Document ID: SEC-2017-0956-0001
Agency: sec
Document Type: Notice
Title: Applications: Partners Group (USA) Inc., et al.
Posted Date: 2017-06-07T04:00Z

[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26554-26559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11728]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Release Act No. 32667; 812-14193-01]

Partners Group (USA) Inc., et al.

DATE: June 1, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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

SUMMARY OF APPLICATION: Applicants request an order to permit certain 
closed-end management investment companies to co-invest in portfolio 
companies with each other and with affiliated investment funds.

APPLICANTS: Partners Group Private Equity (Master Fund), LLC (the 
``Fund''); Partners Group Private Income Opportunities, LLC (``Partners 
Group Private Income Opportunities''); Partners Group (USA) Inc. 
(``Partners Group''); Partners Group AG (``Partners Group AG''); 
Partners Group (UK) Limited (``Partners Group UK''); Partners Group 
(Luxembourg) S.A. (``Partners Group Lux''); Partners Group (Guernsey) 
Limited (``Partners Group Guernsey''); Partners Group Cayman Management 
I Limited (``PGCM I''); Partners Group Cayman Management III Limited 
(``PGCM III''); Partners Group Management Limited (``PGML''); Partners 
Group Management I S.[agrave] r.l. (``PGMS I''); Partners Group 
Management II Limited (``PGML II''); Partners Group Management III 
S.[agrave] r.l. (``PGMS III''); Partners Group Management IX Limited 
(``PGML IX''); Partners Group Management V Limited (``PGML V''); 
Partners Group Management VII Limited (``PGML VII''); Partners Group 
Management VIII Limited (``PGML VIII''); Partners Group Management XI 
Limited (``PGML XI''); Partners Group Management XIII Limited (``PGML 
XIII''); Princess Management Limited (``Princess'' and collectively 
with Partners Group Guernsey, Partners Group UK, PGCM I, PGCM III, 
PGML, PGMS I, PGML II, PGMS III, PGML IX, PGML V, PGML VII, PGML VIII, 
PGML XI and PGML XIII, the ``General Partner Advisers''); and Partners 
Group (Italy) Global Value 2014; Partners Group Direct Equity 2016 
(EUR) G, L.P. Inc.; Partners Group Direct Equity 2016 (EUR) S.C.A., 
SICAV-SIF; Partners Group Direct Equity 2016 (EUR), L.P. Inc.; Partners 
Group Direct Equity 2016 (USD) A, L.P.; Partners Group Direct Equity 
2016 (USD) C, L.P.; Partners Group Direct Equity 2016 (USD) C-G, L.P.; 
Partners Group Direct Equity 2016 (USD) C-I, L.P.; Partners Group 
Direct Infrastructure 2015 (EUR) S.C.A., SICAV-SIF; Partners Group 
Direct Infrastructure 2015 (USD), L.P. Inc.; Partners Group Direct 
Infrastructure 2016 (USD) A, L.P.; Partners Group Emerging Markets 
2015, L.P. Inc.; Partners Group Generations Fund I; Partners Group 
Global Growth 2014, L.P. Inc.; Partners Group Global Infrastructure 
2012, L.P. Inc.; Partners Group Global Infrastructure 2015 (EUR) 
S.C.A., SICAV-SIF; Partners Group Global Infrastructure 2015 (EUR), 
L.P. Inc.; Partners Group Global Infrastructure SICAV; Partners Group 
Global Multi-Asset Fund; Partners

[[Page 26555]]

Group Global Value 2014 (EUR) S.C.A., SICAR; Partners Group Global 
Value 2014, L.P. Inc.; Partners Group Global Value SICAV; Partners 
Group Growth Strategies 2016 S.C.A., SICAV-RAIF; Partners Group Private 
Equity Performance Holding Limited; Partners Group Secondary 2015 (EUR) 
S.C.A., SICAV-SIF; Partners Group Secondary 2015 (EUR), L.P. Inc.; 
Partners Group Secondary 2015 (USD) A, L.P.; Partners Group Secondary 
2015 (USD) C, L.P.; Partners Group U.S. Private Equity 2015 L.P. 
S.C.S., SICAV-SIF; Princess Private Equity Holding Limited; The 
Partners Fund SICAV and The Partners Fund (the ``Existing Affiliated 
Funds'').

FILING DATES: The application was filed on August 2, 2013, and amended 
on August 11, 2014, January 13, 2016, May 4, 2017, and June 1, 2017.

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 June 26, 2017, 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: 1114 Avenue of the 
Americas, 37th Floor, New York, NY 10036.

