[Federal Register Volume 79, Number 57 (Tuesday, March 25, 2014)]
[Notices]
[Pages 16384-16388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06465]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-30985; File No. 812-14134]


PennantPark Investment Corp., et al.; Notice of Application

March 19, 2014.
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.

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Summary of Application: Applicants request an order to permit business 
development companies (each, a ``BDC'') and certain closed-end 
management investment companies to co-invest in portfolio companies 
with each other and with affiliated investment funds.

Applicants: PennantPark Investment Corporation (``PNNT''), PennantPark 
Floating Rate Capital Ltd. (``PFLT''), PennantPark Floating Rate 
Capital Funding I, LLC (``Funding I''), PennantPark SBIC LP (``SBIC 
I''), PennantPark SBIC II LP (``SBIC II''), PennantPark Credit 
Opportunities Fund, LP (``PCOF'') and PennantPark Investment Advisers, 
LLC (the ``Adviser'').

Filing Dates: The application was filed on March 15, 2013, and amended 
on August 7, 2013, December 5, 2013 and March 5, 2014. Applicants have 
agreed to file an amendment during the notice period, the substance of 
which is reflected in this notice.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on April 14, 2014, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
St. NE., Washington, DC 20549-1090. Applicants: 590 Madison Avenue, 
15th Floor, New York, NY 10022.

FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at 
(202) 551-6915 or Daniele Marchesani, 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. PNNT and PFLT are Maryland corporations organized as closed-end 
management investment companies that have elected to be regulated as 
BDCs under the Act (together, the ``PennantPark BDCs'').\1\ PNNT's 
Objectives and Strategies \2\ are to generate both current income and 
capital appreciation through debt and equity investments. PNNT invests 
primarily in U.S. middle-market companies in the form of senior secured 
loans, mezzanine debt and equity investments. PFLT's Objectives and 
Strategies are to generate current income and capital appreciation by 
investing primarily in floating rate loans and other investments made 
to U.S. private middle-market companies. A majority of the directors of 
each of PNNT and PFLT are not ``interested persons'' as defined in 
section 2(a)(19) of the Act of PNNT and PFLT, respectively 
(``Independent Directors'').
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    \1\ Section 2(a)(48) defines a BDC to be any closed-end 
investment company that operates for the purpose of making 
investments in securities described in sections 55(a)(1) through 
55(a)(3) of the Act and makes available significant managerial 
assistance with respect to the issuers of such securities.
    \2\ ``Objectives and Strategies'' means a Regulated Fund's 
(defined below) investment objectives and strategies as described in 
the Regulated Fund's registration statement on Form N-2, other 
filings the Regulated Fund has made with the Commission under the 
Securities Act of 1933 (``Securities Act''), or under the Securities 
Exchange Act of 1934, and the Regulated Fund's reports to 
stockholders.
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    2. PCOF is a limited partnership organized under Delaware law and 
is excluded from the definition of investment company under section 
3(c)(7) of the Act. PCOF's investment objectives are capital 
preservation, income generation and capital

[[Page 16385]]

