[Federal Register Volume 83, Number 135 (Friday, July 13, 2018)]
[Notices]
[Pages 32699-32704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14963]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33152; File No. 812-14925]


AB Private Credit Investors Corp., et al.

July 9, 2018.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION:  Notice.

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    Notice of application for an order under sections 17(d) and 57(i) 
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1 
under the Act to permit certain joint transactions otherwise prohibited 
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.

SUMMARY OF APPLICATION: Applicants request an order to permit business 
development companies (``BDCs'') to co-invest in portfolio companies 
with each other and with certain affiliated investment funds and 
accounts.\1\
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    \1\ The requested order (``Order'') would supersede an exemptive 
order issued by the Commission on October 11, 2016 (In the Matter of 
AB Private Credit Investors Corporation, et al., Investment Company 
Act Release Nos. 32261 (Sept. 13, 2016) (notice) and 32310 (Oct. 11, 
2016) (order) (the ``Prior Order''), with the result that no person 
will continue to rely on the Prior Order if the Order is granted.

APPLICANTS: AB Private Credit Investors Corporation (``AB BDC I''); AB 
Private Credit Investors Middle Market Direct Lending Fund, L.P. (``AB 
PCI Fund I''); AB Energy Opportunity Fund, L.P. (``AB Energy Fund,'' 
and together with AB PCI Fund I, the ``Existing Affiliated Funds''); AB 
Private Credit Investors, LLC (``AB-PCI'') on behalf of itself and

[[Page 32700]]

its successors; \2\ and AXA Equitable Life Insurance Company (``AXA 
Equitable'').
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    \2\ The term ``successor,'' as applied to any AB-PCI Adviser 
(defined below), means an entity that results from a reorganization 
into another jurisdiction or change in the type of business 
organization.

FILING DATES: The application was filed on June 28, 2018. Applicants 
have agreed to file an amendment during the notice period, the 
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substance of which is reflected in this notice.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on August 3, 2018, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
St. NE, Washington, DC 20549-1090. Applicants: J. Brent Humphries, AB 
Private Credit Investors LLC, 1345 Avenue of the Americas, New York, NY 
10105.

FOR FURTHER INFORMATION CONTACT: Stephan N. Packs, Senior Counsel, at 
(202) 551-6853 or David J. Marcinkus, Branch Chief, at (202) 551-6821 
(Chief Counsel's Office, Division of Investment Management).

