Apollo Investment Corporation, et al., 69703-69712 [2021-26597]

Download as PDF Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices jspears on DSK121TN23PROD with NOTICES1 default by a Clearing Participant could leave ICC under-collateralized and default by an FSP could cause ICC to lose its investments or expected return of cash. The Commission therefore believes that default by a Clearing Participant and default by an FSP could cause ICC to lose default resources and operational capital. The Commission believes that such losses could, in turn, threaten ICC’s ability to operate and therefore clear and settle transactions and assure the safeguarding of securities and funds. Thus, the Commission believes that effective management of ICC’s counterparty credit risk could help ICC to control risks to the financial resources needed to clear and settle transactions and to assure the safeguarding of securities and funds in its custody or control. The Commission therefore believes that, by establishing the actions ICC would take to assess, monitor, and mitigate counterparty credit risk, the Procedures and CRS Policy would help ICC to manage counterparty credit risk and thereby would promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of ICC or for which it is responsible. Therefore, the Commission finds that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Act.14 B. Consistency With Rule 17Ad– 22(e)(2)(v) Rule 17Ad–22(e)(2)(v) requires that ICC establish, implement, maintain, and enforce written policies and procedures reasonably designed to provide for governance arrangements that specify clear and direct lines of responsibility.15 As discussed above, the Procedures would assign roles and responsibilities to various ICC groups and personnel. For example, the Risk Department would monitor all counterparties intraday, daily, and monthly and would implement the CRS; the Operations Department would monitor the operational and settlement process performance of all counterparties; the Treasury Department would monitor money movements between Clearing Participants and ICC; and the CRO would be responsible for reviewing and validating the Risk Department’s counterparty credit findings and recommendations and for determining if a counterparty should be added to, or removed from, the Watch List. The Commission believes that these provisions, as well as the other roles and responsibilities described above, would specify clear and direct lines of responsibility for ICC groups and personnel. Therefore, the Commission finds that the proposed rule change is consistent with Rule 17Ad–22(e)(2)(v).16 C. Consistency With Rule 17Ad– 22(e)(3)(i) Rule 17Ad–22(e)(3)(i) requires that ICC establish, implement, maintain and enforce written policies and procedures reasonably designed to, as applicable, maintain a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by ICC, which, among other things, includes risk management policies, procedures, and systems designed to identify, measure, monitor, and manage the range of risks that arise in or are borne by ICC, that are subject to review on a specified periodic basis and approved by the board of directors annually.17 As discussed above, the Procedures and CRS Policy would describe how ICC evaluates and monitors risks posed by its counterparties, and how ICC mitigates such risks. The Commission believes that together these documents would allow ICC to measure comprehensively the credit risk posed by Clearing Participants and FSPs through, among other things, assessing the financial status of Clearing Participants and FSPs and determining ICC’s aggregate exposure to Clearing Participants and FSPs. The Commission further believes that the CRS, watch list, periodic monitoring, and exposure limits would provide ICC a comprehensive means of monitoring the credit risk posed by Clearing Participants and FSPs. Finally, the Commission believes that the mitigating actions discussed above would reduce or eliminate ICC’s exposure to a Clearing Participant or FSP, thereby helping ICC manage overall credit risk. Therefore, the Commission finds that the proposed rule change is consistent with Rule 17Ad–22(e)(3)(i).18 IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act, and in particular, with the requirements of 16 17 CFR 240.17Ad–22(e)(2)(v). CFR 240.17Ad–22(e)(3)(i). 18 17 CFR 240.17Ad–22(e)(3)(i). 14 15 U.S.C. 78q–1(b)(3)(F). 15 17 CFR 240.17Ad–22(e)(2)(v). VerDate Sep<11>2014 16:53 Dec 07, 2021 17 17 Jkt 256001 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 69703 Section 17A(b)(3)(F) of the Act 19 Rules 17Ad–22(e)(2)(v) and (e)(3)(i).20 It is therefore ordered pursuant to Section 19(b)(2) of the Act 21 that the proposed rule change (SR–ICC–2021– 021), be, and hereby is, approved.22 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–26530 Filed 12–7–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 34432; File No. 812–15015] Apollo Investment Corporation, et al. December 3, 2021. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. AGENCY: Notice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ‘‘Act’’) and rule 17d–1 under the Act to permit certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d–1 under the Act. Summary of Application: Applicants request an order to permit certain business development companies (‘‘BDCs’’) and closed-end management investment companies to co-invest in portfolio companies with each other and with certain affiliated investment funds and accounts. Applicants: Apollo Investment Corporation (‘‘AIC’’), Apollo Tactical Income Fund Inc. (‘‘AIF’’), Apollo Debt Solutions BDC (‘‘ADS’’), Apollo Investment Management, L.P. (‘‘AIM’’), Apollo Credit Management, LLC (‘‘ACM’’), Apollo Senior Floating Rate Fund Inc. (‘‘ASFRF’’), Merx Aviation Finance, LLC (‘‘Merx’’), Athene Holding Ltd. (‘‘Athene’’), MidCap FinCo Holdings Limited (‘‘MidCap’’), the Existing Affiliated Funds set forth on Appendix A to the application, and the investment advisers to the Existing Affiliated Funds set forth on Appendix A to the application (the ‘‘Existing Advisers to Affiliated Funds’’; together with AIC, AIF, AIM, ACM, ASFRF, 19 15 U.S.C. 78q–1(b)(3)(F). CFR 240.17Ad–22(e)(2)(v) and (e)(3)(i). 21 15 U.S.C. 78s(b)(2). 22 In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 23 17 CFR 200.30–3(a)(12). 20 17 E:\FR\FM\08DEN1.SGM 08DEN1 69704 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices ADS, Merx and the Existing Affiliated Funds, the ‘‘Applicants’’). Filing Dates: The application was filed on April 1, 2019, and amended on August 15, 2019, January 2, 2020, January 28, 2021, October 19, 2021 and November 24, 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 28, 2021, and should be accompanied by proof of service on the applicants, in the form of an affidavit, or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by emailing the Commission’s Secretary at SecretarysOffice@sec.gov. ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicants: steven.grigoriou@stblaw.com. FOR FURTHER INFORMATION CONTACT: Asen Parachkevov, Senior Counsel, at (202) 551–6908 or Trace Rakestraw, Branch Chief, at (202) 551–6825 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission’s website by searching for the file number, or for an applicant using the Company name box, at https:// www.sec.gov/search/search.htm or by calling (202) 551–8090. Introduction jspears on DSK121TN23PROD with NOTICES1 1. The Applicants request an order of the Commission under Sections 17(d) and 57(i) and Rule 17d–1 thereunder (the ‘‘Order’’) to permit, subject to the terms and conditions set forth in the application (the ‘‘Conditions’’), a Regulated Fund 1 and one or more other 1 ‘‘Regulated Funds’’ means AIC, ASFRF, AIF, ADS the Future Regulated Funds and the BDC Downstream Funds (defined below). ‘‘Future Regulated Fund’’ means a closed-end management investment company (a) that is registered under the Act or has elected to be regulated as a BDC, (b) whose investment adviser (and sub-adviser, if any) is an Adviser, and (c) that intends to participate in the Co-Investment Program. ‘‘Adviser’’ means AIM, ACM and the Existing Advisers to Affiliated Funds (identified in Appendix A to the application) and VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 Regulated Funds and/or one or more Affiliated Funds 2 to enter into CoInvestment Transactions with each other. ‘‘Co-Investment Transaction’’ means any transaction in which a Regulated Fund (or its Wholly-Owned Investment Sub (as defined below)) participated together with one or more Affiliated Funds and/or one or more other Regulated Funds in reliance on the Order. ‘‘Potential Co-Investment Transaction’’ means any investment opportunity in which a Regulated Fund (or its Wholly-Owned Investment Sub) could not participate together with one or more Affiliated Funds and/or one or more other Regulated Funds without obtaining and relying on the Order.3 2. The Order sought by the applicants would supersede a prior order 4 (‘‘Prior any Future Adviser. ‘‘Future Adviser’’ means any future investment adviser that (i) controls, is controlled by, or is under common control with AGM, (ii) (a) is registered as an investment adviser under the Investment Advisers Act of 1940 (‘‘Advisers Act’’) or (b) is a relying adviser of an investment adviser that is registered under the Advisers Act and that controls, is controlled by, or is under common control with, AGM and (iii) is not a Regulated Fund or a subsidiary of a Regulated Fund. ‘‘Co-Investment Program’’ means the proposed co-investment program that would permit one or more Regulated Funds and/or one or more Affiliated Funds to participate in the same investment opportunities 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 negotiates terms in addition to price; and (b) making Follow-On Investments (as defined below). The term ‘‘private placement transactions’’ means transactions in which the offer and sale of securities by the issuer are exempt from registration under the Securities Act of 1933 (the ‘‘Securities Act’’). 2 ‘‘Affiliated Fund’’ means any Existing Affiliated Fund (identified in Appendix A to the application), any Apollo Proprietary Account (defined below) or any entity (a) whose investment adviser (and subadviser(s), if any) is an Adviser, (b) that either (x) would be an investment company but for Section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act or (y) relies on Rule 3a-7 of the Act, (c) that is not a BDC Downstream Fund and (d) that intends to participate in the Co-Investment Program. Applicants represent that no Existing Affiliated Fund is a BDC Downstream Fund. ‘‘BDC Downstream Fund’’ means either (a) with respect to AIC, Merx or (b) with respect to any Regulated Fund that is a BDC, an entity (i) that the BDC directly or indirectly controls, (ii) that is not controlled by any person other than the BDC (except a person that indirectly controls the entity solely because it controls the BDC), (iii) that would be an investment company but for Section 3(c)(1) or 3(c)(7) of the Act, (iv) whose investment adviser (and sub-adviser, if any) is an Adviser, (v) that is not a Wholly-Owned Investment Sub and (vi) that intends to participate in the Co-Investment Program. 3 All existing entities that currently intend to rely on the Order have been named as Applicants and any existing or future entities that may rely on the Order in the future will comply with its terms and Conditions set forth in the application. 4 Apollo Investment Corp., et al., (File No. 812– 13754) Release No. IC–32057 (order) (March 29, 2016), Release No. IC–32019 (notice) (March 2, 2016). PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 Order’’) with the result that no person will continue to rely on the Prior Order if the Order is granted. Applicants 3. AIC is a closed-end management investment company incorporated in Maryland that has elected to be regulated as a business development company (‘‘BDC’’) under the Act.5 AIC’s Board 6 currently consists of eight members, five of whom are Independent Directors.7 ASFRF and AIF are Maryland corporations that are registered as closed-end management investment companies. Each of ASFRF’s and AIF’s Board currently consists of six members, five of whom are Independent Directors. ADS is a closed-end management investment company organized as a Delaware statutory trust that has elected to be regulated as a BDC under the Act. ADS’ Board currently consists of five members, four of whom are Independent Directors. 4. AIM, a Delaware limited partnership that is registered under the Advisers Act, serves as the investment adviser to AIC. ACM, a Delaware limited liability company that is registered as an investment adviser under the Advisers Act, serves as investment adviser to ASFRF, ADS and AIF. 5. Merx, a Delaware limited liability company, is a special purpose vehicle owned by AIC. AIM serves as Merx’s investment adviser. Applicants state that Merx engages primarily in aircraft leasing and related businesses and is thus excluded from investment company status under Section 3(a). Merx is a BDC Downstream Fund. If Applicants receive the requested Order, Merx may on occasion engage in Co5 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 Section 55(a)(1) through 55(a)(3) and makes available significant managerial assistance with respect to the issuers of such securities. 6 ‘‘Board’’ means (i) with respect to a Regulated Fund other than a BDC Downstream Fund, the board of directors (or the equivalent) of the Regulated Fund and (ii) with respect to a BDC Downstream Fund, the Independent Party of the BDC Downstream Fund. ‘‘Independent Party’’ means, with respect to a BDC Downstream Fund, (i) if the BDC Downstream Fund has a board of directors (or the equivalent), the board or (ii) if the BDC Downstream Fund does not have a board of directors (or the equivalent), a transaction committee or advisory committee of the BDC Downstream Fund. 7 ‘‘Independent Director’’ means a member of the Board of any relevant entity who is not an ‘‘interested person’’ as defined in Section 2(a)(19) of the Act. No Independent Director of a Regulated Fund (including any non-interested member of an Independent Party) will have a financial interest in any Co-Investment Transaction, other than indirectly through share ownership in one of the Regulated Funds. E:\FR\FM\08DEN1.SGM 08DEN1 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices jspears on DSK121TN23PROD with NOTICES1 Investment Transactions with other Regulated Funds and with Affiliated Funds.8 6. Any Adviser, and any direct or indirect, wholly- or majority-owned subsidiary of an Adviser, may hold various financial assets in a principal capacity (the ‘‘Apollo Proprietary Accounts’’). 7. The Existing Affiliated Funds are the investment funds identified in Appendix A to the application. Applicants represent that each Existing Affiliated Fund is a separate and distinct legal entity and each, other than Athene and MidCap, would be an investment company but for Section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act. Applicants state that Athene Holding does not come within the definition of investment company in Section 3(a)(1). As described in the application, Applicants state that Athene engages in the insurance business through whollyowned subsidiary insurance companies which are excluded from investment company status by either Rule 3a–6 or Section 3(c)(3). Applicants state that Athene also invests through its affiliate MidCap, which currently is excluded from investment company status by Section 3(b)(1), 3(c)(5) or 3(c)(6).9 As with the other Affiliated Funds, each of Athene and MidCap is advised by an Adviser pursuant to a separate investment management agreement. 8. The Existing Advisers to Affiliated Funds, identified in Appendix A to the application, are the investment advisers to the Existing Affiliated Funds. Each of the Existing Advisers to Affiliated 8 Applicants believe that allowing the other Regulated Funds and the Affiliated Funds to coinvest with Merx does not raise any legal or policy concerns that are not otherwise raised by allowing a Regulated Fund to co-invest with another Regulated Fund and/or one or more Affiliated Funds because, in terms of its operation and purpose, Merx differs from a private fund only in that it invests in and operates aircraft subject to leases instead of in investment securities. 9 Applicants state that, although Athene and MidCap may not rely on section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act, as do the other Existing Affiliated Funds, Applicants do not believe that allowing Athene and MidCap to participate in Coinvestment Transactions as Affiliated Funds raises any additional legal or policy concerns not otherwise raised by allowing a Regulated Fund to co-invest with one or more Affiliated Funds. Specifically, Applicants argue that Athene and MidCap are clients of Advisers the same way that an Affiliated Fund relying on Section 3(c)(1) or 3(c)(7) is a client of an Adviser. Although a relatively small portion of Athene’s assets are managed by an investment adviser that is not an Adviser, only the portion of Athene’s assets for which an Adviser has investment discretion will participate in Co-investment Transactions. Athene and MidCap may continue to be an Affiliated Fund in the future if it instead relies solely on Section 3(c)(1), 3(c)(5)(C) or 3(c)(7) and otherwise satisfies the criteria for an ‘‘Affiliated Fund’’ set out in the definition thereof. VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 Funds is registered as an investment adviser under the Advisers Act. 9. Each of the Applicants may be deemed to be controlled by AGM. AGM owns controlling interests in the Advisers and, thus, may be deemed to control the Regulated Funds and the Affiliated Funds. Applicants state that AGM 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, AGM has not been included as an Applicant. 