[Federal Register Volume 83, Number 6 (Tuesday, January 9, 2018)]
[Notices]
[Pages 1079-1084]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00162]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32960; File No. 812-14821]


Guggenheim Credit Income Fund, et al.; Notice of Application

January 3, 2018.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    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.

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:  Guggenheim Credit Income Fund (the ``Fund'') (f/k/a Carey 
Credit Income Fund); Guggenheim Partners Investment Management, LLC 
(``Guggenheim''); Guggenheim Funds Distributors, LLC, Guggenheim Funds 
Investment Advisors, LLC, Security Investors, LLC (collectively, 
together with Guggenheim, the ``Existing Guggenheim Advisers''); 
Guggenheim European Credit Fund, Guggenheim Private Debt Fund Note 
Issuer, LLC, Guggenheim Private Debt Fund, LLC, Guggenheim Private Debt 
Fund, Ltd., Guggenheim Private Debt Master Fund, LLC, Guggenheim 
Private Debt Fund Note Issuer 2.0, LLC, Guggenheim Private Debt Fund 
2.0, LLC, Guggenheim Private Debt Fund 2.0, Ltd., Guggenheim Private 
Debt Master Fund 2.0, LLC, Guggenheim Private Debt MFLTB 2.0, LLC, NZC 
Guggenheim Fund LLC, NZC Guggenheim Fund Limited, NZC Guggenheim Master 
Fund Limited, NZCG Funding Ltd., NZCG Funding 2 Limited, South Dock 
Funding Limited, NZCG Feeder I, L.P., NZCG Funding 2, LLC, NZCG Funding 
LLC, Guggenheim U.S. Loan Fund, Guggenheim U.S. Loan Fund II, 
Guggenheim U.S. Loan Fund III, Guggenheim Opportunistic U.S. Loan and 
Bond Fund IV, GFI Fund, and GHY Fund (collectively, the ``Existing 
Affiliated Investors'').

Filing Dates:  The application was filed on September 22, 2017, and 
amended on November 22, 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 January 29, 2018, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES:  Secretary, U.S. Securities and Exchange Commission, 100 F 
St. NE, Washington, DC 20549-1090. Applicants: Guggenheim and the Fund: 
330 Madison Avenue, New York, NY 10017; the Existing Guggenheim 
Advisers and the Existing Affiliated Investors: 100 Wilshire Boulevard, 
5th Floor, Santa Monica, CA 90401.

FOR FURTHER INFORMATION CONTACT:  Hae-Sung Lee, Attorney-Adviser, at 
(202) 551-7345 or Robert H. 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 website by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Fund is a Delaware statutory trust organized as a closed-end 
management investment company that has elected to be regulated as a BDC 
under the Act.\1\ The Fund serves as the

[[Page 1080]]