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

Applicants' Representations

    1. AB BDC I, a Maryland corporation, is organized as a closed-end 
management investment company that has elected to be regulated as a BDC 
under section 54(a) of the Act.\3\ AB BDC I's Objectives and Strategies 
\4\ are to principally generate current income through direct 
investments in private loans and notes and, to a lesser extent, long-
term capital appreciation through private equity investments.
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    \3\ Section 2(a)(48) defines a business development company 
(BDC) to be any closed-end investment company that operates for the 
purpose of making investments in securities described in sections 
55(a)(1) through 55(a)(3) of the Act and makes available significant 
managerial assistance with respect to the issuers of such 
securities.
    \4\ ``Objectives and Strategies'' means a Regulated Fund's 
(defined below) investment objectives and strategies, as described 
in the Regulated Fund's registration statement on Form N-2 or Form 
10-12G, as applicable, other filings the Regulated Fund has made 
with the Commission under the Securities Act of 1933 (the 
``Securities Act''), or under the Securities Exchange Act of 1934, 
and the Regulated Fund's reports to shareholders.
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    2. The board of directors of AB BDC I is comprised of five 
directors. The AB BDC I Board and any board of directors of a Future 
Regulated Fund (each a ``Board'') will be comprised of directors, a 
majority of whom will not be ``interested persons'' within the meaning 
of Section 2(a)(19) of the Act (the ``Non-Interested Directors''), of 
AB BDC I or any Future Regulated Fund, as applicable.
    3. AB PCI Fund I is a Delaware limited partnership that is exempt 
from registration pursuant to section 3(c)(7) of the Act. AB PCI Fund 
I's investment objective and strategies are to generate both current 
income and long-term capital appreciation through debt and equity 
investments.
    4. AB Energy Fund is a Delaware limited partnership that is exempt 
from registration pursuant to section 3(c)(7) of the Act. AB Energy 
Fund's investment objective and strategies are to generate attractive 
risk-adjusted returns, through current income and capital gains, by 
capitalizing on private and public debt and equity investment 
opportunities in North American oil and gas producers.
    5. AB-PCI, a Delaware limited liability company, is registered with 
the Commission as an investment adviser under the Investment Advisers 
Act of 1940 (the ``Advisers Act''). AB-PCI is a wholly-owned subsidiary 
of AllianceBernstein L.P., a New York based global asset management 
firm. AB-PCI is the investment adviser to each of AB BDC I and the 
Existing Affiliated Funds. AB-PCI also advises certain Affiliated 
Managed Accounts that may participate in the Co-Investment Program, 
including the Existing Affiliated Managed Accounts.\5\
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    \5\ ``Existing Affiliated Managed Accounts'' means one or more 
investment accounts that have been established by AXA Equitable, and 
that are advised by: (i) AB-PCI; and (ii) any future investment 
adviser that is controlled by AB-PCI and is registered as an 
investment adviser under the Advisers Act (``AB-PCI Adviser'').
    ``Affiliated Managed Account'' means: (i) The Existing 
Affiliated Managed Accounts; and (ii) any Future Affiliated Managed 
Account. ``Future Affiliated Managed Account'' means an account: (i) 
For which an AB-PCI Adviser is acting as investment adviser or sub-
adviser; (b) of a person who is a Section 57(b) affiliate of a 
Regulated Fund and who would not be able to rely on Section 3(c)(1) 
or 3(c)(7) of the Act; and (c) that intends to participate in the 
Co-Investment Program.
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    6. AXA Equitable is a stock life insurance corporation organized 
under the laws of New York, and is the indirect parent company of AB-
PCI.\6\ AXA Equitable has established an Existing Affiliated Managed 
Account, and may from time to time establish Future Affiliated Managed 
Accounts, advised by an AB-PCI Adviser.\7\
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    \6\ Although AXA Equitable is an indirect parent company of AB-
PCI, AB-PCI has a separate management team from AXA Equitable and 
operates as a separate and distinct business and legal entity.
    \7\ AXA Equitable is excluded from the definition of investment 
company by Section 3(c)(3) of the Act.
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    7. Applicants seek an order (``Order'') to permit a Regulated Fund 
\8\ and one or more Regulated Funds and/or one or more Affiliated Funds 
\9\ to participate in the same investment opportunities through a 
proposed co-investment program (the ``Co-Investment Program'') where 
such participation would otherwise be prohibited under section 57(a)(4) 
and rule 17d-1 by (a) co-investing with each other in securities issued 
by issuers in private placement transactions in which an AB-PCI Adviser 
negotiates terms in addition to price, and (b) making additional 
investments in securities of such issuers, including through the 
exercise of warrants, conversion privileges, and other rights to 
purchase securities of the issuers (``Follow-On Investments'').
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    \8\ ``Regulated Fund'' means AB BDC I and any Future Regulated 
Fund. ``Future Regulated Fund'' means any closed-end management 
investment company other than AB BDC I: (i) That is registered under 
the Act or has elected to be regulated as a BDC; (ii) whose 
investment adviser is an AB-PCI Adviser; and (iii) that intends to 
participate in the Co-Investment Program.
    \9\ ``Affiliated Fund'' means: (i) The Existing Affiliated 
Funds; (ii) any Future Affiliated Fund; and (iii) any Affiliated 
Managed Account. ``Future Affiliated Fund'' means any entity: (i) 
Whose investment adviser or sub-adviser is an AB-PCI Adviser; (b) 
that would be an investment company but for Section 3(c)(1) or 
3(c)(7) of the 1940 Act; and (c) that intends to participate in the 
Co-Investment Program.
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    8. The Order would amend the Prior Order to extend the relief 
granted under the Prior Order to certain Existing Affiliated Managed 
Accounts and Future Affiliated Managed Accounts whose investment 
adviser is an AB-PCI Adviser.
    9. For purposes of the requested Order, ``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

