Bain Capital Specialty Finance, Inc., et al., 67768-67774 [2021-25862]
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Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
mechanism of, a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
Specifically, the Exchange believes
that the proposed rule change is
consistent with these principles
because, like the current risk settings,
the Hard to Borrow List fosters
competition by providing another
option in the efficient risk management
of trading on the Exchange. Users are
free to use the Exchange’s Hard to
Borrow List, or other risk management
offerings.
Moreover, as noted by the
Commission, even when shares can be
borrowed short sellers may find it costly
to borrow stock to enter or maintain a
short position.8 In this regard, the Hard
to Borrow List provides Users with a
tool to help manage such costs by
rejecting orders in hard to borrow
securities and thus providing a
mechanism of financial protection to
Exchange Users.
The proposed rule change also is
designed to support the principles of
Section 11A(a)(1) 9 in that it seeks to
assure economically efficient execution
of securities transactions, makes it
practicable for brokers to execute
investors’ orders in the best market, and
provides an opportunity for investors’
orders to be executed without the
participation of a dealer. Additionally,
the rule proposal is consistent with
Section 11(a)(1) 10 in that makes the
Hard to Borrow List available to all
Users, regardless of their size.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change imposes any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, the
proposed rule change is not designed to
address any competitive issues and does
not pose an undue burden on Users, as
the Hard to Borrow List is an optional
risk setting offered to all Users.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposal. No written comments
were solicited or received on the
proposed rule change.
8 See Staff of the U.S. Securities and Exchange
Commission, Staff Report on Equity And Options
Market Structure Conditions in Early 2021, (October
14, 2021) at 30, footnote 84.
9 15 U.S.C. 78k–1(a)(1).
10 Id.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. By order approve or disapprove
such proposed rule change, or
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBYX–2021–027 and
should be submitted on or before
December 20, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–25877 Filed 11–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34422; File No. 812–15222]
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBYX–2021–027 on the subject line.
Bain Capital Specialty Finance, Inc., et
al.
Paper Comments
Notice of application for an order
under sections 17(d) and 57(i) of the
Investment Company Act of 1940 (the
‘‘Act’’) and rule 17d–1 under the Act to
permit certain joint transactions
otherwise prohibited by sections 17(d)
and 57(a)(4) of the Act and rule 17d–1
under the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit business
development companies (‘‘BDCs’’) to coinvest in portfolio companies with each
other and with certain affiliated
investment funds and accounts.
APPLICANTS: Bain Capital Specialty
Finance, Inc. (‘‘BCSF’’); BCSF Advisors,
LP (‘‘BCSFA’’), on behalf of itself and its
successors; 1 Bain Capital Credit (Asia),
Limited, Bain Capital Credit (Australia)
Pty. Ltd, Bain Capital Credit CLO
Advisors, LP, Bain Capital Credit, LP
(‘‘Bain’’), Bain Capital Credit, Ltd., Bain
Capital Investments (Europe) Limited,
Bain Capital Investments (Ireland)
Limited (together with BCSFA, the
‘‘Existing Bain Advisers’’), on behalf of
themselves and their successors; Avery
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBYX–2021–027. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
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November 22, 2021.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
11 17
CFR 200.30–3(a)(12).
term ‘‘successor,’’ as applied to each
Adviser (defined below), means an entity that
results from a reorganization into another
jurisdiction or change in the type of business
organization.
1 The
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Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Notices
Point III CLO, Limited, Avery Point IV
CLO, Limited, Avery Point V CLO,
Limited, Avery Point VI CLO, Limited,
Avery Point VII CLO, Limited, Bain
Capital COPS CV Holdings, L.P., Bain
Capital COPS II Continuation Vehicle,
L.P., Bain Capital COPS III Continuation
Vehicle, L.P., Bain Capital Credit Asian
Opportunities, L.P., Bain Capital Credit
CLO 2016–2, Limited, Bain Capital
Credit CLO 2017–1, Limited, Bain
Capital Credit CLO 2017–2, Limited,
Bain Capital Credit CLO 2018–1,
Limited, Bain Capital Credit CLO 2018–
2, Limited, Bain Capital Credit CLO
2019–1, Limited, Bain Capital Credit
CLO 2019–2, Limited, Bain Capital
Credit CLO 2019–3, Limited, Bain
Capital Credit CLO 2019–4, Limited,
Bain Capital Credit CLO 2020–1,
Limited, Bain Capital Credit CLO 2020–
2, Limited, Bain Capital Credit CLO
2020–3, Limited, Bain Capital Credit
CLO 2020–4, Limited, Bain Capital
Credit CLO 2020–5, Limited, Bain
Capital Credit CLO 2021–1, Limited,
Bain Capital Credit Dislocation Fund
(B), L.P., Bain Capital Credit Managed
Account (BC), L.P., Bain Capital Credit
Managed Account (Blanco), L.P., Bain
Capital Credit Managed Account
(CalPERS), L.P., Bain Capital Credit
Managed Account (CLO), L.P., Bain
Capital Credit Managed Account
(DERP), L.P., Bain Capital Credit
Managed Account (E), L.P., Bain Capital
Credit Managed Account (FSS), L.P.,
Bain Capital Credit Managed Account
(G), SCSp, Bain Capital Credit Managed
Account (Iditarod), L.P., Bain Capital
Credit Managed Account (L), L.P., Bain
Capital Credit Managed Account
(NZSF), L.P., Bain Capital Credit
Managed Account (Pegasus), L.P., Bain
Capital Credit Managed Account (PPF),
L.P., Bain Capital Credit Managed
Account (PSERS), L.P., Bain Capital
Credit Managed Account (Q), L.P., Bain
Capital Credit Managed Account (Re
Special Situations), L.P., Bain Capital
Credit Managed Account (TCCC), L.P.,
Bain Capital Credit Managed Account
(UCAL), L.P., Bain Capital Credit
Managed Account (VFMC), L.P., Bain
Capital Credit Rio Grande FMC, L.P.,
Bain Capital Direct Lending 2015 (L),
L.P., Bain Capital Direct Lending 2015
(U), L.P., Bain Capital Distressed and
Special Situations 2013 (A), L.P., Bain
Capital Distressed and Special
Situations 2013 (A2 Master), L.P., Bain
Capital Distressed and Special
Situations 2013 (AIV I), L.P., Bain
Capital Distressed and Special
Situations 2013 (AIV II Master), L.P.,
Bain Capital Distressed and Special
Situations 2013 (B), L.P., Bain Capital
Distressed and Special Situations 2013
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(D), L.P., Bain Capital Distressed and
Special Situations 2013 (E Master), L.P.,
Bain Capital Distressed and Special
Situations 2013 (E2 Master), L.P., Bain
Capital Distressed and Special
Situations 2016 (A), L.P., Bain Capital
Distressed and Special Situations 2016
(B Master), L.P., Bain Capital Distressed
and Special Situations 2016 (EU
Master), L.P., Bain Capital Distressed
and Special Situations 2016 (F), L.P.,
Bain Capital Distressed and Special
Situations 2016 (F–EU), L.P., Bain
Capital Distressed and Special
Situations 2016 (G), L.P., Bain Capital
Distressed and Special Situations 2019
ICAV, Bain Capital Distressed and
Special Situations 2019 (A), L.P., Bain
Capital Distressed and Special
Situations 2019 (B Master), L.P., Bain
Capital Distressed and Special
Situations 2019 (F), L.P., Bain Capital
Euro CLO 2017–1 Designated Activity
Company, Bain Capital Euro CLO 2018–
1 Designated Activity Company, Bain
Capital Euro CLO 2018–2 Designated
Activity Company, Bain Capital Euro
CLO 2019–1 Designated Activity
Company, Bain Capital Euro CLO 2020–
1 Designated Activity Company, Bain
Capital Global Direct Lending 2021 (L
Master), L.P., Bain Capital Global Direct
Lending 2021 (U Master), SCSp, Bain
Capital High Income Partnership, L.P.,
Bain Capital I ICAV—Global Loan Fund,
Bain Capital Middle Market Credit 2010
(Offshore II Master), L.P., Bain Capital
Middle Market Credit 2010 (Offshore
Master), L.P., Bain Capital Middle
Market Credit 2010, L.P., Bain Capital
Middle Market Credit 2014 (A Master),
L.P., Bain Capital Middle Market Credit
2014 (F), L.P., Bain Capital Middle
Market Credit 2014, L.P., Bain Capital
Middle Market Credit 2018 (A), L.P.,
Bain Capital Middle Market Credit 2018
(B Master), L.P., Bain Capital Middle
Market Credit 2018 (F), L.P., Bain
Capital Senior Loan Fund (SRI), L.P.,
Bain Capital Senior Loan Fund, L.P.,
Bain Capital Special Situations Asia II,
L.P., Bain Capital Special Situations
Asia, L.P., Bain Capital Special
Situations Europe ICAV, Bain Capital
Structured Credit Fund, L.P., Bain
Capital Total Return Credit, L.P.,
Barnstable Ltd., BCIS Fund (LV), LP,
Cape Schanck Direct Lending Trust,
Centerville Ltd., Sankaty CLO
Opportunities Coinvestment Fund, L.P.,
Cmac Fund 1, L.P., Holly Issuer
Designated Activity Company,
Newhaven CLO, Designated Activity
Company, Newhaven II CLO,
Designated Activity Company, Prospect
Harbor Designated Investments, L.P.,
QCT, Queenscliff Trust, Race Point IX
CLO, Limited, Race Point VIII CLO, Ltd.,
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Race Point X CLO, Limited, Rye
Harbour CLO, Designated Activity
Company, Sankaty Beacon Investment
Partners, L.P., Sankaty Credit
Opportunities (Offshore Master) IV, L.P.,
Sankaty Credit Opportunities Grantor
Trust, Sankaty Credit Opportunities II
Grantor Trust, Sankaty Credit
Opportunities III Grantor Trust, Sankaty
Credit Opportunities IV, L.P., Sorrento
Trust (collectively, the ‘‘Existing
Affiliated Funds’’).
