'' means a Wholly-Owned Investment Sub that is
licensed by the Small Business Administration (the ``SBA'') to
operate under the Small Business Investment Act of 1958, as amended
(the ``SBA Act'') as a small business investment company (an
``SBIC'').
---------------------------------------------------------------------------
5. When considering Potential Co-Investment Transactions for any
Regulated Fund, the Adviser will consider only the Objectives and
Strategies, investment policies, investment positions, capital
available for investment, and other pertinent factors applicable to
that Regulated Fund. The Adviser expects that any portfolio company
that is an appropriate investment for a Regulated Fund should also be
an appropriate investment for one or more other Regulated Funds and/or
one or more Affiliated Funds, with certain exceptions based on
available capital or diversification.\8\
---------------------------------------------------------------------------
\8\ The Regulated Funds, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
---------------------------------------------------------------------------
6. Other than pro rata dispositions and Follow-On Investments as
provided in conditions 7 and 8, and after making the determinations
required in conditions 1 and 2(a), the Adviser will present each
Potential Co-Investment Transaction and the proposed allocation to the
directors of the Board eligible to vote under section 57(o) of the Act
(``Eligible Directors''), and the ``required majority,'' as defined in
section 57(o) of the Act (``Required Majority'') \9\ will approve each
Co-Investment Transaction prior to any investment by the participating
Regulated Fund.
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\9\ In the case of a Regulated Fund that is a registered closed-
end fund, the Board members that make up the Required Majority will
be determined as if the Regulated Fund were a BDC subject to Section
57(o).
---------------------------------------------------------------------------
7. With respect to the pro rata dispositions and Follow-On
Investments provided in conditions 7 and 8, a Regulated Fund may
participate in a pro rata disposition or Follow-On Investment without
obtaining prior approval of the Required Majority if, among other
things: (i) The proposed participation of each Regulated Fund and each
Affiliated Fund in such disposition is proportionate to its outstanding
investments in the issuer immediately preceding the disposition or
Follow-On Investment, as the case may be; and (ii) the Board of the
Regulated Fund has approved that Regulated Fund's participation in pro
rata dispositions and Follow-On Investments as being in the best
interests of the Regulated Fund. If the Board does not so approve, any
such disposition or Follow-On Investment will be submitted to the
Regulated Fund's Eligible Directors. The Board of any Regulated Fund
may at any time rescind, suspend or qualify its approval of pro rata
dispositions and Follow-On Investments with the result that all
dispositions and/or Follow-On Investments must be submitted to the
Eligible Directors.
8. No Non-Interested Director of a Regulated Fund will have a
direct or indirect financial interest in any Co-Investment Transaction
(other than
[[Page 38603]]
indirectly through share ownership in one of the Regulated Funds),
including any interest in any company whose securities would be
acquired in a Co-Investment Transaction.
Applicants' Legal Analysis
1. Section 57(a)(4) of the Act prohibits certain affiliated persons
of a BDC from participating in joint transactions with the BDC or a
company controlled by a BDC in contravention of rules as prescribed by
the Commission. Under section 57(b)(2) of the Act, any person who is
directly or indirectly controlling, controlled by, or under common
control with a BDC is subject to section 57(a)(4). Applicants submit
that each of the Regulated Funds and Affiliated Funds could be deemed
to be a person related to each Regulated Fund in a manner described by
section 57(b) by virtue of being under common control. Section 57(i) of
the Act provides that, until the Commission prescribes rules under
section 57(a)(4), the Commission's rules under section 17(d) of the Act
applicable to registered closed-end investment companies will be deemed
to apply to transactions subject to section 57(a)(4). Because the
Commission has not adopted any rules under section 57(a)(4), rule 17d-1
also applies to joint transactions with Regulated Funds that are BDCs.
Section 17(d) of the Act and rule 17d-1 under the Act are applicable to
Regulated Funds that are registered closed-end investment companies.
