Star Mountain Credit Opportunities Fund, LP, et al., 12040-12045 [2021-04075]
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12040
Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices
G. Approval by Sponsors in Accordance
With Plans
Section IV(c)(i) of the CQ Plan and
Section IV(b)(i) of the CTA Plan require
the Participants to unanimously
approve the Amendments proposed
herein. They so approved it.
H. Description of Operation of Facility
Contemplated by the Proposed
Amendments
Not applicable.
I. Terms and Conditions of Access
Not applicable.
J. Method of Determination and
Imposition, and Amount of, Fees and
Charges
Not applicable.
K. Method and Frequency of Processor
Evaluation
Not applicable.
L. Dispute Resolution
Not applicable.
II. Regulation NMS Rule 601(a) (Solely
in Its Application to the Amendments
to the CTA Plan)
A. Equity Securities for Which
Transaction Reports Shall be Required
by the Plan
Not applicable.
B. Reporting Requirements
Not applicable.
C. Manner of Collecting, Processing,
Sequencing, Making Available and
Disseminating Last Sale Information
Not applicable.
D. Manner of Consolidation
Not applicable.
E. Standards and Methods Ensuring
Promptness, Accuracy and
Completeness of Transaction Reports
Not applicable.
F. Rules and Procedures Addressed to
Fraudulent or Manipulative
Dissemination
Not applicable.
G. Terms of Access to Transaction
Reports
Not applicable.
Not applicable.
III. Solicitation of Comments
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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–
CTA/CQ–2021–01 on the subject line.
AGENCY:
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–CTA/CQ–2021–01. This file
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
website (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all
written statements with respect to the
proposed Amendments that are filed
with the Commission, and all written
communications relating to the
proposed Amendments 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 website
viewing and printing at the principal
office of the Plans. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CTA/
CQ–2021–01 and should be submitted
on or before March 22, 2021.
[FR Doc. 2021–04088 Filed 2–26–21; 8:45 am]
The Commission seeks comments on
the Amendments. Interested persons are
invited to submit written data, views,
18:48 Feb 26, 2021
SECURITIES AND EXCHANGE
COMMISSION
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
H. Identification of Marketplace of
Execution
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and arguments concerning the
foregoing, including whether the
proposed Amendments are consistent
with the Act and the rules and
regulations thereunder applicable to
national market system plans.
Comments may be submitted by any of
the following methods:
BILLING CODE 8011–01–P
17 17
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[Investment Company Act Release No.
34202; 812–15120]
Star Mountain Credit Opportunities
Fund, LP, et al.
February 23, 2021.
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
(‘‘BDCs’’) and closed-end management
investment companies to co-invest in
portfolio companies with each other and
with certain affiliated investment funds.
APPLICANTS: Star Mountain Credit
Opportunities Fund, LP (the ‘‘Fund’’);
Star Mountain Fund Management, LLC
(the ‘‘BDC Adviser), on behalf of itself
and its successors; 1 Star Mountain
Diversified Small Business Access Fund
II, LP, Star Mountain Diversified Small
Business Access Fund II–A, LP, Star
Mountain Diversified Credit Income
Fund III, LP, Star Mountain—PA Small
Business Co-Investment Platform, LP,
Star Mountain—PA Small Business CoInvestment Platform II, LP, Star
Mountain—PA Holdings I, LTD, Star
Mount U.S. Lower Middle-Market
Secondary Fund II, LP and Star
Mountain SBIC Fund, LP (collectively,
the ‘‘Existing Affiliated Funds’’).
FILING DATES: The application was filed
on April 3, 2020 and amended on July
29, 2020 and November 25, 2020.
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 emailing the
Commission’s Secretary at SecretarysOffice@sec.gov and serving applicants
with a copy of the request by email.
Hearing requests should be received by
the Commission by 5:30 p.m. on March
22, 2021, 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–
1 The term ‘‘successor’’, as applied to each
Adviser (as defined below), means an entity that
results from a reorganization into another
jurisdiction or change in the type of business
organization.