FILING DATES: The application was filed
on April 23, 2021, and amended on July
30, 2021 and November 9, 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 at SecretarysOffice@sec.gov and serving applicants
with a copy of the request by email.
Hearing requests should be received by
the Commission by 5:30 p.m. on
December 17, 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.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
richard.horowitz@dechert.com.
FOR FURTHER INFORMATION CONTACT:
Joseph Toner at (202) 551–7595 or Marc
Mehrespand 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
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. BCSF is a Delaware corporation
organized as a closed-end management
investment company that has elected to
be regulated as a BDC under Section
54(a) of the Act.2 BCSF’s Objectives and
2 Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the
purpose of making investments in securities
described in sections 55(a)(1) through 55(a)(3) of the
Act and makes available significant managerial
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Strategies 3 are to provide risk-adjusted
returns and current income to investors.
BCSF invests primarily in middlemarket companies with between $10
million and $150 million in annual
earnings before interest, taxes,
depreciation and amortization. BCSF
intends to focus on senior investments
with a first or second lien on collateral
and strong structures and
documentation intended to protect the
lender.
2. GIACF is a Delaware statutory trust
organized as a closed-end investment
management company that has elected
to operate as an interval fund pursuant
to Rule 23c–3 under the Act. GIACF’s
Objectives and Strategies are to generate
a return comprised of both current
income and capital appreciation with an
emphasis on current income with low
volatility and low correlation to the
broader markets. GIACF pursues its
investment objective by investing
primarily in secured debt (including
senior secured, unitranche and second
lien debt) and unsecured debt
(including senior unsecured and
subordinated debt) issued by private or
public U.S. companies. GIACF’s
portfolio will consist of a core of
syndicated high yield bonds and bank
loans.
3. The board of directors of BCSF is
comprised of seven directors, five of
whom are not ‘‘interested persons,’’
within the meaning of Section 2(a)(19)
of the Act (the ‘‘Non-Interested
Directors’’) 4 and the board of trustees of
GIACF (together with the board of
directors of BCSF, the ‘‘Board’’) 5 is
comprised of five trustees, three of
whom are Non-Interested Directors.
4. BCSFA is registered as an
investment adviser under the
Investment Advisers Act of 1940 (the
‘‘Advisers Act’’). BCSFA serves as
investment adviser to BCSF and subadviser to GIACF. It is a wholly-owned
subsidiary of Bain.
5. Griffin is registered an investment
adviser under the Advisers Act. Griffin
serves as investment adviser to GIACF.
Griffin is an indirect majority-owned
assistance with respect to the issuers of such
securities.
3 ‘‘Objectives and Strategies’’ means a Regulated
Fund’s investment objectives and strategies, as
described in the Regulated Fund’s registration
statement on Form 10, other filings the Regulated
Fund has made with the Commission under the
Securities Act of 1933 (the ‘‘Securities Act’’), or
under the Securities Exchange Act of 1934 and the
Regulated Fund’s reports to shareholders.
4 The term ‘‘Non-Interested Directors’’ refers to
the directors or trustees of any Regulated Fund who
are not interested persons within the meaning of
Section 2(a)(19) of the Act.
5 The term ‘‘Board’’ refers to the board of directors
or trustees of any Regulated Fund.
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subsidiary of Griffin Capital Company,
LLC.
6. Bain is registered as an investment
adviser under the Advisers Act. Bain
serves as investment adviser to certain
Existing Affiliated Funds and either it or
another Bain Adviser will serve as the
investment adviser to any Future
Affiliated Funds (defined below).
7. Bain Capital Credit (Australia), Pty.
Ltd., an Australian proprietary company
formed in 2012, is authorized and
regulated by the Australian Securities
and Investments Commission. It is a
wholly-owned subsidiary of Bain.
8. Bain Capital Investments (Europe),
Limited, a United Kingdom private
limited company formed in 2014, and
Bain Capital Credit, Ltd., a United
Kingdom private limited company
formed in 2005, are authorized and
regulated by the U.K. Financial Conduct
Authority. Bain Capital Investments
(Europe) Limited is a subsidiary of Bain
Capital, LP. Bain Capital Credit, Ltd. is
a wholly-owned subsidiary of Bain.
9. Bain Capital Investments (Ireland),
Limited is based in Dublin and provides
consulting advice to BCSFA and its
subsidiaries. It is a wholly-owned
subsidiary of Bain.
10. Bain Capital Credit (Asia), Limited
is registered with the Securities &
Futures Commission in Hong Kong and
provides consulting services to BCSFA
and its subsidiaries. It is a whollyowned subsidiary of Bain.
11. Bain Capital Credit CLO Advisors,
LP is a limited partnership organized in
the State of Delaware and is registered
with the Commission under the
Advisers Act. It is a wholly-owned
subsidiary of Bain.
12. Bain Capital Credit Managed
Account (Pegasus), L.P. and Bain
Capital Credit Managed Account
(Iditarod), L.P. are existing Bain
Proprietary Accounts (defined below),
and are Delaware limited partnerships
that are indirect wholly-owned
subsidiaries of Bain. The Bain
Proprietary Accounts will hold various
financial assets in a principal capacity.
Bain Proprietary Accounts may operate
through wholly- or majority-owned
subsidiaries. Any Bain Proprietary
Accounts are entities or accounts that
are controlling, controlled by, or under
common control with a Bain Adviser.
13. Applicants state that the Bain
Advisers and the Griffin Advisers are
not affiliated persons, or affiliated
persons of affiliated persons (as defined
in the Act), except for the affiliation that
arises as a result of serving as the
advisers of any Regulated Fund that is
advised by a Griffin Adviser and subadvised by a Bain Adviser.
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14. As Bain Capital, LP controls Bain,
and will control any other Bain Adviser,
it may be deemed to control the
Regulated Funds and the Affiliated
Funds. Applicants state that Bain
Capital, LP is a holding company and
does not currently offer investment
advisory services to any person and is
not expected to do so in the future.
Applicants state that as a result, Bain
Capital, LP has not been included as an
Applicant.
15. Applicants seek an order
(‘‘Order’’) to permit a Regulated Fund 6
and one or more Regulated Funds and/
or one or more Affiliated Funds 7 to
participate in the same investment
opportunities through a proposed coinvestment program (the ‘‘CoInvestment Program’’) where such
participation would otherwise be
prohibited under section 57(a)(4) and
rule 17d–1 by (a) co-investing with each
other in securities issued by issuers in
private placement transactions in which
an Adviser 8 negotiates terms in
addition to price; 9 and (b) making
additional investments in securities of
such issuers, including through the
exercise of warrants, conversion
privileges, and other rights to purchase
securities of the issuers (‘‘Follow-On
Investments’’). ‘‘Co-Investment
Transaction’’ means any transaction in
which a Regulated Fund (or its WhollyOwned Investment Sub, as defined
6 ‘‘Regulated Fund’’ means Existing Regulated
Funds and any Future Regulated Fund. ‘‘Future
Regulated Fund’’ means any closed-end
management investment company (a) that is
registered under the Act or has elected to be
regulated as a BDC, (b)(i) whose investment adviser
(and sub-adviser(s), if any) is a Bain Adviser or (ii)
whose investment adviser is a Griffin Adviser and
whose sub-adviser is a Bain Adviser, and (c) that
intends to participate in the Co-Investment
Program.
The term ‘‘Adviser’’ means any Bain Adviser or
Griffin Adviser. The term ‘‘Bain Adviser’’ means
any Existing Bain Adviser and any future
investment adviser that (i) controls, is controlled by
or is under common control with Bain Capital, LP,
and (ii) is registered as an investment adviser under
the Advisers Act and (iii) is not a Regulated Fund
or a subsidiary of a Regulated Fund.
7 ‘‘Affiliated Fund’’ means the Existing Affiliated
Funds, any Future Affiliated Fund or any Bain
Proprietary Account. ‘‘Future Affiliated Fund’’
means any entity (a) whose investment adviser (and
sub-adviser(s), if any) is a Bain Adviser, (b) that
would be an investment company but for section
3(c)(1) or 3(c)(7) of the Act, and (c) that intends to
participate in the Co-Investment Program. ‘‘Bain
Proprietary Account’’ means any account of a Bain
Adviser or its affiliates or any company that is a
direct or indirect, wholly- or majority-owned
subsidiary of the Bain Adviser or its affiliates,
which, from time to time, may hold various
financial assets in a principal capacity.
8 The term ‘‘Adviser’’ means any Bain Adviser or
Griffin Adviser.
9 The term ‘‘private placement transactions’’
means transactions in which the offer and sale of
securities by the issuer are exempt from registration
under the Securities Act.
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below) participated together with one or
more other Regulated Funds and/or one
or more Affiliated Funds in reliance on
the requested Order. ‘‘Potential CoInvestment Transaction’’ means any
investment opportunity in which a
Regulated Fund (or its Wholly-Owned
Investment Sub, as defined below)
could not participate together with one
or more Affiliated Funds and/or one or
more other Regulated Funds without
obtaining and relying on the Order.10
The Order sought by this application
will supersede the Prior Order,11 dated
March 22, 2018, with the result that no
person will continue to rely on the Prior
Order.
16. Applicants state that a Regulated
Fund may, from time to time, form one
or more Wholly-Owned Investment
Subs.12 Such a subsidiary would be
prohibited from investing in a CoInvestment Transaction with any
Affiliated Fund or Regulated Fund
because it would be a company
controlled by its parent Regulated Fund
for purposes of section 57(a)(4) and rule
17d–1. Applicants request that each
Wholly-Owned Investment Sub be
permitted to participate in CoInvestment Transactions in lieu of its
parent Regulated Fund and that the
Wholly-Owned Investment Sub’s
participation in any such transaction be
treated, for purposes of the requested
Order, as though the parent Regulated
Fund were participating directly.
Applicants represent that this treatment
is justified because a Wholly-Owned
Investment Sub would have no purpose
other than serving as a holding vehicle
for the Regulated Fund’s investments
and, therefore, no conflicts of interest
could arise between the Regulated Fund
and the Wholly-Owned Investment Sub.
