[Federal Register Volume 63, Number 42 (Wednesday, March 4, 1998)]
[Notices]
[Pages 10668-10669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5489]



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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-23045; International Series Rel No. 1121; 812-10960]


Old Mutual South Africa Equity Trust, et al.; Notice of 
Application

February 26, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application under section 17(b) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 17(a) 
of the Act.

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Summary of Application

    Order requested to permit a registered investment company to 
purchase certain shares of an affiliated issuer.

Applicants

    Old Mutual South Africa Equity Trust (the ``Trust''), Old Mutual 
Asset Managers (Bermuda) Limited (the ``Adviser''), and Primedia 
Limited (``Primedia'').

Filing Dates

    The application was filed on January 13, 1998. Applicants have 
agreed to file an amendment, the substance of which is incorporated in 
this notice, during the notice period.

Hearing or Notification of Hearing

    An order granting the application will be issued unless the SEC 
orders a hearing. Interested persons may request a hearing by writing 
to the SEC's Secretary and serving applicants with a copy of the 
request, personally or by mail. Hearing requests should be received by 
the SEC by 5:30 p.m. on March 23, 1998, and should be accompanied by 
proof of service on applicants, in the form of an affidavit or, for 
lawyers, a certificate of service. Hearing requests should state the 
nature of the writer's interest, the reason for the request, and the 
issues contested. Persons who wish to be notified of a hearing may 
request notification by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicants, 61 Front Street, Hamilton, Bermuda, Attention: Melanie 
Saunders.

FOR FURTHER INFORMATION CONTACT: Lawerence W. Pisto, Senior Counsel, at 
(202) 942-0527, or Nadya B. Roytblat, Assistant Director, at (202) 942-
0564, Office of Investment Company Regulation, Division of Investment 
Management.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 
20549 (tel. (202) 942-8090).

Applicants' Representations

    1. The Trust is an open-end management investment company organized 
as a trust under Massachusetts law and registered under the Act. The 
investment objective of the Trust is long-term total return in excess 
of that of the Johannesburg Stock Exchange (the ``JSE'') Actuaries All 
Share Index through investment in equity securities of South African 
issuers. Beneficial interests in the Trust are sold solely in private 
placement transactions to investment companies, common or commingled 
trust funds, or similar entities that are ``accredited investors'' 
within the meaning of Regulation D under the Securities Act of 1933, as 
well as to certain investment funds organized outside the United 
States. Old Mutual Fund Holdings (Bermuda) Limited, a wholly-owned 
subsidiary of the South African Mutual Life Assurance Society (``Old 
Mutual''), owns approximately 90.91% of the outstanding voting 
securities of the Trust.\1\
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    \1\ Based on holdings as of December 17, 1997.
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    2. The Adviser is a wholly-owned subsidiary of Old Mutual and is 
registered under the Investment Advisers Act of 1940. The Adviser 
serves as investment adviser to the Trust.
    3. Primedia is a South African corporation. It is an integrated 
media and communications group. Primedia's ordinary shares are listed 
on the JSE. Applicants state that, for the period beginning the week of 
December 5, 1997 and ending the week of January 30, 1998, the 
unweighted average weekly volume of ordinary shares of Primedia traded 
on the JSE, as a percentage of the total number of ordinary shares of 
Primedia outstanding and calculated on an annualized basis, was 16.3%. 
Old Mutual, its wholly-owned subsidiaries and investment vehicles 
managed by Old Mutual and its wholly-owned subsidiaries, but excluding 
the Trust, (collectively, the ``Old Mutual Group'') indirectly own 
approximately 19.82% of the total outstanding ordinary shares of 
Primedia.\2\ Applicants state that neither Old Mutual nor the Old 
Mutual Group control Primedia within the meaning of the Act.
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    \2\ Based on holdings as of December 17, 1997.
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    4. Applicants state that it is common practice in the South African 
equity markets for placements to be offered to large institutional 
investors at a discount to the market price. Applicants also state that 
Old Mutual and its affiliates are major participants in the South 
African equity markets. In December 1997, Primedia offered to the Trust 
a private placing of 1,952,119 ordinary shares of Primedia (the 
``Primedia Shares''), or approxiamtely 2.30% of Primedia's outstanding 
ordinary shares. On December 17, 1997 (the ``Subscription Date'') the 
Trust agreed to purchase the Primedia Shares on March 2, 1998. At the 
request or the Trust, Primedia agreed to defer the settlement date for 
the purchase of the Primedia Shares by the Trust to March 31, 1998 
(such date or such other settlement date as to which the parties 
mutually agree, the ``Settlement Date''). The purchase price per 
Primedia Share is to be SA R21.82 (the ``Purchase Price''), which 
represents a 7.35% discount from the market price on the Subscription 
Date. The Trust's obligation to purchase the Primedia Shares is subject 
to the receipt of the requested order.
    5. Applicants represent that while analysts employed by Old Mutual 
recommended the acquisition of the Primedia Shares, the decision to 
purchase the Primedia Shares was an independent decision made by the 
Adviser solely in the interests of the Trust and was not influenced by 
Old Mutual or its personnel. At a meeting held on February 13, 1998, 
the board of trustees of the Trust, including a majority of the 
independent trustees, approved the purchase of the Primedia Shares as 
in the best interests of the Trust and consistent with the requirements 
of Section 17(b) of the Act.
    6. Applicants represent that the Primedia Shares have all the 
attributes of the Primedia ordinary shares listed on the JSE, and that 
the Primedia Shares are freely transferable under South African law. 
Applicants also state that the Trust has not entered into, and will not 
be subject to, any agreement or understanding, express or implied, that 
the Trust may not sell the Primedia Shares on the open market at any 
time after its purchase.

Applicants' Legal Analysis

    1. Section 17(a) of the Act makes it unlawful for any affiliated 
person of a registered investment company, or any affiliated person of 
such person, acting as principal, knowingly to sell any security to the 
company. Section 2(a)(3) of the Act defines ``affiliated person'' of 
another person to include (a) any person directly or indirectly owning, 
controlling, or holding with power to vote 5% or more of the 
outstanding voting securities of the other person, (b)

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any person directly or indirectly controlling, controlled by, or under 
common control with the other person, or (c) if the other person is an 
investment company, any investment adviser of that person.
    2. Due to Old Mutual's ownership interest in Primedia, Primedia is 
an affiliated person of an affiliated person of the Trust. The sale of 
Primedia Shares to the Trust thus would be prohibited by section 17(a) 
of the Act.
    3. Section 17(b) of the Act provides that the SEC may exempt a 
transaction from the prohibitions of section 17(a) if the terms of the 
proposed transaction, including the consideration to be paid, are 
reasonable and fair and do not involve overreaching on the part of any 
person concerned, and the proposed transaction is consistent with the 
policy of the registered investment company concerned and with the 
general purposes of the Act.
    4. Applicants submit that the requested relief meets the standards 
set forth in section 17(b). Applicants state that the board of trustees 
of the Trust, including a majority of the trustees who are not 
interested persons of the Trust, approved the purchase of the Primedia 
Shares. Applicants also state that the transaction will comply with the 
requirements of rule 17a-7 under the Act, except that (i) the Purchase 
Price will be below the current market price, and (ii) the Trust and 
Primedia are affiliated persons by reason other than having a common 
investment adviser, common directors, and/or officers. Finally, 
applicants represent that the Trust will not purchase the Primedia 
Shares if on the Settlement Date the market price of the Primedia falls 
below the Purchase Price.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-5489 Filed 3-3-98; 8:45 am]
BILLING CODE 8010-01-M