Thrivent Financial for Lutherans, et al., 40587-40591 [2018-17497]

Download as PDF Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices levels at a particular venue to be excessive. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and to attract order flow. The Exchange believes that the proposed rule changes reflect this competitive environment because they modify the Exchange’s fees in a manner that encourages market participants to provide liquidity and to send order flow to the Exchange rather than remove liquidity from the market place. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,18 and Rule 19b–4(f)(2) 19 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: daltland on DSKBBV9HB2PROD with NOTICES Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– MIAX–2018–21 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–MIAX–2018–21. This file 18 15 19 17 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). VerDate Sep<11>2014 18:28 Aug 14, 2018 number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–MIAX–2018–21, and should be submitted on or before September 5, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–17493 Filed 8–14–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 33197; File No. 812–14838] Thrivent Financial for Lutherans, et al. August 9, 2018. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. AGENCY: Notice of application for an order under section 17(d) of the Investment Company Act of 1940 (the ‘‘Act’’) and rule 17d–1 under the Act to permit certain joint transactions otherwise prohibited by section 17(d) of the Act and rule 17d–1 under the Act. 20 17 Jkt 244001 PO 00000 CFR 200.30–3(a)(12). Frm 00089 Fmt 4703 Sfmt 4703 40587 Applicants request an order to permit closed-end management investment companies to co-invest in portfolio companies with each other and with certain affiliated investment funds and accounts. APPLICANTS: Thrivent Financial for Lutherans (‘‘Thrivent Financial’’), Thrivent Asset Management, LLC (‘‘Thrivent Asset Management’’ and, together with Thrivent Financial, the ‘‘Existing Advisers’’), and Thrivent Church Loan and Income Fund (‘‘Church Loan Fund’’ and, together with the Existing Advisers, the ‘‘Applicants’’). FILING DATES: The application was filed on November 1, 2017, and amended on March 28, 2018 and June 22, 2018. 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 September 4, 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: 625 Fourth Avenue South, Minneapolis, Minnesota 55415. FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202) 551– 6819, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551–6821 (Division of Investment Management, Chief Counsel’s Office). 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. SUMMARY OF APPLICATION: Applicants’ Representations 1. The Church Loan Fund is a Delaware statutory trust that will be registered as a non-diversified, closedend management investment company. The Church Loan Fund’s investment E:\FR\FM\15AUN1.SGM 15AUN1 40588 Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices daltland on DSKBBV9HB2PROD with NOTICES objective will be to seek to produce income. The Church Loan Fund expects to have a policy of investing, under normal market conditions, at least 80% of its assets in Church Loans (as defined below) and other fixed income securities. The Church Loan Fund anticipates that its board of trustees (‘‘Board’’) 1 will have five trustees, four of whom will not be ‘‘interested persons’’ as that term is defined in section 2(a)(19) of the Act.2 2. Thrivent Financial is organized and operates as a ‘‘fraternal benefit society’’ as defined under the laws of the state of Wisconsin. Thrivent Financial is an integrated, not-for-profit, Christian membership organization that provides a broad range of financial products and services. Thrivent Financial is also registered as an investment adviser under the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’). Thrivent Financial, among other investments, invests in loans to support church longterm financing, which includes construction and building related activities (‘‘Church Loans’’). These Church Loans are made by Thrivent Financial from a portion of its general account (‘‘Existing Proprietary Account’’).3 3. Thrivent Asset Management is a limited liability company organized under the laws of Delaware and is registered as an investment adviser under the Advisers Act. Thrivent Asset Management, a wholly owned indirect subsidiary of Thrivent Financial, will serve as the investment adviser to the Church Loan Fund. 4. Applicants seek an order (‘‘Order’’) to permit one or more Regulated Funds 4 and one or more Affiliated Accounts 5 to 1 The term ‘‘Board’’ refers to the board of directors or trustees of any Regulated Fund (as defined below). 2 The term ‘‘Independent Trustees’’ refers to the directors or trustees of any Regulated Fund who are not ‘‘interested persons’’ within the meaning of section 2(a)(19) of the Act. 3 ‘‘Proprietary Account’’ means the Existing Proprietary Account and any Future Proprietary Accounts. ‘‘Future Proprietary Account’’ means any direct or indirect, wholly- or majority-owned subsidiary of the Advisers that is formed in the future and, from time to time, may hold various financial assets in a principal capacity and intends to invest in the co-investment program. ‘‘Advisers’’ means (a) the Existing Advisers; and (b) any future investment adviser that controls, is controlled by, or is under common control with the Existing Advisers and is registered as an investment adviser under the Advisers Act. 4 ‘‘Regulated Funds’’ refers to the Church Loan Fund and any Future Regulated Fund. ‘‘Future Regulated Fund’’ means any closed-end management investment company formed in the future that is registered under the Act and is advised by an Adviser. 5 ‘‘Affiliated Accounts’’ means any Proprietary Accounts and Affiliated Funds. ‘‘Affiliated Fund’’ means any investment fund that would be an VerDate Sep<11>2014 18:28 Aug 14, 2018 Jkt 244001 (a) participate in the same investment opportunities through a proposed coinvestment program where such participation would otherwise be prohibited under section 17(d) of the Act; and (b) make additional investments in securities of such issuers (‘‘Follow-On Investments’’), including through the exercise of warrants, conversion privileges, and other rights to purchase securities of the issuers. ‘‘Co-Investment Transaction’’ means any transaction in which a Regulated Fund (or its Wholly-Owned Investment Subsidiary, as defined below) participate together with one or more other Regulated Funds and/or Affiliated Accounts in reliance on the requested Order. ‘‘Potential Co-Investment Transaction’’ means any investment opportunity in which a Regulated Fund (or its Wholly-Owned Investment Subsidiaries) could not participate together with one or more other Regulated Funds and/or one or more Affiliated Accounts without obtaining and relying on the Order.6 5. Applicants state that a Regulated Fund may, from time to time, form one or more Wholly-Owned Investment Subsidiaries.7 Such a subsidiary would be prohibited from investing in a CoInvestment Transaction with any other Regulated Fund or Affiliated Account because it would be a company controlled by its parent Regulated Fund for purposes of rule 17d–1. Applicants request that each Wholly-Owned Investment Subsidiary be permitted to participate in Co-Investment Transactions in lieu of its parent Regulated Fund and that the WhollyOwned Investment Subsidiary’s participation in any such transaction be treated, for purposes of the Order, as ‘‘investment company’’ but for section 3(c)(1) or 3(c)(7) of the Act, is formed in the future, and is advised by the Advisers. No Affiliated Fund is or will be a subsidiary of a Regulated Fund. 6 All existing entities that currently intend to rely upon the requested Order have been named as applicants. Any other existing or future entity that subsequently relies on the Order will comply with the terms and conditions of the application. 