10. Applicants state that a Regulated Fund may, from time to time, form one or more Wholly-Owned Investment Subs.10 Such a subsidiary may be prohibited from investing in a CoInvestment Transaction with a Regulated Fund (other than its parent) or any Affiliated 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 the Regulated Fund that owns it and that the WhollyOwned Investment Sub’s participation in any such transaction be treated, for purposes of the Order, as though the parent Regulated Fund were participating directly. Applicants’ Representations A. Allocation Process 11. Applicants represent that they have established processes ensuring compliance with the Prior Order and for allocating initial investment opportunities, opportunities for subsequent investments in an issuer and dispositions of securities holdings reasonably designed to treat all clients fairly and equitably. Further, Applicants 10 ‘‘Wholly-Owned Investment Sub’’ means an entity (i) that is a wholly-owned subsidiary of a Regulated Fund (with such Regulated Fund at all times holding, beneficially and of record, directly or indirectly, 95% or more of the voting and economic interests); (ii) whose sole business purpose is to hold one or more investments on behalf of such Regulated Fund (and in the case of an SBIC Subsidiary, maintain a license under the Small Business Investment Act of 1958 (‘‘SBA Act’’) and issue debentures guaranteed by the Small Business Administration (‘‘SBA’’)); (iii) with respect to which such Regulated Fund’s Board has the sole authority to make all determinations with respect to the entity’s participation under the Conditions; and (iv) that (A) would be an investment company but for Section 3(c)(1), 3(c)(5)(C), or 3(c)(7) of the Act, or (B) that qualifies as a real estate investment trust within the meaning of Section 856 of the Internal Revenue Code because substantially all of its assets would consist of real properties. ‘‘SBIC Subsidiary’’ means a Wholly-Owned Investment Sub that is licensed by the SBA to operate under the SBA Act as a small business investment company. PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 69705 represent that these processes will be extended and modified in a manner reasonably designed to ensure that the additional transactions permitted under the Order will both (i) be fair and equitable to the Regulated Funds and the Affiliated Funds and (ii) comply with the Conditions. 12. Specifically, applicants state that the Advisers are organized and managed such that the individual portfolio managers, as well as the teams and committees of portfolio managers, analysts and senior management (‘‘Investment Teams’’ and ‘‘Investment Committees’’), responsible for evaluating investment opportunities and making investment decisions on behalf of clients are promptly notified of the opportunities. Under the Prior Order, the Advisers established and implemented policies and procedures reasonably designed to ensure that, when such opportunities arise, the Advisers to the relevant Regulated Funds are promptly notified and receive the same information about the opportunity as any other Advisers considering the opportunity for their clients. If the requested Order is granted, such policies and procedures will be amended to reflect the terms of the requested Order. In particular, consistent with Condition 1, if a Potential Co-Investment Transaction falls within the then-current Objectives and Strategies 11 and any BoardEstablished Criteria 12 of a Regulated 11 ‘‘Objectives and Strategies’’ means (i) with respect to any Regulated Fund other than a BDC Downstream Fund, its investment objectives and strategies, as described in its most current registration statement on Form N–2, other current filings with the Commission under the Securities Act or under the Securities Exchange Act of 1934, as amended, and its most current report to stockholders, and (ii) with respect to any BDC Downstream Fund, those investment objectives and strategies described in its disclosure documents (including private placement memoranda and reports to equity holders) and organizational documents (including operating agreements). 12 ‘‘Board-Established Criteria’’ means criteria that the Board of a Regulated Fund may establish from time to time to describe the characteristics of Potential Co-Investment Transactions regarding which the Adviser to the Regulated Fund should be notified under Condition 1. The Board-Established Criteria will be consistent with the Regulated Fund’s Objectives and Strategies. If no BoardEstablished Criteria are in effect, then the Regulated Fund’s Adviser will be notified of all Potential CoInvestment Transactions that fall within the Regulated Fund’s then-current Objectives and Strategies. Board-Established Criteria will be objective and testable, meaning that they will be based on observable information, such as industry/ sector of the issuer, minimum EBITDA of the issuer, asset class of the investment opportunity or required commitment size, and not on characteristics that involve a discretionary assessment. The Adviser to the Regulated Fund may from time to time recommend criteria for the Board’s consideration, but Board-Established E:\FR\FM\08DEN1.SGM Continued 08DEN1 69706 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices jspears on DSK121TN23PROD with NOTICES1 Fund, the policies and procedures will require that the relevant portfolio managers, Investment Teams and Investment Committees responsible for that Regulated Fund receive sufficient information to allow the Regulated Fund’s Adviser to make its independent determination and recommendations under the Conditions. 13. The Adviser to each applicable Regulated Fund will then make an independent determination of the appropriateness of the investment for the Regulated Fund in light of the Regulated Fund’s then-current circumstances. If the Adviser to a Regulated Fund deems the Regulated Fund’s participation in such Potential Co-Investment Transaction to be appropriate, then it will formulate a recommendation regarding the proposed order amount for the Regulated Fund. 14. Applicants state that, for each Regulated Fund and Affiliated Fund whose Adviser recommends participating in a Potential CoInvestment Transaction, the Adviser will submit a proposed order amount to the internal trading function, which is comprised of a group of individual traders who collect and execute trades. Applicants state further that each proposed order amount may be reviewed and adjusted, in accordance with the Advisers’ written allocation policies and procedures, by an allocation committee for the area in question (e.g., credit, private equity, real estate) on which senior management, legal and compliance personnel from that area participate or, in the case of issues involving multiple areas or AGM as a whole, an AGM-wide allocation committee on which senior management, legal and compliance personnel for AGM participate.13 The order of a Regulated Fund or Affiliated Fund resulting from this process is referred to as its ‘‘Internal Order’’. The Internal Order will be submitted for approval by the Required Majority of any participating Regulated Funds in accordance with the Conditions.14 Criteria will only become effective if approved by a majority of the Independent Directors. The Independent Directors of a Regulated Fund may at any time rescind, suspend or qualify its approval of any Board-Established Criteria, though Applicants anticipate that, under normal circumstances, the Board would not modify these criteria more often than quarterly. 13 The reason for any such adjustment to a proposed order amount will be documented in writing and preserved in the records of the Advisers. 14 ‘‘Required Majority’’ means a required majority, as defined in Section 57(o) of the Act. 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 VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 15. If the aggregate Internal Orders for a Potential Co-Investment Transaction do not exceed the size of the investment opportunity immediately prior to the submission of the orders to the underwriter, broker, dealer or issuer, as applicable (the ‘‘External Submission’’), then each Internal Order will be fulfilled as placed. If, on the other hand, the aggregate Internal Orders for a Potential Co-Investment Transaction exceed the size of the investment opportunity immediately prior to the External Submission, then the allocation of the opportunity will be made pro rata on the basis of the size of the Internal Orders.15 If, subsequent to such External Submission, the size of the opportunity is increased or decreased, or if the terms of such opportunity, or the facts and circumstances applicable to the Regulated Funds’ or the Affiliated Funds’ consideration of the opportunity, change, the participants will be permitted to submit revised Internal Orders in accordance with written allocation policies and procedures that the Advisers will establish, implement and maintain.16 B. Follow-On Investments 16. Applicants state that from time to time the Regulated Funds and Affiliated Funds may have opportunities to make Follow-On Investments 17 in an issuer in which a Regulated Fund and one or more other Regulated Funds and/or 57(o). In the case of a BDC Downstream Fund with a board of directors (or the equivalent), the members that make up the Required Majority will be determined as if the BDC Downstream Fund were a BDC subject to Section 57(o). In the case of a BDC Downstream Fund with a transaction committee or advisory committee, the committee members that make up the Required Majority will be determined as if the BDC Downstream Fund were a BDC subject to Section 57(o) and as if the committee members were directors of the fund. 15 The Advisers will maintain records of all proposed order amounts, Internal Orders and External Submissions in conjunction with Potential Co-Investment Transactions. Each applicable Adviser will provide the Eligible Directors with information concerning the Affiliated Funds’ and Regulated Funds’ order sizes to assist the Eligible Directors with their review of the applicable Regulated Fund’s investments for compliance with the Conditions. ‘‘Eligible Directors’’ means, with respect to a Regulated Fund and a Potential CoInvestment Transaction, the members of the Regulated Fund’s Board eligible to vote on that Potential Co-Investment Transaction under Section 57(o) of the Act (treating any registered investment company or series thereof as a BDC for this purpose). 16 The Board of the Regulated Fund will then either approve or disapprove of the investment opportunity in accordance with condition 2, 6, 7, 8 or 9, as applicable. 17 ‘‘Follow-On Investment’’ means an additional investment in the same issuer, including, but not limited to, through the exercise of warrants, conversion privileges or other rights to purchase securities of the issuer. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 Affiliated Funds previously have invested. 17. Applicants propose that FollowOn Investments would be divided into two categories depending on whether the prior investment was a CoInvestment Transaction or a PreBoarding Investment.18 If the Regulated Funds and Affiliated Funds had previously participated in a CoInvestment Transaction with respect to the issuer, then the terms and approval of the Follow-On Investment would be subject to the Standard Review FollowOns described in Condition 8. If the Regulated Funds and Affiliated Funds have not previously participated in a Co-Investment Transaction with respect to the issuer but hold a Pre-Boarding Investment, then the terms and approval of the Follow-On Investment would be subject to the Enhanced-Review FollowOns described in Condition 9. All Enhanced Review Follow-Ons require the approval of the Required Majority. For a given issuer, the participating Regulated Funds and Affiliated Funds would need to comply with the requirements of Enhanced-Review Follow-Ons only for the first CoInvestment Transaction. Subsequent CoInvestment Transactions with respect to the issuer would be governed by the requirements of Standard Review Follow-Ons. 18. A Regulated Fund would be permitted to invest in Standard Review Follow-Ons either with the approval of the Required Majority under Condition 8(c) or without Board approval under Condition 8(b) if it is (i) a Pro Rata Follow-On Investment 19 or (ii) a NonNegotiated Follow-On Investment.20 18 ‘‘Pre-Boarding Investments’’ are investments in an issuer held by a Regulated Fund as well as one or more Affiliated Funds and/or one or more other Regulated Funds that were acquired prior to participating in any Co-Investment Transaction: (i) In transactions in which the only term negotiated by or on behalf of such funds was price in reliance on one of the JT No-Action Letters (defined below); or (ii) in transactions occurring at least 90 days apart and without coordination between the Regulated Fund and any Affiliated Fund or other Regulated Fund. 19 A ‘‘Pro Rata Follow-On Investment’’ is a Follow-On Investment (i) in which the participation of each Affiliated Fund and each Regulated Fund is proportionate to its outstanding investments in the issuer or security, as appropriate, immediately preceding the Follow-On Investment, and (ii) in the case of a Regulated Fund, a majority of the Board has approved the Regulated Fund’s participation in the pro rata Follow-On Investments as being in the best interests of the Regulated Fund. The Regulated Fund’s Board may refuse to approve, or at any time rescind, suspend or qualify, its approval of Pro Rata Follow-On Investments, in which case all subsequent Follow-On Investments will be submitted to the Regulated Fund’s Eligible Directors in accordance with Condition 8(c). 20 A ‘‘Non-Negotiated Follow-On Investment’’ is a Follow-On Investment in which a Regulated Fund E:\FR\FM\08DEN1.SGM 08DEN1 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices Applicants believe that these Pro Rata and Non-Negotiated Follow-On Investments do not present a significant opportunity for overreaching on the part of any Adviser and thus do not warrant the time or the attention of the Board. Pro Rata Follow-On Investments and Non-Negotiated Follow-On Investments remain subject to the Board’s periodic review in accordance with Condition 10. jspears on DSK121TN23PROD with NOTICES1 C. Dispositions 19. Applicants propose that Dispositions 21 would be divided into two categories. If the Regulated Funds and Affiliated Funds holding investments in the issuer had previously participated in a Co-Investment Transaction with respect to the issuer, then the terms and approval of the Disposition would be subject to the Standard Review Dispositions described in Condition 6. If the Regulated Funds and Affiliated Funds have not previously participated in a CoInvestment Transaction with respect to the issuer but hold a Pre-Boarding Investment, then the terms and approval of the Disposition would be subject to the Enhanced Review Dispositions described in Condition 7. Subsequent Dispositions with respect to the same issuer would be governed by Condition 6 under the Standard Review Dispositions.22 20. A Regulated Fund may participate in a Standard Review Disposition either with the approval of the Required Majority under Condition 6(d) or without Board approval under participates together with one or more Affiliated Funds and/or one or more other Regulated Funds (i) in which the only term negotiated by or on behalf of the funds is price and (ii) with respect to which, if the transaction were considered on its own, the funds would be entitled to rely on one of the JT NoAction Letters. ‘‘JT No-Action Letters’’ means SMC Capital, Inc., SEC No-Action Letter (pub. avail. Sept. 5, 1995) and Massachusetts Mutual Life Insurance Company, SEC No-Action Letter (pub. avail. June 7, 2000). 21 ‘‘Disposition’’ means the sale, exchange or other disposition of an interest in a security of an issuer. 22 However, with respect to an issuer, if a Regulated Fund’s first Co-Investment Transaction is an Enhanced Review Disposition, and the Regulated Fund does not dispose of its entire position in the Enhanced Review Disposition, then before such Regulated Fund may complete its first Standard Review Follow-On in such issuer, the Eligible Directors must review the proposed Follow-On Investment not only on a stand-alone basis but also in relation to the total economic exposure in such issuer (i.e., in combination with the portion of the Pre-Boarding Investment not disposed of in the Enhanced Review Disposition), and the other terms of the investments. This additional review would be required because such findings would not have been required in connection with the prior Enhanced Review Disposition, but they would have been required had the first Co-Investment Transaction been an Enhanced Review Follow-On. VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 Condition 6(c) if (i) the Disposition is a Pro Rata Disposition 23 or (ii) the securities are Tradable Securities 24 and the Disposition meets the other requirements of Condition 6(c)(ii). Pro Rata Dispositions and Dispositions of a Tradable Security remain subject to the Board’s periodic review in accordance with Condition 10. D. Delayed Settlement 21. Applicants represent that under the terms and Conditions of the application, all Regulated Funds and Affiliated Funds participating in a CoInvestment Transaction will invest at the same time, for the same price and with the same terms, conditions, class, registration rights and any other rights, so that none of them receives terms more favorable than any other. However, the settlement date for an Affiliated Fund in a Co-Investment Transaction may occur up to ten business days after the settlement date for the Regulated Fund, and vice versa. Nevertheless, in all cases, (i) the date on which the commitment of the Affiliated Funds and Regulated Funds is made will be the same even where the settlement date is not and (ii) the earliest settlement date and the latest settlement date of any Affiliated Fund or Regulated Fund participating in the transaction will occur within ten business days of each other. E. Holders 22. Under Condition 15, if an Adviser, its principals, or any person controlling, controlled by, or under common control with the Adviser or its principals, and 23 A ‘‘Pro Rata Disposition’’ is a Disposition (i) in which the participation of each Affiliated Fund and each Regulated Fund is proportionate to its outstanding investment in the security subject to Disposition immediately preceding the Disposition; and (ii) in the case of a Regulated Fund, a majority of the Board has approved the Regulated Fund’s participation in pro rata Dispositions as being in the best interests of the Regulated Fund. The Regulated Fund’s Board may refuse to approve, or at any time rescind, suspend or qualify, its approval of Pro Rata Dispositions, in which case all subsequent Dispositions will be submitted to the Regulated Fund’s Eligible Directors. 