Triton Pacific Investment Corporation, Inc., et al.;, 60726-60730 [2015-25465]
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Federal Register / Vol. 80, No. 194 / Wednesday, October 7, 2015 / Notices
19(b)(3)(A)(iii) of the Act 11 and Rule
19b–4(f)(6) thereunder.12 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b4(f)(6)(iii),14 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 15 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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Electronic Comments:
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEMKT–2015–66 on the subject line.
Paper Comments:
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEMKT–2015–66. This
11 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
15 15 U.S.C. 78s(b)(2)(B).
12 17
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file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Section, 100 F Street NE.,
Washington, DC 20549–1090. Copies of
the filing will also be available for
inspection and copying at the NYSE’s
principal office and on its Internet Web
site at www.nyse.com. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEMKT–2015–66 and should be
submitted on or before October 28,
2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–25464 Filed 10–6–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–31856; File No. 812–14122]
Triton Pacific Investment Corporation,
Inc., et al.; Notice of Application
September 30, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
AGENCY:
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:
16 17
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Applicants
request an order to permit certain
business development companies
(‘‘BDCs’’) and closed-end management
investment companies to co-invest in
portfolio companies with each other and
with affiliated investment funds.
APPLICANTS: Triton Pacific Investment
Corporation, Inc. (the ‘‘Company’’),
Triton Pacific Income & Growth Fund
IV, LP (‘‘Fund IV’’), Triton Pacific
Platinum Fund IV, LP (‘‘Platinum IV’’
and, together with Fund IV, the
‘‘Existing Affiliated Private Funds’’),
TPCP Fund Manager IV, LLC (the ‘‘Fund
Manager’’), Triton Pacific Adviser, LLC
(the ‘‘BDC Adviser’’), Triton Pacific
Capital Partners, LLC (‘‘TPCP’’), and
Triton Pacific Group, Inc. (‘‘TPG’’).
FILING DATES: The application was filed
on February 8, 2013, and amended on
May 17, 2013, July 15, 2013, December
18, 2013, June 12, 2014, November 25,
2014, May 28, 2015, and September 29,
2015.
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 October 26, 2015, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, 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: Brent J. Fields, Secretary,
U.S. Securities and Exchange
Commission, 100 F St. NE., Washington,
DC 20549–1090. Applicants: 10877
Wilshire Blvd., 12th Floor, Los Angeles,
CA 90024.
FOR FURTHER INFORMATION CONTACT:
Laura J. Riegel, Senior Counsel, at (202)
551–6873 or Mary Kay Frech, Branch
Chief, 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.
SUMMARY OF APPLICATION:
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Applicants’ Representations
1. The Company, a Maryland
corporation, is organized as a closedend management investment company
that has elected to be regulated as a BDC
under section 54(a) of the Act. 1 The
Company’s Objectives and Strategies2
are to maximize total return by
generating current income from debt
investments and long term capital
appreciation from equity investments.
The Company invests primarily in debt
and equity investments in small and
mid-sized private U.S. companies. The
board of directors of the Company (for
any Regulated Fund, the ‘‘Board’’) is
comprised of five members, three of
whom are not ‘‘interested persons’’ as
defined in section 2(a)(19) of the Act
(‘‘Independent Directors’’). Craig Faggen
(the ‘‘Principal’’) serves as a director on
the Company’s Board and as the
Company’s chief executive officer. The
Principal controls TPG, TPCP, and the
BDC Adviser.
2. The Existing Affiliated Private
Funds are parallel funds. Fund IV is a
Delaware limited partnership and
Platinum IV is a Delaware limited
liability company. Each Existing
Affiliated Private Fund would be an
investment company but for section
3(c)(1) or 3(c)(7) of the Act. The
investment strategy of each Existing
Affiliated Private Fund is to generate
current income and capital appreciation
by investing in small and mid-sized
private U.S. companies. The Existing
Affiliated Private Funds and the
Company have similar investment
strategies.
3. The BDC Adviser, a Delaware
limited liability company, is registered
as an investment adviser under the
Investment Advisers Act of 1940 (the
‘‘Advisers Act’’). The BDC Adviser
serves as investment adviser to the
Company and the Existing Affiliated
Private Funds.
