AB Private Credit Investors Corp., et al., 32699-32704 [2018-14963]
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Federal Register / Vol. 83, No. 135 / Friday, July 13, 2018 / Notices
Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
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I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.40.
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
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deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: CP2018–266; Filing
Title: Notice of United States Postal
Service of Filing a Functionally
Equivalent Global Expedited Package
Services 7 Negotiated Service
Agreement and Application for NonPublic Treatment of Materials Filed
Under Seal; Filing Acceptance Date:
July 9, 2018; Filing Authority: 39 CFR
3015.5; Public Representative:
Christopher C. Mohr; Comments Due:
July 17, 2018.
2. Docket No(s).: MC2018–191 and
CP2018–267; Filing Title: USPS Request
to Add Priority Mail Contract 453 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: July 9, 2018; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3020.30 et seq., and 39 CFR 3015.5;
Public Representative: Christopher C.
Mohr, Comments Due: July 17, 2018.
This Notice will be published in the
Federal Register.
32699
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83456; File No. SR–LCH
SA–2018–003]
Self-Regulatory Organizations; LCH
SA; Notice of Filing of Proposed Rule
Change Relating to Liquidity Risk
Management
June 18, 2018.
Correction
In notice document 2018–13378
beginning on page 29146 in the issue of
Friday, June 22, 2018, make the
following change:
On page 29148, in the second column,
in line 43, ‘‘July 12, 2018’’ should read
‘‘July 13, 2018’’.
[FR Doc. C1–2018–13378 Filed 7–12–18; 8:45 am]
BILLING CODE 1301–00–D
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33152; File No. 812–14925]
Stacy L. Ruble,
Secretary.
[FR Doc. 2018–14987 Filed 7–12–18; 8:45 am]
BILLING CODE 7710–FW–P
AB Private Credit Investors Corp., et al.
July 9, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
POSTAL SERVICE
Product Change—Priority Mail
Negotiated Service Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: July 13,
2018.
FOR FURTHER INFORMATION CONTACT:
Maria W. Votsch, 202–268–6525.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on July 9, 2018, it
filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Contract 453 to
Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2018–191, CP2018–267.
SUMMARY:
Maria W. Votsch,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2018–14969 Filed 7–12–18; 8:45 am]
BILLING CODE 7710–12–P
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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 business
development companies (‘‘BDCs’’) to coinvest in portfolio companies with each
other and with certain affiliated
investment funds and accounts.1
APPLICANTS: AB Private Credit Investors
Corporation (‘‘AB BDC I’’); AB Private
Credit Investors Middle Market Direct
Lending Fund, L.P. (‘‘AB PCI Fund I’’);
AB Energy Opportunity Fund, L.P. (‘‘AB
Energy Fund,’’ and together with AB
PCI Fund I, the ‘‘Existing Affiliated
Funds’’); AB Private Credit Investors,
LLC (‘‘AB–PCI’’) on behalf of itself and
1 The requested order (‘‘Order’’) would supersede
an exemptive order issued by the Commission on
October 11, 2016 (In the Matter of AB Private Credit
Investors Corporation, et al., Investment Company
Act Release Nos. 32261 (Sept. 13, 2016) (notice) and
32310 (Oct. 11, 2016) (order) (the ‘‘Prior Order’’),
with the result that no person will continue to rely
on the Prior Order if the Order is granted.
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its successors; 2 and AXA Equitable Life
Insurance Company (‘‘AXA Equitable’’).
FILING DATES: The application was filed
on June 28, 2018. Applicants have
agreed to file an amendment during the
notice period, the substance of which is
reflected in this notice.
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 August 3, 2018, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F St.
NE, Washington, DC 20549–1090.
Applicants: J. Brent Humphries, AB
Private Credit Investors LLC, 1345
Avenue of the Americas, New York, NY
10105.
FOR FURTHER INFORMATION CONTACT:
Stephan N. Packs, Senior Counsel, at
(202) 551–6853 or David J. Marcinkus,
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
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1. AB BDC I, a Maryland corporation,
is organized as a closed-end
management investment company that
has elected to be regulated as a BDC
under section 54(a) of the Act.3 AB BDC
2 The term ‘‘successor,’’ as applied to any AB–PCI
Adviser (defined below), means an entity that
results from a reorganization into another
jurisdiction or change in the type of business
organization.
3 Section 2(a)(48) defines a business development
company (BDC) to be any closed-end investment
company that operates for the purpose of making
investments in securities described in sections
55(a)(1) through 55(a)(3) of the Act and makes
available significant managerial assistance with
respect to the issuers of such securities.
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I’s Objectives and Strategies 4 are to
principally generate current income
through direct investments in private
loans and notes and, to a lesser extent,
long-term capital appreciation through
private equity investments.
