Application; Benefit Street Partners BDC, Inc., et al., 15648-15653 [2018-07430]
Download as PDF
<![CDATA[
15648
Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices
are available at www.prc.gov, Docket
Nos. MC2018–140, CP2018–201.
Elizabeth Reed,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2018–07403 Filed 4–10–18; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33068; File No. 812–14601]
Application; Benefit Street Partners
BDC, Inc., et al.
April 6, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
amozie on DSK30RV082PROD with NOTICES
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.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
business development companies
(‘‘BDC’’) and closed-end management
investment companies to co-invest in
portfolio companies with each other and
with affiliated investment funds.
APPLICANTS: Benefit Street Partners BDC,
Inc. (‘‘BSP BDC’’), Providence Flexible
Credit Allocation Fund (‘‘Providence
Flexible Credit’’), Business
Development Corporation of America
(‘‘BDCA,’’ together with BSP BDC and
Providence Flexible Credit, the
‘‘Existing Regulated Funds’’),
Providence TMT Debt Opportunity
Fund II L.P. (‘‘Fund II’’), PECM Strategic
Funding L.P. (‘‘Strategic Funding’’), SEI
Energy Debt Fund, LP (‘‘SEI Fund’’),
Providence Debt Fund III L.P. (‘‘Fund
III’’), Providence Debt Fund III Master
(Non-US) L.P. (‘‘Fund III Offshore’’),
Benefit Street Partners Capital
Opportunity Fund L.P. (‘‘BSP Capital
Fund’’), Benefit Street Partners Capital
Opportunity Fund II L.P. (‘‘BSP Capital
Fund II’’), Benefit Street Partners SMA
LM L.P. (‘‘Benefit Street LM’’), Benefit
Street Partners SMA–C L.P. (‘‘Benefit
Street SMA–C’’), Benefit Street Partners
Senior Secured Opportunities Fund L.P.
(‘‘Benefit Street Senior Secured’’),
Benefit Street Partners Senior Secured
Opportunities Master Fund (Non-US)
L.P. (‘‘Benefit Street Senior Secured
Offshore’’), Benefit Street Partners
Senior Secured Opportunities (U) Fund
(Non-US) L.P. (‘‘Opportunities (U)
VerDate Sep<11>2014
17:17 Apr 10, 2018
Jkt 244001
Fund’’), Benefit Street Partners Senior
Secured Opportunities (U) Master Fund
(Non-US) L.P. (‘‘Opportunities (U)
Master Fund’’), BSP Special Situations
Master A L.P. (‘‘BSP Master A’’), BSP
Special Situations Master B L.P. (‘‘BSP
Master B’’), Benefit Street Partners Debt
Fund IV L.P. (‘‘Fund IV’’), Benefit Street
Partners Debt Fund IV Master (Non-US)
L.P. (‘‘Fund IV Offshore’’), Benefit Street
Partners SMA–T L.P. (‘‘SMA–T’’ and
each of Fund II, Strategic Funding, SEI
Fund, Fund III, Fund III Offshore, BSP
Capital Fund, BSP Capital Fund II,
Benefit Street LM, Benefit Street SMA–
C, Benefit Street Senior Secured, Benefit
Street Senior Secured Offshore,
Opportunities (U) Fund, Opportunities
(U) Master Fund, BSP Master A, BSP
Master B, Fund IV and Fund IV Offshore
is referred to as an ‘‘Existing Affiliated
Fund’’ and collectively, the ‘‘Existing
Affiliated Funds’’), Providence Equity
Capital Markets L.L.C. (‘‘Fund II
Affiliated Adviser’’), Benefit Street
Partners L.L.C. (‘‘BSP Adviser’’), BDCA
Adviser, LLC (‘‘BDCA Adviser’’), and
SEI Investments Management
Corporation (‘‘SEI Adviser’’).
FILING DATES: The application was filed
on January 15, 2016, and amended on
January 9, 2017, June 23, 2017, and
December 13, 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 April 30, 2018, 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: Secretary, U.S. Securities
and Exchange Commission, 100 F St.
NE, Washington, DC 20549–1090.
Applicants: BSP BDC, Providence
Flexible Credit, BDCA, Fund II,
Strategic Funding, Fund III, Fund III
Offshore, BSP Capital Fund, BSP Capital
Fund II, Benefit Street LM, Benefit
Street SMA–C, Benefit Street Senior
Secured, Benefit Street Senior Secured
Offshore, Opportunities (U) Fund,
Opportunities (U) Master Fund, BSP
Master A, BSP Master B, Fund IV, Fund
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
IV Offshore, SMA–T, Fund II Affiliated
Adviser, BSP Adviser, and BDCA
Adviser, 9 West 57th Street, 49th Floor,
New York, NY 10019; SEI Fund and SEI
Adviser, One Freedom Valley Drive,
Oaks, PA 19456.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879 or Robert H. Shapiro,
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
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. BSP BDC is a Maryland corporation
organized as a closed-end management
investment company that intends to
elect to be regulated as a BDC under
section 54(a) of the Act.1 BSP BDC’s
Objectives and Strategies 2 are to
generate both current income and
capital appreciation by primarily
investing in secured debt, unsecured
debt, as well as related equity securities
issued by private U.S. middle market
companies. The board of directors
(‘‘Board’’) of BSP BDC will be
comprised of five directors, three of
whom will be persons who are not
‘‘interested persons’’ of BSP BDC as
defined in section 2(a)(19) of the Act
(‘‘Non-Interested Directors’’).
2. Providence Flexible Credit is a
Massachusetts business trust organized
as closed-end investment company
registered under the Act. Providence
Flexible Credit’s Objectives and
Strategies are to seek total return
through a combination of current
income and capital appreciation.
Providence Flexible Credit will seek to
achieve its investment objective by
investing primarily in a portfolio of (i)
secured loans made primarily to
companies whose debt is below
investment grade quality; (ii) corporate
1 Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the
purpose of making investments in securities
described in sections 55(a)(1) through 55(a)(3) of the
Act and makes available significant managerial
assistance with respect to the issuers of such
securities.
2 ‘‘Objectives and Strategies’’ means a Regulated
Fund’s investment objectives and strategies, as
described in the Regulated Fund’s registration
statement on Form N–2, other filings the Regulated
Fund has made with the Commission under the
Securities Act of 1933 (the ‘‘Securities Act’’), or
under the Securities Exchange Act of 1934, and the
Regulated Fund’s reports to shareholders.
E:\FR\FM\11APN1.SGM
11APN1
amozie on DSK30RV082PROD with NOTICES
Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices
bonds that are expected to be primarily
high yield issues of below investment
grade quality; and (iii) debt investment
opportunities in middle market
companies in the United States that are
of below investment grade quality.
Providence Flexible Credit will have a
Board with a majority of trustees that
are Non-Interested Directors.