24 ‘‘Tradable Security’’ means a security that meets the following criteria at the time of Disposition: (i) It trades on a national securities exchange or designated offshore securities market as defined in rule 902(b) under the Securities Act; (ii) it is not subject to restrictive agreements with the issuer or other security holders; and (iii) it trades with sufficient volume and liquidity (findings as to which are documented by the Advisers to any Regulated Funds holding investments in the issuer and retained for the life of the Regulated Fund) to allow each Regulated Fund to dispose of its entire position remaining after the proposed Disposition within a short period of time not exceeding 30 days at approximately the value (as defined by section 2(a)(41) of the Act) at which the Regulated Fund has valued the investment. PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 69707 the Affiliated Funds (collectively, the ‘‘Holders’’) own in the aggregate more than 25 percent of the outstanding voting shares of a Regulated Fund (the ‘‘Shares’’), then the Holders will vote such Shares as required under the Condition. Applicants’ Legal Analysis 1. Section 17(d) of the Act and rule 17d–1 under the Act prohibit participation by a registered investment company and an affiliated person in any ‘‘joint enterprise or other joint arrangement or profit-sharing plan,’’ as defined in the rule, without prior approval by the Commission by order upon application. Section 17(d) of the Act and rule 17d–1 under the Act are applicable to Regulated Funds that are registered closed-end investment companies. 2. Similarly, with regard to BDCs, section 57(a)(4) of the Act generally prohibits certain persons specified in section 57(b) from participating in joint transactions with the BDC or a company controlled by the BDC in contravention of rules as prescribed by the Commission. Section 57(i) of the Act provides that, until the Commission prescribes rules under section 57(a)(4), the Commission’s rules under section 17(d) of the Act applicable to registered closed-end investment companies will be deemed to apply to transactions subject to section 57(a)(4). Because the Commission has not adopted any rules under section 57(a)(4), rule 17d–1 also applies to joint transactions with Regulated Funds that are BDCs. 3. Co-Investment Transactions are prohibited by either or both of Rule 17d–1 and Section 57(a)(4) without a prior exemptive order of the Commission to the extent that the Affiliated Funds and the Regulated Funds participating in such transactions fall within the category of persons described by Rule 17d–1 and/or Section 57(b), as applicable, vis-a`-vis each participating Regulated Fund. Each of the participating Regulated Funds and Affiliated Funds may be deemed to be affiliated persons vis-a`-vis a Regulated Fund within the meaning of section 2(a)(3) by reason of common control because (i) an Adviser, that is either AIM or an entity that controls, is controlled by, or under common control with AIM, will be the investment adviser (and sub-adviser, if any) to each of the Regulated Funds and the Affiliated Funds, (ii) AIM is the Adviser to, and may be deemed to control, AIC, (iii) ACM is the Adviser to, and may be deemed to control, AIF and ASFRF, and (iv) each BDC Downstream Fund will be deemed to be controlled by its BDC E:\FR\FM\08DEN1.SGM 08DEN1 jspears on DSK121TN23PROD with NOTICES1 69708 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices parent and/or its BDC parent’s Adviser; and (v) the Advisers are under common control. Thus, each of the Regulated Fund and each Affiliated Fund may be deemed to be a person related to a Regulated Fund and each Affiliated Fund in a manner described by Section 57(b) (or Section 17(d) in the case of Regulated Funds that are registered under the Act) and therefore would be prohibited by Section 57(a)(4) (or Section 17(d) in the case of Regulated Funds that are registered under the Act) and Rule 17d–1 from participating in Co-Investment Transactions without the Order. Further, because the BDC Downstream Funds and Wholly-Owned Investment Subs are controlled by the Regulated Funds, the BDC Downstream Funds and Wholly-Owned Investment Subs are subject to Section 57(a)(4) (or Section 17(d) in the case of WhollyOwned Investment Subs controlled by Regulated Funds that are registered under the Act), and thus also subject to the provisions of Rule 17d–1, and therefore would be prohibited from participating in Co-Investment Transactions without the Order. In addition, because the Apollo Proprietary Accounts will be controlled by an Adviser and, therefore, may be under common control with AIC, AIF, ASFRF and ADS, the Advisers, and any Future Regulated Funds, the Apollo Proprietary Accounts could be deemed to be persons related to the Regulated Funds (or a company controlled by the Regulated Funds) in a manner described by Section 17(d) or 57(b) and also prohibited from participating in the CoInvestment Program. 4. 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. 5. Applicants state that in the absence of the requested relief, in many circumstances the Regulated Funds would be limited in their ability to participate in attractive and appropriate investment opportunities. Applicants state that, as required by Rule 17d–1(b), the Conditions ensure that the terms on which Co-Investment Transactions may be made will be consistent with the participation of the Regulated Funds being on a basis that it is neither different from nor less advantageous than other participants, thus protecting the equity holders of any participant from being disadvantaged. Applicants further state that the Conditions ensure that all Co-Investment Transactions are VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 reasonable and fair to the Regulated Funds and their shareholders and do not involve overreaching by any person concerned, including the Advisers. Applicants state that the Regulated Funds’ participation in the CoInvestment Transactions in accordance with the Conditions will be consistent with the provisions, policies, and purposes of the Act and would be done in a manner that is not different from, or less advantageous than, that of other participants. Applicants’ Conditions Applicants agree that the Order will be subject to the following Conditions: 1. Identification and Referral of Potential Co-Investment Transactions. (a) The Advisers will establish, maintain and implement policies and procedures reasonably designed to ensure that each Adviser is promptly notified of all Potential Co-Investment Transactions that fall within the thencurrent Objectives and Strategies and Board-Established Criteria of any Regulated Fund the Adviser manages. (b) When an Adviser to a Regulated Fund is notified of a Potential CoInvestment Transaction under Condition 1(a), the Adviser will make an independent determination of the appropriateness of the investment for the Regulated Fund in light of the Regulated Fund’s then-current circumstances. 2. Board Approvals of Co-Investment Transactions. (a) If the Adviser deems a Regulated Fund’s participation in any Potential Co-Investment Transaction to be appropriate for the Regulated Fund, it will then determine an appropriate level of investment for the Regulated Fund. (b) If the aggregate amount recommended by the Advisers to be invested in the Potential Co-Investment Transaction by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, the investment opportunity will be allocated among them pro rata based on the size of the Internal Orders, as described in section III.A.1.b. of the application. Each Adviser to a participating Regulated Fund will promptly notify and provide the Eligible Directors with information concerning the Affiliated Funds’ and Regulated Funds’ order sizes to assist the Eligible Directors with their review of the applicable Regulated Fund’s investments for compliance with these Conditions. (c) After making the determinations required in Condition 1(b) above, each Adviser to a participating Regulated PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 Fund will distribute written information concerning the Potential Co-Investment Transaction (including the amount proposed to be invested by each participating Regulated Fund and each participating Affiliated Fund) to the Eligible Directors of its participating Regulated Fund(s) for their consideration. A Regulated Fund will enter into a Co-Investment Transaction with one or more other Regulated Funds or Affiliated Funds only if, prior to the Regulated Fund’s participation in the Potential Co-Investment Transaction, a Required Majority concludes that: (i) The terms of the transaction, including the consideration to be paid, are reasonable and fair to the Regulated Fund and its equity holders and do not involve overreaching in respect of the Regulated Fund or its equity holders on the part of any person concerned; (ii) the transaction is consistent with: (A) The interests of the Regulated Fund’s equity holders; and (B) the Regulated Fund’s then-current Objectives and Strategies; (iii) the investment by any other Regulated Fund(s) or Affiliated Fund(s) 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(s) or Affiliated Fund(s) participating in the transaction; provided that the Required Majority shall not be prohibited from reaching the conclusions required by this Condition 2(c)(iii) if: (A) The settlement date for another Regulated Fund or an Affiliated Fund in a Co-Investment Transaction is later than the settlement date for the Regulated Fund by no more than ten business days or earlier than the settlement date for the Regulated Fund by no more than ten business days, in either case, so long as: (x) The date on which the commitment of the Affiliated Funds and Regulated Funds is made is the same; and (y) the earliest settlement date and the latest settlement date of any Affiliated Fund or Regulated Fund participating in the transaction will occur within ten business days of each other; or (B) 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, the right to have a board observer or any similar right to participate in the governance or management of the portfolio company so long as: (x) The Eligible Directors will have the right to ratify the selection of such director or board observer, if any; (y) the Adviser agrees to, and does, E:\FR\FM\08DEN1.SGM 08DEN1 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices 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 (z) any fees or other compensation that any other Regulated Fund or Affiliated Fund or any affiliated person of any other Regulated Fund or Affiliated Fund receives in connection with the right of one or more Regulated Funds or Affiliated Funds 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 any participating Affiliated Funds (who may, in turn, share their portion with their affiliated persons) and any participating Regulated Fund(s) in accordance with the amount of each such party’s investment; and (iv) the proposed investment by the Regulated Fund will not involve compensation, remuneration or a direct or indirect 25 financial benefit to the Advisers, any other Regulated Fund, the Affiliated 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 14, (B) to the extent permitted by Section 17(e) or 57(k), 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)(B)(z). 3. Right to Decline. Each Regulated Fund has the right to decline to participate in any Potential CoInvestment Transaction or to invest less than the amount proposed. 4. General Limitation. Except for Follow-On Investments made in accordance with Conditions 8 and 9 below,26 a Regulated Fund will not invest in reliance on the Order in any issuer in which a Related Party has an investment.27 jspears on DSK121TN23PROD with NOTICES1 25 For example, procuring the Regulated Fund’s investment in a Potential Co-Investment Transaction to permit an affiliate to complete or obtain better terms in a separate transaction would constitute an indirect financial benefit. 26 This exception applies only to Follow-On Investments by a Regulated Fund in issuers in which that Regulated Fund already holds investments. 27 ‘‘Related Party’’ means (i) any Close Affiliate and (ii) in respect of matters as to which any Adviser has knowledge, any Remote Affiliate. ‘‘Close Affiliate’’ means the Advisers, the Regulated Funds, the Affiliated Funds and any other person described in Section 57(b) (after giving effect to VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 5. Same Terms and Conditions. A Regulated Fund will not participate in any Potential Co-Investment Transaction unless (i) the terms, conditions, price, class of securities to be purchased, date on which the commitment is entered into and registration rights (if any) will be the same for each participating Regulated Fund and Affiliated Fund and (ii) the earliest settlement date and the latest settlement date of any participating Regulated Fund or Affiliated Fund will occur as close in time as practicable and in no event more than ten business days apart. The grant to one or more Regulated Funds or Affiliated Funds, but not the respective 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 5, if Condition 2(c)(iii)(B) is met. 6. Standard Review Dispositions. (a) General. If any Regulated Fund or Affiliated Fund elects to sell, exchange or otherwise dispose of an interest in a security and one or more Regulated Funds and Affiliated Funds have previously participated in a CoInvestment Transaction with respect to the issuer, then: (i) The Adviser to such Regulated Fund or Affiliated Fund 28 will notify each Regulated Fund that holds an investment in the issuer of the proposed Disposition at the earliest practical time; and (ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to participation by such Regulated Fund in the Disposition. (b) Same Terms and Conditions. Each Regulated Fund will have the right to participate in such Disposition on a proportionate basis, at the same price and on the same terms and conditions as those applicable to the Affiliated Funds and any other Regulated Fund. Rule 57b–1) in respect of any Regulated Fund (treating any registered investment company or series thereof as a BDC for this purpose) except for limited partners included solely by reason of the reference in Section 57(b) to Section 2(a)(3)(D). ‘‘Remote Affiliate’’ means any person described in Section 57(e) in respect of any Regulated Fund (treating any registered investment company or series thereof as a BDC for this purpose) and any limited partner holding 5% or more of the relevant limited partner interests that would be a Close Affiliate but for the exclusion in that definition. 28 Any Apollo Proprietary Account that is not advised by an Adviser is itself deemed to be an Adviser for purposes of Conditions 6(a)(i), 7(a)(i), 8(a)(i) and 9(a)(i). PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 69709 (c) No Board Approval Required. A Regulated Fund may participate in such a Disposition without obtaining prior approval of the Required Majority if: (i) (A) The participation of each Regulated Fund and Affiliated Fund in such Disposition is proportionate to its then-current holding of the security (or securities) of the issuer that is (or are) the subject of the Disposition 29; (B) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in such Dispositions on a pro rata basis (as described in greater detail in the application); and (C) the Board of the Regulated Fund is provided on a quarterly basis with a list of all Dispositions made in accordance with this Condition; or (ii) each security is a Tradable Security and (A) the Disposition is not to the issuer or any affiliated person of the issuer; and (B) the security is sold for cash in a transaction in which the only term negotiated by or on behalf of the participating Regulated Funds and Affiliated Funds is price. (d) Standard Board Approval. In all other cases, the Adviser will provide its written recommendation as to the Regulated Fund’s participation to the Eligible Directors and the Regulated Fund will participate in such Disposition solely to the extent that a Required Majority determines that it is in the Regulated Fund’s best interests. 7. Enhanced Review Dispositions. (a) General. If any Regulated Fund or Affiliated Fund elects to sell, exchange or otherwise dispose of a Pre-Boarding Investment in a Potential Co-Investment Transaction and the Regulated Funds and Affiliated Funds have not previously participated in a CoInvestment Transaction with respect to the issuer: (i) The Adviser to such Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds an investment in the issuer of the proposed Disposition at the earliest practical time; (ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to participation by such Regulated Fund in the Disposition; and (iii) the Advisers will provide to the Board of each Regulated Fund that holds an investment in the issuer all information relating to the existing investments in the issuer of the Regulated Funds and Affiliated Funds, including the terms of such investments 29 In the case of any Disposition, proportionality will be measured by each participating Regulated Fund’s and Affiliated Fund’s outstanding investment in the security in question immediately preceding the Disposition. E:\FR\FM\08DEN1.SGM 08DEN1 69710 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices jspears on DSK121TN23PROD with NOTICES1 and how they were made, that is necessary for the Required Majority to make the findings required by this Condition. (b) Enhanced Board Approval. The Adviser will provide its written recommendation as to the Regulated Fund’s participation to the Eligible Directors, and the Regulated Fund will participate in such Disposition solely to the extent that a Required Majority determines that: (i) The Disposition complies with Conditions 2(c)(i), (ii), (iii)(A), and (iv). (ii) the making and holding of the PreBoarding Investments were not prohibited by Section 57 or Rule 17d– 1, as applicable, and records the basis for the finding in the Board minutes. (c) Additional Requirements. The Disposition may only be completed in reliance on the Order if: (i) Same Terms and Conditions. Each Regulated Fund has the right to participate in such Disposition on a proportionate basis, at the same price and on the same terms and conditions as those applicable to the Affiliated Funds and any other Regulated Fund; (ii) Original Investments. All of the Affiliated Funds’ and Regulated Funds’ investments in the issuer are PreBoarding Investments; (iii) Advice of counsel. Independent counsel to the Board advises that the making and holding of the investments in the Pre-Boarding Investments were not prohibited by Section 57 (as modified by Rule 57b–1) or Rule 17d– 1, as applicable; (iv) Multiple Classes of Securities. All Regulated Funds and Affiliated Funds that hold Pre-Boarding Investments in the issuer immediately before the time of completion of the Co-Investment Transaction hold the same security or securities of the issuer. For the purpose of determining whether the Regulated Funds and Affiliated Funds hold the same security or securities, they may disregard any security held by some but not all of them if, prior to relying on the Order, the Required Majority is presented with all information necessary to make a finding, and finds, that: (x) Any Regulated Fund’s or Affiliated Fund’s holding of a different class of securities (including for this purpose a security with a different maturity date) is immaterial 30 in 30 In determining whether a holding is ‘‘immaterial’’ for purposes of the Order, the Required Majority will consider whether the nature and extent of the interest in the transaction or arrangement is sufficiently small that a reasonable person would not believe that the interest affected the determination of whether to enter into the transaction or arrangement or the terms of the transaction or arrangement. VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 amount, including immaterial relative to the size of the issuer; and (y) the Board records the basis for any such finding in its minutes. In addition, securities that differ only in respect of issuance date, currency, or denominations may be treated as the same security; and (v) No control. The Affiliated Funds, the other Regulated Funds and their affiliated persons (within the meaning of Section 2(a)(3)(C) of the Act), individually or in the aggregate, do not control the issuer of the securities (within the meaning of Section 2(a)(9) of the Act). 