master fund in a master-feeder structure with three feeder funds and 
makes investments with the proceeds it receives from the sale of shares 
of the feeder funds.\2\ The Fund's Objectives and Strategies \3\ are to 
provide shareholders with current income, capital preservation and, to 
a lesser extent, long-term capital appreciation. The Fund invests 
primarily in large, privately-negotiated loans to private middle market 
U.S. companies and in opportunities that are originated by various 
intermediaries where the Fund is able to play a differentiated role 
gaining outsized allocation, influencing structure, pricing, and fees 
compared to the broader market (this could include more broadly 
syndicated assets such as bank loans and corporate bonds). The Fund has 
a five member Board,\4\ of which three members are Independent 
Trustees.\5\
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    \1\ Section 2(a)(48) of the Act defines a ``BDC'' to be any 
closed-end investment company that operates for the purpose of 
making investments in securities described in 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\ The existing feeder funds are Carey Credit Income Fund--I, 
Carey Credit Income Fund 2016 T, and Carey Credit Income Fund 2018 
T. Any future feeder fund will be created by Guggenheim.
    \3\ ``Objectives and Strategies'' means a Regulated Entity's (as 
defined below) investment objectives and strategies, as described in 
the Regulated Entity's registration statement on Form N-2, other 
filings the Regulated Entity 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 Entity's reports 
to shareholders.
    \4\ The term ``Board'' refers to the board of directors or 
trustees of any Regulated Entity.
    \5\ The term ``Independent Trustees'' refers to the trustees or 
directors of any Regulated Entity that are not ``interested 
persons'' of the Regulated Entity within the meaning of section 
2(a)(19) of the Act.
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    2. Guggenheim is a Delaware limited liability company and is 
registered as an investment adviser under the Investment Advisers Act 
of 1940 (the ``Advisers Act''). Guggenheim serves as the investment 
adviser to the Fund. Guggenheim also provides administrative services 
to the Fund under an administrative services agreement. Guggenheim is 
part of the investment management business of Guggenheim Partners LLC, 
a privately held, global financial services firm.
    3. Each Existing Affiliated Investor is a privately-offered fund 
that would be an investment company but for section 3(c)(1) or 3(c)(7) 
of the Act. An Existing Guggenheim Adviser serves as the investment 
adviser to each Existing Affiliated Investor. Each Existing Guggenheim 
Adviser is either controlled by Guggenheim or under common control with 
Guggenheim and is registered as an investment adviser under the 
Advisers Act.
    4. Applicants seek to supersede the Prior Order \6\ to permit one 
or more Regulated Entities \7\ and/or one or more Affiliated Investors 
\8\ 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 sections 17(d) 
and 57(a)(4) and the rules under the Act. For purposes of the 
application, ``Co-Investment Transaction'' means any transaction in 
which a Regulated Entity (or its Wholly-Owned Investment Subsidiary, as 
defined below) participated together with one or more other Regulated 
Entities and/or one or more Affiliated Investors in reliance on the 
requested Order or the Prior Order. ``Potential Co-Investment 
Transaction'' means any investment opportunity in which a Regulated 
Entity (or its Wholly-Owned Investment Subsidiary) could not 
participate together with one or more Affiliated Investors and/or one 
or more other Regulated Entities without obtaining and relying on the 
Order.
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    \6\ The requested order (the ``Order'') would supersede an 
exemptive order issued by the Commission on June 28, 2016 (the 
``Prior Order'') that was granted pursuant to Sections 57(a)(4) and 
57(i) and Rule 17d-1, with the result that no person will continue 
to rely on the Prior Order if the Order is granted. Carey Credit 
Income Fund, et al., Investment Company Act Release Nos. 32138 (June 
2, 2016) (notice) and 32164 (June 28, 2016) (order). 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.
    \7\ ``Regulated Entity'' means the Fund and any Future Regulated 
Entity. ``Future Regulated Entity'' means a closed-end management 
investment company (a) that is registered under the Act or has 
elected to be regulated as a BDC under the Act, (b) whose investment 
adviser is a Guggenheim Adviser. ``Guggenheim Adviser'' means any 
Existing Guggenheim Adviser or any future investment adviser that 
(i) controls, is controlled by or is under common control with 
Guggenheim, (ii) is registered as an investment adviser under the 
Advisers Act, and (iii) is not a Regulated Entity or a subsidiary of 
a Regulated Entity.
    \8\ ``Affiliated Investors'' means the Existing Affiliated 
Investors and any Future Affiliated Investor. ``Future Affiliated 
Investor'' means an entity (a) whose investment adviser is a 
Guggenheim Adviser and (b) that would be an investment company but 
for section 3(c)(1) or 3(c)(7) of the Act.
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    5. Applicants state that a Regulated Entity may, from time to time, 
form a Wholly-Owned Investment Subsidiary.\9\ Such a subsidiary would 
be prohibited from investing in a Co-Investment Transaction with any 
Affiliated Investor because it would be a company controlled by its 
parent Regulated Entity for purposes of section 57(a)(4) and rule 17d-
1. Applicants request that each Wholly-Owned Investment Subsidiary be 
permitted to participate in Co-Investment Transactions in lieu of its 
parent Regulated Entity and that the Wholly-Owned Investment 
Subsidiary's participation in any such transaction be treated, for 
purposes of the requested Order, as though the parent Regulated Entity 
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 
Entity's investments and, therefore, no conflicts of interest could 
arise between the Regulated Entity and the Wholly-Owned Investment 
Subsidiary. The Regulated Entity's Board would make all relevant 
determinations under the conditions with regard to a Wholly-Owned 
Investment Subsidiary's participation in a Co-Investment Transaction, 
and the Regulated Entity's Board would be informed of, and take into 
consideration, any proposed use of a Wholly-Owned Investment Subsidiary 
in the Regulated Entity's place. If the Regulated Entity proposes to 
participate in the same Co-Investment Transaction with any of its 
Wholly-Owned Investment Subsidiaries, the Board will also be informed 
of, and take into consideration, the relative participation of the 
Regulated Entity and the Wholly-Owned Investment Subsidiary.
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    \9\ The term ``Wholly-Owned Investment Subsidiary'' means an 
entity (i) that is wholly-owned by a Regulated Entity (with such 
Regulated Entity 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 Entity (and, in the case of an entity that is licensed by 
the Small Business Administration to operate under the Small 
Business Investment Act of 1958, as amended (the ``SBA Act''), as a 
small business investment company (an ``SBIC''), to maintain a 
license under the SBA Act and issue debentures guaranteed by the 
Small Business Administration); (iii) with respect to which the 
Regulated Entity'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. All 
subsidiaries participating in the Co-Investment Program will be 
Wholly-Owned Investment Subsidiaries and will have Objectives and 
Strategies that are either substantially the same as, or a subset 
of, their parent Regulated Entity's Objectives and Strategies. A 
subsidiary that is an SBIC may be a Wholly-Owned Investment 
Subsidiary if it satisfies the conditions in this definition.
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    6. It is anticipated that a Guggenheim Adviser will periodically 
determine that certain investments the Guggenheim Adviser recommends 
for a Regulated Entity would also be appropriate investments for one or 
more other Regulated Entities and/or one or more Affiliated Investors. 
Such a determination may result in the Regulated Entity, one or more 
other Regulated Entities and/or one or more Affiliated Investors co-
investing in certain investment opportunities. For each such investment 
opportunity, the Guggenheim Adviser to each Regulated Entity will 
independently analyze and

