Tortoise Capital Advisors, L.L.C., et al., 43715-43720 [2018-18427]
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Federal Register / Vol. 83, No. 166 / Monday, August 27, 2018 / Notices
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Section 17(b) of the Act authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–18419 Filed 8–24–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33205; File No. 812–14839]
Tortoise Capital Advisors, L.L.C., et al.
August 21, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
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AGENCY:
Notice of application for an order
under sections 17(d) and 57(i) of the
Investment Company Act of 1940 (the
‘‘Act’’) and rule 17d–1 under the Act to
permit certain joint transactions
otherwise prohibited by sections 17(d)
and 57(a)(4) of the Act and rule 17d–1
under the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
business development companies
(‘‘BDC’’) and closed-end management
investment companies to co-invest in
portfolio companies with each other and
with affiliated investment funds.
APPLICANTS: Tortoise Energy
Infrastructure Corporation (‘‘Energy
Infrastructure Corp.’’), Tortoise MLP
Fund, Inc. (‘‘MLP Fund’’), Tortoise
Pipeline & Energy Fund, Inc. (‘‘Pipeline
Fund’’), Tortoise Energy Independence
Fund, Inc. (‘‘Independence Fund’’),
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Tortoise Power and Energy
Infrastructure Fund, Inc. (‘‘Power
Fund’’), Tortoise Essential Assets
Income 2024 Term Fund, Inc. (‘‘Income
Fund’’), Tortoise Tax-Advantaged Social
Infrastructure Fund, Inc. (‘‘Social
Infrastructure Fund’’ and together with
Energy Infrastructure Corp., MLP Fund,
Pipeline Fund, Independence Fund,
Power Fund, and Income Fund, the
‘‘Existing Regulated Funds’’), Tortoise
Capital Advisors, L.L.C. (‘‘Tortoise
Advisors’’), on behalf of itself and its
successors, Tortoise Direct
Opportunities Fund, LP (‘‘DO Fund’’),
Tortoise Direct Opportunities Fund II,
LP (‘‘DO Fund II’’), Tortoise Direct
Municipal Opportunities Fund, LP
(‘‘Municipal Fund’’ and, together with
DO Fund and DO Fund II, the ‘‘Existing
Affiliated Funds’’), and Tortoise Credit
Strategies, LLC (the ‘‘Existing Affiliated
Adviser’’).
FILING DATES: The application was filed
on November 7, 2017, and amended on
March 29, 2018, and August 1, 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 17, 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, 11550 Ash Street, Suite 300,
Leawood, KS 66211.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879 or Andrea
Ottomanelli Magovern, 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.
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Applicants’ Representations:
1. Energy Infrastructure Corp. was
organized as a Maryland corporation for
the purpose of operating as an
externally-managed, non-diversified,
closed-end management investment
company. Energy Infrastructure Corp. is
a registered investment company under
the Act. Energy Infrastructure Corp.’s
Objectives and Strategies 1 are to seek a
high level of total return with an
emphasis on current distributions
primarily through investments in
publicly traded master limited
partnerships (‘‘MLPs’’) and their
affiliates in the energy infrastructure
sector. Energy Infrastructure Corp. has a
six member Board,2 of which four
members are Non-Interested Directors.3
2. MLP Fund was organized as a
Maryland corporation for the purpose of
operating as an externally-managed,
non-diversified, closed-end
management investment company. MLP
Fund is a registered investment
company under the Act. MLP Fund’s
Objectives and Strategies are to seek a
high level of total return with an
emphasis on current distributions
primarily through investments in energy
MLPs and their affiliates, with an
emphasis on natural gas infrastructure
MLPs. MLP Fund has a six member
Board, of which four members are NonInterested Directors.
3. Pipeline Fund was organized as a
Maryland corporation for the purpose of
operating as an externally-managed,
non-diversified, closed-end
management investment company.
Pipeline Fund is a registered investment
company under the Act. Pipeline Fund
has elected to be treated, and intends to
comply with the requirements to
continue to qualify annually, as a
regulated investment company (‘‘RIC’’)
under the Internal Revenue Code of
1986, as amended (the ‘‘Code’’), and
intends to continue to make such
election in the future. Pipeline Fund’s
Objectives and Strategies are to seek a
high level of total return with an
emphasis on current distributions
primarily through investments in equity
securities of North American pipeline
companies that transport natural gas,
1 ‘‘Objectives and Strategies’’ means a Regulated
Fund’s investment objectives and strategies, as
described in the Regulated Fund’s registration
statement on Form N–2, other filings the Regulated
Fund has made with the Commission under the
Securities Act of 1933 (the ‘‘Securities Act’’), or
under the Securities Exchange Act of 1934, and the
Regulated Fund’s reports to shareholders.
2 The term ‘‘Board’’ refers to the board of directors
of any Regulated Fund.
3 The term ‘‘Non-Interested Directors’’ refers to
the directors of any Regulated Fund that are not
‘‘interested persons’’ of the Regulated Fund within
the meaning of section 2(a)(19) of the Act.
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natural gas liquids, crude oil and
refined products, and other energy
infrastructure companies. Pipeline Fund
has a six member Board, of which four
members are Non-Interested Directors.
4. Independence Fund was organized
as a Maryland corporation for the
purpose of operating as an externallymanaged, non-diversified, closed-end
management investment company.
Independence Fund is a registered
investment company under the Act.
Independence Fund has elected to be
treated, and intends to comply with the
requirements to continue to qualify
annually, as a RIC under the Code, and
intends to continue to make such
election in the future. Independence
Fund’s Objectives and Strategies are to
seek a high level of total return with an
emphasis on current distributions
primarily through investments in North
American energy companies that engage
in the exploration and production of
crude oil, condensate, natural gas and
natural gas liquids that generally have a
strong presence in North American oil
and gas reservoirs, including shale, and,
to a lesser extent, on companies that
provide associated transportation,
processing, storage, servicing and
equipment. Independence Fund has a
six member Board, of which four
members are Non-Interested Directors.
5. Power Fund was organized as a
Maryland corporation for the purpose of
operating as an externally-managed,
non-diversified, closed-end
management investment company.
Power Fund is a registered investment
company under the Act. Power Fund
has elected to be treated, and intends to
comply with the requirements to
continue to qualify annually, as a RIC
under the Code, and intends to continue
to make such election in the future.
Power Fund’s Objectives and Strategies
are to seek a high level of current
income, with a secondary objective of
capital appreciation primarily through
investments in income-producing fixed
income and equity securities issued by
power and energy infrastructure
companies. Power Fund has a six
member Board, of which four members
are Non-Interested Directors.
6. Income Fund was organized as a
Maryland corporation for the purpose of
operating as an externally-managed,
non-diversified, closed-end
management investment company.
Income Fund is a registered investment
company under the Act. Income Fund
has elected to be treated, and intends to
comply with the requirements to
continue to qualify annually, as a RIC
under the Code, and intends to continue
to make such election in the future.
Income Fund’s Objectives and Strategies
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are to seek a high level of current
income, with a secondary objective of
capital appreciation primarily through
investments in corporate debt securities,
and private investments. Income Fund
has a six member Board, of which four
members are Non-Interested Directors.
7. Social Infrastructure Fund was
organized as a Maryland corporation for
the purpose of operating as an
externally-managed, non-diversified,
closed-end management investment
company. Social Infrastructure Fund is
a registered investment company under
the Act. Social Infrastructure Fund has
elected to be treated, and intends to
comply with the requirements to
continue to qualify annually, as a RIC
under the Code, and intends to continue
to make such election in the future.