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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
emailing the Commission’s Secretary at
Secretarys-Office@sec.gov.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, SecretarysOffice@sec.gov. Applicants:
Chris.Gimbert@
starmountaincapital.com and
Richard.horowitz@dechert.com.
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Counsel, at
(202) 551–6990 or Trace W. Rakestraw,
Branch Chief, at (202) 551–6825
(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 Fund is a Delaware limited
partnership that will convert to a
Delaware corporation that is a nondiversified, closed-end management
investment company and intends to
elect to be regulated as a business
development company (‘‘BDC’’) under
section 54(a) of the Act.2 The Fund’s
investment objective is to create a
diversified and current yielding
portfolio composed primarily of senior
and subordinated loans with equity
upside investments in the U.S. small
and medium-sized business (‘‘SMBs’’)
market segment. The Fund invests
primarily in privately negotiated loans
and equity investments to SMBs
generally with annual revenues greater
than $15 million and earnings before
interest, taxes, depreciation and
amortization of less than $50 million.
The Fund generates revenues primarily
through receipt of interest income from
the investments it holds. The board of
directors (the ‘‘Board’’) 3 of the Fund
will be comprised of five directors, three
of whom are not ‘‘interested persons,’’
within the meaning of section 2(a)(19) of
2 Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the
purpose of making investments in securities
described in sections 55(a)(1) through 55(a)(3) of the
Act and makes available significant managerial
assistance with respect to the issuers of such
securities.
3 The term ‘‘Board’’ refers to the board of directors
of any Regulated Fund.
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the Act (‘‘Non-Interested Directors’’).
Prior to relying on the requested Order,
the Fund will have filed an election to
be regulated as a BDC under the Act.
2. The BDC Adviser is a limited
liability company organized under the
laws of the State of Delaware and is
registered with the Commission under
the Investment Advisers Act of 1940
(the ‘‘Advisers Act’’). The BDC Adviser
serves as the investment adviser to the
Fund and each of the Existing Affiliated
Funds.
3. The Existing Affiliated Funds
pursue strategies focused on investing
in senior and subordinated loans with
equity upside investments in U.S. small
and medium-sized businesses. Each
Existing Affiliated Fund is an entity
whose investment adviser is the BDC
Adviser and that would be an
investment company but for section
3(c)(1) or 3(c)(7) of the Act.
4. Applicants seek an order (‘‘Order’’)
to permit a Regulated Fund 4 and one or
more other Regulated Funds and/or one
or more Affiliated Funds 5 to participate
in the same investment opportunities
through a proposed co-investment
program (the ‘‘Co-Investment Program’’)
where such participation would
otherwise be prohibited under section
17(d) and/or section 57(a)(4) and rule
17d–1 by (a) co-investing with each
other in securities issued by issuers in
private placement transactions in which
an Adviser negotiates terms in addition
to price; 6 and (b) making additional
investments in securities of such
issuers, including through the exercise
of warrants, conversion privileges, and
other rights to purchase securities of the
issuers (‘‘Follow-On Investments’’). ‘‘CoInvestment Transaction’’ means any
transaction in which a Regulated Fund
(or its Wholly-Owned Investment Sub,
as defined below) participates 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
5. Applicants state that any of the
Regulated Funds may, from time to
time, form a Wholly-Owned Investment
Sub.8 Such a subsidiary would be
prohibited from investing in a CoInvestment Transaction with any
Affiliated Fund or Regulated Fund
because it would be a company
controlled by its parent Regulated Fund
for purposes of section 57(a)(4) of the
Act and rule 17d–1 under the Act.
Applicants request that each WhollyOwned 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 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
4 ‘‘Regulated Fund’’ means the Fund 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 BDC, (b) whose
investment adviser is an Adviser, and (c) that
intends to participate in the Co-Investment
Program. The term ‘‘Adviser’’ means the BDC
Adviser and any future investment adviser that (i)
controls, is controlled by, or is under common
control with the BDC Adviser and (ii) is registered
as an investment adviser under the Advisers Act.
