Document ID: SEC-2018-1517-0001
Agency: sec
Document Type: Notice
Title: Applications: BC Partners Lending Corp., et al.
Posted Date: 2018-10-02T04:00Z

[Federal Register Volume 83, Number 191 (Tuesday, October 2, 2018)]
[Notices]
[Pages 49608-49613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21375]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33256; File No. 812-14860]

BC Partners Lending Corporation, et al.; Notice of Application

September 26, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

-----------------------------------------------------------------------

    Notice of an 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 permitting 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 a 
business development company (``BDC'') and certain closed-end 
investment companies to co-invest in portfolio companies with each 
other and with affiliated investment funds.

APPLICANTS: BC Partners Lending Corporation (the ``Company''), BCP 
Special Opportunities Fund I LP (the ``Private Fund''), and BC Partners 
Advisors L.P. (the ``Company Adviser'').

FILING DATES: The application was filed on December 27, 2017, and 
amended on May 31, 2018 and September 12, 2018.

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 October 22, 2018 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 writing to the 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
St. NE, Washington, DC 20549-1090. Applicants: 650 Madison Avenue, New 
York, New York 10022.

FOR FURTHER INFORMATION CONTACT: Kieran G. Brown, Senior Counsel, at 
(202) 551-6773, or Kaitlin C. Bottock, 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. The Company is a Maryland corporation organized on December 22, 
2017. On April 23, 2018, the Company filed an election to be treated as 
a BDC \1\

[[Page 49609]]

through a notification of election to be subject to sections 55 through 
65 of the Act on Form N-54A. The Company filed a registration statement 
on Form 10 under the Securities Exchange Act of 1934, that became 
effective on April 23, 2018. The Company will not register its 
securities on Form N-2 in reliance on Regulation D under the 1933 Act. 
The Company's Objectives and Strategies will be to generate current 
income and, to a lesser extent, capital appreciation.\2\ The Company 
intends its investments to primarily take the form of debt investments, 
which may include secured debt, unsecured debt, other debt and/or 
equity in private middle-market companies. While the Company's primary 
focus will be on investments within the U.S., the Company may, on 
occasion, invest in foreign securities. The Company has a five-member 
board of directors (the ``Board''), of which a majority are not 
``interested persons'' of the Company within the meaning of section 
2(a)(19) of the Act (the ``Non-Interested Directors'').\3\
---------------------------------------------------------------------------

    \1\ Section 2(a)(48) of the Act defines a BDC to be any closed-
end investment company that operates for the purpose of making 
investments in securities described in section 55(a)(1) through 
55(a)(3) of the Act and makes available significant managerial 
assistance with respect to the issuers of such securities.
    \2\ ``Objectives and Strategies'' means a Regulated Fund's 
(defined below) investment objectives and strategies, as described 
in the Regulated Fund's registration statement, other filings the 
Regulated Fund has made with the Commission under the Act, under the 
Securities Act of 1933 (the ``Securities Act''), or under the 
Securities Exchange Act of 1934, and in the Regulated Fund's reports 
to shareholders.
    \3\ No Director will be considered a Non-Interested Director 
with respect to a particular Co-Investment Transaction unless the 
Director has no direct or indirect financial interest in that Co-
Investment Transaction (as defined below) or any interest in any 
portfolio company, other than through an interest in the securities 
of a Regulated Fund (as defined below).
---------------------------------------------------------------------------

    2. The Private Fund was formed as a Cayman Islands exempted limited 
partnership and would be an investment company but for the exclusion 
from the definition of investment company provided by section 3(c)(7) 
of the Act. The Private Fund is managed by the Company Adviser. The 
Private Fund's investment objective is to make credit-oriented 
investments on an opportunistic basis. The Private Fund has investment 
objectives and strategies that overlap, to an extent, with those of the 
Company.
    3. The Company Adviser, a Delaware limited partnership formed on 
March 29, 2017 and an investment adviser registered with the Commission 
under the Investment Advisers Act of 1940 (``Advisers Act''), serves as 
investment adviser to both the Company and the Private Fund, in each 
case, pursuant to an investment advisory agreement with such entity. 
Under the investment advisory agreements of the Company and the Private 
Fund, the Company Adviser manages the assets of each entity in 
accordance with the investment objective, policies and restrictions of 
each entity, makes investment decisions for each entity, monitors the 
investments of each entity, and provides each entity with such other 
investment advisory and related services that each entity may 
reasonably require for the investment of capital, subject, in the case 
of the Company, to the oversight of its Board.
    4. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds \4\ and/or one or more Affiliated Funds \5\ to 
participate in the same investment opportunities through a proposed co-
investment program (the ``Co-Investment Program'') where such 
participation would otherwise be prohibited under section 57(a)(4) and 
rule 17d-1 by (a) co-investing with each other in securities issued by 
issuers in private placement transactions in which an Adviser 
negotiates terms in addition to price; \6\ and (b) making additional 
investments in securities of such issuers, including through the 
exercise of warrants, conversion privileges, and other rights to 
purchase securities of the issuers (``Follow-On Investments''). ``Co-
Investment Transaction'' means any transaction in which a Regulated 
Fund (or its Wholly-Owned Investment Subsidiary) participates together 
with one or more other Regulated Funds and/or one or more Affiliated 
Funds in reliance on the requested Order. ``Potential Co-Investment 
Transaction'' means any investment opportunity in which a Regulated 
Fund (or its Wholly-Owned Investment Subsidiary) 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.\7\
---------------------------------------------------------------------------