7 The term ‘‘Wholly-Owned Investment Subsidiary’’ means any entity: (i) That is whollyowned by a Regulated Fund (with such 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 such Regulated Fund; (iii) with respect to which the board of trustees of such Regulated Fund 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. All subsidiaries participating in Co-Investment Transactions will be Wholly-Owned Investment Subsidiaries and will have Objectives and Strategies (as defined below) that are either the same as, or a subset of, their parent Regulated Fund’s Objectives and Strategies. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 though the parent Regulated Fund were participating directly. Applicants represent that this treatment is justified because a Wholly-Owned Investment Subsidiary 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 Subsidiary. The Regulated Fund’s Board would make all relevant determinations under the conditions with regard to a Wholly-Owned Investment Subsidiary’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 Subsidiary 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 Subsidiaries, the Board will also be informed of, and take into consideration, the relative participation of the Regulated Fund and the WhollyOwned Investment Subsidiary. 6. When considering Potential CoInvestment Transactions for any Regulated Fund, the relevant Adviser will consider only the Objectives and Strategies,8 investment policies, investment positions, capital available for investment, 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 Accounts, with certain exceptions based on available capital or diversification.9 7. 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 will present each Potential CoInvestment Transaction and the proposed allocation to the trustees of the Board eligible to vote on that CoInvestment Transaction (the ‘‘Eligible Trustees’’) 10 and the majority of such trustees of the Board who are Independent Trustees (a ‘‘Required 8 The term ‘‘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 Exchange Act of 1934 or the Act, and the Regulated Fund’s reports to investors. 9 The Regulated Funds, however, will not be obligated to invest, or co-invest, when investment opportunities are referred to them. 10 Eligible Trustees may not have a financial interest in such transaction, plan, or arrangement. E:\FR\FM\15AUN1.SGM 15AUN1 daltland on DSKBBV9HB2PROD with NOTICES Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices Majority’’) will approve each CoInvestment Transaction prior to any investment by the participating Regulated Fund. 8. With respect to the pro rata dispositions and Follow-On Investments provided in conditions 7 and 8, a Regulated Fund may participate in a pro rata disposition or Follow-On Investment without obtaining prior approval of the Required Majority if, among other things: (i) The proposed participation of each Regulated Fund and each Affiliated Account 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 Trustees. 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 Trustees. 9. No Independent Trustee of a Regulated Fund will have a direct or indirect financial interest in any CoInvestment Transaction (other than indirectly through share ownership in one of the Regulated Funds), including any interest in any issuer whose securities would be acquired in a CoInvestment Transaction. 10. Under condition 16, if an Adviser, its principals, or any person controlling, controlled by, or under common control with the Adviser or its principals, and the Affiliated Accounts (collectively, the ‘‘Holders’’) own in the aggregate more than 25 percent of the outstanding voting shares of a Regulated Fund (the ‘‘Shares’’), then the Holders will vote such Shares as directed by an independent third party when voting on matters specified in the condition. Applicants believe that this condition will ensure that the Independent Trustees will act independently in evaluating the co-investment program, because the ability of an Adviser or the principals to influence the Independent Trustees by a suggestion, explicit or implied, that the Independent Trustees can be removed will be limited significantly. The Independent Trustees shall evaluate and approve any such independent third party, taking into account its qualifications, reputation for VerDate Sep<11>2014 18:28 Aug 14, 2018 Jkt 244001 independence, cost to the investors, 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 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 may be, in some circumstances, limited in their ability to participate in attractive and appropriate investment opportunities. Applicants believe that the proposed terms and conditions will ensure that the Co-Investment Transactions are consistent with the protection of each Regulated Fund’s shareholders and with the purposes intended by the policies and provisions of the Act. Applicants state that the Regulated Funds’ participation in the Co-Investment Transactions will be consistent with the provisions, policies, and purposes of the Act and on a basis that is not different from or less advantageous than that of other participants. Applicants’ Conditions Applicants agree that the Order will be subject to the following conditions: 1. Each time an Adviser considers a Potential Co-Investment Transaction for another Regulated Fund or an Affiliated Account that falls within a Regulated Fund’s then-current Objectives and Strategies, the Regulated Fund’s Adviser will make an independent determination of the appropriateness of the investment for the Regulated Fund in light of the Regulated Fund’s thencurrent circumstances. 2. (a) If the Adviser deems a Regulated Fund’s participation in any Potential Co-Investment Transaction to be appropriate for the Regulated Fund, the Adviser will then determine an appropriate level of investment for the Regulated Fund. (b) If the aggregate amount recommended by the applicable Adviser to be invested by the applicable Regulated Fund in the Potential CoInvestment Transaction together with the amount proposed to be invested by the other participating Regulated Funds PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 40589 and Affiliated Accounts, collectively, in the same transaction, exceeds the amount of the investment opportunity, the investment opportunity will be allocated among them pro rata based on each participant’s capital available for investment in the asset class being allocated, up to the amount proposed to be invested by each. The applicable Adviser will provide the Eligible Trustees of each participating Regulated Fund with information concerning each participating party’s available capital to assist the Eligible Trustees with their review of the Regulated Fund’s investments for compliance with these allocation procedures. (c) After