[Federal Register Volume 80, Number 105 (Tuesday, June 2, 2015)]
[Notices]
[Pages 31432-31437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-13321]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-31651; File No. 812-14126]


Benefit Street Partners BDC, Inc., et al.; Notice of Application

May 27, 2015.
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 certain 
business development companies (``BDC'') and closed-end management 
investment companies to co-invest in portfolio companies with each 
other and with affiliated investment funds.

Applicants: Benefit Street Partners BDC, Inc. (``BSP BDC''), Providence 
Flexible Credit Allocation Fund (``Providence Flexible Credit''), 
Griffin-Benefit Street Partners BDC Corp. (``Griffin BSP,'' and with 
BSP BDC and Providence Flexible Credit, the ``Existing Regulated 
Funds''), Providence TMT Debt Opportunity Fund II L.P. (``Fund II''), 
PECM Strategic Funding L.P. (``Strategic Funding''), Providence Debt 
Fund III L.P. (``Fund III''), Providence Debt Fund III Master (Non-
U.S.) L.P. (``Fund III Offshore''), Benefit Street Partners Capital 
Opportunity Fund L.P. (``BSP Capital Fund''), Benefit Street Partners 
SMA LM L.P (``Benefit Street LM''), Benefit Street Partners SMA-C L.P. 
(``Benefit Street SMA-C,'' and with Fund II, Strategic Funding, Fund 
III, Fund III Offshore, BSP Capital Fund and Benefit Street LM, the 
``Existing Affiliated Funds''), Providence Equity Capital Markets 
L.L.C. (``Fund II Affiliated Adviser''), Benefit Street Partners L.L.C. 
(``BSP Adviser'') and Griffin Capital BDC Advisor, LLC (``GBA'').

Filing Dates: The application was filed on February 26, 2013, and 
amended on January 31, 2014, July 23, 2014, December 18, 2014 and April 
22, 2015.

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 22, 2015, 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: 9 West 57th Street, 
49th Floor, New York, NY 10019.

FOR FURTHER INFORMATION CONTACT: David J. Marcinkus, Senior Counsel, at 
(202) 551-6882 or David P. Bartels, 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. BSP BDC is a Maryland corporation organized as a closed-end 
management investment company that intends to elect to be regulated as 
a BDC under section 54(a) of the Act.\1\ BSP BDC's Objectives and 
Strategies \2\ are to generate both current income and capital 
appreciation by primarily investing in secured debt, unsecured debt, as 
well as related equity securities issued by private U.S. middle market 
companies. The board of directors (``Board'') of BSP BDC will be 
comprised of five directors, three of whom will be persons who are not 
``interested persons'' of BSP BDC as defined in section 2(a)(19) of the 
Act (``Non-Interested 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 
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 (the ``Securities Act''), or under the Securities Exchange 
Act of 1934, and the Regulated Fund's reports to shareholders.
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    2. Providence Flexible Credit is a Massachusetts business trust 
organized as closed-end investment company registered under the Act. 
Providence Flexible Credit's Objectives and Strategies are to seek 
total return through a combination of current income and capital 
appreciation. Providence Flexible Credit will seek to achieve its 
investment objective by investing primarily in a portfolio of (i) 
secured loans made primarily to companies whose debt is below 
investment grade quality; (ii) corporate bonds that are expected to be 
primarily high yield issues of below investment grade quality; and 
(iii) debt investment opportunities in middle market companies in the 
United States that are of below investment grade quality. Providence 
Flexible Credit will have a Board with a majority of trustees that are 
Non-Interested Directors.
    3. Griffin BSP is a Maryland corporation organized as a closed-end 
management investment company that has elected to be regulated as a BDC 
under the Act. Griffin BSP's Objectives and Strategies are to generate 
both current income and capital appreciation. Applicants state that 
Griffin BSP seeks to achieve its investment objective by investing in 
secured and unsecured debt, as well as