8. Standard Review Follow-Ons. (a) General. If any Regulated Fund or Affiliated Fund desires to make a Follow-On Investment in an issuer and the Regulated Funds and Affiliated Funds holding investments in the issuer previously participated in a CoInvestment Transaction with respect to the issuer: (i) The Adviser to each such Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds securities of the portfolio company of the proposed transaction at the earliest practical time; and (ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to the proposed participation, including the amount of the proposed investment, by such Regulated Fund. (b) No Board Approval Required. A Regulated Fund may participate in the Follow-On Investment without obtaining prior approval of the Required Majority if: (i) (A) The proposed participation of each Regulated Fund and each Affiliated Fund in such investment is proportionate to its outstanding investments in the issuer or the security at issue, as appropriate,31 immediately preceding the Follow-On Investment; and (B) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in Follow-On Investments on a pro rata basis (as 31 To the extent that a Follow-On Investment opportunity is in a security or arises in respect of a security held by the participating Regulated Funds and Affiliated Funds, proportionality will be measured by each participating Regulated Fund’s and Affiliated Fund’s outstanding investment in the security in question immediately preceding the Follow-On Investment using the most recent available valuation thereof. To the extent that a Follow-On Investment opportunity relates to an opportunity to invest in a security that is not in respect of any security held by any of the participating Regulated Funds or Affiliated Funds, proportionality will be measured by each participating Regulated Fund’s and Affiliated Fund’s outstanding investment in the issuer immediately preceding the Follow-On Investment using the most recent available valuation thereof. PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 described in greater detail in the application); or (ii) it is a Non-Negotiated Follow-On Investment. (c) Standard Board Approval. In all other cases, the Adviser will provide its written recommendation as to the Regulated Fund’s participation to the Eligible Directors and the Regulated Fund will participate in such Follow-On Investment solely to the extent that a Required Majority makes the determinations set forth in Condition 2(c). If the only previous Co-Investment Transaction with respect to the issuer was an Enhanced Review Disposition the Eligible Directors must complete this review of the proposed Follow-On Investment both on a stand-alone basis and together with the Pre-Boarding Investments in relation to the total economic exposure and other terms of the investment. (d) Allocation. If, with respect to any such Follow-On Investment: (i) The amount of the opportunity proposed to be made available to any Regulated Fund is not based on the Regulated Funds’ and the Affiliated Funds’ outstanding investments in the issuer or the security at issue, as appropriate, immediately preceding the Follow-On Investment; and (ii) the aggregate amount recommended by the Advisers to be invested in the Follow-On Investment by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, then the Follow-On Investment opportunity will be allocated among them pro rata based on the size of the Internal Orders, as described in section III.A.1.b. of the application. (e) Other Conditions. The acquisition of Follow-On Investments as permitted by this Condition will be considered a Co-Investment Transaction for all purposes and subject to the other Conditions set forth in the application. 9. Enhanced Review Follow-Ons. (a) General. If any Regulated Fund or Affiliated Fund desires to make a Follow-On Investment in an issuer that is a Potential Co-Investment Transaction and the Regulated Funds and Affiliated Funds holding investments in the issuer have not previously participated in a Co-Investment Transaction with respect to the issuer: (i) The Adviser to each such Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds securities of the portfolio company of the proposed transaction at the earliest practical time; (ii) the Adviser to each Regulated Fund that holds an investment in the E:\FR\FM\08DEN1.SGM 08DEN1 jspears on DSK121TN23PROD with NOTICES1 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices issuer will formulate a recommendation as to the proposed participation, including the amount of the proposed investment, by such Regulated Fund; and (iii) the Advisers will provide to the Board of each Regulated Fund that holds an investment in the issuer all information relating to the existing investments in the issuer of the Regulated Funds and Affiliated Funds, including the terms of such investments and how they were made, that is necessary for the Required Majority to make the findings required by this Condition. (b) Enhanced Board Approval. The Adviser will provide its written recommendation as to the Regulated Fund’s participation to the Eligible Directors, and the Regulated Fund will participate in such Follow-On Investment solely to the extent that a Required Majority reviews the proposed Follow-On Investment both on a standalone basis and together with the PreBoarding Investments in relation to the total economic exposure and other terms and makes the determinations set forth in Condition 2(c). In addition, the Follow-On Investment may only be completed in reliance on the Order if the Required Majority of each participating Regulated Fund determines that the making and holding of the Pre-Boarding Investments were not prohibited by Section 57 (as modified by Rule 57b–1) or Rule 17d– 1, as applicable. The basis for the Board’s findings will be recorded in its minutes. (c) Additional Requirements. The Follow-On Investment may only be completed in reliance on the Order if: (i) Original Investments. All of the Affiliated Funds’ and Regulated Funds’ investments in the issuer are PreBoarding Investments; (ii) Advice of counsel. Independent counsel to the Board advises that the making and holding of the investments in the Pre-Boarding Investments were not prohibited by Section 57 (as modified by Rule 57b–1) or Rule 17d– 1, as applicable; (iii) Multiple Classes of Securities. All Regulated Funds and Affiliated Funds that hold Pre-Boarding Investments in the issuer immediately before the time of completion of the Co-Investment Transaction hold the same security or securities of the issuer. For the purpose of determining whether the Regulated Funds and Affiliated Funds hold the same security or securities, they may disregard any security held by some but not all of them if, prior to relying on the Order, the Required Majority is presented with all information VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 necessary to make a finding, and finds, that: (x) Any Regulated Fund’s or Affiliated Fund’s holding of a different class of securities (including for this purpose a security with a different maturity date) is immaterial in amount, including immaterial relative to the size of the issuer; and (y) the Board records the basis for any such finding in its minutes. In addition, securities that differ only in respect of issuance date, currency, or denominations may be treated as the same security; and (iv) No control. The Affiliated Funds, the other Regulated Funds and their affiliated persons (within the meaning of Section 2(a)(3)(C) of the Act), individually or in the aggregate, do not control the issuer of the securities (within the meaning of Section 2(a)(9) of the Act). (d) Allocation. If, with respect to any such Follow-On Investment: (i) The amount of the opportunity proposed to be made available to any Regulated Fund is not based on the Regulated Funds’ and the Affiliated Funds’ outstanding investments in the issuer or the security at issue, as appropriate, immediately preceding the Follow-On Investment; and (ii) the aggregate amount recommended by the Advisers to be invested in the Follow-On Investment by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, then the Follow-On Investment opportunity will be allocated among them pro rata based on the size of the Internal Orders, as described in section III.A.1.b. of the application. (e) Other Conditions. The acquisition of Follow-On Investments as permitted by this Condition will be considered a Co-Investment Transaction for all purposes and subject to the other Conditions set forth in the application. 10. Board Reporting, Compliance and Annual Re-Approval. (a) Each Adviser to a Regulated Fund will present to the Board of each Regulated Fund, on a quarterly basis, and at such other times as the Board may request, (i) a record of all investments in Potential Co-Investment Transactions made by any of the other Regulated Funds or any of the Affiliated Funds during the preceding quarter that fell within the Regulated Fund’s thencurrent Objectives and Strategies and Board-Established Criteria that were not made available to the Regulated Fund, and an explanation of why such investment opportunities were not made available to the Regulated Fund; (ii) a record of all Follow-On Investments in and Dispositions of investments in any PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 69711 issuer in which the Regulated Fund holds any investments by any Affiliated Fund or other Regulated Fund during the prior quarter; and (iii) all information concerning Potential CoInvestment Transactions and CoInvestment Transactions, including investments made by other Regulated Funds or Affiliated Funds that the Regulated Fund considered but declined to participate in, so that the Independent Directors, may determine whether all Potential Co-Investment Transactions and Co-Investment Transactions during the preceding quarter, including those investments that the Regulated Fund considered but declined to participate in, comply with the Conditions. (b) All information presented to the Regulated Fund’s 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. (c) 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. In the case of a BDC Downstream Fund that does not have a chief compliance officer, the chief compliance officer of the BDC that controls the BDC Downstream Fund will prepare the report for the relevant Independent Party. (d) The Independent Directors (including the non-interested members of each Independent Party) will consider at least annually whether continued participation in new and existing Co-Investment Transactions is in the Regulated Fund’s best interests. 11. Record Keeping. 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). 12. Director Independence. No Independent Director (including the non-interested members of any Independent Party) of a Regulated Fund will also be a director, general partner, managing member or principal, or otherwise be an ‘‘affiliated person’’ (as defined in the Act) of any Affiliated Fund. 13. Expenses. The expenses, if any, associated with acquiring, holding or disposing of any securities acquired in a Co-Investment Transaction (including, E:\FR\FM\08DEN1.SGM 08DEN1 jspears on DSK121TN23PROD with NOTICES1 69712 Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Notices without limitation, the expenses of the distribution of any such securities registered for sale under the Securities Act) will, to the extent not payable by the Advisers under their respective advisory agreements with the Regulated Funds and the Affiliated Funds, be shared by the Regulated Funds and the participating Affiliated Funds in proportion to the relative amounts of the securities held or being acquired or disposed of, as the case may be. 14. Transaction Fees.32 Any transaction fee (including break-up, structuring, monitoring or commitment fees but excluding brokerage or underwriting compensation permitted by Section 17(e) or 57(k)) received in connection with any Co-Investment Transaction will be distributed to the participants 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), and the account will earn a competitive rate of interest that will also be divided pro rata among the participants. None of the Advisers, the Affiliated Funds, the other Regulated Funds or any affiliated person of the Affiliated Funds or the Regulated Funds will receive any additional compensation or remuneration of any kind as a result of or in connection with a Co-Investment Transaction other than (i) 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)(B)(z), (ii) brokerage or underwriting compensation permitted by Section 17(e) or 57(k) or (iii) in the case of the Advisers, investment advisory compensation paid in accordance with investment advisory agreements between the applicable Regulated Fund(s) or Affiliated Fund(s) and its Adviser. 15. Independence. 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 32 Applicants are not requesting and the Commission is not providing any relief for transaction fees received in connection with any Co-Investment Transaction. VerDate Sep<11>2014 16:53 Dec 07, 2021 Jkt 256001 applicable State law affecting the Board’s composition, size or manner of election. For the Commission, by the Division of Investment Management, under delegated authority. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–26597 Filed 12–7–21; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF TRANSPORTATION Federal Transit Administration [FTA Docket No. FTA 2021–0018] Agency Information Collection Activity Under OMB Review AGENCY: Federal Transit Administration, DOT. ACTION: Notice of request for comments. In accordance with the Paperwork Reduction Act of 1995, this notice announces the intention of the Federal Transit Administration (FTA) to request the Office of Management and Budget (OMB) to approve the extension of a currently approved information collection: Job Access and Reverse Commute Program. DATES: Comments must be submitted before February 7, 2022. ADDRESSES: To ensure that your comments are not entered more than once into the docket, submit comments identified by the docket number by only one of the following methods: 1. Website: www.regulations.gov. Follow the instructions for submitting comments on the U.S. Government electronic docket site. (Note: The U.S. Department of Transportation’s (DOT’s) electronic docket is no longer accepting electronic comments.) All electronic submissions must be made to the U.S. Government electronic docket site at www.regulations.gov. Commenters should follow the directions below for mailed and hand-delivered comments. 2. Fax: 202–366–7951. 3. Mail: U.S. Department of Transportation, 1200 New Jersey Avenue SE, Docket Operations, M–30, West Building, Ground Floor, Room W12–140, Washington, DC 20590–0001. 4. Hand Delivery: U.S. Department of Transportation, 1200 New Jersey Avenue SE, Docket Operations, M–30, West Building, Ground Floor, Room W12–140, Washington, DC 20590–0001 between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. Instructions: You must include the agency name and docket number for this SUMMARY: PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 notice at the beginning of your comments. Submit two copies of your comments if you submit them by mail. For confirmation that FTA has received your comments, include a selfaddressed stamped postcard. Note that all comments received, including any personal information, will be posted and will be available to internet users, without change, to www.regulations.gov. You may review DOT’s complete Privacy Act Statement in the Federal Register published April 11, 2000, (65 FR 19477), or you may visit www.regulations.gov. Docket: For access to the docket to read background documents and comments received, go to www.regulations.gov at any time. Background documents and comments received may also be viewed at the U.S. Department of Transportation, 1200 New Jersey Avenue SE, Docket Operations, M–30, West Building, Ground Floor, Room W12–140, Washington, DC 20590–0001 between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. FOR FURTHER INFORMATION CONTACT: Elan Flippin (202) 366–3800 or email: Elan.Fliipin@dot.gov. SUPPLEMENTARY INFORMATION: Interested parties are invited to send comments regarding any aspect of this information collection, including: (1) The necessity and utility of the information collection for the proper performance of the functions of the FTA; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the collected information; and (4) ways to minimize the collection burden without reducing the quality of the collected information. Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection. Title: Job Access and Reverse Commute Program (OMB Number: 2132–0563). Background: The Job Access and Reverse Commute (JARC) program, provided grants for filling gaps in employment transportation. The primary beneficiaries of this program were low-income families and families coming off welfare assistance who otherwise would have a difficult time getting to jobs and related services, such as child care and training. The program was begun in 1999 and was continued under Section 5316 of the federal transportation legislation, Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA–LU), passed by Congress in 2005. The JARC program authorized two kinds of grants: Job E:\FR\FM\08DEN1.SGM 08DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 233 (Wednesday, December 8, 2021)]
[Notices]
[Pages 69703-69712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26597]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34432; File No. 812-15015]