Social Infrastructure Fund’s Objectives
and Strategies are to seek a high level
of total return with an emphasis on taxadvantaged income primarily through
investments in the social infrastructure
sector. Social Infrastructure Fund has a
four member Board, of which three
members are Non-Interested Directors.
8. Each of the Existing Affiliated
Funds was organized as a Delaware
limited partnership and would be an
investment company but for section
3(c)(7) of the Act. Each Existing
Affiliated Fund has investment
objectives and policies that are similar
to those of the Existing Regulated
Funds.
9. Tortoise Advisors is a Delaware
limited liability company and is
registered as an investment adviser
under the Investment Advisers Act of
1940 (the ‘‘Advisers Act’’). Tortoise
Advisors is wholly-owned by Tortoise
Investments, LLC. Lovell Minnick
Partners LLC (‘‘Lovell Minnick’’) owns a
majority interest in Tortoise
Investments, LLC (‘‘Tortoise’’). An
entity formed by Lovell Minnick owned
by certain private funds sponsored by
Lovell Minnick and a group of
institutional co-investors owns a
controlling interest in Tortoise. Certain
employees in the Tortoise complex also
own interests in Tortoise. Tortoise
Advisors serves as investment adviser to
Energy Infrastructure Corp., MLP Fund,
Pipeline Fund, Independence Fund,
Power Fund, DO Fund, and DO Fund II.
10. The Existing Affiliated Adviser is
a Delaware limited liability company
and is registered as an investment
adviser under the Advisers Act. The
Existing Affiliated Adviser is privately
held and is an affiliate of, and under
common control with, Tortoise
Advisors. The Existing Affiliated
Adviser serves as investment adviser to
Income Fund, Social Infrastructure
Fund, and Municipal Fund.
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11. Applicants seek an order
(‘‘Order’’) to permit one or more
Regulated Funds 4 and/or one or more
Affiliated Funds 5 to participate in the
same investment opportunities through
a proposed co-investment program (the
‘‘Co-Investment Program’’) where such
participation would otherwise be
prohibited under sections 17(d) and
57(a)(4) and rule 17d–1 by (a) coinvesting with each other in securities
issued by issuers in private placement
transactions in which an Adviser
negotiates terms in addition to price; 6
and (b) making additional investments
in securities of such issuers, including
through the exercise of warrants,
conversion privileges, and other rights
to purchase securities of the issuers
(‘‘Follow-On Investments’’). ‘‘CoInvestment Transaction’’ means any
transaction in which a Regulated Fund
(or its Wholly-Owned Investment Sub,
as defined below) participated together
with one or more other Regulated Funds
and/or one or more Affiliated Funds in
reliance on the requested Order.
‘‘Potential Co-Investment Transaction’’
means any investment opportunity in
which a Regulated Fund (or its WhollyOwned Investment Sub) could not
participate together with one or more
Affiliated Funds and/or one or more
other Regulated Funds without
obtaining and relying on the Order.7
12. Applicants state that a Regulated
Fund may, from time to time, form a
Wholly-Owned Investment Sub.8 Such a
4 ‘‘Regulated Fund’’ means the Existing Regulated
Funds and any Future Regulated Fund. ‘‘Future
Regulated Fund’’ means any closed-end
management investment company (a) that is
registered under the Act or has elected to be
regulated as a BDC, (b) whose investment adviser
is an Adviser, and (c) that intends to participate in
the Co-Investment Program. The term ‘‘Adviser’’
means (a) Tortoise Advisors, (b) the Existing
Affiliated Adviser, and (c) any future investment
adviser that is controlled by Tortoise Advisors and
is registered under the Advisers Act.
5 ‘‘Affiliated Fund’’ means (a) the Existing
Affiliated Funds and (b) any Future Affiliated Fund.
‘‘Future Affiliated Fund’’ means any entity (a)
whose investment adviser is an Adviser, (b) that
would be an investment company but for section
3(c)(1) or 3(c)(7) of the Act, and (c) that intends to
participate in the Co-Investment Program.
6 The term ‘‘private placement transactions’’
means transactions in which the offer and sale of
securities by the issuer are exempt from registration
under the Securities Act.
7 All existing entities that currently intend to rely
upon the requested Order have been named as
applicants. Any other existing or future entity that
subsequently relies on the Order will comply with
the terms and conditions of the application.
8 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
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subsidiary would be prohibited from
investing in a Co-Investment
Transaction with any Affiliated Fund or
Regulated Fund because it would be a
company controlled by its parent
Regulated Fund for purposes of section
57(a)(4) and rule 17d–1. Applicants
request that each Wholly-Owned
Investment Sub be permitted to
participate in Co-Investment
Transactions in lieu of its parent
Regulated Fund and that the WhollyOwned Investment Sub’s participation
in any such transaction be treated, for
purposes of the requested Order, as
though the parent Regulated Fund were
participating directly. Applicants
represent that this treatment is justified
because a Wholly-Owned Investment
Sub would have no purpose other than
serving as a holding vehicle for the
Regulated Fund’s investments and,
therefore, no conflicts of interest could
arise between the Regulated Fund and
the Wholly-Owned Investment Sub. The
Regulated Fund’s Board would make all
relevant determinations under the
conditions with regard to a WhollyOwned Investment Sub’s participation
in a Co-Investment Transaction, and the
Regulated Fund’s Board would be
informed of, and take into
consideration, any proposed use of a
Wholly-Owned Investment Sub in the
Regulated Fund’s place. If the Regulated
Fund proposes to participate in the
same Co-Investment Transaction with
any of its Wholly-Owned Investment
Subs, the Board will also be informed
of, and take into consideration, the
relative participation of the Regulated
Fund and the Wholly-Owned
Investment Sub.
13. When considering Potential CoInvestment Transactions for any
Regulated Fund, the applicable Adviser
will consider only the Objectives and
Strategies, investment policies,
investment positions, capital available
for investment (‘‘Available Capital’’),
and other pertinent factors applicable to
that Regulated Fund. The Advisers
expect that any portfolio company that
is an appropriate investment for a
Regulated Fund should also be an
appropriate investment for one or more
other Regulated Funds and/or one or
more Affiliated Funds, with certain
exceptions based on Available Capital
or diversification. The Regulated Funds,
however, will not be obligated to invest,
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. Any future subsidiaries of the
Regulated Funds that participate in Co-Investment
Transactions will be Wholly-Owned Investment
Subs.
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or co-invest, when investment
opportunities are referred to them.
14. Other than pro rata dispositions
and Follow-On Investments as provided
in conditions 7 and 8, and after making
the determinations required in
conditions 1 and 2(a), the Adviser will
present each Potential Co-Investment
Transaction and the proposed allocation
to the directors of the Board eligible to
vote under section 57(o) of the Act
(‘‘Eligible Directors’’), and the ‘‘required
majority,’’ as defined in section 57(o) of
the Act (‘‘Required Majority’’) 9 will
approve each Co-Investment
Transaction prior to any investment by
the participating Regulated Fund.
15. 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.
16. No Non-Interested Director of a
Regulated Fund will have a financial
interest in any Co-Investment
Transaction, other than indirectly
through share ownership in one of the
Regulated Funds.