    \4\ ``Regulated Fund'' means the Company and any Future 
Regulated Fund. ``Future Regulated Fund'' means any closed-end 
management investment company (a) that is registered under the Act 
or has elected to be regulated as a BDC, (b) whose investment 
adviser is an Adviser, and (c) that intends to participate in the 
Co-Investment Program. The term ``Adviser'' means (a) the Company 
Adviser and (b) any future investment adviser that controls, is 
controlled by or is under common control with the Company Adviser or 
its successor and is registered as an investment adviser under the 
Advisers Act. The term ``successor,'' as applied to each Adviser, 
means an entity that results from a reorganization into another 
jurisdiction or change in the type of business organization.
    \5\ ``Affiliated Fund'' means the Private Fund and any Future 
Affiliated Fund. ``Future Affiliated Fund'' means any entity (a) 
whose investment adviser is an Adviser, (b) that would be an 
investment company but for section 3(c)(1) or 3(c)(7) of the Act, 
and (c) that intends to participate in the Co-Investment Program.
    \6\ 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.
    \7\ All existing entities that currently intend to rely upon the 
requested Order have been named as applicants. Any other existing or 
future entity that subsequently relies on the Order will comply with 
the terms and conditions of the application.
---------------------------------------------------------------------------

    5. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly-Owned Investment Subsidiaries.\8\ 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 Subsidiary be permitted to participate in Co-
Investment Transactions in lieu of its parent Regulated Fund and that 
the Wholly-Owned Investment Subsidiary's participation in any such 
transaction be treated, for purposes of the requested Order, as though 
the parent Regulated Fund were participating directly. Applicants 
represent that this treatment is justified because a Wholly-Owned 
Investment Subsidiary would have no purpose other than serving as a 
holding vehicle for the Regulated Fund's investments and, therefore, no 
conflicts of interest could arise between the Regulated Fund and the 
Wholly-Owned Investment Subsidiary. The Regulated Fund's Board would 
make all relevant determinations under the conditions with regard to a 
Wholly-Owned Investment Subsidiary'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 
Subsidiary 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 Subsidiaries, the Board will also be 
informed of, and take into consideration, the relative participation

[[Page 49610]]

of the Regulated Fund and the Wholly-Owned Investment Subsidiary.
---------------------------------------------------------------------------

    \8\ The term ``Wholly-Owned Investment Subsidiary'' 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 and incur debt (which is 
or would be consolidated with other indebtedness of such Regulated 
Fund for financial reporting or compliance purposes under the Act) 
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 sections 3(c)(1) or 3(c)(7) of the Act.
---------------------------------------------------------------------------

    6. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the applicable Adviser will consider only the 
Objectives and Strategies, Board-Established Criteria,\9\ investment 
policies, investment positions, capital available for investment 
(``Available Capital''), and other pertinent factors applicable to that 
Regulated Fund. The Board of each Regulated Fund, including the Non-
Interested Directors has (or will have prior to relying on the 
requested Order) determined that it is in the best interests of the 
Regulated Fund to participate in the Co-Investment Transaction.
---------------------------------------------------------------------------

    \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 each Adviser to the Regulated Fund should be notified under 
condition 1.
---------------------------------------------------------------------------

    7. 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(b) and 2(a), the Adviser will present each 
Potential Co-Investment Transaction that meets the Board-Established 
Criteria 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'') \10\ will approve each Co-
Investment Transaction prior to any investment by the participating 
Regulated Fund. No Eligible Director will have any direct or indirect 
financial interest in any Co-Investment Transaction or any interest in 
any portfolio company, other than indirectly through share ownership 
(if any) of the Regulated Funds.
---------------------------------------------------------------------------

    \10\ 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).
---------------------------------------------------------------------------

