Blackstone/GSO Floating Rate Enhanced Income Fund, et al., 61372-61379 [2021-24148]
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Federal Register / Vol. 86, No. 212 / Friday, November 5, 2021 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–199, OMB Control No.
3235–0199]
Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
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Extension:
Rule 17a–5(c)
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17a–5(c) (17 CFR
240.17a–5(c)), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17a–5(c) generally requires
broker-dealers who carry customer
accounts to provide statements of the
broker-dealer’s financial condition to
their customers. Paragraph (c)(5) of Rule
17a–5 provides a conditional exemption
from this requirement. A broker-dealer
that elects to take advantage of the
exemption must publish its statements
on its website in a prescribed manner,
and must maintain a toll-free number
that customers can call to request a copy
of the statements.
The purpose of the Rule is to ensure
that customers of broker-dealers are
provided with information concerning
the financial condition of the firm that
may be holding the customers’ cash and
securities. The Commission, when
adopting the Rule in 1972, stated that
the goal was to ‘‘directly’’ send a
customer essential information so that
the customer could ‘‘judge whether his
broker or dealer is financially sound.’’
The Commission adopted the Rule in
response to the failure of several brokerdealers holding customer funds and
securities in the period between 1968
and 1971.
The Commission estimates that
approximately 163 broker-dealer
respondents carrying approximately 186
million public customer accounts incur
a burden of approximately 228,024
hours per year to comply with the Rule.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
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information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John R.
Pezzullo, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: November 1, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–24137 Filed 11–4–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34412; 812–15135]
Blackstone/GSO Floating Rate
Enhanced Income Fund, et al.
November 1, 2021.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
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 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 and
accounts.
APPLICANTS: Blackstone/GSO Floating
Rate Enhanced Income Fund
(‘‘BGFLX’’); Blackstone Long-Short
Credit Income Fund (‘‘BGX’’);
Blackstone Private Credit Fund
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(‘‘BCRED’’); Blackstone Senior Floating
Rate Term Fund (‘‘BSL’’); Blackstone
Strategic Credit Fund (‘‘BGB’’);
Blackstone Secured Lending Fund
(‘‘BGSL,’’ and together with BGFLX,
BGX, BSL and BGB, the ‘‘Blackstone
Credit Regulated Funds’’); Blackstone
Liquid Credit Strategies LLC (‘‘BLCS’’),
the investment adviser to BGFLX, BGX,
BSL and BGB; Blackstone Credit BDC
Advisors LLC (‘‘BCBA’’), the investment
adviser to BCRED and BGSL; the
investment advisers set forth in
Schedule A to the application (together
with BLCS and BCBA, the ‘‘Blackstone
Credit Advisers’’); and the Existing
Affiliated Funds set forth on Schedule
A to the application.1
FILING DATES: The application was filed
on June 16, 2020, and amended on
February 22, 2021 and July 16, 2021.
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 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
November 26, 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 0–5 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 SecretarysOffice@sec.gov.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Rajib Chanda at Rajib.Chanda@
stblaw.com and Christopher Healey at
Christopher.Healey@stblaw.com.
FOR FURTHER INFORMATION CONTACT:
Joseph Toner, Senior Counsel, at (202)
551–7595 or Marc Mehrespand, Branch
Chief, at (202) 551–6825 (Chief
Counsel’s Office, Division of Investment
Management).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
1 The Existing Affiliated Funds are entities (i)
whose primary investment adviser or sub-adviser is
an Adviser (as defined below)(when the sub-adviser
is an Adviser, the primary adviser is a Primary
Adviser (as defined below)) (ii) that either (A)
would be an investment company but for section
3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act or (B) relies
on the rule 3a–7 exemption thereunder from
investment company status.
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Federal Register / Vol. 86, No. 212 / Friday, November 5, 2021 / Notices
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. BGFLX, BGX, BSL and BGB, each
a Delaware statutory trust, are externally
managed, diversified, closed-end
management investment companies.
Each of BGFLX’s and BGX’s investment
objective is to provide current income,
with a secondary objective of capital
appreciation. Each of BSL’s and BGB’s
investment objective is to seek high
current income, with a secondary
objective to seek preservation of capital,
consistent with its primary goal of high
current income. Each of BGFLX, BGX,
BSL and BGB has a five-member Board,
of which four members are NonInterested Trustees.2
2. BCRED is a Delaware statutory trust
that has elected to be regulated as a
business development company
(‘‘BDC’’) under the Act.3 BCRED’s
investment objective is to generate
current income and, to a lesser extent,
generate long-term capital appreciation.
BCRED has a six-member Board, of
which four members are Non-Interested
Trustees.
3. BGSL is a Delaware statutory trust
that has elected to be regulated as a
BDC. BGSL’s investment objective is to
generate current income and, to a lesser
extent, long-term capital appreciation.
BGSL has a seven-member Board, of
which four members are Non-Interested
Trustees.
4. Each of the Advisers 4 is a
subsidiary of The Blackstone Group,
2 ‘‘Board’’ means the board of trustees (or
equivalent) of a Regulated Fund (as defined below).
‘‘Non-Interested Trustees’’ are not ‘‘interested
persons’’ as defined in section 2(a)(19) of the Act.
3 Section 2(a)(48) of the Act 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.
4 The term ‘‘Adviser’’ means the Blackstone
Credit Advisers and any future investment adviser
that (i) controls, is controlled by or is under
common control with a Blackstone Credit Adviser,
(ii) is registered as an investment adviser under the
Advisers Act, and (iii) that intends to participate in
the Co-Investment Program (as defined below). The
term ‘‘Primary Adviser’’ means any future or
existing investment adviser that (i) controls, is
controlled by or is under common control with an
Adviser, (ii) is registered as an investment adviser
under the Advisers Act, and (iii) is not an Adviser
under the requested order. For the avoidance of
doubt, a Primary Adviser will not be treated as an
Adviser under the requested order, but will be
subject to conditions 2(c)(iv) and 15 only. No
Primary Adviser will rely on the requested order
with respect to any investment entities it manages
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Inc. (‘‘Blackstone’’). Blackstone is a
leading global alternative asset manager,
whose alternative asset management
businesses include investment entities
focused on private equity, real estate,
hedge fund solutions, non-investment
grade credit, secondary private equity
funds of funds and multi-asset class
strategies. Blackstone’s four business
segments are (1) private equity, (2) real
estate, (3) hedge fund solutions and (4)
credit.
5. The Blackstone Credit Advisers
operate as a self-contained advisory
business within Blackstone’s credit
group. Each Blackstone Credit Adviser
is under common control with BLCS
and BCBA, the Adviser to each of the
Blackstone Credit Regulated Funds, and
collectively they conduct a single
advisory business for purposes of the
requested order. The Blackstone Credit
Advisers are each either separately
registered as investment advisers with
the Commission or are relying advisers
that rely on the registration of another
Blackstone Credit Adviser. No
Blackstone Credit Adviser is a relying
adviser of any Blackstone-affiliated
investment adviser from outside of the
self-contained group.
6. Applicants seek an order to permit
one or more Regulated Funds 5 to be
able to participate with one or more
other Regulated Funds and/or one or
more Affiliated Investors 6 in the same
other than to the extent those entities are subadvised by an Adviser. No Primary Adviser will be
the source of any Potential Co-Investment
Transactions (as defined below) under the
requested order.
5 ‘‘Regulated Fund’’ means (i) the Blackstone
Credit Regulated Funds and (ii) and any Future
Regulated Fund (as defined below). ‘‘Future
Regulated Fund’’ means any future closed-end
management investment company (i) that has
elected to be regulated as a BDC or is registered
under the Act, (ii) whose investment adviser is an
Adviser and (iii) who intends to participate in the
Co-Investment Program.
6 ‘‘Affiliated Investor’’ means (i) the Existing
Affiliated Funds, (ii) any Affiliated Proprietary
Account and (iii) any Future Affiliated Fund (as
defined below). Affiliated Investors may include
funds that are ultimately structured as
collateralized loan obligation funds (‘‘CLOs’’). Such
CLOs would be investment companies but for the
exception in section 3(c)(7) of the Act or their
ability to rely on rule 3a–7 thereunder. During the
investment period of a CLO, the CLO may engage
in certain transactions customary in CLO
formations with another Affiliated Investor on a
secondary basis at fair market value. For purposes
of the requested order, any securities that were
acquired by an Affiliated Investor in a particular
Co-Investment Transaction that are then transferred
in such customary transactions to an Affiliated
Investor that is or will become a CLO (an ‘‘Affiliated
Fund CLO’’) will be treated as if the Affiliated Fund
CLO acquired such securities in the Co-Investment
Transaction. For the avoidance of doubt, any such
transfer from an Affiliated Investor to an Affiliated
Fund CLO will be treated as a Disposition (as
defined below) and completed pursuant to the
terms and conditions of the application, though the
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investment opportunities through a
proposed co-investment program where
such participation would otherwise be
prohibited under sections 17(d) and
57(a)(4) of the Act and the rules
thereunder (the ‘‘Co-Investment
Program’’).
7. For purposes of the requested
order, ‘‘Co-Investment Transaction’’
means any transaction in which one or
more Regulated Funds (or one or more
Wholly-Owned Investment Subsidiaries,
as defined below) participates together
with one or more other Regulated Funds
(or one or more Wholly-Owned
Investment Subsidiaries) and/or one or
more Affiliated Investors in reliance on
the requested order. ‘‘Potential CoInvestment Transaction’’ means any
investment opportunity in which a
Regulated Fund (or its Wholly-Owned
Investment Subsidiary, as defined
below) could not participate together
with one or more Affiliated Investors
and/or one or more other Regulated
Funds without obtaining and relying on
the requested order.7 Funds that are
advised or sub-advised by affiliates of
Blackstone other than an Adviser or
Primary Adviser will not participate in
the Co-Investment Program. No Primary
Adviser will be the source of any
Potential Co-Investment Transactions
under the requested order. Potential CoInvestment Transactions will not be
shared outside of the Co-Investment
Program.
8. Applicants state that a Regulated
Fund may, from time to time, form one
or more Wholly-Owned Investment
applicants note that the Regulated Funds would be
prohibited from participating in such Disposition
by section 17(a)(2) or section 57(a)(2) of the Act, as
applicable. The participation by any Affiliated
Fund CLO in any such Co-Investment Transaction
will remain subject to the requested order.
‘‘Future Affiliated Fund’’ means an entity (i)(A)
whose investment adviser is an Adviser or (B)
whose investment adviser is a Primary Adviser and
whose sub-adviser is an Adviser, (ii) that either (A)
would be an investment company but for an
exemption in section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of
the Act or (B) relies on the rule 3a–7 exemption
from investment company status, and (iii) that
intends to participate in the Co-Investment
Program.