5 ‘‘Affiliated Fund’’ means the Existing Affiliated
Funds and 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 CoInvestment 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 of 1933 (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
percent 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. All subsidiaries participating in
Co-Investment Transactions will be Wholly-Owned
Investment Subs 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.
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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.
6. When considering Potential CoInvestment Transactions for any
Regulated Fund, the applicable Adviser
will consider only the Objectives and
Strategies,9 investment policies,
investment positions, capital available
for investment,10 and other pertinent
factors applicable to that Regulated
Fund. The Regulated Fund’s Adviser
expects 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 capital available for
investment or diversification. The Board
of each Regulated Fund, including the
Non-Interested Directors, has
determined, or will have determined,
that it is in the best interests of the
Regulated Fund to participate in CoInvestment Transactions.11
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 Adviser will
present each Potential Co-Investment
Transaction and the proposed allocation
to the directors of the Board eligible to
vote on that Co-Investment Transaction
under section 57(o) of the Act (‘‘Eligible
Directors’’), and the required majority of
such directors of the Board, as defined
in section 57(o) of the Act (‘‘Required
Majority’’) 12 will approve each CoInvestment Transaction prior to any
9 ‘‘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, or under the Securities Exchange
Act of 1934, and the Regulated Fund’s reports to
shareholders.
10 The amount of each Regulated Fund’s capital
available for investment will be determined based
on the amount of cash on hand, existing
commitments and reserves, if any, the targeted
leverage level, targeted asset mix and other
investment policies and restrictions set from time
to time by the Board of the applicable Regulated
Fund or imposed by applicable laws, rules,
regulations or interpretations.
11 The Regulated Funds, however, will not be
obligated to invest, or co-invest, when investment
opportunities are referred to them.
12 In the case of a Regulated Fund that is a
registered closed-end fund, the Board members that
make up the Required Majority will be determined
as if the Regulated Fund were a BDC subject to
section 57(o).
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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 Affiliated Fund in such disposition
or Follow-On Investment 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.
9. 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.
10. If the Advisers, their principal
owners (the ‘‘Principals’’), or any person
controlling, controlled by, or under
common control with the Advisers or
the Principals, and the Affiliated Funds
(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 required under
condition 14.
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.
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2. 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.
3. 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 set forth in the application
ensure that the proposed 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 believe that the
participation of the Regulated Funds in
the Co-Investment Transactions done in
accordance with the proposed terms and
conditions would be consistent with the
provisions, policies, and purposes of the
Act and would be done in a manner that
was not different from, or less
advantageous than, the other
participants.
Applicants’ Conditions
Applicants agree that the Order shall
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
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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 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
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
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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 an Affiliated Fund or a
Regulated Fund to nominate a director
or appoint a board observer or otherwise
to participate in the governance or
management of the portfolio company
will be shared proportionately among
the participating Affiliated Funds (who
each may, in turn, share its portion with
its affiliated persons) and the
participating Regulated Funds in
accordance with the amount of each
party’s investment; and
(iv) the proposed investment by the
Regulated Fund will not benefit the
Advisers, the Affiliated Funds or the
other Regulated Funds or any affiliated
person of any of them (other than the
parties to the Co-Investment
Transaction), except (A) to the extent
permitted by condition 13, (B) to the
extent permitted by section 17(e) or
57(k) of the Act, as applicable, (C)
indirectly, as a result of an interest in
the securities issued by one of the
parties to the Co-Investment
Transaction, or (D) in the case of fees or
other compensation described in
condition 2(c)(iii)(C).
3. Each Regulated Fund has the right
to decline to participate in any Potential
Co-Investment Transaction or to invest
less than the amount proposed.
4. The 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
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subject to examination by the
Commission and its staff.
5. Except for Follow-On Investments
made in accordance with condition 8,13
a Regulated Fund will not invest in
reliance on the Order in any issuer in
which another Regulated Fund,
Affiliated Fund, or any affiliated person
of another Regulated Fund or 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 any
other Regulated Fund.