2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
affiliated persons of a registered investment company from
participating in joint transactions with the company unless the
Commission has granted an order permitting such transactions. In
passing upon applications under rule 17d-1, the Commission considers
whether the company's participation 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.
3. Applicants state that in the absence of the requested relief,
the Regulated Funds would be, in some circumstances, limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants believe that the proposed terms and
conditions will ensure that the Co-Investment Transactions are
consistent with the protection of each Regulated Fund's shareholders
and with the purposes intended by the policies and provisions of the
Act. Applicants state that the Regulated Funds' participation in the
Co-Investment Transactions will be consistent with the provisions,
policies, and purposes of the Act and on a basis that is not different
from or less advantageous than that of other participants.
Applicants' Conditions
Applicants agree that the Order will be subject to the following
conditions:
1. Each time the Adviser considers a Potential Co-Investment
Transaction for another Regulated Fund or an Affiliated Fund that falls
within a Regulated Fund's then-current Objectives and Strategies, the
Adviser will make an independent determination of the appropriateness
of the investment for the Regulated Fund in light of the Regulated
Fund's then-current circumstances.
2. (a) If the Adviser deems a Regulated Fund's participation in any
Potential Co-Investment Transaction to be appropriate for the Regulated
Fund, the Adviser will then determine an appropriate level of
investment for the Regulated Fund.
(b) If the aggregate amount recommended by the Adviser to be
invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction together with the amount proposed to be invested
by the other participating Regulated Funds and Affiliated Funds,
collectively, in the same transaction, exceeds the amount of the
investment opportunity, the investment opportunity will be allocated
among them pro rata based on each participant's capital available for
investment in the asset class being allocated, up to the amount
proposed to be invested by each. The Adviser will provide the Eligible
Directors of each participating Regulated Fund with information
concerning each participating party's available capital to assist the
Eligible Directors with their review of the Regulated Fund's
investments for compliance with these allocation procedures.
(c) After making the determinations required in conditions 1 and
2(a), the Adviser will distribute written information concerning the
Potential Co-Investment Transaction (including the amount proposed to
be invested by each Regulated Fund and each Affiliated Fund) to the
Eligible Directors of each participating Regulated Fund for their
consideration. A Regulated Fund will co-invest with another Regulated
Fund or an Affiliated Fund only if, prior to the Regulated Fund's
participation in the Potential Co-Investment Transaction, a Required
Majority concludes that:
(i) The terms of the Potential Co-Investment Transaction, including
the consideration to be paid, are reasonable and fair to the Regulated
Fund and its shareholders and do not involve overreaching in respect of
the Regulated Fund or its shareholders on the part of any person
concerned;
(ii) the Potential Co-Investment Transaction is consistent with:
(A) the interests of the Regulated Fund's shareholders; and
(B) the Regulated Fund's then-current Objectives and Strategies;
(iii) the investment by any other Regulated Funds or any Affiliated
Funds would not disadvantage the Regulated Fund, and participation by
the Regulated Fund would not be on a basis different from or less
advantageous than that of any other Regulated Funds or any Affiliated
Funds; provided that, if any other Regulated Fund or any Affiliated
Fund, but not the Regulated Fund itself, gains the right to nominate a
director for election to a portfolio company's board of directors or
the right to have a board observer or any similar right to participate
in the governance or management of the portfolio company, such event
shall not be interpreted to prohibit the Required Majority from
reaching the conclusions required by this condition (2)(c)(iii), if:
(A) the Eligible Directors will have the right to ratify the
selection of such director or board observer, if any; and
(B) the Adviser agrees to, and does, provide periodic reports to
the Board of the Regulated Fund with respect to the actions of such
director or the information received by such board observer or obtained
through the exercise of any similar right to participate in the
governance or management of the portfolio company; and
(C) any fees or other compensation that any Regulated Fund or any
Affiliated Fund or any affiliated person of any Regulated Fund or any
Affiliated Fund receives in connection with the right of a Regulated
Fund or an Affiliated Fund to nominate a director or appoint a board
observer or otherwise to participate in the governance or management of
the portfolio company will be shared proportionately among the
participating Affiliated Funds (who may each, in turn, share its
portion with its affiliated persons) and the participating Regulated
Funds in accordance with the amount of each party's investment; and
(iv) the proposed investment by the Regulated Fund will not benefit
the Adviser, the other Regulated Funds, the Affiliated Funds or any
affiliated person of any of them (other than the parties to
[[Page 38604]]
the Co-Investment Transaction), except (A) to the extent permitted by
condition 13, (B) to the extent permitted by section 17(e) or 57(k) of
the Act, as applicable, (C) indirectly, as a result of an interest in
the securities issued by one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or other compensation described
in condition 2(c)(iii)(C).