FOR FURTHER INFORMATION CONTACT: Robert Shapiro, 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 Web site 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 Fund \1\ is a Delaware limited liability company that is 
registered as a closed-end management investment company under the Act. 
The Fund's investment objective is to seek attractive long-term capital 
appreciation by investing in a globally diversified portfolio of 
private equity investments. The board of directors of the Fund (the 
``Fund Board'') is currently comprised of three managers, two of whom 
are not ``interested persons,'' within the meaning of Section 2(a)(19) 
of the Act (the ``Non-Interested Directors''), of the Fund.
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    \1\ The Fund, Partners Group Private Income Opportunities, and 
any Future Regulated Fund are referred to individually as a 
``Regulated Fund,'' and collectively as the ``Regulated Funds.'' 
``Future Regulated Fund'' means any closed-end management investment 
company (a) that is registered under the Act, (b) whose investment 
adviser is an Adviser (defined below) that is registered as an 
investment adviser under the Investment Advisers Act of 1940, as 
amended (the ``Advisers Act''), and (c) that intends to participate 
in the Co-Investment Program. The term ``Adviser'' means (a) 
Partners Group, Partners Group AG, Partners Group UK, Partners Group 
Lux and each General Partner Adviser, and (b) any future investment 
adviser that controls, is controlled by or is under common control 
with Partners Group, Partners Group AG, Partners Group UK, Partners 
Group Lux or any General Partner Adviser and is either registered as 
an investment adviser under the Advisers Act or is an exempt 
reporting adviser or a foreign private adviser.
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    2. Partners Group Private Income Opportunities is a Delaware 
limited liability company that is registered as a closed-end management 
investment company under the Act. Partners Group Private Income 
Opportunities' investment objective will be to generate attractive 
risk-adjusted returns and current income by investing in a diversified 
portfolio of predominantly credit-related opportunities. The board of 
managers of Partners Group Private Income Opportunities (the ``PGPIO 
Board'') \2\ is currently comprised of five managers, four of whom are 
Non-Interested Directors of Partners Group Private Income 
Opportunities.
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    \2\ The Fund Board, the PGPIO Board and any board of managers, 
board of directors or board of trustees of a Future Regulated Fund 
are each referred to herein as a ``Board'' and collectively the 
``Boards,'' as applicable.
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    3. Each of the Existing Affiliated Funds would be an investment 
company but for section 3(c)(1) or 3(c)(7) of the Act.
    4. Partners Group is a Delaware corporation and an investment 
adviser registered with the Commission under the Investment Advisers 
Act of 1940, as amended (the ``Advisers Act''). Partners Group serves 
as investment adviser to the Fund and Partners Group Private Income 
Opportunities. Partners Group is a wholly-owned subsidiary of Partners 
Group Holding AG, a corporation organized in Switzerland.
    5. Partners Group AG is a corporation organized in Switzerland and 
is an exempt reporting adviser under the Advisers Act. Partners Group 
AG is registered with the Swiss Financial Markets Authority (FINMA) and 
provides investment recommendations to Partners Group with respect to 
its clients' portfolios. While Partners Group AG may provide investment 
recommendations to Partners Group, Partners Group maintains ultimate 
investment discretion as to whether such recommendations will translate 
into investments made by its clients.
    6. Partners Group Guernsey is a company limited by shares organized 
in Guernsey and is an exempt reporting adviser under the Advisers Act. 
Partners Group Guernsey is registered with the Guernsey Financial 
Services Commission (GFSC) and provides administrative and in 
particular investment execution services to Partners Group with respect 
to its clients. Partners Group Guernsey also serves as General Partner 
Adviser to Affiliated Funds.
    7. Partners Group UK is a foreign private adviser under the 
Advisers Act, formed as a private limited company in the United 
Kingdom. Partners Group UK is registered with the UK Financial Conduct 
Authority (FCA) and provides investment management or advisory services 
to certain Affiliated Funds.
    8. Partners Group Lux is an exempt reporting adviser under the 
Advisers Act, formed as a soci[eacute]t[eacute] anonyme in Luxembourg. 
Partners Group Lux is registered with the Luxembourg Commission de 
Surveillance du Secteur Financier (CSSF) and provides administrative, 
domiciliary, depositary and/or investment management or advisory 
services to certain Affiliated Funds.
    9. As described more fully in the application, each General Partner 
Adviser serves as the general partner or fund manager of one or more 
Affiliated Funds. Investment decisions are made by affiliated 
investment committees and the respective General Partner signs-off or 
otherwise ratifies such decisions. Other than Partners Group UK, each 
General Partner Adviser is an exempt reporting adviser.
    10. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds and/or one or more Affiliated Funds \3\ to participate 
in the