17. Under condition 14, if an Adviser
or its principal owners (the
‘‘Principals’’), or any person controlling,
controlled by, or under common control
with an Adviser or the Principals, and
the Affiliated Funds (collectively, the
‘‘Holders’’) own in the aggregate more
than 25% of the outstanding voting
shares of a Regulated Fund (the
‘‘Shares’’), then the Holders will vote
such Shares as directed by an
9 In the case of a Regulated Fund that is a
registered closed-end fund, the Board members that
make up the Required Majority will be determined
as if the Regulated Fund were a BDC subject to
section 57(o).
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independent third party when voting on
matters specified in the condition.
Applicants believe that this condition
will ensure that the Non-Interested
Directors will act independently in
evaluating the Co-Investment Program,
because the ability of an Adviser or the
Principals to influence the NonInterested Directors by a suggestion,
explicit or implied, that the NonInterested Directors can be removed will
be limited significantly. Applicants
represent that the Non-Interested
Directors will evaluate and approve any
such independent party, taking into
account its qualifications, reputation for
independence, cost to the shareholders,
and other factors that they deem
relevant.
Applicants’ Legal Analysis:
1. Section 17(d) of the Act and rule
17d–1 under the Act prohibit
participation by a registered investment
company and an affiliated person in any
‘‘joint enterprise or other joint
arrangement or profit-sharing plan,’’ as
defined in the rule, without prior
approval by the Commission by order
upon application. Section 17(d) of the
Act and rule 17d–1 under the Act are
applicable to Regulated Funds that are
registered closed-end investment
companies. Similarly, with regard to
BDCs, section 57(a)(4) of the Act
generally prohibits certain persons
specified in section 57(b) from
participating in joint transactions with
the BDC or a company controlled by the
BDC in contravention of rules as
prescribed by the Commission. Section
57(i) of the Act provides that, until the
Commission prescribes rules under
section 57(a)(4), the Commission’s rules
under section 17(d) of the Act
applicable to registered closed-end
investment companies will be deemed
to apply to transactions subject to
section 57(a)(4). Because the
Commission has not adopted any rules
under section 57(a)(4), rule 17d–1 also
applies to joint transactions with
Regulated Funds that are BDCs.
2. In passing upon applications under
rule 17d–1, the Commission considers
whether the company’s participation in
the joint transaction is consistent with
the provisions, policies, and purposes of
the Act and the extent to which such
participation is on a basis different from
or less advantageous than that of other
participants.
3. Applicants submit that Tortoise
Advisors and the Existing Affiliated
Adviser may be deemed to control the
Existing Regulated Funds and the
Existing Affiliated Funds, respectively,
and any other Adviser will be
controlling, controlled by, or under
common control with Tortoise Advisors.
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As a result, the Regulated Funds may be
deemed to be under common control,
and thus affiliated persons of each other
under section 2(a)(3)(C) of the Act. In
addition, the Affiliated Funds may be
deemed to be under common control
with the Regulated Funds, and thus
affiliated persons of each Regulated
Fund under section 2(a)(3)(C) of the Act.
As a result, these relationships might
cause a Regulated Fund and one or more
other Regulated Funds and/or one or
more Affiliated Funds participating in
Co-Investment Transactions to be
subject to section 17(d) or 57(a)(4) of the
Act, and thus subject to the provisions
of rule 17d–1 of the Act.
4. Applicants state that in the absence
of the requested relief, in some
circumstances the Regulated Funds
would be limited in their ability to
participate in attractive and appropriate
investment opportunities. Applicants
believe that the proposed terms and
conditions of the application will
ensure that the Co-Investment
Transactions are consistent with the
protection of each Regulated Fund’s
shareholders and with the purposes
intended by the policies and provisions
of the Act. Applicants state that the
Regulated Funds’ participation in the
Co-Investment Transactions will be
consistent with the provisions, policies,
and purposes of the Act and would be
done in a manner that is not different
from, or less advantageous than, that of
other participants.
Applicants’ Conditions:
Applicants agree that the Order will
be subject to the following conditions:
1. Each time an 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, the Regulated Fund’s Adviser
will make an independent
determination of the appropriateness of
the investment for such Regulated Fund
in light of the Regulated Fund’s 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, it
will then determine an appropriate level
of investment for the Regulated Fund.
(b) If the aggregate amount
recommended by the applicable Adviser
to be invested by the applicable
Regulated Fund in the Potential CoInvestment Transaction, together with
the amount proposed to be invested by
the other participating Regulated Funds
and Affiliated Funds, collectively, in the
same transaction, exceeds the amount of
the investment opportunity, the
investment opportunity will be
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allocated among them pro rata based on
each participant’s Available Capital, up
to the amount proposed to be invested
by each. The applicable Adviser will
provide the Eligible Directors of each
participating Regulated Fund with
information concerning each
participating party’s Available Capital to
assist the Eligible Directors with their
review of the Regulated Fund’s
investments for compliance with these
allocation procedures.
(c) After making the determinations
required in conditions 1 and 2(a), the
applicable Adviser will distribute
written information concerning the
Potential Co-Investment Transaction
(including the amount proposed to be
invested by each participating Regulated
Fund and Affiliated Fund) to the
Eligible Directors of each participating
Regulated Fund for their consideration.
A Regulated Fund will co-invest with
one or more other Regulated Funds and/
or one or more Affiliated Funds only if,
prior to the Regulated Fund’s
participation in the Potential CoInvestment Transaction, a Required
Majority concludes that:
(i) the terms of the Potential CoInvestment Transaction, including the
consideration to be paid, are reasonable
and fair to the Regulated Fund and its
shareholders and do not involve
overreaching in respect of the Regulated
Fund or its shareholders on the part of
any person concerned;
(ii) the Potential Co-Investment
Transaction is consistent with:
(A) the interests of the shareholders of
the Regulated Fund; and
(B) the Regulated Fund’s then-current
Objectives and Strategies;
(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 other Regulated Funds or
Affiliated Funds; provided that, if any
other Regulated Fund or Affiliated
Fund, but not the Regulated Fund itself,
gains the right to nominate a director for
election to a portfolio company’s board
of directors or the right to have a board
observer or any similar right to
participate in the governance or
management of the portfolio company,
such event shall not be interpreted to
prohibit the Required Majority from
reaching the conclusions required by
this condition (2)(c)(iii), if:
(A) the Eligible Directors will have the
right to ratify the selection of such
director or board observer, if any;
(B) the applicable Adviser agrees to,
and does, provide periodic reports to
the Regulated Fund’s Board with respect
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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 the Affiliated Fund or a
Regulated Fund to nominate a director
or appoint a board observer or otherwise
to participate in the governance or
management of the portfolio company
will be shared proportionately among
the participating Affiliated Funds (who
each may, in turn, share its portion with
its affiliated persons) and the
participating Regulated Funds in
accordance with the amount of each
party’s investment; and
(iv) the proposed investment by the
Regulated Fund will not benefit the
Advisers, the Affiliated Funds or the
other Regulated Funds or any affiliated
person of any of them (other than the
parties to the Co-Investment
Transaction), except (A) to the extent
permitted by condition 13, (B) to the
extent permitted by Section 17(e) or
57(k) of the Act, as applicable, (C)
indirectly, as a result of an interest in
the securities issued by one of the
parties to the Co-Investment
Transaction, or (D) in the case of fees or
other compensation described in
condition 2(c)(iii)(C).
3. Each Regulated Fund has the right
to decline to participate in any Potential
Co-Investment Transaction or to invest
less than the amount proposed.