3. BDCA is a Maryland corporation
organized as a closed-end management
investment company that has elected to
be regulated as a BDC under the Act.
BDCA’s Objectives and Strategies are to
generate both current income and
capital appreciation by primarily
investing in senior secured loans and
mezzanine debt issued by middle
market companies. BDCA’s Board
consists of seven members, a majority of
whom are Non-Interested Directors.
4. Each of the Affiliated Funds
(defined below) would be an investment
company but for section 3(c)(1) or
3(c)(7) of the Act. Each Affiliated Fund
has, or will have, investment objectives
and strategies that are similar to or that
overlap with the Regulated Funds’
Objectives and Strategies.
5. Fund II Affiliated Adviser, BSP
Adviser, and BDCA Adviser are each
Delaware limited liability companies
registered as investment advisers under
the Investment Advisers Act of 1940
(the ‘‘Advisers Act’’). Applicants state
that the Providence Advisers (defined
below) are controlled by their principal
owners (the ‘‘Principals’’) and are thus
affiliated persons of each other as
described by section 2(a)(3)(C) of the
Act. Fund II Affiliated Adviser serves as
investment adviser to Fund II and
Strategic Funding. BSP Adviser serves
as investment adviser to BSP BDC,
Providence Flexible Credit, Fund III,
Fund III Offshore, BSP Capital Fund,
BSP Capital Fund II, Benefit Street LM,
Benefit Street SMA–C, Benefit Street
Senior Secured, Benefit Street Senior
Secured Offshore, Opportunities (U)
Fund, Opportunities (U) Master Fund,
BSP Master A, BSP Master B, Fund IV,
Fund IV Offshore, and SMA–T. In
addition, BSP Adviser serves as subadviser to SEI Fund, whose investment
adviser, SEI Adviser, is not affiliated
with BSP Adviser. BDCA Adviser serves
as investment adviser to BDCA.
6. SEI Adviser is a Delaware
corporation registered as an investment
adviser under the Advisers Act. SEI
Adviser serves as investment adviser to
SEI Fund. As noted above, BSP Adviser
serves as Sub-Adviser to SEI Fund. SEI
Adviser is not an affiliated person of
any Providence Adviser.
VerDate Sep<11>2014
17:17 Apr 10, 2018
Jkt 244001
7. Applicants seek to supersede the
Prior Order 3 to permit one or more
Regulated Funds 4 and/or one or more
Affiliated Funds 5 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; 6 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,
as defined below) participated together
with one or more other Regulated Funds
and/or one or more Affiliated Funds in
reliance on the requested Order.
‘‘Potential Co-Investment Transaction’’
means any investment opportunity in
which a Regulated Fund (or its WhollyOwned Investment Sub) could not
participate together with one or more
Affiliated Funds and/or one or more
3 The requested order (the ‘‘Order’’) would
supersede an exemptive order issued by the
Commission on June 23, 2015 (the ‘‘Prior Order’’)
that was granted pursuant to sections 57(a)(4) and
57(i) and rule 17d–1, with the result that no person
will continue to rely on the Prior Order if the Order
is granted. Benefit Street Partners BDC, Inc., et al.,
Investment Company Act Release Nos. 31651 (May
27, 2015) (notice) and 31686 (Jun. 23, 2015) (order).
4 ‘‘Regulated Fund’’ means any 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 Act or has elected to be
regulated as a BDC, (b) whose investment adviser
is a Providence Adviser, and (c) that intends to
participate in the Co-Investment Program. The term
‘‘Providence Adviser’’ means (a) BSP Adviser, (b)
BDCA Adviser, (c) Fund II Affiliated Adviser, and
(d) any future investment adviser, other than
Providence Equity Partners L.L.C., that controls, is
controlled by or is under common control with BSP
Adviser, BDCA Adviser and Fund II Affiliated
Adviser and is registered under the Advisers Act.
The term ‘‘Adviser’’ means any Providence Adviser
and SEI Adviser. Providence Equity Partners L.L.C.
is excluded from the definition of Adviser because
none of its clients will participate in any CoInvestment Transaction.
5 ‘‘Affiliated Fund’’ means (a) the Existing
Affiliated Funds and (b) any Future Affiliated Fund.
‘‘Future Affiliated Fund’’ means any entity (a)
whose investment adviser is a Providence 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.
6 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.
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
15649
other Regulated Funds without
obtaining and relying on the Order.7
8. Applicants state that a Regulated
Fund may, from time to time, form a
Wholly-Owned Investment Sub.8 Such a
subsidiary would be prohibited from
investing in a Co-Investment
Transaction with any Affiliated Fund or
Regulated 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 WhollyOwned Investment Sub’s participation
in any such transaction be treated, for
purposes of the requested order, as
though the parent Regulated Fund were
participating directly. Applicants
represent that this treatment is justified
because a Wholly-Owned Investment
Sub would have no purpose other than
serving as a holding vehicle for the
Regulated Fund’s investments and,
therefore, no conflicts of interest could
arise between the Regulated Fund and
the Wholly-Owned Investment Sub. The
Regulated Fund’s Board would make all
relevant determinations under the
conditions with regard to a WhollyOwned Investment Sub’s participation
in a Co-Investment Transaction, and the
Regulated Fund’s Board would be
informed of, and take into
consideration, any proposed use of a
Wholly-Owned Investment Sub in the
Regulated Fund’s place. If the Regulated
Fund proposes to participate in the
same Co-Investment Transaction with
any of its Wholly-Owned Investment
Subs, the Board will also be informed
of, and take into consideration, the
relative participation of the Regulated
Fund and the Wholly-Owned
Investment Sub.
9. When considering Potential CoInvestment Transactions for any
Regulated Fund, the Adviser (or
Advisers if there are more than one) will
consider only the Objectives and
7 All existing entities that currently intend to rely
upon the requested Order have been named as
applicants. Any other existing or future entity that
subsequently relies on the Order will comply with
the terms and conditions of the application.
8 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 holding, beneficially and of record, 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.
E:\FR\FM\11APN1.SGM
11APN1
amozie on DSK30RV082PROD with NOTICES
15650
Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices
Strategies, investment policies,
investment positions, capital available
for investment (‘‘Available Capital’’),
and other pertinent factors applicable to
that Regulated Fund. The Advisers
expect that any portfolio company that
is an appropriate investment for a
Regulated Fund should also be an
appropriate investment for one or more
other Regulated Funds and/or one or
more Affiliated Funds, with certain
exceptions based on Available Capital
or diversification. The Regulated Funds,
however, will not be obligated to invest,
or co-invest, when investment
opportunities are referred to them.
10. Applicants state that SEI Adviser
serves as investment adviser to SEI
Fund, while BSP Adviser serves as subadviser. Applicants represent that SEI
Adviser is responsible for the overall
management of SEI Fund’s activities,
and BSP Adviser is responsible for the
day-to-day management of SEI Fund’s
investment portfolio. Applicants
represent that although BSP Adviser
identifies and recommends investments
for SEI Fund, SEI Adviser has ultimate
authority with respect to SEI Fund’s
investments.