Apollo Investment Corporation, et al.

December 3, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION:  Notice.

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    Notice of application for an order under sections 17(d) and 57(i) 
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1 
under the Act to permit certain joint transactions otherwise prohibited 
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
    Summary of Application: Applicants request an order to permit 
certain business development companies (``BDCs'') and closed-end 
management investment companies to co-invest in portfolio companies 
with each other and with certain affiliated investment funds and 
accounts.
    Applicants: Apollo Investment Corporation (``AIC''), Apollo 
Tactical Income Fund Inc. (``AIF''), Apollo Debt Solutions BDC 
(``ADS''), Apollo Investment Management, L.P. (``AIM''), Apollo Credit 
Management, LLC (``ACM''), Apollo Senior Floating Rate Fund Inc. 
(``ASFRF''), Merx Aviation Finance, LLC (``Merx''), Athene Holding Ltd. 
(``Athene''), MidCap FinCo Holdings Limited (``MidCap''), the Existing 
Affiliated Funds set forth on Appendix A to the application, and the 
investment advisers to the Existing Affiliated Funds set forth on 
Appendix A to the application (the ``Existing Advisers to Affiliated 
Funds''; together with AIC, AIF, AIM, ACM, ASFRF,

[[Page 69704]]

ADS, Merx and the Existing Affiliated Funds, the ``Applicants'').
    Filing Dates: The application was filed on April 1, 2019, and 
amended on August 15, 2019, January 2, 2020, January 28, 2021, October 
19, 2021 and November 24, 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 28, 2021, and should be 
accompanied by proof of service on the applicants, in the form of an 
affidavit, or, for lawyers, a certificate of service. Pursuant to rule 
0-5 under the Act, hearing requests should state the nature of the 
writer's interest, any facts bearing upon the desirability of a hearing 
on the matter, the reason for the request, and the issues contested. 
Persons who wish to be notified of a hearing may request notification 
by emailing the Commission's Secretary at [email protected].

ADDRESSES: The Commission: [email protected]. Applicants: 
[email protected].

FOR FURTHER INFORMATION CONTACT:  Asen Parachkevov, Senior Counsel, at 
(202) 551-6908 or Trace Rakestraw, Branch Chief, at (202) 551-6825 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION:  The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website by searching for the file number, or for an 
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Introduction

    1. The Applicants request an order of the Commission under Sections 
17(d) and 57(i) and Rule 17d-1 thereunder (the ``Order'') to permit, 
subject to the terms and conditions set forth in the application (the 
``Conditions''), a Regulated Fund \1\ and one or more other Regulated 
Funds and/or one or more Affiliated Funds \2\ to enter into Co-
Investment Transactions with each other. ``Co-Investment Transaction'' 
means any transaction in which a Regulated Fund (or its Wholly-Owned 
Investment Sub (as defined below)) participated together with one or 
more Affiliated Funds and/or one or more other Regulated Funds in 
reliance on the Order. ``Potential Co-Investment Transaction'' means 
any investment opportunity in which a Regulated Fund (or its Wholly-
Owned Investment Sub) could not participate together with one or more 
Affiliated Funds and/or one or more other Regulated Funds without 
obtaining and relying on the Order.\3\
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    \1\ ``Regulated Funds'' means AIC, ASFRF, AIF, ADS the Future 
Regulated Funds and the BDC Downstream Funds (defined below). 
``Future Regulated Fund'' means a closed-end management investment 
company (a) that is registered under the Act or has elected to be 
regulated as a BDC, (b) whose investment adviser (and sub-adviser, 
if any) is an Adviser, and (c) that intends to participate in the 
Co-Investment Program. ``Adviser'' means AIM, ACM and the Existing 
Advisers to Affiliated Funds (identified in Appendix A to the 
application) and any Future Adviser. ``Future Adviser'' means any 
future investment adviser that (i) controls, is controlled by, or is 
under common control with AGM, (ii) (a) is registered as an 
investment adviser under the Investment Advisers Act of 1940 
(``Advisers Act'') or (b) is a relying adviser of an investment 
adviser that is registered under the Advisers Act and that controls, 
is controlled by, or is under common control with, AGM and (iii) is 
not a Regulated Fund or a subsidiary of a Regulated Fund. ``Co-
Investment Program'' means the proposed co-investment program that 
would permit one or more Regulated Funds and/or one or more 
Affiliated Funds to participate in the same investment opportunities 
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 negotiates terms in addition to price; and (b) 
making Follow-On Investments (as defined below). The term ``private 
placement transactions'' means transactions in which the offer and 
sale of securities by the issuer are exempt from registration under 
the Securities Act of 1933 (the ``Securities Act'').
    \2\ ``Affiliated Fund'' means any Existing Affiliated Fund 
(identified in Appendix A to the application), any Apollo 
Proprietary Account (defined below) or any entity (a) whose 
investment adviser (and sub-adviser(s), if any) is an Adviser, (b) 
that either (x) would be an investment company but for Section 
3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act or (y) relies on Rule 3a-7 
of the Act, (c) that is not a BDC Downstream Fund and (d) that 
intends to participate in the Co-Investment Program. Applicants 
represent that no Existing Affiliated Fund is a BDC Downstream Fund. 
``BDC Downstream Fund'' means either (a) with respect to AIC, Merx 
or (b) with respect to any Regulated Fund that is a BDC, an entity 
(i) that the BDC directly or indirectly controls, (ii) that is not 
controlled by any person other than the BDC (except a person that 
indirectly controls the entity solely because it controls the BDC), 
(iii) that would be an investment company but for Section 3(c)(1) or 
3(c)(7) of the Act, (iv) whose investment adviser (and sub-adviser, 
if any) is an Adviser, (v) that is not a Wholly-Owned Investment Sub 
and (vi) that intends to participate in the Co-Investment Program.
    \3\ All existing entities that currently intend to rely on the 
Order have been named as Applicants and any existing or future 
entities that may rely on the Order in the future will comply with 
its terms and Conditions set forth in the application.
---------------------------------------------------------------------------

    2. The Order sought by the applicants would supersede a prior order 
\4\ (``Prior Order'') with the result that no person will continue to 
rely on the Prior Order if the Order is granted.
---------------------------------------------------------------------------

    \4\ Apollo Investment Corp., et al., (File No. 812-13754) 
Release No. IC-32057 (order) (March 29, 2016), Release No. IC-32019 
(notice) (March 2, 2016).
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Applicants

    3. AIC is a closed-end management investment company incorporated 
in Maryland that has elected to be regulated as a business development 
company (``BDC'') under the Act.\5\ AIC's Board \6\ currently consists 
of eight members, five of whom are Independent Directors.\7\ ASFRF and 
AIF are Maryland corporations that are registered as closed-end 
management investment companies. Each of ASFRF's and AIF's Board 
currently consists of six members, five of whom are Independent 
Directors. ADS is a closed-end management investment company organized 
as a Delaware statutory trust that has elected to be regulated as a BDC 
under the Act. ADS' Board currently consists of five members, four of 
whom are Independent Directors.
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    \5\ 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 Section 55(a)(1) through 
55(a)(3) and makes available significant managerial assistance with 
respect to the issuers of such securities.
    \6\ ``Board'' means (i) with respect to a Regulated Fund other 
than a BDC Downstream Fund, the board of directors (or the 
equivalent) of the Regulated Fund and (ii) with respect to a BDC 
Downstream Fund, the Independent Party of the BDC Downstream Fund. 
``Independent Party'' means, with respect to a BDC Downstream Fund, 
(i) if the BDC Downstream Fund has a board of directors (or the 
equivalent), the board or (ii) if the BDC Downstream Fund does not 
have a board of directors (or the equivalent), a transaction 
committee or advisory committee of the BDC Downstream Fund.
    \7\ ``Independent Director'' means a member of the Board of any 
relevant entity who is not an ``interested person'' as defined in 
Section 2(a)(19) of the Act. No Independent Director of a Regulated 
Fund (including any non-interested member of an Independent Party) 
will have a financial interest in any Co-Investment Transaction, 
other than indirectly through share ownership in one of the 
Regulated Funds.
---------------------------------------------------------------------------

    4. AIM, a Delaware limited partnership that is registered under the 
Advisers Act, serves as the investment adviser to AIC. ACM, a Delaware 
limited liability company that is registered as an investment adviser 
under the Advisers Act, serves as investment adviser to ASFRF, ADS and 
AIF.
    5. Merx, a Delaware limited liability company, is a special purpose 
vehicle owned by AIC. AIM serves as Merx's investment adviser. 
Applicants state that Merx engages primarily in aircraft leasing and 
related businesses and is thus excluded from investment company status 
under Section 3(a). Merx is a BDC Downstream Fund. If Applicants 
receive the requested Order, Merx may on occasion engage in Co-

[[Page 69705]]

Investment Transactions with other Regulated Funds and with Affiliated 
Funds.\8\
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    \8\ Applicants believe that allowing the other Regulated Funds 
and the Affiliated Funds to co-invest with Merx does not raise any 
legal or policy concerns that are not otherwise raised by allowing a 
Regulated Fund to co-invest with another Regulated Fund and/or one 
or more Affiliated Funds because, in terms of its operation and 
purpose, Merx differs from a private fund only in that it invests in 
and operates aircraft subject to leases instead of in investment 
securities.
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    6. Any Adviser, and any direct or indirect, wholly- or majority-
owned subsidiary of an Adviser, may hold various financial assets in a 
principal capacity (the ``Apollo Proprietary Accounts'').
    7. The Existing Affiliated Funds are the investment funds 
identified in Appendix A to the application. Applicants represent that 
each Existing Affiliated Fund is a separate and distinct legal entity 
and each, other than Athene and MidCap, would be an investment company 
but for Section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act. Applicants 
state that Athene Holding does not come within the definition of 
investment company in Section 3(a)(1). As described in the application, 
Applicants state that Athene engages in the insurance business through 
wholly-owned subsidiary insurance companies which are excluded from 
investment company status by either Rule 3a-6 or Section 3(c)(3). 
Applicants state that Athene also invests through its affiliate MidCap, 
which currently is excluded from investment company status by Section 
3(b)(1), 3(c)(5) or 3(c)(6).\9\ As with the other Affiliated Funds, 
each of Athene and MidCap is advised by an Adviser pursuant to a 
separate investment management agreement.
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    \9\ Applicants state that, although Athene and MidCap may not 
rely on section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act, as do the 
other Existing Affiliated Funds, Applicants do not believe that 
allowing Athene and MidCap to participate in Co-investment 
Transactions as Affiliated Funds raises any additional legal or 
policy concerns not otherwise raised by allowing a Regulated Fund to 
co-invest with one or more Affiliated Funds. Specifically, 
Applicants argue that Athene and MidCap are clients of Advisers the 
same way that an Affiliated Fund relying on Section 3(c)(1) or 
3(c)(7) is a client of an Adviser. Although a relatively small 
portion of Athene's assets are managed by an investment adviser that 
is not an Adviser, only the portion of Athene's assets for which an 
Adviser has investment discretion will participate in Co-investment 
Transactions. Athene and MidCap may continue to be an Affiliated 
Fund in the future if it instead relies solely on Section 3(c)(1), 
3(c)(5)(C) or 3(c)(7) and otherwise satisfies the criteria for an 
``Affiliated Fund'' set out in the definition thereof.
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    8. The Existing Advisers to Affiliated Funds, identified in 
Appendix A to the application, are the investment advisers to the 
Existing Affiliated Funds. Each of the Existing Advisers to Affiliated 
Funds is registered as an investment adviser under the Advisers Act.
    9. Each of the Applicants may be deemed to be controlled by AGM. 
AGM owns controlling interests in the Advisers and, thus, may be deemed 
to control the Regulated Funds and the Affiliated Funds. Applicants 
state that AGM 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, AGM has not been 
included as an Applicant.
    10. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly-Owned Investment Subs.\10\ Such a subsidiary 
may be prohibited from investing in a Co-Investment Transaction with a 
Regulated Fund (other than its parent) or any Affiliated 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 the Regulated Fund that owns it and 
that the Wholly-Owned Investment Sub's participation in any such 
transaction be treated, for purposes of the Order, as though the parent 
Regulated Fund were participating directly.
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    \10\ ``Wholly-Owned Investment Sub'' means an entity (i) that is 
a wholly-owned subsidiary of a Regulated Fund (with such Regulated 
Fund at all times holding, beneficially and of record, directly or 
indirectly, 95% or more of the voting and economic interests); (ii) 
whose sole business purpose is to hold one or more investments on 
behalf of such Regulated Fund (and in the case of an SBIC 
Subsidiary, maintain a license under the Small Business Investment 
Act of 1958 (``SBA Act'') and issue debentures guaranteed by the 
Small Business Administration (``SBA'')); (iii) with respect to 
which such Regulated Fund's Board has the sole authority to make all 
determinations with respect to the entity's participation under the 
Conditions; and (iv) that (A) would be an investment company but for 
Section 3(c)(1), 3(c)(5)(C), or 3(c)(7) of the Act, or (B) that 
qualifies as a real estate investment trust within the meaning of 
Section 856 of the Internal Revenue Code because substantially all 
of its assets would consist of real properties. ``SBIC Subsidiary'' 
means a Wholly-Owned Investment Sub that is licensed by the SBA to 
operate under the SBA Act as a small business investment company.
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Applicants' Representations