(c) A Regulated Fund may participate
in such disposition without obtaining
prior approval of the Required Majority
if: (i) The proposed participation of each
Regulated Fund and each Affiliated
Fund in such disposition is
proportionate to its outstanding
investments in the issuer immediately
preceding the disposition; (ii) the Board
of the Regulated Fund has approved as
being in the best interests of the
Regulated Fund the ability to participate
in such dispositions on a pro rata basis
(as described in greater detail in the
13 This exception applies only to Follow-On
Investments by a Regulated Fund in issuers in
which that Regulated Fund already holds
investments.
E:\FR\FM\01MRN1.SGM
01MRN1
12044
Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices
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 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 Funds in the
VerDate Sep<11>2014
18:48 Feb 26, 2021
Jkt 253001
same transaction, exceeds the amount of
the opportunity; then the amount
invested by each such party will be
allocated among them pro rata based on
each party’s capital available for
investment in the asset class to be
allocated, up to the amount proposed to
be invested by each.
(d) The acquisition of Follow-On
Investments as permitted by this
condition will be considered a CoInvestment Transaction for all purposes
and subject to the other conditions set
forth in the application.
9. The Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds and
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
which 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 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.
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
13. Any transaction fee 14 (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k) of the Act, as
applicable), received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by an 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 percent of the Shares of
a Regulated Fund, then the Holders will
vote such Shares in the same
percentages as the Regulated Fund’s
other shareholders (not including the
Holders) 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) 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.
14 Applicants are not requesting and the staff is
not providing any relief for transaction fees
received in connection with any Co-Investment
Transaction.
E:\FR\FM\01MRN1.SGM
01MRN1
Federal Register / Vol. 86, No. 38 / Monday, March 1, 2021 / Notices
For the Commission, by the Division
of Investment Management, under
delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–04075 Filed 2–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Extension Form Id 3235–0328]
Submission for OMB Review;
Comment Request; Upon Written
Request
Copies Available From: Securities and
Exchange Commission, Office of FOIA
Services, 100 F Street NE,
Washington, DC 20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (the ‘‘Paperwork
Reduction Act’’), the Commission is
soliciting comments on the collection of
information summarized below. The
Commission plans to submit this
existing collection of information to the
Office of Management and Budget.
Form ID (OMB Control No. 3235–
0328) must be completed and filed with
the Commission by all individuals,
companies, and other organizations who
seek access to file electronically on the
Commission’s primary electronic filing
system, Electronic Data Gathering,
Analysis and Retrieval system
(‘‘EDGAR’’). Those seeking access to file
on EDGAR typically include those who
are required to make certain disclosures
pursuant to the federal securities laws.
The information provided on Form ID is
an essential part of the security of
EDGAR. Form ID is not a public
document because it is used solely for
the purpose of screening applicants and
granting access to EDGAR. Form ID
must be submitted whenever an
applicant seeks an EDGAR
identification number (Central Index
Key or CIK) and access codes to file on
EDGAR.
The Commission may consider,
among other things, amendments to
Form ID that would result in a more
uniform and secure process for EDGAR
access by requiring certain applicants
that already have a CIK, but do not have
EDGAR access codes, to submit the
Form ID to obtain access to EDGAR. If
these amendments are adopted, for
purposes of the Paperwork Reduction
Act, the estimated total number of
annual Form ID filings for filers with
CIKs that need to obtain access codes is
VerDate Sep<11>2014
18:48 Feb 26, 2021
Jkt 253001
approximately 404 filings.1
Additionally, we would update the
current approved estimate of the annual
number of Form ID filings for new filers
without CIKs (46,842 filings) by
approximately 1,247 filings.2
Thus, for purposes of the Paperwork
Reduction Act, the estimated total
number of annual Form ID filings would
increase from 46,842 filings to 48,493
filings.3 The estimate of 0.15 hours per
response would stay the same, as the
filers with CIKs would be filling out the
same information as filers without CIKs.