11. Applicants represent that each
Providence Adviser has adopted
allocation policies and procedures
which are designed to allocate
investment opportunities fairly and
equitably among their clients over time.
Applicants state that in the case of a
Potential Co-Investment Transaction,
the applicable Providence Adviser
applies its allocation policies and
procedures in determining the proposed
allocation for the applicable Regulated
Fund consistent with the requirements
of condition 2(a). Applicants state that,
as a result, all Potential Co-Investment
Transactions that are presented to any
Providence Adviser would also be
presented to each Providence Adviser
advising or sub-advising a Regulated
Fund, which, as required by condition
1, would make an independent
determination of the appropriateness of
the investments for such Regulated
Fund.
12. 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 applicable
Adviser(s) 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
VerDate Sep<11>2014
17:17 Apr 10, 2018
Jkt 244001
Majority’’) 9 will approve each CoInvestment Transaction prior to any
investment by the participating
Regulated Fund.
13. 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 Fund in such disposition
is proportionate to its outstanding
investments in the issuer immediately
preceding the disposition or Follow-On
Investment, as the case may be; and (ii)
the Board of the Regulated Fund has
approved that Regulated Fund’s
participation in pro rata dispositions
and Follow-On Investments as being in
the best interests of the Regulated Fund.
If the Board does not so approve, any
such disposition or Follow-On
Investment will be submitted to the
Regulated Fund’s Eligible Directors. The
Board of any Regulated Fund may at any
time rescind, suspend or qualify its
approval of pro rata dispositions and
Follow-On Investments with the result
that all dispositions and/or Follow-On
Investments must be submitted to the
Eligible Directors.
14. No Non-Interested Director 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.
15. Under condition 15, if the
Providence Advisers, the Principals, or
any person controlling, controlled by, or
under common control with the
Providence Advisers or the Principals,
and the Affiliated Funds (collectively,
the ‘‘Holders’’) own in the aggregate
more than 25% of the outstanding
voting securities of 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 Non-Interested
Directors will act independently in
evaluating the Co-Investment Program,
because the ability of the Providence
Advisers or the Principals to influence
the Independent Directors by a
suggestion, explicit or implied, that the
Non-Interested Directors can be
removed will be limited significantly.
Applicants represent that the Non9 In the case of a Regulated Fund that is a
registered closed-end fund, the Board members that
make up the Required Majority will be determined
as if the Regulated Fund were a BDC subject to
section 57(o).
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
Interested Directors will evaluate and
approve any such independent party,
taking into account its qualifications,
reputation for independence, cost to the
shareholders, and other factors that they
deem relevant.
Applicants’ Legal Analysis
1. Section 17(d) of the Act and rule
17d–1 under the Act prohibit
participation by a registered investment
company and an affiliated person in any
‘‘joint enterprise or other joint
arrangement or profit-sharing plan,’’ as
defined in the rule, without prior
approval by the Commission by order
upon application. 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. Similarly, with regard to
BDCs, section 57(a)(4) of the Act
generally prohibits certain persons
specified in section 57(b) from
participating in joint transactions with
the BDC or a company controlled by the
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.
2. 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 submit that each of the
other Regulated Funds and the
Affiliated Funds may be deemed to be
affiliated persons of a Regulated Fund
within the meaning of section 2(a)(3)(C)
of the Act by reason of common control
because (i) a Providence Adviser may be
deemed to control each of the Existing
Regulated Funds and the Existing
Affiliated Funds, (ii) a Providence
Adviser may be deemed to control any
Future Regulated Funds or Future
Affiliated Funds, (iii) the Providence
Advisers are owned and controlled by
the Principals and (iv) a Providence
Adviser sub-advises SEI Fund and,
therefore, SEI Fund may be deemed to
be under common control with the
Existing Regulated Funds. As a result, a
Regulated Fund and one or more other
E:\FR\FM\11APN1.SGM
11APN1
Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices
amozie on DSK30RV082PROD with NOTICES
Regulated Funds and/or one or more
Affiliated Funds would be prohibited
from participating in Co-Investment
Transactions by sections 17(d) or
57(a)(4) of the Act, and rule 17d–1 of the
Act.
4. 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. Applicants
believe that the proposed terms and
conditions of the application 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 would be
done in a manner that is not different
from, or less advantageous than, that of
other participants.
Applicants’ Conditions
Applicants agree that the Order will
be subject to the following conditions:
1. Each time a Providence Adviser
considers a Potential Co-Investment
Transaction for an Affiliated Fund or
another Regulated Fund that falls within
a Regulated Fund’s then-current
Objectives and Strategies, each Adviser
to the Regulated Fund 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 each Adviser to a Regulated
Fund deems the participation in any
Potential Co-Investment Transaction to
be appropriate for the Regulated Fund,
the Adviser (or Advisers if there are
more than one) will then determine an
appropriate level of investment for the
Regulated Fund.
(b) If the aggregate amount
recommended by the Adviser (or
Advisers if there are more than one) to
a Regulated Fund to be invested by the
Regulated Fund in the Potential CoInvestment Transaction, together with
the amount proposed to be invested by
the other participating Regulated Funds
and Affiliated Funds, collectively, in the
same transaction, exceeds the amount of
the investment opportunity, the
investment opportunity will be
allocated among them pro rata based on
each participant’s Available Capital, up
to the amount proposed to be invested
by each. The Adviser (or Advisers if
there are more than one) to each
participating Regulated Fund will
VerDate Sep<11>2014
17:17 Apr 10, 2018
Jkt 244001
provide the Eligible Directors of each
participating Regulated Fund with
information concerning each
participating party’s Available Capital to
assist the Eligible Directors with their
review of the Regulated Fund’s
investments for compliance with these
allocation procedures.
