3616 Federal Register / Vol. 87, No. 15 / Monday, January 24, 2022 / Notices 

1 ‘‘Regulated Funds’’ means the Company, any 

Future Regulated Funds and any BDC Downstream 

Funds (defined below). ‘‘Future Regulated Fund’’ 

means any closed-end management investment 

company (a) that is registered under the Act or has 

elected to be regulated as a BDC, (b) whose 

investment adviser (and sub-adviser(s), if any) is an 

Adviser and (c) that intends to participate in the CoInvestment Program. ‘‘Adviser’’ means any Existing 

Advisers (defined below), together with any future 

investment adviser that intends to participate in the 

Co-Investment Program (defined below) and (i) 

controls, is controlled by or is under common 

control with an Existing Adviser, (ii)(a) is registered 

as an investment adviser under the 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 an Existing Adviser 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 (defined below) 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 (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’’). 

‘‘Existing Advisers’’ means Management, SPC, 

Specialty Credit II Management, Silver Star 

Management, Funding Management and Distressed 

Opportunities Management. 

2 ‘‘Affiliated Fund’’ means the Existing Affiliated 

Funds and any Future Affiliated Funds. No Existing 

Affiliated Fund is a BDC Downstream Fund. ‘‘BDC 

Downstream Fund’’ means, with respect to the 

Company or 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(s), 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. 

3All 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. 

Dated: January 20, 2022. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2022–01446 Filed 1–20–22; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

34472; File No. 812–14556] 

Silver Point Specialty Lending Fund, et 

al.; Notice of Application 

January 19, 2022. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: 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 affiliated investment funds. 

APPLICANTS: Silver Point Specialty 

Lending Fund (the ‘‘Company’’), Silver 

Point Specialty Credit Fund 

Management, LLC (‘‘Management’’), 

Silver Point Capital, L.P. (‘‘SPC’’), Silver 

Point Capital Offshore Fund, Ltd., Silver 

Point Capital Offshore Master Fund, 

L.P., Silver Point Capital, L.P., Silver 

Point Distressed Opportunities Fund, 

L.P., Silver Point Distressed 

Opportunities Offshore Master Fund, 

L.P., Silver Point Distressed 

Opportunities Offshore Fund, L.P., 

Silver Point Distressed Opportunity 

Institutional Partners (Offshore), L.P., 

Silver Point Distressed Opportunity 

Institutional Partners, L.P., Silver Point 

Distressed Opportunity Institutional 

Partners Master Fund (Offshore), L.P., 

Silver Point Distressed Opportunities 

Management, LLC (‘‘Distressed 

Opportunities Management’’), Silver 

Point Select Opportunities Fund A, L.P., 

Silver Point Specialty Credit Fund II, 

L.P., Silver Point Specialty Credit Fund 

II (Offshore), L.P., Silver Point Specialty 

Credit Fund II (Offshore) B, L.P., Silver 

Point Specialty Credit Fund II (Offshore) 

C, L.P., Silver Point Specialty Credit 

Fund II Mini-Master Fund (Offshore), 

L.P., Silver Point Specialty Credit Fund 

II Mini-Master Fund, L.P., Silver Point 

Specialty Credit Fund II Management, 

LLC (‘‘Specialty Credit II 

Management’’), Silver Point Specialty 

Credit Silver Star Fund, L.P., Silver 

Point Specialty Credit Silver Star Fund 

Management, LLC (‘‘Silver Star 

Management’’), Silver Point Loan 

Funding, LLC, and Silver Point Loan 

Funding Management, LLC (‘‘Funding 

Management’’). 

DATES: The application was filed on 

October 1, 2015, and amended on 

December 27, 2017, July 20, 2018, 

September 17, 2018, December 17, 2018, 

July 28, 2021, October 22, 2021, January 

7, 2022 and January 12, 2022. 

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 

February 14, 2022, and should be 

accompanied by proof of service on 

applicants, in the form of an affidavit or, 

for lawyers, a certificate of service. 

Pursuant to rule 0–5 under the Act, 

hearing requests should state the nature 

of the writer’s interest, any facts bearing 

upon the desirability of a hearing on the 

matter, the reason for the request, and 

the issues contested. Persons who wish 

to be notified of a hearing may request 

notification by emailing the 

Commission’s Secretary at SecretarysOffice@sec.gov. 

ADDRESSES: The Commission: 

Secretarys-Office@sec.gov. Applicants: 

Compliance@silverpointcapital.com. 