The estimated total annual burden
would increase from 7,026 hours to
7,274 hours.4 The estimate that the filers
are responsible for 100% of the total
burden hours would stay the same.
In relation to the potential
amendments described above, the
Commission may consider amending
the Form ID to delete references to
applicants that do not have CIKs. If
adopted, this amendment would clarify
that a Form ID submission would also
be required by applicants that already
have CIKs but do not have EDGAR
access codes. Separately, the
Commission may also consider
modifying Form ID to update its
instructions and cross-references to
Volume I of the EDGAR Filer Manual.5
Other than the potential amendments
to require certain applicants that already
have a CIK, but do not have EDGAR
access codes, to submit the Form ID, we
do not believe that these additional
amendments to the Form ID would
make any substantive modifications to
any existing collection of information
requirements or impose any new
substantive recordkeeping or
information collection requirements
within the meaning of the Paperwork
Reduction Act.
An agency may not conduct or
sponsor, and a person is not required to
1 We base this estimate on the average number of
filers with CIKs who have obtained access codes to
EDGAR for the past three fiscal years. (524 + 359
+ 330)/3 = 404.
2 We base this estimate on the number of Form
ID filings for filers with no CIKs for the past three
fiscal years and subtracting it from the current
approved estimate. ((49,269 + 48,136 + 46,861)/3)
¥ 46,842 = 1,247.
3 46,842 + 404 + 1,247 = 48,493.
4 48,493 × 0.15 = 7,274.
5 See Adoption of Updated EDGAR Filer Manual,
Proposed Collection and Comment Request for
Form ID, Release No. 33–10902 (Dec. 11, 2020) [86
FR 7968] (Feb. 3, 2021)] (allowing applicants to
EDGAR the option of obtaining electronic
notarizations and remote online notarizations). The
Commission also amended 17 CFR 232.10(b) to
remove the manual signature requirement for
EDGAR access requests to allow electronic
signature requests. Id. The methods of notarization
provide an efficient means of authenticating
signatures in connection with requests for EDGAR
access.
PO 00000
Frm 00127
Fmt 4703
Sfmt 4703
12045
respond to, a collection of information
unless it displays a currently valid
control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to (i) www.reginfo.gov/public/do/
PRAMain and (ii) David Bottom,
Director/Chief Information Officer,
Securities and Exchange Commission, c/
o Cynthia Roscoe, 100 F Street NE,
Washington, DC 20549, or by sending an
email to: PRA_Mailbox@sec.gov.
Dated: February 24, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–04139 Filed 2–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91190; File No. S7–24–89]
Joint Industry Plan; Notice of Filing
and Immediate Effectiveness of the
Fiftieth Amendment to the Joint SelfRegulatory Organization Plan
Governing the Collection,
Consolidation and Dissemination of
Quotation and Transaction Information
for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading
Privileges Basis
February 23, 2021.
Pursuant to Section 11A of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 608 thereunder,2
notice is hereby given that on February
11, 2021,3 the Participants 4 in the Joint
Self-Regulatory Organization Plan
Governing the Collection, Consolidation
and Dissemination of Quotation and
Transaction Information for NasdaqListed Securities Traded on Exchanges
1 15
U.S.C. 78k–1.
CFR 242.608.
3 See Letter from Robert Books, Chair, UTP
Operating Committee, to Vanessa Countryman,
Secretary, Commission (Feb. 11, 2021).
4 The Participants are: Cboe BYX Exchange, Inc.,
Cboe BZX Exchange, Inc., Cboe EDGA Exchange,
Inc., Cboe EDGX Exchange, Inc., Cboe Exchange,
Inc., Financial Industry Regulatory Authority, Inc.,
The Investors’ Exchange LLC, Long-Term Stock
Exchange, Inc., MEMX LLC, MIAX PEARL, LLC,
Nasdaq BX, Inc., Nasdaq ISE, LLC, Nasdaq PHLX,
Inc., The Nasdaq Stock Market LLC, New York
Stock Exchange LLC, NYSE American LLC, NYSE
Arca, Inc., NYSE Chicago, Inc., and NYSE National,
Inc. (collectively, the ‘‘Participants’’).