The Regulated Fund’s Board would
make all relevant determinations under
the conditions with regard to a Wholly10 All existing entities that currently intend to
rely upon the requested Order have been named as
applicants. Any other existing or future entity that
subsequently relies on the Order will comply with
the terms and conditions of the application.
11 Bain Capital Specialty Finance, Inc., et al. (File
No. 812–14766) Investment Company Act Release
No. 33031 (Feb. 23, 2018) (notice) and 33051 (Mar.
22, 2018) (order). Certain of the applicants to the
Prior Order have been named as Applicants to the
Order.
12 The term ‘‘Wholly-Owned Investment Sub’’
means an entity (i) that is wholly-owned by a
Regulated Fund (with the Regulated Fund at all
times holding, beneficially and of record, 100% of
the voting and economic interests); (ii) whose sole
business purpose is to hold one or more
investments on behalf of the Regulated Fund; (iii)
with respect to which the Regulated Fund’s Board
has the sole authority to make all determinations
with respect to the entity’s participation under the
conditions of the Application; and (iv) that would
be an investment company but for section 3(c)(1) or
3(c)(7) of the Act.
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Owned Investment Sub’s participation
in a Co-Investment Transaction, and the
Regulated Fund’s Board would be
informed of, and take into
consideration, any proposed use of a
Wholly-Owned Investment Sub in the
Regulated Fund’s place. If the Regulated
Fund proposes to participate in the
same Co-Investment Transaction with
any of its Wholly-Owned Investment
Subs, the Board will also be informed
of, and take into consideration, the
relative participation of the Regulated
Fund and the Wholly-Owned
Investment Sub.
17. Applicants note that Griffin is
responsible for the overall management
of GIACF’s activities, and BCSFA is
responsible for the day-to-day
management of GIACF’s investment
portfolio, in each case consistent with
their fiduciary duties. A Griffin Adviser
will serve as the investment adviser to
any Regulated Fund with a Bain Adviser
as its sub-adviser. In the case of a
Regulated Fund with a Bain Adviser as
sub-adviser, the Bain Adviser will
identify and recommend the Potential
Co-Investment Transactions for the
Regulated Fund, and the applicable subadvisory agreement will require the
Bain Adviser to present such Potential
Co-Investment Transaction to the
applicable Griffin Adviser, which will
have the authority to approve or reject
it for the Regulated Fund.
18. When considering Potential CoInvestment Transactions for any
Regulated Fund, the applicable Adviser
will consider only the Objectives and
Strategies, investment policies,
investment positions, capital available
for investment, and other pertinent
factors applicable to that Regulated
Fund. The Regulated Fund Advisers
expect that any portfolio company that
is an appropriate investment for a
Regulated Fund should also be an
appropriate investment for one or more
other Regulated Funds and/or one or
more Affiliated Funds, with certain
exceptions based on available capital or
diversification.13
19. Other than pro rata dispositions
and Follow-On Investments as provided
in conditions 7 and 8, and after making
the determinations required in
conditions 1 and 2(a), the Advisers will
present each Potential Co-Investment
Transaction and the proposed allocation
to the directors of the Board eligible to
vote under section 57(o) of the Act
(‘‘Eligible Directors’’), and the ‘‘required
majority,’’ as defined in section 57(o) of
13 The Regulated Funds, however, will not be
obligated to invest, or co-invest, when investment
opportunities are referred to them.
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67771
the Act (‘‘Required Majority’’) 14 will
approve each Co-Investment
Transaction prior to any investment by
the participating Regulated Fund.
20. Applicants state that a Bain
Adviser has an investment committee
through which it will carry out its
obligation under condition 1 to make a
determination as to the appropriateness
of the Potential Co-Investment
Transaction for any Regulated Fund.
Applicants represent that in the case of
a Potential Co-Investment Transaction,
the Bain Adviser would apply its
allocation policies and procedures in
determining the proposed allocation for
the Regulated Fund consistent with the
requirements of condition 2(a).
Applicants further note that each Griffin
Adviser and Bain Adviser has adopted
its own allocation policies and
procedures that take into account the
allocation policies and procedures for
the Regulated Funds. Applicants believe
that while each Bain Adviser client may
not participate in each investment
opportunity, over time each Bain
Adviser client would participate in
investment opportunities fairly and
equitably.
21. With respect to the pro rata
dispositions and Follow-On Investments
provided in conditions 7 and 8, a
Regulated Fund may participate in a pro
rata disposition or Follow-On
Investment without obtaining prior
approval of the Required Majority if,
among other things: (i) The proposed
participation of each Regulated Fund
and Affiliated Fund in such disposition
is proportionate to its outstanding
investments in the issuer immediately
preceding the disposition or Follow-On
Investment, as the case may be; and (ii)
the Board of the Regulated Fund has
approved that Regulated Fund’s
participation in pro rata dispositions
and Follow-On Investments as being in
the best interests of the Regulated Fund.
If the Board does not so approve, any
such disposition or Follow-On
Investment will be submitted to the
Regulated Fund’s Eligible Directors. The
Board of any Regulated Fund may at any
time rescind, suspend or qualify its
approval of pro rata dispositions and
Follow-On Investments with the result
that all dispositions and/or Follow-On
Investments must be submitted to the
Eligible Directors.
22. No Non-Interested Director of a
Regulated Fund will have a financial
interest in any Co-Investment
Transaction, other than through share
14 In the case of a Regulated Fund that is a
registered closed-end fund, the Board members that
make up the Required Majority will be determined
as if the Regulated Fund were a BDC subject to
Section 57(o).
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ownership in one of the Regulated
Funds.
Applicants’ Legal Analysis
1. Section 57(a)(4) of the Act prohibits
certain affiliated persons of a BDC from
participating in joint transactions with
the BDC or a company controlled by a
BDC in contravention of rules as
prescribed by the Commission. Under
section 57(b)(2) of the Act, any person
who is directly or indirectly controlling,
controlled by, or under common control
with a BDC is subject to section 57(a)(4).
Applicants submit that each of the
Regulated Funds and Affiliated Funds
be deemed to be a person related to each
Regulated Fund in a manner described
by section 57(b) by virtue of being under
common control. In addition, section
57(b) applies to any investment adviser
to a Regulated Fund that is a BDC and
to any section 2(a)(3)(C) affiliates of the
investment adviser, including GIACF
and the Affiliated Funds (including the
Bain Proprietary Accounts). Section
57(i) of the Act provides that, until the
Commission prescribes rules under
section 57(a)(4), the Commission’s rules
under section 17(d) of the Act
applicable to registered closed-end
investment companies will be deemed
to apply to transactions subject to
section 57(a)(4). Because the
Commission has not adopted any rules
under section 57(a)(4), rule 17d-1 also
applies to joint transactions with
Regulated Funds that are BDCs. Section
17(d) of the Act and rule 17d-1 under
the Act are applicable to Regulated
Funds that are registered closed-end
investment companies.
2. Section 17(d) of the Act and rule
17d–1 under the Act prohibit affiliated
persons of a registered investment
company from participating in joint
transactions with the company unless
the Commission has granted an order
permitting such transactions. In passing
upon applications under rule 17d-1, the
Commission considers whether the
company’s participation in the joint
transaction is consistent with the
provisions, policies, and purposes of the
Act and the extent to which such
participation is on a basis different from
or less advantageous than that of other
participants.
3. Applicants state that in the absence
of the requested relief, the Regulated
Funds would be, in some
circumstances, limited in their ability to
participate in attractive and appropriate
investment opportunities. Applicants
believe that the proposed terms and
conditions will ensure that the CoInvestment Transactions are consistent
with the protection of each Regulated
Fund’s shareholders and with the
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purposes intended by the policies and
provisions of the Act. Applicants state
that the Regulated Funds’ participation
in the Co-Investment Transactions will
be consistent with the provisions,
policies, and purposes of the Act and on
a basis that is not different from or less
advantageous than that of other
participants.
4. Applicants also represent that if the
Advisers, certain employees and
principals of Bain and its affiliated
advisers (collectively, the ‘‘Principals’’),
any person controlling, controlled by, or
under common control with the
Advisers or the Principals, and the
Affiliated Funds (collectively, the
‘‘Holders’’) own in the aggregate more
than 25 percent of the outstanding
voting securities of a Regulated Fund
(‘‘Shares’’), then the Holders will vote
such Shares as required under
Condition 14. Applicants believe that
this condition will ensure that the NonInterested Directors will act
independently in evaluating the CoInvestment Program, because the ability
of the Advisers or the Principals to
influence the Non-Interested Directors
by a suggestion, explicit or implied, that
the Non-Interested Directors can be
removed will be limited significantly.
Applicants’ Conditions
Applicants agree that the Order will
be subject to the following conditions:
1. Each time a Bain Adviser considers
a Potential Co-Investment Transaction
for an Affiliated Fund or another
Regulated Fund that falls within a
Regulated Fund’s then-current
Objectives and Strategies, each Adviser
to a Regulated Fund will make an
independent determination of the
appropriateness of the investment for
such Regulated Fund in light of the
Regulated Fund’s then-current
circumstances.
2. (a) If each Adviser to a Regulated
Fund deems the Regulated Fund’s
participation in any Potential CoInvestment Transaction to be
appropriate for the Regulated Fund, the
Adviser (or Advisers if there are more
than one) will then determine an
appropriate level of investment for the
Regulated Fund.
(b) If the aggregate amount
recommended by the Adviser (or
Advisers if there are more than one) to
a Regulated Fund to be invested by the
Regulated Fund in the Potential CoInvestment Transaction, together with
the amount proposed to be invested by
the other participating Regulated Funds
and Affiliated Funds, collectively, in the
same transaction, exceeds the amount of
the investment opportunity, the amount
of the investment opportunity will be
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allocated among the Regulated Funds
and Affiliated Funds pro rata based on
each participant’s capital available for
investment in the asset class being
allocated, up to the amount proposed to
be invested by each. The Adviser (or
Advisers if there are more than one) to
a Regulated Fund will provide the
Eligible Directors of each participating
Regulated Fund with information
concerning each participating party’s
available capital to assist the Eligible
Directors with their review of the
Regulated Fund’s investments for
compliance with these allocation
procedures.