FOR FURTHER INFORMATION CONTACT: Erin 

Loomis Moore, Senior Counsel, or 

Joseph Toner, Acting Branch Chief, at 

(202) 551–6825 (Chief Counsel’s Office, 

Division of Investment Management). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

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 CoInvestment Transactions with each 

other. ‘‘Co-Investment Transaction’’ 

means any transaction in which one or 

more Regulated Funds (or its WhollyOwned Investment Sub) 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

Applicants 

2. The Company is a closed-end 

Maryland statutory trust that has elected 


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4Section 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. 

5 ‘‘Board’’ means (i) with respect to a Regulated 

Fund other than a BDC Downstream Fund, the 

board of directors (or the equivalent) of the 

applicable 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. 

6 ‘‘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. 

7 ‘‘Wholly-Owned Investment Sub’’ means an 

entity (i) that is wholly-owned by a Regulated Fund 

(with such 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 such Regulated Fund (and, in the case of 

a SBIC Subsidiary (defined below), maintain a 

license under the SBA Act (defined below) and 

issue debentures guaranteed by the SBA (defined 

below)); (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 to the 

application; and (iv) that would be an investment 

company but for Section 3(c)(1) or 3(c)(7) of the Act. 

The term ‘‘SBIC Subsidiary’’ means a WhollyOwned Investment Sub that is licensed by the 

Small Business Administration (the ‘‘SBA’’) to 

operate under the Small Business Investment Act of 

1958, as amended, (the ‘‘SBA Act’’) as a small 

business investment company (an ‘‘SBIC’’). 

8 ‘‘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 a 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). 

9 ‘‘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 such Regulated Fund should 

be notified under Condition 1. The BoardEstablished Criteria will be consistent with the 

Continued 

to be regulated as a BDC under the Act.4

The Company’s Board 5 is comprised of 

a majority of members who are 

Independent Directors.6

3. Management, a Delaware limited 

liability company that is registered 

under the Investment Advisers Act of 

1940 (the ‘‘Advisers Act’’), serves as the 

investment adviser to the Company. 

4. 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 would be 

an investment company but for Section 

3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act. 

5. SPC, Specialty Credit II 

Management, Silver Star Management, 

Funding Management and Distressed 

Opportunities Management are the 

investment advisers to the Existing 

Affiliated Funds. SPC is registered as an 

investment adviser under the Advisers 

Act. Specialty Credit II Management is 

a wholly-owned subsidiary of SPC and 

is a relying adviser under the Advisers 

Act through a single registration with 

SPC. Silver Star Management is a 

wholly-owned subsidiary of SPC and is 

a relying adviser under the Advisers Act 

through a single registration with SPC. 

Funding Management is a whollyowned subsidiary of SPC and will be a 

relying adviser under the Advisers Act 

through a single registration with SPC 

prior to relying on the Order. Distressed 

Opportunities Management is a whollyowned subsidiary of SPC and is a 

relying adviser under the Advisers Act 

through a single registration with SPC. 

6. Applicants state that a Regulated 

Fund may, from time to time, form one 

or more Wholly-Owned Investment 

Subs.7 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 applicable 

parent 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. Applicants represent that this 

treatment is justified because a WhollyOwned Investment Sub would have no 

purpose other than serving as a holding 

vehicle for the Regulated Fund’s 

investments and, therefore, no conflicts 

of interest could arise between the 

parent Regulated Fund and the WhollyOwned Investment Sub. The Board of 

the parent Regulated Fund would make 

all relevant determinations under the 

Conditions with regard to a WhollyOwned Investment Sub’s participation 

in a Co-Investment Transaction, and the 

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 parent 

Regulated Fund proposes to participate 

in the same Co-Investment Transaction 

with any of its Wholly-Owned 

Investment Subs, the Board of the 

parent Regulated Fund will also be 

informed of, and take into 

consideration, the relative participation 

of the Regulated Fund and the WhollyOwned Investment Sub. 

Applicants’ Representations 

A. Allocation Process 

7. Applicants state that the Adviser is 

presented with numerous investment 

opportunities each year on behalf of its 

clients and the Adviser will determine 

how to allocate those opportunities in a 

manner that, over time, is fair and 

equitable to all of its clients, and 

without violating the prohibitions on 

joint transactions included in Rule 17d– 

1 and Section 57(a)(4) of the Act. Such 

investment opportunities may be 

Potential Co-Investment Transactions. 

8. Applicants represent that the 

Adviser has established processes 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 contained in the 

Order. 

9. Specifically, applicants state that 

the Advisers are organized and managed 

such that the portfolio managers and 

analysts (‘‘Investment Teams’’), 

responsible for evaluating investment 

opportunities and making investment 

decisions on behalf of clients are 

promptly notified of the opportunities. 