4. The 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 Funds
during the preceding quarter that fell
within the Regulated Fund’s thencurrent Objectives and Strategies that
were not made available to the
Regulated Fund, and an explanation of
why the investment opportunities were
not offered to the Regulated Fund. All
information presented to the Board
pursuant to this condition will be kept
for the life of the Regulated Fund and
at least two years thereafter, and will be
subject to examination by the
Commission and its staff.
5. Except for Follow-On Investments
made in accordance with condition 8,10
10 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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Federal Register / Vol. 83, No. 166 / Monday, August 27, 2018 / Notices
a Regulated Fund will not invest in
reliance on the Order in any issuer in
which another Regulated Fund,
Affiliated Fund, or any affiliated person
of another Regulated Fund or Affiliated
Fund is an existing investor.
6. A Regulated Fund will not
participate in any Potential CoInvestment Transaction unless the
terms, conditions, price, class of
securities to be purchased, settlement
date, and registration rights will be the
same for each participating Regulated
Fund and Affiliated Fund. The grant to
an Affiliated Fund or another Regulated
Fund, but not the Regulated Fund, of
the right to nominate a director for
election to a portfolio company’s board
of directors, the right to have an
observer on the board of directors or
similar rights to participate in the
governance or management of the
portfolio company will not be
interpreted so as to violate this
condition 6, if conditions 2(c)(iii)(A), (B)
and (C) are met.
7. (a) If any Affiliated Fund or any
Regulated Fund elects to sell, exchange
or otherwise dispose of an interest in a
security that was acquired in a CoInvestment Transaction, the applicable
Advisers will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed disposition
at the earliest practical time; and
(ii) formulate a recommendation as to
participation by each Regulated Fund in
the disposition.
(b) Each Regulated Fund will have the
right to participate in such disposition
on a proportionate basis, at the same
price and on the same terms and
conditions as those applicable to the
participating Affiliated Funds and
Regulated Funds.
(c) A Regulated Fund may participate
in such disposition without obtaining
prior approval of the Required Majority
if: (i) The proposed participation of each
Regulated Fund and each Affiliated
Fund in such disposition is
proportionate to its outstanding
investments in the issuer immediately
preceding the disposition; (ii) the Board
of the Regulated Fund has approved as
being in the best interests of the
Regulated Fund the ability to participate
in such dispositions on a pro rata basis
(as described in greater detail in the
application); and (iii) the Board of the
Regulated Fund is provided on a
quarterly basis with a list of all
dispositions made in accordance with
this condition. In all other cases, the
Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Eligible
Directors, and the Regulated Fund will
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17:51 Aug 24, 2018
Jkt 244001
participate in such disposition solely to
the extent that a Required Majority
determines that it is in the Regulated
Fund’s best interests.
(d) Each Affiliated Fund and each
Regulated Fund will bear its own
expenses in connection with any such
disposition.
8. (a) If any Affiliated Fund or any
Regulated Fund desires to make a
Follow-On Investment in a portfolio
company whose securities were
acquired in a Co-Investment
Transaction, the applicable 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
Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Eligible
Directors, and the Regulated Fund will
participate in such Follow-On
Investment solely to the extent that a
Required Majority determines that it is
in the Regulated Fund’s best interests.
(c) If, with respect to any Follow-On
Investment:
(i) The amount of the opportunity is
not based on the Regulated Funds’ and
the Affiliated Funds’ outstanding
investments immediately preceding the
Follow-On Investment; and
(ii) the aggregate amount
recommended by the applicable Adviser
to be invested by the applicable
Regulated Fund in the Follow-On
Investment, 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, then the
investment opportunity will be
allocated among them pro rata based on
each participant’s Available Capital, up
to the maximum amount proposed to be
invested by each.
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
43719
(d) The acquisition of Follow-On
Investments as permitted by this
condition will be considered a CoInvestment Transaction for all purposes
and subject to the other conditions set
forth in the application.
9. The Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds or
Affiliated Funds that the Regulated
Fund considered but declined to
participate in, so that the Non-Interested
Directors may determine whether all
investments made during the preceding
quarter, including those investments
that the Regulated Fund considered but
declined to participate in, comply with
the conditions of the Order. In addition,
the Non-Interested Directors will
consider at least annually the continued
appropriateness for the Regulated Fund
of participating in new and existing CoInvestment Transactions.
10. Each Regulated Fund will
maintain the records required by section
57(f)(3) of the Act as if each of the
Regulated Funds were a BDC and each
of the investments permitted under
these conditions were approved by the
Required Majority under section 57(f) of
the Act.
11. No Non-Interested Director of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act) of an
Affiliated Fund.
12. The expenses, if any, associated
with acquiring, holding or disposing of
any securities acquired in a CoInvestment Transaction (including,
without limitation, the expenses of the
distribution of any such securities
registered for sale under the Securities
Act) will, to the extent not payable by
the Advisers under their respective
investment advisory agreements with
Affiliated Funds and the Regulated
Funds, be shared by the Regulated
Funds and the Affiliated Funds in
proportion to the relative amounts of the
securities held or to be acquired or
disposed of, as the case may be.
13. Any transaction fee 11 (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k) of the Act, as
applicable), received in connection with
a Co-Investment Transaction will be
distributed to the participating
11 Applicants are not requesting and the staff of
the Commission is not providing any relief for
transaction fees received in connection with any
Co-Investment Transaction.
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Federal Register / Vol. 83, No. 166 / Monday, August 27, 2018 / Notices
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Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by an Adviser pending
consummation of the transaction, the
fee will be deposited into an account
maintained by such Adviser at a bank or
banks having the qualifications
prescribed in section 26(a)(1) of the Act,
and the account will earn a competitive
rate of interest that will also be divided
pro rata among the participating
Regulated Funds and Affiliated Funds
based on the amounts they invest in
such Co-Investment Transaction. None
of the Affiliated Funds, the Advisers,
the other Regulated Funds or any
affiliated person of the Regulated Funds
or Affiliated Funds will receive
additional compensation or
remuneration of any kind as a result of
or in connection with a Co-Investment
Transaction (other than (a) in the case
of the Regulated Funds and 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 Adviser, investment advisory fees
paid in accordance with the agreement
between the Adviser and the Regulated
Fund or Affiliated Fund.
14. If the Holders own in the aggregate
more than 25% of the Shares of a
Regulated Fund, then the Holders will
vote such Shares as directed by an
independent third party when voting on
(1) the election of directors; (2) the
removal of one or more directors; or (3)
any other matter under either the Act or
applicable State law affecting the
Board’s composition, size or manner of
election.
15. Each Regulated Fund’s chief
compliance officer, as defined in rule
38a–1(a)(4), will prepare an annual
report for its Board that evaluates (and
documents the basis of that evaluation)
the Regulated Fund’s compliance with
the terms and conditions of the
application and the procedures
established to achieve such compliance.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–18427 Filed 8–24–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83892; File No. SR–NYSE–
2018–38]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Independence Policy of the Board of
Directors of the Exchange
August 21, 2018.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Independence Policy of the Board of
Directors of the Exchange by (a)
streamlining references to
Intercontinental Exchange, Inc.
subsidiaries that are national securities
exchanges, (b) removing obsolete
references, and (c) adding references to
national securities exchange affiliates of
the Exchange. The proposed rule change
is available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
2 17
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PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00087
Fmt 4703
1. Purpose
The Exchange proposes to amend the
Independence Policy by (a) streamlining
references to ICE subsidiaries that are
national securities exchanges, (b)
removing obsolete references, and (c)
adding references to national securities
exchange affiliates of the Exchange.