(c) After making the determinations
required in conditions 1 and 2(a)above,
the Adviser to the Regulated Fund (or
Advisers if there are more than one) will
distribute written information
concerning the Potential Co-Investment
Transaction (including the amount
proposed to be invested by each
participating Regulated Fund and
Affiliated Fund) to the Eligible Directors
for their consideration. A Regulated
Fund will co-invest with one or more
other Regulated Funds and/or one or
more Affiliated Funds only if, prior to
the Regulated Funds’ and Affiliated
Funds’ participation in the Potential CoInvestment Transaction, a Required
Majority concludes that:
(i) the terms of the Potential CoInvestment Transaction, including the
consideration to be paid, are reasonable
and fair to the Regulated Fund and its
shareholders and do not involve
overreaching in respect of the Regulated
Fund or its shareholders on the part of
any person concerned;
(ii) the Potential Co-Investment
Transaction is consistent with:
(A) the interests of the Regulated
Fund’s shareholders; and
(B) the Regulated Fund’s then-current
Objectives and Strategies;
(iii) the investment by any other
Regulated Funds or Affiliated Funds
would not disadvantage the Regulated
Fund, and participation by the
Regulated Fund would not be on a basis
different from or less advantageous than
that of any other Regulated Fund or
Affiliated Fund; provided that, if any
other Regulated Fund or Affiliated
Fund, but not the Regulated Fund itself,
gains the right to nominate a director for
election to a portfolio company’s board
of directors or the right to have a board
observer or any similar right to
participate in the governance or
management of the portfolio company,
such event shall not be interpreted to
prohibit the Required Majority from
reaching the conclusions required by
this condition 2(c)(iii), if:
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(A) The Eligible Directors will have
the right to ratify the selection of such
director or board observer, if any;
(B) the Adviser to the Regulated Fund
(or Advisers if there are more than one)
agrees to, and does, provide periodic
reports to the Regulated Fund’s Board
with respect to the actions of such
director or the information received by
such board observer or obtained through
the exercise of any similar right to
participate in the governance or
management of the portfolio company;
and
(C) any fees or other compensation
that any Affiliated Fund or any
Regulated Fund or any affiliated person
of any Affiliated Fund or any Regulated
Fund receives in connection with the
right of an Affiliated Fund or a
Regulated Fund to nominate a director
or appoint a board observer or otherwise
to participate in the governance or
management of the portfolio company
will be shared proportionately among
the participating Affiliated Funds (who
each may, in turn, share its portion with
its affiliated persons) and the
participating Regulated Funds in
accordance with the amount of each
party’s investment; and
(iv) the proposed investment by the
Regulated Fund will not benefit the
Adviser to the Regulated Fund (or
Advisers if there are more than one), the
Affiliated Funds or the other Regulated
Funds or any affiliated person of any of
them (other than the parties to the CoInvestment Transaction), except (A) to
the extent permitted by condition 13,
(B) to the extent permitted by sections
17(e) or 57(k) of the Act, as applicable,
(C) indirectly, as a result of an interest
in the securities issued by one of the
parties to the Co-Investment
Transaction, or (D) in the case of fees or
other compensation described in
condition 2(c)(iii)(C).
3. Each Regulated Fund has the right
to decline to participate in any Potential
Co-Investment Transaction or to invest
less than the amount proposed.
4. The Adviser to the Regulated Fund
(or Advisers if there are more than one)
will present to the Board of each
Regulated Fund, on a quarterly basis, a
record of all investments in Potential
Co-Investment Transactions made by
any of the other Regulated Funds or
Affiliated Funds during the preceding
quarter that fell within the Regulated
Fund’s then-current Objectives and
Strategies that were not made available
to the Regulated Fund, and an
explanation of why the investment
opportunities were not offered to the
Regulated Fund. All information
presented to the Board pursuant to this
condition will be kept for the life of the
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16:55 Nov 26, 2021
Jkt 256001
Regulated Fund and at least two years
thereafter, and will be subject to
examination by the Commission and its
staff.
5. Except for Follow-On Investments
made in accordance with condition 8,15
a Regulated Fund will not invest in
reliance on the Order in any issuer in
which another Regulated Fund,
Affiliated Fund, or any affiliated person
of another Regulated Fund or an
Affiliated Fund is an existing investor.
6. A Regulated Fund will not
participate in any Potential CoInvestment Transaction unless the
terms, conditions, price, class of
securities to be purchased, settlement
date, and registration rights will be the
same for each participating Regulated
Fund and Affiliated Fund. The grant to
an Affiliated Fund or another Regulated
Fund, but not the Regulated Fund, of
the right to nominate a director for
election to a portfolio company’s board
of directors, the right to have an
observer on the board of directors or
similar rights to participate in the
governance or management of the
portfolio company will not be
interpreted so as to violate this
condition 6, if conditions 2(c)(iii)(A), (B)
and (C) are met.
7. (a) If any Affiliated Fund or any
Regulated Fund elects to sell, exchange
or otherwise dispose of an interest in a
security that was acquired by one or
more Regulated Funds and/or Affiliated
Funds in a Co-Investment Transaction,
the applicable Adviser(s) 16 will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed disposition
at the earliest practical time; and
(ii) formulate a recommendation as to
participation by the Regulated Fund in
the disposition.
(b) Each Regulated Fund will have the
right to participate in such disposition
on a proportionate basis, at the same
price and on the same terms and
conditions as those applicable to the
participating Affiliated Funds and any
other Regulated Fund.
(c) A Regulated Fund may participate
in such disposition without obtaining
prior approval of the Required Majority
if: (i) The proposed participation of each
Regulated Fund and each Affiliated
Fund in such disposition is
proportionate to its outstanding
investments in the issuer immediately
15 This exception applies only to Follow-On
Investments by a Regulated Fund in issuers in
which that Regulated Fund already holds
investments.
16 Any Bain Proprietary Account that is not
advised by a Bain Adviser is itself deemed to be an
Adviser for purposes of Conditions 7(a)(i) and
8(a)(i).
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67773
preceding the disposition; (ii) the Board
of the Regulated Fund has approved as
being in the best interests of the
Regulated Fund the ability to participate
in such dispositions on a pro rata basis
(as described in greater detail in the
application); and (iii) the Board of the
Regulated Fund is provided on a
quarterly basis with a list of all
dispositions made in accordance with
this condition. In all other cases, the
Adviser to the Regulated Fund (or
Advisers if there are more than one) will
provide their written recommendation
as to the Regulated Fund’s participation
to the Eligible Directors, and the
Regulated Fund will participate in such
disposition solely to the extent that a
Required Majority determines that it is
in the Regulated Fund’s best interests.
(d) Each Affiliated Fund and each
Regulated Fund will bear its own
expenses in connection with any such
disposition.
8. (a) If any Affiliated Fund or any
Regulated Fund desires to make a
Follow-On Investment in a portfolio
company whose securities were
acquired by the Regulated Fund and the
Affiliated Fund in a Co-Investment
Transaction, the applicable Adviser(s)
will:
(i) Notify each Regulated Fund that
participated in the Co-Investment
Transaction of the proposed transaction
at the earliest practical time; and
(ii) formulate a recommendation as to
the proposed participation, including
the amount of the proposed Follow-On
Investment, by each Regulated Fund.
(b) A Regulated Fund may participate
in such Follow-On Investment without
obtaining prior approval of the Required
Majority if: (i) The proposed
participation of each Regulated Fund
and each Affiliated Fund in such
investment is proportionate to its
outstanding investments in the issuer
immediately preceding the Follow-On
Investment; and (ii) the Board of the
Regulated Fund has approved as being
in the best interests of the Regulated
Fund the ability to participate in
Follow-On Investments on a pro rata
basis (as described in greater detail in
the application). In all other cases, the
Adviser to the Regulated Fund (or
Advisers if there are more than one) will
provide their written recommendation
as to such Regulated Fund’s
participation to the Eligible Directors,
and the Regulated Fund will participate
in such Follow-On Investment solely to
the extent that the Required Majority
determines that it is in such Regulated
Fund’s best interests.
(c) If, with respect to any Follow-On
Investment:
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(i) The amount of the opportunity is
not based on the Regulated Funds’ and
the Affiliated Funds’ outstanding
investments immediately preceding the
Follow-On Investment; and
(ii) the aggregate amount
recommended by the Adviser (or
Advisers if there are more than one) to
a Regulated Fund to be invested by the
Regulated Fund in the Follow-On
Investment, together with the amount
proposed to be invested by the other
participating Regulated Funds and the
Affiliated Funds in the same
transaction, exceeds the amount of the
opportunity; then the amount invested
by each such party will be allocated
among them pro rata based on each
participant’s capital available for
investment in the asset class being
allocated, up to the amount proposed to
be invested by each.
(d) The acquisition of Follow-On
Investments as permitted by this
condition will be considered a CoInvestment Transaction for all purposes
and subject to the other conditions set
forth in the application.
9. The Non-Interested Directors of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds or
Affiliated Funds that a Regulated Fund
considered but declined to participate
in, so that the Non-Interested Directors
may determine whether all investments
made during the preceding quarter,
including those investments that the
Regulated Fund considered but declined
to participate in, comply with the
conditions of the Order. In addition, the
Non-Interested Directors will consider
at least annually the continued
appropriateness for such Regulated
Fund of participating in new and
existing Co-Investment Transactions.
10. Each Regulated Fund will
maintain the records required by section
57(f)(3) of the Act as if each of the
Regulated Funds were a BDC and each
of the investments permitted under
these conditions were approved by the
Required Majority under section 57(f) of
the Act.
11. No Non-Interested Director of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act), of any
Affiliated Fund.
12. The expenses, if any, associated
with acquiring, holding or disposing of
any securities acquired in a CoInvestment Transaction (including,
without limitation, the expenses of the
distribution of any such securities
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16:55 Nov 26, 2021
Jkt 256001
registered for sale under the Securities
Act) will, to the extent not payable by
the applicable Adviser(s) under their
respective investment advisory
agreements with the Affiliated Funds
and the Regulated Funds, be shared by
the Regulated Funds and the Affiliated
Funds in proportion to the relative
amounts of the securities held or to be
acquired or disposed of, as the case may
be.