(c) After making the determinations
required in conditions 1 and 2(a), the
Adviser to the Regulated Fund (or
Advisers if there are more than one) will
distribute written information
concerning the Potential Co-Investment
Transaction (including the amount
proposed to be invested by each
participating Regulated Fund and
Affiliated Fund) to the Eligible Directors
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 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 any other
Regulated Funds or any Affiliated
Funds would not disadvantage the
Regulated Fund, and participation by
the Regulated Fund would not be on a
basis different from or less advantageous
than that of other Regulated Funds or
Affiliated Funds; provided that, if any
other Regulated Fund or Affiliated
Fund, but not the Regulated Fund itself,
gains the right to nominate a director for
election to a portfolio company’s board
of directors or the right to have a board
observer or any similar right to
participate in the governance or
management of the portfolio company,
such event shall not be interpreted to
prohibit the Required Majority from
reaching the conclusions required by
this condition (2)(c)(iii), if:
(A) The Eligible Directors will have
the right to ratify the selection of such
director or board observer, if any;
(B) the Adviser to the Regulated Fund
(or Advisers if there are more than one)
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
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
15651
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 Fund or any
Regulated Fund or any affiliated person
of any Affiliated Fund or Regulated
Fund receives in connection with the
right of an Affiliated Fund 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 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 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 Adviser to the Regulated Fund
(or Advisers if there are more than one)
will present to the Board of each
Regulated Fund, on a quarterly basis, a
record of all investments in Potential
Co-Investment Transactions made by
any of the other Regulated Funds or
Affiliated Funds during the preceding
quarter that fell within the Regulated
Fund’s then-current Objectives and
Strategies that were not made available
to the Regulated Fund, and an
explanation of why the investment
opportunities were not offered to the
Regulated Fund. All information
presented to the Board pursuant to this
condition will be kept for the life of the
Regulated Fund and at least two years
thereafter, and will be subject to
examination by the Commission and its
staff.
5. Except for Follow-On Investments
made in accordance with condition 8,10
10 This exception applies only to Follow-On
Investments by a Regulated Fund in issuers in
E:\FR\FM\11APN1.SGM
Continued
11APN1
amozie on DSK30RV082PROD with NOTICES
15652
Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices
a Regulated Fund will not invest in
reliance on the Order in any issuer in
which another Regulated Fund,
Affiliated Fund, or any affiliated person
of another Regulated Fund or Affiliated
Fund is an existing investor.
6. A Regulated Fund will not
participate in any Potential CoInvestment Transaction unless the
terms, conditions, price, class of
securities to be purchased, settlement
date, and registration rights will be the
same for each participating Regulated
Fund and Affiliated Fund. The grant to
an Affiliated 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 Fund 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
Providence Adviser will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed disposition
at the earliest practical time; and
(ii) formulate a recommendation as to
participation by each Regulated Fund in
the disposition.
(b) Each Regulated Fund will have the
right to participate in such disposition
on a proportionate basis, at the same
price and on the same terms and
conditions as those applicable to the
participating Affiliated 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
Fund in such disposition is
proportionate to its outstanding
investments in the issuer immediately
preceding the disposition; (ii) the Board
of the Regulated Fund has approved as
being in the best interests of the
Regulated Fund the ability to participate
in such dispositions on a pro rata basis
(as described in greater detail in the
application); and (iii) the Board of the
Regulated Fund is provided on a
quarterly basis with a list of all
dispositions made in accordance with
this condition. In all other cases, the
Adviser to the Regulated Fund (or
which that Regulated Fund already holds
investments.
VerDate Sep<11>2014
17:17 Apr 10, 2018
Jkt 244001
Advisers if there are more than one) 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 Fund and each
Regulated Fund will bear its own
expenses in connection with any such
disposition.
8. (a) If any Affiliated 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 Providence
Adviser will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed transaction
at the earliest practical time; and
(ii) formulate a recommendation as to
the proposed participation, including
the amount of the proposed Follow-On
Investment, by each Regulated Fund.
(b) A Regulated Fund may participate
in such Follow-On Investment without
obtaining prior approval of the Required
Majority if: (i) The proposed
participation of each Regulated Fund
and each Affiliated Fund in such
investment is proportionate to its
outstanding investments in the issuer
immediately preceding the Follow-On
Investment; and (ii) the Board of the
Regulated Fund has approved as being
in the best interests of the Regulated
Fund the ability to participate in
Follow-On Investments on a pro rata
basis (as described in greater detail in
the application). In all other cases, the
Adviser to the Regulated Fund (or
Advisers if there are more than one) 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 Affiliated Funds’ and
the Regulated Funds’ outstanding
investments immediately preceding the
Follow-On Investment; and
(ii) the aggregate amount
recommended by the Adviser(s) to be
invested by each Regulated Fund in the
Follow-On Investment, together with
the amount proposed to be invested by
the participating Affiliated Funds in the
same transaction, exceeds the amount of
the opportunity; then the amount
invested by each such party will be
allocated among them pro rata based on
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
each participant’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 Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds or
Affiliated Funds that the Regulated
Fund considered but declined to
participate in, so that the Non-Interested
Directors may determine whether all
investments made during the preceding
quarter, including those investments
that the Regulated Fund considered but
declined to participate in, comply with
the conditions of the Order. In addition,
the Non-Interested Directors will
consider at least annually the continued
appropriateness for the Regulated Fund
of participating in new and existing 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 Director of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act) of an
Affiliated Fund.
12. The expenses, if any, associated
with acquiring, holding or disposing of
any securities acquired in a CoInvestment Transaction (including,
without limitation, the expenses of the
distribution of any such securities
registered for sale under the Securities
Act) will, to the extent not payable by
the Advisers under their respective
investment advisory agreements with
the Affiliated Funds and the Regulated
Funds, be shared by the Regulated
Funds and the Affiliated Funds in
proportion to the relative amounts of the
securities held or to be acquired or
disposed of, as the case may be.
13. Any transaction fee 11 (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k) of the Act, as
11 Applicants are not requesting and the staff of
the Commission is not providing any relief for
transaction fees received in connection with any
Co-Investment Transaction.
E:\FR\FM\11APN1.SGM
11APN1
Federal Register / Vol. 83, No. 70 / Wednesday, April 11, 2018 / Notices
amozie on DSK30RV082PROD with NOTICES
applicable), received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by 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 Funds
based on the amounts they invest in
such Co-Investment Transaction. None
of the Affiliated Funds, the Advisers,
the other Regulated Funds or any
affiliated person of the Regulated Funds
or Affiliated Funds will receive
additional compensation or
remuneration of any kind as a result of
or in connection with a Co-Investment
Transaction (other than (a) in the case
of the Regulated Funds and Affiliated
Funds, the pro rata transaction fees
described above and fees or other
compensation described in condition
2(c)(iii)(C), and (b) in the case of an
Adviser, investment advisory fees paid
in accordance with the agreement
between the Adviser and the Regulated
Fund or Affiliated Fund).
14. If the Holders own in the aggregate
more than 25% of the Shares 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 directors; (2) the
removal of one or more directors; 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 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. 2018–07430 Filed 4–10–18; 8:45 am]
BILLING CODE 8011–01–P
VerDate Sep<11>2014
17:17 Apr 10, 2018
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83001; File No. SR–ISE–
2018–29]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to the Delay of
Complex Order Quoting Functionality
April 5, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 28,
2018, Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II,
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
delay for re-introduction of
functionality which permits Market
Makers to enter quotes in certain
symbols for complex strategies on the
complex order book in their appointed
options classes by an additional one
year.