2. The board of directors of AB BDC
I is comprised of five directors. The AB
BDC I Board and any board of directors
of a Future Regulated Fund (each a
‘‘Board’’) will be comprised of directors,
a majority of whom will not be
‘‘interested persons’’ within the
meaning of Section 2(a)(19) of the Act
(the ‘‘Non-Interested Directors’’), of AB
BDC I or any Future Regulated Fund, as
applicable.
3. AB PCI Fund I is a Delaware
limited partnership that is exempt from
registration pursuant to section 3(c)(7)
of the Act. AB PCI Fund I’s investment
objective and strategies are to generate
both current income and long-term
capital appreciation through debt and
equity investments.
4. AB Energy Fund is a Delaware
limited partnership that is exempt from
registration pursuant to section 3(c)(7)
of the Act. AB Energy Fund’s
investment objective and strategies are
to generate attractive risk-adjusted
returns, through current income and
capital gains, by capitalizing on private
and public debt and equity investment
opportunities in North American oil and
gas producers.
5. AB–PCI, a Delaware limited
liability company, is registered with the
Commission as an investment adviser
under the Investment Advisers Act of
1940 (the ‘‘Advisers Act’’). AB–PCI is a
wholly-owned subsidiary of
AllianceBernstein L.P., a New York
based global asset management firm.
AB–PCI is the investment adviser to
each of AB BDC I and the Existing
Affiliated Funds. AB–PCI also advises
certain Affiliated Managed Accounts
that may participate in the CoInvestment Program, including the
Existing Affiliated Managed Accounts.5
4 ‘‘Objectives and Strategies’’ means a Regulated
Fund’s (defined below) investment objectives and
strategies, as described in the Regulated Fund’s
registration statement on Form N–2 or Form 10–
12G, as applicable, 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.
5 ‘‘Existing Affiliated Managed Accounts’’ means
one or more investment accounts that have been
established by AXA Equitable, and that are advised
by: (i) AB–PCI; and (ii) any future investment
adviser that is controlled by AB–PCI and is
registered as an investment adviser under the
Advisers Act (‘‘AB–PCI Adviser’’).
‘‘Affiliated Managed Account’’ means: (i) The
Existing Affiliated Managed Accounts; and (ii) any
Future Affiliated Managed Account. ‘‘Future
Affiliated Managed Account’’ means an account: (i)
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6. AXA Equitable is a stock life
insurance corporation organized under
the laws of New York, and is the
indirect parent company of AB–PCI.6
AXA Equitable has established an
Existing Affiliated Managed Account,
and may from time to time establish
Future Affiliated Managed Accounts,
advised by an AB–PCI Adviser.7
7. Applicants seek an order (‘‘Order’’)
to permit a Regulated Fund 8 and one or
more Regulated Funds and/or one or
more Affiliated Funds 9 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) coinvesting with each other in securities
issued by issuers in private placement
transactions in which an AB–PCI
Adviser negotiates terms in addition to
price, 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’’).
8. The Order would amend the Prior
Order to extend the relief granted under
the Prior Order to certain Existing
Affiliated Managed Accounts and
Future Affiliated Managed Accounts
whose investment adviser is an AB–PCI
Adviser.
9. For purposes of the requested
Order, ‘‘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
For which an AB–PCI Adviser is acting as
investment adviser or sub-adviser; (b) of a person
who is a Section 57(b) affiliate of a Regulated Fund
and who would not be able to rely on Section
3(c)(1) or 3(c)(7) of the Act; and (c) that intends to
participate in the Co-Investment Program.
6 Although AXA Equitable is an indirect parent
company of AB–PCI, AB–PCI has a separate
management team from AXA Equitable and
operates as a separate and distinct business and
legal entity.
7 AXA Equitable is excluded from the definition
of investment company by Section 3(c)(3) of the
Act.
8 ‘‘Regulated Fund’’ means AB BDC I and any
Future Regulated Fund. ‘‘Future Regulated Fund’’
means any closed-end management investment
company other than AB BDC I: (i) That is registered
under the Act or has elected to be regulated as a
BDC; (ii) whose investment adviser is an AB–PCI
Adviser; and (iii) that intends to participate in the
Co-Investment Program.
9 ‘‘Affiliated Fund’’ means: (i) The Existing
Affiliated Funds; (ii) any Future Affiliated Fund;
and (iii) any Affiliated Managed Account. ‘‘Future
Affiliated Fund’’ means any entity: (i) Whose
investment adviser or sub-adviser is an AB–PCI
Adviser; (b) that would be an investment company
but for Section 3(c)(1) or 3(c)(7) of the 1940 Act; and
(c) that intends to participate in the Co-Investment
Program.
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other Regulated Funds and/or one or
more Affiliated Funds in reliance on the
requested Order. ‘‘Potential CoInvestment Transaction’’ means any
investment opportunity in which a
Regulated Fund (or its Wholly-Owned
Investment Sub, as defined below)
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.