A. Allocation Process

    11. Applicants represent that they have established processes 
ensuring compliance with the Prior Order and for allocating initial 
investment opportunities, opportunities for subsequent investments in 
an issuer and dispositions of securities holdings reasonably designed 
to treat all clients fairly and equitably. Further, Applicants 
represent that these processes will be extended and modified in a 
manner reasonably designed to ensure that the additional transactions 
permitted under the Order will both (i) be fair and equitable to the 
Regulated Funds and the Affiliated Funds and (ii) comply with the 
Conditions.
    12. Specifically, applicants state that the Advisers are organized 
and managed such that the individual portfolio managers, as well as the 
teams and committees of portfolio managers, analysts and senior 
management (``Investment Teams'' and ``Investment Committees''), 
responsible for evaluating investment opportunities and making 
investment decisions on behalf of clients are promptly notified of the 
opportunities. Under the Prior Order, the Advisers established and 
implemented policies and procedures reasonably designed to ensure that, 
when such opportunities arise, the Advisers to the relevant Regulated 
Funds are promptly notified and receive the same information about the 
opportunity as any other Advisers considering the opportunity for their 
clients. If the requested Order is granted, such policies and 
procedures will be amended to reflect the terms of the requested Order. 
In particular, consistent with Condition 1, if a Potential Co-
Investment Transaction falls within the then-current Objectives and 
Strategies \11\ and any Board-Established Criteria \12\ of a Regulated

[[Page 69706]]

Fund, the policies and procedures will require that the relevant 
portfolio managers, Investment Teams and Investment Committees 
responsible for that Regulated Fund receive sufficient information to 
allow the Regulated Fund's Adviser to make its independent 
determination and recommendations under the Conditions.
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    \11\ ``Objectives and Strategies'' means (i) with respect to any 
Regulated Fund other than a BDC Downstream Fund, its investment 
objectives and strategies, as described in its most current 
registration statement on Form N-2, other current filings with the 
Commission under the Securities Act or under the Securities Exchange 
Act of 1934, as amended, and its most current report to 
stockholders, and (ii) with respect to any BDC Downstream Fund, 
those investment objectives and strategies described in its 
disclosure documents (including private placement memoranda and 
reports to equity holders) and organizational documents (including 
operating agreements).
    \12\ ``Board-Established Criteria'' means criteria that the 
Board of a Regulated Fund may establish from time to time to 
describe the characteristics of Potential Co-Investment Transactions 
regarding which the Adviser to the Regulated Fund should be notified 
under Condition 1. The Board-Established Criteria will be consistent 
with the Regulated Fund's Objectives and Strategies. If no Board-
Established Criteria are in effect, then the Regulated Fund's 
Adviser will be notified of all Potential Co-Investment Transactions 
that fall within the Regulated Fund's then-current Objectives and 
Strategies. Board-Established Criteria will be objective and 
testable, meaning that they will be based on observable information, 
such as industry/sector of the issuer, minimum EBITDA of the issuer, 
asset class of the investment opportunity or required commitment 
size, and not on characteristics that involve a discretionary 
assessment. The Adviser to the Regulated Fund may from time to time 
recommend criteria for the Board's consideration, but Board-
Established Criteria will only become effective if approved by a 
majority of the Independent Directors. The Independent Directors of 
a Regulated Fund may at any time rescind, suspend or qualify its 
approval of any Board-Established Criteria, though Applicants 
anticipate that, under normal circumstances, the Board would not 
modify these criteria more often than quarterly.
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    13. The Adviser to each applicable Regulated Fund will then make an 
independent determination of the appropriateness of the investment for 
the Regulated Fund in light of the Regulated Fund's then-current 
circumstances. If the Adviser to a Regulated Fund deems the Regulated 
Fund's participation in such Potential Co-Investment Transaction to be 
appropriate, then it will formulate a recommendation regarding the 
proposed order amount for the Regulated Fund.
    14. Applicants state that, for each Regulated Fund and Affiliated 
Fund whose Adviser recommends participating in a Potential Co-
Investment Transaction, the Adviser will submit a proposed order amount 
to the internal trading function, which is comprised of a group of 
individual traders who collect and execute trades. Applicants state 
further that each proposed order amount may be reviewed and adjusted, 
in accordance with the Advisers' written allocation policies and 
procedures, by an allocation committee for the area in question (e.g., 
credit, private equity, real estate) on which senior management, legal 
and compliance personnel from that area participate or, in the case of 
issues involving multiple areas or AGM as a whole, an AGM-wide 
allocation committee on which senior management, legal and compliance 
personnel for AGM participate.\13\ The order of a Regulated Fund or 
Affiliated Fund resulting from this process is referred to as its 
``Internal Order''. The Internal Order will be submitted for approval 
by the Required Majority of any participating Regulated Funds in 
accordance with the Conditions.\14\
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    \13\ The reason for any such adjustment to a proposed order 
amount will be documented in writing and preserved in the records of 
the Advisers.
    \14\ ``Required Majority'' means a required majority, as defined 
in Section 57(o) of the Act. 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). In the case of a BDC Downstream Fund 
with a board of directors (or the equivalent), the members that make 
up the Required Majority will be determined as if the BDC Downstream 
Fund were a BDC subject to Section 57(o). In the case of a BDC 
Downstream Fund with a transaction committee or advisory committee, 
the committee members that make up the Required Majority will be 
determined as if the BDC Downstream Fund were a BDC subject to 
Section 57(o) and as if the committee members were directors of the 
fund.
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    15. If the aggregate Internal Orders for a Potential Co-Investment 
Transaction do not exceed the size of the investment opportunity 
immediately prior to the submission of the orders to the underwriter, 
broker, dealer or issuer, as applicable (the ``External Submission''), 
then each Internal Order will be fulfilled as placed. If, on the other 
hand, the aggregate Internal Orders for a Potential Co-Investment 
Transaction exceed the size of the investment opportunity immediately 
prior to the External Submission, then the allocation of the 
opportunity will be made pro rata on the basis of the size of the 
Internal Orders.\15\ If, subsequent to such External Submission, the 
size of the opportunity is increased or decreased, or if the terms of 
such opportunity, or the facts and circumstances applicable to the 
Regulated Funds' or the Affiliated Funds' consideration of the 
opportunity, change, the participants will be permitted to submit 
revised Internal Orders in accordance with written allocation policies 
and procedures that the Advisers will establish, implement and 
maintain.\16\
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    \15\ The Advisers will maintain records of all proposed order 
amounts, Internal Orders and External Submissions in conjunction 
with Potential Co-Investment Transactions. Each applicable Adviser 
will provide the Eligible Directors with information concerning the 
Affiliated Funds' and Regulated Funds' order sizes to assist the 
Eligible Directors with their review of the applicable Regulated 
Fund's investments for compliance with the Conditions. ``Eligible 
Directors'' means, with respect to a Regulated Fund and a Potential 
Co-Investment Transaction, the members of the Regulated Fund's Board 
eligible to vote on that Potential Co-Investment Transaction under 
Section 57(o) of the Act (treating any registered investment company 
or series thereof as a BDC for this purpose).
    \16\ The Board of the Regulated Fund will then either approve or 
disapprove of the investment opportunity in accordance with 
condition 2, 6, 7, 8 or 9, as applicable.
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B. Follow-On Investments

    16. Applicants state that from time to time the Regulated Funds and 
Affiliated Funds may have opportunities to make Follow-On Investments 
\17\ in an issuer in which a Regulated Fund and one or more other 
Regulated Funds and/or Affiliated Funds previously have invested.
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    \17\ ``Follow-On Investment'' means an additional investment in 
the same issuer, including, but not limited to, through the exercise 
of warrants, conversion privileges or other rights to purchase 
securities of the issuer.
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    17. Applicants propose that Follow-On Investments would be divided 
into two categories depending on whether the prior investment was a Co-
Investment Transaction or a Pre-Boarding Investment.\18\ If the 
Regulated Funds and Affiliated Funds had previously participated in a 
Co-Investment Transaction with respect to the issuer, then the terms 
and approval of the Follow-On Investment would be subject to the 
Standard Review Follow-Ons described in Condition 8. If the Regulated 
Funds and Affiliated Funds have not previously participated in a Co-
Investment Transaction with respect to the issuer but hold a Pre-
Boarding Investment, then the terms and approval of the Follow-On 
Investment would be subject to the Enhanced-Review Follow-Ons described 
in Condition 9. All Enhanced Review Follow-Ons require the approval of 
the Required Majority. For a given issuer, the participating Regulated 
Funds and Affiliated Funds would need to comply with the requirements 
of Enhanced-Review Follow-Ons only for the first Co-Investment 
Transaction. Subsequent Co-Investment Transactions with respect to the 
issuer would be governed by the requirements of Standard Review Follow-
Ons.
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    \18\ ``Pre-Boarding Investments'' are investments in an issuer 
held by a Regulated Fund as well as one or more Affiliated Funds 
and/or one or more other Regulated Funds that were acquired prior to 
participating in any Co-Investment Transaction: (i) In transactions 
in which the only term negotiated by or on behalf of such funds was 
price in reliance on one of the JT No-Action Letters (defined 
below); or (ii) in transactions occurring at least 90 days apart and 
without coordination between the Regulated Fund and any Affiliated 
Fund or other Regulated Fund.
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    18. A Regulated Fund would be permitted to invest in Standard 
Review Follow-Ons either with the approval of the Required Majority 
under Condition 8(c) or without Board approval under Condition 8(b) if 
it is (i) a Pro Rata Follow-On Investment \19\ or (ii) a Non-Negotiated 
Follow-On Investment.\20\

[[Page 69707]]

Applicants believe that these Pro Rata and Non-Negotiated Follow-On 
Investments do not present a significant opportunity for overreaching 
on the part of any Adviser and thus do not warrant the time or the 
attention of the Board. Pro Rata Follow-On Investments and Non-
Negotiated Follow-On Investments remain subject to the Board's periodic 
review in accordance with Condition 10.
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    \19\ A ``Pro Rata Follow-On Investment'' is a Follow-On 
Investment (i) in which the participation of each Affiliated Fund 
and each Regulated Fund is proportionate to its outstanding 
investments in the issuer or security, as appropriate, immediately 
preceding the Follow-On Investment, and (ii) in the case of a 
Regulated Fund, a majority of the Board has approved the Regulated 
Fund's participation in the pro rata Follow-On Investments as being 
in the best interests of the Regulated Fund. The Regulated Fund's 
Board may refuse to approve, or at any time rescind, suspend or 
qualify, its approval of Pro Rata Follow-On Investments, in which 
case all subsequent Follow-On Investments will be submitted to the 
Regulated Fund's Eligible Directors in accordance with Condition 
8(c).
    \20\ A ``Non-Negotiated Follow-On Investment'' is a Follow-On 
Investment in which a Regulated Fund participates together with one 
or more Affiliated Funds and/or one or more other Regulated Funds 
(i) in which the only term negotiated by or on behalf of the funds 
is price and (ii) with respect to which, if the transaction were 
considered on its own, the funds would be entitled to rely on one of 
the JT No-Action Letters. ``JT No-Action Letters'' means SMC 
Capital, Inc., SEC No-Action Letter (pub. avail. Sept. 5, 1995) and 
Massachusetts Mutual Life Insurance Company, SEC No-Action Letter 
(pub. avail. June 7, 2000).
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C. Dispositions

    19. Applicants propose that Dispositions \21\ would be divided into 
two categories. If the Regulated Funds and Affiliated Funds holding 
investments in the issuer had previously participated in a Co-
Investment Transaction with respect to the issuer, then the terms and 
approval of the Disposition would be subject to the Standard Review 
Dispositions described in Condition 6. If the Regulated Funds and 
Affiliated Funds have not previously participated in a Co-Investment 
Transaction with respect to the issuer but hold a Pre-Boarding 
Investment, then the terms and approval of the Disposition would be 
subject to the Enhanced Review Dispositions described in Condition 7. 
Subsequent Dispositions with respect to the same issuer would be 
governed by Condition 6 under the Standard Review Dispositions.\22\
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    \21\ ``Disposition'' means the sale, exchange or other 
disposition of an interest in a security of an issuer.
    \22\ However, with respect to an issuer, if a Regulated Fund's 
first Co-Investment Transaction is an Enhanced Review Disposition, 
and the Regulated Fund does not dispose of its entire position in 
the Enhanced Review Disposition, then before such Regulated Fund may 
complete its first Standard Review Follow-On in such issuer, the 
Eligible Directors must review the proposed Follow-On Investment not 
only on a stand-alone basis but also in relation to the total 
economic exposure in such issuer (i.e., in combination with the 
portion of the Pre-Boarding Investment not disposed of in the 
Enhanced Review Disposition), and the other terms of the 
investments. This additional review would be required because such 
findings would not have been required in connection with the prior 
Enhanced Review Disposition, but they would have been required had 
the first Co-Investment Transaction been an Enhanced Review Follow-
On.
---------------------------------------------------------------------------

    20. A Regulated Fund may participate in a Standard Review 
Disposition either with the approval of the Required Majority under 
Condition 6(d) or without Board approval under Condition 6(c) if (i) 
the Disposition is a Pro Rata Disposition \23\ or (ii) the securities 
are Tradable Securities \24\ and the Disposition meets the other 
requirements of Condition 6(c)(ii). Pro Rata Dispositions and 
Dispositions of a Tradable Security remain subject to the Board's 
periodic review in accordance with Condition 10.
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    \23\ A ``Pro Rata Disposition'' is a Disposition (i) in which 
the participation of each Affiliated Fund and each Regulated Fund is 
proportionate to its outstanding investment in the security subject 
to Disposition immediately preceding the Disposition; and (ii) in 
the case of a Regulated Fund, a majority of the Board has approved 
the Regulated Fund's participation in pro rata Dispositions as being 
in the best interests of the Regulated Fund. The Regulated Fund's 
Board may refuse to approve, or at any time rescind, suspend or 
qualify, its approval of Pro Rata Dispositions, in which case all 
subsequent Dispositions will be submitted to the Regulated Fund's 
Eligible Directors.
    \24\ ``Tradable Security'' means a security that meets the 
following criteria at the time of Disposition: (i) It trades on a 
national securities exchange or designated offshore securities 
market as defined in rule 902(b) under the Securities Act; (ii) it 
is not subject to restrictive agreements with the issuer or other 
security holders; and (iii) it trades with sufficient volume and 
liquidity (findings as to which are documented by the Advisers to 
any Regulated Funds holding investments in the issuer and retained 
for the life of the Regulated Fund) to allow each Regulated Fund to 
dispose of its entire position remaining after the proposed 
Disposition within a short period of time not exceeding 30 days at 
approximately the value (as defined by section 2(a)(41) of the Act) 
at which the Regulated Fund has valued the investment.
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D. Delayed Settlement

    21. Applicants represent that under the terms and Conditions of the 
application, all Regulated Funds and Affiliated Funds participating in 
a Co-Investment Transaction will invest at the same time, for the same 
price and with the same terms, conditions, class, registration rights 
and any other rights, so that none of them receives terms more 
favorable than any other. However, the settlement date for an 
Affiliated Fund in a Co-Investment Transaction may occur up to ten 
business days after the settlement date for the Regulated Fund, and 
vice versa. Nevertheless, in all cases, (i) the date on which the 
commitment of the Affiliated Funds and Regulated Funds is made will be 
the same even where the settlement date is not and (ii) the earliest 
settlement date and the latest settlement date of any Affiliated Fund 
or Regulated Fund participating in the transaction will occur within 
ten business days of each other.