13. Any transaction fee 17 (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) or 57(k) of the Act, as
applicable) received in connection with
a Co-Investment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by an Adviser pending
consummation of the transaction, the
fee will be deposited into an account
maintained by 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 Funds
based on the amounts they invest in
such Co-Investment Transaction. None
of the Affiliated Funds, the applicable
Adviser(s), the other Regulated Funds or
any affiliated person of the Regulated
Funds or Affiliated Funds will receive
additional compensation or
remuneration of any kind as a result of
or in connection with a Co-Investment
Transaction (other than (a) in the case
of the Regulated Funds and the
Affiliated Funds, the pro rata
transaction fees described above and
fees or other compensation described in
condition 2(c)(iii)(C); and (b) in the case
of the Advisers, investment advisory
fees paid in accordance with the
Regulated Funds’ and the Affiliated
Funds’ investment advisory
agreements).
14. If the Holders own in the aggregate
more than 25 percent of the Shares of
a Regulated Fund, then the Holders will
vote such Shares in the same
percentages as the Regulated Fund’s
other shareholders (not including the
Holders) when voting on (1) the election
of directors; (2) the removal of one or
more directors; or (3) any other matter
under either the Act or applicable State
law affecting the Board’s composition,
size or manner of election.
15. Each Regulated Fund’s chief
compliance officer, as defined in rule
38a-1(a)(4), 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. 2021–25862 Filed 11–26–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93643; File No. SR–
CboeEDGX–2021–048]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
of a Proposed Rule Change To Amend
Interpretation and Policy .01 to Rule
11.10 in Connection With a Risk
Setting That Users May Elect To Apply
to Their Orders in Hard To Borrow
Securities
November 22, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
18, 2021, Cboe EDGX Exchange, Inc.
filed with the Securities and Exchange
Commission the proposed rule change
as described in Items I, II, and III below,
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (‘‘EDGX’’
or the ‘‘Exchange’’) is filing with the
Securities and Exchange Commission
(the ‘‘Commission’’) a proposal to
amend Interpretation and Policy .01 to
Rule 11.10 in connection with a risk
setting that Users 3 may elect to apply to
their orders in hard to borrow securities.
1 15
17 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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U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 A User is any Member or Sponsored Participant
who is authorized to obtain access to the System
pursuant to Rule 11.10. See Rule 1.5(ee).
2 17
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]]>Agencies
[Federal Register Volume 86, Number 226 (Monday, November 29, 2021)]
[Notices]
[Pages 67768-67774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25862]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34422; File No. 812-15222]
Bain Capital Specialty Finance, Inc., et al.
November 22, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
Notice of application for an order under sections 17(d) and 57(i)
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1
under the Act to permit certain joint transactions otherwise prohibited
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
Summary of Application: Applicants request an order to permit business
development companies (``BDCs'') to co-invest in portfolio companies
with each other and with certain affiliated investment funds and
accounts.
Applicants: Bain Capital Specialty Finance, Inc. (``BCSF''); BCSF
Advisors, LP (``BCSFA''), on behalf of itself and its successors; \1\
Bain Capital Credit (Asia), Limited, Bain Capital Credit (Australia)
Pty. Ltd, Bain Capital Credit CLO Advisors, LP, Bain Capital Credit, LP
(``Bain''), Bain Capital Credit, Ltd., Bain Capital Investments
(Europe) Limited, Bain Capital Investments (Ireland) Limited (together
with BCSFA, the ``Existing Bain Advisers''), on behalf of themselves
and their successors; Avery
[[Page 67769]]
Point III CLO, Limited, Avery Point IV CLO, Limited, Avery Point V CLO,
Limited, Avery Point VI CLO, Limited, Avery Point VII CLO, Limited,
Bain Capital COPS CV Holdings, L.P., Bain Capital COPS II Continuation
Vehicle, L.P., Bain Capital COPS III Continuation Vehicle, L.P., Bain
Capital Credit Asian Opportunities, L.P., Bain Capital Credit CLO 2016-
2, Limited, Bain Capital Credit CLO 2017-1, Limited, Bain Capital
Credit CLO 2017-2, Limited, Bain Capital Credit CLO 2018-1, Limited,
Bain Capital Credit CLO 2018-2, Limited, Bain Capital Credit CLO 2019-
1, Limited, Bain Capital Credit CLO 2019-2, Limited, Bain Capital
Credit CLO 2019-3, Limited, Bain Capital Credit CLO 2019-4, Limited,
Bain Capital Credit CLO 2020-1, Limited, Bain Capital Credit CLO 2020-
2, Limited, Bain Capital Credit CLO 2020-3, Limited, Bain Capital
Credit CLO 2020-4, Limited, Bain Capital Credit CLO 2020-5, Limited,
Bain Capital Credit CLO 2021-1, Limited, Bain Capital Credit
Dislocation Fund (B), L.P., Bain Capital Credit Managed Account (BC),
L.P., Bain Capital Credit Managed Account (Blanco), L.P., Bain Capital
Credit Managed Account (CalPERS), L.P., Bain Capital Credit Managed
Account (CLO), L.P., Bain Capital Credit Managed Account (DERP), L.P.,
Bain Capital Credit Managed Account (E), L.P., Bain Capital Credit
Managed Account (FSS), L.P., Bain Capital Credit Managed Account (G),
SCSp, Bain Capital Credit Managed Account (Iditarod), L.P., Bain
Capital Credit Managed Account (L), L.P., Bain Capital Credit Managed
Account (NZSF), L.P., Bain Capital Credit Managed Account (Pegasus),
L.P., Bain Capital Credit Managed Account (PPF), L.P., Bain Capital
Credit Managed Account (PSERS), L.P., Bain Capital Credit Managed
Account (Q), L.P., Bain Capital Credit Managed Account (Re Special
Situations), L.P., Bain Capital Credit Managed Account (TCCC), L.P.,
Bain Capital Credit Managed Account (UCAL), L.P., Bain Capital Credit
Managed Account (VFMC), L.P., Bain Capital Credit Rio Grande FMC, L.P.,
Bain Capital Direct Lending 2015 (L), L.P., Bain Capital Direct Lending
2015 (U), L.P., Bain Capital Distressed and Special Situations 2013
(A), L.P., Bain Capital Distressed and Special Situations 2013 (A2
Master), L.P., Bain Capital Distressed and Special Situations 2013 (AIV
I), L.P., Bain Capital Distressed and Special Situations 2013 (AIV II
Master), L.P., Bain Capital Distressed and Special Situations 2013 (B),
L.P., Bain Capital Distressed and Special Situations 2013 (D), L.P.,
Bain Capital Distressed and Special Situations 2013 (E Master), L.P.,
Bain Capital Distressed and Special Situations 2013 (E2 Master), L.P.,
Bain Capital Distressed and Special Situations 2016 (A), L.P., Bain
Capital Distressed and Special Situations 2016 (B Master), L.P., Bain
Capital Distressed and Special Situations 2016 (EU Master), L.P., Bain
Capital Distressed and Special Situations 2016 (F), L.P., Bain Capital
Distressed and Special Situations 2016 (F-EU), L.P., Bain Capital
Distressed and Special Situations 2016 (G), L.P., Bain Capital
Distressed and Special Situations 2019 ICAV, Bain Capital Distressed
and Special Situations 2019 (A), L.P., Bain Capital Distressed and
Special Situations 2019 (B Master), L.P., Bain Capital Distressed and
Special Situations 2019 (F), L.P., Bain Capital Euro CLO 2017-1
Designated Activity Company, Bain Capital Euro CLO 2018-1 Designated
Activity Company, Bain Capital Euro CLO 2018-2 Designated Activity
Company, Bain Capital Euro CLO 2019-1 Designated Activity Company, Bain
Capital Euro CLO 2020-1 Designated Activity Company, Bain Capital
Global Direct Lending 2021 (L Master), L.P., Bain Capital Global Direct
Lending 2021 (U Master), SCSp, Bain Capital High Income Partnership,
L.P., Bain Capital I ICAV--Global Loan Fund, Bain Capital Middle Market
Credit 2010 (Offshore II Master), L.P., Bain Capital Middle Market
Credit 2010 (Offshore Master), L.P., Bain Capital Middle Market Credit
2010, L.P., Bain Capital Middle Market Credit 2014 (A Master), L.P.,
Bain Capital Middle Market Credit 2014 (F), L.P., Bain Capital Middle
Market Credit 2014, L.P., Bain Capital Middle Market Credit 2018 (A),
L.P., Bain Capital Middle Market Credit 2018 (B Master), L.P., Bain
Capital Middle Market Credit 2018 (F), L.P., Bain Capital Senior Loan
Fund (SRI), L.P., Bain Capital Senior Loan Fund, L.P., Bain Capital
Special Situations Asia II, L.P., Bain Capital Special Situations Asia,
L.P., Bain Capital Special Situations Europe ICAV, Bain Capital
Structured Credit Fund, L.P., Bain Capital Total Return Credit, L.P.,
Barnstable Ltd., BCIS Fund (LV), LP, Cape Schanck Direct Lending Trust,
Centerville Ltd., Sankaty CLO Opportunities Coinvestment Fund, L.P.,
Cmac Fund 1, L.P., Holly Issuer Designated Activity Company, Newhaven
CLO, Designated Activity Company, Newhaven II CLO, Designated Activity
Company, Prospect Harbor Designated Investments, L.P., QCT, Queenscliff
Trust, Race Point IX CLO, Limited, Race Point VIII CLO, Ltd., Race
Point X CLO, Limited, Rye Harbour CLO, Designated Activity Company,
Sankaty Beacon Investment Partners, L.P., Sankaty Credit Opportunities
(Offshore Master) IV, L.P., Sankaty Credit Opportunities Grantor Trust,
Sankaty Credit Opportunities II Grantor Trust, Sankaty Credit
Opportunities III Grantor Trust, Sankaty Credit Opportunities IV, L.P.,
Sorrento Trust (collectively, the ``Existing Affiliated Funds'').