The text of the proposed rule change
is available on the Exchange’s website at
https://ise.cchwallstreet.com/, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
2 17
Jkt 244001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00104
Fmt 4703
Sfmt 4703
15653
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to extend the delay for reintroduction of functionality which
permits Market Makers to enter quotes
in certain symbols for complex
strategies on the complex order book in
their appointed options classes by an
additional one year. The Exchange filed
a rule change to designate that a symbol
would not be eligible for Market Maker
quotes in the complex order book after
the symbol migrated to the INET 3
platform (‘‘May 2017 Rule Change’’).4 In
conjunction with the May 2017 Rule
Change, the Exchange issued an Options
Trader Alert notifying Members that
complex order quoting functionality
would no longer be available.5 The rule
change provided that within a year from
the date of filing the May 2017 Rule
Change, the Exchange would offer
complex quoting functionality on the
ISE INET platform.6
By way of background, prior to the
delay in re-introducing the quoting
functionality, ISE’s rules permitted
Market Makers to enter quotes in certain
symbols for complex strategies on the
complex order book in their appointed
options classes. Market Maker quotes for
complex strategies were not
automatically executed against bids and
offers on the Exchange for the
individual legs nor marked for price
improvement.7 Market Makers were not
required to enter quotes on ISE’s
complex order book. Quotes for
complex orders were not subject to any
quotation requirements that are
applicable to Market Maker quotes in
the regular market for individual
options series or classes, nor was any
volume executed in complex orders
taken into consideration when
determining whether Market Makers
met quotation obligations applicable to
Market Maker quotes in the regular
market for individual options series.
3 INET is the proprietary core technology utilized
across Nasdaq’s global markets and utilized on The
Nasdaq Options Market LLC (‘‘NOM’’), Nasdaq
PHLX LLC (‘‘Phlx’’) and Nasdaq BX, Inc. (‘‘BX’’)
(collectively, ‘‘Nasdaq Exchanges’’). The migration
of ISE to the Nasdaq INET architecture has resulted
in higher performance, scalability, and more robust
architecture.
4 See Securities Exchange Act Release No. 80613
(May 5, 2017), 82 FR 22022 (May 11, 2017) (SR–
ISE–2017–37).
5 Even though the complex quoting functionality
would not be available, Market Makers would still
be able to submit complex orders.
6 See note 4 above.
7 See Supplementary Material .03 to Rule 722.
E:\FR\FM\11APN1.SGM
11APN1
]]>Agencies
[Federal Register Volume 83, Number 70 (Wednesday, April 11, 2018)]
[Notices]
[Pages 15648-15653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07430]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33068; File No. 812-14601]
Application; Benefit Street Partners BDC, Inc., et al.
April 6, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
Notice of application for an order under sections 17(d) and 57(i)
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1
under the Act to permit certain joint transactions otherwise prohibited
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
Summary of Application: Applicants request an order to permit certain
business development companies (``BDC'') and closed-end management
investment companies to co-invest in portfolio companies with each
other and with affiliated investment funds.
Applicants: Benefit Street Partners BDC, Inc. (``BSP BDC''), Providence
Flexible Credit Allocation Fund (``Providence Flexible Credit''),
Business Development Corporation of America (``BDCA,'' together with
BSP BDC and Providence Flexible Credit, the ``Existing Regulated
Funds''), Providence TMT Debt Opportunity Fund II L.P. (``Fund II''),
PECM Strategic Funding L.P. (``Strategic Funding''), SEI Energy Debt
Fund, LP (``SEI Fund''), Providence Debt Fund III L.P. (``Fund III''),
Providence Debt Fund III Master (Non-US) L.P. (``Fund III Offshore''),
Benefit Street Partners Capital Opportunity Fund L.P. (``BSP Capital
Fund''), Benefit Street Partners Capital Opportunity Fund II L.P.
(``BSP Capital Fund II''), Benefit Street Partners SMA LM L.P.
(``Benefit Street LM''), Benefit Street Partners SMA-C L.P. (``Benefit
Street SMA-C''), Benefit Street Partners Senior Secured Opportunities
Fund L.P. (``Benefit Street Senior Secured''), Benefit Street Partners
Senior Secured Opportunities Master Fund (Non-US) L.P. (``Benefit
Street Senior Secured Offshore''), Benefit Street Partners Senior
Secured Opportunities (U) Fund (Non-US) L.P. (``Opportunities (U)
Fund''), Benefit Street Partners Senior Secured Opportunities (U)
Master Fund (Non-US) L.P. (``Opportunities (U) Master Fund''), BSP
Special Situations Master A L.P. (``BSP Master A''), BSP Special
Situations Master B L.P. (``BSP Master B''), Benefit Street Partners
Debt Fund IV L.P. (``Fund IV''), Benefit Street Partners Debt Fund IV
Master (Non-US) L.P. (``Fund IV Offshore''), Benefit Street Partners
SMA-T L.P. (``SMA-T'' and each of Fund II, Strategic Funding, SEI Fund,
Fund III, Fund III Offshore, BSP Capital Fund, BSP Capital Fund II,
Benefit Street LM, Benefit Street SMA-C, Benefit Street Senior Secured,
Benefit Street Senior Secured Offshore, Opportunities (U) Fund,
Opportunities (U) Master Fund, BSP Master A, BSP Master B, Fund IV and
Fund IV Offshore is referred to as an ``Existing Affiliated Fund'' and
collectively, the ``Existing Affiliated Funds''), Providence Equity
Capital Markets L.L.C. (``Fund II Affiliated Adviser''), Benefit Street
Partners L.L.C. (``BSP Adviser''), BDCA Adviser, LLC (``BDCA
Adviser''), and SEI Investments Management Corporation (``SEI
Adviser'').
Filing Dates: The application was filed on January 15, 2016, and
amended on January 9, 2017, June 23, 2017, and December 13, 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 April 30, 2018, 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: Secretary, U.S. Securities and Exchange Commission, 100 F
St. NE, Washington, DC 20549-1090. Applicants: BSP BDC, Providence
Flexible Credit, BDCA, Fund II, Strategic Funding, Fund III, Fund III
Offshore, BSP Capital Fund, BSP Capital Fund II, Benefit Street LM,
Benefit Street SMA-C, Benefit Street Senior Secured, Benefit Street
Senior Secured Offshore, Opportunities (U) Fund, Opportunities (U)
Master Fund, BSP Master A, BSP Master B, Fund IV, Fund IV Offshore,
SMA-T, Fund II Affiliated Adviser, BSP Adviser, and BDCA Adviser, 9
West 57th Street, 49th Floor, New York, NY 10019; SEI Fund and SEI
Adviser, One Freedom Valley Drive, Oaks, PA 19456.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879 or Robert H. Shapiro, 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 website by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. BSP BDC is a Maryland corporation organized as a closed-end
management investment company that intends to elect to be regulated as
a BDC under section 54(a) of the Act.\1\ BSP BDC's Objectives and
Strategies \2\ are to generate both current income and capital
appreciation by primarily investing in secured debt, unsecured debt, as
well as related equity securities issued by private U.S. middle market
companies. The board of directors (``Board'') of BSP BDC will be
comprised of five directors, three of whom will be persons who are not
``interested persons'' of BSP BDC as defined in section 2(a)(19) of the
Act (``Non-Interested Directors'').