4. The Fund Manager, a Delaware
limited liability company, is the general
partner of the Existing Affiliated Private
Funds. TPCP, a California limited
liability company, is the managing
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 (as defined below) investment objectives
and strategies, as described in the Regulated Fund’s
registration statement on Form N–2, other filings
the Regulated Fund makes 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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member of the Fund Manager. TPG, a
California corporation, is the managing
member of TPCP.
5. Applicants seek an order (‘‘Order’’)
to permit one or more Regulated Funds3
and/or one or more Affiliated Private
Funds4 to participate in the same
investment opportunities through a
proposed co-investment program (the
‘‘Co-Investment Program’’) where such
participation would otherwise be
prohibited under section 57(a)(4) and
rule 17d-1 by (a) co-investing with each
other in securities issued by issuers in
private placement transactions in which
an Adviser negotiates terms in addition
to price (‘‘Co-Investment Program’’); 5
and (b) making additional investments
in securities of such issuers, including
through the exercise of warrants,
conversion privileges, and other rights
to purchase additional securities of the
issuers (‘‘Follow-On Investments’’). ‘‘CoInvestment 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 Private
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 Private Funds
without obtaining and relying on the
Order.6
3 ‘‘Regulated Funds’’ means the Company and any
Future Regulated Fund. ‘‘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, (b) whose
investment adviser is an Adviser, and (c) that
intends to participate in the Co-Investment
Program. The term ‘‘Adviser’’ means the BDC
Adviser and any future investment adviser that
controls, is controlled by, or is under common
control with the BDC Adviser and is registered as
an investment adviser under the Advisers Act. All
references to the term ‘‘Adviser’’ include
successors-in-interest to the Adviser. A successorin-interest is limited to an entity that results from
a reorganization into another jurisdiction or change
in the type of business organization.
4 ‘‘Affiliated Private Fund’’ means the Existing
Affiliated Private Funds and any Future Affiliated
Private Fund. ‘‘Future Affiliated Private Fund’’
means any entity (a) whose investment adviser is
an Adviser, (b) that would be an investment
company but for section 3(c)(1) or 3(c)(7) of the Act,
and (c) that intends to participate in the CoInvestment Program.
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
on the 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.
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6. Applicants state that a Regulated
Fund may, from time to time, form one
or more Wholly-Owned Investment
Subs.7 Such a subsidiary would be
prohibited from investing in a CoInvestment Transaction with any other
Regulated Fund or Affiliated Private
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 CoInvestment 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 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 of the Regulated Fund
will also be informed of, and take into
consideration, the relative participation
of the Regulated Fund and the WhollyOwned Investment Sub.
7. When considering Potential CoInvestment Transactions for any
Regulated Fund, the Adviser will
consider only the Objectives and
Strategies, investment policies,
investment positions, capital available
for investment (‘‘Available Capital’’),
and other pertinent factors applicable to
that Regulated Fund.8 The Adviser
7 The term ‘‘Wholly-Owned Investment Sub’’
means an entity: (i) That is wholly-owned by a
Regulated Fund (with the Regulated Fund at all
times beneficially holding, directly or indirectly,
100% of the voting and economic interests); (ii)
whose sole business purpose is to hold one or more
investments on behalf of the Regulated Fund; (iii)
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 (iv) that would
be an investment company but for section 3(c)(1) or
3(c)(7) of the Act.
8 ‘‘Available Capital’’ consists solely of liquid
assets not held for permanent investment, including
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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 Private Funds, with
certain exceptions based on Available
Capital or diversification.9
8. 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’’)10 will
approve each Co-Investment
Transaction prior to any investment by
the participating Regulated Fund.
9. 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 Affiliated Private Fund in such
disposition or Follow-On Investment 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.
cash, amounts that can currently be drawn from
lines of credit, and marketable securities held for
short-term purposes. In addition, for the Affiliated
Private Funds, Available Capital would include
bona fide uncalled capital commitments that can be
called by the settlement date of the Co-Investment
Transaction.