E. Holders

    22. Under Condition 15, if an Adviser, its principals, or any 
person controlling, controlled by, or under common control with the 
Adviser or its principals, and the Affiliated Funds (collectively, the 
``Holders'') own in the aggregate more than 25 percent of the 
outstanding voting shares of a Regulated Fund (the ``Shares''), then 
the Holders will vote such Shares as required under the Condition.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
participation by a registered investment company and an affiliated 
person in any ``joint enterprise or other joint arrangement or profit-
sharing plan,'' as defined in the rule, without prior approval by the 
Commission by order upon application. Section 17(d) of the Act and rule 
17d-1 under the Act are applicable to Regulated Funds that are 
registered closed-end investment companies.
    2. Similarly, with regard to BDCs, section 57(a)(4) of the Act 
generally prohibits certain persons specified in section 57(b) from 
participating in joint transactions with the BDC or a company 
controlled by the BDC in contravention of rules as prescribed by the 
Commission. Section 57(i) of the Act provides that, until the 
Commission prescribes rules under section 57(a)(4), the Commission's 
rules under section 17(d) of the Act applicable to registered closed-
end investment companies will be deemed to apply to transactions 
subject to section 57(a)(4). Because the Commission has not adopted any 
rules under section 57(a)(4), rule 17d-1 also applies to joint 
transactions with Regulated Funds that are BDCs.
    3. Co-Investment Transactions are prohibited by either or both of 
Rule 17d-1 and Section 57(a)(4) without a prior exemptive order of the 
Commission to the extent that the Affiliated Funds and the Regulated 
Funds participating in such transactions fall within the category of 
persons described by Rule 17d-1 and/or Section 57(b), as applicable, 
vis-[agrave]-vis each participating Regulated Fund. Each of the 
participating Regulated Funds and Affiliated Funds may be deemed to be 
affiliated persons vis-[agrave]-vis a Regulated Fund within the meaning 
of section 2(a)(3) by reason of common control because (i) an Adviser, 
that is either AIM or an entity that controls, is controlled by, or 
under common control with AIM, will be the investment adviser (and sub-
adviser, if any) to each of the Regulated Funds and the Affiliated 
Funds, (ii) AIM is the Adviser to, and may be deemed to control, AIC, 
(iii) ACM is the Adviser to, and may be deemed to control, AIF and 
ASFRF, and (iv) each BDC Downstream Fund will be deemed to be 
controlled by its BDC

[[Page 69708]]

parent and/or its BDC parent's Adviser; and (v) the Advisers are under 
common control. Thus, each of the Regulated Fund and each Affiliated 
Fund may be deemed to be a person related to a Regulated Fund and each 
Affiliated Fund in a manner described by Section 57(b) (or Section 
17(d) in the case of Regulated Funds that are registered under the Act) 
and therefore would be prohibited by Section 57(a)(4) (or Section 17(d) 
in the case of Regulated Funds that are registered under the Act) and 
Rule 17d-1 from participating in Co-Investment Transactions without the 
Order. Further, because the BDC Downstream Funds and Wholly-Owned 
Investment Subs are controlled by the Regulated Funds, the BDC 
Downstream Funds and Wholly-Owned Investment Subs are subject to 
Section 57(a)(4) (or Section 17(d) in the case of Wholly-Owned 
Investment Subs controlled by Regulated Funds that are registered under 
the Act), and thus also subject to the provisions of Rule 17d-1, and 
therefore would be prohibited from participating in Co-Investment 
Transactions without the Order. In addition, because the Apollo 
Proprietary Accounts will be controlled by an Adviser and, therefore, 
may be under common control with AIC, AIF, ASFRF and ADS, the Advisers, 
and any Future Regulated Funds, the Apollo Proprietary Accounts could 
be deemed to be persons related to the Regulated Funds (or a company 
controlled by the Regulated Funds) in a manner described by Section 
17(d) or 57(b) and also prohibited from participating in the Co-
Investment Program.
    4. 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.
    5. Applicants state that in the absence of the requested relief, in 
many circumstances the Regulated Funds would be limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants state that, as required by Rule 17d-1(b), the 
Conditions ensure that the terms on which Co-Investment Transactions 
may be made will be consistent with the participation of the Regulated 
Funds being on a basis that it is neither different from nor less 
advantageous than other participants, thus protecting the equity 
holders of any participant from being disadvantaged. Applicants further 
state that the Conditions ensure that all Co-Investment Transactions 
are reasonable and fair to the Regulated Funds and their shareholders 
and do not involve overreaching by any person concerned, including the 
Advisers. Applicants state that the Regulated Funds' participation in 
the Co-Investment Transactions in accordance with the Conditions will 
be consistent with the provisions, policies, and purposes of the Act 
and would be done in a manner that is not different from, or less 
advantageous than, that of other participants.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following 
Conditions:
    1. Identification and Referral of Potential Co-Investment 
Transactions.
    (a) The Advisers will establish, maintain and implement policies 
and procedures reasonably designed to ensure that each Adviser is 
promptly notified of all Potential Co-Investment Transactions that fall 
within the then-current Objectives and Strategies and Board-Established 
Criteria of any Regulated Fund the Adviser manages.
    (b) When an Adviser to a Regulated Fund is notified of a Potential 
Co-Investment Transaction under Condition 1(a), the Adviser will make 
an independent determination of the appropriateness of the investment 
for the Regulated Fund in light of the Regulated Fund's then-current 
circumstances.
    2. Board Approvals of Co-Investment Transactions.
    (a) If the Adviser deems a Regulated Fund's participation in any 
Potential Co-Investment Transaction to be appropriate for the Regulated 
Fund, it will then determine an appropriate level of investment for the 
Regulated Fund.
    (b) If the aggregate amount recommended by the Advisers to be 
invested in the Potential Co-Investment Transaction by the 
participating Regulated Funds and any participating Affiliated Funds, 
collectively, exceeds the amount of the investment opportunity, the 
investment opportunity will be allocated among them pro rata based on 
the size of the Internal Orders, as described in section III.A.1.b. of 
the application. Each Adviser to a participating Regulated Fund will 
promptly notify and provide the Eligible Directors with information 
concerning the Affiliated Funds' and Regulated Funds' order sizes to 
assist the Eligible Directors with their review of the applicable 
Regulated Fund's investments for compliance with these Conditions.
    (c) After making the determinations required in Condition 1(b) 
above, each Adviser to a participating Regulated Fund will distribute 
written information concerning the Potential Co-Investment Transaction 
(including the amount proposed to be invested by each participating 
Regulated Fund and each participating Affiliated Fund) to the Eligible 
Directors of its participating Regulated Fund(s) for their 
consideration. A Regulated Fund will enter into a Co-Investment 
Transaction with one or more other Regulated Funds or Affiliated Funds 
only if, prior to the Regulated Fund's participation in the Potential 
Co-Investment Transaction, a Required Majority concludes that:
    (i) The terms of the transaction, including the consideration to be 
paid, are reasonable and fair to the Regulated Fund and its equity 
holders and do not involve overreaching in respect of the Regulated 
Fund or its equity holders on the part of any person concerned;
    (ii) the transaction is consistent with:
    (A) The interests of the Regulated Fund's equity holders; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Fund(s) or Affiliated 
Fund(s) 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(s) or Affiliated 
Fund(s) participating in the transaction; provided that the Required 
Majority shall not be prohibited from reaching the conclusions required 
by this Condition 2(c)(iii) if:
    (A) The settlement date for another Regulated Fund or an Affiliated 
Fund in a Co-Investment Transaction is later than the settlement date 
for the Regulated Fund by no more than ten business days or earlier 
than the settlement date for the Regulated Fund by no more than ten 
business days, in either case, so long as: (x) The date on which the 
commitment of the Affiliated Funds and Regulated Funds is made is the 
same; and (y) the earliest settlement date and the latest settlement 
date of any Affiliated Fund or Regulated Fund participating in the 
transaction will occur within ten business days of each other; or
    (B) 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, the right to have 
a board observer or any similar right to participate in the governance 
or management of the portfolio company so long as: (x) The Eligible 
Directors will have the right to ratify the selection of such director 
or board observer, if any; (y) the Adviser agrees to, and does,

[[Page 69709]]

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 (z) any fees or other compensation that any other Regulated Fund or 
Affiliated Fund or any affiliated person of any other Regulated Fund or 
Affiliated Fund receives in connection with the right of one or more 
Regulated Funds or Affiliated Funds 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 any participating Affiliated Funds (who may, in turn, share their 
portion with their affiliated persons) and any participating Regulated 
Fund(s) in accordance with the amount of each such party's investment; 
and
    (iv) the proposed investment by the Regulated Fund will not involve 
compensation, remuneration or a direct or indirect \25\ financial 
benefit to the Advisers, any other Regulated Fund, the Affiliated 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 14, (B) to the extent permitted by Section 17(e) or 57(k), 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)(B)(z).
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    \25\ For example, procuring the Regulated Fund's investment in a 
Potential Co-Investment Transaction to permit an affiliate to 
complete or obtain better terms in a separate transaction would 
constitute an indirect financial benefit.
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    3. Right to Decline. 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. General Limitation. Except for Follow-On Investments made in 
accordance with Conditions 8 and 9 below,\26\ a Regulated Fund will not 
invest in reliance on the Order in any issuer in which a Related Party 
has an investment.\27\
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    \26\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
    \27\ ``Related Party'' means (i) any Close Affiliate and (ii) in 
respect of matters as to which any Adviser has knowledge, any Remote 
Affiliate. ``Close Affiliate'' means the Advisers, the Regulated 
Funds, the Affiliated Funds and any other person described in 
Section 57(b) (after giving effect to Rule 57b-1) in respect of any 
Regulated Fund (treating any registered investment company or series 
thereof as a BDC for this purpose) except for limited partners 
included solely by reason of the reference in Section 57(b) to 
Section 2(a)(3)(D). ``Remote Affiliate'' means any person described 
in Section 57(e) in respect of any Regulated Fund (treating any 
registered investment company or series thereof as a BDC for this 
purpose) and any limited partner holding 5% or more of the relevant 
limited partner interests that would be a Close Affiliate but for 
the exclusion in that definition.
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    5. Same Terms and Conditions. A Regulated Fund will not participate 
in any Potential Co-Investment Transaction unless (i) the terms, 
conditions, price, class of securities to be purchased, date on which 
the commitment is entered into and registration rights (if any) will be 
the same for each participating Regulated Fund and Affiliated Fund and 
(ii) the earliest settlement date and the latest settlement date of any 
participating Regulated Fund or Affiliated Fund will occur as close in 
time as practicable and in no event more than ten business days apart. 
The grant to one or more Regulated Funds or Affiliated Funds, but not 
the respective 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 5, if Condition 
2(c)(iii)(B) is met.
    6. Standard Review Dispositions.
    (a) General. If any Regulated Fund or Affiliated Fund elects to 
sell, exchange or otherwise dispose of an interest in a security and 
one or more Regulated Funds and Affiliated Funds have previously 
participated in a Co-Investment Transaction with respect to the issuer, 
then:
    (i) The Adviser to such Regulated Fund or Affiliated Fund \28\ will 
notify each Regulated Fund that holds an investment in the issuer of 
the proposed Disposition at the earliest practical time; and
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    \28\ Any Apollo Proprietary Account that is not advised by an 
Adviser is itself deemed to be an Adviser for purposes of Conditions 
6(a)(i), 7(a)(i), 8(a)(i) and 9(a)(i).
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    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to participation by such 
Regulated Fund in the Disposition.
    (b) Same Terms and Conditions. Each Regulated Fund will have the 
right to participate in such Disposition on a proportionate basis, at 
the same price and on the same terms and conditions as those applicable 
to the Affiliated Funds and any other Regulated Fund.
    (c) No Board Approval Required. A Regulated Fund may participate in 
such a Disposition without obtaining prior approval of the Required 
Majority if:
    (i) (A) The participation of each Regulated Fund and Affiliated 
Fund in such Disposition is proportionate to its then-current holding 
of the security (or securities) of the issuer that is (or are) the 
subject of the Disposition \29\; (B) the Board of the Regulated Fund 
has approved as being in the best interests of the Regulated Fund the 
ability to participate in such Dispositions on a pro rata basis (as 
described in greater detail in the application); and (C) the Board of 
the Regulated Fund is provided on a quarterly basis with a list of all 
Dispositions made in accordance with this Condition; or
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    \29\ In the case of any Disposition, proportionality will be 
measured by each participating Regulated Fund's and Affiliated 
Fund's outstanding investment in the security in question 
immediately preceding the Disposition.
---------------------------------------------------------------------------

