Barings Corporate Investors, et al.; Notice of Application, 44685-44690 [2017-20438]
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change is consistent with the Act.
Comments may be submitted by any of
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comment form (https://www.sec.gov/
rules/sro.shtml); or
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sec.gov. Please include File Number SR–
NYSEAMER–2017–14 on the subject
line.
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• Send paper comments in triplicate
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Washington, DC 20549–1090.
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2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–20361 Filed 9–22–17; 8:45 am]
BILLING CODE 8011–01–P
14 17
20:52 Sep 22, 2017
[Investment Company Act Release No.
32822; File No. 812–14689]
Barings Corporate Investors, et al.;
Notice of Application
September 20, 2017.
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 permitting certain joint transactions
otherwise prohibited by Sections 17(d)
and 57(a)(4) of the Act and Rule 17d–
1 under the Act.
AGENCY:
Applicants
request an order to permit certain
closed-end investment companies and
certain business development
companies (‘‘BDCs’’) to co-invest in
portfolio companies with each other and
with affiliated investment funds.
APPLICANTS: Barings Corporate Investors
(formerly, Babson Capital Corporate
Investors) (‘‘MCI’’) and Barings
Participation Investors (formerly,
Babson Capital Participation Investors)
(‘‘MPV’’ and together with MCI, the
‘‘Existing Regulated Funds’’); CI
Subsidiary Trust (‘‘MCI Sub’’) and PI
Subsidiary Trust (‘‘MPV Sub’’);
Massachusetts Mutual Life Insurance
Company and its successors 1
(‘‘MassMutual’’); C.M. Life Insurance
Company (‘‘C.M. Life’’); Barings Finance
LLC (formerly, Babson Capital Finance
LLC) (‘‘BCF’’); Barings LLC (formerly,
Babson Capital Management, LLC) and
its successors (‘‘Barings’’) and any other
person controlling, controlled by, or
under common control with
MassMutual or Barings that is registered
as an investment adviser under the
Investment Advisers Act of 1940, as
amended (the ‘‘Advisers Act’’), and that
serves as an investment adviser to any
Regulated Fund (as defined below) or
any Affiliated Account (as defined
below) relying on the requested order
(each an ‘‘Adviser’’ and together with
Barings, the ‘‘Advisers’’); Tower Square
Capital Partners, L.P. (‘‘TS Capital’’);
TSCP Selective, L.P. (‘‘TSCP’’); Tower
Square Capital Partners II, L.P. (‘‘TS
Capital II’’); Tower Square Capital
Partners II–A, L.P. (‘‘TS Capital II–A’’);
Tower Square Capital Partners II–B, L.P.
(‘‘TS Capital II–B’’); Tower Square II
Holding 06–1, Inc. (‘‘TS Holding 06–1’’);
Tower Square Capital Partners III, L.P.
SUMMARY OF APPLICATION:
1 The term ‘‘successor’’ means an entity that
results from a reorganization or change in the type
of business organization.
CFR 200.30–3(a)(12).
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(‘‘TS Capital III’’); Tower Square Capital
Partners III–A, L.P. (‘‘TS Capital III–A’’);
Tower Square Capital Partners II–B, L.P.
(‘‘TS Capital III–B’’); Tower Square III
Holdings 08–1, Inc. (‘‘TS Holdings 08–
1’’); Tower Square Capital Partners IV,
L.P. (‘‘TS Capital IV’’); Tower Square
Capital Partners IV–A, L.P. (‘‘TS Capital
IV–A’’); Tower Square IV Holding 14–1,
Inc. (‘‘TS Holding 14–1’’); Barings
Global Credit Fund (Lux) SCSp, SICAV–
SIF (‘‘Global Credit Fund’’ and, together
with TS Capital, TSCP, TS Capital II, TS
Capital II–A, TS Capital II–B, TS
Holding 06–1, TS Capital III, TS Capital
III–A, TS Capital III–B, TS Holdings 08–
1, TS Capital IV, TS Capital IV–A, TS
Holding 14–1, and BCF, the ‘‘Existing
Private Funds’’ and, together with
MassMutual and C.M. Life, the
‘‘Existing Affiliated Accounts’’.
The application was filed
on August 12, 2016 and amended on
August 29, 2017.
FILING DATES:
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 16, 2017 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.
HEARING OR NOTIFICATION OF HEARING:
Brent J. Fields, Secretary,
U.S. Securities and Exchange
Commission, 100 F St. NE., Washington,
DC 20549–1090. Applicants: 300 S.
Tryon Street, Suite 2500, Charlotte, NC
28202.
ADDRESSES:
Kyle
R. Ahlgren, Senior Counsel, at (202)
551–6857, or Holly L. Hunter-Ceci,
Assistant Chief Counsel, at (202) 551–
6825.
FOR FURTHER INFORMATION CONTACT:
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.
SUPPLEMENTARY INFORMATION:
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Applicants’ Representations
1. Applicants seek an order (‘‘Order’’)
to permit a Regulated Fund 2 and one or
more other Regulated Funds and/or one
or more Affiliated Accounts 3 to
participate in the same investment
opportunities through a proposed coinvestment program (the ‘‘CoInvestment Program’’) where such
participation would otherwise be
prohibited under Sections 17(d) and
57(a)(4) and Rule 17d–1 by: (a) Coinvesting with each other in securities
issued by issuers in private placement
transactions in which an Adviser
negotiates terms in addition to price
(‘‘Private Placement Securities’’); 4 and
(b) making 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’’). ‘‘CoInvestment Transaction’’ means any
transaction in which a Regulated Fund
(or its Wholly-Owned Investment Sub 5)
participates together with one or more
other Regulated Funds and/or one or
more Affiliated Accounts in reliance on
the requested Order. No Non-Interested
Trustee 6 of a Regulated Fund will have
a financial interest in any Co-Investment
2 ‘‘Regulated Fund’’ means either of the Existing
Regulated Funds and any Future Regulated Fund.