[[Page 31433]]

equity and equity related securities issued by private U.S. companies 
primarily in the middle market or public U.S. companies with market 
equity capitalization of less than $250 million. Griffin BSP's Board 
consists of five members, a majority of whom are Non-Interested 
Directors.
    4. Each of the Affiliated Funds would be an investment company but 
for section 3(c)(1) or 3(c)(7) of the Act. Fund II is a Cayman Islands 
limited partnership which seeks to make debt investments primarily in 
small to mid-sized companies primarily in the media, entertainment, 
education, communications and information industries. Strategic Funding 
is a Cayman Islands limited partnership which seeks to invest in 
distressed companies in non-control transactions, secured and unsecured 
instruments in syndicated transactions, and privately negotiated debt 
deals primarily in U.S.-based middle market companies across various 
industries. Fund III is a Delaware limited partnership which seeks to 
make debt investments primarily in U.S.-based middle market companies 
across various industries. Fund III Offshore is a Cayman Islands 
limited partnership which seeks to make debt investments primarily in 
small to mid-sized companies across various industries. BSP Capital 
Fund is a Delaware limited partnership which seeks to make debt 
investments primarily in small to mid-sized companies across various 
industries. Benefit Street LM is a Delaware limited partnership which 
seeks to make debt investments in U.S.-based middle market companies, 
larger cap issuers and real estate related companies across various 
industries and related equity securities. Benefit Street SMA-C is a 
Delaware limited partnership which seeks to make debt investments 
primarily in secured debt, unsecured debt, and related equity 
securities issued by primarily U.S.-based companies of any size 
capitalization and real estate related companies across various 
industries and related equity securities.
    5. Fund II Affiliated Adviser and BSP Adviser are each Delaware 
limited liability companies registered as investment advisers under the 
Investment Advisers Act of 1940 (the ``Advisers Act''). Applicants 
state that Fund II Affiliated Adviser and BSP Adviser are controlled by 
the same individuals (the ``Principals'') and are thus affiliated 
persons of each other as described by section 2(a)(3)(C) of the Act. 
Fund II Affiliated Adviser serves as investment adviser to Fund II and 
Strategic Funding. BSP Adviser serves as investment adviser to BSP BDC, 
Providence Flexible Credit, Fund III, Fund III Offshore, Benefit Street 
LM, BSP Capital Fund and Benefit Street SMA-C.
    6. GBA is a Delaware limited liability company registered as an 
investment adviser under the Advisers Act. GBA serves as investment 
adviser to Griffin BSP. In addition, BSP Adviser serves as sub-adviser 
to Griffin BSP. Applicants state that GBA and BSP Adviser are not 
affiliated persons as defined by the Act.
    7. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds \3\ and/or one or more Affiliated Funds \4\ 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; \5\ 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 Sub, as defined below) 
participated 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 
Sub) could not participate together with one or more Affiliated Funds 
and/or one or more other Regulated Funds without obtaining and relying 
on the Order.\6\
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    \3\ ``Regulated Fund'' means any of the Existing Regulated Funds 
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 a Providence Adviser, and (c) that intends to 
participate in the Co-Investment Program. The term ``Providence 
Adviser'' means (a) BSP Adviser and (b) any future investment 
adviser, other than Providence Equity Partners L.L.C., that 
controls, is controlled by or is under common control with BSP 
Adviser and is registered under the Advisers Act. The term 
``Adviser'' means any Providence Adviser and GBA. Providence Equity 
Partners L.L.C. is excluded from the definition of Adviser because 
none of its clients will participate in any Co-Investment 
Transaction.
    \4\ ``Affiliated Fund'' means (a) the Existing Affiliated Funds 
and (b) any Future Affiliated Fund. ``Future Affiliated Fund'' means 
any entity (a) whose investment adviser is a Providence 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.
    \5\ 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.
    \6\ 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.
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    8. Applicants state that a Regulated Fund may, from time to time, 
form a Wholly-Owned Investment Sub.\7\ 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 Sub be permitted to participate in Co-Investment 
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub'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 Sub would 
have no purpose other than serving as a holding vehicle for the 
Regulated Fund's investments and, therefore, no conflicts of interest 
could arise between the Regulated Fund and the Wholly-Owned Investment 
Sub. The Regulated Fund's Board would make all relevant determinations 
under the conditions with regard to a Wholly-Owned Investment Sub'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 Sub 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 Subs, the Board 
will also be informed of, and take into consideration, the relative 
participation of the Regulated Fund and the Wholly-Owned Investment 
Sub.
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    \7\ The term ``Wholly-Owned Investment Sub'' 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 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 section 3(c)(1) or 3(c)(7) of 
the Act.
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    9. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the Adviser (or