2 17
E:\FR\FM\01MRN1.SGM
01MRN1
]]>Agencies
[Federal Register Volume 86, Number 38 (Monday, March 1, 2021)]
[Notices]
[Pages 12040-12045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04075]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34202; 812-15120]
Star Mountain Credit Opportunities Fund, LP, et al.
February 23, 2021.
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 (``BDCs'') and closed-end management
investment companies to co-invest in portfolio companies with each
other and with certain affiliated investment funds.
Applicants: Star Mountain Credit Opportunities Fund, LP (the
``Fund''); Star Mountain Fund Management, LLC (the ``BDC Adviser), on
behalf of itself and its successors; \1\ Star Mountain Diversified
Small Business Access Fund II, LP, Star Mountain Diversified Small
Business Access Fund II-A, LP, Star Mountain Diversified Credit Income
Fund III, LP, Star Mountain--PA Small Business Co-Investment Platform,
LP, Star Mountain--PA Small Business Co-Investment Platform II, LP,
Star Mountain--PA Holdings I, LTD, Star Mount U.S. Lower Middle-Market
Secondary Fund II, LP and Star Mountain SBIC Fund, LP (collectively,
the ``Existing Affiliated Funds'').
---------------------------------------------------------------------------
\1\ The term ``successor'', as applied to each Adviser (as
defined below), means an entity that results from a reorganization
into another jurisdiction or change in the type of business
organization.
Filing Dates: The application was filed on April 3, 2020 and amended
---------------------------------------------------------------------------
on July 29, 2020 and November 25, 2020.
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 emailing the Commission's
Secretary at [email protected] and serving applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on March 22, 2021, 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-
[[Page 12041]]
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 emailing the Commission's Secretary at [email protected].
ADDRESSES: Secretary, U.S. Securities and Exchange Commission,
[email protected]. Applicants:
[email protected] and [email protected].
FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel,
at (202) 551-6990 or Trace W. Rakestraw, Branch Chief, at (202) 551-
6825 (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 Fund is a Delaware limited partnership that will convert to
a Delaware corporation that is a non-diversified, closed-end management
investment company and intends to elect to be regulated as a business
development company (``BDC'') under section 54(a) of the Act.\2\ The
Fund's investment objective is to create a diversified and current
yielding portfolio composed primarily of senior and subordinated loans
with equity upside investments in the U.S. small and medium-sized
business (``SMBs'') market segment. The Fund invests primarily in
privately negotiated loans and equity investments to SMBs generally
with annual revenues greater than $15 million and earnings before
interest, taxes, depreciation and amortization of less than $50
million. The Fund generates revenues primarily through receipt of
interest income from the investments it holds. The board of directors
(the ``Board'') \3\ of the Fund will be comprised of five directors,
three of whom are not ``interested persons,'' within the meaning of
section 2(a)(19) of the Act (``Non-Interested Directors''). Prior to
relying on the requested Order, the Fund will have filed an election to
be regulated as a BDC under the Act.
---------------------------------------------------------------------------
\2\ Section 2(a)(48) defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
\3\ The term ``Board'' refers to the board of directors of any
Regulated Fund.
---------------------------------------------------------------------------
2. The BDC Adviser is a limited liability company organized under
the laws of the State of Delaware and is registered with the Commission
under the Investment Advisers Act of 1940 (the ``Advisers Act''). The
BDC Adviser serves as the investment adviser to the Fund and each of
the Existing Affiliated Funds.
3. The Existing Affiliated Funds pursue strategies focused on
investing in senior and subordinated loans with equity upside
investments in U.S. small and medium-sized businesses. Each Existing
Affiliated Fund is an entity whose investment adviser is the BDC
Adviser and that would be an investment company but for section 3(c)(1)
or 3(c)(7) of the Act.