    8. 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.
    9. Applicants also represent that if the Advisers, the principals 
of the Advisers (``Principals''), or any person controlling, controlled 
by, or under common control with an Adviser or the Principals, and the 
Affiliated Funds (collectively, the ``Holders'') own in the aggregate 
more than 25% of the outstanding voting shares of a Regulated Fund (the 
``Shares''), then the Holders will vote such Shares as required under 
condition 14. Applicants believe this condition will ensure that the 
Non-Interested Directors will act independently in evaluating the Co-
Investment Program, because the ability of the Advisers or the 
Principals to influence the Non-Interested Directors by a suggestion, 
explicit or implied, that the Non-Interested Directors can be removed 
will be limited significantly. Applicants represent that the Non-
Interested Directors will evaluate and approve any such independent 
third 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 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 could 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. Section 57(i) of 
the Act provides that, until the Commission prescribes rules under 
section 57(a)(4), the Commission's rules under section 17(d) of the Act 
applicable to registered closed-end investment companies will be deemed 
to apply to transactions subject to section 57(a)(4). Because the 
Commission has not adopted any rules under section 57(a)(4), rule 17d-1 
also applies to joint transactions with Regulated Funds that are BDCs. 
Section 17(d) of the Act and rule 17d-1 under the Act are applicable to 
Regulated Funds that are registered closed-end investment companies.
    2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
affiliated persons of a registered investment company from 
participating in joint transactions with the company unless the 
Commission has granted an order permitting such transactions. In 
passing upon applications under rule 17d-1, the Commission considers 
whether the company's participation in the joint transaction is 
consistent with the provisions, policies, and purposes of the Act and 
the extent to which such participation is on a basis different from or 
less advantageous than that of other participants.
    3. Applicants state that in the absence of the requested relief, 
the Regulated Funds would be, in some circumstances, limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants believe that the proposed terms and 
conditions will ensure that the Co-Investment Transactions are 
consistent with the protection of each Regulated Fund's shareholders 
and with the purposes intended by the policies and provisions of the 
Act. Applicants state that the Regulated Funds' participation in the 
Co-Investment Transactions will be consistent with the provisions, 
policies, and purposes of the Act and on a basis that is not different 
from or less advantageous than that of other participants.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following 
conditions:
    1.(a) The Advisers will establish, maintain and implement policies 
and procedures reasonably designed to ensure that each Adviser is 
promptly notified, for each Regulated Fund the Adviser manages, of all 
Potential Co-Investment Transactions that (i) an Adviser considers for 
any other Regulated Fund or Affiliated Fund and (ii) fall within the 
Regulated Fund's then-current Objectives and Strategies and Board-
Established Criteria.
    (b) When an Adviser to a Regulated Fund is notified of a Potential 
Co-Investment Transaction under condition 1(a), the Adviser will make 
an independent determination of the appropriateness of the investment 
for the Regulated Fund in light of the Regulated Fund's then-current 
circumstances.
    2.(a) If the Adviser deems a Regulated Fund's participation in any 
Potential

[[Page 49611]]

Co-Investment Transaction to be appropriate for the Regulated Fund, the 
Adviser will then determine an appropriate level of investment for the 
Regulated Fund.
    (b) If the aggregate amount recommended by the applicable Adviser 
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be 
invested by the other participating Regulated Funds and Affiliated 
Funds, collectively, in the same transaction, exceeds the amount of the 
investment opportunity, the investment opportunity will be allocated 
among them pro rata based on each participant's Available Capital, up 
to the amount proposed to be invested by each. The applicable Adviser 
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(b) and 
2(a), the applicable Adviser will distribute written information 
concerning the Potential Co-Investment Transaction (including the 
amount proposed to be invested by each participating Regulated Fund and 
Affiliated Fund) to the Eligible Directors of each participating 
Regulated Fund for their consideration. A Regulated Fund will co-invest 
with one or more other Regulated Funds and/or one or more Affiliated 
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 Potential Co-Investment Transaction, including 
the consideration to be paid, are reasonable and fair to the Regulated 
Fund and its stockholders and do not involve overreaching in respect of 
the Regulated Fund or its stockholders on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) The interests of the Regulated Fund's stockholders; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Funds or Affiliated 
Funds would not disadvantage the Regulated Fund, and participation by 
the Regulated Fund would not be on a basis different from or less 
advantageous than that of any other Regulated Funds or Affiliated 
Funds; provided that if any other Regulated Funds or Affiliated Funds, 
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 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 the Affiliated 
Fund or 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 
Fund in accordance with the amount of each party's investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
the Advisers, any Affiliated Funds or 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 section 17(e) or 57(k) of 
the Act, as applicable, (C) indirectly, as a result of an interest in 
the securities issued by one of the parties to the Co-Investment 
Transaction, or (D) in the case of fees or other compensation described 
in condition 2(c)(iii)(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 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 subject to 
examination by the Commission and its staff.
    5. Except for Follow-On Investments made in accordance with 
condition 8,\11\ a Regulated Fund will not invest in reliance on the 
Order in any issuer in which another Regulated Fund, an Affiliated Fund 
or any affiliated person of another Regulated Fund or Affiliated Fund 
is an existing investor.
---------------------------------------------------------------------------