10. Applicants state that a Regulated
Fund may, from time to time, form one
or more Wholly-Owned Investment
Subs.10 Such a subsidiary would be
prohibited from investing in a CoInvestment 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 CoInvestment Transactions in lieu of its
parent Regulated Fund and that the
Wholly-Owned Investment Sub’s
participation in any such transaction be
treated, for purposes of the requested
Order, as though the parent Regulated
Fund were participating directly. 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.
11. When considering Potential CoInvestment Transactions for any
Regulated Fund, the AB–PCI Adviser
will consider only the Objectives and
Strategies, Board-Established Criteria,11
10 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.
11 ‘‘Board-Established Criteria’’ means criteria
that the Board of a Regulated Fund may establish
from time to time to describe the characteristics of
Potential Co-Investment Transactions regarding
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investment policies, investment
positions, capital available for
investment, and other pertinent factors
applicable to that 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 Advisers 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’’) 12 will
approve each Co-Investment
Transaction prior to any investment by
the participating Regulated Fund.
13. AXA Equitable may decline the
opportunity for its Affiliated Managed
Accounts to participate in whole or in
part in a Potential Co-Investment
Transaction pursuant to AXA
Equitable’s arrangement with AB–PCI
with respect to its Affiliated Managed
Accounts. AXA Equitable does not have
the ability to cause AB–PCI to change
the allocations of any Potential CoInvestment Transaction.
14. 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.
15. No Non-Interested Director of a
Regulated Fund will have a financial
which the AB–PCI Adviser to the Regulated Fund
should be notified under Condition 1.
12 In the case of a Regulated Fund that is a
registered closed-end fund, the Board members that
make up the Required Majority will be determined
as if the Regulated Fund were a BDC subject to
Section 57(o).
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interest in any Co-Investment
Transaction, other than through share
ownership in one of the Regulated
Funds.
Applicants’ Legal Analysis:
1. Section 57(a)(4) of the Act prohibits
certain affiliated persons of a BDC from
participating in joint transactions with
the BDC or a company controlled by a
BDC in contravention of rules as
prescribed by the Commission. Under
section 57(b)(2) of the Act, any person
who is directly or indirectly controlling,
controlled by, or under common control
with a BDC is subject to section 57(a)(4).
Applicants submit that each of the
Regulated Funds and Affiliated Funds
be deemed to be a person related to each
Regulated Fund in a manner described
by section 57(b) by virtue of being under
common control. In addition, section
57(b) applies to any investment adviser
to a Regulated Fund that is a BDC and
to any section 2(a)(3)(C) affiliates of the
investment adviser, including AXA
Equitable and the Affiliated Managed
Accounts. Section 57(i) of the Act
provides that, until the Commission
prescribes rules under section 57(a)(4),
the Commission’s rules under section
17(d) of the Act applicable to registered
closed-end investment companies will
be deemed to apply to transactions
subject to section 57(a)(4). Because the
Commission has not adopted any rules
under section 57(a)(4), rule 17d–1 also
applies to joint transactions with
Regulated Funds that are BDCs. Section
17(d) of the Act and rule 17d–1 under
the Act are applicable to Regulated
Funds that are registered closed-end
investment companies.
2. Section 17(d) of the Act and rule
17d–1 under the Act prohibit affiliated
persons of a registered investment
company from participating in joint
transactions with the company unless
the Commission has granted an order
permitting such transactions. In passing
upon applications under rule 17d–1, the
Commission considers whether the
company’s participation in the joint
transaction is consistent with the
provisions, policies, and purposes of the
Act and the extent to which such
participation is on a basis different from
or less advantageous than that of other
participants.
3. Applicants state that in the absence
of the requested relief, the Regulated
Funds would be, in some
circumstances, limited in their ability to
participate in attractive and appropriate
investment opportunities. Applicants
believe that the proposed terms and
conditions will ensure that the CoInvestment Transactions are consistent
with the protection of each Regulated
Fund’s shareholders and with the
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purposes intended by the policies and
provisions of the Act. Applicants state
that the Regulated Funds’ participation
in the Co-Investment Transactions will
be consistent with the provisions,
policies, and purposes of the Act and on
a basis that is not different from or less
advantageous than that of other
participants.
4. Applicants also represent that if the
AB–PCI Adviser or its principals, or any
person controlling, controlled by, or
under common control with an AB–PCI
Adviser or its principals, and the
Affiliated Funds (collectively, the
‘‘Holders’’) own in the aggregate more
than 25 percent of the outstanding
voting securities of a Regulated Fund
(‘‘Shares’’), then the Holders will vote
such Shares as required under
Condition 14. Applicants believe that
this Condition will ensure that the NonInterested Directors will act
independently in evaluating the CoInvestment Program, because the ability
of an AB–PCI Adviser or its principals
to influence the Non-Interested
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’ Conditions:
Applicants agree that the Order will
be subject to the following Conditions:
1. Each time an AB–PCI 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 and BoardEstablished Criteria, the Regulated
Fund’s AB–PCI 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 AB–PCI Adviser deems the
Regulated Fund’s participation in any
Potential Co-Investment Transaction to
be appropriate for the Regulated Fund,
the AB–PCI Adviser will then determine
an appropriate level of investment for
the Regulated Fund.