[[Page 32701]]

other Regulated Funds and/or one or more Affiliated Funds in reliance 
on the requested Order. ``Potential Co-Investment Transaction'' means 
any investment opportunity in which a Regulated Fund (or its Wholly-
Owned Investment Sub, as defined below) could not participate together 
with one or more Affiliated Funds and/or one or more other Regulated 
Funds without obtaining and relying on the Order.
    10. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly-Owned Investment Subs.\10\ Such a subsidiary 
would be prohibited from investing in a Co-Investment Transaction with 
any Affiliated Fund or Regulated Fund because it would be a company 
controlled by its parent Regulated Fund for purposes of section 
57(a)(4) and rule 17d-1. Applicants request that each Wholly-Owned 
Investment Sub be permitted to participate in Co-Investment 
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub's participation in any such transaction be 
treated, for purposes of the requested Order, as though the parent 
Regulated Fund were participating directly. The Regulated Fund's Board 
would make all relevant determinations under the Conditions with regard 
to a Wholly-Owned Investment Sub's participation in a Co-Investment 
Transaction, and the Regulated Fund's Board would be informed of, and 
take into consideration, any proposed use of a Wholly-Owned Investment 
Sub in the Regulated Fund's place. If the Regulated Fund proposes to 
participate in the same Co-Investment Transaction with any of its 
Wholly-Owned Investment Subs, the Board will also be informed of, and 
take into consideration, the relative participation of the Regulated 
Fund and the Wholly-Owned Investment Sub.
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    \10\ The term ``Wholly-Owned Investment Sub'' means an entity: 
(i) That is wholly-owned by a Regulated Fund (with the Regulated 
Fund at all times holding, beneficially and of record, 100% of the 
voting and economic interests); (ii) whose sole business purpose is 
to hold one or more investments on behalf of the Regulated Fund; 
(iii) with respect to which the Regulated Fund's Board has the sole 
authority to make all determinations with respect to the entity's 
participation under the Conditions of the Application; and (iv) that 
would be an investment company but for section 3(c)(1) or 3(c)(7) of 
the Act.
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    11. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the AB-PCI Adviser will consider only the Objectives 
and Strategies, Board-Established Criteria,\11\ investment policies, 
investment positions, capital available for investment, and other 
pertinent factors applicable to that Regulated Fund.
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    \11\ ``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 AB-PCI Adviser to the Regulated Fund should be 
notified under Condition 1.
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    12. Other than pro rata dispositions and Follow-On Investments as 
provided in Conditions 7 and 8, and after making the determinations 
required in Conditions 1 and 2(a), the Advisers will present each 
Potential Co-Investment Transaction and the proposed allocation to the 
directors of the Board eligible to vote under section 57(o) of the Act 
(``Eligible Directors''), and the ``required majority,'' as defined in 
section 57(o) of the Act (``Required Majority'') \12\ will approve each 
Co-Investment Transaction prior to any investment by the participating 
Regulated Fund.
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    \12\ In the case of a Regulated Fund that is a registered 
closed-end fund, the Board members that make up the Required 
Majority will be determined as if the Regulated Fund were a BDC 
subject to Section 57(o).
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    13. AXA Equitable may decline the opportunity for its Affiliated 
Managed Accounts to participate in whole or in part in a Potential Co-