‘‘Future Regulated Fund’’ means any closed-end
management investment company: (a) That is
registered under the 1940 Act or has elected to be
regulated as a business development company; (b)
whose investment adviser is an Adviser; and (c)
that intends to participate in the Co-Investment
Program (as defined below).
3 ‘‘Affiliated Account’’ means any Existing
Affiliated Account and any future account or entity:
(a) Whose investment adviser is an Adviser; (b) that
would be an investment company but for Sections
3(a)(1) or 3(c)(7) of the 1940 Act; and (c) that
intends to participate in the Co-Investment
Program.
4 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 of 1933, as amended (the
‘‘1933 Act’’).
5 The term ‘‘Wholly-Owned Investment Sub’’
means any existing or future special purpose
subsidiary: (a) That is wholly-owned by a Regulated
Fund (with the Regulated Fund at all times holding,
beneficially and of record, 100 percent of the voting
and economic interests); (b) whose sole business
purpose is to hold one or more investments on
behalf of the Regulated Fund; (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 to
this Application; and (d) that would be an
investment company but for Section 3(c)(1) or
3(c)(7) of the 1940 Act.
6 The term ‘‘Non-Interested Trustees’’ means,
with respect to any Board, the directors or trustees
who are not ‘‘interested persons’’ within the
meaning of Section 2(a)(19) of the 1940 Act. The
term ‘‘Board’’ means, with respect to any Regulated
Fund, the board of directors or trustees of that
Regulated Fund (including the MCI/MPV Board
(defined below) for MCI and MPV).
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Transaction, other than indirectly
through share ownership in one of the
Regulated Funds. ‘‘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 Affiliated
Accounts and/or one or more other
Regulated Funds without obtaining and
relying on this order or the Existing
Order.7 The relief requested would also
cover any existing and future WhollyOwned Investment Sub.
2. MCI and MPV are closed-end
diversified management investment
companies registered under the 1940
Act. MCI’s Objectives and Strategies 8
are to maintain a portfolio of securities
providing a fixed yield and at the same
time offering an opportunity for capital
gains. MCI’s principal investments are
privately placed, below-investment
grade, long-term debt obligations with
equity features such as common stock,
warrants, conversion rights, or other
equity features and, occasionally,
preferred stocks. MCI typically
purchases these investments, which are
not publicly tradable, directly from their
issuers in private placement
transactions. In addition, MCI may
invest, subject to certain limitations, in
marketable investment grade debt
securities, other marketable debt
securities (including high yield
securities) and marketable common
stocks. MPV’s Objectives and Strategies
are to maximize total return by
providing a high level of current
income, the potential for growth of
income, and capital appreciation. MPV’s
principal investments are privately
placed, below-investment grade, longterm debt obligations purchased directly
from their issuers, which tend to be
smaller companies. MPV may also
invest in publicly traded debt securities
(including high yield securities) with an
emphasis on those with equity features,
and in convertible preferred stocks and,
subject to certain limitations, readily
marketable equity securities. In
7 The term ‘‘Existing Order’’ refers to
Massachusetts Mutual Life Ins. Company, et al.,
Investment Company Act Rel. Nos. 24557 (Jul. 13,
2000) (notice) and 24595 (Aug. 8, 2000) (order). The
requested order would supersede the Existing
Order.
8 ‘‘Objectives and Strategies’’ means, for each
Regulated Fund, the Regulated Fund’s investment
objectives and strategies and investment policies, as
described in the Regulated Fund’s registration
statement on Form N–2 and other filings the
Regulated Fund has made with the Commission, as
further supplemented, amended or modified in
accordance with applicable law, including, without
limitation, the 1933 Act, the Securities Exchange
Act of 1934, and the 1940 Act, as amended.
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addition, MPV may invest in high
quality, readily marketable securities.
3. MCI and MPV are each managed
under the direction of a board of
trustees (the ‘‘MCI/MPV Board’’), which
consists of seven members, five of
whom are not ‘‘interested persons’’ of
MCI or MPV within the meaning of
Section 2(a)(19) of the 1940 Act (the
‘‘Non-Interested Trustees’’). MCI Sub
and MPV Sub are wholly owned
subsidiaries of MCI and MPV,
respectively. MCI Sub and MPV Sub are
each Wholly-Owned Investment Subs.
4. MassMutual is a mutual life
insurance company organized under the
laws of the Commonwealth of
Massachusetts. Both C.M. Life, a stock
life insurance company organized under
the laws of Connecticut, and BCF, a
limited liability company organized
under the laws of Delaware that makes
loans to middle market companies, are
wholly-owned subsidiaries of
MassMutual. Barings is an investment
adviser registered with the Commission
under the Advisers Act and is an
indirect, wholly-owned subsidiary of
MassMutual. Barings is the investment
adviser to the Existing Regulated Funds
and the Existing Affiliated Accounts.
MassMutual, BCF, Barings, and
investment advisory clients of
MassMutual and Barings may from time
to time invest in the Regulated Funds
and/or the Affiliated Accounts.
5. MassMutual has invested side-byside with MCI in Private Placement
Securities since 1971 pursuant to an
exemptive order under Section 17(d)
and Rule 17d–1 thereunder and Section
17(b).9 Similarly, MassMutual has
invested side-by-side with MPV since
1988, when the exemptive order was
amended to add MPV.10 The 1971 and
1988 orders, as successively amended
through the Existing Order, were
intended to give the Regulated Funds
the opportunity to invest in Private
Placement Securities that MassMutual
intended to purchase for MassMutual’s
accounts and that would not otherwise
be available to the Regulated Funds, but
for MassMutual’s participation in the
investments. As a mutual life insurance
company regulated by the
Massachusetts Department of Insurance
(the ‘‘MA DOI’’) and the self-regulatory
organization the National Association of
Insurance Commissioners, MassMutual
invests its general investment account to
match its liabilities with respect to
maturity and interest rate risk, including
9 Massachusetts Mutual Life Ins. Company et al.,
Investment Company Act Rel. No. 6690 (Aug. 19,
1971) (order).