‘‘Affiliated Proprietary Account’’ means any
account of an Adviser or its affiliates or any
company that is an indirect, wholly- or majorityowned subsidiary of an Adviser or its affiliates,
which, from time to time, may hold various
financial assets in a principal capacity. For the
avoidance of doubt, neither the Regulated Funds,
the Existing Affiliated Funds nor any Future
Affiliated Fund shall be deemed to be Affiliated
Proprietary Accounts for purposes of the
application.
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 requested order will
comply with the terms and conditions of the
application.
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Subsidiaries.8 A Wholly-Owned
Investment Subsidiary would be
prohibited from investing in a CoInvestment Transaction with another
Regulated Fund or any Affiliated
Investor because it would be a company
controlled by the applicable Regulated
Fund for purposes of sections 17(d) and
57(a)(4) of the Act and rule 17d–1
thereunder. Applicants request that a
Wholly-Owned Investment Subsidiary
be permitted to participate in CoInvestment Transactions in lieu of the
applicable Regulated Fund and that the
Wholly-Owned Investment Subsidiary’s
participation in any such transaction be
treated, for purposes of the requested
order, as though the Regulated Fund
were participating directly.
9. When considering Potential CoInvestment Transactions for any
Regulated Fund, an Adviser will
consider only the Objectives and
Strategies,9 Board-Established Criteria,10
8 ‘‘Wholly-Owned Investment Subsidiary’’ means
an entity (i) whose sole business purpose is to hold
one or more investments on behalf of a Regulated
Fund (and, in the case of an SBIC Subsidiary (as
defined below), maintain a license under the SBA
Act (as defined below) and issue debentures
guaranteed by the SBA (as defined below)); (ii) that
is a wholly-owned subsidiary (as defined in the
Act) of a Regulated Fund (with such Regulated
Fund at all times holding, beneficially and of
record, 95% or more of the voting and economic
interests); (iii) with respect to which the Board of
the Regulated Fund has the sole authority to make
all determinations with respect to the WhollyOwned Investment Subsidiary’s participation under
the conditions of the requested order; and (iv) that
is an entity that would be an investment company
but for an exemption in section 3(c)(1) or 3(c)(7) of
the Act.
The term ‘‘SBIC Subsidiary’’ means a WhollyOwned Investment Subsidiary that is licensed by
the Small Business Administration (the ‘‘SBA’’) to
operate under the Small Business Investment Act of
1958, as amended, (the ‘‘SBA Act’’) as a small
business investment company (a ‘‘SBIC’’).
9 The term ‘‘Objectives and Strategies’’ means a
Regulated Fund’s investment objectives and
strategies, as described in the filings made with the
Commission by the Regulated Fund under the
Securities Exchange Act of 1934, as amended, the
Securities Act of 1933, as amended (the ‘‘1933 Act’’)
and the Act, and the Regulated Fund’s reports to
shareholders.
10 The term ‘‘Board-Established Criteria’’ means
criteria that the Board of the applicable Regulated
Fund may establish from time to time to describe
the characteristics of Potential Co-Investment
Transactions regarding which an Adviser to the
Regulated Fund should be notified under condition
1 of the requested order. The Board-Established
Criteria will be consistent with the Regulated
Fund’s then-current Objectives and Strategies. If no
Board-Established Criteria are in effect, then the
Regulated Fund’s Adviser will be notified of all
Potential Co-Investment Transactions that fall
within the Regulated Fund’s then current
Objectives and Strategies. Board-Established
Criteria will be objective and testable, meaning that
they will be based on observable information, such
as industry/sector of the issuer, minimum earnings
before interest, taxes, depreciation, and
amortization of the issuer, asset class of the
investment opportunity or required commitment
size, and not on characteristics that involve
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investment policies, investment
positions, capital available for
investment, and other pertinent factors
applicable to that Regulated Fund. The
participation of a Regulated Fund in a
Potential Co-Investment Transaction
may only be approved by a Required
Majority, as defined in section 57(o) of
the Act (a ‘‘Required Majority’’), of the
trustees of the Board eligible to vote on
that Co-Investment Transaction under
section 57(o) of the Act (the ‘‘Eligible
Trustees’’).11 When selecting
investments for the Affiliated Investors,
an Adviser will select investments
separately for each Affiliated Investor,
considering, in each case, only the
investment objective, investment
policies, investment position, capital
available for investment, and other
pertinent factors applicable to that
particular Affiliated Investor.
10. With respect to participation in a
Potential Co-Investment Transaction by
a Regulated Fund, the applicable
Adviser will present each Potential CoInvestment Transaction and the
proposed allocation of each investment
opportunity to the Eligible Trustees. The
Required Majority of a Regulated Fund
will approve each Co-Investment
Transaction prior to any investment by
the Regulated Fund.
11. Applicants state that the majority
of the Blackstone Credit Advisers’
employees work on matters for Close
Affiliates 12 and information about
potential investment opportunities is
routinely disseminated among such
Adviser’s employees. Other than to
satisfy compliance obligations,
information regarding Potential CoInvestment Transactions will not be
shared with Remote Affiliates,13 which
discretionary assessment. The Adviser to the
Regulated Fund may from time to time recommend
criteria for the applicable Board’s consideration, but
Board-Established Criteria will only become
effective if approved by a majority of the NonInterested Trustees. The Non-Interested Trustees of
a Regulated Fund may at any time rescind, suspend
or qualify its approval of any Board-Established
Criteria, though Applicants anticipate that, under
normal circumstances, the Board would not modify
these criteria more often than quarterly.
11 The defined terms Eligible Trustees and
Required Majority apply as if each Regulated Fund
were a BDC subject to section 57(o) of the Act.
12 The term ‘‘Close Affiliate’’ means the Advisers,
the Regulated Funds, the Affiliated Investors and
any other person described in section 57(b) of the
Act (after giving effect to rule 57b-1 thereunder) in
respect of any Regulated Fund (treating any
registered investment company or series thereof as
a BDC for this purpose) except for limited partners
included solely by reason of the reference in section
57(b) to section 2(a)(3)(D) of the Act.
13 The term ‘‘Remote Affiliate’’ means any person
described in section 57(e) of the Act in respect of
any Regulated Fund (treating any registered
investment company or series thereof as a BDC for
this purpose) and any limited partner holding 5%
or more of the relevant limited partner interests that
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would include other investment
advisers that operate in other Blackstone
business groups, except in unusual
circumstances, as the Blackstone
business groups each generally target
different investment strategies or asset
classes and there are information barrier
policies in place between the Blackstone
business groups. Applicants further note
that within the Blackstone Credit
Advisers, the personnel overlap and
coordination among portfolio
management teams ensures that all
relevant investment opportunities will
be brought to the attention of each
Regulated Fund managed by the
respective Adviser. Applicants submit
that the Blackstone Credit Advisers will
receive all information regarding all
investment opportunities that fall
within the then-current Objectives and
Strategies and Board-Established
Criteria of each Regulated Fund
managed by the respective Adviser,
regardless of whether the Adviser serves
as the primary investment adviser or
sub-adviser to the Regulated Fund.
12. Applicants acknowledge that
some of the Affiliated Investors may not
be funds advised by an Adviser because
they are Affiliated Proprietary Accounts.
Applicants do not believe these
Affiliated Proprietary Accounts should
raise issues under the conditions of the
requested order because allocation
policies and procedures of the account
owners provide that investment
opportunities are offered to client
accounts before they are offered to
Affiliated Proprietary Accounts.
13. Applicants represent that the CoInvestment Program requires that the
terms, conditions, price, class of
securities, settlement date, and
registration rights applicable to a
Regulated Fund’s purchase be the same
as those applicable to the purchase by
the other participating Regulated Funds
and Affiliated Investors. However, the
settlement date for an Affiliated Investor
in a Co-Investment Transaction may
occur up to ten business days after the
settlement date for the Regulated Fund,
and vice versa. Nevertheless, in all cases
(i) the date on which the commitment
of the Affiliated Investors and Regulated
Funds is made will be the same even
where the settlement date is not and (ii)
the earliest settlement date and the
latest settlement date of any Affiliated
Investor or Regulated Fund participating
in the transaction will occur within ten
business days of each other.
14. Under condition 16, if an Adviser
or its principals, or any person
controlling, controlled by, or under
would be a Close Affiliate but for the exclusion in
that definition.
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common control with the Adviser or its
principal owners, and the Affiliated
Investor (collectively, the ‘‘Holders’’)
own in the aggregate more than 25
percent of the outstanding voting shares
of a Regulated Fund (‘‘Shares’’), then the
Holders will vote such Shares as
required under condition 16.
15. No Eligible Trustee will have a
direct or indirect financial interest in
any Co-Investment Transaction, other
than through any interest such Eligible
Trustee may have in securities of a
Regulated Fund.
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. Section 57(a)(4) of the Act prohibits
certain affiliated persons of a BDC from
participating in joint transactions with
the BDC or a company controlled by a
BDC in contravention of rules as
prescribed by the Commission. Under
section 57(b)(2) of the Act, any person
who is directly or indirectly controlling,
controlled by, or under common control
with a BDC is subject to section 57(a)(4)
of the Act. Section 57(i) of the Act
provides that, until the Commission
prescribes rules under section 57(a)(4)
of the Act, 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) of the Act. Because the
Commission has not adopted any rules
under section 57(a)(4) of the Act, rule
17d–1 thereunder applies.
3. Applicants state that certain
transactions effected as part of the CoInvestment Program may be prohibited
by sections 17(d) and 57(a)(4) of the Act
and rule 17d–1 thereunder without a
prior exemptive order of the
Commission to the extent that the
Affiliated Investors fall within the
category of persons described by section
17(d) or section 57(b) of the Act, as
modified by rule 57b–1 thereunder with
respect to a Regulated Fund. Applicants
believe that the proposed terms and
conditions will ensure would ensure
that the conflicts of interest that section
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17(d) and section 57(a)(4) of the Act
were designed to prevent would be
addressed and the standards for an
order under rule 17d–1 under the Act
are met.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief shall be
subject to the following conditions:
1. (a) Each Adviser will establish,
maintain and implement policies and
procedures reasonably designed to
ensure that each Adviser is promptly
notified, for each Regulated Fund the
Adviser manages, of all Potential CoInvestment Transactions 14 that (i) an
Adviser considers for any other
Regulated Fund or Affiliated Investor
and (ii) fall within the Regulated Fund’s
then-current Objectives and Strategies
and Board-Established Criteria.
(b) When an Adviser to a Regulated
Fund is notified of a Potential CoInvestment Transaction under condition
1(a), such Adviser will make an
independent determination of the
appropriateness of the investment for
the Regulated Fund in light of the
Regulated Fund’s then-current
circumstances.