Investment Transaction pursuant to AXA Equitable's arrangement with AB-
PCI with respect to its Affiliated Managed Accounts. AXA Equitable does 
not have the ability to cause AB-PCI to change the allocations of any 
Potential Co-Investment Transaction.
    14. With respect to the pro rata dispositions and Follow-On 
Investments provided in Conditions 7 and 8, a Regulated Fund may 
participate in a pro rata disposition or Follow-On Investment without 
obtaining prior approval of the Required Majority if, among other 
things: (i) The proposed participation of each Regulated Fund and 
Affiliated Fund in such disposition is proportionate to its outstanding 
investments in the issuer immediately preceding the disposition or 
Follow-On Investment, as the case may be; and (ii) the Board of the 
Regulated Fund has approved that Regulated Fund's participation in pro 
rata dispositions and Follow-On Investments as being in the best 
interests of the Regulated Fund. If the Board does not so approve, any 
such disposition or Follow-On Investment will be submitted to the 
Regulated Fund's Eligible Directors. The Board of any Regulated Fund 
may at any time rescind, suspend or qualify its approval of pro rata 
dispositions and Follow-On Investments with the result that all 
dispositions and/or Follow-On Investments must be submitted to the 
Eligible Directors.
    15. No Non-Interested Director of a Regulated Fund will have a 
financial interest in any Co-Investment Transaction, other than through 
share ownership in one of the Regulated Funds.
    Applicants' Legal Analysis:
    1. Section 57(a)(4) of the Act prohibits certain affiliated persons 
of a BDC from participating in joint transactions with the BDC or a 
company controlled by a BDC in contravention of rules as prescribed by 
the Commission. Under section 57(b)(2) of the Act, any person who is 
directly or indirectly controlling, controlled by, or under common 
control with a BDC is subject to section 57(a)(4). Applicants submit 
that each of the Regulated Funds and Affiliated Funds be deemed to be a 
person related to each Regulated Fund in a manner described by section 
57(b) by virtue of being under common control. In addition, section 
57(b) applies to any investment adviser to a Regulated Fund that is a 
BDC and to any section 2(a)(3)(C) affiliates of the investment adviser, 
including AXA Equitable and the Affiliated Managed Accounts. Section 
57(i) of the Act provides that, until the Commission prescribes rules 
under section 57(a)(4), the Commission's rules under section 17(d) of 
the Act applicable to registered closed-end investment companies will 
be deemed to apply to transactions subject to section 57(a)(4). Because 
the Commission has not adopted any rules under section 57(a)(4), rule 
17d-1 also applies to joint transactions with Regulated Funds that are 
BDCs. Section 17(d) of the Act and rule 17d-1 under the Act are 
applicable to Regulated Funds that are registered closed-end investment 
companies.
    2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
affiliated persons of a registered investment company from 
participating in joint transactions with the company unless the 
Commission has granted an order permitting such transactions. In 
passing upon applications under rule 17d-1, the Commission considers 
whether the company's participation in the joint transaction is 
consistent with the provisions, policies, and purposes of the Act and 
the extent to which such participation is on a basis different from or 
less advantageous than that of other participants.
    3. Applicants state that in the absence of the requested relief, 
the Regulated Funds would be, in some circumstances, limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants believe that the proposed terms and 
conditions will ensure that the Co-Investment Transactions are 
consistent with the protection of each Regulated Fund's shareholders 
and with the