10 Massachusetts Mutual Life Ins. Company et al.,
Investment Company Act Rel. Nos. 16578 (Sept. 28,
1988) (notice) and 16601 (Oct. 19, 1988) (order).
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managing duration, liquidity and overall
volatility. MassMutual’s accounts are
reviewed by the MA DOI to ensure
compliance with various legal and
accounting rules that, among other
things, govern the types and amount of
assets that an insurance company must
maintain to help assure its ability to
meet its obligations to policy holders.
6. MassMutual’s accounts are advised
by Barings and other unaffiliated
investment advisers. Barings serves as
investment adviser to a portion of
MassMutual’s accounts pursuant to
investment advisory agreements.
7. Although MassMutual indirectly
owns Barings, Barings has a separate
Board of Directors, officers and
management team from MassMutual
and operates as a separate, distinct legal
entity. Barings’ portfolio managers’
compensation is paid on the same basis
with respect to managing the
MassMutual accounts and any thirdparty accounts. Barings’ allocation
procedures do not distinguish between
MassMutual’s accounts and third-party
accounts. Consequently, despite the
affiliation between MassMutual and
Barings, Barings manages the
MassMutual accounts at arm’s length in
the same way it manages third-party
accounts in the relevant asset classes.
8. TS Capital, TSCP, TS Capital II, TS
Capital II–A, TS Capital II–B, TS Capital
III, TS Capital III–A, TS Capital III–B,
TS Capital IV, and TS Capital IV–A are
Delaware limited partnerships for which
Barings acts as investment manager.
These funds invest primarily in direct
mezzanine and equity investments
focused on small and middle market
companies. Each Existing Private Fund
relies on Section 3(c)(7) of the 1940 Act.
9. Mezzco LLC acts as the general
partner of TS Capital and TSCP. Mezzco
II LLC acts as the general partner of TS
Capital II, TS Capital II–A and TS
Capital II–B. Mezzco III LLC acts as the
general partner of TS Capital III, TS
Capital III–A and TS Capital III–B, and
Mezzco IV LLC acts as the general
partner of TS Capital IV and TS Capital
IV–A.
10. Global Credit Fund is a
Luxembourg special limited partnership
for which Barings acts as the subadviser. Global Credit Fund invests in
global private corporate loans, including
senior secured loans, unitranche loans,
second lien loans and subordinated debt
(including mezzanine and payment in
kind securities) of private companies
(primarily in North America, the
European Economic Area, Australia,
New Zealand and other jurisdictions in
the Developed Asia-Pacific Region) that
generally cannot access public capital
markets.
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11. Applicants represent that when
considering Potential Co-Investment
Transactions for any Regulated Fund,
the applicable 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.
Applicants further represent that the
amount of each Regulated Fund’s and
Affiliated Account’s capital available for
investment will be determined based on
the amount of cash on hand, existing
commitments and reserves, if any, the
targeted leverage level, targeted asset
mix and other investment policies and
restrictions set from time to time by the
Board of the applicable Regulated Fund
or the directors, or the general partners
or adviser of the applicable Affiliated
Account, or imposed by applicable
laws, rules, regulations or
interpretations. Applicants represent
that each Adviser, as applicable,
undertakes to perform these duties
consistently for each Regulated Fund, as
applicable, regardless of which of them
serves as investment adviser to these
entities, and that the participation of a
Regulated Fund in a Potential CoInvestment Transaction may only be
approved by a required majority, as
defined in Section 57(o) of the Act (a
‘‘Required Majority’’), of the trustees of
the Board eligible to vote on that CoInvestment Transaction under Section
57(o) (‘‘Eligible Trustees’’).
12. Applicants represent that at least
once each quarter, based on several
factors, including the requirements set
forth by state insurance regulations for
MassMutual’s general investment
account, relative value determinations
among different types of assets, current
rate and spread environment, asset
liability management needs (e.g., based
on the types of insurance products sold
and expected to be sold), portfolio
liquidity, risk-based capital charges, and
long-term investment portfolio
performance, MassMutual’s chief
investment officer determines
MassMutual’s capital available for
investment in Private Placement
Securities selected by Barings and
communicates its commitment to
Barings in writing. Applicants further
represent that these commitments are
established prospectively, and not based
on the investment merits of any
particular Co-Investment Transaction,
and that Barings will, in connection
with each Potential Co-Investment
Transaction, provide the Board of each
participating Regulated Fund with
information showing any material
changes in MassMutual’s capital
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available for investment and/or the
aggregate amount of available capital for
all participating parties.
Applicants’ Legal Analysis
1. Section 17(d) of the Act and Rule
17d–1 under the Act generally 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.
2. Section 57(a)(4) of the Act generally
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.
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.
3. Applicants state that Barings is the
investment adviser to the Existing
Regulated Funds and an Adviser will be
the investment adviser to each of the
Future Regulated Funds. Applicants
acknowledge that the Regulated Funds
may be deemed to be under common
control, and thus affiliated persons of
each other under Section 2(a)(3)(C) of
the Act. Applicants further acknowledge
that because MassMutual controls
Barings, MassMutual is an affiliated
person of Barings under Section
2(a)(3)(C), and therefore an affiliated
person of an affiliated person (a
‘‘second-tier affiliate’’) of each Existing
Regulated Fund. Finally, Applicants
acknowledge that because Barings or
another Adviser will be the investment
adviser to each Affiliated Account, each
Adviser and each other Regulated Fund
and Affiliated Account may be deemed
to be under common control with, and
therefore an affiliated person of, each
Regulated Fund under Section
2(a)(3)(C). Applicants note that, as a
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result, these relationships might cause a
Regulated Fund and one or more
Advisers, other Regulated Funds and/or
one or more Affiliated Accounts
participating in the Co-Investment
Transactions to be subject to Sections
17(d) or 57(a)(4), and thus subject to the
provisions of Rule 17d–1.