[[Page 26556]]

same investment opportunities through a proposed co-investment program 
where such participation would otherwise be prohibited under section 
17(d) and the rules under the Act (the ``Co-Investment Program'').\4\ A 
``Co-Investment Transaction'' means any transaction in which a 
Regulated Fund (or its Wholly-Owned Investment Subsidiary, as defined 
below) participated together with one or more other Regulated Funds 
and/or one or more Affiliated Funds in reliance on the Order. A 
``Potential Co-Investment Transaction'' means any investment 
opportunity in which a Regulated Fund (or its Wholly-Owned Investment 
Subsidiary, as defined below) could not participate together with one 
or more Regulated Funds and/or one or more Affiliated Funds without 
obtaining and relying on the Order.
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    \3\ The term ``Affiliated Fund'' means any of the Existing 
Affiliated Funds and any Future Affiliated Fund. ``Future Affiliated 
Fund'' means an entity (a) whose investment adviser is an Adviser 
and (b) that would be an investment company but for section 3(c)(1) 
or 3(c)(7) of the Act, and (iii) that intends to participate in the 
Co-Investment Program.
    \4\ All existing entities that currently intend to rely upon the 
requested Order have been named as applicants. Any other existing or 
future entity that relies on the Order in the future will comply 
with the terms and conditions of the application.
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    11. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly-Owned Investment Subsidiaries.\5\ A Wholly-
Owned Investment Subsidiary would be prohibited from investing in a Co-
Investment Transaction with another Regulated Fund or any Affiliated 
Fund because it would be a company controlled by the applicable 
Regulated Fund for purposes of sections 17(d) and rule 17d-1. 
Applicants request that a Wholly-Owned Investment Subsidiary be 
permitted to participate in Co-Investment Transactions in lieu of the 
applicable Regulated Fund, and that such Wholly-Owned Investment 
Subsidiary's participation in any such transaction be treated, for 
purposes of the requested Order, as though the 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 such Regulated Fund and its respective Wholly-Owned Investment 
Subsidiaries. The Board of the Regulated Fund 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 Board would be informed of, and take into consideration, any 
proposed use of a Wholly-Owned Investment Subsidiary in place of the 
Regulated Fund. If a Regulated Fund proposes to participate in the same 
Co-Investment Transaction with any of its Wholly-Owned Investment 
Subsidiaries, its Board will also be informed of, and take into 
consideration, the relative participation of the Regulated Fund and the 
Wholly-Owned Investment Subsidiary.
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    \5\ The term ``Wholly-Owned Investment Subsidiary'' means an 
entity (a) whose sole business purpose is to hold one or more 
investments on behalf of a Regulated Fund; (b) 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); (c) with respect to which the Board of the Regulated 
Fund has the sole authority to make all determinations with respect 
to the Wholly-Owned Investment Subsidiary's participation under the 
conditions of the application; and (d) that is and entity that would 
be an investment company but for section 3(c)(1) or 3(c)(7) of the 
Act.
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    12. When considering Potential Co-Investment Transactions for any 
Regulated Fund, an Adviser will consider only the Objectives and 
Strategies,\6\ investment policies, investment positions, capital 
available for investment,\7\ and other pertinent factors applicable to 
that Regulated Fund. Each Adviser, as applicable, undertakes to perform 
these duties consistently for each Regulated Fund, as applicable, 
regardless of which of them serves as investment adviser to these 
entities. The participation of a Regulated Fund in a Potential Co-
Investment Transaction may only be approved by a Required Majority, as 
defined in section 57(o) of the Act (a ``Required Majority''), of the 
directors of the Board eligible to vote on that Co-Investment 
Transaction under section 57(o) (the ``Eligible Directors'').\8\ Due to 
the similarity in Objectives and Strategies of certain Regulated Funds 
with the investment objectives, policies and strategies of certain 
Affiliated Funds, the Adviser expects that investments for a Regulated 
Fund should also generally be appropriate investments for one or more 
other Regulated Funds and/or one or more Affiliated Funds, with certain 
exceptions based on available capital, diversification, investment 
objectives, policies and strategies.\9\
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    \6\ The term ``Objectives and Strategies'' means a Regulated 
Fund's 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 Securities Act of 1933 
(the ``1933 Act'') or the Securities Exchange Act of 1934, and the 
Regulated Fund's reports to shareholders.
    \7\ Capital available for investment will be determined based on 
the amount of cash on hand, existing commitments and reserves, if 
any, the targeted leverage level, targeted asset mix and other 
investment policies and restrictions set from time to time by the 
Board of the applicable Regulated Fund or imposed by applicable 
laws, rules, or regulations or interpretations.
    \8\ Although each Regulated Fund will be 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) of the Act.
    \9\ A Regulated Fund, however, will not be obligated to invest, 
or co-invest, when investment opportunities are referred to them.
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    13. With respect to participation in a Potential Co-Investment 
Transaction by a Regulated Fund, the applicable Adviser will present 
each Potential Co-Investment Transaction and the proposed allocation of 
each investment opportunity to the Eligible Directors. The Required 
Majority of a Regulated Fund will approve each Co-Investment 
Transaction prior to any investment by the Regulated Fund.
    14. With respect to the pro rata dispositions and Follow-On 
Investments \10\ 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 Affiliated Fund and 
Regulated Fund in such disposition or Follow-On Investment 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 applicable Board has approved such Regulated Fund's 
participation in pro rata dispositions and Follow-On Investments as 
being in the best interests of such Regulated Fund. If the Board of the 
applicable Regulated Fund does not so approve, any such disposition or 
Follow-On Investment will be submitted to the Eligible Directors. The 
Board of any Regulated Fund may at any time rescind, suspend or qualify 
their respective 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.
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    \10\ ``Follow-On Investment'' means any additional investment in 
an existing portfolio company whose securities were acquired in a 
Co-Investment Transaction, including the exercise of warrants, 
conversion privileges or other similar rights to acquire additional 
securities of the portfolio company.
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    15. No Non-Interested Director of a Regulated Fund will have a 
financial interest in any Co-Investment Transaction, other than through 
an interest in the securities of a Regulated Fund.
    16. Applicants represent that if an Adviser or its principal owners 
(the ``Principals''), or any person controlling, controlled by, or 
under common control