---------------------------------------------------------------------------
\1\ Section 2(a)(48) defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
\2\ ``Objectives and Strategies'' means a Regulated Fund's
investment objectives and strategies, as described in the Regulated
Fund's registration statement on Form N-2, other filings the
Regulated Fund has made with the Commission under the Securities Act
of 1933 (the ``Securities Act''), or under the Securities Exchange
Act of 1934, and the Regulated Fund's reports to shareholders.
---------------------------------------------------------------------------
2. Providence Flexible Credit is a Massachusetts business trust
organized as closed-end investment company registered under the Act.
Providence Flexible Credit's Objectives and Strategies are to seek
total return through a combination of current income and capital
appreciation. Providence Flexible Credit will seek to achieve its
investment objective by investing primarily in a portfolio of (i)
secured loans made primarily to companies whose debt is below
investment grade quality; (ii) corporate
[[Page 15649]]
bonds that are expected to be primarily high yield issues of below
investment grade quality; and (iii) debt investment opportunities in
middle market companies in the United States that are of below
investment grade quality. Providence Flexible Credit will have a Board
with a majority of trustees that are Non-Interested Directors.
3. BDCA is a Maryland corporation organized as a closed-end
management investment company that has elected to be regulated as a BDC
under the Act. BDCA's Objectives and Strategies are to generate both
current income and capital appreciation by primarily investing in
senior secured loans and mezzanine debt issued by middle market
companies. BDCA's Board consists of seven members, a majority of whom
are Non-Interested Directors.
4. Each of the Affiliated Funds (defined below) would be an
investment company but for section 3(c)(1) or 3(c)(7) of the Act. Each
Affiliated Fund has, or will have, investment objectives and strategies
that are similar to or that overlap with the Regulated Funds'
Objectives and Strategies.
5. Fund II Affiliated Adviser, BSP Adviser, and BDCA Adviser are
each Delaware limited liability companies registered as investment
advisers under the Investment Advisers Act of 1940 (the ``Advisers
Act''). Applicants state that the Providence Advisers (defined below)
are controlled by their principal owners (the ``Principals'') and are
thus affiliated persons of each other as described by section
2(a)(3)(C) of the Act. Fund II Affiliated Adviser serves as investment
adviser to Fund II and Strategic Funding. BSP Adviser serves as
investment adviser to BSP BDC, Providence Flexible Credit, Fund III,
Fund III Offshore, BSP Capital Fund, BSP Capital Fund II, Benefit
Street LM, Benefit Street SMA-C, Benefit Street Senior Secured, Benefit
Street Senior Secured Offshore, Opportunities (U) Fund, Opportunities
(U) Master Fund, BSP Master A, BSP Master B, Fund IV, Fund IV Offshore,
and SMA-T. In addition, BSP Adviser serves as sub-adviser to SEI Fund,
whose investment adviser, SEI Adviser, is not affiliated with BSP
Adviser. BDCA Adviser serves as investment adviser to BDCA.
6. SEI Adviser is a Delaware corporation registered as an
investment adviser under the Advisers Act. SEI Adviser serves as
investment adviser to SEI Fund. As noted above, BSP Adviser serves as
Sub-Adviser to SEI Fund. SEI Adviser is not an affiliated person of any
Providence Adviser.
7. Applicants seek to supersede the Prior Order \3\ to permit one
or more Regulated Funds \4\ and/or one or more Affiliated Funds \5\ 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; \6\ 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, as defined below)
participated together with one or more other Regulated Funds and/or one
or more Affiliated Funds in reliance on the requested Order.
``Potential Co-Investment Transaction'' means any investment
opportunity in which a Regulated Fund (or its Wholly-Owned Investment
Sub) could not participate together with one or more Affiliated Funds
and/or one or more other Regulated Funds without obtaining and relying
on the Order.\7\
---------------------------------------------------------------------------
\3\ The requested order (the ``Order'') would supersede an
exemptive order issued by the Commission on June 23, 2015 (the
``Prior Order'') that was granted pursuant to sections 57(a)(4) and
57(i) and rule 17d-1, with the result that no person will continue
to rely on the Prior Order if the Order is granted. Benefit Street
Partners BDC, Inc., et al., Investment Company Act Release Nos.
31651 (May 27, 2015) (notice) and 31686 (Jun. 23, 2015) (order).
\4\ ``Regulated Fund'' means any 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 Act or has elected to be regulated as a BDC, (b) whose
investment adviser is a Providence Adviser, and (c) that intends to
participate in the Co-Investment Program. The term ``Providence
Adviser'' means (a) BSP Adviser, (b) BDCA Adviser, (c) Fund II
Affiliated Adviser, and (d) any future investment adviser, other
than Providence Equity Partners L.L.C., that controls, is controlled
by or is under common control with BSP Adviser, BDCA Adviser and
Fund II Affiliated Adviser and is registered under the Advisers Act.
The term ``Adviser'' means any Providence Adviser and SEI Adviser.
Providence Equity Partners L.L.C. is excluded from the definition of
Adviser because none of its clients will participate in any Co-
Investment Transaction.
\5\ ``Affiliated Fund'' means (a) the Existing Affiliated Funds
and (b) any Future Affiliated Fund. ``Future Affiliated Fund'' means
any entity (a) whose investment adviser is a Providence 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.
\6\ 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.
\7\ All existing entities that currently intend to rely upon the
requested Order have been named as applicants. Any other existing or
future entity that subsequently relies on the Order will comply with
the terms and conditions of the application.
---------------------------------------------------------------------------
8. Applicants state that a Regulated Fund may, from time to time,
form a Wholly-Owned Investment Sub.\8\ Such a subsidiary would be
prohibited from investing in a Co-Investment Transaction with any
Affiliated Fund or Regulated 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 requested order, as though the parent
Regulated Fund were participating directly. Applicants represent that
this treatment is justified because a Wholly-Owned Investment Sub would
have no purpose other than serving as a holding vehicle for the
Regulated Fund's investments and, therefore, no conflicts of interest
could arise between the Regulated Fund and the Wholly-Owned Investment
Sub. The Regulated Fund's Board would make all relevant determinations
under the conditions with regard to a Wholly-Owned Investment Sub's
participation in a Co-Investment Transaction, and the Regulated Fund's
Board would be informed of, and take into consideration, any proposed
use of a Wholly-Owned Investment Sub in the Regulated Fund's place. If
the Regulated Fund proposes to participate in the same Co-Investment
Transaction with any of its Wholly-Owned Investment Subs, the Board
will also be informed of, and take into consideration, the relative
participation of the Regulated Fund and the Wholly-Owned Investment
Sub.