appreciation primarily through debt and/or equity investments generally 
in midsize companies in North America and Western Europe.
    3. Funding I is a wholly-owned subsidiary of PFLT formed to enter 
into a credit facility. SBIC I and SBIC II, wholly-owned subsidiaries 
of PNNT, are Delaware limited partnerships operating as small business 
investment companies whose investment objectives are to generate both 
current income and capital appreciation through debt and equity 
investments. Each of Funding I, SBIC I and SBIC II is a Wholly-Owned 
Investment Subsidiary (as defined below).
    4. PennantPark Investment Advisers, LLC, a Delaware limited 
liability company, is and any other Adviser will be registered as an 
investment adviser under the Investment Advisers Act of 1940 (the 
``Advisers Act''). PennantPark Investment Advisers, LLC serves as the 
investment adviser to PNNT, PFLT, PCOF and Funding I. PNNT advises SBIC 
I and SBIC II.\3\
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    \3\ Advisory personnel of the Adviser will act on behalf of PNNT 
in providing management services to SBIC I and SBIC II.
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    5. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds \4\ and one or more Private Funds \5\ to participate in 
the same investment opportunities through a proposed co-investment 
program where such participation would otherwise be prohibited under 
sections 17(d) and 57(a)(4) and rule 17d-1 (the ``Co-Investment 
Program'') by (a) co-investing with each other in certain securities of 
issuers (a ``portfolio company'') and (b) making additional investments 
in securities of 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 a Wholly-Owned 
Investment Subsidiary (as defined below)) participated together with a 
Co-Investment Affiliate in reliance on the Order. ``Potential Co-
Investment Transaction'' means any investment opportunity in which a 
Regulated Fund (or a Wholly-Owned Investment Subsidiary) could not 
participate together with one or more Co-Investment Affiliates without 
obtaining and relying on the Order.\6\
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    \4\ ``Regulated Fund'' means the PennantPark BDCs and any 
management investment company (a) that is registered under the Act 
as a closed-end fund or has elected to be regulated as a BDC; (b) 
whose investment adviser is PennantPark Investment Advisers, LLC or 
any other adviser that is controlling, controlled by or under common 
control with PennantPark Investment Advisers, LLC (included in the 
term ``Adviser''); and (c) that intends to participate in the Co-
Investment Program (as defined below).
    \5\ ``Private Fund'' means PCOF and any other 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. The Private 
Funds, together with the Regulated Funds are referred to as the 
``Co-Investment Affiliates.''
    \6\ All existing entities that currently intend to rely on the 
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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    6. Applicants state that a Regulated Fund may, from time to time, 
form a special purpose subsidiary (a ``Wholly-Owned Investment 
Subsidiary'').\7\ A Co-Investment Affiliate would be prohibited from 
investing in a Co-Investment Transaction with any Wholly-Owned 
Investment Subsidiary because the Wholly-Owned Investment Subsidiary 
would be a company controlled by a Regulated Fund for purposes of 
sections 17(d) and 57(a)(4) and rule 17d-1. Applicants request that a 
Wholly-Owned Investment Subsidiary be permitted to participate in Co-
Investment Transactions in lieu of the parent Regulated Fund and that 
the Wholly-Owned Investment Subsidiary's participation in any such 
transaction be treated, for purposes of the Order, as though the 
applicable 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 a Regulated Fund's investments and, therefore, no 
conflicts of interest could arise between such Regulated Fund and the 
Wholly-Owned Investment Subsidiary. The board of directors of the 
applicable 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 of 
directors would be informed of, and take into consideration, any 
proposed use of a Wholly-Owned Investment Subsidiary in the applicable 
Regulated Fund's place. If a Regulated Fund proposes to participate in 
the same Co-Investment Transaction with any of its Wholly-Owned 
Investment Subsidiaries, the board of directors 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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    \7\ The term ``Wholly-Owned Investment Subsidiary'' means an 
entity (a) whose sole business purposes are to hold one or more 
investments and issue debt on behalf of a Regulated Fund (and, in 
the case of an SBIC Subsidiary (as defined below), maintain a 
license under the SBA Act (as defined below) and issue debentures 
guaranteed by the SBA (as defined below); (b) that is wholly-owned 
by such Regulated Fund (with such Regulated Fund at all times 
directly or indirectly holding, beneficially and of record, 100% of 
the voting and economic interests); (c) with respect to which the 
board of directors 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 an entity 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 Wholly-Owned Investment Subsidiary 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'').
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    7. Applicants represent that the Advisers will refer all Potential 
Co-Investment Transactions that an investment adviser considers for a 
Co-Investment Affiliate, and that are within a Regulated Fund's 
Objectives and Strategies, to that Regulated Fund's Adviser. For each 
such referral, when selecting investments for a Co-Investment 
Affiliate, the applicable Adviser will consider only the investment 
objective, investment policies, investment position, Available Capital 
(as defined below), and other pertinent factors applicable to the 
respective Co-Investment Affiliate. The Adviser expects that a 
portfolio company that is an appropriate investment for one Co-
Investment Affiliate may be an appropriate investment for another Co-
Investment Affiliate, with certain exceptions based on available 
capital (``Available Capital'') \8\ or diversification.
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    \8\ ``Available Capital'' consists solely of liquid assets not 
held for permanent investment, including cash, amounts that can 
currently be drawn down from lines of credit, and marketable 
securities held for short-term purposes. In addition, Available 
Capital would include bona fide uncalled capital commitments that 
can be called by the settlement date of the Co-Investment 
Transaction.
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    8. Other than pro rata dispositions and Follow-On Investments as 
provided in conditions 7 and 8, and after making the determinations 
required in conditions 1 and 2(a), the Adviser will present each 
Potential Co-Investment Transaction and the proposed allocation to the 
directors of the board eligible to vote under section 57(o) of the Act 
(``Eligible Directors''), and the ``required majority,'' as defined in 
section 57(o) of the Act (``Required Majority'') \9\ of a Regulated 
Fund will approve each Co-Investment Transaction prior to any 
investment by a Regulated Fund.
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    \9\ With respect to Regulated Funds that are not BDCs, the 
defined terms Eligible Directors and Required Majority apply as if 
each Regulated Fund were a BDC subject to section 57(o) of the Act.
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    9. With respect to the pro rata dispositions and Follow-On 
Investments provided in conditions 7 and 8, a