Definition of ‘‘Exchange’’
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 August
15, 2018, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘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.
1 15
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Sfmt 4703
The Independence Policy includes
references to the Exchange and its
national securities exchange affiliates
NYSE American, Inc. (‘‘NYSE
American’’) and NYSE Arca, Inc.
(‘‘NYSE Arca’’).3 It does not include
references to the Exchange’s newest
national securities exchange affiliates,
NYSE National, Inc. (‘‘NYSE National’’)
and Chicago Stock Exchange, Inc.
(‘‘CHX’’). The Exchange proposes to
replace lists of individual national
securities exchange affiliates in the
Independence Policy with the term
‘‘Exchange,’’ defined as any national
securities exchange registered under
Section 6 of the Exchange Act 4 and
controlled, directly or indirectly, by ICE.
The definition would encompass the
Exchange, NYSE American, NYSE Arca,
NYSE National, and CHX (collectively,
the ‘‘SRO Affiliates’’).
Specifically, the Exchange proposes to
add a second paragraph under
‘‘Purpose’’ with the definition of
‘‘Exchange.’’ 5 In addition, the Exchange
proposes to make the following changes
in the section under ‘‘Independence
Qualifications’’:
• Replace ‘‘New York Stock Exchange
LLC, NYSE Arca, Inc. and NYSE
American LLC’’ with ‘‘an Exchange’’ in
category 1(b) and (c);
• Replace ‘‘New York Stock Exchange
LLC, on NYSE Arca, Inc. or on NYSE
American LLC’’ with ‘‘an Exchange’’ in
category 1(d) and category 4;
• Replace ‘‘New York Stock Exchange
LLC, and NYSE Arca, Inc. and NYSE
American LLC exercise’’ with ‘‘each
Exchange exercises’’ in the final
paragraph of category 1;
3 The independence policy of the board of
directors of the Exchange’s affiliate NYSE American
is substantially the same as the Independence
Policy. NYSE American has submitted substantially
the same proposed rule change to its independence
policy as described herein. See SR–NYSEAmer–
2018–42.
4 15 U.S.C. 78f.
5 The proposed text would include the definition
of ‘‘ICE.’’ Accordingly, the Exchange proposes to
delete the definition of ICE in ‘‘Independence
Requirements,’’ category 1.
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]]>Agencies
[Federal Register Volume 83, Number 166 (Monday, August 27, 2018)]
[Notices]
[Pages 43715-43720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18427]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33205; File No. 812-14839]
Tortoise Capital Advisors, L.L.C., et al.
August 21, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
Notice of application for an order under sections 17(d) and 57(i)
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1
under the Act to permit certain joint transactions otherwise prohibited
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
SUMMARY OF APPLICATION: Applicants request an order to permit certain
business development companies (``BDC'') and closed-end management
investment companies to co-invest in portfolio companies with each
other and with affiliated investment funds.
APPLICANTS: Tortoise Energy Infrastructure Corporation (``Energy
Infrastructure Corp.''), Tortoise MLP Fund, Inc. (``MLP Fund''),
Tortoise Pipeline & Energy Fund, Inc. (``Pipeline Fund''), Tortoise
Energy Independence Fund, Inc. (``Independence Fund''), Tortoise Power
and Energy Infrastructure Fund, Inc. (``Power Fund''), Tortoise
Essential Assets Income 2024 Term Fund, Inc. (``Income Fund''),
Tortoise Tax-Advantaged Social Infrastructure Fund, Inc. (``Social
Infrastructure Fund'' and together with Energy Infrastructure Corp.,
MLP Fund, Pipeline Fund, Independence Fund, Power Fund, and Income
Fund, the ``Existing Regulated Funds''), Tortoise Capital Advisors,
L.L.C. (``Tortoise Advisors''), on behalf of itself and its successors,
Tortoise Direct Opportunities Fund, LP (``DO Fund''), Tortoise Direct
Opportunities Fund II, LP (``DO Fund II''), Tortoise Direct Municipal
Opportunities Fund, LP (``Municipal Fund'' and, together with DO Fund
and DO Fund II, the ``Existing Affiliated Funds''), and Tortoise Credit
Strategies, LLC (the ``Existing Affiliated Adviser'').
FILING DATES: The application was filed on November 7, 2017, and
amended on March 29, 2018, and August 1, 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 17, 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, 11550 Ash Street, Suite
300, Leawood, KS 66211.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879 or Andrea Ottomanelli Magovern, 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. Energy Infrastructure Corp. was organized as a Maryland
corporation for the purpose of operating as an externally-managed, non-
diversified, closed-end management investment company. Energy
Infrastructure Corp. is a registered investment company under the Act.
Energy Infrastructure Corp.'s Objectives and Strategies \1\ are to seek
a high level of total return with an emphasis on current distributions
primarily through investments in publicly traded master limited
partnerships (``MLPs'') and their affiliates in the energy
infrastructure sector. Energy Infrastructure Corp. has a six member
Board,\2\ of which four members are Non-Interested Directors.\3\
---------------------------------------------------------------------------
\1\ ``Objectives and Strategies'' means a Regulated Fund's
investment objectives and strategies, as described in the Regulated
Fund's registration statement on Form N-2, other filings the
Regulated Fund has made with the Commission under the Securities Act
of 1933 (the ``Securities Act''), or under the Securities Exchange
Act of 1934, and the Regulated Fund's reports to shareholders.
\2\ The term ``Board'' refers to the board of directors of any
Regulated Fund.
\3\ The term ``Non-Interested Directors'' refers to the
directors of any Regulated Fund that are not ``interested persons''
of the Regulated Fund within the meaning of section 2(a)(19) of the
Act.
---------------------------------------------------------------------------
2. MLP Fund was organized as a Maryland corporation for the purpose
of operating as an externally-managed, non-diversified, closed-end
management investment company. MLP Fund is a registered investment
company under the Act. MLP Fund's Objectives and Strategies are to seek
a high level of total return with an emphasis on current distributions
primarily through investments in energy MLPs and their affiliates, with
an emphasis on natural gas infrastructure MLPs. MLP Fund has a six
member Board, of which four members are Non-Interested Directors.
3. Pipeline Fund was organized as a Maryland corporation for the
purpose of operating as an externally-managed, non-diversified, closed-
end management investment company. Pipeline Fund is a registered
investment company under the Act. Pipeline Fund has elected to be
treated, and intends to comply with the requirements to continue to
qualify annually, as a regulated investment company (``RIC'') under the
Internal Revenue Code of 1986, as amended (the ``Code''), and intends
to continue to make such election in the future. Pipeline Fund's
Objectives and Strategies are to seek a high level of total return with
an emphasis on current distributions primarily through investments in
equity securities of North American pipeline companies that transport
natural gas,
[[Page 43716]]
natural gas liquids, crude oil and refined products, and other energy
infrastructure companies. Pipeline Fund has a six member Board, of
which four members are Non-Interested Directors.
4. Independence Fund was organized as a Maryland corporation for
the purpose of operating as an externally-managed, non-diversified,
closed-end management investment company. Independence Fund is a
registered investment company under the Act. Independence Fund has
elected to be treated, and intends to comply with the requirements to
continue to qualify annually, as a RIC under the Code, and intends to
continue to make such election in the future. Independence Fund's
Objectives and Strategies are to seek a high level of total return with
an emphasis on current distributions primarily through investments in
North American energy companies that engage in the exploration and
production of crude oil, condensate, natural gas and natural gas
liquids that generally have a strong presence in North American oil and
gas reservoirs, including shale, and, to a lesser extent, on companies
that provide associated transportation, processing, storage, servicing
and equipment. Independence Fund has a six member Board, of which four
members are Non-Interested Directors.