    \11\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which the Regulated Fund already holds 
investments.
---------------------------------------------------------------------------

    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 in a Co-Investment Transaction, the applicable 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 each 
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 Regulated Funds.
    (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

[[Page 49612]]

proportionate to its outstanding investments in the issuer immediately 
preceding the disposition; (ii) the Board of the Regulated Fund has 
approved as being in the best interests of the Regulated Fund the 
ability to participate in such dispositions on a pro rata basis (as 
described in greater detail in the application); and (iii) the Board of 
the Regulated Fund is provided on a quarterly basis with a list of all 
dispositions made in accordance with this condition. In all other 
cases, the Adviser 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 Regulated Fund desires to make a 
Follow-On Investment in a portfolio company whose securities were 
acquired in a Co-Investment Transaction, the applicable Advisers will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed Follow-On Investment at the 
earliest practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including the amount of the proposed Follow-On Investment, by each 
Regulated Fund.
    (b) A Regulated Fund may participate in such Follow-On Investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Fund and each Affiliated Fund 
in such investment is proportionate to its outstanding investments in 
the issuer immediately preceding the Follow-On Investment; and (ii) the 
Board of the Regulated Fund has approved as being in the best interests 
of the Regulated Fund the ability to participate in Follow-On 
Investments on a pro rata basis (as described in greater detail in the 
application). In all other cases, the Adviser 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 determines 
that it is in the 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 applicable Adviser to 
be invested by the applicable Regulated Fund in the Follow-On 
Investment, together with the amount proposed to be invested by other 
participating Regulated Funds and Affiliated Funds, collectively, in 
the same transaction, exceeds the amount of the investment opportunity, 
then the investment opportunity will be allocated among them pro rata 
based on each participant's Available Capital, 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 that fell within the Regulated Fund's then-
current Objectives and Strategies and Board-Established Criteria, 
including investments in Potential Co-Investment Transactions made by 
other Regulated Funds or Affiliated Funds that the Regulated Fund 
considered but declined to participate in, and concerning Co-Investment 
Transactions in which the Regulated Fund participated, so that the Non-
Interested Directors may determine whether all Potential Co-Investment 
Transactions and Co-Investment Transactions during the preceding 
quarter, including those Potential Co-Investment Transactions which the 
Regulated Fund considered but declined to participate in, comply with 
the conditions of the Order. In addition, the Non-Interested Directors 
will consider at least annually: (a) The continued appropriateness for 
the Regulated Fund of participating in new and existing Co-Investment 
Transactions, and (b) the continued appropriateness of any Board-
Established Criteria.
    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 an 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 1933 Act) will, to the 
extent not payable by the Advisers under their respective investment 
advisory agreements with Affiliated Funds and the Regulated Funds, be 
shared by the Regulated Funds and the Affiliated Funds in proportion to 
the relative amounts of the securities held or to be acquired or 
disposed of, as the case may be.
    13. Any transaction fee \12\ (including break-up or commitment fees 
but excluding broker's fees contemplated by section 17(e) or 57(k) of 
the Act, as applicable) received in connection with a Co-Investment 
Transaction will be distributed to the participating Regulated Funds 
and Affiliated Funds on a pro rata basis based on the amounts they 
invested or committed, as the case may be, in such Co-Investment 
Transaction. If any transaction fee is to be held by an Adviser pending 
consummation of the Co-Investment Transaction, the fee will be 
deposited into an account maintained by such 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 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 Adviser, investment advisory fees paid in accordance 
with the investment advisory agreements between such Adviser and the 
Regulated Fund or Affiliated Fund).
---------------------------------------------------------------------------

    \12\ The applicants are not requesting, and the Commission is 
not providing, any relief for transaction fees received in 
connection with any Co-Investment Transaction.
---------------------------------------------------------------------------

    14. If the Holders own in the aggregate more than 25% 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

[[Page 49613]]

removal of one or more directors; or (3) any other matter under either 
the Act or applicable State laws 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 the Board of such 
Regulated Fund 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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21375 Filed 10-1-18; 8:45 am]
 BILLING CODE 8011-01-P