[[Page 16386]]

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 Co-
Investment Affiliate 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 board of directors 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.
    10. No Independent Director of a Regulated Fund will have a direct 
or indirect financial interest in any Co-Investment Transaction or any 
interest in a portfolio company other than through an interest (if any) 
in the securities of a Regulated Fund and none will participate 
individually in any Co-Investment Transaction.

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 or a company 
controlled by such registered investment company unless the Commission 
has granted an order permitting such transactions. 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 such 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 BDCs. Because the 
Commission has not adopted any rules under section 57(a)(4), rule 17d-1 
applies.
    2. Applicants submit that the Adviser and the Co-Investment 
Affiliates would be deemed to be persons related to a Regulated Fund in 
a manner described by sections 17(d) or 57(b) and therefore prohibited 
by sections 17(d) or 57(a)(4) and rule 17d-1 from participating in the 
Co-Investment Transactions without the Order.
    3. Rule 17d-1 under the Act generally prohibits participation by a 
registered investment company, or a company controlled by such 
registered investment company, and an affiliated person (as defined in 
section 2(a)(3) of the Act) or principal underwriter for that 
investment company, or an affiliated person of such affiliated person 
or principal underwriter, in any joint enterprise or other joint 
arrangement or profit sharing plan, as defined in the rule, absent an 
order by the Commission. Similarly, rule 17d-1, as made applicable to 
BDCs by section 57(i), prohibits any person who is related to a BDC in 
a manner described in section 57(b), acting as principal, from 
participating in, or effecting any transaction in connection with, any 
joint enterprise or other joint arrangement or profit-sharing plan in 
which the BDC (or a company controlled by such BDC) is a participant, 
absent an order from the Commission. 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.
    4. Applicants state that co-investment in portfolio companies by 
the Co-Investment Affiliates will increase favorable investment 
opportunities for the PennantPark BDCs and any other Regulated Fund. 
Applicants submit that the Required Majority's approval of each Co-
Investment Transaction before investment, and other protective 
conditions set forth in the application, will ensure that the Regulated 
Funds will be treated fairly. 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 Co-Investment Affiliates.

Applicants' Conditions

    Applicants agree that any Order granting the requested relief will 
be subject to the following conditions:
    1. Each time an investment adviser of a Co-Investment Affiliate 
considers a Potential Co-Investment Transaction for any Co-Investment 
Affiliate that falls within a Regulated Fund's Objectives and 
Strategies, the Regulated Fund's 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 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 Adviser to be 
invested by the Regulated Fund in the Potential Co-Investment 
Transaction, together with the amount proposed to be invested by each 
other Co-Investment Affiliate, 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 
participating party's Available Capital in the asset class being 
allocated, up to the amount proposed to be invested by each. The 
Adviser will provide the respective Eligible Directors with information 
concerning each party's Available Capital to assist the Eligible 
Directors with their review of such Regulated Fund's investments for 
compliance with these allocation procedures; and
    (c) After making the determinations required in conditions 1 and 
2(a), the Adviser will distribute written information concerning the 
Potential Co-Investment Transaction, (including the amount proposed to 
be invested by each Co-Investment Affiliate), to the Eligible Directors 
for their consideration. The Regulated Fund will co-invest with one or 
more Co-Investment Affiliates only if, prior to participating 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 
stockholders and do not involve overreaching in respect of the 
Regulated Fund or its stockholders on the part of any person concerned;
    (ii) the transaction is consistent with:
    (A) the interests of the stockholders of the Regulated Fund; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by the Co-Investment Affiliates 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 the Co-Investment Affiliates; provided, that, if any Co-
Investment Affiliate, but not the Regulated Fund itself, gains the 
right to nominate a director for election to a portfolio company's 
board of directors