[[Page 31434]]

Advisers if there are more than one) will consider only the Objectives 
and Strategies, investment policies, investment positions, capital 
available for investment, and other pertinent factors applicable to 
that Regulated Fund. The Advisers expect that any portfolio company 
that is an appropriate investment for a Regulated Fund should also be 
an appropriate investment for one or more other Regulated Funds and/or 
one or more Affiliated Funds, with certain exceptions based on 
available capital or diversification. The Regulated Funds, however, 
will not be obligated to invest, or co-invest, when investment 
opportunities are referred to them.
    10. Applicants state that GBA will be investment adviser to Griffin 
BSP, while BSP Adviser will be sub-adviser. Applicants represent that 
although BSP Adviser will identify and recommend investments for 
Griffin BSP, GBA will have ultimate authority to approve or reject the 
investments proposed by BSP Adviser, subject to the oversight of 
Griffin-BSP's Board. Applicants further represent that each of BSP 
Adviser and GBA has adopted allocation policies and procedures which 
are designed to allocate investment opportunities fairly and equitably 
among their clients over time. Applicants state that in the case of a 
Potential Co-Investment Transaction, BSP Adviser will apply its 
allocation policies and procedures in determining the proposed 
allocation for Griffin BSP consistent with the requirements of 
condition 2(a). Applicants further submit that if GBA approves the 
investment for Griffin BSP, the investment and all relevant allocation 
information would then be presented to Griffin BSP's Board for its 
approval in accordance with the conditions to the application. 
Applicants state that they believe the investment process between BSP 
Adviser and GBA, prior to seeking approval from Griffin BSP's Board 
(which is in addition to, rather than in lieu of, the procedures 
required under the conditions of the application), is significant and 
provides for additional procedures and processes to ensure that Griffin 
BSP is being treated fairly in respect of Potential Co-Investment 
Transactions.
    11. 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 applicable Adviser(s) 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'') \8\ will approve each Co-Investment Transaction prior to 
any investment by the participating Regulated Fund.
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    \8\ 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).
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    12. 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.
    13. No Non-Interested Director of a Regulated Fund will have a 
financial interest in any Co-Investment Transaction, other than 
indirectly through share ownership in one of the Regulated Funds.
    14. Under condition 15, if the Providence Advisers, the Principals, 
or any person controlling, controlled by, or under common control with 
the Providence Advisers 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 directed by an independent 
third party when voting on matters specified in the condition. 
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 the Providence Advisers or 
the Principals to influence the Independent 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 voting trust or 
proxy adviser, taking into accounts its qualifications, reputation for 
independence, cost to the shareholders, and other factors that they 
deem relevant.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
participation by a registered investment company and an affiliated 
person in any ``joint enterprise or other joint arrangement or profit-
sharing plan,'' as defined in the rule, without prior approval by the 
Commission by order upon application. Section 17(d) of the Act and rule 
17d-1 under the Act are applicable to Regulated Funds that are 
registered closed-end investment companies. Similarly, with regard to 
BDCs, section 57(a)(4) of the Act generally prohibits certain persons 
specified in section 57(b) from participating in joint transactions 
with the BDC or a company controlled by the BDC in contravention of 
rules as prescribed by the Commission. Section 57(i) of the Act 
provides that, until the Commission prescribes rules under section 
57(a)(4), the Commission's rules under section 17(d) of the Act 
applicable to registered closed-end investment companies will be deemed 
to apply to transactions subject to section 57(a)(4). Because the 
Commission has not adopted any rules under section 57(a)(4), rule 17d-1 
also applies to joint transactions with Regulated Funds that are BDCs.
    2. 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. 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 
Affiliated Funds and the Regulated Funds (excluding Griffin BSP) could 
be deemed to be a person related to each other Regulated Fund 
(excluding Griffin BSP) in a manner described by section 57(b) by 
virtue of being under common control. In addition, section 57(b) 
applies to any investment adviser to a Regulated Fund, including 
subadvisers. Applicants submit that BSP Adviser, in its role as 
subadviser to Griffin BSP, could be deemed to be a person related to 
Griffin BSP in a manner described in section