2. (a) If the Adviser deems a Regulated
Fund’s participation in any Potential
Co-Investment Transaction to be
appropriate for the Regulated Fund, 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 Investors, 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 15
14 No Primary Adviser will be the source of any
Potential Co-Investment Transactions under the
requested order.
15 ‘‘Available Capital’’ means (a) for each
Regulated Fund, the amount of capital available for
investment determined based on the amount of cash
on hand, liquidity considerations, existing
commitments and reserves, if any, the targeted
leverage level, targeted asset mix, risk-return and
target-return profile, tax implications, regulatory or
contractual restrictions or consequences, 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, and (b) for each
Affiliated Investor, the amount of capital available
for investment determined based on the amount of
cash on hand, liquidity considerations, existing
commitments and reserves, if any, the targeted
leverage level, targeted asset mix, risk-return and
target-return profile, tax implications, regulatory or
contractual restrictions or consequences and other
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61375
up to the amount proposed to be
invested by each. The applicable
Adviser will provide the Eligible
Trustees of each participating Regulated
Fund with information concerning each
participating party’s Available Capital to
assist the Eligible Trustees with their
review of the Regulated Fund’s
investments for compliance with these
allocation procedures.
(c) After making the determinations
required in conditions 1 and 2(a), the
applicable Adviser will distribute
written information concerning the
Potential Co-Investment Transaction
(including the amount proposed to be
invested by each participating Regulated
Fund and Affiliated Investor) to the
Eligible Trustees 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 Investors 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 Investors
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 Investors; provided that, if
any other Regulated Fund or Affiliated
Investor, 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 settlement date for another
Regulated Fund or an Affiliated Investor
in a Co-Investment Transaction is later
investment policies and restrictions set from time
to time by the Affiliated Investors’ trustees, general
partners, or adviser or imposed by applicable laws,
rules, regulations or interpretations.
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than the settlement date for the
Regulated Fund by no more than ten
business days or earlier than the
settlement date for the Regulated Fund
by no more than ten business days, in
either case, so long as: (x) The date on
which the commitment of the Affiliated
Investors and Regulated Funds is made
is the same; and (y) the earliest
settlement date and the latest settlement
date of any Affiliated Investor or
Regulated Fund participating in the
transaction will occur within ten
business days of each other;
(B) the Eligible Trustees will have the
right to ratify the selection of such
director or board observer, if any;
(C) 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
(D) any fees or other compensation
that any Affiliated Investor or any
Regulated Fund or any affiliated person
of any Affiliated Investor or any
Regulated Fund receives in connection
with the right of an Affiliated Investor
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 Investors (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 Investors, the
other Regulated Funds or any Primary
Adviser or any affiliated person of any
of them (other than the parties to the CoInvestment Transaction), except
(A) to the extent permitted by
condition 15;
(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)(D).
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
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investments in Potential Co-Investment
Transactions made by any of the other
Regulated Funds or Affiliated Investors
during the preceding quarter that fell
within the Regulated Fund’s thencurrent Objectives and Strategies and
Board Established Criteria that were not
made available to the Regulated Fund,
and an explanation of why the
investment opportunities were not
offered to the Regulated Fund. All
information presented to the Board
pursuant to this condition will be kept
for the life of the Regulated Fund and
at least two years thereafter, and will be
subject to examination by the
Commission and its staff.
5. Except for Follow-On
Investments 16 made in accordance with
condition 9 and 10,17 a Regulated Fund
will not invest in reliance on the Order
in any issuer in which a Related Party 18
has an investment. The Adviser will
maintain books and records that
demonstrate compliance with this
condition for each Regulated Fund.
6. A Regulated Fund will not
participate in any Potential CoInvestment Transaction unless (i) the
terms, conditions, price, class of
securities to be purchased, registration
rights and the date on which the
commitment is entered into will be the
same for each participating Regulated
Fund and Affiliated Investor and (ii) the
earliest settlement date and the latest
settlement date of any participating
Regulated Fund or Affiliated Investor
will occur as close in time as practicable
and in no event more than ten business
days apart. The grant to an Affiliated
Investor 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)(B), (C), and (D) are met.
7. Standard Review Dispositions.
(a) If any Regulated Fund or Affiliated
Investor elects to sell, exchange or
otherwise dispose of an interest in a
16 ‘‘Follow-On Investment’’ means any additional
investment in an existing portfolio company whose
securities were acquired in a Co-Investment
Transaction, including the exercise of warrants,
conversion privileges or other similar rights to
acquired additional securities of the portfolio
company.
17 This exception applies only to Follow-On
Investments by a Regulated Fund in issuers in
which that Regulated Fund already holds
investments.
18 The term ‘‘Related Party’’ means (i) any Close
Affiliate and (ii) in respect of matters as to which
any Adviser has knowledge, any Remote Affiliate.
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security and one or more Regulated
Funds and Affiliated Investors have
previously participated in a CoInvestment Transaction with respect to
the issuer, then:
(i) The Adviser to such Regulated
Fund or Affiliated Investor will notify
each Regulated Fund that holds an
investment in the issuer of the proposed
disposition at the earliest practical
time; 19 and
(ii) the Adviser to each Regulated
Fund that holds an investment in the
issuer will formulate a recommendation
as to participation by such 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
Affiliated Investors and any other
Regulated Fund.
(c) A Regulated Fund may participate
in such a disposition without obtaining
prior approval of the Required Majority
if: (i) (A) The participation of each
Regulated Fund and Affiliated Investor
in such disposition is proportionate to
its then-current holding of the security
(or securities) of the issuer that is (or
are) the subject of the disposition; 20 (B)
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 (C) the Board of
the Regulated Fund is provided on a
quarterly basis with a list of all
dispositions made in accordance with
this condition; or (ii) each security is a
Tradable Security 21 and (A) the
disposition is not to the issuer or any
affiliated person of the issuer and (B)
the security is sold for cash in a
transaction in which the only term
19 Any Affiliated Proprietary Account that is not
advised by an adviser is itself deemed to be an
Adviser for purposes of conditions 7(a)(i), 8(a)(i),
9(a)(i) and 10(a)(i).
20 In the case of any disposition, proportionality
will be measured by each participating Regulated
Fund’s and Affiliated Investor’s outstanding
investment in the security in question immediately
preceding the disposition.
21 The term ‘‘Tradable Security’’ means a security
that (i) trades on a national securities exchange or
designated offshore securities market as defined in
rule 902(b) under the 1933 Act; (ii) is not subject
to restrictive agreements with the issuer or other
security holders; and (iii) trades with sufficient
volume and liquidity (findings as to which are
documented by the Advisers to any Regulated
Funds holding investments in the issuer and
retained for the life of the Regulated Fund) to allow
each Regulated Fund to dispose of its entire
position remaining after the proposed disposition
within a short period of time not exceeding 30 days
at approximately the value (as defined by section
2(a)(41) of the Act) at which the Regulated Fund has
valued the investment.
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negotiated by or on behalf of the
participating Regulated Funds and
Affiliated Investors is price.
(d) In all other cases, the Adviser will
provide its written recommendation as
to the Regulated Fund’s participation to
the Eligible Trustees, and the Regulated
Fund will participate in such
disposition solely to the extent that a
Required Majority determines that it is
in the Regulated Fund’s best interests.
Each Affiliated Investor and each
Regulated Fund will bear its own
expenses in connection with any such
disposition.
8. Enhanced Review Dispositions.
(a) If any Regulated Fund or Affiliated
Investor elects to sell, exchange or
otherwise dispose of a Pre-Boarding
Investment 22 in a Potential CoInvestment Transaction and the
Regulated Funds and Affiliated
Investors have not previously
participated in a Co-Investment
Transaction with respect to the issuer:
(i) The Adviser to such Regulated
Fund or Affiliated Investor will notify
each Regulated Fund that holds an
investment in the issuer of the proposed
disposition at the earliest practical time;
(ii) the Adviser to each Regulated
Fund that holds an investment in the
issuer will formulate a recommendation
as to participation by such Regulated
Fund in the disposition; and
(iii) the Advisers will provide to the
Board of each Regulated Fund that
holds an investment in the issuer all
information relating to the existing
investments in the issuer of the
Regulated Funds and Affiliated
Investors, including the terms of such
investments and how they were made,
that is necessary for the Required
Majority to make the findings required
by this condition.
(b) The Adviser will provide its
written recommendation as to the
Regulated Fund’s participation to the
Eligible Trustees, and the Regulated
Fund will participate in such
disposition solely to the extent that a
Required Majority determines that:
22 The term ‘‘Pre-Boarding Investments’’ means
any investment in an issuer that is (i) held by a
Regulated Fund as well as one or more Affiliated
Investors and/or one or more other Regulated
Funds, (ii) acquired prior to participating in any CoInvestment Transaction, and (iii) acquired (A) in a
transaction in which the only term negotiated by or
on behalf of such funds was price in reliance on one
of the Joint Transaction No-Action Letters; or (B) in
transactions occurring at least 90 days apart and
without coordination between the Regulated Fund
and any Affiliated Investor or other Regulated
Fund. The ‘‘Joint Transaction No-Action Letters’’
are SMC Capital, Inc., SEC Staff No-Action Letter
(Sept. 5, 1995) and Massachusetts Mutual Life
Insurance Company, SEC Staff No-Action Letter
(June 7, 2000).
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(i) The disposition complies with
condition 2(c)(i), (ii), (iii)(A) and (iv);
and
(ii) the making and holding of the PreBoarding Investments were not
prohibited by section 57 or rule 17d–1,
as applicable, and records the basis for
the finding in the Board minutes.
(c) The disposition may only be
completed in reliance on the order if:
(i) Each Regulated Fund has 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 Affiliated
Investors and any other Regulated Fund.
(ii) All of the Affiliated Investors’ and
Regulated Funds’ investments in the
issuer are Pre-Boarding Investments;
(iii) Independent counsel to the Board
advises that the making and holding of
the investments in the Pre-Boarding
Investments were not prohibited by
section 57 (as modified by rule 57b–1)
or rule 17d–1, as applicable;
(iv) all Regulated Funds and Affiliated
Investors that hold Pre-Boarding
Investments in the issuer immediately
before the time of completion of the CoInvestment Transaction hold the same
security or securities of the issuer. For
the purpose of determining whether the
Regulated Funds and Affiliated
Investors hold the same security or
securities, they may disregard any
security held by some but not all of
them if, prior to relying on the Order,
the Required Majority is presented with
all information necessary to make a
finding, and finds, that: (A) Any
Regulated Fund’s or Affiliated Investor’s
holding of a different class of securities
(including for this purpose a security
with a different maturity date) is
immaterial 23 in amount, including
immaterial relative to the size of the
issuer; and (B) the Board records the
basis for any such finding in its
minutes. In addition, securities that
differ only in respect of issuance date,
currency, or denominations may be
treated as the same security; and
(d) The Affiliated Investors, the other
Regulated Funds and their affiliated
persons (within the meaning of section
2(a)(3)(C) of the Act), individually or in
the aggregate, do not control the issuer
of the securities (within the meaning of
section 2(a)(9) of the Act).