(b) If the aggregate amount
recommended by the applicable AB–PCI
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 Funds, collectively, in the
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same transaction, exceeds the amount of
the investment opportunity, the
investment opportunity will be
allocated among the Regulated Funds
and Affiliated Funds 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 AB–
PCI Adviser to a 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
AB–PCI 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 Fund) to the Eligible Directors
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 Funds’ and Affiliated
Funds’ 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 Regulated
Fund’s shareholders; and
(B) the Regulated Fund’s then-current
Objectives and Strategies and BoardEstablished Criteria;
(iii) the investment by any other
Regulated Funds or Affiliated Funds
would not disadvantage the Regulated
Fund, and participation by the
Regulated Fund would not be on a basis
different from or less advantageous than
that of any other Regulated Fund or
Affiliated Fund; 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:
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(A) The Eligible Directors will have
the right to ratify the selection of such
director or board observer, if any;
(B) the applicable AB–PCI 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 Fund or any
Regulated Fund or any affiliated person
of any Affiliated Fund or any 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 AB–
PCI 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 sections 17(e) or
57(k) of the Act, as applicable, (C)
indirectly, as a result of an interest in
the securities issued by one of the
parties to the Co-Investment
Transaction, or (D) in the case of fees or
other compensation described in
Condition 2(c)(iii)(C).
3. Each Regulated Fund has the right
to decline to participate in any Potential
Co-Investment Transaction or to invest
less than the amount proposed.
4. The applicable AB–PCI Adviser
will present to the Board of each
Regulated Fund, on a quarterly basis, a
record of all investments in Potential
Co-Investment Transactions made by
any of the other Regulated Funds or
Affiliated Funds during the preceding
quarter that fell within the Regulated
Fund’s then-current Objectives and
Strategies and Board-Established
Criteria 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
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subject to examination by the
Commission and its staff.
5. Except for Follow-On Investments
made in accordance with Condition 8,13
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 an
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 by one or
more Regulated Funds and/or Affiliated
Funds in a Co-Investment Transaction,
the applicable AB–PCI 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 the 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 any
other Regulated Fund.
(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
13 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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16:47 Jul 12, 2018
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(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
AB–PCI Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Eligible
Directors, and the Regulated Fund will
participate in such disposition solely to
the extent that a Required Majority
determines that it is in the Regulated
Fund’s best interests.
(d) Each Affiliated 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 by the Regulated Fund and the
Affiliated Fund in a Co-Investment
Transaction, the applicable AB–PCI
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 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
AB–PCI Adviser will provide its written
recommendation as to such Regulated
Fund’s participation to the Eligible
Directors, and the Regulated Fund will
participate in such Follow-On
Investment solely to the extent that the
Required Majority determines that it is
in such 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 Funds’ outstanding
investments immediately preceding the
Follow-On Investment; and
(ii) the aggregate amount
recommended by the AB–PCI Adviser to
be invested by each Regulated Fund in
the Follow-On Investment, together
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32703
with the amount proposed to be
invested by the other participating
Regulated Funds and the 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 capital available
for investment in the asset class being
allocated, up to the amount proposed to
be invested by each.
(d) The acquisition of Follow-On
Investments as permitted by this
Condition will be considered a CoInvestment Transaction for all purposes
and subject to the other Conditions set
forth in the application.
9. The Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds or
Affiliated Funds that a 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: (i) The continued
appropriateness for such Regulated
Fund of participating in new and
existing Co-Investment Transactions;
and (ii) the continued appropriateness
of any Board-Established Criteria.
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 any
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 AB–PCI 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
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acquired or disposed of, as the case may
be.
13. Any transaction fee 14 (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k) of the Act, as
applicable) received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by an AB–PCI Adviser pending
consummation of the transaction, the
fee will be deposited into an account
maintained by such AB–PCI 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 AB–PCI 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 the Affiliated Funds, the pro rata
transaction fees described above and
fees or other compensation described in
Condition 2(c)(iii)(C); and (b) in the case
of an AB–PCI Adviser, investment
advisory fees paid in accordance with
the agreement between the AB–PCI
Adviser and the Regulated Fund or
Affiliated Fund).