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57(b). Therefore, BSP Adviser and any control affiliate of BSP Adviser 
(such as the Regulated Funds and the Affiliated Funds) could be 
prohibited from participating in the Co-Investment Program with Griffin 
BSP by section 57(a)(4) and Rule 17d-1.
    4. Applicants state that in the absence of the requested relief, in 
some circumstances the Regulated Funds would be limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants believe that the proposed terms and 
conditions of the application 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 would be done in 
a manner that is not different from, or less advantageous than, that of 
other participants.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following 
conditions:
    1. Each time a Providence 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, each Adviser to the Regulated Fund 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 each Adviser to a Regulated Fund deems the participation 
in any Potential Co-Investment Transaction to be appropriate for the 
Regulated Fund, the Adviser (or Advisers if there are more than one) 
will then determine an appropriate level of investment for the 
Regulated Fund.
    (b) If the aggregate amount recommended by the Adviser (or Advisers 
if there are more than one) to a Regulated Fund to be invested by the 
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 party's net asset value, up to the amount proposed to be invested 
by each. The Adviser (or Advisers if there are more than one) to each 
participating Regulated Fund will provide the Eligible Directors of 
each participating Regulated Fund with information concerning each 
participating party's net asset value 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 Adviser to the Regulated Fund (or Advisers if there are more 
than one) 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 Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Funds or any 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 or Affiliated Fund, but not 
the Regulated Fund itself, gains the right to nominate a director for 
election to a portfolio company's board of directors 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 to the Regulated Fund (or Advisers if there are 
more than one) 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 
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 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) 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 Adviser to the Regulated Fund (or Advisers if there are more 
than one) 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.

[[Page 31436]]

    5. Except for Follow-On Investments made in accordance with 
condition 8,\9\ 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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    \9\ 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 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 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 to the Regulated Fund (or Advisers if 
there are more than one) 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 Advisers 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 the 
application). In all other cases, the Adviser to the Regulated Fund (or 
Advisers if there are more than one) 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 Affiliated 
Funds' and the Regulated Funds' outstanding investments immediately 
preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the Adviser(s) 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 party's net asset value, 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 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.
    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 Securities Act) will, to 
the extent not payable by the Advisers under their respective 
investment advisory agreements with the 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 \10\ (including break-up or commitment fees 
but

[[Page 31437]]

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 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 
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 agreement between the Adviser and the Regulated Fund or 
Affiliated Fund).
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    \10\ Applicants are not requesting and the staff of the 
Commission is not providing any relief for transaction fees received 
in connection with any Co-Investment Transaction.
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    14. The Advisers will maintain written policies and procedures 
reasonably designed to ensure compliance with the foregoing conditions. 
These policies and procedures will require, among other things, that 
GBA will be notified of all Potential Co-Investment Transactions that 
fall within Griffin BSP's then-current Objectives and Strategies and 
will be given sufficient information to make its independent 
determination and recommendations under conditions 1, 2(a), 7 and 8.
    15. If the Holders own in the aggregate more than 25% of the 
outstanding Shares of a Regulated Fund, then the Holders will vote such 
Shares as directed by an independent third party (such as the trustee 
of a voting trust or a proxy adviser) when voting on (1) the election 
of directors; (2) the removal of one or more directors; or (3) any 
matters requiring approval by the vote of a majority of the outstanding 
voting securities, as defined in section 2(a)(42) of the Act.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-13321 Filed 6-1-15; 8:45 am]
 BILLING CODE 8011-01-P