---------------------------------------------------------------------------
\8\ 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 holding, beneficially and of record, 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.
---------------------------------------------------------------------------
9. When considering Potential Co-Investment Transactions for any
Regulated Fund, the Adviser (or Advisers if there are more than one)
will consider only the Objectives and
[[Page 15650]]
Strategies, investment policies, investment positions, capital
available for investment (``Available Capital''), and other pertinent
factors applicable to that Regulated Fund. The Advisers expect that any
portfolio company that is an appropriate investment for a Regulated
Fund should also be an appropriate investment for one or more other
Regulated Funds and/or one or more Affiliated Funds, with certain
exceptions based on Available Capital or diversification. The Regulated
Funds, however, will not be obligated to invest, or co-invest, when
investment opportunities are referred to them.
10. Applicants state that SEI Adviser serves as investment adviser
to SEI Fund, while BSP Adviser serves as sub-adviser. Applicants
represent that SEI Adviser is responsible for the overall management of
SEI Fund's activities, and BSP Adviser is responsible for the day-to-
day management of SEI Fund's investment portfolio. Applicants represent
that although BSP Adviser identifies and recommends investments for SEI
Fund, SEI Adviser has ultimate authority with respect to SEI Fund's
investments.
11. Applicants represent that each Providence Adviser has adopted
allocation policies and procedures which are designed to allocate
investment opportunities fairly and equitably among their clients over
time. Applicants state that in the case of a Potential Co-Investment
Transaction, the applicable Providence Adviser applies its allocation
policies and procedures in determining the proposed allocation for the
applicable Regulated Fund consistent with the requirements of condition
2(a). Applicants state that, as a result, all Potential Co-Investment
Transactions that are presented to any Providence Adviser would also be
presented to each Providence Adviser advising or sub-advising a
Regulated Fund, which, as required by condition 1, would make an
independent determination of the appropriateness of the investments for
such Regulated Fund.
12. 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 applicable Adviser(s) will
present each Potential Co-Investment Transaction and the proposed
allocation to the directors of the Board eligible to vote under section
57(o) of the Act (``Eligible Directors''), and the ``required
majority,'' as defined in section 57(o) of the Act (``Required
Majority'') \9\ will approve each Co-Investment Transaction prior to
any investment by the participating Regulated Fund.
---------------------------------------------------------------------------
\9\ In the case of a Regulated Fund that is a registered closed-
end fund, the Board members that make up the Required Majority will
be determined as if the Regulated Fund were a BDC subject to section
57(o).
---------------------------------------------------------------------------
13. 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 Fund in such disposition is proportionate to its outstanding
investments in the issuer immediately preceding the disposition or
Follow-On Investment, as the case may be; and (ii) the Board of the
Regulated Fund has approved that Regulated Fund's participation in pro
rata dispositions and Follow-On Investments as being in the best
interests of the Regulated Fund. If the Board does not so approve, any
such disposition or Follow-On Investment will be submitted to the
Regulated Fund's Eligible Directors. The Board of any Regulated Fund
may at any time rescind, suspend or qualify its approval of pro rata
dispositions and Follow-On Investments with the result that all
dispositions and/or Follow-On Investments must be submitted to the
Eligible Directors.
14. No Non-Interested Director 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.
15. Under condition 15, if the Providence Advisers, the Principals,
or any person controlling, controlled by, or under common control with
the Providence Advisers or the Principals, and the Affiliated Funds
(collectively, the ``Holders'') own in the aggregate more than 25% of
the outstanding voting securities of 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 Non-
Interested Directors will act independently in evaluating the Co-
Investment Program, because the ability of the Providence Advisers or
the Principals to influence the Independent Directors by a suggestion,
explicit or implied, that the Non-Interested Directors can be removed
will be limited significantly. Applicants represent that the Non-
Interested Directors will evaluate and approve any such independent
party, taking into account its qualifications, reputation for
independence, cost to the shareholders, and other factors that they
deem relevant.
Applicants' Legal Analysis
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
participation by a registered investment company and an affiliated
person in any ``joint enterprise or other joint arrangement or profit-
sharing plan,'' as defined in the rule, without prior approval by the
Commission by order upon application. 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. Similarly, with regard to
BDCs, section 57(a)(4) of the Act generally prohibits certain persons
specified in section 57(b) from participating in joint transactions
with the BDC or a company controlled by the 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.
2. 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 submit that each of the other Regulated Funds and the
Affiliated Funds may be deemed to be affiliated persons of a Regulated
Fund within the meaning of section 2(a)(3)(C) of the Act by reason of
common control because (i) a Providence Adviser may be deemed to
control each of the Existing Regulated Funds and the Existing
Affiliated Funds, (ii) a Providence Adviser may be deemed to control
any Future Regulated Funds or Future Affiliated Funds, (iii) the
Providence Advisers are owned and controlled by the Principals and (iv)
a Providence Adviser sub-advises SEI Fund and, therefore, SEI Fund may
be deemed to be under common control with the Existing Regulated Funds.
As a result, a Regulated Fund and one or more other
[[Page 15651]]
Regulated Funds and/or one or more Affiliated Funds would be prohibited
from participating in Co-Investment Transactions by sections 17(d) or
57(a)(4) of the Act, and rule 17d-1 of the Act.
4. 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. Applicants believe that the proposed terms and
conditions of the application 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 would be done in
a manner that is not different from, or less advantageous than, that of
other participants.
Applicants' Conditions
Applicants agree that the Order will be subject to the following
conditions:
1. Each time a Providence Adviser considers a Potential Co-
Investment Transaction for an Affiliated Fund or another Regulated Fund
that falls within a Regulated Fund's then-current Objectives and
Strategies, each Adviser to the Regulated Fund 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 each Adviser to a Regulated Fund deems the participation
in any Potential Co-Investment Transaction to be appropriate for the
Regulated Fund, the Adviser (or Advisers if there are more than one)
will then determine an appropriate level of investment for the
Regulated Fund.
(b) If the aggregate amount recommended by the Adviser (or Advisers
if there are more than one) to a Regulated Fund to be invested by the
Regulated Fund in the Potential Co-Investment Transaction, together
with the amount proposed to be invested by the other participating
Regulated Funds and Affiliated Funds, collectively, in the same
transaction, exceeds the amount of the investment opportunity, the
investment opportunity will be allocated among them pro rata based on
each participant's Available Capital, up to the amount proposed to be
invested by each. The Adviser (or Advisers if there are more than one)
to each participating Regulated Fund will provide the Eligible
Directors of each participating Regulated Fund with information
concerning each participating party's Available Capital to assist the
Eligible Directors with their review of the Regulated Fund's
investments for compliance with these allocation procedures.