9. Standard Review Follow-Ons.
23 In determining whether a holding is
‘‘immaterial’’ for purposes of the requested order,
the Required Majority will consider whether the
nature and extent of the interest in the transaction
or arrangement is sufficiently small that a
reasonable person would not believe that the
interest affect the determination of whether to enter
into the transaction or arrangement or the terms of
the transaction or arrangement.
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(a) If any Regulated Fund or Affiliated
Investor desires to make a Follow-On
Investment in an issuer and the
Regulated Funds and Affiliated
Investors holding investments in the
issuer previously participated in a CoInvestment Transaction with respect to
the issuer:
(i) The Adviser to each such
Regulated Fund or Affiliated Investor
will notify each Regulated Fund that
holds securities of the portfolio
company of the proposed transaction at
the earliest practical time; and
(ii) the Adviser to each Regulated
Fund that holds an investment in the
issuer will formulate a recommendation
as to the proposed participation,
including the amount of the proposed
investment, by such Regulated Fund.
(b) A Regulated Fund may participate
in the Follow-On Investment without
obtaining prior approval of the Required
Majority if: (i)(A) The proposed
participation of each Regulated Fund
and each Affiliated Investor in such
investment is proportionate to its
outstanding investments in the issuer or
the security at issue, as appropriate,24
immediately preceding the Follow-On
Investment; and (B) 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); or (ii) it is a NonNegotiated Follow-On Investment.25
(c) In all other cases, the Adviser will
provide its written recommendation as
to the Regulated Fund’s participation to
the Eligible Trustees, and the Regulated
Fund will participate in such Follow-On
Investment solely to the extent that a
Required Majority makes the
24 To the extent that a Follow-On Investment
opportunity is in a security or arises in respect of
a security held by the participating Regulated
Funds and Affiliated Investors, proportionality will
be measured by each participating Regulated Fund’s
and Affiliated Investor’s outstanding investment in
the security in question immediately preceding the
Follow-On Investment using the most recent
available valuation thereof. To the extent that a
Follow-On Investment opportunity relates to an
opportunity to invest in a security that is not in
respect of any security held by any of the
participating Regulated Funds or Affiliated
Investors, proportionality will be measured by each
participating Regulated Fund’s and Affiliated
Investor’s outstanding investment in the issuer
immediately preceding the Follow-On Investment
using the most recent available valuation thereof.
25 The term ‘‘Non-Negotiated Follow-On
Investment’’ means a Follow-On Investment in
which a Regulated Fund participates together with
one or more Affiliated Investors and/or one or more
other Regulated Funds (i) in which the only term
negotiated by or on behalf of the funds is price and
(ii) with respect to which, if the transaction were
considered on its own, the funds would be entitled
to rely on SEC guidance under either of the Joint
Transaction No-Action Letters.
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determinations set forth in condition
2(c). If the only previous Co-Investment
Transaction with respect to the issuer
was an Enhanced Review Disposition
the Eligible Trustees must complete this
review of the proposed Follow-On
Investment both on a stand-alone basis
and together with the Pre-Boarding
Investments in relation to the total
economic exposure and other terms of
the investment.
(d) If, with respect to any such
Follow-On Investment:
(i) The amount of the opportunity
proposed to be made available to any
Regulated Fund is not based on the
Regulated Funds’ and the Affiliated
Investors’ outstanding investments in
the issuer or the security at issue, as
appropriate, immediately preceding the
Follow-On Investment; and
(ii) 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 Investors, collectively, in
the same transaction, exceeds the
amount of the investment opportunity;
then the Follow-On Investment
Opportunity will be allocated among
them pro rata based on Available
Capital (as described in greater detail in
the application), up to the amount
proposed to be invested by each.
(e) 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.
10. Enhanced Review Follow-Ons.
(a) If any Regulated Fund or Affiliated
Investor desires to make a Follow-On
Investment in an issuer that is a
Potential Co-Investment Transaction
and the Regulated Funds and Affiliated
Investor holding investments in the
issuer have not previously participated
in a Co-Investment Transaction with
respect to the issuer:
(i) The Adviser to each such
Regulated Fund or Affiliated Investor
will notify each Regulated Fund that
holds securities of the portfolio
company of the proposed transaction at
the earliest practical time;
(ii) the Adviser to each Regulated
Fund that holds an investment in the
issuer will formulate a recommendation
as to the proposed participation,
including the amount of the proposed
investment, by such Regulated Fund;
and
(iii) the Advisers will provide to the
Board of each Regulated Fund that
holds an investment in the issuer all
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information relating to the existing
investments in the issuer of the
Regulated Funds and Affiliated
Investors, including the terms of such
investments and how they were made,
that is necessary for the Required
Majority to make the findings required
by this condition.
(b) The applicable Adviser will
provide its written recommendation as
to a Regulated Fund’s participation to
the Eligible Trustees, and the Regulated
Fund will participate in such Follow-On
Investment solely to the extent that a
Required Majority reviews the proposed
Follow-On Investment both on a standalone basis and together with the PreBoarding Investments in relation to the
total economic exposure and other
terms and makes the determinations set
forth in condition 2(c). In addition, the
Follow-On Investment may only be
completed in reliance on the order if the
Required Majority of each participating
Regulated Fund determines that the
making and holding of the Pre-Boarding
Investments were not prohibited by
section 57 (as modified by rule 57b–1)
or rule 17d–1, as applicable. The basis
for the Board’s findings will be recorded
in its minutes.
(c) The Follow-On Investment may
only be completed in reliance on the
order if:
(i) All of the Affiliated Investors’ and
Regulated Funds’ investments in the
issuer are Pre-Boarding Investments;
(ii) Independent counsel to the Board
of each Regulated Fund that holds an
investment in the issuer advises that the
making and holding of the investments
in the Pre-Boarding Investments were
not prohibited by section 57 (as
modified by rule 57b–1) or rule 17d–1,
as applicable;
(iii) All Regulated Funds and
Affiliated Investors that hold PreBoarding Investments in the issuer
immediately before the time of
completion of the Co-Investment
Transaction hold the same security or
securities of the issuer. For the purpose
of determining whether the Regulated
Funds and Affiliated Investors hold the
same security or securities, they may
disregard any security held by some but
not all of them if, prior to relying on the
order, the Required Majority is
presented with all information
necessary to make a finding, and finds,
that: (A) Any Regulated Fund’s or
Affiliated Investor’s holding of a
different class of securities (including
for this purpose a security with a
different maturity date) is immaterial in
amount, including immaterial relative to
the size of the issuer; and (B) the Board
records the basis for any such finding in
its minutes. In addition, securities that
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differ only in respect of issuance date,
currency or denominations may be
treated as the same security; and
(iv) The Affiliated Investors, the other
Regulated Funds and their affiliated
persons (within the meaning of section
2(a)(3)(C) of the Act), individually or in
the aggregate, do not control the issuer
of the securities (within the meaning of
section 2(a)(9) of the Act).
(d) If, with respect to any such
Follow-On Investment:
(i) The amount of the opportunity
proposed to be made available to any
Regulated Fund is not based on the
Regulated Funds’ and the Affiliated
Investors’ outstanding investments in
the issuer or the security at issue, as
appropriate, immediately preceding the
Follow-On Investment; and
(ii) the aggregate amount
recommended by the Advisers to be
invested in the Follow-On Investment
by the participating Regulated Funds
and any participating Affiliated
Investors, collectively, exceeds the
amount of the investment opportunity,
then the Follow-On Investment
opportunity will be allocated among
them pro rata based on Available
Capital (as described in greater detail in
the application).
(e) Other Conditions. 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.
11. The Non-Interested Trustees of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions that fell within the
Regulated Fund’s then-current
Objectives and Strategies and BoardEstablished Criteria, including
investments in Potential Co-Investment
Transactions made by other Regulated
Funds or Affiliated Investors that the
Regulated Fund considered but declined
to participate in, and concerning CoInvestment Transactions in which the
Regulated Fund participated, so that the
Non-Interested Trustees may determine
whether all Potential Co-Investment
Transactions and Co-Investment
Transactions during the preceding
quarter, including those Potential CoInvestment Transactions which the
Regulated Fund considered but declined
to participate in, comply with the
conditions of the order. In addition, the
Non-Interested Trustees will consider at
least annually: (a) The continued
appropriateness for the Regulated Fund
of participating in new and existing CoInvestment Transactions, and (b) the
continued appropriateness of any
Board-Established Criteria.
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12. 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.
13. No Non-Interested Trustee of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act) of any
of the Affiliated Investors.
14. 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 1933 Act)
will, to the extent not payable by the
Advisers under their respective
investment advisory agreements with
Affiliated Investors and the Regulated
Funds, be shared by the Regulated
Funds and the Affiliated Investors in
proportion to the relative amounts of the
securities held or to be acquired or
disposed of, as the case may be.
15. Any transaction fee 26 (including
break-up, structuring, monitoring 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 Investors 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 the
Adviser at a bank or banks having the
qualifications prescribed in section
26(a)(1) of the Act, and the account will
earn a competitive rate of interest that
will also be divided pro rata among the
participating Regulated Funds and
Affiliated Investors based on the amount
they invest in such Co-Investment
Transaction. None of the Advisers, the
Primary Advisers, the Affiliated
Investors, the other Regulated Funds nor
any affiliated person of the Regulated
Funds or Affiliated Investors 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
26 Applicants are not requesting and the staff is
not providing any relief for transaction fees
received in connection with any Co-Investment
Transaction.
VerDate Sep<11>2014
21:40 Nov 04, 2021
Jkt 256001
Affiliated Investors, the pro rata
transaction fees described above and
fees or other compensation described in
condition 2(c)(iii)(D), and (b) in the case
of an Adviser or Primary Adviser,
investment advisory fees paid in
accordance with their respective
agreements between the Advisers and
the Regulated Fund or Affiliated
Investor).
16. If the Holders own in the aggregate
more than 25% of the Shares, 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 trustees; (2) the
removal of one or more trustees; or (3)
all other matters under either the Act or
applicable state law affecting the
Board’s composition, size or manner of
election.
17. Each Regulated Fund’s chief
compliance officer, as defined in rule
38a–1(a)(4) under the Act, will prepare
an annual report for its Board each year
that evaluates (and documents the basis
of that evaluation) the Regulated Fund’s
compliance with the terms and
conditions of the application and the
procedures established to achieve such
compliance.