9 The Regulated Funds, however, will not be
obligated to invest, or co-invest, when investment
opportunities are referred to them.
10 In the case of a Regulated Fund that is a
registered closed-end fund, the directors 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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10. No Independent Director of a
Regulated Fund will have a direct or
indirect financial interest in any CoInvestment Transaction, other than
through share ownership in one of the
Regulated Funds, including any interest
in securities of a company whose
securities are acquired in the CoInvestment Transaction.
11. Under condition 14, if an Adviser,
the Principal, any person controlling,
controlled by, or under common control
with the Adviser or the Principal, and
the Affiliated Private Funds
(collectively, the ‘‘Holders’’) own in the
aggregate more than 25% of the
outstanding voting securities of the
Company or another a Regulated Fund
(‘‘Shares’’), then the Holders will vote
such Shares as directed by an
independent third party when voting on
matters specified in the condition.
Applicants believe that this condition
will ensure that the Independent
Directors will act independently in
evaluating the Co-Investment Program,
because the ability of an Adviser or the
Principal to influence the Independent
Directors by a suggestion, explicit or
implied, that the Independent Directors
can be removed will be limited
significantly. Applicants represent that
the Independent Directors will evaluate
and approve any such voting trust or
proxy adviser, taking into accounts its
qualifications, reputation for
independence, cost to the shareholders,
and other factors that they deem
relevant.
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 Private
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
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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
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 any Order
granting the requested relief shall be
subject to the following conditions:
1. Each time an Adviser considers a
Potential Co-Investment Transaction for
the Affiliated Private Funds or another
Regulated 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 thencurrent 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 applicable Adviser
to be invested by the applicable
Regulated Fund in the Potential CoInvestment Transaction, together with
the amount proposed to be invested by
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the other participating Regulated Funds
and Affiliated Private 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 participating party’s
Available Capital, up to the amount
proposed to be invested by each. The
applicable 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
applicable Adviser will distribute
written information concerning the
Potential Co-Investment Transaction
(including the amount proposed to be
invested by each participating Regulated
Fund and the Affiliated Private Funds)
to the Eligible Directors of each
participating Regulated Fund for their
consideration. A Regulated Fund will
co-invest with one or more Regulated
Funds and/or one or more Affiliated
Private Funds 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 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 shareholders of
the Regulated Fund; and
(B) the Regulated Fund’s then-current
Objectives and Strategies;
(iii) the investment by other Regulated
Funds or the Affiliated Private 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 other Regulated Funds or the
Affiliated Private Funds; provided that,
if any other Regulated Fund or the
Affiliated Private Funds, 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 will not
be interpreted to prohibit the Required
Majority from reaching the conclusions
required by this condition (2)(c)(iii), if:
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(A) the Eligible Directors will have the
right to ratify the selection of such
director or board observer, if any;
(B) the Adviser agrees to, and does,
provide, periodic reports to the
Regulated Fund’s Board with respect to
the actions of the director or the
information received by the 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 the Affiliated Private Funds or any
Regulated Fund or any affiliated person
of the Affiliated Private Funds or any
Regulated Fund receives in connection
with the right of the Affiliated Private
Funds or the Regulated 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 Private Funds (who each may,
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
Advisers, the Affiliated Private Funds or
the other Regulated Funds or any
affiliated person of any of them (other
than the parties to 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 applicable Adviser will present
to each Regulated Fund’s Board, on a
quarterly basis, a record of all
investments in Potential Co-Investment
Transactions made by any of the other
Regulated Funds or the Affiliated
Private 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 Regulated Fund’s Board
pursuant to this condition will be kept
for the life of the Regulated Fund and
at least two years thereafter, and will be
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60729
subject to examination by the
Commission and its staff.