[[Page 16387]]

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 Adviser agrees to, and does, provide periodic reports to 
the Regulated Fund's board of directors with respect to the actions of 
the director or the information received by the 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 Co-Investment Affiliate 
or any affiliated person of any Co-Investment Affiliate receives in 
connection with the right of the Co-Investment Affiliate 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 Co-Investment Affiliates (the 
Private Funds may, in turn, share their portion with their affiliated 
persons) and the 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 Adviser or the Co-Investment Affiliates 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 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 Adviser will present to the board of directors of each 
Regulated Fund, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by the Co-Investment 
Affiliates 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 such 
investment opportunities were not offered to the Regulated Fund. All 
information presented to the board of directors 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, the Regulated Fund will not invest in reliance on the 
Order in any issuer in which any Co-Investment Affiliate or any 
affiliated person of the Co-Investment Affiliates is an existing 
investor.
    6. The 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 the Regulated Fund as for each participating Co-
Investment Affiliate. The grant to a Co-Investment Affiliate, 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 Co-Investment Affiliate elects to sell, exchange or 
otherwise dispose of an interest in a security that was acquired in a 
Co-Investment Transaction, the 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 Co-
Investment Affiliates.
    (c) A Regulated Fund may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Co-Investment Affiliate in such disposition is 
proportionate to its outstanding investment in the issuer immediately 
preceding the disposition; (ii) the board of directors 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 
directors 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 participating Co-Investment Affiliate will bear its own 
expenses in connection with any such disposition.
    8. (a) If any Co-Investment Affiliate desires to make a Follow-On 
Investment in a portfolio company whose securities were acquired in a 
Co-Investment Transaction, the 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 Co-Investment Affiliate in such 
investment is proportionate to its outstanding investments in the 
issuer immediately preceding the Follow-On Investment; and (ii) the 
board of directors 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 Co-Investment 
Affiliates' outstanding investments immediately preceding the Follow-On 
Investment; and
    (ii) the aggregate amount recommended by the Adviser to be invested 
by the Regulated Fund in the Follow-On Investment, together with the 
amount proposed to be invested by the participating Co-Investment 
Affiliates 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 party's Available Capital in the asset 
class being allocated, up to the amount proposed to be invested by 
each.

[[Page 16388]]

    (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 Independent 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 Co-Investment Affiliates that the Regulated 
Fund considered but declined to participate in, so that the Independent 
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 Independent Directors will consider at 
least annually the continued appropriateness for the Regulated Fund of 
participating in new and existing Co-Investment Transactions.
    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).
    11. No Independent Director 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 Private 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 Securities Act) will, to 
the extent not payable by the Adviser under its respective investment 
advisory agreements with the Co-Investment Affiliates, be shared by the 
Co-Investment Affiliates in proportion to the relative amounts of the 
securities held or being acquired or disposed of, as the case may be.
    13. Any transaction fee (including break-up or commitment fees but 
excluding broker's fees contemplated by section 17(e) or 57(k), as 
applicable) received in connection with a Co-Investment Transaction 
will be distributed to the participating Co-Investment Affiliates 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), and the account will earn a competitive rate of interest that 
will also be divided pro rata among the participating Co-Investment 
Affiliates based on the amounts they invest in such Co-Investment 
Transaction. None of the Adviser, the Co-Investment Affiliates nor any 
affiliated person of the Co-Investment Affiliates 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 participating Co-Investment Affiliates, 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 
respective agreements between the Adviser and the Co-Investment 
Affiliates).

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06465 Filed 3-24-14; 8:45 am]
BILLING CODE 8011-01-P