4. Applicants note that the
Commission has stated that Section
17(d) of the Act, upon which Rule 17d–
1 is based, upon which Section 57(a)(4)
of the Act was modeled, was designed
to protect investment companies from
self-dealing and overreaching by
insiders. Applicants believe that the
terms and Conditions of the Application
would ensure that the conflicts of
interest that Section 17(d) and Section
57(a)(4) were designed to prevent would
be addressed and the standards for an
order under Rule 17d–1 are met.
5. Applicants believe that the
participation of the Regulated Funds in
Co-Investment Transactions done in
accordance with the Conditions would
be consistent with the provisions,
policies, and purposes of the Act, and
would be done in a manner that was not
different from, or less advantageous
than, the other participants.
6. Applicants state that in the absence
of the requested relief, in some
circumstances the Regulated Funds
would be limited in their ability to
participate in attractive and appropriate
investment opportunities, and that each
Regulated Fund’s inability to co-invest
with one or more of the Affiliated
Accounts and the other Regulated
Funds could potentially result in the
loss of beneficial investment
opportunities for such Regulated Fund
and, in turn, adversely affect such
Regulated Fund’s shareholders.
Applicants further state that the ability
to participate in Co-Investment
Transactions that involve committing
larger amounts of financing would
enable each Regulated Fund to
participate with one or more of the
Affiliated Accounts and the other
Regulated Funds in larger financing
commitments, which would, in turn, be
expected to obtain discounted prices
and increase income, expand
investment opportunities and provide
better access to due diligence
information for the Regulated Funds.
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
an Affiliated Account or another
Regulated Fund that falls within a
Regulated Fund’s then-current
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Objectives and Strategies, the Regulated
Fund’s Adviser will make an
independent determination of the
appropriateness of the investment for
such 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, it
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
the other participating Regulated Funds
and Affiliated Accounts, 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 applicable
Adviser will provide the Eligible
Trustees 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 Affiliated Account) to the
Eligible Trustees of each participating
Regulated Fund for their consideration.
A Regulated Fund will co-invest with
one or more other Regulated Funds and/
or one or more Affiliated Accounts only
if, prior to the Regulated Fund’s
participation in the Potential CoInvestment 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;
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(iii) the investment by any other
Regulated Funds or Affiliated Accounts
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
Affiliated Accounts; provided that, if
any other Regulated Fund or Affiliated
Account, 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 Trustees will have
the right to ratify the selection of such
director or board observer, if any;
(B) the applicable Adviser agrees to,
and does, provide periodic reports to
the Regulated Fund’s Board 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 Affiliated Account or any
Regulated Fund or any affiliated person
of any Affiliated Account or any
Regulated Fund receives in connection
with the right of an Affiliated Account
or a 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 Accounts (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 Accounts or the
other Regulated Funds or Affiliated
Accounts or any affiliated person of any
of them (other than the parties to the CoInvestment 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
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Co-Investment Transaction or to invest
less than the amount proposed.
4. The applicable 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 Accounts
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 8,11
a Regulated Fund will not invest in
reliance on the Order in any issuer in
which another Regulated Fund,
Affiliated Account, or any affiliated
person of another Regulated Fund or
Affiliated Account 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 Account. The grant
to an Affiliated Account 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 Account or any
Regulated Fund elects to sell, exchange
or otherwise dispose of an interest in a
security that was acquired in a CoInvestment 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
11 This exception applies only to Follow-On
Investments by a Regulated Fund in issuers in
which that Regulated Fund already holds
investments.
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20:52 Sep 22, 2017
Jkt 241001
on a proportionate basis, at the same
price and on the same terms and
conditions as those applicable to the
participating Affiliated Accounts 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
Account 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 Eligible
Trustees, 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 Account and each
Regulated Fund will bear its own
expenses in connection with any such
disposition.
8. (a) If any Affiliated Account 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 Account 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
PO 00000
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Fmt 4703
Sfmt 4703
44689
Fund’s participation to the Eligible
Trustees, 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 Accounts’ 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 Accounts 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 participant’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 Trustees 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
Affiliated Accounts that the Regulated
Fund considered but declined to
participate in, so that the Non-Interested
Trustees may determine whether all
investments made during the preceding
quarter, including those investments
that the Regulated Fund considered but
declined to participate in, comply with
the conditions of the Order. In addition,
the Non-Interested Trustees will
consider at least annually the continued
appropriateness for the Regulated Fund
of participating in new and existing CoInvestment 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) of
the Act.
11. No Non-Interested Trustee 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 Account.
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Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Notices
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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 1933 Act)
will, to the extent not payable by the
Advisers under their respective
investment advisory agreements with
Affiliated Accounts and the Regulated
Funds, be shared by the Regulated
Funds and the Affiliated Accounts 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 12 (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
Accounts 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 such
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 Accounts based on the
amounts they invest in such CoInvestment Transaction. None of the
Affiliated Accounts, the Advisers, the
other Regulated Funds or any affiliated
person of the Regulated Funds or
Affiliated Accounts 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 Accounts, 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 agreement
between the Adviser and the Regulated
Fund or Affiliated Account.
14. If the Holders 13 own in the
aggregate more than 25 percent of the
12 Applicants are not requesting and the staff is
not providing any relief for transaction fees
received in connection with any Co-Investment
Transaction.
13 ‘‘Holders’’ means the Advisers, certain
employees and principals of MassMutual and its
affiliated advisers (collectively, the ‘‘Principals’’),
and any person controlling, controlled by, or under
common control with the Advisers or the
Principals, and the Affiliated Accounts.
VerDate Sep<11>2014
20:52 Sep 22, 2017
Jkt 241001
Shares 14 of a Regulated Fund, then the
Holders will vote such Shares as
directed by an independent third party
when voting on (1) the election of
trustees; (2) the removal of one or more
trustees; or (3) any other matter under
either the Act or applicable State law
affecting the Board’s composition, size
or manner of election.