[[Page 26557]]

with an Adviser or the Principals, and the Affiliated Funds 
(collectively, the ``Holders'') own in the aggregate more than 25% of 
the outstanding voting securities of a Regulated Fund (``Shares''), 
then the Holders will vote such Shares as required under condition 14. 
Applicants believe that this condition will ensure that the Non-
Interested Directors will act independently in evaluating the Co-
Investment Program, because the ability of an Adviser 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. The Non-Interested Directors shall evaluate and 
approve any such independent third party, taking into account its 
qualifications, reputation for independence, cost to the shareholders, 
and other factors they deem relevant.
    17. As discussed in more detail in the application, all of 
Applicants' investment activities are conducted within a global, 
centralized investment committee and allocation process and overseen by 
a unified, global compliance program. Applicants represent that the 
global processes and compliance program would ensure that (a) the 
Commission and its staff have complete transparency into the Co-
Investment Program and the Advisers involved with the Co-Investment 
Program through its access to Partners Group and (b) the Co-Investment 
Program would be subject to Commission and staff oversight. Applicants 
acknowledge that this global compliance program will be a key element 
in ensuring that the proposed 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' Legal Analysis

    1. 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 will 
consider whether the participation by the Regulated Fund in such 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.
    2. Applicants state that the Co-Investment Program will increase 
favorable investment opportunities for the Regulated Funds and allow 
the Regulated Funds to participate in attractive opportunities at 
levels that are appropriate. The conditions are designed to ensure that 
the Advisors would not be able to favor any Regulated Fund or 
Affiliated Funds over other Regulated Funds through the allocation of 
investment opportunities among them. Applicants state that the 
Regulated Fund's 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 any Order granting the requested relief will 
be subject to the following conditions:
    1. Each time an Adviser considers a Potential Co-Investment 
Transaction for an Affiliated Fund or another Regulated Fund that falls 
within a Regulated Fund's then-current Objectives and Strategies, the 
Regulated Fund's Adviser will make an independent determination of the 
appropriateness of the investment for such Regulated Fund in light of 
the Regulated Fund's then-current circumstances.
    2. (a) If the 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 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 ``capital available for 
investment'' in the asset class being allocated, 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 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 shareholders and do not involve overreaching in respect of 
the Regulated Fund or its shareholders on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) the interests of the shareholders of the Regulated Fund; and
    (B) the Regulated Funds 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 other Regulated Funds or Affiliated Funds; 
provided that, if any other Regulated Fund, Affiliated Fund or Adviser, 
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, 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, board observer or participant, 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 an Affiliated 
Fund or a Regulated Fund to nominate a director or appoint a board 
observer or otherwise to participate in the governance or