For the Commission, by the Division of
Investment Management, under delegated
authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–24148 Filed 11–4–21; 8:45 am]
BILLING CODE 8011–01–P
SURFACE TRANSPORTATION BOARD
[Docket No. EP 670 (Sub–No. 1)]
Notice of Rail Energy Transportation
Advisory Committee Meeting
Surface Transportation Board.
Notice of Rail Energy
Transportation Advisory Committee
meeting.
AGENCY:
ACTION:
Notice is hereby given of a
meeting of the Rail Energy
Transportation Advisory Committee
(RETAC), pursuant to the Federal
Advisory Committee Act.
DATES: The meeting will be held on
Tuesday, November 16, 2021, beginning
at 1:00 p.m. E.S.T., and is expected to
conclude by 4:00 p.m. E.S.T.
ADDRESSES: The meeting will be held
virtually via Zoom. See SUPPLEMENTARY
INFORMATION for registration details.
FOR FURTHER INFORMATION CONTACT:
Kristen Nunnally at (202) 245–0312 or
Kristen.Nunnally@stb.gov. Assistance
SUMMARY:
PO 00000
Frm 00267
Fmt 4703
Sfmt 4703
61379
for the hearing impaired is available
through the Federal Relay Service at
(800) 877–8339.
SUPPLEMENTARY INFORMATION: RETAC
was formed in 2007 to provide advice
and guidance to the Board, and to serve
as a forum for discussion of emerging
issues related to the transportation of
energy resources by rail. Establishment
of a Rail Energy Transp. Advisory
Comm., EP 670 (STB served July 17,
2007). The purpose of this meeting is to
facilitate discussions regarding issues of
interest, including rail service,
infrastructure planning and
development, and effective coordination
among suppliers, rail carriers, and users
of energy resources. Agenda items for
this meeting may include a rail
performance measures review, industry
segment updates by RETAC members,
and a roundtable discussion.
The meeting, which is open to the
public via Zoom, will be conducted in
accordance with the Federal Advisory
Committee Act, 5 U.S.C. app. 2; Federal
Advisory Committee Management
regulations, 41 CFR pt. 102–3; the
RETAC charter; and Board procedures.
Members of the public who wish to
attend this meeting must register in
advance of the meeting. The registration
link will be provided on the Board’s
website at https://stb.gov/resources/
stakeholder-committees/retac/.
Registrations will be accepted on a
space-available basis. Further
communications about this meeting may
be announced through the Board’s
website at www.stb.gov.
Public Comments: Members of the
public may submit written comments to
RETAC at any time. Comments should
be emailed to Kristen Nunnally,
Kristen.Nunnally@stb.gov, with RETAC
Comments as the subject line.
Authority: 49 U.S.C. 1321, 49 U.S.C.
11101; 49 U.S.C. 11121.
Decided: November 1, 2021.
By the Board, Scott M. Zimmerman, Acting
Director, Office of Proceedings.
Tammy Lowery,
Clearance Clerk.
[FR Doc. 2021–24178 Filed 11–4–21; 8:45 am]
BILLING CODE 4915–01–P
SURFACE TRANSPORTATION BOARD
[Docket No. FD 36546]
325 South Route 31 Railroad, LLC—
Operation Exemption—Tracks of 325
South Route 31, LLC in Kendall
County, Ill.
325 South Route 31 Railroad, LLC
(SRRR), a noncarrier, has filed a verified
notice of exemption pursuant to 49 CFR
E:\FR\FM\05NON1.SGM
05NON1
]]>Agencies
[Federal Register Volume 86, Number 212 (Friday, November 5, 2021)]
[Notices]
[Pages 61372-61379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24148]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34412; 812-15135]
Blackstone/GSO Floating Rate Enhanced Income Fund, et al.
November 1, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of application for an order under sections 17(d) and 57(i)
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1
under the Act to permit certain joint transactions otherwise prohibited
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
Summary of Application: Applicants request an order to permit business
development companies (``BDCs'') and closed-end management investment
companies to co-invest in portfolio companies with each other and with
certain affiliated investment funds and accounts.
Applicants: Blackstone/GSO Floating Rate Enhanced Income Fund
(``BGFLX''); Blackstone Long-Short Credit Income Fund (``BGX'');
Blackstone Private Credit Fund (``BCRED''); Blackstone Senior Floating
Rate Term Fund (``BSL''); Blackstone Strategic Credit Fund (``BGB'');
Blackstone Secured Lending Fund (``BGSL,'' and together with BGFLX,
BGX, BSL and BGB, the ``Blackstone Credit Regulated Funds'');
Blackstone Liquid Credit Strategies LLC (``BLCS''), the investment
adviser to BGFLX, BGX, BSL and BGB; Blackstone Credit BDC Advisors LLC
(``BCBA''), the investment adviser to BCRED and BGSL; the investment
advisers set forth in Schedule A to the application (together with BLCS
and BCBA, the ``Blackstone Credit Advisers''); and the Existing
Affiliated Funds set forth on Schedule A to the application.\1\
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\1\ The Existing Affiliated Funds are entities (i) whose primary
investment adviser or sub-adviser is an Adviser (as defined
below)(when the sub-adviser is an Adviser, the primary adviser is a
Primary Adviser (as defined below)) (ii) that either (A) would be an
investment company but for section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of
the Act or (B) relies on the rule 3a-7 exemption thereunder from
investment company status.
Filing Dates: The application was filed on June 16, 2020, and amended
---------------------------------------------------------------------------
on February 22, 2021 and July 16, 2021.
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 [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 November 26, 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 0-5 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: The Commission: [email protected]. Applicants: Rajib
Chanda at [email protected] and Christopher Healey at
[email protected].
FOR FURTHER INFORMATION CONTACT: Joseph Toner, Senior Counsel, at (202)
551-7595 or Marc Mehrespand, Branch Chief, at (202) 551-6825 (Chief
Counsel's Office, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application
[[Page 61373]]
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. BGFLX, BGX, BSL and BGB, each a Delaware statutory trust, are
externally managed, diversified, closed-end management investment
companies. Each of BGFLX's and BGX's investment objective is to provide
current income, with a secondary objective of capital appreciation.
Each of BSL's and BGB's investment objective is to seek high current
income, with a secondary objective to seek preservation of capital,
consistent with its primary goal of high current income. Each of BGFLX,
BGX, BSL and BGB has a five-member Board, of which four members are
Non-Interested Trustees.\2\
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\2\ ``Board'' means the board of trustees (or equivalent) of a
Regulated Fund (as defined below).
``Non-Interested Trustees'' are not ``interested persons'' as
defined in section 2(a)(19) of the Act.
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2. BCRED is a Delaware statutory trust that has elected to be
regulated as a business development company (``BDC'') under the Act.\3\
BCRED's investment objective is to generate current income and, to a
lesser extent, generate long-term capital appreciation. BCRED has a
six-member Board, of which four members are Non-Interested Trustees.
---------------------------------------------------------------------------
\3\ Section 2(a)(48) of the Act 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. BGSL is a Delaware statutory trust that has elected to be
regulated as a BDC. BGSL's investment objective is to generate current
income and, to a lesser extent, long-term capital appreciation. BGSL
has a seven-member Board, of which four members are Non-Interested
Trustees.
4. Each of the Advisers \4\ is a subsidiary of The Blackstone
Group, Inc. (``Blackstone''). Blackstone is a leading global
alternative asset manager, whose alternative asset management
businesses include investment entities focused on private equity, real
estate, hedge fund solutions, non-investment grade credit, secondary
private equity funds of funds and multi-asset class strategies.
Blackstone's four business segments are (1) private equity, (2) real
estate, (3) hedge fund solutions and (4) credit.
---------------------------------------------------------------------------
\4\ The term ``Adviser'' means the Blackstone Credit Advisers
and any future investment adviser that (i) controls, is controlled
by or is under common control with a Blackstone Credit Adviser, (ii)
is registered as an investment adviser under the Advisers Act, and
(iii) that intends to participate in the Co-Investment Program (as
defined below). The term ``Primary Adviser'' means any future or
existing investment adviser that (i) controls, is controlled by or
is under common control with an Adviser, (ii) is registered as an
investment adviser under the Advisers Act, and (iii) is not an
Adviser under the requested order. For the avoidance of doubt, a
Primary Adviser will not be treated as an Adviser under the
requested order, but will be subject to conditions 2(c)(iv) and 15
only. No Primary Adviser will rely on the requested order with
respect to any investment entities it manages other than to the
extent those entities are sub-advised by an Adviser. No Primary
Adviser will be the source of any Potential Co-Investment
Transactions (as defined below) under the requested order.
---------------------------------------------------------------------------
5. The Blackstone Credit Advisers operate as a self-contained
advisory business within Blackstone's credit group. Each Blackstone
Credit Adviser is under common control with BLCS and BCBA, the Adviser
to each of the Blackstone Credit Regulated Funds, and collectively they
conduct a single advisory business for purposes of the requested order.
The Blackstone Credit Advisers are each either separately registered as
investment advisers with the Commission or are relying advisers that
rely on the registration of another Blackstone Credit Adviser. No
Blackstone Credit Adviser is a relying adviser of any Blackstone-
affiliated investment adviser from outside of the self-contained group.
6. Applicants seek an order to permit one or more Regulated Funds
\5\ to be able to participate with one or more other Regulated Funds
and/or one or more Affiliated Investors \6\ in the same investment
opportunities through a proposed co-investment program where such
participation would otherwise be prohibited under sections 17(d) and
57(a)(4) of the Act and the rules thereunder (the ``Co-Investment
Program'').
---------------------------------------------------------------------------
\5\ ``Regulated Fund'' means (i) the Blackstone Credit Regulated
Funds and (ii) and any Future Regulated Fund (as defined below).
``Future Regulated Fund'' means any future closed-end management
investment company (i) that has elected to be regulated as a BDC or
is registered under the Act, (ii) whose investment adviser is an
Adviser and (iii) who intends to participate in the Co-Investment
Program.
\6\ ``Affiliated Investor'' means (i) the Existing Affiliated
Funds, (ii) any Affiliated Proprietary Account and (iii) any Future
Affiliated Fund (as defined below). Affiliated Investors may include
funds that are ultimately structured as collateralized loan
obligation funds (``CLOs''). Such CLOs would be investment companies
but for the exception in section 3(c)(7) of the Act or their ability
to rely on rule 3a-7 thereunder. During the investment period of a
CLO, the CLO may engage in certain transactions customary in CLO
formations with another Affiliated Investor on a secondary basis at
fair market value. For purposes of the requested order, any
securities that were acquired by an Affiliated Investor in a
particular Co-Investment Transaction that are then transferred in
such customary transactions to an Affiliated Investor that is or
will become a CLO (an ``Affiliated Fund CLO'') will be treated as if
the Affiliated Fund CLO acquired such securities in the Co-
Investment Transaction. For the avoidance of doubt, any such
transfer from an Affiliated Investor to an Affiliated Fund CLO will
be treated as a Disposition (as defined below) and completed
pursuant to the terms and conditions of the application, though the
applicants note that the Regulated Funds would be prohibited from
participating in such Disposition by section 17(a)(2) or section
57(a)(2) of the Act, as applicable. The participation by any
Affiliated Fund CLO in any such Co-Investment Transaction will
remain subject to the requested order.