making the determinations required in conditions 1 and 2(a), the applicable Adviser will distribute written information concerning the Potential Co-Investment Transaction (including the amount proposed to be invested by each Regulated Fund and each Affiliated Account) to the Eligible Trustees of each participating Regulated Fund for their consideration. A Regulated Fund will co-invest with another Regulated Fund or an Affiliated Account only if, prior to the Regulated Fund’s participation in the Potential CoInvestment Transaction, a Required Majority concludes that: (i) The terms of the Potential CoInvestment Transaction, including the consideration to be paid, are reasonable and fair to the Regulated Fund and its investors and do not involve overreaching in respect of the Regulated Fund or its investors on the part of any person concerned; (ii) the Potential Co-Investment Transaction is consistent with: (A) The interests of the Regulated Fund’s investors; and (B) the Regulated Fund’s then-current Objectives and Strategies; (iii) the investment by any other Regulated Funds or any Affiliated Accounts would not disadvantage the Regulated Fund, and participation by the Regulated Fund would not be on a basis different from or less advantageous than that of any other Regulated Funds or any Affiliated Accounts; provided that, if any other Regulated Fund or any Affiliated Account, but not the Regulated Fund itself gains the right to nominate a director for election to a portfolio company’s board of directors or the right to have a board observer or any similar right to participate in the governance or management of the portfolio company, such event shall not be interpreted to prohibit the Required Majority from reaching the conclusions required by this condition (2)(c)(iii), if: E:\FR\FM\15AUN1.SGM 15AUN1 daltland on DSKBBV9HB2PROD with NOTICES 40590 Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices (A) The Eligible Trustees will have the right to ratify the selection of such director or board observer, if any; and (B) the applicable Adviser agrees to, and does, provide periodic reports to the Board of the Regulated Fund with respect to the actions of such director or the information received by such board observer or obtained through the exercise of any similar right to participate in the governance or management of the portfolio company; and (C) any fees or other compensation that any Regulated Fund or any Affiliated Account or any affiliated person of any Regulated Fund or any Affiliated Account receives in connection with the right of a Regulated Fund or an Affiliated Account to nominate a director or appoint a board observer or otherwise to participate in the governance or management of the portfolio company will be shared proportionately among the participating Affiliated Accounts (who may each, in turn, share its portion with its affiliated persons) and the participating Regulated Funds in accordance with the amount of each party’s investment; and (iv) the proposed investment by the Regulated Fund will not benefit any Adviser, the other Regulated Funds, the Affiliated Accounts, or any affiliated person of any of them (other than the parties to the Co-Investment Transaction), except (A) to the extent permitted by condition 13, (B) to the extent permitted by section 17(e) of the Act, as applicable, (C) indirectly, as a result of an interest in the securities issued by one of the parties to the CoInvestment Transaction, or (D) in the case of fees or other compensation described in condition 2(c)(iii)(C). 3. Each Regulated Fund has the right to decline to participate in any Potential Co-Investment Transaction or to invest less than the amount proposed. 4. The applicable Adviser will present to the Board of each Regulated Fund, on a quarterly basis, a record of all investments in Potential Co-Investment Transactions made by any of the other Regulated Funds or Affiliated Accounts during the preceding quarter that fell within the Regulated Fund’s thencurrent Objectives and Strategies that were not made available to the Regulated Fund, and an explanation of why the investment opportunities were not offered to the Regulated Fund. All information presented to the Board pursuant to this condition will be kept for the life of the Regulated Fund and at least two years thereafter, and will be subject to examination by the Securities and Exchange Commission and its staff. VerDate Sep<11>2014 18:28 Aug 14, 2018 Jkt 244001 5. Except for Follow-On Investments made in accordance with condition 8,11 a Regulated Fund will not invest in reliance on the Order in any issuer in which another Regulated Fund, Affiliated Account, or any affiliated person of another Regulated Fund or Affiliated Account is an existing investor. 6. A Regulated Fund will not participate in any Potential CoInvestment Transaction unless the terms, conditions, price, class of securities to be purchased, settlement date and registration rights, will be the same for each participating Regulated Fund and Affiliated Account. The grant to another Regulated Fund or Affiliated Account, but not the Regulated Fund, of 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 will not be interpreted so as to violate this condition 6, if conditions 2(c)(iii)(A), (B) and (C) are met. 7. (a) If any Regulated Fund or an Affiliated Account elects to sell, exchange or otherwise dispose of an interest in a security that was acquired in a Co-Investment Transaction, the applicable Adviser will: (i) Notify each Regulated Fund that participated in the Co-Investment Transaction of the proposed disposition at the earliest practical time; and (ii) formulate a recommendation as to participation by each Regulated Fund in the disposition. (b) Each Regulated Fund will have the right to participate in such disposition on a proportionate basis, at the same price and on the same terms and conditions as those applicable to the participating Regulated Funds and Affiliated Accounts. (c) A Regulated Fund may participate in such disposition without obtaining prior approval of the Required Majority if: (i) The proposed participation of each Regulated Fund and each Affiliated Account in such disposition is proportionate to its outstanding investments in the issuer immediately preceding the disposition; (ii) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in such dispositions on a pro rata basis (as described in greater detail in the application); and (iii) the Board of the Regulated Fund is provided on a 11 This exception applies only to Follow-On Investments by a Regulated Fund in issuers in which that Regulated Fund already holds investments. PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 quarterly basis with a list of all dispositions made in accordance with this condition. In all other cases, the Adviser will provide its written recommendation as to the Regulated Fund’s participation to the Regulated Fund’s Eligible Trustees, and the Regulated Fund will participate in such disposition solely to the extent that a Required Majority determines that it is in the Regulated Fund’s best interests. (d) Each Regulated Fund and each Affiliated Account will bear its own expenses in connection with any such disposition. 