4. Applicants seek an order (``Order'') to permit a Regulated Fund
\4\ and one or more other Regulated Funds and/or one or more Affiliated
Funds \5\ to participate in the same investment opportunities through a
proposed co-investment program (the ``Co-Investment Program'') where
such participation would otherwise be prohibited under section 17(d)
and/or section 57(a)(4) and rule 17d-1 by (a) co-investing with each
other in securities issued by issuers in private placement transactions
in which an Adviser negotiates terms in addition to price; \6\ and (b)
making additional investments in securities of such issuers, including
through the exercise of warrants, conversion privileges, and other
rights to purchase securities of the issuers (``Follow-On
Investments''). ``Co-Investment Transaction'' means any transaction in
which a Regulated Fund (or its Wholly-Owned Investment Sub, as defined
below) participates 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 Fund 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 BDC, (b) whose investment adviser is an
Adviser, and (c) that intends to participate in the Co-Investment
Program. The term ``Adviser'' means the BDC Adviser and any future
investment adviser that (i) controls, is controlled by, or is under
common control with the BDC Adviser and (ii) is registered as an
investment adviser under the Advisers Act.
\5\ ``Affiliated Fund'' means the Existing Affiliated Funds and
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 of 1933 (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.
---------------------------------------------------------------------------
5. Applicants state that any of the Regulated Funds may, from time
to time, form a Wholly-Owned Investment Sub.\8\ Such a subsidiary would
be prohibited from investing in a Co-Investment Transaction with any
Affiliated Fund or Regulated Fund because it would be a company
controlled by its parent Regulated Fund for purposes of section
57(a)(4) of the Act and rule 17d-1 under the Act. 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 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
[[Page 12042]]
same Co-Investment Transaction with any of its Wholly-Owned Investment
Subs, the Board will also be informed of, and take into consideration,
the relative participation of the Regulated Fund and the Wholly-Owned
Investment Sub.
---------------------------------------------------------------------------
\8\ The term ``Wholly-Owned Investment Sub'' means an entity (i)
that is wholly-owned by a Regulated Fund (with the Regulated Fund at
all times holding, beneficially and of record, 100 percent 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. All subsidiaries participating in Co-Investment
Transactions will be Wholly-Owned Investment Subs 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 applicable Adviser will consider only the
Objectives and Strategies,\9\ investment policies, investment
positions, capital available for investment,\10\ and other pertinent
factors applicable to that Regulated Fund. The Regulated Fund's Adviser
expects 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 capital available for investment or
diversification. The Board of each Regulated Fund, including the Non-
Interested Directors, has determined, or will have determined, that it
is in the best interests of the Regulated Fund to participate in Co-
Investment Transactions.\11\
---------------------------------------------------------------------------
\9\ ``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, or under the Securities Exchange Act of 1934, and the Regulated
Fund's reports to shareholders.
\10\ The amount of each Regulated Fund's capital available for
investment will be determined based on the amount of cash on hand,
existing commitments and reserves, if any, the targeted leverage
level, targeted asset mix and other investment policies and
restrictions set from time to time by the Board of the applicable
Regulated Fund or imposed by applicable laws, rules, regulations or
interpretations.
\11\ The Regulated Funds, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
---------------------------------------------------------------------------
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 Adviser will present each
Potential Co-Investment Transaction and the proposed allocation to the
directors of the Board eligible to vote on that Co-Investment
Transaction under section 57(o) of the Act (``Eligible Directors''),
and the required majority of such directors of the Board, as defined in
section 57(o) of the Act (``Required Majority'') \12\ will approve each
Co-Investment Transaction prior to any investment by the participating
Regulated Fund.
---------------------------------------------------------------------------
\12\ In the case of a Regulated Fund that is a registered
closed-end fund, the Board members that make up the Required
Majority will be determined as if the Regulated Fund were a BDC
subject to section 57(o).
---------------------------------------------------------------------------
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
Affiliated Fund in such disposition or Follow-On Investment 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.
9. 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.
10. If the Advisers, their principal owners (the ``Principals''),
or any person controlling, controlled by, or under common control with
the Advisers or the Principals, and the Affiliated Funds (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 required under condition 14.