``Future Affiliated Fund'' means an entity (i)(A) whose
investment adviser is an Adviser or (B) whose investment adviser is
a Primary Adviser and whose sub-adviser is an Adviser, (ii) that
either (A) would be an investment company but for an exemption in
section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act or (B) relies on
the rule 3a-7 exemption from investment company status, and (iii)
that intends to participate in the Co-Investment Program.
``Affiliated Proprietary Account'' means any account of an
Adviser or its affiliates or any company that is an indirect,
wholly- or majority-owned subsidiary of an Adviser or its
affiliates, which, from time to time, may hold various financial
assets in a principal capacity. For the avoidance of doubt, neither
the Regulated Funds, the Existing Affiliated Funds nor any Future
Affiliated Fund shall be deemed to be Affiliated Proprietary
Accounts for purposes of the application.
---------------------------------------------------------------------------
7. For purposes of the requested order, ``Co-Investment
Transaction'' means any transaction in which one or more Regulated
Funds (or one or more Wholly-Owned Investment Subsidiaries, as defined
below) participates together with one or more other Regulated Funds (or
one or more Wholly-Owned Investment Subsidiaries) and/or one or more
Affiliated Investors in reliance on the requested order. ``Potential
Co-Investment Transaction'' means any investment opportunity in which a
Regulated Fund (or its Wholly-Owned Investment Subsidiary, as defined
below) could not participate together with one or more Affiliated
Investors and/or one or more other Regulated Funds without obtaining
and relying on the requested order.\7\ Funds that are advised or sub-
advised by affiliates of Blackstone other than an Adviser or Primary
Adviser will not participate in the Co-Investment Program. No Primary
Adviser will be the source of any Potential Co-Investment Transactions
under the requested order. Potential Co-Investment Transactions will
not be shared outside of the Co-Investment Program.
---------------------------------------------------------------------------
\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 requested order will
comply with the terms and conditions of the application.
---------------------------------------------------------------------------
8. Applicants state that a Regulated Fund may, from time to time,
form one or more Wholly-Owned Investment
[[Page 61374]]
Subsidiaries.\8\ A Wholly-Owned Investment Subsidiary would be
prohibited from investing in a Co-Investment Transaction with another
Regulated Fund or any Affiliated Investor because it would be a company
controlled by the applicable Regulated Fund for purposes of sections
17(d) and 57(a)(4) of the Act and rule 17d-1 thereunder. Applicants
request that a Wholly-Owned Investment Subsidiary be permitted to
participate in Co-Investment Transactions in lieu of the applicable
Regulated Fund and that the Wholly-Owned Investment Subsidiary's
participation in any such transaction be treated, for purposes of the
requested order, as though the Regulated Fund were participating
directly.
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\8\ ``Wholly-Owned Investment Subsidiary'' means an entity (i)
whose sole business purpose is to hold one or more investments on
behalf of a Regulated Fund (and, in the case of an SBIC Subsidiary
(as defined below), maintain a license under the SBA Act (as defined
below) and issue debentures guaranteed by the SBA (as defined
below)); (ii) that is a wholly-owned subsidiary (as defined in the
Act) of a Regulated Fund (with such Regulated Fund at all times
holding, beneficially and of record, 95% or more of the voting and
economic interests); (iii) with respect to which the Board of the
Regulated Fund has the sole authority to make all determinations
with respect to the Wholly-Owned Investment Subsidiary's
participation under the conditions of the requested order; and (iv)
that is an entity that would be an investment company but for an
exemption in section 3(c)(1) or 3(c)(7) of the Act.
The term ``SBIC Subsidiary'' means a Wholly-Owned Investment
Subsidiary that is licensed by the Small Business Administration
(the ``SBA'') to operate under the Small Business Investment Act of
1958, as amended, (the ``SBA Act'') as a small business investment
company (a ``SBIC'').
---------------------------------------------------------------------------
9. When considering Potential Co-Investment Transactions for any
Regulated Fund, an Adviser will consider only the Objectives and
Strategies,\9\ Board-Established Criteria,\10\ investment policies,
investment positions, capital available for investment, and other
pertinent factors applicable to that Regulated Fund. The participation
of a Regulated Fund in a Potential Co-Investment Transaction may only
be approved by a Required Majority, as defined in section 57(o) of the
Act (a ``Required Majority''), of the trustees of the Board eligible to
vote on that Co-Investment Transaction under section 57(o) of the Act
(the ``Eligible Trustees'').\11\ When selecting investments for the
Affiliated Investors, an Adviser will select investments separately for
each Affiliated Investor, considering, in each case, only the
investment objective, investment policies, investment position, capital
available for investment, and other pertinent factors applicable to
that particular Affiliated Investor.
---------------------------------------------------------------------------
\9\ The term ``Objectives and Strategies'' means a Regulated
Fund's investment objectives and strategies, as described in the
filings made with the Commission by the Regulated Fund under the
Securities Exchange Act of 1934, as amended, the Securities Act of
1933, as amended (the ``1933 Act'') and the Act, and the Regulated
Fund's reports to shareholders.
\10\ The term ``Board-Established Criteria'' means criteria that
the Board of the applicable Regulated Fund may establish from time
to time to describe the characteristics of Potential Co-Investment
Transactions regarding which an Adviser to the Regulated Fund should
be notified under condition 1 of the requested order. The Board-
Established Criteria will be consistent with the Regulated Fund's
then-current Objectives and Strategies. If no Board-Established
Criteria are in effect, then the Regulated Fund's Adviser will be
notified of all Potential Co-Investment Transactions that fall
within the Regulated Fund's then current Objectives and Strategies.
Board-Established Criteria will be objective and testable, meaning
that they will be based on observable information, such as industry/
sector of the issuer, minimum earnings before interest, taxes,
depreciation, and amortization of the issuer, asset class of the
investment opportunity or required commitment size, and not on
characteristics that involve discretionary assessment. The Adviser
to the Regulated Fund may from time to time recommend criteria for
the applicable Board's consideration, but Board-Established Criteria
will only become effective if approved by a majority of the Non-
Interested Trustees. The Non-Interested Trustees of a Regulated Fund
may at any time rescind, suspend or qualify its approval of any
Board-Established Criteria, though Applicants anticipate that, under
normal circumstances, the Board would not modify these criteria more
often than quarterly.
\11\ The defined terms Eligible Trustees and Required Majority
apply as if each Regulated Fund were a BDC subject to section 57(o)
of the Act.
---------------------------------------------------------------------------
10. With respect to participation in a Potential Co-Investment
Transaction by a Regulated Fund, the applicable Adviser will present
each Potential Co-Investment Transaction and the proposed allocation of
each investment opportunity to the Eligible Trustees. The Required
Majority of a Regulated Fund will approve each Co-Investment
Transaction prior to any investment by the Regulated Fund.
11. Applicants state that the majority of the Blackstone Credit
Advisers' employees work on matters for Close Affiliates \12\ and
information about potential investment opportunities is routinely
disseminated among such Adviser's employees. Other than to satisfy
compliance obligations, information regarding Potential Co-Investment
Transactions will not be shared with Remote Affiliates,\13\ which would
include other investment advisers that operate in other Blackstone
business groups, except in unusual circumstances, as the Blackstone
business groups each generally target different investment strategies
or asset classes and there are information barrier policies in place
between the Blackstone business groups. Applicants further note that
within the Blackstone Credit Advisers, the personnel overlap and
coordination among portfolio management teams ensures that all relevant
investment opportunities will be brought to the attention of each
Regulated Fund managed by the respective Adviser. Applicants submit
that the Blackstone Credit Advisers will receive all information
regarding all investment opportunities that fall within the then-
current Objectives and Strategies and Board-Established Criteria of
each Regulated Fund managed by the respective Adviser, regardless of
whether the Adviser serves as the primary investment adviser or sub-
adviser to the Regulated Fund.
---------------------------------------------------------------------------
\12\ The term ``Close Affiliate'' means the Advisers, the
Regulated Funds, the Affiliated Investors and any other person
described in section 57(b) of the Act (after giving effect to rule
57b-1 thereunder) in respect of any Regulated Fund (treating any
registered investment company or series thereof as a BDC for this
purpose) except for limited partners included solely by reason of
the reference in section 57(b) to section 2(a)(3)(D) of the Act.
\13\ The term ``Remote Affiliate'' means any person described in
section 57(e) of the Act in respect of any Regulated Fund (treating
any registered investment company or series thereof as a BDC for
this purpose) and any limited partner holding 5% or more of the
relevant limited partner interests that would be a Close Affiliate
but for the exclusion in that definition.
---------------------------------------------------------------------------
12. Applicants acknowledge that some of the Affiliated Investors
may not be funds advised by an Adviser because they are Affiliated
Proprietary Accounts. Applicants do not believe these Affiliated
Proprietary Accounts should raise issues under the conditions of the
requested order because allocation policies and procedures of the
account owners provide that investment opportunities are offered to
client accounts before they are offered to Affiliated Proprietary
Accounts.
13. Applicants represent that the Co-Investment Program requires
that the terms, conditions, price, class of securities, settlement
date, and registration rights applicable to a Regulated Fund's purchase
be the same as those applicable to the purchase by the other
participating Regulated Funds and Affiliated Investors. However, the
settlement date for an Affiliated Investor in a Co-Investment
Transaction may occur up to ten business days after the settlement date
for the Regulated Fund, and vice versa. Nevertheless, in all cases (i)
the date on which the commitment of the Affiliated Investors and
Regulated Funds is made will be the same even where the settlement date
is not and (ii) the earliest settlement date and the latest settlement
date of any Affiliated Investor or Regulated Fund participating in the
transaction will occur within ten business days of each other.
14. Under condition 16, if an Adviser or its principals, or any
person controlling, controlled by, or under
[[Page 61375]]
common control with the Adviser or its principal owners, and the
Affiliated Investor (collectively, the ``Holders'') own in the
aggregate more than 25 percent of the outstanding voting shares of a
Regulated Fund (``Shares''), then the Holders will vote such Shares as
required under condition 16.
15. No Eligible Trustee will have a direct or indirect financial
interest in any Co-Investment Transaction, other than through any
interest such Eligible Trustee may have in securities of a Regulated
Fund.