15. Each Regulated Fund’s chief
compliance officer, as defined in Rule
38a–1(a)(4), will prepare an annual
report for its Board each year that
evaluates (and documents the basis of
that evaluation) the Regulated Fund’s
compliance with the terms and
conditions of the Application and the
procedures established to achieve such
compliance.
loans may be filed at the address listed
above or other locally announced
locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties (Physical Damage and
Economic Injury Loans): Camden,
Chatham, Glynn
Contiguous Counties (Economic Injury
Loans Only):
Georgia: Brantley, Bryan, Charlton,
Effingham, Mcintosh, Wayne
Florida: Nassau
South Carolina: Jasper
The Interest Rates are:
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
For Physical Damage:
Homeowners with Credit Available Elsewhere ......................
Homeowners without Credit
Available Elsewhere ..............
Businesses with Credit Available Elsewhere ......................
Businesses
without
Credit
Available Elsewhere ..............
Non-Profit Organizations with
Credit Available Elsewhere ...
Non-Profit Organizations without Credit Available Elsewhere .....................................
For Economic Injury:
Businesses & Small Agricultural
Cooperatives without Credit
Available Elsewhere ..............
Non-Profit Organizations without Credit Available Elsewhere .....................................
[FR Doc. 2017–20438 Filed 9–22–17; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #15314 and #15315;
Georgia Disaster Number GA–00100]
Presidential Declaration of a Major
Disaster for the State of Georgia
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for the State of Georgia (FEMA–
4338–DR), dated 09/15/2017.
Incident: Hurricane Irma.
Incident Period: 09/07/2017 and
continuing.
DATES: Issued on 09/15/2017.
Physical Loan Application Deadline
Date: 11/14/2017.
Economic Injury (EIDL) Loan
Application Deadline Date: 06/15/2018.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT:
A. Escobar, Office of Disaster
Assistance, U.S. Small Business
Administration, 409 3rd Street SW.,
Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
09/15/2017, applications for disaster
SUMMARY:
14 ‘‘Shares’’ means the outstanding voting shares
of a Regulated Fund.
PO 00000
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Fmt 4703
Sfmt 4703
Percent
3.500
1.750
6.610
3.305
2.500
2.500
3.305
2.500
The number assigned to this disaster
for physical damage is 153148 and for
economic injury is 153150.
(Catalog of Federal Domestic Assistance
Number 59008)
James E. Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2017–20315 Filed 9–22–17; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #15291 and #15292;
TEXAS Disaster Number TX–00488]
Presidential Declaration Amendment of
a Major Disaster for Public Assistance
Only for the State of Texas
U.S. Small Business
Administration.
ACTION: Amendment 2.
AGENCY:
This is an amendment of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Texas (FEMA–4332–DR),
dated 09/04/2017.
SUMMARY:
E:\FR\FM\25SEN1.SGM
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]]>Agencies
[Federal Register Volume 82, Number 184 (Monday, September 25, 2017)]
[Notices]
[Pages 44685-44690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20438]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32822; File No. 812-14689]
Barings Corporate Investors, et al.; Notice of Application
September 20, 2017.
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 permitting 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 certain
closed-end investment companies and certain business development
companies (``BDCs'') to co-invest in portfolio companies with each
other and with affiliated investment funds.
APPLICANTS: Barings Corporate Investors (formerly, Babson Capital
Corporate Investors) (``MCI'') and Barings Participation Investors
(formerly, Babson Capital Participation Investors) (``MPV'' and
together with MCI, the ``Existing Regulated Funds''); CI Subsidiary
Trust (``MCI Sub'') and PI Subsidiary Trust (``MPV Sub'');
Massachusetts Mutual Life Insurance Company and its successors \1\
(``MassMutual''); C.M. Life Insurance Company (``C.M. Life''); Barings
Finance LLC (formerly, Babson Capital Finance LLC) (``BCF''); Barings
LLC (formerly, Babson Capital Management, LLC) and its successors
(``Barings'') and any other person controlling, controlled by, or under
common control with MassMutual or Barings that is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended (the ``Advisers Act''), and that serves as an investment
adviser to any Regulated Fund (as defined below) or any Affiliated
Account (as defined below) relying on the requested order (each an
``Adviser'' and together with Barings, the ``Advisers''); Tower Square
Capital Partners, L.P. (``TS Capital''); TSCP Selective, L.P.
(``TSCP''); Tower Square Capital Partners II, L.P. (``TS Capital II'');
Tower Square Capital Partners II-A, L.P. (``TS Capital II-A''); Tower
Square Capital Partners II-B, L.P. (``TS Capital II-B''); Tower Square
II Holding 06-1, Inc. (``TS Holding 06-1''); Tower Square Capital
Partners III, L.P. (``TS Capital III''); Tower Square Capital Partners
III-A, L.P. (``TS Capital III-A''); Tower Square Capital Partners II-B,
L.P. (``TS Capital III-B''); Tower Square III Holdings 08-1, Inc. (``TS
Holdings 08-1''); Tower Square Capital Partners IV, L.P. (``TS Capital
IV''); Tower Square Capital Partners IV-A, L.P. (``TS Capital IV-A'');
Tower Square IV Holding 14-1, Inc. (``TS Holding 14-1''); Barings
Global Credit Fund (Lux) SCSp, SICAV-SIF (``Global Credit Fund'' and,
together with TS Capital, TSCP, TS Capital II, TS Capital II-A, TS
Capital II-B, TS Holding 06-1, TS Capital III, TS Capital III-A, TS
Capital III-B, TS Holdings 08-1, TS Capital IV, TS Capital IV-A, TS
Holding 14-1, and BCF, the ``Existing Private Funds'' and, together
with MassMutual and C.M. Life, the ``Existing Affiliated Accounts''.
---------------------------------------------------------------------------
\1\ The term ``successor'' means an entity that results from a
reorganization or change in the type of business organization.
FILING DATES: The application was filed on August 12, 2016 and amended
---------------------------------------------------------------------------
on August 29, 2017.