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purposes intended by the policies and provisions of the Act. Applicants 
state that the Regulated Funds' participation in the Co-Investment 
Transactions will be consistent with the provisions, policies, and 
purposes of the Act and on a basis that is not different from or less 
advantageous than that of other participants.
    4. Applicants also represent that if the AB-PCI Adviser or its 
principals, or any person controlling, controlled by, or under common 
control with an AB-PCI Adviser or its principals, and the Affiliated 
Funds (collectively, the ``Holders'') own in the aggregate more than 25 
percent of the outstanding voting securities of a Regulated Fund 
(``Shares''), then the Holders will vote such Shares as required under 
Condition 14. Applicants believe that this Condition will ensure that 
the Non-Interested Directors will act independently in evaluating the 
Co-Investment Program, because the ability of an AB-PCI Adviser or its 
principals to influence the Non-Interested Directors by a suggestion, 
explicit or implied, that the Non-Interested Directors can be removed 
will be limited significantly. Applicants represent that the Non-
Interested Directors will evaluate and approve any such independent 
party, taking into account its qualifications, reputation for 
independence, cost to the shareholders, and other factors that they 
deem relevant.
    Applicants' Conditions:
    Applicants agree that the Order will be subject to the following 
Conditions:
    1. Each time an AB-PCI Adviser considers a Potential Co-Investment 
Transaction for an Affiliated Fund or another Regulated Fund that falls 
within a Regulated Fund's then-current Objectives and Strategies and 
Board-Established Criteria, the Regulated Fund's AB-PCI Adviser will 
make an independent determination of the appropriateness of the 
investment for such Regulated Fund in light of the Regulated Fund's 
then-current circumstances.
    2. (a) If the AB-PCI Adviser deems the Regulated Fund's 
participation in any Potential Co-Investment Transaction to be 
appropriate for the Regulated Fund, the AB-PCI Adviser will then 
determine an appropriate level of investment for the Regulated Fund.
    (b) If the aggregate amount recommended by the applicable AB-PCI 
Adviser to be invested by the applicable Regulated Fund in the 
Potential Co-Investment Transaction, together with the amount proposed 
to be invested by the other participating Regulated Funds and 
Affiliated Funds, collectively, in the same transaction, exceeds the 
amount of the investment opportunity, the investment opportunity will 
be allocated among the Regulated Funds and Affiliated Funds pro rata 
based on each participant's capital available for investment in the 
asset class being allocated, up to the amount proposed to be invested 
by each. The applicable AB-PCI Adviser to a Regulated Fund will provide 
the Eligible Directors of each participating Regulated Fund with 
information concerning each participating party's available capital to 
assist the Eligible Directors with their review of the Regulated Fund's 
investments for compliance with these allocation procedures.
    (c) After making the determinations required in Conditions 1 and 
2(a), the AB-PCI Adviser will distribute written information concerning 
the Potential Co-Investment Transaction (including the amount proposed 
to be invested by each participating Regulated Fund and Affiliated 
Fund) to the Eligible Directors for their consideration. A Regulated 
Fund will co-invest with one or more other Regulated Funds and/or one 
or more Affiliated Funds only if, prior to the Regulated Funds' and 
Affiliated Funds' participation in the Potential Co-Investment 
Transaction, a Required Majority concludes that:
    (i) The terms of the Potential Co-Investment Transaction, including 
the consideration to be paid, are reasonable and fair to the Regulated 
Fund and its shareholders and do not involve overreaching in respect of 
the Regulated Fund or its shareholders on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) The interests of the Regulated Fund's shareholders; and
    (B) the Regulated Fund's then-current Objectives and Strategies and 
Board-Established Criteria;
    (iii) the investment by any other Regulated Funds or Affiliated 
Funds would not disadvantage the Regulated Fund, and participation by 
the Regulated Fund would not be on a basis different from or less 
advantageous than that of any other Regulated Fund or Affiliated Fund; 
provided that, if any other Regulated Fund or Affiliated Fund, but not 
the Regulated Fund itself, gains the right to nominate a director for 
election to a portfolio company's board of directors or the right to 
have a board observer or any similar right to participate in the 
governance or management of the portfolio company, such event shall not 
be interpreted to prohibit the Required Majority from reaching the 
conclusions required by this Condition 2(c)(iii), if:
    (A) The Eligible Directors will have the right to ratify the 
selection of such director or board observer, if any;
    (B) the applicable AB-PCI Adviser agrees to, and does, provide 
periodic reports to the Regulated Fund's Board with respect to the 
actions of such director or the information received by such board 
observer or obtained through the exercise of any similar right to 
participate in the governance or management of the portfolio company; 
and
    (C) any fees or other compensation that any Affiliated Fund or any 
Regulated Fund or any affiliated person of any Affiliated Fund or any 
Regulated Fund receives in connection with the right of an Affiliated 
Fund or a Regulated Fund to nominate a director or appoint a board 
observer or otherwise to participate in the governance or management of 
the portfolio company will be shared proportionately among the 
participating Affiliated Funds (who each may, in turn, share its 
portion with its affiliated persons) and the participating Regulated 
Funds in accordance with the amount of each party's investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
the AB-PCI Advisers, the Affiliated Funds or the other Regulated Funds 
or any affiliated person of any of them (other than the parties to the 
Co-Investment Transaction), except (A) to the extent permitted by 
Condition 13, (B) to the extent permitted by sections 17(e) or 57(k) of 
the Act, as applicable, (C) indirectly, as a result of an interest in 
the securities issued by one of the parties to the Co-Investment 
Transaction, or (D) in the case of fees or other compensation described 
in Condition 2(c)(iii)(C).
    3. Each Regulated Fund has the right to decline to participate in 
any Potential Co-Investment Transaction or to invest less than the 
amount proposed.
    4. The applicable AB-PCI Adviser will present to the Board of each 
Regulated Fund, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Funds or Affiliated Funds during the preceding quarter that fell within 
the Regulated Fund's then-current Objectives and Strategies and Board-
Established Criteria that were not made available to the Regulated 
Fund, and an explanation of why the investment opportunities were not 
offered to the Regulated Fund. All information presented to the Board 
pursuant to this Condition will be kept for the life of the Regulated 
Fund and at least two years thereafter, and will be