5. Except for Follow-On Investments
made in accordance with condition 8,11
a Regulated Fund will not invest in
reliance on the Order in any issuer in
which another Regulated Fund or
Affiliated Private Fund or any affiliated
person of another Regulated Fund or
Affiliated Private 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 Private Fund. The
grant to any Affiliated Private Fund or
another Regulated 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 Affiliated Private Fund or
any Regulated Fund elects to sell,
exchange or otherwise dispose of an
interest in a security that was acquired
in a Co-Investment Transaction, the
applicable Advisers 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 Affiliated Private Funds
and Regulated 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
Private Fund in such disposition is
proportionate to its outstanding
investments in the issuer immediately
preceding the disposition; (ii) the
Regulated Fund’s Board has approved as
being in the best interests of the
Regulated Fund the ability to participate
in such dispositions on a pro rata basis
11 This exception only applies to Follow-On
Investments by a Regulated Fund in issuers in
which that Regulated Fund already holds
investments.
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Federal Register / Vol. 80, No. 194 / Wednesday, October 7, 2015 / Notices
(as described in greater detail in the
application); and (iii) the Regulated
Fund’s Board 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
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 Affiliated Private Fund and
each Regulated Fund will bear their
own expenses in connection with any
such disposition.
8. (a) If any Affiliated Private Fund or
any Regulated Fund desires to make a
Follow-On Investment in a portfolio
company whose securities were
acquired in a Co-Investment
Transaction, the applicable Advisers
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 Private Fund in such
investment is proportionate to its
outstanding investments in the issuer
immediately preceding the Follow-On
Investment; and (ii) the Regulated
Fund’s Board 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 the opportunity is
not based on the Regulated Funds’ and
the Affiliated Private Funds’
outstanding investments immediately
preceding the Follow-On Investment;
and
(ii) the aggregate amount
recommended by the applicable Adviser
to be invested by each Regulated Fund
in the Follow-On Investment, together
with the amount proposed to be
VerDate Sep<11>2014
18:12 Oct 06, 2015
Jkt 238001
invested by the participating Affiliated
Private 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 Available
Capital, 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 Independent 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 or the
Affiliated Private Funds that the
Regulated Fund considered but declined
to participate in, so that the
Independent Directors may determine
whether all investments made during
the preceding quarter, including
investments that the Regulated Fund
considered but declined to participate
in, comply with the conditions of the
Order. In addition, the Independent
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 BDC and each
of the investments permitted under
these conditions were approved by the
Required Majority under section 57(f).
11. No Independent 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 any
of the Affiliated Private Funds.
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 Advisers under their investment
advisory agreements with the Regulated
Funds and the Affiliated Private Funds,
be shared by the Regulated Funds and
the Affiliated Private Funds in
proportion to the relative amounts of the
securities held or 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
PO 00000
Frm 00120
Fmt 4703
Sfmt 4703
applicable) received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and the Affiliated
Private 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 an
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 the
Affiliated Private Funds based on the
amounts they invest in such CoInvestment Transaction. None of the
Affiliated Private Funds, the Advisers,
the other Regulated Funds, or any
affiliated person of the Regulated Funds
or the Affiliated Private 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 Private 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 an Adviser, investment advisory fees
paid in accordance with the respective
agreements between the Adviser and the
Regulated Funds or the Affiliated
Private Funds).
14. If the Holders own in the aggregate
more than 25% of the outstanding
Shares of a Regulated Fund, then the
Holders will vote such Shares as
directed by an independent third party
(such as the trustee of a voting trust or
a proxy adviser) when voting on (1) the
election of directors; (2) the removal of
one or more directors; or (3) any matters
requiring approval by the vote of a
majority of the outstanding voting
securities, as defined in section 2(a)(42)
of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–25465 Filed 10–6–15; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #14484 and #14485]
Florida Disaster #FL–00107
U.S. Small Business
Administration.
AGENCY:
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]]>Agencies
[Federal Register Volume 80, Number 194 (Wednesday, October 7, 2015)]
[Notices]
[Pages 60726-60730]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-25465]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-31856; File No. 812-14122]
Triton Pacific Investment Corporation, Inc., et al.; Notice of
Application
September 30, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').
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.
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Summary of Application: Applicants request an order to permit certain
business development companies (``BDCs'') and closed-end management
investment companies to co-invest in portfolio companies with each
other and with affiliated investment funds.