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 16, 2017 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: 300
S. Tryon Street, Suite 2500, Charlotte, NC 28202.
FOR FURTHER INFORMATION CONTACT: Kyle R. Ahlgren, Senior Counsel, at
(202) 551-6857, or Holly L. Hunter-Ceci, Assistant Chief Counsel, at
(202) 551-6825.
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 44686]]
Applicants' Representations
1. Applicants seek an order (``Order'') to permit a Regulated Fund
\2\ and one or more other Regulated Funds and/or one or more Affiliated
Accounts \3\ 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
Sections 17(d) and 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
(``Private Placement Securities''); \4\ and (b) making 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''). ``Co-
Investment Transaction'' means any transaction in which a Regulated
Fund (or its Wholly-Owned Investment Sub \5\) participates together
with one or more other Regulated Funds and/or one or more Affiliated
Accounts in reliance on the requested Order. No Non-Interested Trustee
\6\ of a Regulated Fund will have a financial interest in any Co-
Investment Transaction, other than indirectly through share ownership
in one of the Regulated Funds. ``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 Affiliated Accounts and/or one or more other Regulated Funds
without obtaining and relying on this order or the Existing Order.\7\
The relief requested would also cover any existing and future Wholly-
Owned Investment Sub.
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\2\ ``Regulated Fund'' means either of the Existing Regulated
Funds and any Future Regulated Fund. ``Future Regulated Fund'' means
any closed-end management investment company: (a) That is registered
under the 1940 Act or has elected to be regulated as a business
development company; (b) whose investment adviser is an Adviser; and
(c) that intends to participate in the Co-Investment Program (as
defined below).
\3\ ``Affiliated Account'' means any Existing Affiliated Account
and any future account or entity: (a) Whose investment adviser is an
Adviser; (b) that would be an investment company but for Sections
3(a)(1) or 3(c)(7) of the 1940 Act; and (c) that intends to
participate in the Co-Investment Program.
\4\ 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 of 1933, as
amended (the ``1933 Act'').
\5\ The term ``Wholly-Owned Investment Sub'' means any existing
or future special purpose subsidiary: (a) That is wholly-owned by a
Regulated Fund (with the Regulated Fund at all times holding,
beneficially and of record, 100 percent of the voting and economic
interests); (b) whose sole business purpose is to hold one or more
investments on behalf of the Regulated Fund; (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 to this Application; and (d) that would be an investment
company but for Section 3(c)(1) or 3(c)(7) of the 1940 Act.
\6\ The term ``Non-Interested Trustees'' means, with respect to
any Board, the directors or trustees who are not ``interested
persons'' within the meaning of Section 2(a)(19) of the 1940 Act.
The term ``Board'' means, with respect to any Regulated Fund, the
board of directors or trustees of that Regulated Fund (including the
MCI/MPV Board (defined below) for MCI and MPV).
\7\ The term ``Existing Order'' refers to Massachusetts Mutual
Life Ins. Company, et al., Investment Company Act Rel. Nos. 24557
(Jul. 13, 2000) (notice) and 24595 (Aug. 8, 2000) (order). The
requested order would supersede the Existing Order.
---------------------------------------------------------------------------
2. MCI and MPV are closed-end diversified management investment
companies registered under the 1940 Act. MCI's Objectives and
Strategies \8\ are to maintain a portfolio of securities providing a
fixed yield and at the same time offering an opportunity for capital
gains. MCI's principal investments are privately placed, below-
investment grade, long-term debt obligations with equity features such
as common stock, warrants, conversion rights, or other equity features
and, occasionally, preferred stocks. MCI typically purchases these
investments, which are not publicly tradable, directly from their
issuers in private placement transactions. In addition, MCI may invest,
subject to certain limitations, in marketable investment grade debt
securities, other marketable debt securities (including high yield
securities) and marketable common stocks. MPV's Objectives and
Strategies are to maximize total return by providing a high level of
current income, the potential for growth of income, and capital
appreciation. MPV's principal investments are privately placed, below-
investment grade, long-term debt obligations purchased directly from
their issuers, which tend to be smaller companies. MPV may also invest
in publicly traded debt securities (including high yield securities)
with an emphasis on those with equity features, and in convertible
preferred stocks and, subject to certain limitations, readily
marketable equity securities. In addition, MPV may invest in high
quality, readily marketable securities.
---------------------------------------------------------------------------
\8\ ``Objectives and Strategies'' means, for each Regulated
Fund, the Regulated Fund's investment objectives and strategies and
investment policies, as described in the Regulated Fund's
registration statement on Form N-2 and other filings the Regulated
Fund has made with the Commission, as further supplemented, amended
or modified in accordance with applicable law, including, without
limitation, the 1933 Act, the Securities Exchange Act of 1934, and
the 1940 Act, as amended.
---------------------------------------------------------------------------
3. MCI and MPV are each managed under the direction of a board of
trustees (the ``MCI/MPV Board''), which consists of seven members, five
of whom are not ``interested persons'' of MCI or MPV within the meaning
of Section 2(a)(19) of the 1940 Act (the ``Non-Interested Trustees'').
MCI Sub and MPV Sub are wholly owned subsidiaries of MCI and MPV,
respectively. MCI Sub and MPV Sub are each Wholly-Owned Investment
Subs.
4. MassMutual is a mutual life insurance company organized under
the laws of the Commonwealth of Massachusetts. Both C.M. Life, a stock
life insurance company organized under the laws of Connecticut, and
BCF, a limited liability company organized under the laws of Delaware
that makes loans to middle market companies, are wholly-owned
subsidiaries of MassMutual. Barings is an investment adviser registered
with the Commission under the Advisers Act and is an indirect, wholly-
owned subsidiary of MassMutual. Barings is the investment adviser to
the Existing Regulated Funds and the Existing Affiliated Accounts.
MassMutual, BCF, Barings, and investment advisory clients of MassMutual
and Barings may from time to time invest in the Regulated Funds and/or
the Affiliated Accounts.