3. Each Regulated Fund has the right to decline to participate in
any Potential Co-Investment Transaction or to invest less than the
amount proposed.
4. The Adviser will present to the Board of each Regulated Fund, on
a quarterly basis, a record of all investments in Potential Co-
Investment Transactions made by any of the other Regulated Funds or
Affiliated Funds during the preceding quarter that fell within the
Regulated Fund's then-current Objectives and Strategies that were not
made available to the Regulated Fund, and an explanation of why the
investment opportunities were not offered to the Regulated Fund. All
information presented to the Board pursuant to this condition will be
kept for the life of the Regulated Fund and at least two years
thereafter, and will be subject to examination by the Commission and
its staff.
5. Except for Follow-On Investments made in accordance with
condition 8, a Regulated Fund will not invest in reliance on the Order
in any issuer in which another Regulated Fund, Affiliated Fund, or any
affiliated person of another Regulated Fund or Affiliated Fund is an
existing investor.
6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of
securities to be purchased, settlement date, and registration rights
will be the same for each participating Regulated Fund and Affiliated
Fund. The grant to another Regulated Fund or an Affiliated Fund, but
not the Regulated Fund, of the right to nominate a director for
election to a portfolio company's board of directors, the right to have
an observer on the board of directors or similar rights to participate
in the governance or management of the portfolio company will not be
interpreted so as to violate this condition 6, if conditions
2(c)(iii)(A), (B) and (C) are met.
7. (a) If any Regulated Fund or an Affiliated Fund elects to sell,
exchange or otherwise dispose of an interest in a security that was
acquired in a Co-Investment Transaction, the Adviser will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest
practical time; and
(ii) formulate a recommendation as to participation by each
Regulated Fund in the disposition.
(b) Each Regulated Fund will have the right to participate in such
disposition on a proportionate basis, at the same price and on the same
terms and conditions as those applicable to the participating Regulated
Funds and Affiliated Funds.
(c) A Regulated Fund may participate in such disposition without
obtaining prior approval of the Required Majority if: (i) The proposed
participation of each Regulated Fund and each Affiliated Fund in such
disposition is proportionate to its outstanding investments in the
issuer immediately preceding the disposition; (ii) the Board of the
Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in such dispositions on a pro
rata basis (as described in greater detail in the application); and
(iii) the Board of the Regulated Fund is provided on a quarterly basis
with a list of all dispositions made in accordance with this condition.
In all other cases, the Adviser will provide its written recommendation
as to the Regulated Fund's participation to the Regulated Fund's
Eligible Directors, and the Regulated Fund will participate in such
disposition solely to the extent that a Required Majority determines
that it is in the Regulated Fund's best interests.
(d) Each Regulated Fund and each Affiliated Fund will bear its own
expenses in connection with any such disposition.
8. (a) If a Regulated Fund or an Affiliated Fund desires to make a
Follow-On Investment in a portfolio company whose securities were
acquired in a Co-Investment Transaction, the Adviser will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest
practical time; and
(ii) formulate a recommendation as to the proposed participation,
including the amount of the proposed Follow-On Investment, by each
Regulated Fund.