    (ii) each security is a Tradable Security and (A) the Disposition 
is not to the issuer or any affiliated person of the issuer; and (B) 
the security is sold for cash in a transaction in which the only term 
negotiated by or on behalf of the participating Regulated Funds and 
Affiliated Funds is price.
    (d) Standard Board Approval. In all other cases, the Adviser will 
provide its written recommendation as to the Regulated Fund's 
participation to the Eligible Directors and the Regulated Fund will 
participate in such Disposition solely to the extent that a Required 
Majority determines that it is in the Regulated Fund's best interests.
    7. Enhanced Review Dispositions.
    (a) General. If any Regulated Fund or Affiliated Fund elects to 
sell, exchange or otherwise dispose of a Pre-Boarding Investment in a 
Potential Co-Investment Transaction and the Regulated Funds and 
Affiliated Funds have not previously participated in a Co-Investment 
Transaction with respect to the issuer:
    (i) The Adviser to such Regulated Fund or Affiliated Fund will 
notify each Regulated Fund that holds an investment in the issuer of 
the proposed Disposition at the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to participation by such 
Regulated Fund in the Disposition; and
    (iii) the Advisers will provide to the Board of each Regulated Fund 
that holds an investment in the issuer all information relating to the 
existing investments in the issuer of the Regulated Funds and 
Affiliated Funds, including the terms of such investments

[[Page 69710]]

and how they were made, that is necessary for the Required Majority to 
make the findings required by this Condition.
    (b) Enhanced Board Approval. The Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Directors, and the Regulated Fund will participate in such Disposition 
solely to the extent that a Required Majority determines that:
    (i) The Disposition complies with Conditions 2(c)(i), (ii), 
(iii)(A), and (iv).
    (ii) the making and holding of the Pre-Boarding Investments were 
not prohibited by Section 57 or Rule 17d-1, as applicable, and records 
the basis for the finding in the Board minutes.
    (c) Additional Requirements. The Disposition may only be completed 
in reliance on the Order if:
    (i) Same Terms and Conditions. Each Regulated Fund has the right to 
participate in such Disposition on a proportionate basis, at the same 
price and on the same terms and conditions as those applicable to the 
Affiliated Funds and any other Regulated Fund;
    (ii) Original Investments. All of the Affiliated Funds' and 
Regulated Funds' investments in the issuer are Pre-Boarding 
Investments;
    (iii) Advice of counsel. Independent counsel to the Board advises 
that the making and holding of the investments in the Pre-Boarding 
Investments were not prohibited by Section 57 (as modified by Rule 57b-
1) or Rule 17d-1, as applicable;
    (iv) Multiple Classes of Securities. All Regulated Funds and 
Affiliated Funds that hold Pre-Boarding Investments in the issuer 
immediately before the time of completion of the Co-Investment 
Transaction hold the same security or securities of the issuer. For the 
purpose of determining whether the Regulated Funds and Affiliated Funds 
hold the same security or securities, they may disregard any security 
held by some but not all of them if, prior to relying on the Order, the 
Required Majority is presented with all information necessary to make a 
finding, and finds, that: (x) Any Regulated Fund's or Affiliated Fund's 
holding of a different class of securities (including for this purpose 
a security with a different maturity date) is immaterial \30\ in 
amount, including immaterial relative to the size of the issuer; and 
(y) the Board records the basis for any such finding in its minutes. In 
addition, securities that differ only in respect of issuance date, 
currency, or denominations may be treated as the same security; and
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    \30\ In determining whether a holding is ``immaterial'' for 
purposes of the Order, the Required Majority will consider whether 
the nature and extent of the interest in the transaction or 
arrangement is sufficiently small that a reasonable person would not 
believe that the interest affected the determination of whether to 
enter into the transaction or arrangement or the terms of the 
transaction or arrangement.
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    (v) No control. The Affiliated Funds, the other Regulated Funds and 
their affiliated persons (within the meaning of Section 2(a)(3)(C) of 
the Act), individually or in the aggregate, do not control the issuer 
of the securities (within the meaning of Section 2(a)(9) of the Act).
    8. Standard Review Follow-Ons.
    (a) General. If any Regulated Fund or Affiliated Fund desires to 
make a Follow-On Investment in an issuer and the Regulated Funds and 
Affiliated Funds holding investments in the issuer previously 
participated in a Co-Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund or Affiliated Fund will 
notify each Regulated Fund that holds securities of the portfolio 
company of the proposed transaction at the earliest practical time; and
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to the proposed 
participation, including the amount of the proposed investment, by such 
Regulated Fund.
    (b) No Board Approval Required. A Regulated Fund may participate in 
the Follow-On Investment without obtaining prior approval of the 
Required Majority if:
    (i) (A) The proposed participation of each Regulated Fund and each 
Affiliated Fund in such investment is proportionate to its outstanding 
investments in the issuer or the security at issue, as appropriate,\31\ 
immediately preceding the Follow-On Investment; and (B) the Board of 
the Regulated Fund has approved as being in the best interests of the 
Regulated Fund the ability to participate in Follow-On Investments on a 
pro rata basis (as described in greater detail in the application); or
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    \31\ To the extent that a Follow-On Investment opportunity is in 
a security or arises in respect of a security held by the 
participating Regulated Funds and Affiliated Funds, proportionality 
will be measured by each participating Regulated Fund's and 
Affiliated Fund's outstanding investment in the security in question 
immediately preceding the Follow-On Investment using the most recent 
available valuation thereof. To the extent that a Follow-On 
Investment opportunity relates to an opportunity to invest in a 
security that is not in respect of any security held by any of the 
participating Regulated Funds or Affiliated Funds, proportionality 
will be measured by each participating Regulated Fund's and 
Affiliated Fund's outstanding investment in the issuer immediately 
preceding the Follow-On Investment using the most recent available 
valuation thereof.
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    (ii) it is a Non-Negotiated Follow-On Investment.
    (c) Standard Board Approval. In all other cases, the Adviser will 
provide its written recommendation as to the Regulated Fund's 
participation to the Eligible Directors and the Regulated Fund will 
participate in such Follow-On Investment solely to the extent that a 
Required Majority makes the determinations set forth in Condition 2(c). 
If the only previous Co-Investment Transaction with respect to the 
issuer was an Enhanced Review Disposition the Eligible Directors must 
complete this review of the proposed Follow-On Investment both on a 
stand-alone basis and together with the Pre-Boarding Investments in 
relation to the total economic exposure and other terms of the 
investment.
    (d) Allocation. If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to 
any Regulated Fund is not based on the Regulated Funds' and the 
Affiliated Funds' outstanding investments in the issuer or the security 
at issue, as appropriate, immediately preceding the Follow-On 
Investment; and
    (ii) the aggregate amount recommended by the Advisers to be 
invested in the Follow-On Investment by the participating Regulated 
Funds and any participating Affiliated Funds, collectively, exceeds the 
amount of the investment opportunity, then the Follow-On Investment 
opportunity will be allocated among them pro rata based on the size of 
the Internal Orders, as described in section III.A.1.b. of the 
application.
    (e) Other Conditions. The acquisition of Follow-On Investments as 
permitted by this Condition will be considered a Co-Investment 
Transaction for all purposes and subject to the other Conditions set 
forth in the application.
    9. Enhanced Review Follow-Ons.
    (a) General. If any Regulated Fund or Affiliated Fund desires to 
make a Follow-On Investment in an issuer that is a Potential Co-
Investment Transaction and the Regulated Funds and Affiliated Funds 
holding investments in the issuer have not previously participated in a 
Co-Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund or Affiliated Fund will 
notify each Regulated Fund that holds securities of the portfolio 
company of the proposed transaction at the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the

[[Page 69711]]

issuer will formulate a recommendation as to the proposed 
participation, including the amount of the proposed investment, by such 
Regulated Fund; and
    (iii) the Advisers will provide to the Board of each Regulated Fund 
that holds an investment in the issuer all information relating to the 
existing investments in the issuer of the Regulated Funds and 
Affiliated Funds, including the terms of such investments and how they 
were made, that is necessary for the Required Majority to make the 
findings required by this Condition.
    (b) Enhanced Board Approval. The Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Directors, and the Regulated Fund will participate in such Follow-On 
Investment solely to the extent that a Required Majority reviews the 
proposed Follow-On Investment both on a stand-alone basis and together 
with the Pre-Boarding Investments in relation to the total economic 
exposure and other terms and makes the determinations set forth in 
Condition 2(c). In addition, the Follow-On Investment may only be 
completed in reliance on the Order if the Required Majority of each 
participating Regulated Fund determines that the making and holding of 
the Pre-Boarding Investments were not prohibited by Section 57 (as 
modified by Rule 57b-1) or Rule 17d-1, as applicable. The basis for the 
Board's findings will be recorded in its minutes.
    (c) Additional Requirements. The Follow-On Investment may only be 
completed in reliance on the Order if:
    (i) Original Investments. All of the Affiliated Funds' and 
Regulated Funds' investments in the issuer are Pre-Boarding 
Investments;
    (ii) Advice of counsel. Independent counsel to the Board advises 
that the making and holding of the investments in the Pre-Boarding 
Investments were not prohibited by Section 57 (as modified by Rule 57b-
1) or Rule 17d-1, as applicable;
    (iii) Multiple Classes of Securities. All Regulated Funds and 
Affiliated Funds that hold Pre-Boarding Investments in the issuer 
immediately before the time of completion of the Co-Investment 
Transaction hold the same security or securities of the issuer. For the 
purpose of determining whether the Regulated Funds and Affiliated Funds 
hold the same security or securities, they may disregard any security 
held by some but not all of them if, prior to relying on the Order, the 
Required Majority is presented with all information necessary to make a 
finding, and finds, that: (x) Any Regulated Fund's or Affiliated Fund's 
holding of a different class of securities (including for this purpose 
a security with a different maturity date) is immaterial in amount, 
including immaterial relative to the size of the issuer; and (y) the 
Board records the basis for any such finding in its minutes. In 
addition, securities that differ only in respect of issuance date, 
currency, or denominations may be treated as the same security; and
    (iv) No control. The Affiliated Funds, the other Regulated Funds 
and their affiliated persons (within the meaning of Section 2(a)(3)(C) 
of the Act), individually or in the aggregate, do not control the 
issuer of the securities (within the meaning of Section 2(a)(9) of the 
Act).
    (d) Allocation. If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to 
any Regulated Fund is not based on the Regulated Funds' and the 
Affiliated Funds' outstanding investments in the issuer or the security 
at issue, as appropriate, immediately preceding the Follow-On 
Investment; and
    (ii) the aggregate amount recommended by the Advisers to be 
invested in the Follow-On Investment by the participating Regulated 
Funds and any participating Affiliated Funds, collectively, exceeds the 
amount of the investment opportunity, then the Follow-On Investment 
opportunity will be allocated among them pro rata based on the size of 
the Internal Orders, as described in section III.A.1.b. of the 
application.
    (e) Other Conditions. The acquisition of Follow-On Investments as 
permitted by this Condition will be considered a Co-Investment 
Transaction for all purposes and subject to the other Conditions set 
forth in the application.
    10. Board Reporting, Compliance and Annual Re-Approval.
    (a) Each Adviser to a Regulated Fund will present to the Board of 
each Regulated Fund, on a quarterly basis, and at such other times as 
the Board may request, (i) a record of all investments in Potential Co-
Investment Transactions made by any of the other Regulated Funds or any 
of the Affiliated Funds during the preceding quarter that fell within 
the Regulated Fund's then-current Objectives and Strategies and Board-
Established Criteria that were not made available to the Regulated 
Fund, and an explanation of why such investment opportunities were not 
made available to the Regulated Fund; (ii) a record of all Follow-On 
Investments in and Dispositions of investments in any issuer in which 
the Regulated Fund holds any investments by any Affiliated Fund or 
other Regulated Fund during the prior quarter; and (iii) all 
information concerning Potential Co-Investment Transactions and Co-
Investment Transactions, including investments made by other Regulated 
Funds or Affiliated Funds that the Regulated Fund considered but 
declined to participate in, so that the Independent Directors, may 
determine whether all Potential Co-Investment Transactions and Co-
Investment Transactions during the preceding quarter, including those 
investments that the Regulated Fund considered but declined to 
participate in, comply with the Conditions.
    (b) All information presented to the Regulated Fund's 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.
    (c) 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. 
In the case of a BDC Downstream Fund that does not have a chief 
compliance officer, the chief compliance officer of the BDC that 
controls the BDC Downstream Fund will prepare the report for the 
relevant Independent Party.
    (d) The Independent Directors (including the non-interested members 
of each Independent Party) will consider at least annually whether 
continued participation in new and existing Co-Investment Transactions 
is in the Regulated Fund's best interests.
    11. Record Keeping. 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).
    12. Director Independence. No Independent Director (including the 
non-interested members of any Independent Party) of a Regulated Fund 
will also be a director, general partner, managing member or principal, 
or otherwise be an ``affiliated person'' (as defined in the Act) of any 
Affiliated Fund.
    13. Expenses. The expenses, if any, associated with acquiring, 
holding or disposing of any securities acquired in a Co-Investment 
Transaction (including,

[[Page 69712]]

without limitation, the expenses of the distribution of any such 
securities registered for sale under the Securities Act) will, to the 
extent not payable by the Advisers under their respective advisory 
agreements with the Regulated Funds and the Affiliated Funds, be shared 
by the Regulated Funds and the participating Affiliated Funds in 
proportion to the relative amounts of the securities held or being 
acquired or disposed of, as the case may be.
    14. Transaction Fees.\32\ Any transaction fee (including break-up, 
structuring, monitoring or commitment fees but excluding brokerage or 
underwriting compensation permitted by Section 17(e) or 57(k)) received 
in connection with any Co-Investment Transaction will be distributed to 
the participants 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), and the account will earn a competitive rate of 
interest that will also be divided pro rata among the participants. 
None of the Advisers, the Affiliated Funds, the other Regulated Funds 
or any affiliated person of the Affiliated Funds or the Regulated Funds 
will receive any additional compensation or remuneration of any kind as 
a result of or in connection with a Co-Investment Transaction other 
than (i) 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)(B)(z), (ii) brokerage or 
underwriting compensation permitted by Section 17(e) or 57(k) or (iii) 
in the case of the Advisers, investment advisory compensation paid in 
accordance with investment advisory agreements between the applicable 
Regulated Fund(s) or Affiliated Fund(s) and its Adviser.
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    \32\ Applicants are not requesting and the Commission is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    15. Independence. 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.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26597 Filed 12-7-21; 8:45 am]
BILLING CODE 8011-01-P

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