Applicants: Triton Pacific Investment Corporation, Inc. (the
``Company''), Triton Pacific Income & Growth Fund IV, LP (``Fund IV''),
Triton Pacific Platinum Fund IV, LP (``Platinum IV'' and, together with
Fund IV, the ``Existing Affiliated Private Funds''), TPCP Fund Manager
IV, LLC (the ``Fund Manager''), Triton Pacific Adviser, LLC (the ``BDC
Adviser''), Triton Pacific Capital Partners, LLC (``TPCP''), and Triton
Pacific Group, Inc. (``TPG'').
Filing Dates: The application was filed on February 8, 2013, and
amended on May 17, 2013, July 15, 2013, December 18, 2013, June 12,
2014, November 25, 2014, May 28, 2015, and September 29, 2015.
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 October 26, 2015, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, 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: Brent J. Fields, Secretary, U.S. Securities and Exchange
Commission, 100 F St. NE., Washington, DC 20549-1090. Applicants: 10877
Wilshire Blvd., 12th Floor, Los Angeles, CA 90024.
FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at
(202) 551-6873 or Mary Kay Frech, Branch Chief, 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.
[[Page 60727]]
Applicants' Representations
1. The Company, a Maryland corporation, is organized as a closed-
end management investment company that has elected to be regulated as a
BDC under section 54(a) of the Act. \1\ The Company's Objectives and
Strategies\2\ are to maximize total return by generating current income
from debt investments and long term capital appreciation from equity
investments. The Company invests primarily in debt and equity
investments in small and mid-sized private U.S. companies. The board of
directors of the Company (for any Regulated Fund, the ``Board'') is
comprised of five members, three of whom are not ``interested persons''
as defined in section 2(a)(19) of the Act (``Independent Directors'').
Craig Faggen (the ``Principal'') serves as a director on the Company's
Board and as the Company's chief executive officer. The Principal
controls TPG, TPCP, and the BDC Adviser.
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\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 (as
defined below) investment objectives and strategies, as described in
the Regulated Fund's registration statement on Form N-2, other
filings the Regulated Fund makes 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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2. The Existing Affiliated Private Funds are parallel funds. Fund
IV is a Delaware limited partnership and Platinum IV is a Delaware
limited liability company. Each Existing Affiliated Private Fund would
be an investment company but for section 3(c)(1) or 3(c)(7) of the Act.
The investment strategy of each Existing Affiliated Private Fund is to
generate current income and capital appreciation by investing in small
and mid-sized private U.S. companies. The Existing Affiliated Private
Funds and the Company have similar investment strategies.
3. The BDC Adviser, a Delaware limited liability company, is
registered as an investment adviser under the Investment Advisers Act
of 1940 (the ``Advisers Act''). The BDC Adviser serves as investment
adviser to the Company and the Existing Affiliated Private Funds.
4. The Fund Manager, a Delaware limited liability company, is the
general partner of the Existing Affiliated Private Funds. TPCP, a
California limited liability company, is the managing member of the
Fund Manager. TPG, a California corporation, is the managing member of
TPCP.
5. Applicants seek an order (``Order'') to permit one or more
Regulated Funds\3\ and/or one or more Affiliated Private Funds\4\ to
participate in the same investment opportunities through a proposed co-
investment program (the ``Co-Investment Program'') where such
participation would otherwise be prohibited under section 57(a)(4) and
rule 17d-1 by (a) co-investing with each other in securities issued by
issuers in private placement transactions in which an Adviser
negotiates terms in addition to price (``Co-Investment Program''); \5\
and (b) making additional investments in securities of such issuers,
including through the exercise of warrants, conversion privileges, and
other rights to purchase additional securities of the issuers
(``Follow-On Investments''). ``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 Private 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 Private Funds
without obtaining and relying on the Order.\6\
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\3\ ``Regulated Funds'' means the Company and any Future
Regulated Fund. ``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, (b) whose investment adviser
is an Adviser, and (c) that intends to participate in the Co-
Investment Program. The term ``Adviser'' means the BDC Adviser and
any future investment adviser that controls, is controlled by, or is
under common control with the BDC Adviser and is registered as an
investment adviser under the Advisers Act. All references to the
term ``Adviser'' include successors-in-interest to the Adviser. A
successor-in-interest is limited to an entity that results from a
reorganization into another jurisdiction or change in the type of
business organization.