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\1\ The term ``successor,'' as applied to each Adviser (defined
below), means an entity that results from a reorganization into
another jurisdiction or change in the type of business organization.
Filing Dates: The application was filed on April 23, 2021, and amended
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on July 30, 2021 and November 9, 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 at [email protected] and serving applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on December 17, 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.
ADDRESSES: The Commission: [email protected]. Applicants:
[email protected].
FOR FURTHER INFORMATION CONTACT: Joseph Toner at (202) 551-7595 or Marc
Mehrespand 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 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. BCSF is a Delaware corporation organized as a closed-end
management investment company that has elected to be regulated as a BDC
under Section 54(a) of the Act.\2\ BCSF's Objectives and
[[Page 67770]]
Strategies \3\ are to provide risk-adjusted returns and current income
to investors. BCSF invests primarily in middle-market companies with
between $10 million and $150 million in annual earnings before
interest, taxes, depreciation and amortization. BCSF intends to focus
on senior investments with a first or second lien on collateral and
strong structures and documentation intended to protect the lender.
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\2\ Section 2(a)(48) defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
\3\ ``Objectives and Strategies'' means a Regulated Fund's
investment objectives and strategies, as described in the Regulated
Fund's registration statement on Form 10, other filings the
Regulated Fund has made with the Commission under the Securities Act
of 1933 (the ``Securities Act''), or under the Securities Exchange
Act of 1934 and the Regulated Fund's reports to shareholders.
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2. GIACF is a Delaware statutory trust organized as a closed-end
investment management company that has elected to operate as an
interval fund pursuant to Rule 23c-3 under the Act. GIACF's Objectives
and Strategies are to generate a return comprised of both current
income and capital appreciation with an emphasis on current income with
low volatility and low correlation to the broader markets. GIACF
pursues its investment objective by investing primarily in secured debt
(including senior secured, unitranche and second lien debt) and
unsecured debt (including senior unsecured and subordinated debt)
issued by private or public U.S. companies. GIACF's portfolio will
consist of a core of syndicated high yield bonds and bank loans.
3. The board of directors of BCSF is comprised of seven directors,
five of whom are not ``interested persons,'' within the meaning of
Section 2(a)(19) of the Act (the ``Non-Interested Directors'') \4\ and
the board of trustees of GIACF (together with the board of directors of
BCSF, the ``Board'') \5\ is comprised of five trustees, three of whom
are Non-Interested Directors.
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\4\ The term ``Non-Interested Directors'' refers to the
directors or trustees of any Regulated Fund who are not interested
persons within the meaning of Section 2(a)(19) of the Act.
\5\ The term ``Board'' refers to the board of directors or
trustees of any Regulated Fund.
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4. BCSFA is registered as an investment adviser under the
Investment Advisers Act of 1940 (the ``Advisers Act''). BCSFA serves as
investment adviser to BCSF and sub-adviser to GIACF. It is a wholly-
owned subsidiary of Bain.
5. Griffin is registered an investment adviser under the Advisers
Act. Griffin serves as investment adviser to GIACF. Griffin is an
indirect majority-owned subsidiary of Griffin Capital Company, LLC.
6. Bain is registered as an investment adviser under the Advisers
Act. Bain serves as investment adviser to certain Existing Affiliated
Funds and either it or another Bain Adviser will serve as the
investment adviser to any Future Affiliated Funds (defined below).
7. Bain Capital Credit (Australia), Pty. Ltd., an Australian
proprietary company formed in 2012, is authorized and regulated by the
Australian Securities and Investments Commission. It is a wholly-owned
subsidiary of Bain.
8. Bain Capital Investments (Europe), Limited, a United Kingdom
private limited company formed in 2014, and Bain Capital Credit, Ltd.,
a United Kingdom private limited company formed in 2005, are authorized
and regulated by the U.K. Financial Conduct Authority. Bain Capital
Investments (Europe) Limited is a subsidiary of Bain Capital, LP. Bain
Capital Credit, Ltd. is a wholly-owned subsidiary of Bain.
9. Bain Capital Investments (Ireland), Limited is based in Dublin
and provides consulting advice to BCSFA and its subsidiaries. It is a
wholly-owned subsidiary of Bain.
10. Bain Capital Credit (Asia), Limited is registered with the
Securities & Futures Commission in Hong Kong and provides consulting
services to BCSFA and its subsidiaries. It is a wholly-owned subsidiary
of Bain.
11. Bain Capital Credit CLO Advisors, LP is a limited partnership
organized in the State of Delaware and is registered with the
Commission under the Advisers Act. It is a wholly-owned subsidiary of
Bain.
12. Bain Capital Credit Managed Account (Pegasus), L.P. and Bain
Capital Credit Managed Account (Iditarod), L.P. are existing Bain
Proprietary Accounts (defined below), and are Delaware limited
partnerships that are indirect wholly-owned subsidiaries of Bain. The
Bain Proprietary Accounts will hold various financial assets in a
principal capacity. Bain Proprietary Accounts may operate through
wholly- or majority-owned subsidiaries. Any Bain Proprietary Accounts
are entities or accounts that are controlling, controlled by, or under
common control with a Bain Adviser.
13. Applicants state that the Bain Advisers and the Griffin
Advisers are not affiliated persons, or affiliated persons of
affiliated persons (as defined in the Act), except for the affiliation
that arises as a result of serving as the advisers of any Regulated
Fund that is advised by a Griffin Adviser and sub-advised by a Bain
Adviser.
14. As Bain Capital, LP controls Bain, and will control any other
Bain Adviser, it may be deemed to control the Regulated Funds and the
Affiliated Funds. Applicants state that Bain Capital, LP is a holding
company and does not currently offer investment advisory services to
any person and is not expected to do so in the future. Applicants state
that as a result, Bain Capital, LP has not been included as an
Applicant.
15. Applicants seek an order (``Order'') to permit a Regulated Fund
\6\ and one or more Regulated Funds and/or one or more Affiliated Funds
\7\ to participate in the same investment opportunities through a
proposed co-investment program (the ``Co-Investment Program'') where
such participation would otherwise be prohibited under section 57(a)(4)
and rule 17d-1 by (a) co-investing with each other in securities issued
by issuers in private placement transactions in which an Adviser \8\
negotiates terms in addition to price; \9\ and (b) making additional
investments in securities of such issuers, including through the
exercise of warrants, conversion privileges, and other rights to
purchase securities of the issuers (``Follow-On Investments''). ``Co-
Investment Transaction'' means any transaction in which a Regulated
Fund (or its Wholly-Owned Investment Sub, as defined
[[Page 67771]]
below) participated together with one or more other Regulated Funds
and/or one or more Affiliated Funds in reliance on the requested Order.
``Potential Co-Investment Transaction'' means any investment
opportunity in which a Regulated Fund (or its Wholly-Owned Investment
Sub, as defined below) could not participate together with one or more
Affiliated Funds and/or one or more other Regulated Funds without
obtaining and relying on the Order.\10\ The Order sought by this
application will supersede the Prior Order,\11\ dated March 22, 2018,
with the result that no person will continue to rely on the Prior
Order.
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\6\ ``Regulated Fund'' means Existing Regulated Funds and any
Future Regulated Fund. ``Future Regulated Fund'' means any closed-
end management investment company (a) that is registered under the
Act or has elected to be regulated as a BDC, (b)(i) whose investment
adviser (and sub-adviser(s), if any) is a Bain Adviser or (ii) whose
investment adviser is a Griffin Adviser and whose sub-adviser is a
Bain Adviser, and (c) that intends to participate in the Co-
Investment Program.
The term ``Adviser'' means any Bain Adviser or Griffin Adviser.
The term ``Bain Adviser'' means any Existing Bain Adviser and any
future investment adviser that (i) controls, is controlled by or is
under common control with Bain Capital, LP, and (ii) is registered
as an investment adviser under the Advisers Act and (iii) is not a
Regulated Fund or a subsidiary of a Regulated Fund.
\7\ ``Affiliated Fund'' means the Existing Affiliated Funds, any
Future Affiliated Fund or any Bain Proprietary Account. ``Future
Affiliated Fund'' means any entity (a) whose investment adviser (and
sub-adviser(s), if any) is a Bain Adviser, (b) that would be an
investment company but for section 3(c)(1) or 3(c)(7) of the Act,
and (c) that intends to participate in the Co-Investment Program.
``Bain Proprietary Account'' means any account of a Bain Adviser or
its affiliates or any company that is a direct or indirect, wholly-
or majority-owned subsidiary of the Bain Adviser or its affiliates,
which, from time to time, may hold various financial assets in a
principal capacity.
\8\ The term ``Adviser'' means any Bain Adviser or Griffin
Adviser.
\9\ The term ``private placement transactions'' means
transactions in which the offer and sale of securities by the issuer
are exempt from registration under the Securities Act.
\10\ All existing entities that currently intend to rely upon
the requested Order have been named as applicants. Any other
existing or future entity that subsequently relies on the Order will
comply with the terms and conditions of the application.
\11\ Bain Capital Specialty Finance, Inc., et al. (File No. 812-
14766) Investment Company Act Release No. 33031 (Feb. 23, 2018)
(notice) and 33051 (Mar. 22, 2018) (order). Certain of the
applicants to the Prior Order have been named as Applicants to the
Order.
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16. Applicants state that a Regulated Fund may, from time to time,
form one or more Wholly-Owned Investment Subs.\12\ Such a subsidiary
would be prohibited from investing in a Co-Investment Transaction with
any Affiliated Fund or Regulated Fund because it would be a company
controlled by its parent Regulated Fund for purposes of section
57(a)(4) and rule 17d-1. Applicants request that each Wholly-Owned
Investment Sub be permitted to participate in Co-Investment
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub's participation in any such transaction be
treated, for purposes of the requested Order, as though the parent
Regulated Fund were participating directly. Applicants represent that
this treatment is justified because a Wholly-Owned Investment Sub would
have no purpose other than serving as a holding vehicle for the
Regulated Fund's investments and, therefore, no conflicts of interest
could arise between the Regulated Fund and the Wholly-Owned Investment
Sub. The Regulated Fund's Board would make all relevant determinations
under the conditions with regard to a Wholly-Owned Investment Sub's
participation in a Co-Investment Transaction, and the Regulated Fund's
Board would be informed of, and take into consideration, any proposed
use of a Wholly-Owned Investment Sub in the Regulated Fund's place. If
the Regulated Fund proposes to participate in the same Co-Investment
Transaction with any of its Wholly-Owned Investment Subs, the Board
will also be informed of, and take into consideration, the relative
participation of the Regulated Fund and the Wholly-Owned Investment
Sub.