8. (a) If a Regulated Fund or an Affiliated Account desires to make a Follow-On Investment in a portfolio company whose securities were acquired in a Co-Investment Transaction, the applicable 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 Account in such investment is proportionate to its outstanding investments in the issuer immediately preceding the Follow-On Investment; and (ii) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in Follow-On Investments on a pro rata basis (as described in greater detail in the application). In all other cases, the Adviser will provide its written recommendation as to the Regulated Fund’s participation to the Eligible Trustees, and the Regulated Fund will participate in such Follow-On Investment solely to the extent that a Required Majority determines that it is in the Regulated Fund’s best interests. (c) If, with respect to any Follow-On Investment: (i) The amount of a Follow-On Investment is not based on the Regulated Funds’ and the Affiliated Accounts’ outstanding investments immediately preceding the Follow-On Investment; and (ii) the aggregate amount recommended by the Adviser to be invested by each Regulated Fund in the Follow-On Investment, together with the amount proposed to be invested by the participating Affiliated Accounts in the same transaction, exceeds the E:\FR\FM\15AUN1.SGM 15AUN1 daltland on DSKBBV9HB2PROD with NOTICES Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices amount of the opportunity; then the amount invested by each such party will be allocated among them pro rata based on each party’s capital available for investment in the asset class being allocated, up to the amount proposed to be invested by each. (d) The acquisition of Follow-On Investments as permitted by this condition will be considered a CoInvestment Transaction for all purposes and subject to the other conditions set forth in the application. 9. The Independent Trustees of each Regulated Fund will be provided quarterly for review all information concerning Potential Co-Investment Transactions and Co-Investment Transactions, including investments made by other Regulated Funds and the Affiliated Accounts that the Regulated Fund considered but declined to participate in, so that the Independent Trustees may determine whether all investments made during the preceding quarter, including those investments which the Regulated Fund considered but declined to participate in, comply with the conditions of the Order. In addition, the Independent Trustees will consider at least annually the continued appropriateness for the Regulated Fund of participating in new and existing CoInvestment Transactions. 10. Each Regulated Fund will maintain the records required by section 57(f)(3) of the Act as if each of the Regulated Funds were a business development company (as defined in section 2(a)(48) of the Act) and each of the investments permitted under these conditions were approved by the Required Majority under section 57(f) of the Act. 11. No Independent Trustee of a Regulated Fund will also be a director, trustee, general partner, managing member or principal, or otherwise an ‘‘affiliated person’’ (as defined in the Act), of an Affiliated Account. 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 of 1933) will, to the extent not payable by an Adviser under the investment advisory agreements with the Regulated Funds and the Affiliated Accounts be shared by the Affiliated Accounts and the Regulated Funds in proportion to the relative amounts of the securities held or to be acquired or disposed of, as the case may be. VerDate Sep<11>2014 18:28 Aug 14, 2018 Jkt 244001 13. Any transaction fee 12 (including break-up or commitment fees but excluding broker’s fees contemplated by section 17(e) of the Act, as applicable), received in connection with a CoInvestment Transaction will be distributed to the participating Regulated Funds and Affiliated Accounts on a pro rata basis based on the amounts they invested or committed, as the case may be, in such Co-Investment Transaction. If any transaction fee is to be held by the Adviser pending consummation of the transaction, the fee will be deposited into an account maintained by the Adviser at a bank or banks having the qualifications prescribed in section 26(a)(1) of the Act, and the account will earn a competitive rate of interest that will also be divided pro rata among the participating Regulated Funds and Affiliated Accounts based on the amounts they invest in such CoInvestment Transaction. None of the Affiliated Accounts, the Advisers, the other Regulated Funds or any affiliated person of the Regulated Funds or Affiliated Accounts will receive additional compensation or remuneration of any kind as a result of or in connection with a Co-Investment Transaction (other than (a) in the case of the Regulated Funds and the Affiliated Accounts, the pro rata transaction fees described above and fees or other compensation described in condition 2(c)(iii)(C); and (b) in the case of the Advisers, investment advisory fees paid in accordance with the agreements between the Advisers and the Regulated Funds or the Affiliated Accounts). 14. The Proprietary Accounts will not be permitted to invest in a Potential CoInvestment Transaction except to the extent the demand from the Regulated Funds and the other Affiliated Accounts is less than the total investment opportunity. 15. The Advisers will each maintain policies and procedures reasonably designed to ensure compliance with the foregoing conditions. These policies and procedures will require, among other things, that the applicable Adviser will be notified of all Potential CoInvestment Transactions that fall within a Regulated Fund’s then-current Objectives and Strategies and will be given sufficient information to make its independent determination and recommendations under conditions 1, 2(a), 7 and 8. 12 Applicants are not requesting and the staff is not providing any relief for transaction fees received in connection with any Co-Investment Transaction. PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 40591 16. 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 trustees; (2) the removal of one or more trustees; or (3) all other matters under either the Act or applicable State law affecting the Board’s composition, size or manner of election. 17. Each Regulated Fund’s chief compliance officer, as defined in Rule 38a–1(a)(4) under the Act, will prepare an annual report for its Board each year that evaluates (and documents the basis of that evaluation) the Regulated Fund’s compliance with the terms and conditions of the application and the procedures established to achieve such compliance. For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–17497 Filed 8–14–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83810; File No. SR–BX– 2018–036] Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Incorporate BX Rule 7039 Into the Market Data Enterprise License Proposed by the Nasdaq Stock Market LLC August 9, 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 July 27, 2018, Nasdaq BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, 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. This amendment is immediately effective upon filing.3 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 This proposed change was initially filed on July 3, 2018, and became immediately effective on that date. See SR–BX–2018–031, available at https:// nasdaq.cchwallstreet.com/. It was subsequently refiled on July 17, 2018. See SR–BX–2018–034, available at https://nasdaq.cchwallstreet.com/. A 2 17 E:\FR\FM\15AUN1.SGM Continued 15AUN1