If the requested Order is granted, the 

Advisers will establish, maintain and 

implement 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. In particular, consistent with 

Condition 1, if a Potential CoInvestment Transaction falls within the 

then-current Objectives and Strategies 8

and any Board-Established Criteria 9 of a 


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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 earnings 

before interest expense, income tax expense, 

depreciation and amortization, or ‘‘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 the 

Applicants anticipate that, under normal 

circumstances, the Board would not modify these 

criteria more often than quarterly. 

10The reason for any such adjustment to a 

proposed order amount will be documented in 

writing and preserved in the records of the 

Advisers. 

11 ‘‘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. 

12The 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. 

13However, if the size of the opportunity is 

decreased such that the aggregate of the original 

Internal Orders would exceed the amount of the 

remaining investment opportunity, then upon 

submitting any revised order amount to the Board 

of a Regulated Fund for approval, the Adviser to the 

Regulated Fund will also notify the Board promptly 

of the amount that the Regulated Fund would 

receive if the remaining investment opportunity 

were allocated pro rata on the basis of the size of 

the original Internal Orders. 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. 

14 ‘‘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. 

15 ‘‘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. 

Regulated Fund, the policies and 

procedures will require that the relevant 

Investment Team 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. 

10. The Adviser to each applicable 

Regulated Fund, working through the 

applicable Investment Team, 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, working 

through the applicable Investment 

Team, formulate a recommendation 

regarding the proposed order amount for 

the Regulated Fund. 

11. 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 allocation committee, 

which the Adviser will establish to 

handle the allocation of investment 

opportunities in Potential CoInvestment Transactions (‘‘CoInvestment Transaction Allocation 

Committee’’). Applicants state further 

that each proposed order amount may 

be reviewed and adjusted, in accordance 

with the Advisers’ written allocation 

policies and procedures, by the CoInvestment Transaction Allocation 

Committee.10 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.11

12. 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.12 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.13

B. Follow-On Investments 

13. Applicants state that from time to 

time the Regulated Funds and Affiliated 

Funds may have opportunities to make 

Follow-On Investments 14 in an issuer in 

which a Regulated Fund and one or 

more other Regulated Funds and/or 

Affiliated Funds previously have 

invested and continue to hold an 

investment. 

14. Applicants propose that FollowOn Investments would be divided into 

two categories depending on whether 

the Regulated Funds and Affiliated 

Funds holding investments in the issuer 

previously participated in a CoInvestment Transaction with respect to 

the issuer and continue to hold any 

securities acquired in a Co-Investment 

Transaction for that issuer. 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 9.15 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. 


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16A ‘‘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, their 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). 

17A ‘‘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 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). 

18 ‘‘Disposition’’ means the sale, exchange or 

other disposition of an interest in a security of an 

issuer. 

19However, 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. 

20A ‘‘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, their approval of Pro 

Rata Dispositions, in which case all subsequent 

Dispositions will be submitted to the Regulated 

Fund’s Eligible Directors. 

21 ‘‘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. 

22Applicants state this may occur for two 

reasons. First, when the Affiliated Fund or 

Regulated Fund is not yet fully funded because, 

when the Affiliated Fund or Regulated Fund desires 

to make an investment, it must call capital from its 

investors to obtain the financing to make the 

investment, and in these instances, the notice 

requirement to call capital could be as much as ten 

business days. Second, where, for tax or regulatory 

reasons, an Affiliated Fund or Regulated Fund does 

not purchase new issuances immediately upon 

issuance but only after a short seasoning period of 

up to ten business days. 

15. 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 16 or (ii) a NonNegotiated Follow-On Investment.17

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. 

C. Dispositions 

16. Applicants propose that 

Dispositions 18 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 

and continue to hold any securities 

acquired in a Co-Investment Transaction 

for such 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, 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.19

17. 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 20 or (ii) the 

securities are Tradable Securities 21 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 

18. 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.22 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 

19. 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 directed by an 

independent third party when voting on 

matters specified in Condition 15. 

Applicants believe that this Condition 

will ensure that the Independent 

Directors will act independently in 

evaluating Co-Investment Transactions, 

because the ability of the Adviser or its 

principals to influence the Independent 

Directors by a suggestion, explicit or 

implied, that the Independent Directors 

can be removed will be limited 

significantly. The Independent Directors 

shall evaluate and approve any 

independent party, taking into account 

its qualifications, reputation for 

independence, cost to the shareholders, 

and other factors that they deem 

relevant. 