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\12\ The term ``Wholly-Owned Investment Sub'' means an entity
(i) that is wholly-owned by a Regulated Fund (with the Regulated
Fund at all times holding, beneficially and of record, 100% of the
voting and economic interests); (ii) whose sole business purpose is
to hold one or more investments on behalf of the Regulated Fund;
(iii) with respect to which the Regulated Fund's Board has the sole
authority to make all determinations with respect to the entity's
participation under the conditions of the Application; and (iv) that
would be an investment company but for section 3(c)(1) or 3(c)(7) of
the Act.
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17. Applicants note that Griffin is responsible for the overall
management of GIACF's activities, and BCSFA is responsible for the day-
to-day management of GIACF's investment portfolio, in each case
consistent with their fiduciary duties. A Griffin Adviser will serve as
the investment adviser to any Regulated Fund with a Bain Adviser as its
sub-adviser. In the case of a Regulated Fund with a Bain Adviser as
sub-adviser, the Bain Adviser will identify and recommend the Potential
Co-Investment Transactions for the Regulated Fund, and the applicable
sub-advisory agreement will require the Bain Adviser to present such
Potential Co-Investment Transaction to the applicable Griffin Adviser,
which will have the authority to approve or reject it for the Regulated
Fund.
18. When considering Potential Co-Investment Transactions for any
Regulated Fund, the applicable Adviser will consider only the
Objectives and Strategies, investment policies, investment positions,
capital available for investment, and other pertinent factors
applicable to that Regulated Fund. The Regulated Fund Advisers expect
that any portfolio company that is an appropriate investment for a
Regulated Fund should also be an appropriate investment for one or more
other Regulated Funds and/or one or more Affiliated Funds, with certain
exceptions based on available capital or diversification.\13\
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\13\ The Regulated Funds, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
---------------------------------------------------------------------------
19. Other than pro rata dispositions and Follow-On Investments as
provided in conditions 7 and 8, and after making the determinations
required in conditions 1 and 2(a), the Advisers will present each
Potential Co-Investment Transaction and the proposed allocation to the
directors of the Board eligible to vote under section 57(o) of the Act
(``Eligible Directors''), and the ``required majority,'' as defined in
section 57(o) of the Act (``Required Majority'') \14\ will approve each
Co-Investment Transaction prior to any investment by the participating
Regulated Fund.
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\14\ In the case of a Regulated Fund that is a registered
closed-end fund, the Board members that make up the Required
Majority will be determined as if the Regulated Fund were a BDC
subject to Section 57(o).
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20. Applicants state that a Bain Adviser has an investment
committee through which it will carry out its obligation under
condition 1 to make a determination as to the appropriateness of the
Potential Co-Investment Transaction for any Regulated Fund. Applicants
represent that in the case of a Potential Co-Investment Transaction,
the Bain Adviser would apply its allocation policies and procedures in
determining the proposed allocation for the Regulated Fund consistent
with the requirements of condition 2(a). Applicants further note that
each Griffin Adviser and Bain Adviser has adopted its own allocation
policies and procedures that take into account the allocation policies
and procedures for the Regulated Funds. Applicants believe that while
each Bain Adviser client may not participate in each investment
opportunity, over time each Bain Adviser client would participate in
investment opportunities fairly and equitably.
21. With respect to the pro rata dispositions and Follow-On
Investments provided in conditions 7 and 8, a Regulated Fund may
participate in a pro rata disposition or Follow-On Investment without
obtaining prior approval of the Required Majority if, among other
things: (i) The proposed participation of each Regulated Fund and
Affiliated Fund in such disposition is proportionate to its outstanding
investments in the issuer immediately preceding the disposition or
Follow-On Investment, as the case may be; and (ii) the Board of the
Regulated Fund has approved that Regulated Fund's participation in pro
rata dispositions and Follow-On Investments as being in the best
interests of the Regulated Fund. If the Board does not so approve, any
such disposition or Follow-On Investment will be submitted to the
Regulated Fund's Eligible Directors. The Board of any Regulated Fund
may at any time rescind, suspend or qualify its approval of pro rata
dispositions and Follow-On Investments with the result that all
dispositions and/or Follow-On Investments must be submitted to the
Eligible Directors.
22. No Non-Interested Director of a Regulated Fund will have a
financial interest in any Co-Investment Transaction, other than through
share
[[Page 67772]]
ownership in one of the Regulated Funds.
Applicants' Legal Analysis
1. Section 57(a)(4) of the Act prohibits certain affiliated persons
of a BDC from participating in joint transactions with the BDC or a
company controlled by a BDC in contravention of rules as prescribed by
the Commission. Under section 57(b)(2) of the Act, any person who is
directly or indirectly controlling, controlled by, or under common
control with a BDC is subject to section 57(a)(4). Applicants submit
that each of the Regulated Funds and Affiliated Funds be deemed to be a
person related to each Regulated Fund in a manner described by section
57(b) by virtue of being under common control. In addition, section
57(b) applies to any investment adviser to a Regulated Fund that is a
BDC and to any section 2(a)(3)(C) affiliates of the investment adviser,
including GIACF and the Affiliated Funds (including the Bain
Proprietary Accounts). Section 57(i) of the Act provides that, until
the Commission prescribes rules under section 57(a)(4), the
Commission's rules under section 17(d) of the Act applicable to
registered closed-end investment companies will be deemed to apply to
transactions subject to section 57(a)(4). Because the Commission has
not adopted any rules under section 57(a)(4), rule 17d-1 also applies
to joint transactions with Regulated Funds that are BDCs. Section 17(d)
of the Act and rule 17d-1 under the Act are applicable to Regulated
Funds that are registered closed-end investment companies.
2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
affiliated persons of a registered investment company from
participating in joint transactions with the company unless the
Commission has granted an order permitting such transactions. In
passing upon applications under rule 17d-1, the Commission considers
whether the company's participation in the joint transaction is
consistent with the provisions, policies, and purposes of the Act and
the extent to which such participation is on a basis different from or
less advantageous than that of other participants.
3. Applicants state that in the absence of the requested relief,
the Regulated Funds would be, in some circumstances, limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants believe that the proposed terms and
conditions will ensure that the Co-Investment Transactions are
consistent with the protection of each Regulated Fund's shareholders
and with the purposes intended by the policies and provisions of the
Act. Applicants state that the Regulated Funds' participation in the
Co-Investment Transactions will be consistent with the provisions,
policies, and purposes of the Act and on a basis that is not different
from or less advantageous than that of other participants.
4. Applicants also represent that if the Advisers, certain
employees and principals of Bain and its affiliated advisers
(collectively, the ``Principals''), any person controlling, controlled
by, or under common control with the Advisers or the Principals, and
the Affiliated Funds (collectively, the ``Holders'') own in the
aggregate more than 25 percent of the outstanding voting securities of
a Regulated Fund (``Shares''), then the Holders will vote such Shares
as required under Condition 14. Applicants believe that this condition
will ensure that the Non-Interested Directors will act independently in
evaluating the Co-Investment Program, because the ability of the
Advisers or the Principals to influence the Non-Interested Directors by
a suggestion, explicit or implied, that the Non-Interested Directors
can be removed will be limited significantly.
Applicants' Conditions
Applicants agree that the Order will be subject to the following
conditions:
1. Each time a Bain Adviser considers a Potential Co-Investment
Transaction for an Affiliated Fund or another Regulated Fund that falls
within a Regulated Fund's then-current Objectives and Strategies, each
Adviser to a Regulated Fund will make an independent determination of
the appropriateness of the investment for such Regulated Fund in light
of the Regulated Fund's then-current circumstances.
2. (a) If each Adviser to a Regulated Fund deems the Regulated
Fund's participation in any Potential Co-Investment Transaction to be
appropriate for the Regulated Fund, the Adviser (or Advisers if there
are more than one) will then determine an appropriate level of
investment for the Regulated Fund.
(b) If the aggregate amount recommended by the Adviser (or Advisers
if there are more than one) to a Regulated Fund to be invested by the
Regulated Fund in the Potential Co-Investment Transaction, together
with the amount proposed to be invested by the other participating
Regulated Funds and Affiliated Funds, collectively, in the same
transaction, exceeds the amount of the investment opportunity, the
amount of the investment opportunity will be allocated among the
Regulated Funds and Affiliated Funds pro rata based on each
participant's capital available for investment in the asset class being
allocated, up to the amount proposed to be invested by each. The
Adviser (or Advisers if there are more than one) to a Regulated Fund
will provide the Eligible Directors of each participating Regulated
Fund with information concerning each participating party's available
capital to assist the Eligible Directors with their review of the
Regulated Fund's investments for compliance with these allocation
procedures.