Agencies

[Federal Register Volume 83, Number 158 (Wednesday, August 15, 2018)]
[Notices]
[Pages 40587-40591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-17497]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33197; File No. 812-14838]


Thrivent Financial for Lutherans, et al.

August 9, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under section 17(d) of the 
Investment Company Act of 1940 (the ``Act'') and rule 17d-1 under the 
Act to permit certain joint transactions otherwise prohibited by 
section 17(d) of the Act and rule 17d-1 under the Act.

Summary of Application: Applicants request an order to permit closed-
end management investment companies to co-invest in portfolio companies 
with each other and with certain affiliated investment funds and 
accounts.

Applicants: Thrivent Financial for Lutherans (``Thrivent Financial''), 
Thrivent Asset Management, LLC (``Thrivent Asset Management'' and, 
together with Thrivent Financial, the ``Existing Advisers''), and 
Thrivent Church Loan and Income Fund (``Church Loan Fund'' and, 
together with the Existing Advisers, the ``Applicants'').

Filing Dates: The application was filed on November 1, 2017, and 
amended on March 28, 2018 and June 22, 2018.

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 September 4, 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: 625 Fourth Avenue South, 
Minneapolis, Minnesota 55415.

FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202) 
551-6819, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-
6821 (Division of Investment Management, Chief Counsel's Office).

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. The Church Loan Fund is a Delaware statutory trust that will be 
registered as a non-diversified, closed-end management investment 
company. The Church Loan Fund's investment

[[Page 40588]]

objective will be to seek to produce income. The Church Loan Fund 
expects to have a policy of investing, under normal market conditions, 
at least 80% of its assets in Church Loans (as defined below) and other 
fixed income securities. The Church Loan Fund anticipates that its 
board of trustees (``Board'') \1\ will have five trustees, four of whom 
will not be ``interested persons'' as that term is defined in section 
2(a)(19) of the Act.\2\
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    \1\ The term ``Board'' refers to the board of directors or 
trustees of any Regulated Fund (as defined below).
    \2\ The term ``Independent Trustees'' refers to the directors or 
trustees of any Regulated Fund who are not ``interested persons'' 
within the meaning of section 2(a)(19) of the Act.
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    2. Thrivent Financial is organized and operates as a ``fraternal 
benefit society'' as defined under the laws of the state of Wisconsin. 
Thrivent Financial is an integrated, not-for-profit, Christian 
membership organization that provides a broad range of financial 
products and services. Thrivent Financial is also registered as an 
investment adviser under the Investment Advisers Act of 1940 (the 
``Advisers Act''). Thrivent Financial, among other investments, invests 
in loans to support church long-term financing, which includes 
construction and building related activities (``Church Loans''). These 
Church Loans are made by Thrivent Financial from a portion of its 
general account (``Existing Proprietary Account'').\3\
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    \3\ ``Proprietary Account'' means the Existing Proprietary 
Account and any Future Proprietary Accounts. ``Future Proprietary 
Account'' means any direct or indirect, wholly- or majority-owned 
subsidiary of the Advisers that is formed in the future and, from 
time to time, may hold various financial assets in a principal 
capacity and intends to invest in the co-investment program. 
``Advisers'' means (a) the Existing Advisers; and (b) any future 
investment adviser that controls, is controlled by, or is under 
common control with the Existing Advisers and is registered as an 
investment adviser under the Advisers Act.
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    3. Thrivent Asset Management is a limited liability company 
organized under the laws of Delaware and is registered as an investment 
adviser under the Advisers Act. Thrivent Asset Management, a wholly 
owned indirect subsidiary of Thrivent Financial, will serve as the 
investment adviser to the Church Loan Fund.
    4. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds \4\ and one or more Affiliated Accounts \5\ to (a) 
participate in the same investment opportunities through a proposed co-
investment program where such participation would otherwise be 
prohibited under section 17(d) of the Act; and (b) make additional 
investments in securities of such issuers (``Follow-On Investments''), 
including through the exercise of warrants, conversion privileges, and 
other rights to purchase securities of the issuers. ``Co-Investment 
Transaction'' means any transaction in which a Regulated Fund (or its 
Wholly-Owned Investment Subsidiary, as defined below) participate 
together with one or more other Regulated Funds and/or Affiliated 
Accounts in reliance on the requested Order. ``Potential Co-Investment 
Transaction'' means any investment opportunity in which a Regulated 
Fund (or its Wholly-Owned Investment Subsidiaries) could not 
participate together with one or more other Regulated Funds and/or one 
or more Affiliated Accounts without obtaining and relying on the 
Order.\6\
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    \4\ ``Regulated Funds'' refers to the Church Loan Fund and any 
Future Regulated Fund. ``Future Regulated Fund'' means any closed-
end management investment company formed in the future that is 
registered under the Act and is advised by an Adviser.
    \5\ ``Affiliated Accounts'' means any Proprietary Accounts and 
Affiliated Funds. ``Affiliated Fund'' means any investment fund that 
would be an ``investment company'' but for section 3(c)(1) or 
3(c)(7) of the Act, is formed in the future, and is advised by the 
Advisers. No Affiliated Fund is or will be a subsidiary of a 
Regulated Fund.
    \6\ All existing entities that currently intend to rely upon the 
requested Order have been named as applicants. Any other existing or 
future entity that subsequently relies on the Order will comply with 
the terms and conditions of the application.
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    5. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly-Owned Investment Subsidiaries.\7\ Such a 
subsidiary would be prohibited from investing in a Co-Investment 
Transaction with any other Regulated Fund or Affiliated Account because 
it would be a company controlled by its parent Regulated Fund for 
purposes of rule 17d-1. Applicants request that each Wholly-Owned 
Investment Subsidiary be permitted to participate in Co-Investment 
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Subsidiary's participation in any such transaction be 
treated, for purposes of the Order, as though the parent Regulated Fund 
were participating directly. Applicants represent that this treatment 
is justified because a Wholly-Owned Investment Subsidiary 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 Subsidiary. 
The Regulated Fund's Board would make all relevant determinations under 
the conditions with regard to a Wholly-Owned Investment Subsidiary'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 Subsidiary 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 
Subsidiaries, the Board will also be informed of, and take into 
consideration, the relative participation of the Regulated Fund and the 
Wholly-Owned Investment Subsidiary.
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    \7\ The term ``Wholly-Owned Investment Subsidiary'' means any 
entity: (i) That is wholly-owned by a Regulated Fund (with such 
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 such 
Regulated Fund; (iii) with respect to which the board of trustees of 
such Regulated Fund 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. All 
subsidiaries participating in Co-Investment Transactions will be 
Wholly-Owned Investment Subsidiaries and will have Objectives and 
Strategies (as defined below) that are either the same as, or a 
subset of, their parent Regulated Fund's Objectives and Strategies.
---------------------------------------------------------------------------