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subject to examination by the Commission and its staff.
    5. Except for Follow-On Investments made in accordance with 
Condition 8,\13\ a Regulated Fund will not invest in reliance on the 
Order in any issuer in which another Regulated Fund, Affiliated Fund, 
or any affiliated person of another Regulated Fund or an Affiliated 
Fund is an existing investor.
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    \13\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
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    6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of 
securities to be purchased, settlement date, and registration rights 
will be the same for each participating Regulated Fund and Affiliated 
Fund. The grant to an Affiliated Fund or another Regulated Fund, but 
not the Regulated Fund, of the right to nominate a director for 
election to a portfolio company's board of directors, the right to have 
an observer on the board of directors or similar rights to participate 
in the governance or management of the portfolio company will not be 
interpreted so as to violate this Condition 6, if Conditions 
2(c)(iii)(A), (B) and (C) are met.
    7. (a) If any Affiliated Fund or any Regulated Fund elects to sell, 
exchange or otherwise dispose of an interest in a security that was 
acquired by one or more Regulated Funds and/or Affiliated Funds in a 
Co-Investment Transaction, the applicable AB-PCI Advisers will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest 
practical time; and
    (ii) formulate a recommendation as to participation by the 
Regulated Fund in the disposition.
    (b) Each Regulated Fund will have the right to participate in such 
disposition on a proportionate basis, at the same price and on the same 
terms and conditions as those applicable to the participating 
Affiliated Funds and any other Regulated Fund.
    (c) A Regulated Fund may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Fund and each Affiliated Fund in such 
disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Board of the 
Regulated Fund has approved as being in the best interests of the 
Regulated Fund the ability to participate in such dispositions on a pro 
rata basis (as described in greater detail in the application); and 
(iii) the Board of the Regulated Fund is provided on a quarterly basis 
with a list of all dispositions made in accordance with this Condition. 
In all other cases, the AB-PCI Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Directors, and the Regulated Fund will participate in such disposition 
solely to the extent that a Required Majority determines that it is in 
the Regulated Fund's best interests.
    (d) Each Affiliated Fund and each Regulated Fund will bear its own 
expenses in connection with any such disposition.
    8. (a) If any Affiliated Fund or any Regulated Fund desires to make 
a Follow-On Investment in a portfolio company whose securities were 
acquired by the Regulated Fund and the Affiliated Fund in a Co-
Investment Transaction, the applicable AB-PCI Advisers will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest 
practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including the amount of the proposed Follow-On Investment, by each 
Regulated Fund.
    (b) A Regulated Fund may participate in such Follow-On Investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Fund and each Affiliated Fund 
in such investment is proportionate to its outstanding investments in 
the issuer immediately preceding the Follow-On Investment; and (ii) the 
Board of the Regulated Fund has approved as being in the best interests 
of the Regulated Fund the ability to participate in Follow-On 
Investments on a pro rata basis (as described in greater detail in the 
application). In all other cases, the AB-PCI Adviser will provide its 
written recommendation as to such Regulated Fund's participation to the 
Eligible Directors, and the Regulated Fund will participate in such 
Follow-On Investment solely to the extent that the Required Majority 
determines that it is in such Regulated Fund's best interests.
    (c) If, with respect to any Follow-On Investment:
    (i) The amount of the opportunity is not based on the Regulated 
Funds' and the Affiliated Funds' outstanding investments immediately 
preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the AB-PCI Adviser to be 
invested by each Regulated Fund in the Follow-On Investment, together 
with the amount proposed to be invested by the other participating 
Regulated Funds and the Affiliated Funds in the same transaction, 
exceeds the amount of the opportunity; then the amount invested by each 
such party will be allocated among them pro rata based on each 
participant's capital available for investment in the asset class being 
allocated, up to the amount proposed to be invested by each.
    (d) The acquisition of Follow-On Investments as permitted by this 
Condition will be considered a Co-Investment Transaction for all 
purposes and subject to the other Conditions set forth in the 
application.
    9. The Non-Interested Directors of each Regulated Fund will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by other Regulated Funds or Affiliated Funds that a 
Regulated Fund considered but declined to participate in, so that the 
Non-Interested Directors may determine whether all investments made 
during the preceding quarter, including those investments that the 
Regulated Fund considered but declined to participate in, comply with 
the Conditions of the Order. In addition, the Non-Interested Directors 
will consider at least annually: (i) The continued appropriateness for 
such Regulated Fund of participating in new and existing Co-Investment 
Transactions; and (ii) the continued appropriateness of any Board-
Established Criteria.
    10. Each Regulated Fund will maintain the records required by 
section 57(f)(3) of the Act as if each of the Regulated Funds were a 
BDC and each of the investments permitted under these Conditions were 
approved by the Required Majority under section 57(f) of the Act.
    11. No Non-Interested Director of a Regulated Fund will also be a 
director, general partner, managing member or principal, or otherwise 
an ``affiliated person'' (as defined in the Act), of any Affiliated 
Fund.
    12. The expenses, if any, associated with acquiring, holding or 
disposing of any securities acquired in a Co-Investment Transaction 
(including, without limitation, the expenses of the distribution of any 
such securities registered for sale under the Securities Act) will, to 
the extent not payable by the AB-PCI Advisers under their respective 
investment advisory agreements with the Affiliated Funds and the 
Regulated Funds, be shared by the Regulated Funds and the Affiliated 
Funds in proportion to the relative amounts of the securities held or 
to be