5. MassMutual has invested side-by-side with MCI in Private
Placement Securities since 1971 pursuant to an exemptive order under
Section 17(d) and Rule 17d-1 thereunder and Section 17(b).\9\
Similarly, MassMutual has invested side-by-side with MPV since 1988,
when the exemptive order was amended to add MPV.\10\ The 1971 and 1988
orders, as successively amended through the Existing Order, were
intended to give the Regulated Funds the opportunity to invest in
Private Placement Securities that MassMutual intended to purchase for
MassMutual's accounts and that would not otherwise be available to the
Regulated Funds, but for MassMutual's participation in the investments.
As a mutual life insurance company regulated by the Massachusetts
Department of Insurance (the ``MA DOI'') and the self-regulatory
organization the National Association of Insurance Commissioners,
MassMutual invests its general investment account to match its
liabilities with respect to maturity and interest rate risk, including
[[Page 44687]]
managing duration, liquidity and overall volatility. MassMutual's
accounts are reviewed by the MA DOI to ensure compliance with various
legal and accounting rules that, among other things, govern the types
and amount of assets that an insurance company must maintain to help
assure its ability to meet its obligations to policy holders.
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\9\ Massachusetts Mutual Life Ins. Company et al., Investment
Company Act Rel. No. 6690 (Aug. 19, 1971) (order).
\10\ Massachusetts Mutual Life Ins. Company et al., Investment
Company Act Rel. Nos. 16578 (Sept. 28, 1988) (notice) and 16601
(Oct. 19, 1988) (order).
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6. MassMutual's accounts are advised by Barings and other
unaffiliated investment advisers. Barings serves as investment adviser
to a portion of MassMutual's accounts pursuant to investment advisory
agreements.
7. Although MassMutual indirectly owns Barings, Barings has a
separate Board of Directors, officers and management team from
MassMutual and operates as a separate, distinct legal entity. Barings'
portfolio managers' compensation is paid on the same basis with respect
to managing the MassMutual accounts and any third-party accounts.
Barings' allocation procedures do not distinguish between MassMutual's
accounts and third-party accounts. Consequently, despite the
affiliation between MassMutual and Barings, Barings manages the
MassMutual accounts at arm's length in the same way it manages third-
party accounts in the relevant asset classes.
8. TS Capital, TSCP, TS Capital II, TS Capital II-A, TS Capital II-
B, TS Capital III, TS Capital III-A, TS Capital III-B, TS Capital IV,
and TS Capital IV-A are Delaware limited partnerships for which Barings
acts as investment manager. These funds invest primarily in direct
mezzanine and equity investments focused on small and middle market
companies. Each Existing Private Fund relies on Section 3(c)(7) of the
1940 Act.
9. Mezzco LLC acts as the general partner of TS Capital and TSCP.
Mezzco II LLC acts as the general partner of TS Capital II, TS Capital
II-A and TS Capital II-B. Mezzco III LLC acts as the general partner of
TS Capital III, TS Capital III-A and TS Capital III-B, and Mezzco IV
LLC acts as the general partner of TS Capital IV and TS Capital IV-A.
10. Global Credit Fund is a Luxembourg special limited partnership
for which Barings acts as the sub-adviser. Global Credit Fund invests
in global private corporate loans, including senior secured loans,
unitranche loans, second lien loans and subordinated debt (including
mezzanine and payment in kind securities) of private companies
(primarily in North America, the European Economic Area, Australia, New
Zealand and other jurisdictions in the Developed Asia-Pacific Region)
that generally cannot access public capital markets.
11. Applicants represent that when considering Potential Co-
Investment Transactions for any Regulated Fund, the applicable 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. Applicants further
represent that the amount of each Regulated Fund's and Affiliated
Account's capital available for investment will be determined based on
the amount of cash on hand, existing commitments and reserves, if any,
the targeted leverage level, targeted asset mix and other investment
policies and restrictions set from time to time by the Board of the
applicable Regulated Fund or the directors, or the general partners or
adviser of the applicable Affiliated Account, or imposed by applicable
laws, rules, regulations or interpretations. Applicants represent that
each Adviser, as applicable, undertakes to perform these duties
consistently for each Regulated Fund, as applicable, regardless of
which of them serves as investment adviser to these entities, and that
the participation of a Regulated Fund in a Potential Co-Investment
Transaction may only be approved by a required majority, as defined in
Section 57(o) of the Act (a ``Required Majority''), of the trustees of
the Board eligible to vote on that Co-Investment Transaction under
Section 57(o) (``Eligible Trustees'').
12. Applicants represent that at least once each quarter, based on
several factors, including the requirements set forth by state
insurance regulations for MassMutual's general investment account,
relative value determinations among different types of assets, current
rate and spread environment, asset liability management needs (e.g.,
based on the types of insurance products sold and expected to be sold),
portfolio liquidity, risk-based capital charges, and long-term
investment portfolio performance, MassMutual's chief investment officer
determines MassMutual's capital available for investment in Private
Placement Securities selected by Barings and communicates its
commitment to Barings in writing. Applicants further represent that
these commitments are established prospectively, and not based on the
investment merits of any particular Co-Investment Transaction, and that
Barings will, in connection with each Potential Co-Investment
Transaction, provide the Board of each participating Regulated Fund
with information showing any material changes in MassMutual's capital
available for investment and/or the aggregate amount of available
capital for all participating parties.
Applicants' Legal Analysis
1. Section 17(d) of the Act and Rule 17d-1 under the Act generally
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.
2. Section 57(a)(4) of the Act generally 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. 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.
3. Applicants state that Barings is the investment adviser to the
Existing Regulated Funds and an Adviser will be the investment adviser
to each of the Future Regulated Funds. Applicants acknowledge that the
Regulated Funds may be deemed to be under common control, and thus
affiliated persons of each other under Section 2(a)(3)(C) of the Act.