5. Power Fund was organized as a Maryland corporation for the
purpose of operating as an externally-managed, non-diversified, closed-
end management investment company. Power Fund is a registered
investment company under the Act. Power Fund has elected to be treated,
and intends to comply with the requirements to continue to qualify
annually, as a RIC under the Code, and intends to continue to make such
election in the future. Power Fund's Objectives and Strategies are to
seek a high level of current income, with a secondary objective of
capital appreciation primarily through investments in income-producing
fixed income and equity securities issued by power and energy
infrastructure companies. Power Fund has a six member Board, of which
four members are Non-Interested Directors.
6. Income Fund was organized as a Maryland corporation for the
purpose of operating as an externally-managed, non-diversified, closed-
end management investment company. Income Fund is a registered
investment company under the Act. Income Fund has elected to be
treated, and intends to comply with the requirements to continue to
qualify annually, as a RIC under the Code, and intends to continue to
make such election in the future. Income Fund's Objectives and
Strategies are to seek a high level of current income, with a secondary
objective of capital appreciation primarily through investments in
corporate debt securities, and private investments. Income Fund has a
six member Board, of which four members are Non-Interested Directors.
7. Social Infrastructure Fund was organized as a Maryland
corporation for the purpose of operating as an externally-managed, non-
diversified, closed-end management investment company. Social
Infrastructure Fund is a registered investment company under the Act.
Social Infrastructure Fund has elected to be treated, and intends to
comply with the requirements to continue to qualify annually, as a RIC
under the Code, and intends to continue to make such election in the
future. Social Infrastructure Fund's Objectives and Strategies are to
seek a high level of total return with an emphasis on tax-advantaged
income primarily through investments in the social infrastructure
sector. Social Infrastructure Fund has a four member Board, of which
three members are Non-Interested Directors.
8. Each of the Existing Affiliated Funds was organized as a
Delaware limited partnership and would be an investment company but for
section 3(c)(7) of the Act. Each Existing Affiliated Fund has
investment objectives and policies that are similar to those of the
Existing Regulated Funds.
9. Tortoise Advisors is a Delaware limited liability company and is
registered as an investment adviser under the Investment Advisers Act
of 1940 (the ``Advisers Act''). Tortoise Advisors is wholly-owned by
Tortoise Investments, LLC. Lovell Minnick Partners LLC (``Lovell
Minnick'') owns a majority interest in Tortoise Investments, LLC
(``Tortoise''). An entity formed by Lovell Minnick owned by certain
private funds sponsored by Lovell Minnick and a group of institutional
co-investors owns a controlling interest in Tortoise. Certain employees
in the Tortoise complex also own interests in Tortoise. Tortoise
Advisors serves as investment adviser to Energy Infrastructure Corp.,
MLP Fund, Pipeline Fund, Independence Fund, Power Fund, DO Fund, and DO
Fund II.
10. The Existing Affiliated Adviser is a Delaware limited liability
company and is registered as an investment adviser under the Advisers
Act. The Existing Affiliated Adviser is privately held and is an
affiliate of, and under common control with, Tortoise Advisors. The
Existing Affiliated Adviser serves as investment adviser to Income
Fund, Social Infrastructure Fund, and Municipal Fund.
11. Applicants seek an order (``Order'') to permit one or more
Regulated Funds \4\ and/or one or more Affiliated Funds \5\ to
participate in the same investment opportunities through a proposed co-
investment program (the ``Co-Investment Program'') where such
participation would otherwise be prohibited under sections 17(d) and
57(a)(4) and rule 17d-1 by (a) co-investing with each other in
securities issued by issuers in private placement transactions in which
an Adviser negotiates terms in addition to price; \6\ and (b) making
additional investments in securities of such issuers, including through
the exercise of warrants, conversion privileges, and other rights to
purchase securities of the issuers (``Follow-On Investments''). ``Co-
Investment Transaction'' means any transaction in which a Regulated
Fund (or its Wholly-Owned Investment Sub, as defined below)
participated together with one or more other Regulated Funds and/or one
or more Affiliated Funds in reliance on the requested Order.
``Potential Co-Investment Transaction'' means any investment
opportunity in which a Regulated Fund (or its Wholly-Owned Investment
Sub) could not participate together with one or more Affiliated Funds
and/or one or more other Regulated Funds without obtaining and relying
on the Order.\7\
---------------------------------------------------------------------------
\4\ ``Regulated Fund'' means the Existing Regulated Funds and
any Future Regulated Fund. ``Future Regulated Fund'' means any
closed-end management investment company (a) that is registered
under the Act or has elected to be regulated as a BDC, (b) whose
investment adviser is an Adviser, and (c) that intends to
participate in the Co-Investment Program. The term ``Adviser'' means
(a) Tortoise Advisors, (b) the Existing Affiliated Adviser, and (c)
any future investment adviser that is controlled by Tortoise
Advisors and is registered under the Advisers Act.
\5\ ``Affiliated Fund'' means (a) the Existing Affiliated Funds
and (b) any Future Affiliated Fund. ``Future Affiliated Fund'' means
any entity (a) whose investment adviser is an Adviser, (b) that
would be an investment company but for section 3(c)(1) or 3(c)(7) of
the Act, and (c) that intends to participate in the Co-Investment
Program.
\6\ The term ``private placement transactions'' means
transactions in which the offer and sale of securities by the issuer
are exempt from registration under the Securities Act.
\7\ All existing entities that currently intend to rely upon the
requested Order have been named as applicants. Any other existing or
future entity that subsequently relies on the Order will comply with
the terms and conditions of the application.
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12. Applicants state that a Regulated Fund may, from time to time,
form a Wholly-Owned Investment Sub.\8\ Such a
[[Page 43717]]
subsidiary would be prohibited from investing in a Co-Investment
Transaction with any Affiliated Fund or Regulated Fund because it would
be a company controlled by its parent Regulated Fund for purposes of
section 57(a)(4) and rule 17d-1. Applicants request that each Wholly-
Owned Investment Sub be permitted to participate in Co-Investment
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub's participation in any such transaction be
treated, for purposes of the requested Order, as though the parent
Regulated Fund were participating directly. Applicants represent that
this treatment is justified because a Wholly-Owned Investment Sub would
have no purpose other than serving as a holding vehicle for the
Regulated Fund's investments and, therefore, no conflicts of interest
could arise between the Regulated Fund and the Wholly-Owned Investment
Sub. The Regulated Fund's Board would make all relevant determinations
under the conditions with regard to a Wholly-Owned Investment Sub's
participation in a Co-Investment Transaction, and the Regulated Fund's
Board would be informed of, and take into consideration, any proposed
use of a Wholly-Owned Investment Sub in the Regulated Fund's place. If
the Regulated Fund proposes to participate in the same Co-Investment
Transaction with any of its Wholly-Owned Investment Subs, the Board
will also be informed of, and take into consideration, the relative
participation of the Regulated Fund and the Wholly-Owned Investment
Sub.