14. If the Holders own in the aggregate
more than 25 percent 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 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.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018–14963 Filed 7–12–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83609; File No. SR–IEX–
2018–14]
Self-Regulatory Organizations;
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
16.160 To Remove Form 19b–4(e)
Filing Requirement
July 9, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 2 and
Rule 19b–4 thereunder,3 notice is
hereby given that, on June 26, 2018, the
Investors Exchange LLC (‘‘IEX’’ 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 self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Pursuant to the provisions of Section
19(b)(1) under the Securities Exchange
Act of 1934 (‘‘Act’’),4 and Rule 19b–4
thereunder,5 IEX is filing with the
Commission a proposed rule change to
amend IEX Rule 16.160 related to
derivative securities traded under
unlisted trading privileges (‘‘UTP’’) to
remove the requirement in Rule
16.160(a)(1) for the Exchange to file
with the Commission a Form 19b–4(e)
for each ‘‘new derivative securities
product’’ as defined in Rule 19b–4(e)
under the Act 6 (a ‘‘Derivative Security’’)
traded under UTP and renumber the
remaining provisions of Rule 16.160(a)
to maintain an organized rule structure.
The Exchange has designated this rule
change as ‘‘non-controversial’’ under
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
4 15 U.S.C. 78s(b)(1).
5 17 CRF [sic] 240.19b–4.
6 17 CRF [sic] 240.19b–4(e).
2 15
14 Applicants are not requesting and the staff is
not providing any relief for transaction fees
received in connection with any Co-Investment
Transaction.
VerDate Sep<11>2014
16:47 Jul 12, 2018
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Section 19(b)(3)(A) of the Act 7 and
provided the Commission with the
notice required by Rule 19b–4(f)(6)
thereunder.8 The text of the proposed
rule change is available at the
Exchange’s website at
www.iextrading.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 the
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statement [sic] may be
examined at the places specified in Item
IV below. The self-regulatory
organization has prepared summaries,
set forth in Sections A, B, and C below,
of the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend Rule 16.160 related
to derivative securities traded under
UTP by removing the requirement in
Rule 16.160(a)(1) for the Exchange to
file with the Commission a Form 19b–
4(e) for each Derivative Security, and
renumbering the remaining rules of Rule
16.160(a) to maintain an organized rule
structure, as described below.
Rule 16.160(a)(1) sets forth the
requirement for IEX to file with the
Commission a Form 19b–4(e) with
respect to each Derivative Security that
is traded under UTP. However, IEX
believes that it should not be necessary
to file a Form 19b–4(e) with the
Commission if it begins trading a
Derivative Security on a UTP basis,
because Rule 19b–4(e)(1) under the Act
refers to the ‘‘listing and trading’’ of a
‘‘new derivative securities product.’’
The Exchange believes that the
requirements of that rule refers [sic] to
when an exchange lists and trades a
Derivative Security, and not when an
exchange seeks only to trade such
product on a UTP basis pursuant to Rule
12f–2 under the Act.9 Therefore, IEX
proposes to delete the requirement in
current Rule 16.160(a)(1) for IEX to file
a Form 19b–4(e) with the Commission
7 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(e) [sic].
9 17 CFR 240.12f–2.
8 17
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]]>Agencies
[Federal Register Volume 83, Number 135 (Friday, July 13, 2018)]
[Notices]
[Pages 32699-32704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14963]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33152; File No. 812-14925]
AB Private Credit Investors Corp., et al.
July 9, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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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 business
development companies (``BDCs'') to co-invest in portfolio companies
with each other and with certain affiliated investment funds and
accounts.\1\
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\1\ The requested order (``Order'') would supersede an exemptive
order issued by the Commission on October 11, 2016 (In the Matter of
AB Private Credit Investors Corporation, et al., Investment Company
Act Release Nos. 32261 (Sept. 13, 2016) (notice) and 32310 (Oct. 11,
2016) (order) (the ``Prior Order''), with the result that no person
will continue to rely on the Prior Order if the Order is granted.
APPLICANTS: AB Private Credit Investors Corporation (``AB BDC I''); AB
Private Credit Investors Middle Market Direct Lending Fund, L.P. (``AB
PCI Fund I''); AB Energy Opportunity Fund, L.P. (``AB Energy Fund,''
and together with AB PCI Fund I, the ``Existing Affiliated Funds''); AB
Private Credit Investors, LLC (``AB-PCI'') on behalf of itself and
[[Page 32700]]
its successors; \2\ and AXA Equitable Life Insurance Company (``AXA
Equitable'').
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\2\ The term ``successor,'' as applied to any AB-PCI Adviser
(defined below), means an entity that results from a reorganization
into another jurisdiction or change in the type of business
organization.
FILING DATES: The application was filed on June 28, 2018. Applicants
have agreed to file an amendment during the notice period, the
---------------------------------------------------------------------------
substance of which is reflected in this notice.
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 August 3, 2018, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
St. NE, Washington, DC 20549-1090. Applicants: J. Brent Humphries, AB
Private Credit Investors LLC, 1345 Avenue of the Americas, New York, NY
10105.