[[Page 26558]]

management of the portfolio company will be shared proportionately 
among the participating Affiliated Funds (who each may, in turn, share 
its portion with its affiliated persons) and the participating 
Regulated Funds in accordance with the amount of each party's 
investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
the Advisers, the Affiliated Funds or the other Regulated Funds or any 
affiliated person of any of them (other than the parties to the Co-
Investment Transaction), except
    (A) to the extent permitted by condition 13;
    (B) to the extent permitted by section 17(e) of the Act;
    (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 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, Affiliated Fund or 
any affiliated person of another Regulated Fund or Affiliated Fund is 
an existing investor.
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    \11\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
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    6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of 
securities to be purchased, settlement date and registration rights 
will be identical 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 a 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 Adviser 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 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 this 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 any Regulated Fund desires to make 
a Follow-On Investment in a portfolio company whose securities were 
acquired in a Co-Investment Transaction, the applicable Adviser will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest 
practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including the amount of the proposed Follow-On Investment, by each 
Regulated Fund.
    (b) A Regulated Fund may participate in such Follow-On Investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Fund and each Affiliated Fund 
in such investment is proportionate to its outstanding investments in 
the issuer immediately preceding the Follow-On Investment; and (ii) the 
Board of the Regulated Fund has approved as being in the best interests 
of the Regulated Fund the ability to participate in Follow-On 
Investments on a pro rata basis (as described in greater detail in this 
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 Adviser to be invested 
by each Regulated Fund in the Follow-On Investment, together with the 
amount proposed to be invested by the participating Affiliated Funds in 
the same transaction, exceeds the amount of the opportunity; then the 
amount invested by each such party will be allocated among them pro 
rata based on each participant's ``capital available for investment'' 
in the asset class being allocated, up to the amount proposed to be 
invested by each.
    (d) The acquisition of Follow-On Investments as permitted by this 
condition will be considered a Co-Investment Transaction for all 
purposes and subject to the other conditions set forth in the 
application.
    9. Each Regulated Fund will maintain the records required by 
Section 57(f)(3) of the Act as if each of the Regulated Funds was a 
business development company and each of the investments permitted 
under these conditions was approved by the Required Majority under 
Section 57(f).

[[Page 26559]]

    10. The Non-Interested Directors of each Regulated Fund will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by other Regulated Funds or Affiliated Funds that the 
Regulated Fund considered but declined to participate in, so that the 
Non-Interested Directors may determine whether all investments made 
during the preceding quarter, including those investments that the 
Regulated Fund considered but declined to participate in, comply with 
the conditions of the Order. In addition, the Non-Interested Directors 
will consider at least annually the continued appropriateness for the 
Regulated Fund of participating in new and existing Co-Investment 
Transactions.
    11. No Non-Interested Director of a Regulated Fund will also be a 
director, general partner, managing member or principal, or otherwise 
an ``affiliated person'' (as defined in the Act) of any of the 
Affiliated Funds.
    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 Adviser under its 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 (including, without limitation, break-up or 
commitment fees but excluding broker's fees contemplated by Section 
17(e) of the Act) received in connection with a Co-Investment 
Transaction will be distributed to the participating Regulated Funds 
and Affiliated Funds (who may, in turn, share their portion with 
affiliated persons) 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 the Adviser 
pending consummation of the transaction, the fee will be deposited into 
an account maintained by the Adviser at a bank or banks having the 
qualifications prescribed in Section 26(a)(1) of the Act, and the 
account will earn a competitive rate of interest that will also be 
divided pro rata among the participating Regulated Funds and Affiliated 
Funds based on the amounts they invest in such Co-Investment 
Transaction. None of the Affiliated Funds, the Adviser, the other 
Regulated Funds or any affiliated person of the Regulated Funds or 
Affiliated Funds will receive additional compensation or remuneration 
of any kind as a result of or in connection with a Co-Investment 
Transaction (other than (a) in the case of the Regulated Funds and the 
Affiliated Funds, the pro rata transaction fees described above and 
fees or other compensation described in condition 2(c)(iii)(C); and (b) 
in the case of the Adviser, investment advisory fees paid in accordance 
with the agreement between the Adviser and the Regulated Fund or 
Affiliated Fund).
    14. If the Holders own in the aggregate more than 25% of the 
Shares, then the Holders will vote such Shares as directed by an 
independent third party when voting on (1) the election of directors; 
(2) the removal of one or more directors; or (3) all other matters 
under either the Act or applicable state law affecting the Board's 
composition, size or manner of election.
    15. Each Regulated Fund's chief compliance officer, as defined in 
rule 38a-1(a)(4) of the Act, will prepare an annual report for its 
Board each year that evaluates (and documents the basis of that 
evaluation) the Regulated Fund's compliance with the terms and 
conditions of the application and the procedures established to achieve 
such compliance.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11728 Filed 6-6-17; 8:45 am]
 BILLING CODE 8011-01-P