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\8\ The term ``Wholly-Owned Investment Sub'' means an entity (i)
that is wholly-owned by a Regulated Fund (with the Regulated Fund at
all times holding, beneficially and of record, 100% of the voting
and economic interests); (ii) whose sole business purpose is to hold
one or more investments on behalf of the Regulated Fund; (iii) with
respect to which the Regulated Fund's Board has the sole authority
to make all determinations with respect to the entity's
participation under the conditions of the application; and (iv) that
would be an investment company but for section 3(c)(1) or 3(c)(7) of
the Act. Any future subsidiaries of the Regulated Funds that
participate in Co-Investment Transactions will be Wholly-Owned
Investment Subs.
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13. When considering Potential Co-Investment Transactions for any
Regulated Fund, the applicable Adviser will consider only the
Objectives and Strategies, investment policies, investment positions,
capital available for investment (``Available Capital''), and other
pertinent factors applicable to that Regulated Fund. The Advisers
expect that any portfolio company that is an appropriate investment for
a Regulated Fund should also be an appropriate investment for one or
more other Regulated Funds and/or one or more Affiliated Funds, with
certain exceptions based on Available Capital or diversification. The
Regulated Funds, however, will not be obligated to invest, or co-
invest, when investment opportunities are referred to them.
14. Other than pro rata dispositions and Follow-On Investments as
provided in conditions 7 and 8, and after making the determinations
required in conditions 1 and 2(a), the Adviser will present each
Potential Co-Investment Transaction and the proposed allocation to the
directors of the Board eligible to vote under section 57(o) of the Act
(``Eligible Directors''), and the ``required majority,'' as defined in
section 57(o) of the Act (``Required Majority'') \9\ will approve each
Co-Investment Transaction prior to any investment by the participating
Regulated Fund.
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\9\ In the case of a Regulated Fund that is a registered closed-
end fund, the Board members that make up the Required Majority will
be determined as if the Regulated Fund were a BDC subject to section
57(o).
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15. 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.
16. No Non-Interested Director of a Regulated Fund will have a
financial interest in any Co-Investment Transaction, other than
indirectly through share ownership in one of the Regulated Funds.
17. Under condition 14, if an Adviser or its principal owners (the
``Principals''), or any person controlling, controlled by, or under
common control with an Adviser or the Principals, and the Affiliated
Funds (collectively, the ``Holders'') own in the aggregate more than
25% 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
Non-Interested Directors will act independently in evaluating the Co-
Investment Program, because the ability of an Adviser or the 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' Legal Analysis:
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
participation by a registered investment company and an affiliated
person in any ``joint enterprise or other joint arrangement or profit-
sharing plan,'' as defined in the rule, without prior approval by the
Commission by order upon application. Section 17(d) of the Act and rule
17d-1 under the Act are applicable to Regulated Funds that are
registered closed-end investment companies. Similarly, with regard to
BDCs, section 57(a)(4) of the Act generally prohibits certain persons
specified in section 57(b) from participating in joint transactions
with the BDC or a company controlled by the BDC in contravention of
rules as prescribed by the Commission. Section 57(i) of the Act
provides that, until the Commission prescribes rules under section
57(a)(4), the Commission's rules under section 17(d) of the Act
applicable to registered closed-end investment companies will be deemed
to apply to transactions subject to section 57(a)(4). Because the
Commission has not adopted any rules under section 57(a)(4), rule 17d-1
also applies to joint transactions with Regulated Funds that are BDCs.
2. In passing upon applications under rule 17d-1, the Commission
considers whether the company's participation in the joint transaction
is consistent with the provisions, policies, and purposes of the Act
and the extent to which such participation is on a basis different from
or less advantageous than that of other participants.
3. Applicants submit that Tortoise Advisors and the Existing
Affiliated Adviser may be deemed to control the Existing Regulated
Funds and the Existing Affiliated Funds, respectively, and any other
Adviser will be controlling, controlled by, or under common control
with Tortoise Advisors.
[[Page 43718]]
As a result, the Regulated Funds may be deemed to be under common
control, and thus affiliated persons of each other under section
2(a)(3)(C) of the Act. In addition, the Affiliated Funds may be deemed
to be under common control with the Regulated Funds, and thus
affiliated persons of each Regulated Fund under section 2(a)(3)(C) of
the Act. As a result, these relationships might cause a Regulated Fund
and one or more other Regulated Funds and/or one or more Affiliated
Funds participating in Co-Investment Transactions to be subject to
section 17(d) or 57(a)(4) of the Act, and thus subject to the
provisions of rule 17d-1 of the Act.
4. Applicants state that in the absence of the requested relief, in
some circumstances the Regulated Funds would be limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants believe that the proposed terms and
conditions of the application will ensure that the Co-Investment
Transactions are consistent with the protection of each Regulated
Fund's shareholders and with the purposes intended by the policies and
provisions of the Act. Applicants state that the Regulated Funds'
participation in the Co-Investment Transactions will be consistent with
the provisions, policies, and purposes of the Act and would be done in
a manner that is not different from, or less advantageous than, that of
other participants.
Applicants' Conditions:
Applicants agree that the Order will be subject to the following
conditions:
1. Each time an 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, the
Regulated Fund's Adviser will make an independent determination of the
appropriateness of the investment for such Regulated Fund in light of
the Regulated Fund's then-current circumstances.
2. (a) If the Adviser deems a Regulated Fund's participation in any
Potential Co-Investment Transaction to be appropriate for the Regulated
Fund, it will then determine an appropriate level of investment for the
Regulated Fund.
(b) If the aggregate amount recommended by the applicable Adviser
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be
invested by the other participating Regulated Funds and Affiliated
Funds, collectively, in the same transaction, exceeds the amount of the
investment opportunity, the investment opportunity will be allocated
among them pro rata based on each participant's Available Capital, up
to the amount proposed to be invested by each. The applicable Adviser
will provide the Eligible Directors of each participating Regulated
Fund with information concerning each participating party's Available
Capital to assist the Eligible Directors with their review of the
Regulated Fund's investments for compliance with these allocation
procedures.
(c) After making the determinations required in conditions 1 and
2(a), the applicable Adviser will distribute written information
concerning the Potential Co-Investment Transaction (including the
amount proposed to be invested by each participating Regulated Fund and
Affiliated Fund) to the Eligible Directors of each participating
Regulated Fund for their consideration. A Regulated Fund will co-invest
with one or more other Regulated Funds and/or one or more Affiliated
Funds only if, prior to the Regulated Fund's participation in the
Potential Co-Investment Transaction, a Required Majority concludes
that:
(i) the terms of the Potential Co-Investment Transaction, including
the consideration to be paid, are reasonable and fair to the Regulated
Fund and its shareholders and do not involve overreaching in respect of
the Regulated Fund or its shareholders on the part of any person
concerned;
(ii) the Potential Co-Investment Transaction is consistent with:
(A) the interests of the shareholders of the Regulated Fund; and
(B) the Regulated Fund's then-current Objectives and Strategies;
(iii) the investment by any other Regulated Funds or Affiliated
Funds would not disadvantage the Regulated Fund, and participation by
the Regulated Fund would not be on a basis different from or less
advantageous than that of other Regulated Funds or Affiliated Funds;
provided that, if any other Regulated Fund or Affiliated Fund, but not
the Regulated Fund itself, gains the right to nominate a director for
election to a portfolio company's board of directors or the right to
have a board observer or any similar right to participate in the
governance or management of the portfolio company, such event shall not
be interpreted to prohibit the Required Majority from reaching the
conclusions required by this condition (2)(c)(iii), if:
(A) the Eligible Directors will have the right to ratify the
selection of such director or board observer, if any;
(B) the applicable Adviser agrees to, and does, provide periodic
reports to the Regulated Fund's Board with respect to the actions of
such director or the information received by such board observer or
obtained through the exercise of any similar right to participate in
the governance or management of the portfolio company; and
(C) any fees or other compensation that any Affiliated Fund or any
Regulated Fund or any affiliated person of any Affiliated Fund or any
Regulated Fund receives in connection with the right of the Affiliated
Fund or a Regulated Fund to nominate a director or appoint a board
observer or otherwise to participate in the governance or management of
the portfolio company will be shared proportionately among the
participating Affiliated Funds (who each may, in turn, share its
portion with its affiliated persons) and the participating Regulated
Funds in accordance with the amount of each party's investment; and
(iv) the proposed investment by the Regulated Fund will not benefit
the Advisers, the Affiliated Funds or the other Regulated Funds or any
affiliated person of any of them (other than the parties to the Co-
Investment Transaction), except (A) to the extent permitted by
condition 13, (B) to the extent permitted by Section 17(e) or 57(k) of
the Act, as applicable, (C) indirectly, as a result of an interest in
the securities issued by one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or other compensation described
in condition 2(c)(iii)(C).