FOR FURTHER INFORMATION CONTACT: Stephan N. Packs, Senior Counsel, at
(202) 551-6853 or David J. Marcinkus, 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. AB BDC I, a Maryland corporation, is organized as a closed-end
management investment company that has elected to be regulated as a BDC
under section 54(a) of the Act.\3\ AB BDC I's Objectives and Strategies
\4\ are to principally generate current income through direct
investments in private loans and notes and, to a lesser extent, long-
term capital appreciation through private equity investments.
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\3\ Section 2(a)(48) defines a business development company
(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.
\4\ ``Objectives and Strategies'' means a Regulated Fund's
(defined below) investment objectives and strategies, as described
in the Regulated Fund's registration statement on Form N-2 or Form
10-12G, as applicable, other filings the Regulated Fund has made
with the Commission under the Securities Act of 1933 (the
``Securities Act''), or under the Securities Exchange Act of 1934,
and the Regulated Fund's reports to shareholders.
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2. The board of directors of AB BDC I is comprised of five
directors. The AB BDC I Board and any board of directors of a Future
Regulated Fund (each a ``Board'') will be comprised of directors, a
majority of whom will not be ``interested persons'' within the meaning
of Section 2(a)(19) of the Act (the ``Non-Interested Directors''), of
AB BDC I or any Future Regulated Fund, as applicable.
3. AB PCI Fund I is a Delaware limited partnership that is exempt
from registration pursuant to section 3(c)(7) of the Act. AB PCI Fund
I's investment objective and strategies are to generate both current
income and long-term capital appreciation through debt and equity
investments.
4. AB Energy Fund is a Delaware limited partnership that is exempt
from registration pursuant to section 3(c)(7) of the Act. AB Energy
Fund's investment objective and strategies are to generate attractive
risk-adjusted returns, through current income and capital gains, by
capitalizing on private and public debt and equity investment
opportunities in North American oil and gas producers.
5. AB-PCI, a Delaware limited liability company, is registered with
the Commission as an investment adviser under the Investment Advisers
Act of 1940 (the ``Advisers Act''). AB-PCI is a wholly-owned subsidiary
of AllianceBernstein L.P., a New York based global asset management
firm. AB-PCI is the investment adviser to each of AB BDC I and the
Existing Affiliated Funds. AB-PCI also advises certain Affiliated
Managed Accounts that may participate in the Co-Investment Program,
including the Existing Affiliated Managed Accounts.\5\
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\5\ ``Existing Affiliated Managed Accounts'' means one or more
investment accounts that have been established by AXA Equitable, and
that are advised by: (i) AB-PCI; and (ii) any future investment
adviser that is controlled by AB-PCI and is registered as an
investment adviser under the Advisers Act (``AB-PCI Adviser'').
``Affiliated Managed Account'' means: (i) The Existing
Affiliated Managed Accounts; and (ii) any Future Affiliated Managed
Account. ``Future Affiliated Managed Account'' means an account: (i)
For which an AB-PCI Adviser is acting as investment adviser or sub-
adviser; (b) of a person who is a Section 57(b) affiliate of a
Regulated Fund and who would not be able to rely on Section 3(c)(1)
or 3(c)(7) of the Act; and (c) that intends to participate in the
Co-Investment Program.
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6. AXA Equitable is a stock life insurance corporation organized
under the laws of New York, and is the indirect parent company of AB-
PCI.\6\ AXA Equitable has established an Existing Affiliated Managed
Account, and may from time to time establish Future Affiliated Managed
Accounts, advised by an AB-PCI Adviser.\7\
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\6\ Although AXA Equitable is an indirect parent company of AB-
PCI, AB-PCI has a separate management team from AXA Equitable and
operates as a separate and distinct business and legal entity.
\7\ AXA Equitable is excluded from the definition of investment
company by Section 3(c)(3) of the Act.
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7. Applicants seek an order (``Order'') to permit a Regulated Fund
\8\ and one or more Regulated Funds and/or one or more Affiliated Funds
\9\ 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 AB-PCI Adviser
negotiates terms in addition to price, 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'').
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\8\ ``Regulated Fund'' means AB BDC I and any Future Regulated
Fund. ``Future Regulated Fund'' means any closed-end management
investment company other than AB BDC I: (i) That is registered under
the Act or has elected to be regulated as a BDC; (ii) whose
investment adviser is an AB-PCI Adviser; and (iii) that intends to
participate in the Co-Investment Program.
\9\ ``Affiliated Fund'' means: (i) The Existing Affiliated
Funds; (ii) any Future Affiliated Fund; and (iii) any Affiliated
Managed Account. ``Future Affiliated Fund'' means any entity: (i)
Whose investment adviser or sub-adviser is an AB-PCI Adviser; (b)
that would be an investment company but for Section 3(c)(1) or
3(c)(7) of the 1940 Act; and (c) that intends to participate in the
Co-Investment Program.