    6. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the relevant Adviser will consider only the Objectives 
and Strategies,\8\ investment policies, investment positions, capital 
available for investment, 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 Accounts, with certain exceptions based on 
available capital or diversification.\9\
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    \8\ The term ``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 Exchange Act of 1934 or the Act, and the 
Regulated Fund's reports to investors.
    \9\ The Regulated Funds, however, will not be obligated to 
invest, or co-invest, when investment opportunities are referred to 
them.
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    7. 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 will present 
each Potential Co-Investment Transaction and the proposed allocation to 
the trustees of the Board eligible to vote on that Co-Investment 
Transaction (the ``Eligible Trustees'') \10\ and the majority of such 
trustees of the Board who are Independent Trustees (a ``Required

[[Page 40589]]

Majority'') will approve each Co-Investment Transaction prior to any 
investment by the participating Regulated Fund.
---------------------------------------------------------------------------

    \10\ Eligible Trustees may not have a financial interest in such 
transaction, plan, or arrangement.
---------------------------------------------------------------------------

    8. With respect to the pro rata dispositions and Follow-On 
Investments provided in conditions 7 and 8, a Regulated Fund may 
participate in a pro rata disposition or Follow-On Investment without 
obtaining prior approval of the Required Majority if, among other 
things: (i) The proposed participation of each Regulated Fund and each 
Affiliated Account 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 Trustees. 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 Trustees.
    9. No Independent Trustee of a Regulated Fund will have a direct or 
indirect financial interest in any Co-Investment Transaction (other 
than indirectly through share ownership in one of the Regulated Funds), 
including any interest in any issuer whose securities would be acquired 
in a Co-Investment Transaction.
    10. Under condition 16, if an Adviser, its principals, or any 
person controlling, controlled by, or under common control with the 
Adviser or its principals, and the Affiliated Accounts (collectively, 
the ``Holders'') own in the aggregate more than 25 percent of the 
outstanding voting shares of a Regulated Fund (the ``Shares''), then 
the Holders will vote such Shares as directed by an independent third 
party when voting on matters specified in the condition. Applicants 
believe that this condition will ensure that the Independent Trustees 
will act independently in evaluating the co-investment program, because 
the ability of an Adviser or the principals to influence the 
Independent Trustees by a suggestion, explicit or implied, that the 
Independent Trustees can be removed will be limited significantly. The 
Independent Trustees shall evaluate and approve any such independent 
third party, taking into account its qualifications, reputation for 
independence, cost to the investors, 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 
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 may be, in some circumstances, limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants believe that the proposed terms and 
conditions will ensure that the Co-Investment Transactions are 
consistent with the protection of each Regulated Fund's shareholders 
and with the purposes intended by the policies and provisions of the 
Act. Applicants state that the Regulated Funds' participation in the 
Co-Investment Transactions will be consistent with the provisions, 
policies, and purposes of the Act and on a basis that is not different 
from or less advantageous than that of other participants.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following 
conditions:
    1. Each time an Adviser considers a Potential Co-Investment 
Transaction for another Regulated Fund or an Affiliated Account that 
falls within a Regulated Fund's then-current Objectives and Strategies, 
the Regulated Fund's Adviser will make an independent determination of 
the appropriateness of the investment for the Regulated Fund in light 
of the Regulated Fund's then-current circumstances.
    2. (a) If the Adviser deems a Regulated Fund's participation in any 
Potential Co-Investment Transaction to be appropriate for the Regulated 
Fund, the Adviser will then determine an appropriate level of 
investment for the Regulated Fund.
    (b) If the aggregate amount recommended by the applicable Adviser 
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction together with the amount proposed to be invested 
by the other participating Regulated Funds and Affiliated Accounts, 
collectively, in the same transaction, exceeds the amount of the 
investment opportunity, the investment opportunity will be allocated 
among them pro rata based on each participant's capital available for 
investment in the asset class being allocated, up to the amount 
proposed to be invested by each. The applicable Adviser will provide 
the Eligible Trustees of each participating Regulated Fund with 
information concerning each participating party's available capital to 
assist the Eligible Trustees with their review of the Regulated Fund's 
investments for compliance with these allocation procedures.
    (c) After making the determinations required in conditions 1 and 
2(a), the applicable Adviser will distribute written information 
concerning the Potential Co-Investment Transaction (including the 
amount proposed to be invested by each Regulated Fund and each 
Affiliated Account) to the Eligible Trustees of each participating 
Regulated Fund for their consideration. A Regulated Fund will co-invest 
with another Regulated Fund or an Affiliated Account 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 investors and do not involve overreaching in respect of 
the Regulated Fund or its investors on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) The interests of the Regulated Fund's investors; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Funds or any Affiliated 
Accounts would not disadvantage the Regulated Fund, and participation 
by the Regulated Fund would not be on a basis different from or less 
advantageous than that of any other Regulated Funds or any Affiliated 
Accounts; provided that, if any other Regulated Fund or any Affiliated 
Account, but not the Regulated Fund itself gains the right to nominate 
a director for election to a portfolio company's board of directors or 
the right to have a board observer or any similar right to participate 
in the governance or management of the portfolio company, such event 
shall not be interpreted to prohibit the Required Majority from 
reaching the conclusions required by this condition (2)(c)(iii), if:

[[Page 40590]]

    (A) The Eligible Trustees will have the right to ratify the 
selection of such director or board observer, if any; and
    (B) the applicable Adviser agrees to, and does, provide periodic 
reports to the Board of the Regulated Fund with respect to the actions 
of such director or the information received by such board observer or 
obtained through the exercise of any similar right to participate in 
the governance or management of the portfolio company; and
    (C) any fees or other compensation that any Regulated Fund or any 
Affiliated Account or any affiliated person of any Regulated Fund or 
any Affiliated Account receives in connection with the right of a 
Regulated Fund or an Affiliated Account to nominate a director or 
appoint a board observer or otherwise to participate in the governance 
or management of the portfolio company will be shared proportionately 
among the participating Affiliated Accounts (who may each, in turn, 
share its portion with its affiliated persons) and the participating 
Regulated Funds in accordance with the amount of each party's 
investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
any Adviser, the other Regulated Funds, the Affiliated Accounts, or any 
affiliated person of any of them (other than the parties to the Co-
Investment Transaction), except (A) to the extent permitted by 
condition 13, (B) to the extent permitted by section 17(e) of the Act, 
as applicable, (C) indirectly, as a result of an interest in the 
securities issued by one of the parties to the Co-Investment 
Transaction, or (D) in the case of fees or other compensation described 
in condition 2(c)(iii)(C).
    3. Each Regulated Fund has the right to decline to participate in 
any Potential Co-Investment Transaction or to invest less than the 
amount proposed.
    4. The applicable Adviser will present to the Board of each 
Regulated Fund, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Funds or Affiliated Accounts during the preceding quarter that fell 
within the Regulated Fund's then-current Objectives and Strategies that 
were not made available to the Regulated Fund, and an explanation of 
why the investment opportunities were not offered to the Regulated 
Fund. All information presented to the Board pursuant to this condition 
will be kept for the life of the Regulated Fund and at least two years 
thereafter, and will be subject to examination by the Securities and 
Exchange Commission and its staff.
    5. Except for Follow-On Investments made in accordance with 
condition 8,\11\ a Regulated Fund will not invest in reliance on the 
Order in any issuer in which another Regulated Fund, Affiliated 
Account, or any affiliated person of another Regulated Fund or 
Affiliated Account is an existing investor.
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    \11\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
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    6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of 
securities to be purchased, settlement date and registration rights, 
will be the same for each participating Regulated Fund and Affiliated 
Account. The grant to another Regulated Fund or Affiliated Account, but 
not the Regulated Fund, of 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 will not be 
interpreted so as to violate this condition 6, if conditions 
2(c)(iii)(A), (B) and (C) are met.
    7. (a) If any Regulated Fund or an Affiliated Account elects to 
sell, exchange or otherwise dispose of an interest in a security that 
was acquired in a Co-Investment Transaction, the applicable Adviser 
will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest 
practical time; and
    (ii) formulate a recommendation as to participation by each 
Regulated Fund in the disposition.
    (b) Each Regulated Fund will have the right to participate in such 
disposition on a proportionate basis, at the same price and on the same 
terms and conditions as those applicable to the participating Regulated 
Funds and Affiliated Accounts.
    (c) A Regulated Fund may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Fund and each Affiliated Account in 
such disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Board of the 
Regulated Fund has approved as being in the best interests of the 
Regulated Fund the ability to participate in such dispositions on a pro 
rata basis (as described in greater detail in the application); and 
(iii) the Board of the Regulated Fund is provided on a quarterly basis 
with a list of all dispositions made in accordance with this condition. 
In all other cases, the Adviser will provide its written recommendation 
as to the Regulated Fund's participation to the Regulated Fund's 
Eligible Trustees, and the Regulated Fund will participate in such 
disposition solely to the extent that a Required Majority determines 
that it is in the Regulated Fund's best interests.
    (d) Each Regulated Fund and each Affiliated Account will bear its 
own expenses in connection with any such disposition.
    8. (a) If a Regulated Fund or an Affiliated Account desires to make 
a Follow-On Investment in a portfolio company whose securities were 
acquired in a Co-Investment Transaction, the applicable 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 
Account in such investment is proportionate to its outstanding 
investments in the issuer immediately preceding the Follow-On 
Investment; and (ii) the Board of the Regulated Fund has approved as 
being in the best interests of the Regulated Fund the ability to 
participate in Follow-On Investments on a pro rata basis (as described 
in greater detail in the application). In all other cases, the Adviser 
will provide its written recommendation as to the Regulated Fund's 
participation to the Eligible Trustees, and the Regulated Fund will 
participate in such Follow-On Investment solely to the extent that a 
Required Majority determines that it is in the Regulated Fund's best 
interests.
    (c) If, with respect to any Follow-On Investment:
    (i) The amount of a Follow-On Investment is not based on the 
Regulated Funds' and the Affiliated Accounts' outstanding investments 
immediately preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the Adviser to be invested 
by each Regulated Fund in the Follow-On Investment, together with the 
amount proposed to be invested by the participating Affiliated Accounts 
in the same transaction, exceeds the