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. Section 57(a)(4) of the Act prohibits certain affiliated persons
of a BDC from participating in joint transactions with the BDC or a
company controlled by a BDC in contravention of rules as prescribed by
the Commission. Under section 57(b)(2) of the Act, any person who is
directly or indirectly controlling, controlled by, or under common
control with a BDC is subject to section 57(a)(4) of the Act. Section
57(i) of the Act provides that, until the Commission prescribes rules
under section 57(a)(4) of the Act, 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) of the Act. Because the Commission has not adopted any rules
under section 57(a)(4) of the Act, rule 17d-1 thereunder applies.
3. Applicants state that certain transactions effected as part of
the Co-Investment Program may be prohibited by sections 17(d) and
57(a)(4) of the Act and rule 17d-1 thereunder without a prior exemptive
order of the Commission to the extent that the Affiliated Investors
fall within the category of persons described by section 17(d) or
section 57(b) of the Act, as modified by rule 57b-1 thereunder with
respect to a Regulated Fund. Applicants believe that the proposed terms
and conditions will ensure would ensure that the conflicts of interest
that section 17(d) and section 57(a)(4) of the Act were designed to
prevent would be addressed and the standards for an order under rule
17d-1 under the Act are met.
Applicants' Conditions
Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
1. (a) Each Adviser will establish, maintain and implement policies
and procedures reasonably designed to ensure that each Adviser is
promptly notified, for each Regulated Fund the Adviser manages, of all
Potential Co-Investment Transactions \14\ that (i) an Adviser considers
for any other Regulated Fund or Affiliated Investor and (ii) fall
within the Regulated Fund's then-current Objectives and Strategies and
Board-Established Criteria.
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\14\ No Primary Adviser will be the source of any Potential Co-
Investment Transactions under the requested order.
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(b) When an Adviser to a Regulated Fund is notified of a Potential
Co-Investment Transaction under condition 1(a), such Adviser will make
an independent determination of the appropriateness of the investment
for the Regulated Fund in light of the Regulated Fund's then-current
circumstances.
2. (a) If the Adviser deems a Regulated Fund's participation in any
Potential Co-Investment Transaction to be appropriate for the Regulated
Fund, 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
Investors, 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 \15\ up to the amount proposed to be invested by each. The
applicable Adviser will provide the Eligible Trustees of each
participating Regulated Fund with information concerning each
participating party's Available Capital to assist the Eligible Trustees
with their review of the Regulated Fund's investments for compliance
with these allocation procedures.
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\15\ ``Available Capital'' means (a) for each Regulated Fund,
the amount of capital available for investment determined based on
the amount of cash on hand, liquidity considerations, existing
commitments and reserves, if any, the targeted leverage level,
targeted asset mix, risk-return and target-return profile, tax
implications, regulatory or contractual restrictions or
consequences, 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,
and (b) for each Affiliated Investor, the amount of capital
available for investment determined based on the amount of cash on
hand, liquidity considerations, existing commitments and reserves,
if any, the targeted leverage level, targeted asset mix, risk-return
and target-return profile, tax implications, regulatory or
contractual restrictions or consequences and other investment
policies and restrictions set from time to time by the Affiliated
Investors' trustees, general partners, or adviser or imposed by
applicable laws, rules, regulations or interpretations.
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(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 Investor) to the Eligible Trustees 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
Investors 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
Investors 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
Investors; provided that, if any other Regulated Fund or Affiliated
Investor, 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 settlement date for another Regulated Fund or an Affiliated
Investor in a Co-Investment Transaction is later
[[Page 61376]]
than the settlement date for the Regulated Fund by no more than ten
business days or earlier than the settlement date for the Regulated
Fund by no more than ten business days, in either case, so long as: (x)
The date on which the commitment of the Affiliated Investors and
Regulated Funds is made is the same; and (y) the earliest settlement
date and the latest settlement date of any Affiliated Investor or
Regulated Fund participating in the transaction will occur within ten
business days of each other;
(B) the Eligible Trustees will have the right to ratify the
selection of such director or board observer, if any;
(C) 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
(D) any fees or other compensation that any Affiliated Investor or
any Regulated Fund or any affiliated person of any Affiliated Investor
or any Regulated Fund receives in connection with the right of an
Affiliated Investor 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 Investors (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 Investors, the other Regulated Funds or
any Primary Adviser 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 15;
(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)(D).
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 Investors during the preceding quarter that fell
within the Regulated Fund's then-current Objectives and Strategies and
Board Established Criteria that were not made available to the
Regulated Fund, and an explanation of why the investment opportunities
were not offered to the Regulated Fund. All information presented to
the Board pursuant to this condition will be kept for the life of the
Regulated Fund and at least two years thereafter, and will be subject
to examination by the Commission and its staff.
5. Except for Follow-On Investments \16\ made in accordance with
condition 9 and 10,\17\ a Regulated Fund will not invest in reliance on
the Order in any issuer in which a Related Party \18\ has an
investment. The Adviser will maintain books and records that
demonstrate compliance with this condition for each Regulated Fund.
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\16\ ``Follow-On Investment'' means any additional investment in
an existing portfolio company whose securities were acquired in a
Co-Investment Transaction, including the exercise of warrants,
conversion privileges or other similar rights to acquired additional
securities of the portfolio company.
\17\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
\18\ The term ``Related Party'' means (i) any Close Affiliate
and (ii) in respect of matters as to which any Adviser has
knowledge, any Remote Affiliate.
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6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless (i) the terms, conditions, price, class
of securities to be purchased, registration rights and the date on
which the commitment is entered into will be the same for each
participating Regulated Fund and Affiliated Investor and (ii) the
earliest settlement date and the latest settlement date of any
participating Regulated Fund or Affiliated Investor will occur as close
in time as practicable and in no event more than ten business days
apart. The grant to an Affiliated Investor 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)(B), (C), and (D) are met.
7. Standard Review Dispositions.
(a) If any Regulated Fund or Affiliated Investor elects to sell,
exchange or otherwise dispose of an interest in a security and one or
more Regulated Funds and Affiliated Investors have previously
participated in a Co-Investment Transaction with respect to the issuer,
then:
(i) The Adviser to such Regulated Fund or Affiliated Investor will
notify each Regulated Fund that holds an investment in the issuer of
the proposed disposition at the earliest practical time; \19\ and
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\19\ Any Affiliated Proprietary Account that is not advised by
an adviser is itself deemed to be an Adviser for purposes of
conditions 7(a)(i), 8(a)(i), 9(a)(i) and 10(a)(i).
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(ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to participation by such
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 Affiliated Investors
and any other Regulated Fund.
(c) A Regulated Fund may participate in such a disposition without
obtaining prior approval of the Required Majority if: (i) (A) The
participation of each Regulated Fund and Affiliated Investor in such
disposition is proportionate to its then-current holding of the
security (or securities) of the issuer that is (or are) the subject of
the disposition; \20\ (B) 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 (C) the Board of the Regulated
Fund is provided on a quarterly basis with a list of all dispositions
made in accordance with this condition; or (ii) each security is a
Tradable Security \21\ and (A) the disposition is not to the issuer or
any affiliated person of the issuer and (B) the security is sold for
cash in a transaction in which the only term
[[Page 61377]]
negotiated by or on behalf of the participating Regulated Funds and
Affiliated Investors is price.
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\20\ In the case of any disposition, proportionality will be
measured by each participating Regulated Fund's and Affiliated
Investor's outstanding investment in the security in question
immediately preceding the disposition.
\21\ The term ``Tradable Security'' means a security that (i)
trades on a national securities exchange or designated offshore
securities market as defined in rule 902(b) under the 1933 Act; (ii)
is not subject to restrictive agreements with the issuer or other
security holders; and (iii) trades with sufficient volume and
liquidity (findings as to which are documented by the Advisers to
any Regulated Funds holding investments in the issuer and retained
for the life of the Regulated Fund) to allow each Regulated Fund to
dispose of its entire position remaining after the proposed
disposition within a short period of time not exceeding 30 days at
approximately the value (as defined by section 2(a)(41) of the Act)
at which the Regulated Fund has valued the investment.
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(d) In all other cases, the Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Trustees, and the Regulated Fund will participate in such disposition
solely to the extent that a Required Majority determines that it is in
the Regulated Fund's best interests. Each Affiliated Investor and each
Regulated Fund will bear its own expenses in connection with any such
disposition.
8. Enhanced Review Dispositions.
(a) If any Regulated Fund or Affiliated Investor elects to sell,
exchange or otherwise dispose of a Pre-Boarding Investment \22\ in a
Potential Co-Investment Transaction and the Regulated Funds and
Affiliated Investors have not previously participated in a Co-
Investment Transaction with respect to the issuer:
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\22\ The term ``Pre-Boarding Investments'' means any investment
in an issuer that is (i) held by a Regulated Fund as well as one or
more Affiliated Investors and/or one or more other Regulated Funds,
(ii) acquired prior to participating in any Co-Investment
Transaction, and (iii) acquired (A) in a transaction in which the
only term negotiated by or on behalf of such funds was price in
reliance on one of the Joint Transaction No-Action Letters; or (B)
in transactions occurring at least 90 days apart and without
coordination between the Regulated Fund and any Affiliated Investor
or other Regulated Fund. The ``Joint Transaction No-Action Letters''
are SMC Capital, Inc., SEC Staff No-Action Letter (Sept. 5, 1995)
and Massachusetts Mutual Life Insurance Company, SEC Staff No-Action
Letter (June 7, 2000).
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(i) The Adviser to such Regulated Fund or Affiliated Investor will
notify each Regulated Fund that holds an investment in the issuer of
the proposed disposition at the earliest practical time;
(ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to participation by such
Regulated Fund in the disposition; and
(iii) the Advisers will provide to the Board of each Regulated Fund
that holds an investment in the issuer all information relating to the
existing investments in the issuer of the Regulated Funds and
Affiliated Investors, including the terms of such investments and how
they were made, that is necessary for the Required Majority to make the
findings required by this condition.
(b) The Adviser will provide its written recommendation as to the
Regulated Fund's participation to the Eligible Trustees, and the
Regulated Fund will participate in such disposition solely to the
extent that a Required Majority determines that:
(i) The disposition complies with condition 2(c)(i), (ii), (iii)(A)
and (iv); and
(ii) the making and holding of the Pre-Boarding Investments were
not prohibited by section 57 or rule 17d-1, as applicable, and records
the basis for the finding in the Board minutes.
(c) The disposition may only be completed in reliance on the order
if:
(i) Each Regulated Fund has 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 Affiliated Investors and
any other Regulated Fund.