\4\ ``Affiliated Private Fund'' means the Existing Affiliated
Private Funds and any Future Affiliated Private Fund. ``Future
Affiliated Private Fund'' means any entity (a) whose investment
adviser is an Adviser, (b) that would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act, and (c) that intends to
participate in the Co-Investment Program.
\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 on the
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.
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6. Applicants state that a Regulated Fund may, from time to time,
form one or more Wholly-Owned Investment Subs.\7\ Such a subsidiary
would be prohibited from investing in a Co-Investment Transaction with
any other Regulated Fund or Affiliated Private 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 of the Regulated
Fund will also be informed of, and take into consideration, the
relative participation of the Regulated Fund and the Wholly-Owned
Investment Sub.
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\7\ The term ``Wholly-Owned Investment Sub'' means an entity:
(i) That is wholly-owned by a Regulated Fund (with the Regulated
Fund at all times beneficially holding, directly or indirectly, 100%
of the voting and economic interests); (ii) whose sole business
purpose is to hold one or more investments on behalf of the
Regulated Fund; (iii) 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 (iv) that would be an investment company but for
section 3(c)(1) or 3(c)(7) of the Act.
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7. 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 (``Available Capital''), and other pertinent
factors applicable to that Regulated Fund.\8\ The Adviser
[[Page 60728]]
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 Private
Funds, with certain exceptions based on Available Capital or
diversification.\9\
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\8\ ``Available Capital'' consists solely of liquid assets not
held for permanent investment, including cash, amounts that can
currently be drawn from lines of credit, and marketable securities
held for short-term purposes. In addition, for the Affiliated
Private Funds, Available Capital would include bona fide uncalled
capital commitments that can be called by the settlement date of the
Co-Investment Transaction.
\9\ The Regulated Funds, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
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8. 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'')\10\ will approve each
Co-Investment Transaction prior to any investment by the participating
Regulated Fund.
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\10\ In the case of a Regulated Fund that is a registered
closed-end fund, the directors 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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9. 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
Affiliated Private Fund in such disposition or Follow-On Investment 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.
10. No Independent Director of a Regulated Fund will have a direct
or indirect financial interest in any Co-Investment Transaction, other
than through share ownership in one of the Regulated Funds, including
any interest in securities of a company whose securities are acquired
in the Co-Investment Transaction.
11. Under condition 14, if an Adviser, the Principal, any person
controlling, controlled by, or under common control with the Adviser or
the Principal, and the Affiliated Private Funds (collectively, the
``Holders'') own in the aggregate more than 25% of the outstanding
voting securities of the Company or another a Regulated Fund
(``Shares''), then the Holders will vote such Shares as directed by an
independent third party when voting on matters specified in the
condition. Applicants believe that this condition will ensure that the
Independent Directors will act independently in evaluating the Co-
Investment Program, because the ability of an Adviser or the Principal
to influence the Independent Directors by a suggestion, explicit or
implied, that the Independent Directors can be removed will be limited
significantly. Applicants represent that the Independent Directors will
evaluate and approve any such voting trust or proxy adviser, taking
into accounts its qualifications, reputation for independence, cost to
the shareholders, and other factors that they deem relevant.