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.
2. 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.
3. 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 set forth in the application ensure that the proposed 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 believe that the
participation of the Regulated Funds in the Co-Investment Transactions
done in accordance with the proposed terms and conditions would be
consistent with the provisions, policies, and purposes of the Act and
would be done in a manner that was not different from, or less
advantageous than, the other participants.
Applicants' Conditions
Applicants agree that the Order shall 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
[[Page 12043]]
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 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 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 an Affiliated
Fund or a Regulated Fund to nominate a director or appoint a board
observer or otherwise to participate in the governance or management of
the portfolio company will be shared proportionately among the
participating Affiliated Funds (who each may, in turn, share its
portion with its affiliated persons) and the participating Regulated
Funds in accordance with the amount of each party's investment; and
(iv) the proposed investment by the Regulated Fund will not benefit
the Advisers, the Affiliated Funds or the other Regulated Funds or any
affiliated person of any of them (other than the parties to the Co-
Investment Transaction), except (A) to the extent permitted by
condition 13, (B) to the extent permitted by section 17(e) or 57(k) of
the Act, as applicable, (C) indirectly, as a result of an interest in
the securities issued by one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or other compensation described
in condition 2(c)(iii)(C).
3. Each Regulated Fund has the right to decline to participate in
any Potential Co-Investment Transaction or to invest less than the
amount proposed.
4. The 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,\13\ a Regulated Fund will not invest in reliance on the
Order in any issuer in which another Regulated Fund, Affiliated Fund,
or any affiliated person of another Regulated Fund or Affiliated Fund
is an existing investor.
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\13\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
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6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of
securities to be purchased, settlement date, and registration rights
will be the same for each participating Regulated Fund and Affiliated
Fund. The grant to an Affiliated Fund or another Regulated Fund, but
not the Regulated Fund, of the right to nominate a director for
election to a portfolio company's board of directors, the right to have
an observer on the board of directors or similar rights to participate
in the governance or management of the portfolio company will not be
interpreted so as to violate this condition 6, if conditions
2(c)(iii)(A), (B) and (C) are met.
7.(a) If any Affiliated Fund or any Regulated Fund elects to sell,
exchange or otherwise dispose of an interest in a security that was
acquired 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 any other Regulated Fund.
(c) A Regulated Fund may participate in such disposition without
obtaining prior approval of the Required Majority if: (i) The proposed
participation of each Regulated Fund and each Affiliated Fund in such
disposition is proportionate to its outstanding investments in the
issuer immediately preceding the disposition; (ii) the Board of the
Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in such dispositions on a pro
rata basis (as described in greater detail in the
[[Page 12044]]
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 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 Funds in
the same transaction, exceeds the amount of the opportunity; then the
amount invested by each such party will be allocated among them pro
rata based on each party's capital available for investment in the
asset class to be allocated, up to the amount proposed to be invested
by each.
(d) The acquisition of Follow-On Investments as permitted by this
condition will be considered a Co-Investment Transaction for all
purposes and subject to the other conditions set forth in the
application.
9. The Non-Interested Directors of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Funds and 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 which 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 \14\ (including break-up or commitment fees
but excluding broker's fees contemplated by section 17(e) or 57(k) of
the Act, as applicable), received in connection with a Co-Investment
Transaction will be distributed to the participating Regulated Funds
and Affiliated Funds on a pro rata basis based on the amounts they
invested or committed, as the case may be, in such Co-Investment
Transaction. If any transaction fee is to be held by an 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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\14\ Applicants are not requesting and the staff is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
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14. If the Holders own in the aggregate more than 25 percent of the
Shares of a Regulated Fund, then the Holders will vote such Shares in
the same percentages as the Regulated Fund's other shareholders (not
including the Holders) 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) 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.
[[Page 12045]]
For the Commission, by the Division of Investment Management, under
delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-04075 Filed 2-26-21; 8:45 am]
BILLING CODE 8011-01-P