(c) After making the determinations required in conditions 1 and
2(a), the Adviser to the Regulated Fund (or Advisers if there are more
than one) will distribute written information concerning the Potential
Co-Investment Transaction (including the amount proposed to be invested
by each participating Regulated Fund and Affiliated Fund) to the
Eligible Directors 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 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 any other Regulated Funds or any Affiliated
Funds would not disadvantage the Regulated Fund, and participation by
the Regulated Fund would not be on a basis different from or less
advantageous than that of other Regulated Funds or Affiliated Funds;
provided that, if any other Regulated Fund or Affiliated Fund, but not
the Regulated Fund itself, gains the right to nominate a director for
election to a portfolio company's board of directors or the right to
have a board observer or any similar right to participate in the
governance or management of the portfolio company, such event shall not
be interpreted to prohibit the Required Majority from reaching the
conclusions required by this condition (2)(c)(iii), if:
(A) The Eligible Directors will have the right to ratify the
selection of such director or board observer, if any;
(B) the Adviser to the Regulated Fund (or Advisers if there are
more than one) 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 Fund or any
Regulated Fund or any affiliated person of any Affiliated Fund or
Regulated Fund receives in connection with the right of an Affiliated
Fund 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 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 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 Adviser to the Regulated Fund (or Advisers if there are more
than one) will present to the Board of each Regulated Fund, on a
quarterly basis, a record of all investments in Potential Co-Investment
Transactions made by any of the other Regulated Funds or Affiliated
Funds during the preceding quarter that fell within the Regulated
Fund's then-current Objectives and Strategies that were not made
available to the Regulated Fund, and an explanation of why the
investment opportunities were not offered to the Regulated Fund. All
information presented to the Board pursuant to this condition will be
kept for the life of the Regulated Fund and at least two years
thereafter, and will be subject to examination by the Commission and
its staff.
5. Except for Follow-On Investments made in accordance with
condition 8,\10\
[[Page 15652]]
a Regulated Fund will not invest in reliance on the Order in any issuer
in which another Regulated Fund, Affiliated Fund, or any affiliated
person of another Regulated Fund or Affiliated Fund is an existing
investor.
---------------------------------------------------------------------------
\10\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
---------------------------------------------------------------------------
6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of
securities to be purchased, settlement date, and registration rights
will be the same for each participating Regulated Fund and Affiliated
Fund. The grant to an Affiliated 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 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 Providence
Adviser will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest
practical time; and
(ii) formulate a recommendation as to participation by each
Regulated Fund in the disposition.
(b) Each Regulated Fund will have the right to participate in such
disposition on a proportionate basis, at the same price and on the same
terms and conditions as those applicable to the participating
Affiliated 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 Fund in such
disposition is proportionate to its outstanding investments in the
issuer immediately preceding the disposition; (ii) the Board of the
Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in such dispositions on a pro
rata basis (as described in greater detail in the application); and
(iii) the Board of the Regulated Fund is provided on a quarterly basis
with a list of all dispositions made in accordance with this condition.
In all other cases, the Adviser to the Regulated Fund (or Advisers if
there are more than one) 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 Fund and each Regulated Fund will bear its own
expenses in connection with any such disposition.
8. (a) If any Affiliated 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 Providence
Adviser will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest
practical time; and
(ii) formulate a recommendation as to the proposed participation,
including the amount of the proposed Follow-On Investment, by each
Regulated Fund.
(b) A Regulated Fund may participate in such Follow-On Investment
without obtaining prior approval of the Required Majority if: (i) The
proposed participation of each Regulated Fund and each Affiliated Fund
in such investment is proportionate to its outstanding investments in
the issuer immediately preceding the Follow-On Investment; and (ii) the
Board of the Regulated Fund has approved as being in the best interests
of the Regulated Fund the ability to participate in Follow-On
Investments on a pro rata basis (as described in greater detail in the
application). In all other cases, the Adviser to the Regulated Fund (or
Advisers if there are more than one) 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 Affiliated
Funds' and the Regulated Funds' outstanding investments immediately
preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by the Adviser(s) to be
invested by each Regulated Fund in the Follow-On Investment, together
with the amount proposed to be invested by the participating Affiliated
Funds in the same transaction, exceeds the amount of the opportunity;
then the amount invested by each such party will be allocated among
them pro rata based on each participant'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 Non-Interested Directors of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Funds or Affiliated Funds that the
Regulated Fund considered but declined to participate in, so that the
Non-Interested Directors may determine whether all investments made
during the preceding quarter, including those investments that the
Regulated Fund considered but declined to participate in, comply with
the conditions of the Order. In addition, the Non-Interested Directors
will consider at least annually the continued appropriateness for the
Regulated Fund of participating in new and existing Co-Investment
Transactions.
10. Each Regulated Fund will maintain the records required by
section 57(f)(3) of the Act as if each of the Regulated Funds were a
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 Director of a Regulated Fund will also be a
director, general partner, managing member or principal, or otherwise
an ``affiliated person'' (as defined in the Act) of an Affiliated Fund.
12. The expenses, if any, associated with acquiring, holding or
disposing of any securities acquired in a Co-Investment Transaction
(including, without limitation, the expenses of the distribution of any
such securities registered for sale under the Securities Act) will, to
the extent not payable by the Advisers under their respective
investment advisory agreements with the Affiliated Funds and the
Regulated Funds, be shared by the Regulated Funds and the Affiliated
Funds in proportion to the relative amounts of the securities held or
to be acquired or disposed of, as the case may be.
13. Any transaction fee \11\ (including break-up or commitment fees
but excluding broker's fees contemplated by section 17(e) or 57(k) of
the Act, as
[[Page 15653]]
applicable), received in connection with a Co-Investment Transaction
will be distributed to the participating Regulated Funds and Affiliated
Funds on a pro rata basis based on the amounts they invested or
committed, as the case may be, in such Co-Investment Transaction. If
any transaction fee is to be held by 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 Funds based on the amounts
they invest in such Co-Investment Transaction. None of the Affiliated
Funds, the Advisers, the other Regulated Funds or any affiliated person
of the Regulated Funds or Affiliated Funds will receive additional
compensation or remuneration of any kind as a result of or in
connection with a Co-Investment Transaction (other than (a) in the case
of the Regulated Funds and Affiliated Funds, the pro rata transaction
fees described above and fees or other compensation described in
condition 2(c)(iii)(C), and (b) in the case of an Adviser, investment
advisory fees paid in accordance with the agreement between the Adviser
and the Regulated Fund or Affiliated Fund).
---------------------------------------------------------------------------
\11\ Applicants are not requesting and the staff of the
Commission is not providing any relief for transaction fees received
in connection with any Co-Investment Transaction.
---------------------------------------------------------------------------
14. If the Holders own in the aggregate more than 25% of the Shares
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
directors; (2) the removal of one or more directors; 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 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. 2018-07430 Filed 4-10-18; 8:45 am]
BILLING CODE 8011-01-P