(ii) All of the Affiliated Investors' and Regulated Funds'
investments in the issuer are Pre-Boarding Investments;
(iii) Independent counsel to the Board advises that the making and
holding of the investments in the Pre-Boarding Investments were not
prohibited by section 57 (as modified by rule 57b-1) or rule 17d-1, as
applicable;
(iv) all Regulated Funds and Affiliated Investors that hold Pre-
Boarding Investments in the issuer immediately before the time of
completion of the Co-Investment Transaction hold the same security or
securities of the issuer. For the purpose of determining whether the
Regulated Funds and Affiliated Investors hold the same security or
securities, they may disregard any security held by some but not all of
them if, prior to relying on the Order, the Required Majority is
presented with all information necessary to make a finding, and finds,
that: (A) Any Regulated Fund's or Affiliated Investor's holding of a
different class of securities (including for this purpose a security
with a different maturity date) is immaterial \23\ in amount, including
immaterial relative to the size of the issuer; and (B) the Board
records the basis for any such finding in its minutes. In addition,
securities that differ only in respect of issuance date, currency, or
denominations may be treated as the same security; and
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\23\ In determining whether a holding is ``immaterial'' for
purposes of the requested order, the Required Majority will consider
whether the nature and extent of the interest in the transaction or
arrangement is sufficiently small that a reasonable person would not
believe that the interest affect the determination of whether to
enter into the transaction or arrangement or the terms of the
transaction or arrangement.
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(d) The Affiliated Investors, the other Regulated Funds and their
affiliated persons (within the meaning of section 2(a)(3)(C) of the
Act), individually or in the aggregate, do not control the issuer of
the securities (within the meaning of section 2(a)(9) of the Act).
9. Standard Review Follow-Ons.
(a) If any Regulated Fund or Affiliated Investor desires to make a
Follow-On Investment in an issuer and the Regulated Funds and
Affiliated Investors holding investments in the issuer previously
participated in a Co-Investment Transaction with respect to the issuer:
(i) The Adviser to each such Regulated Fund or Affiliated Investor
will notify each Regulated Fund that holds securities of the portfolio
company of the proposed transaction at the earliest practical time; and
(ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to the proposed
participation, including the amount of the proposed investment, by such
Regulated Fund.
(b) A Regulated Fund may participate in the Follow-On Investment
without obtaining prior approval of the Required Majority if: (i)(A)
The proposed participation of each Regulated Fund and each Affiliated
Investor in such investment is proportionate to its outstanding
investments in the issuer or the security at issue, as appropriate,\24\
immediately preceding the Follow-On Investment; and (B) 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); or
(ii) it is a Non-Negotiated Follow-On Investment.\25\
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\24\ To the extent that a Follow-On Investment opportunity is in
a security or arises in respect of a security held by the
participating Regulated Funds and Affiliated Investors,
proportionality will be measured by each participating Regulated
Fund's and Affiliated Investor's outstanding investment in the
security in question immediately preceding the Follow-On Investment
using the most recent available valuation thereof. To the extent
that a Follow-On Investment opportunity relates to an opportunity to
invest in a security that is not in respect of any security held by
any of the participating Regulated Funds or Affiliated Investors,
proportionality will be measured by each participating Regulated
Fund's and Affiliated Investor's outstanding investment in the
issuer immediately preceding the Follow-On Investment using the most
recent available valuation thereof.
\25\ The term ``Non-Negotiated Follow-On Investment'' means a
Follow-On Investment in which a Regulated Fund participates together
with one or more Affiliated Investors and/or one or more other
Regulated Funds (i) in which the only term negotiated by or on
behalf of the funds is price and (ii) with respect to which, if the
transaction were considered on its own, the funds would be entitled
to rely on SEC guidance under either of the Joint Transaction No-
Action Letters.
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(c) In all other cases, the Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Trustees, and the Regulated Fund will participate in such Follow-On
Investment solely to the extent that a Required Majority makes the
[[Page 61378]]
determinations set forth in condition 2(c). If the only previous Co-
Investment Transaction with respect to the issuer was an Enhanced
Review Disposition the Eligible Trustees must complete this review of
the proposed Follow-On Investment both on a stand-alone basis and
together with the Pre-Boarding Investments in relation to the total
economic exposure and other terms of the investment.
(d) If, with respect to any such Follow-On Investment:
(i) The amount of the opportunity proposed to be made available to
any Regulated Fund is not based on the Regulated Funds' and the
Affiliated Investors' outstanding investments in the issuer or the
security at issue, as appropriate, immediately preceding the Follow-On
Investment; and
(ii) 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
Investors, collectively, in the same transaction, exceeds the amount of
the investment opportunity; then the Follow-On Investment Opportunity
will be allocated among them pro rata based on Available Capital (as
described in greater detail in the application), up to the amount
proposed to be invested by each.
(e) 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.
10. Enhanced Review Follow-Ons.
(a) If any Regulated Fund or Affiliated Investor desires to make a
Follow-On Investment in an issuer that is a Potential Co-Investment
Transaction and the Regulated Funds and Affiliated Investor holding
investments in the issuer have not previously participated in a Co-
Investment Transaction with respect to the issuer:
(i) The Adviser to each such Regulated Fund or Affiliated Investor
will notify each Regulated Fund that holds securities of the portfolio
company of the proposed transaction at the earliest practical time;
(ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to the proposed
participation, including the amount of the proposed investment, by such
Regulated Fund; and
(iii) the Advisers will provide to the Board of each Regulated Fund
that holds an investment in the issuer all information relating to the
existing investments in the issuer of the Regulated Funds and
Affiliated Investors, including the terms of such investments and how
they were made, that is necessary for the Required Majority to make the
findings required by this condition.
(b) The applicable Adviser will provide its written recommendation
as to a Regulated Fund's participation to the Eligible Trustees, and
the Regulated Fund will participate in such Follow-On Investment solely
to the extent that a Required Majority reviews the proposed Follow-On
Investment both on a stand-alone basis and together with the Pre-
Boarding Investments in relation to the total economic exposure and
other terms and makes the determinations set forth in condition 2(c).
In addition, the Follow-On Investment may only be completed in reliance
on the order if the Required Majority of each participating Regulated
Fund determines that the making and holding of the Pre-Boarding
Investments were not prohibited by section 57 (as modified by rule 57b-
1) or rule 17d-1, as applicable. The basis for the Board's findings
will be recorded in its minutes.
(c) The Follow-On Investment may only be completed in reliance on
the order if:
(i) All of the Affiliated Investors' and Regulated Funds'
investments in the issuer are Pre-Boarding Investments;
(ii) Independent counsel to the Board of each Regulated Fund that
holds an investment in the issuer advises that the making and holding
of the investments in the Pre-Boarding Investments were not prohibited
by section 57 (as modified by rule 57b-1) or rule 17d-1, as applicable;
(iii) All Regulated Funds and Affiliated Investors that hold Pre-
Boarding Investments in the issuer immediately before the time of
completion of the Co-Investment Transaction hold the same security or
securities of the issuer. For the purpose of determining whether the
Regulated Funds and Affiliated Investors hold the same security or
securities, they may disregard any security held by some but not all of
them if, prior to relying on the order, the Required Majority is
presented with all information necessary to make a finding, and finds,
that: (A) Any Regulated Fund's or Affiliated Investor's holding of a
different class of securities (including for this purpose a security
with a different maturity date) is immaterial in amount, including
immaterial relative to the size of the issuer; and (B) the Board
records the basis for any such finding in its minutes. In addition,
securities that differ only in respect of issuance date, currency or
denominations may be treated as the same security; and
(iv) The Affiliated Investors, the other Regulated Funds and their
affiliated persons (within the meaning of section 2(a)(3)(C) of the
Act), individually or in the aggregate, do not control the issuer of
the securities (within the meaning of section 2(a)(9) of the Act).
(d) If, with respect to any such Follow-On Investment:
(i) The amount of the opportunity proposed to be made available to
any Regulated Fund is not based on the Regulated Funds' and the
Affiliated Investors' outstanding investments in the issuer or the
security at issue, as appropriate, immediately preceding the Follow-On
Investment; and
(ii) the aggregate amount recommended by the Advisers to be
invested in the Follow-On Investment by the participating Regulated
Funds and any participating Affiliated Investors, collectively, exceeds
the amount of the investment opportunity, then the Follow-On Investment
opportunity will be allocated among them pro rata based on Available
Capital (as described in greater detail in the application).
(e) Other Conditions. 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.
11. The Non-Interested Trustees of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions that fell within the Regulated Fund's then-
current Objectives and Strategies and Board-Established Criteria,
including investments in Potential Co-Investment Transactions made by
other Regulated Funds or Affiliated Investors that the Regulated Fund
considered but declined to participate in, and concerning Co-Investment
Transactions in which the Regulated Fund participated, so that the Non-
Interested Trustees may determine whether all Potential Co-Investment
Transactions and Co-Investment Transactions during the preceding
quarter, including those Potential Co-Investment Transactions which the
Regulated Fund considered but declined to participate in, comply with
the conditions of the order. In addition, the Non-Interested Trustees
will consider at least annually: (a) The continued appropriateness for
the Regulated Fund of participating in new and existing Co-Investment
Transactions, and (b) the continued appropriateness of any Board-
Established Criteria.
[[Page 61379]]
12. 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.
13. No Non-Interested Trustee of a Regulated Fund will also be a
director, general partner, managing member or principal, or otherwise
an ``affiliated person'' (as defined in the Act) of any of the
Affiliated Investors.
14. 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 1933 Act) will, to the
extent not payable by the Advisers under their respective investment
advisory agreements with Affiliated Investors and the Regulated Funds,
be shared by the Regulated Funds and the Affiliated Investors in
proportion to the relative amounts of the securities held or to be
acquired or disposed of, as the case may be.
15. Any transaction fee \26\ (including break-up, structuring,
monitoring 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 Investors 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 the Adviser at a bank
or banks having the qualifications prescribed in section 26(a)(1) of
the Act, and the account will earn a competitive rate of interest that
will also be divided pro rata among the participating Regulated Funds
and Affiliated Investors based on the amount they invest in such Co-
Investment Transaction. None of the Advisers, the Primary Advisers, the
Affiliated Investors, the other Regulated Funds nor any affiliated
person of the Regulated Funds or Affiliated Investors 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 Investors, the pro rata
transaction fees described above and fees or other compensation
described in condition 2(c)(iii)(D), and (b) in the case of an Adviser
or Primary Adviser, investment advisory fees paid in accordance with
their respective agreements between the Advisers and the Regulated Fund
or Affiliated Investor).
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\26\ 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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16. If the Holders own in the aggregate more than 25% of the
Shares, 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 trustees; (2) the removal of one or
more trustees; or (3) all other matters under either the Act or
applicable state law affecting the Board's composition, size or manner
of election.
17. Each Regulated Fund's chief compliance officer, as defined in
rule 38a-1(a)(4) under the Act, will prepare an annual report for its
Board each year that evaluates (and documents the basis of that
evaluation) the Regulated Fund's compliance with the terms and
conditions of the application and the procedures established to achieve
such compliance.
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-24148 Filed 11-4-21; 8:45 am]
BILLING CODE 8011-01-P