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 


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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 Existing Adviser is the 

investment adviser (and sub-adviser, if 

any) to, and may be deemed to control, 

each of the Existing Affiliated Funds, 

and an Adviser to Affiliated Funds will 

be the investment adviser (and subadviser, if any) to, and may be deemed 

to control, any other Affiliated Fund; (ii) 

an Existing Adviser is the investment 

adviser (and sub-adviser, if any) to, and 

may be deemed to control, the Company 

and an Adviser will be the investment 

adviser (and sub-adviser, if any) to, and 

may be deemed to control, any Future 

Regulated Fund; (iii) each BDC 

Downstream Fund will be deemed to be 

controlled by its BDC parent and/or its 

BDC parent’s investment adviser; and 

(iv) the Advisers to Affiliated Funds and 

the Advisers to Regulated Funds are 

under common control. Thus, each of 

the Affiliated Funds could be deemed to 

be a person related to the Regulated 

Funds, including any BDC Downstream 

Fund, in a manner described by Section 

57(b) and related to the other Regulated 

Funds in a manner described by Rule 

17d–1; and therefore the prohibitions of 

Rule 17d–1 and Section 57(a)(4) would 

apply respectively to prohibit the 

Affiliated Funds from participating in 

Co-Investment. Transactions with the 

Regulated Funds. 

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 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 

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 


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23For 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. 

24This exception applies only to Follow-On 

Investments by a Regulated Fund in issuers in 

which that Regulated Fund already holds 

investments. 

25 ‘‘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. 

26 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. 

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, 

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 23 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,24 a Regulated Fund will not 

invest in reliance on the Order in any 

issuer in which a Related Party has an 

investment.25

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 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. 

(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; 26 (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 


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27 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. 

28To 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. 

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 

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 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 27 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 

(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,28 immediately 

preceding the Follow-On Investment; 

and (B) the Board of the Regulated Fund 

has approved as being in the best 

interests of the Regulated Fund the 

ability to participate in Follow-On 

Investments on a pro rata basis (as 

described in greater detail in the 

Application); or 

(ii) it is a Non-Negotiated Follow-On 

Investment. 

(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, 


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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 

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 

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 

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 


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3624 Federal Register / Vol. 87, No. 15 / Monday, January 24, 2022 / Notices 

29Applicants are not requesting and the 

Commission is not providing any relief for 

transaction fees received in connection with any 

Co-Investment Transaction. 

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 of a Regulated 

Fund (including the non-interested 

members of any Independent Party) 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, 

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.29 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 

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. 2022–01292 Filed 1–21–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

34474; 812–15264] 

Catholic Responsible Investments 

Funds and Christian Brothers 

Investment Services, Inc.; Notice of 

Application 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application under section 

6(c) of the Investment Company Act of 

1940 (‘‘Act’’) for an exemption from 

section 15(a) of the Act and rule 18f–2 

under the Act, as well as from certain 

disclosure requirements in rule 20a–1 

under the Act, Item 19(a)(3) of Form N– 

1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 

22(c)(8) and 22(c)(9) of Schedule 14A 

under the Securities Exchange Act of 

1934, and sections 6–07(2)(a), (b), and 

(c) of Regulation S–X (‘‘Disclosure 

Requirements’’). The requested 

exemption would permit an investment 

adviser to hire and replace certain subadvisers without shareholder approval 

and grant relief from the Disclosure 

Requirements as they relate to fees paid 

to the sub-advisers. 

APPLICANTS: Catholic Responsible 

Investments Funds (the ‘‘Trust’’), a 

Delaware statutory trust registered 

under the Act as an open-end 

management investment company with 

multiple series (each a ‘‘Fund’’) and 

Christian Brothers Investment Services, 

Inc. (the ‘‘Adviser’’), an Illinois 

corporation that is registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(collectively with the Trust, the 

‘‘Applicants’’). 

FILING DATES: The application was filed 

on September 20, 2021, and amended 

on December 27, 2021. 

HEARING OR NOTIFICATION OF HEARING: 

An order granting the application 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 February 14, 2022, 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 

writing to the Commission’s Secretary. 

ADDRESSES: The Commission: 

Secretarys-Office@sec.gov. Applicants: 

The Trust, mbeattie@seic.com, and the 

Adviser, jmccroy@cbisonline.com (with 

a copy to sean.graber@

morganlewis.com_and_mrenetzky@

lockelord.com). 

FOR FURTHER INFORMATION CONTACT: 

Adam R. Bolter, Senior Counsel, at (202) 

674–8049, or Lisa Reid Ragen, 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 an applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 


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