3. Each Regulated Fund has the right to decline to participate in
any Potential Co-Investment Transaction or to invest less than the
amount proposed.
4. The 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 Funds during the preceding quarter that fell within
the Regulated Fund's then-current Objectives and Strategies that were
not made available to the Regulated Fund, and an explanation of why the
investment opportunities were not offered to the Regulated Fund. All
information presented to the Board pursuant to this condition will be
kept for the life of the Regulated Fund and at least two years
thereafter, and will be subject to examination by the Commission and
its staff.
5. Except for Follow-On Investments made in accordance with
condition 8,\10\
[[Page 43719]]
a Regulated Fund will not invest in reliance on the Order in any issuer
in which another Regulated Fund, Affiliated Fund, or any affiliated
person of another Regulated Fund or Affiliated Fund is an existing
investor.
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\10\ 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 in a Co-Investment Transaction, the applicable Advisers will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest
practical time; and
(ii) formulate a recommendation as to participation by each
Regulated Fund in the disposition.
(b) Each Regulated Fund will have the right to participate in such
disposition on a proportionate basis, at the same price and on the same
terms and conditions as those applicable to the participating
Affiliated Funds and Regulated Funds.
(c) A Regulated Fund may participate in such disposition without
obtaining prior approval of the Required Majority if: (i) The proposed
participation of each Regulated Fund and each Affiliated Fund in such
disposition is proportionate to its outstanding investments in the
issuer immediately preceding the disposition; (ii) the Board of the
Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in such dispositions on a pro
rata basis (as described in greater detail in the application); and
(iii) the Board of the Regulated Fund is provided on a quarterly basis
with a list of all dispositions made in accordance with this condition.
In all other cases, the Adviser will provide its written recommendation
as to the Regulated Fund's participation to the Eligible Directors, and
the Regulated Fund will participate in such disposition solely to the
extent that a Required Majority determines that it is in the Regulated
Fund's best interests.
(d) Each Affiliated Fund and each Regulated Fund will bear its own
expenses in connection with any such disposition.
8. (a) If any Affiliated Fund or any Regulated Fund desires to make
a Follow-On Investment in a portfolio company whose securities were
acquired in a Co-Investment Transaction, the applicable 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 Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Directors, and the Regulated Fund will participate in such Follow-On
Investment solely to the extent that a Required Majority determines
that it is in the Regulated Fund's best interests.
(c) If, with respect to any Follow-On Investment:
(i) The amount of the opportunity is not based on the Regulated
Funds' and the Affiliated Funds' outstanding investments immediately
preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by the applicable Adviser to
be invested by the applicable Regulated Fund in the Follow-On
Investment, 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, then the investment opportunity will be allocated among
them pro rata based on each participant's Available Capital, up to the
maximum amount proposed to be invested by each.
(d) The acquisition of Follow-On Investments as permitted by this
condition will be considered a Co-Investment Transaction for all
purposes and subject to the other conditions set forth in the
application.
9. The Non-Interested Directors of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Funds or Affiliated Funds that the
Regulated Fund considered but declined to participate in, so that the
Non-Interested Directors may determine whether all investments made
during the preceding quarter, including those investments that the
Regulated Fund considered but declined to participate in, comply with
the conditions of the Order. In addition, the Non-Interested Directors
will consider at least annually the continued appropriateness for the
Regulated Fund of participating in new and existing Co-Investment
Transactions.
10. Each Regulated Fund will maintain the records required by
section 57(f)(3) of the Act as if each of the Regulated Funds were a
BDC and each of the investments permitted under these conditions were
approved by the Required Majority under section 57(f) of the Act.
11. No Non-Interested Director of a Regulated Fund will also be a
director, general partner, managing member or principal, or otherwise
an ``affiliated person'' (as defined in the Act) of an Affiliated Fund.
12. The expenses, if any, associated with acquiring, holding or
disposing of any securities acquired in a Co-Investment Transaction
(including, without limitation, the expenses of the distribution of any
such securities registered for sale under the Securities Act) will, to
the extent not payable by the Advisers under their respective
investment advisory agreements with Affiliated Funds and the Regulated
Funds, be shared by the Regulated Funds and the Affiliated Funds in
proportion to the relative amounts of the securities held or to be
acquired or disposed of, as the case may be.
13. Any transaction fee \11\ (including break-up or commitment fees
but excluding broker's fees contemplated by section 17(e) or 57(k) of
the Act, as applicable), received in connection with a Co-Investment
Transaction will be distributed to the participating
[[Page 43720]]
Regulated Funds and Affiliated Funds on a pro rata basis based on the
amounts they invested or committed, as the case may be, in such Co-
Investment Transaction. If any transaction fee is to be held by an
Adviser pending consummation of the transaction, the fee will be
deposited into an account maintained by such Adviser at a bank or banks
having the qualifications prescribed in section 26(a)(1) of the Act,
and the account will earn a competitive rate of interest that will also
be divided pro rata among the participating Regulated Funds and
Affiliated Funds based on the amounts they invest in such Co-Investment
Transaction. None of the Affiliated Funds, the Advisers, the other
Regulated Funds or any affiliated person of the Regulated Funds or
Affiliated Funds will receive additional compensation or remuneration
of any kind as a result of or in connection with a Co-Investment
Transaction (other than (a) in the case of the Regulated Funds and 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 Adviser, investment advisory fees paid in accordance
with the agreement between the Adviser and the Regulated Fund or
Affiliated Fund.
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\11\ Applicants are not requesting and the staff of the
Commission is not providing any relief for transaction fees received
in connection with any Co-Investment Transaction.
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14. If the Holders own in the aggregate more than 25% of the Shares
of a Regulated Fund, then the Holders will vote such Shares as directed
by an independent third party when voting on (1) the election of
directors; (2) the removal of one or more directors; or (3) any other
matter under either the Act or applicable State law affecting the
Board's composition, size or manner of election.
15. Each Regulated Fund's chief compliance officer, as defined in
rule 38a-1(a)(4), will prepare an annual report for its Board that
evaluates (and documents the basis of that evaluation) the Regulated
Fund's compliance with the terms and conditions of the application and
the procedures established to achieve such compliance.
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18427 Filed 8-24-18; 8:45 am]
BILLING CODE 8011-01-P