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8. The Order would amend the Prior Order to extend the relief
granted under the Prior Order to certain Existing Affiliated Managed
Accounts and Future Affiliated Managed Accounts whose investment
adviser is an AB-PCI Adviser.
9. For purposes of the requested Order, ``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
[[Page 32701]]
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, as defined below) 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.
10. Applicants state that a Regulated Fund may, from time to time,
form one or more Wholly-Owned Investment Subs.\10\ 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. 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.
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\10\ 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.
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11. When considering Potential Co-Investment Transactions for any
Regulated Fund, the AB-PCI Adviser will consider only the Objectives
and Strategies, Board-Established Criteria,\11\ investment policies,
investment positions, capital available for investment, and other
pertinent factors applicable to that Regulated Fund.
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\11\ ``Board-Established Criteria'' means criteria that the
Board of a Regulated Fund may establish from time to time to
describe the characteristics of Potential Co-Investment Transactions
regarding which the AB-PCI Adviser to the Regulated Fund should be
notified under Condition 1.
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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 Advisers 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'') \12\ will approve each
Co-Investment Transaction prior to any investment by the participating
Regulated Fund.
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\12\ In the case of a Regulated Fund that is a registered
closed-end fund, the Board members that make up the Required
Majority will be determined as if the Regulated Fund were a BDC
subject to Section 57(o).
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13. AXA Equitable may decline the opportunity for its Affiliated
Managed Accounts to participate in whole or in part in a Potential Co-
Investment Transaction pursuant to AXA Equitable's arrangement with AB-
PCI with respect to its Affiliated Managed Accounts. AXA Equitable does
not have the ability to cause AB-PCI to change the allocations of any
Potential Co-Investment Transaction.
14. 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.
15. No Non-Interested Director of a Regulated Fund will have a
financial interest in any Co-Investment Transaction, other than through
share ownership in one of the Regulated Funds.
Applicants' Legal Analysis:
1. Section 57(a)(4) of the Act prohibits certain affiliated persons
of a BDC from participating in joint transactions with the BDC or a
company controlled by a BDC in contravention of rules as prescribed by
the Commission. Under section 57(b)(2) of the Act, any person who is
directly or indirectly controlling, controlled by, or under common
control with a BDC is subject to section 57(a)(4). Applicants submit
that each of the Regulated Funds and Affiliated Funds be deemed to be a
person related to each Regulated Fund in a manner described by section
57(b) by virtue of being under common control. In addition, section
57(b) applies to any investment adviser to a Regulated Fund that is a
BDC and to any section 2(a)(3)(C) affiliates of the investment adviser,
including AXA Equitable and the Affiliated Managed Accounts. Section
57(i) of the Act provides that, until the Commission prescribes rules
under section 57(a)(4), the Commission's rules under section 17(d) of
the Act applicable to registered closed-end investment companies will
be deemed to apply to transactions subject to section 57(a)(4). Because
the Commission has not adopted any rules under section 57(a)(4), rule
17d-1 also applies to joint transactions with Regulated Funds that are
BDCs. Section 17(d) of the Act and rule 17d-1 under the Act are
applicable to Regulated Funds that are registered closed-end investment
companies.
2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
affiliated persons of a registered investment company from
participating in joint transactions with the company unless the
Commission has granted an order permitting such transactions. In
passing upon applications under rule 17d-1, the Commission considers
whether the company's participation in the joint transaction is
consistent with the provisions, policies, and purposes of the Act and
the extent to which such participation is on a basis different from or
less advantageous than that of other participants.
3. Applicants state that in the absence of the requested relief,
the Regulated Funds would be, in some circumstances, limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants believe that the proposed terms and
conditions will ensure that the Co-Investment Transactions are
consistent with the protection of each Regulated Fund's shareholders
and with the
[[Page 32702]]
purposes intended by the policies and provisions of the Act. Applicants
state that the Regulated Funds' participation in the Co-Investment
Transactions will be consistent with the provisions, policies, and
purposes of the Act and on a basis that is not different from or less
advantageous than that of other participants.
4. Applicants also represent that if the AB-PCI Adviser or its
principals, or any person controlling, controlled by, or under common
control with an AB-PCI Adviser or its principals, and the Affiliated
Funds (collectively, the ``Holders'') own in the aggregate more than 25
percent of the outstanding voting securities of a Regulated Fund
(``Shares''), then the Holders will vote such Shares as required under
Condition 14. 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 an AB-PCI Adviser or its
principals to influence the Non-Interested 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' Conditions:
Applicants agree that the Order will be subject to the following
Conditions:
1. Each time an AB-PCI 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 and
Board-Established Criteria, the Regulated Fund's AB-PCI 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 AB-PCI Adviser deems the Regulated Fund's
participation in any Potential Co-Investment Transaction to be
appropriate for the Regulated Fund, the AB-PCI Adviser will then
determine an appropriate level of investment for the Regulated Fund.