Applicants further acknowledge that because MassMutual controls
Barings, MassMutual is an affiliated person of Barings under Section
2(a)(3)(C), and therefore an affiliated person of an affiliated person
(a ``second-tier affiliate'') of each Existing Regulated Fund. Finally,
Applicants acknowledge that because Barings or another Adviser will be
the investment adviser to each Affiliated Account, each Adviser and
each other Regulated Fund and Affiliated Account may be deemed to be
under common control with, and therefore an affiliated person of, each
Regulated Fund under Section 2(a)(3)(C). Applicants note that, as a
[[Page 44688]]
result, these relationships might cause a Regulated Fund and one or
more Advisers, other Regulated Funds and/or one or more Affiliated
Accounts participating in the Co-Investment Transactions to be subject
to Sections 17(d) or 57(a)(4), and thus subject to the provisions of
Rule 17d-1.
4. Applicants note that the Commission has stated that Section
17(d) of the Act, upon which Rule 17d-1 is based, upon which Section
57(a)(4) of the Act was modeled, was designed to protect investment
companies from self-dealing and overreaching by insiders. Applicants
believe that the terms and Conditions of the Application would ensure
that the conflicts of interest that Section 17(d) and Section 57(a)(4)
were designed to prevent would be addressed and the standards for an
order under Rule 17d-1 are met.
5. Applicants believe that the participation of the Regulated Funds
in Co-Investment Transactions done in accordance with the Conditions
would be consistent with the provisions, policies, and purposes of the
Act, and would be done in a manner that was not different from, or less
advantageous than, the other participants.
6. Applicants state that in the absence of the requested relief, in
some circumstances the Regulated Funds would be limited in their
ability to participate in attractive and appropriate investment
opportunities, and that each Regulated Fund's inability to co-invest
with one or more of the Affiliated Accounts and the other Regulated
Funds could potentially result in the loss of beneficial investment
opportunities for such Regulated Fund and, in turn, adversely affect
such Regulated Fund's shareholders. Applicants further state that the
ability to participate in Co-Investment Transactions that involve
committing larger amounts of financing would enable each Regulated Fund
to participate with one or more of the Affiliated Accounts and the
other Regulated Funds in larger financing commitments, which would, in
turn, be expected to obtain discounted prices and increase income,
expand investment opportunities and provide better access to due
diligence information for the Regulated Funds.
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 an Affiliated Account or another Regulated Fund that
falls within a Regulated Fund's then-current Objectives and Strategies,
the Regulated Fund's Adviser will make an independent determination of
the appropriateness of the investment for such 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, it 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 the other participating Regulated Funds and Affiliated
Accounts, 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 applicable Adviser will
provide the Eligible Trustees 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
Affiliated Account) to the Eligible Trustees of each participating
Regulated Fund for their consideration. A Regulated Fund will co-invest
with one or more other Regulated Funds and/or one or more Affiliated
Accounts 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 any other Regulated Funds or Affiliated
Accounts 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 Affiliated Accounts;
provided that, if any other Regulated Fund or Affiliated Account, 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 Trustees will have the right to ratify the
selection of such director or board observer, if any;
(B) the applicable Adviser agrees to, and does, provide periodic
reports to the Regulated Fund's Board 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 Affiliated Account or
any Regulated Fund or any affiliated person of any Affiliated Account
or any Regulated Fund receives in connection with the right of an
Affiliated Account or a 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 Accounts (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 Accounts or the other Regulated Funds or
Affiliated Accounts 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
[[Page 44689]]
Co-Investment Transaction or to invest less than the amount proposed.
4. The applicable 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 Accounts 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,\11\ a Regulated Fund will not invest in reliance on the
Order in any issuer in which another Regulated Fund, Affiliated
Account, or any affiliated person of another Regulated Fund or
Affiliated Account is an existing investor.
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\11\ This exception applies only 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
Account. The grant to an Affiliated Account 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 Account 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 Accounts 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 Account 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 Eligible Trustees, 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 Account and each Regulated Fund will bear its
own expenses in connection with any such disposition.
8. (a) If any Affiliated Account 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
Account 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 Trustees, 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 Accounts' 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 Accounts
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 participant'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 Trustees 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 Affiliated Accounts that
the Regulated Fund considered but declined to participate in, so that
the Non-Interested Trustees may determine whether all investments made
during the preceding quarter, including those investments that the
Regulated Fund considered but declined to participate in, comply with
the conditions of the Order. In addition, the Non-Interested Trustees
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) of the Act.
11. No Non-Interested Trustee 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
Account.
[[Page 44690]]
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 1933 Act) will, to the
extent not payable by the Advisers under their respective investment
advisory agreements with Affiliated Accounts and the Regulated Funds,
be shared by the Regulated Funds and the Affiliated Accounts 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 \12\ (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 Accounts 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 such 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
Accounts based on the amounts they invest in such Co-Investment
Transaction. None of the Affiliated Accounts, the Advisers, the other
Regulated Funds or any affiliated person of the Regulated Funds or
Affiliated Accounts 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 Accounts, 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 agreement between the Adviser and the
Regulated Fund or Affiliated Account.
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\12\ Applicants are not requesting and the staff is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
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14. If the Holders \13\ own in the aggregate more than 25 percent
of the Shares \14\ of a Regulated Fund, then the Holders will vote such
Shares as directed by an independent third party when voting on (1) the
election of trustees; (2) the removal of one or more trustees; or (3)
any other matter under either the Act or applicable State law affecting
the Board's composition, size or manner of election.
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\13\ ``Holders'' means the Advisers, certain employees and
principals of MassMutual and its affiliated advisers (collectively,
the ``Principals''), and any person controlling, controlled by, or
under common control with the Advisers or the Principals, and the
Affiliated Accounts.
\14\ ``Shares'' means the outstanding voting shares of a
Regulated Fund.
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15. Each Regulated Fund's chief compliance officer, as defined in
Rule 38a-1(a)(4), will prepare an annual report for its Board each year
that evaluates (and documents the basis of that evaluation) the
Regulated Fund's compliance with the terms and conditions of the
Application and the procedures established to achieve such compliance.
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-20438 Filed 9-22-17; 8:45 am]
BILLING CODE 8011-01-P