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 Private 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 any Order granting the requested relief shall
be subject to the following conditions:
1. Each time an Adviser considers a Potential Co-Investment
Transaction for the Affiliated Private Funds or another Regulated 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 applicable Adviser
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be
invested by
[[Page 60729]]
the other participating Regulated Funds and Affiliated Private 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 participating party's Available
Capital, up to the amount proposed to be invested by each. The
applicable 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 applicable Adviser will distribute written information
concerning the Potential Co-Investment Transaction (including the
amount proposed to be invested by each participating Regulated Fund and
the Affiliated Private Funds) to the Eligible Directors of each
participating Regulated Fund for their consideration. A Regulated Fund
will co-invest with one or more Regulated Funds and/or one or more
Affiliated Private Funds 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 shareholders of the Regulated Fund; and
(B) the Regulated Fund's then-current Objectives and Strategies;
(iii) the investment by other Regulated Funds or the Affiliated
Private 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 other Regulated Funds or the
Affiliated Private Funds; provided that, if any other Regulated Fund or
the Affiliated Private Funds, 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 will 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;
(B) the Adviser agrees to, and does, provide, periodic reports to
the Regulated Fund's Board with respect to the actions of the director
or the information received by the 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 the Affiliated Private
Funds or any Regulated Fund or any affiliated person of the Affiliated
Private Funds or any Regulated Fund receives in connection with the
right of the Affiliated Private Funds or the Regulated 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 Private Funds (who
each may, 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 Advisers, the Affiliated Private Funds or the other Regulated Funds
or any affiliated person of any of them (other than the parties to 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 applicable Adviser will present to each Regulated Fund's
Board, on a quarterly basis, a record of all investments in Potential
Co-Investment Transactions made by any of the other Regulated Funds or
the Affiliated Private 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 Regulated Fund's 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,\11\ a Regulated Fund will not invest in reliance on the
Order in any issuer in which another Regulated Fund or Affiliated
Private Fund or any affiliated person of another Regulated Fund or
Affiliated Private Fund is an existing investor.
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\11\ This exception only applies to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
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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
Private Fund. The grant to any Affiliated Private Fund or another
Regulated 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 Affiliated Private Fund or any Regulated Fund elects
to sell, exchange or otherwise dispose of an interest in a security
that was acquired in a Co-Investment Transaction, the applicable
Advisers 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
Affiliated Private Funds and Regulated 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 Private Fund
in such disposition is proportionate to its outstanding investments in
the issuer immediately preceding the disposition; (ii) the Regulated
Fund's Board has approved as being in the best interests of the
Regulated Fund the ability to participate in such dispositions on a pro
rata basis
[[Page 60730]]
(as described in greater detail in the application); and (iii) the
Regulated Fund's Board 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 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 Affiliated Private Fund and each Regulated Fund will bear
their own expenses in connection with any such disposition.
8. (a) If any Affiliated Private Fund or any Regulated Fund desires
to make a Follow-On Investment in a portfolio company whose securities
were acquired in a Co-Investment Transaction, the applicable Advisers
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
Private Fund in such investment is proportionate to its outstanding
investments in the issuer immediately preceding the Follow-On
Investment; and (ii) the Regulated Fund's Board 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 the opportunity is not based on the Regulated
Funds' and the Affiliated Private Funds' outstanding investments
immediately preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by the applicable 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 Private 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 Available Capital,
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 Independent 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 or the Affiliated Private
Funds that the Regulated Fund considered but declined to participate
in, so that the Independent Directors may determine whether all
investments made during the preceding quarter, including investments
that the Regulated Fund considered but declined to participate in,
comply with the conditions of the Order. In addition, the Independent
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
BDC and each of the investments permitted under these conditions were
approved by the Required Majority under section 57(f).
11. No Independent 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 any of the
Affiliated Private Funds.
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 Advisers under their investment advisory
agreements with the Regulated Funds and the Affiliated Private Funds,
be shared by the Regulated Funds and the Affiliated Private Funds in
proportion to the relative amounts of the securities held or 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 the Affiliated Private 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 an
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 the
Affiliated Private Funds based on the amounts they invest in such Co-
Investment Transaction. None of the Affiliated Private Funds, the
Advisers, the other Regulated Funds, or any affiliated person of the
Regulated Funds or the Affiliated Private 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 Private 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 an Adviser,
investment advisory fees paid in accordance with the respective
agreements between the Adviser and the Regulated Funds or the
Affiliated Private Funds).
14. If the Holders own in the aggregate more than 25% of the
outstanding Shares of a Regulated Fund, then the Holders will vote such
Shares as directed by an independent third party (such as the trustee
of a voting trust or a proxy adviser) when voting on (1) the election
of directors; (2) the removal of one or more directors; or (3) any
matters requiring approval by the vote of a majority of the outstanding
voting securities, as defined in section 2(a)(42) of the Act.
For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-25465 Filed 10-6-15; 8:45 am]
BILLING CODE 8011-01-P