(b) A Regulated Fund may participate in such Follow-On Investment
without obtaining prior approval of the Required Majority if: (i) The
proposed participation of each Regulated Fund and each Affiliated Fund
in such investment is proportionate to its outstanding investments in
the issuer immediately preceding the Follow-On Investment; and (ii) the
Board of the Regulated Fund has approved as being in the best interests
of the Regulated Fund the ability to participate in Follow-On
Investments on a pro rata basis (as described in greater detail in the
application). In all other cases, the Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Directors, and the Regulated Fund will participate in such Follow-On
Investment solely to the extent that a Required Majority determines
that it is in the Regulated Fund's best interests.
(c) If, with respect to any Follow-On Investment:
(i) The amount of a Follow-On Investment is not based on the
Regulated Funds' and the Affiliated Funds' outstanding investments
immediately preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by the Adviser to be invested
by each Regulated Fund in the Follow-On Investment, together with the
amount proposed to be invested by the participating Affiliated Funds in
the same transaction, exceeds the amount of the opportunity; then the
amount invested by each such party will be allocated among them pro
rata based on each party's capital available for investment in the
asset class being allocated, up to the amount proposed to be invested
by each.
(d) The acquisition of Follow-On Investments as permitted by this
condition will be considered a Co-Investment Transaction for all
purposes and subject to the other conditions set forth in the
application.
9. The Non-Interested Directors of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Funds and the Affiliated Funds that
the Regulated Fund considered but declined to participate in, so that
the Non-Interested Directors may determine whether all investments made
during the preceding quarter, including those investments which the
Regulated Fund considered but declined to participate in, comply with
the conditions of the Order. In addition, the Non-Interested Directors
will consider at least annually the continued appropriateness for the
Regulated Fund of participating in new and existing Co-Investment
Transactions.
10. Each Regulated Fund will maintain the records required by
section 57(f)(3) of the Act as if each of the Regulated Funds were a
business development company and each of the investments permitted
under these conditions were approved by the
[[Page 38605]]
Required Majority under section 57(f) of the Act.
11. No Non-Interested Director of a Regulated Fund will also be a
director, general partner, managing member or principal, or otherwise
an ``affiliated person'' (as defined in the Act) of an Affiliated Fund.
12. The expenses, if any, associated with acquiring, holding or
disposing of any securities acquired in a Co-Investment Transaction
(including, without limitation, the expenses of the distribution of any
such securities registered for sale under the Securities Act) will, to
the extent not payable by the Adviser under the investment advisory
agreements with the Regulated Funds and the Affiliated Funds, be shared
by the Affiliated Funds and the Regulated Funds in proportion to the
relative amounts of the securities held or to be acquired or disposed
of, as the case may be.
13. Any transaction fee (including break-up or commitment fees but
excluding broker's fees contemplated by section 17(e) or 57(k) of the
Act, as applicable), received in connection with a Co-Investment
Transaction will be distributed to the participating Regulated Funds
and Affiliated Funds on a pro rata basis based on the amounts they
invested or committed, as the case may be, in such Co-Investment
Transaction. If any transaction fee is to be held by the Adviser
pending consummation of the transaction, the fee will be deposited into
an account maintained by the Adviser at a bank or banks having the
qualifications prescribed in section 26(a)(1) of the Act, and the
account will earn a competitive rate of interest that will also be
divided pro rata among the participating Regulated Funds and Affiliated
Funds based on the amounts they invest in such Co-Investment
Transaction. None of the Affiliated Funds, the Adviser, the other
Regulated Funds or any affiliated person of the Regulated Funds or
Affiliated Funds will receive additional compensation or remuneration
of any kind as a result of or in connection with a Co-Investment
Transaction (other than (a) in the case of the Regulated Funds and the
Affiliated Funds, the pro rata transaction fees described above and
fees or other compensation described in condition 2(c)(iii)(C); and (b)
in the case of the Adviser, investment advisory fees paid in accordance
with the agreements between the Adviser and the Regulated Funds or the
Affiliated Funds.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-15817 Filed 7-7-14; 8:45 am]
BILLING CODE 8011-01-P