[[Page 40591]]

amount of the opportunity; then the amount invested by each such party 
will be allocated among them pro rata based on each party's capital 
available for investment in the asset class being allocated, up to the 
amount proposed to be invested by each.
    (d) The acquisition of Follow-On Investments as permitted by this 
condition will be considered a Co-Investment Transaction for all 
purposes and subject to the other conditions set forth in the 
application.
    9. The Independent Trustees of each Regulated Fund will be provided 
quarterly for review all information concerning Potential Co-Investment 
Transactions and Co-Investment Transactions, including investments made 
by other Regulated Funds and the Affiliated Accounts that the Regulated 
Fund considered but declined to participate in, so that the Independent 
Trustees may determine whether all investments made during the 
preceding quarter, including those investments which the Regulated Fund 
considered but declined to participate in, comply with the conditions 
of the Order. In addition, the Independent Trustees will consider at 
least annually the continued appropriateness for the Regulated Fund of 
participating in new and existing Co-Investment Transactions.
    10. Each Regulated Fund will maintain the records required by 
section 57(f)(3) of the Act as if each of the Regulated Funds were a 
business development company (as defined in section 2(a)(48) of the 
Act) and each of the investments permitted under these conditions were 
approved by the Required Majority under section 57(f) of the Act.
    11. No Independent Trustee of a Regulated Fund will also be a 
director, trustee, general partner, managing member or principal, or 
otherwise an ``affiliated person'' (as defined in the Act), of an 
Affiliated Account.
    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 of 1933) 
will, to the extent not payable by an Adviser under the investment 
advisory agreements with the Regulated Funds and the Affiliated 
Accounts be shared by the Affiliated Accounts and the Regulated Funds 
in proportion to the relative amounts of the securities held or to be 
acquired or disposed of, as the case may be.
    13. Any transaction fee \12\ (including break-up or commitment fees 
but excluding broker's fees contemplated by section 17(e) of the Act, 
as applicable), received in connection with a Co-Investment Transaction 
will be distributed to the participating Regulated Funds and Affiliated 
Accounts on a pro rata basis based on the amounts they invested or 
committed, as the case may be, in such Co-Investment Transaction. If 
any transaction fee is to be held by the Adviser pending consummation 
of the transaction, the fee will be deposited into an account 
maintained by the Adviser at a bank or banks having the qualifications 
prescribed in section 26(a)(1) of the Act, and the account will earn a 
competitive rate of interest that will also be divided pro rata among 
the participating Regulated Funds and Affiliated Accounts based on the 
amounts they invest in such Co-Investment Transaction. None of the 
Affiliated Accounts, the Advisers, the other Regulated Funds or any 
affiliated person of the Regulated Funds or Affiliated Accounts will 
receive additional compensation or remuneration of any kind as a result 
of or in connection with a Co-Investment Transaction (other than (a) in 
the case of the Regulated Funds and the Affiliated Accounts, the pro 
rata transaction fees described above and fees or other compensation 
described in condition 2(c)(iii)(C); and (b) in the case of the 
Advisers, investment advisory fees paid in accordance with the 
agreements between the Advisers and the Regulated Funds or the 
Affiliated Accounts).
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    \12\ Applicants are not requesting and the staff is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    14. The Proprietary Accounts will not be permitted to invest in a 
Potential Co-Investment Transaction except to the extent the demand 
from the Regulated Funds and the other Affiliated Accounts is less than 
the total investment opportunity.
    15. The Advisers will each maintain policies and procedures 
reasonably designed to ensure compliance with the foregoing conditions. 
These policies and procedures will require, among other things, that 
the applicable Adviser will be notified of all Potential Co-Investment 
Transactions that fall within a Regulated Fund's then-current 
Objectives and Strategies and will be given sufficient information to 
make its independent determination and recommendations under conditions 
1, 2(a), 7 and 8.
    16. 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 trustees; (2) the removal of one or more trustees; or (3) all other 
matters under either the Act or applicable State law affecting the 
Board's composition, size or manner of election.
    17. Each Regulated Fund's chief compliance officer, as defined in 
Rule 38a-1(a)(4) under the Act, will prepare an annual report for its 
Board each year that evaluates (and documents the basis of that 
evaluation) the Regulated Fund's compliance with the terms and 
conditions of the application and the procedures established to achieve 
such compliance.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-17497 Filed 8-14-18; 8:45 am]
BILLING CODE 8011-01-P
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