(c) After making the determinations required in conditions 1 and
2(a)above, the Adviser to the Regulated Fund (or Advisers if there are
more than one) will distribute written information concerning the
Potential Co-Investment Transaction (including the amount proposed to
be invested by each participating Regulated Fund and Affiliated Fund)
to the Eligible Directors for their consideration. A Regulated Fund
will co-invest with one or more other Regulated Funds and/or one or
more Affiliated Funds only if, prior to the Regulated Funds' and
Affiliated Funds' participation in the Potential Co-Investment
Transaction, a Required Majority concludes that:
(i) the terms of the Potential Co-Investment Transaction, including
the consideration to be paid, are reasonable and fair to the Regulated
Fund and its shareholders and do not involve overreaching in respect of
the Regulated Fund or its shareholders on the part of any person
concerned;
(ii) the Potential Co-Investment Transaction is consistent with:
(A) the interests of the Regulated Fund's shareholders; and
(B) the Regulated Fund's then-current Objectives and Strategies;
(iii) the investment by any other Regulated Funds or Affiliated
Funds would not disadvantage the Regulated Fund, and participation by
the Regulated Fund would not be on a basis different from or less
advantageous than that of any other Regulated Fund or Affiliated Fund;
provided that, if any other Regulated Fund or Affiliated Fund, but not
the Regulated Fund itself, gains the right to nominate a director for
election to a portfolio company's board of directors or the right to
have a board observer or any similar right to participate in the
governance or management of the portfolio company, such event shall not
be interpreted to prohibit the Required Majority from reaching the
conclusions required by this condition 2(c)(iii), if:
[[Page 67773]]
(A) The Eligible Directors will have the right to ratify the
selection of such director or board observer, if any;
(B) the Adviser to the Regulated Fund (or Advisers if there are
more than one) agrees to, and does, provide periodic reports to the
Regulated Fund's Board with respect to the actions of such director or
the information received by such board observer or obtained through the
exercise of any similar right to participate in the governance or
management of the portfolio company; and
(C) any fees or other compensation that any Affiliated Fund or any
Regulated Fund or any affiliated person of any Affiliated Fund or any
Regulated Fund receives in connection with the right of an Affiliated
Fund or a Regulated Fund to nominate a director or appoint a board
observer or otherwise to participate in the governance or management of
the portfolio company will be shared proportionately among the
participating Affiliated Funds (who each may, in turn, share its
portion with its affiliated persons) and the participating Regulated
Funds in accordance with the amount of each party's investment; and
(iv) the proposed investment by the Regulated Fund will not benefit
the Adviser to the Regulated Fund (or Advisers if there are more than
one), the Affiliated Funds or the other Regulated Funds or any
affiliated person of any of them (other than the parties to the Co-
Investment Transaction), except (A) to the extent permitted by
condition 13, (B) to the extent permitted by sections 17(e) or 57(k) of
the Act, as applicable, (C) indirectly, as a result of an interest in
the securities issued by one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or other compensation described
in condition 2(c)(iii)(C).
3. Each Regulated Fund has the right to decline to participate in
any Potential Co-Investment Transaction or to invest less than the
amount proposed.
4. The Adviser to the Regulated Fund (or Advisers if there are more
than one) will present to the Board of each Regulated Fund, on a
quarterly basis, a record of all investments in Potential Co-Investment
Transactions made by any of the other Regulated Funds or Affiliated
Funds during the preceding quarter that fell within the Regulated
Fund's then-current Objectives and Strategies that were not made
available to the Regulated Fund, and an explanation of why the
investment opportunities were not offered to the Regulated Fund. All
information presented to the Board pursuant to this condition will be
kept for the life of the Regulated Fund and at least two years
thereafter, and will be subject to examination by the Commission and
its staff.
5. Except for Follow-On Investments made in accordance with
condition 8,\15\ a Regulated Fund will not invest in reliance on the
Order in any issuer in which another Regulated Fund, Affiliated Fund,
or any affiliated person of another Regulated Fund or an Affiliated
Fund is an existing investor.
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\15\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
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6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of
securities to be purchased, settlement date, and registration rights
will be the same for each participating Regulated Fund and Affiliated
Fund. The grant to an Affiliated Fund or another Regulated Fund, but
not the Regulated Fund, of the right to nominate a director for
election to a portfolio company's board of directors, the right to have
an observer on the board of directors or similar rights to participate
in the governance or management of the portfolio company will not be
interpreted so as to violate this condition 6, if conditions
2(c)(iii)(A), (B) and (C) are met.
7. (a) If any Affiliated Fund or any Regulated Fund elects to sell,
exchange or otherwise dispose of an interest in a security that was
acquired by one or more Regulated Funds and/or Affiliated Funds in a
Co-Investment Transaction, the applicable Adviser(s) \16\ will:
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\16\ Any Bain Proprietary Account that is not advised by a Bain
Adviser is itself deemed to be an Adviser for purposes of Conditions
7(a)(i) and 8(a)(i).
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(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest
practical time; and
(ii) formulate a recommendation as to participation by the
Regulated Fund in the disposition.
(b) Each Regulated Fund will have the right to participate in such
disposition on a proportionate basis, at the same price and on the same
terms and conditions as those applicable to the participating
Affiliated Funds and any other Regulated Fund.
(c) A Regulated Fund may participate in such disposition without
obtaining prior approval of the Required Majority if: (i) The proposed
participation of each Regulated Fund and each Affiliated Fund in such
disposition is proportionate to its outstanding investments in the
issuer immediately preceding the disposition; (ii) the Board of the
Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in such dispositions on a pro
rata basis (as described in greater detail in the application); and
(iii) the Board of the Regulated Fund is provided on a quarterly basis
with a list of all dispositions made in accordance with this condition.
In all other cases, the Adviser to the Regulated Fund (or Advisers if
there are more than one) will provide their written recommendation as
to the Regulated Fund's participation to the Eligible Directors, and
the Regulated Fund will participate in such disposition solely to the
extent that a Required Majority determines that it is in the Regulated
Fund's best interests.
(d) Each Affiliated Fund and each Regulated Fund will bear its own
expenses in connection with any such disposition.
8. (a) If any Affiliated Fund or any Regulated Fund desires to make
a Follow-On Investment in a portfolio company whose securities were
acquired by the Regulated Fund and the Affiliated Fund in a Co-
Investment Transaction, the applicable Adviser(s) will:
(i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest
practical time; and
(ii) formulate a recommendation as to the proposed participation,
including the amount of the proposed Follow-On Investment, by each
Regulated Fund.
(b) A Regulated Fund may participate in such Follow-On Investment
without obtaining prior approval of the Required Majority if: (i) The
proposed participation of each Regulated Fund and each Affiliated Fund
in such investment is proportionate to its outstanding investments in
the issuer immediately preceding the Follow-On Investment; and (ii) the
Board of the Regulated Fund has approved as being in the best interests
of the Regulated Fund the ability to participate in Follow-On
Investments on a pro rata basis (as described in greater detail in the
application). In all other cases, the Adviser to the Regulated Fund (or
Advisers if there are more than one) will provide their written
recommendation as to such Regulated Fund's participation to the
Eligible Directors, and the Regulated Fund will participate in such
Follow-On Investment solely to the extent that the Required Majority
determines that it is in such Regulated Fund's best interests.
(c) If, with respect to any Follow-On Investment:
[[Page 67774]]
(i) The amount of the opportunity is not based on the Regulated
Funds' and the Affiliated Funds' outstanding investments immediately
preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by the Adviser (or Advisers
if there are more than one) to a Regulated Fund to be invested by the
Regulated Fund in the Follow-On Investment, together with the amount
proposed to be invested by the other participating Regulated Funds and
the Affiliated Funds in the same transaction, exceeds the amount of the
opportunity; then the amount invested by each such party will be
allocated among them pro rata based on each participant's capital
available for investment in the asset class being allocated, up to the
amount proposed to be invested by each.
(d) The acquisition of Follow-On Investments as permitted by this
condition will be considered a Co-Investment Transaction for all
purposes and subject to the other conditions set forth in the
application.
9. The Non-Interested Directors of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Funds or Affiliated Funds that a
Regulated Fund considered but declined to participate in, so that the
Non-Interested Directors may determine whether all investments made
during the preceding quarter, including those investments that the
Regulated Fund considered but declined to participate in, comply with
the conditions of the Order. In addition, the Non-Interested Directors
will consider at least annually the continued appropriateness for such
Regulated Fund of participating in new and existing Co-Investment
Transactions.
10. Each Regulated Fund will maintain the records required by
section 57(f)(3) of the Act as if each of the Regulated Funds were a
BDC and each of the investments permitted under these conditions were
approved by the Required Majority under section 57(f) of the Act.
11. No Non-Interested Director of a Regulated Fund will also be a
director, general partner, managing member or principal, or otherwise
an ``affiliated person'' (as defined in the Act), of any Affiliated
Fund.
12. The expenses, if any, associated with acquiring, holding or
disposing of any securities acquired in a Co-Investment Transaction
(including, without limitation, the expenses of the distribution of any
such securities registered for sale under the Securities Act) will, to
the extent not payable by the applicable Adviser(s) under their
respective investment advisory agreements with the Affiliated Funds and
the Regulated Funds, be shared by the Regulated Funds and the
Affiliated Funds in proportion to the relative amounts of the
securities held or to be acquired or disposed of, as the case may be.
13. Any transaction fee \17\ (including break-up or commitment fees
but excluding broker's fees contemplated by section 17(e) or 57(k) of
the Act, as applicable) received in connection with a Co-Investment
Transaction will be distributed to the participating Regulated Funds
and Affiliated Funds on a pro rata basis based on the amounts they
invested or committed, as the case may be, in such Co-Investment
Transaction. If any transaction fee is to be held by an Adviser pending
consummation of the transaction, the fee will be deposited into an
account maintained by 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
Funds based on the amounts they invest in such Co-Investment
Transaction. None of the Affiliated Funds, the applicable Adviser(s),
the other Regulated Funds or any affiliated person of the Regulated
Funds or Affiliated Funds will receive additional compensation or
remuneration of any kind as a result of or in connection with a Co-
Investment Transaction (other than (a) in the case of the Regulated
Funds and the Affiliated Funds, the pro rata transaction fees described
above and fees or other compensation described in condition
2(c)(iii)(C); and (b) in the case of the Advisers, investment advisory
fees paid in accordance with the Regulated Funds' and the Affiliated
Funds' investment advisory agreements).
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\17\ Applicants are not requesting and the staff is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
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14. If the Holders own in the aggregate more than 25 percent of the
Shares of a Regulated Fund, then the Holders will vote such Shares in
the same percentages as the Regulated Fund's other shareholders (not
including the Holders) when voting on (1) the election of directors;
(2) the removal of one or more directors; or (3) any other matter under
either the Act or applicable State law affecting the Board's
composition, size or manner of election.
15. Each Regulated Fund's chief compliance officer, as defined in
rule 38a-1(a)(4), 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. 2021-25862 Filed 11-26-21; 8:45 am]
BILLING CODE 8011-01-P