(b) If the aggregate amount recommended by the applicable AB-PCI
Adviser to be invested by the applicable Regulated Fund in the
Potential Co-Investment Transaction, together with the amount proposed
to be invested by the other participating Regulated Funds and
Affiliated Funds, collectively, in the same transaction, exceeds the
amount of the investment opportunity, the investment opportunity will
be allocated among the Regulated Funds and Affiliated Funds 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 AB-PCI Adviser to a 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 AB-PCI 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
Fund) to the Eligible Directors 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 Funds' and
Affiliated Funds' participation in the Potential Co-Investment
Transaction, a Required Majority concludes that:
(i) The terms of the Potential Co-Investment Transaction, including
the consideration to be paid, are reasonable and fair to the Regulated
Fund and its shareholders and do not involve overreaching in respect of
the Regulated Fund or its shareholders on the part of any person
concerned;
(ii) the Potential Co-Investment Transaction is consistent with:
(A) The interests of the Regulated Fund's shareholders; and
(B) the Regulated Fund's then-current Objectives and Strategies and
Board-Established Criteria;
(iii) the investment by any other Regulated Funds or Affiliated
Funds would not disadvantage the Regulated Fund, and participation by
the Regulated Fund would not be on a basis different from or less
advantageous than that of any other Regulated Fund or Affiliated Fund;
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 applicable AB-PCI 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 Fund or any
Regulated Fund or any affiliated person of any Affiliated Fund or any
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 AB-PCI 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 sections 17(e) or 57(k) of
the Act, as applicable, (C) indirectly, as a result of an interest in
the securities issued by one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or other compensation described
in Condition 2(c)(iii)(C).
3. Each Regulated Fund has the right to decline to participate in
any Potential Co-Investment Transaction or to invest less than the
amount proposed.
4. The applicable AB-PCI Adviser will present to the Board of each
Regulated Fund, on a quarterly basis, a record of all investments in
Potential Co-Investment Transactions made by any of the other Regulated
Funds or Affiliated Funds during the preceding quarter that fell within
the Regulated Fund's then-current Objectives and Strategies and Board-
Established Criteria 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
[[Page 32703]]
subject to examination by the Commission and its staff.
5. Except for Follow-On Investments made in accordance with
Condition 8,\13\ 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 an Affiliated
Fund is an existing investor.
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\13\ 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
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 by one or more Regulated Funds and/or Affiliated Funds in a
Co-Investment Transaction, the applicable AB-PCI 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 the
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 any other Regulated Fund.
(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 AB-PCI Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Directors, and the Regulated Fund will participate in such disposition
solely to the extent that a Required Majority determines that it is in
the Regulated Fund's best interests.
(d) Each Affiliated 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 by the Regulated Fund and the Affiliated Fund in a Co-
Investment Transaction, the applicable AB-PCI 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 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 AB-PCI Adviser will provide its
written recommendation as to such Regulated Fund's participation to the
Eligible Directors, and the Regulated Fund will participate in such
Follow-On Investment solely to the extent that the Required Majority
determines that it is in such 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 Funds' outstanding investments immediately
preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by the AB-PCI Adviser to be
invested by each Regulated Fund in the Follow-On Investment, together
with the amount proposed to be invested by the other participating
Regulated Funds and the 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 capital available for investment in the asset class being
allocated, up to the amount proposed to be invested by each.
(d) The acquisition of Follow-On Investments as permitted by this
Condition will be considered a Co-Investment Transaction for all
purposes and subject to the other Conditions set forth in the
application.
9. The Non-Interested Directors of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Funds or Affiliated Funds that a
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: (i) The continued appropriateness for
such Regulated Fund of participating in new and existing Co-Investment
Transactions; and (ii) the continued appropriateness of any Board-
Established Criteria.
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 any 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 AB-PCI 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
[[Page 32704]]
acquired or disposed of, as the case may be.
13. Any transaction fee \14\ (including break-up or commitment fees
but excluding broker's fees contemplated by section 17(e) or 57(k) of
the Act, as applicable) received in connection with a Co-Investment
Transaction will be distributed to the participating Regulated Funds
and Affiliated Funds on a pro rata basis based on the amounts they
invested or committed, as the case may be, in such Co-Investment
Transaction. If any transaction fee is to be held by an AB-PCI Adviser
pending consummation of the transaction, the fee will be deposited into
an account maintained by such AB-PCI 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 AB-PCI 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 the Affiliated Funds, the pro rata transaction fees described
above and fees or other compensation described in Condition
2(c)(iii)(C); and (b) in the case of an AB-PCI Adviser, investment
advisory fees paid in accordance with the agreement between the AB-PCI
Adviser and the Regulated Fund or Affiliated Fund).
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\14\ 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 own in the aggregate more than 25 percent 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 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.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-14963 Filed 7-12-18; 8:45 am]
BILLING CODE 8011-01-P