[[Page 32704]]

acquired or disposed of, as the case may be.
    13. Any transaction fee \14\ (including break-up or commitment fees 
but excluding broker's fees contemplated by section 17(e) or 57(k) of 
the Act, as applicable) received in connection with a Co-Investment 
Transaction will be distributed to the participating Regulated Funds 
and Affiliated Funds on a pro rata basis based on the amounts they 
invested or committed, as the case may be, in such Co-Investment 
Transaction. If any transaction fee is to be held by an AB-PCI Adviser 
pending consummation of the transaction, the fee will be deposited into 
an account maintained by such AB-PCI Adviser at a bank or banks having 
the qualifications prescribed in section 26(a)(1) of the Act, and the 
account will earn a competitive rate of interest that will also be 
divided pro rata among the participating Regulated Funds and Affiliated 
Funds based on the amounts they invest in such Co-Investment 
Transaction. None of the Affiliated Funds, the AB-PCI Advisers, the 
other Regulated Funds or any affiliated person of the Regulated Funds 
or Affiliated Funds will receive additional compensation or 
remuneration of any kind as a result of or in connection with a Co-
Investment Transaction (other than (a) in the case of the Regulated 
Funds and the Affiliated Funds, the pro rata transaction fees described 
above and fees or other compensation described in Condition 
2(c)(iii)(C); and (b) in the case of an AB-PCI Adviser, investment 
advisory fees paid in accordance with the agreement between the AB-PCI 
Adviser and the Regulated Fund or Affiliated Fund).
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    \14\ Applicants are not requesting and the staff is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    14. If the Holders own in the aggregate more than 25 percent of the 
Shares of a Regulated Fund, then the Holders will vote such Shares as 
directed by an independent third party when voting on: (1) The election 
of directors; (2) the removal of one or more directors; or (3) any 
other matter under either the Act or applicable State law affecting the 
Board's composition, size or manner of election.
    15. Each Regulated Fund's chief compliance officer, as defined in 
rule 38a-1(a)(4), will prepare an annual report for its Board each year 
that evaluates (and documents the basis of that evaluation) the 
Regulated Fund's compliance with the terms and conditions of the 
application and the procedures established to achieve such compliance.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-14963 Filed 7-12-18; 8:45 am]
 BILLING CODE 8011-01-P