[[Page 1081]]

evaluate the investment opportunity as to its appropriateness for such 
Regulated Entity taking into consideration the Regulated Entity's 
Objectives and Strategies.
    7. Applicants state that Guggenheim serves as the Fund's investment 
adviser and administrator and either it or another Guggenheim Adviser 
will serve in the same capacity to any Future Regulated Entity. 
Applicants represent that a Guggenheim Adviser will identify and 
recommend investments for each Regulated Entity and will have the 
authority to approve or reject all investments proposed for the 
Regulated Entity.
    8. Applicants state that each Guggenheim Adviser has (or will have, 
in the case of future advisers) an investment committee through which 
it will carry out its obligation under condition 1 to make a 
determination as to the appropriateness of a Potential Co-Investment 
Transaction for each Regulated Entity. Applicants represent that each 
Guggenheim Adviser, as a registered investment adviser, has (or will 
have, in the case of future advisers) developed a robust allocation 
process that is designed to allocate investment opportunities fairly 
and equitably among its clients over time. Applicants state that, in 
the case of a Potential Co-Investment Transaction, the applicable 
Guggenheim Adviser would apply its allocation policies and procedures 
in determining the proposed allocation for the Regulated Entity 
consistent with the requirements of condition 2(a).
    9. Applicants state that, once the applicable Guggenheim Adviser's 
investment committee approves a transaction, the Guggenheim Adviser 
would present the Potential Co-Investment Transaction and proposed 
allocation to the Regulated Entity's Board for its approval in 
accordance with the conditions to the application.
    10. If the applicable Guggenheim Adviser to a Regulated Entity 
determines that a Potential Co-Investment Transaction is appropriate 
for the Regulated Entity, and one or more other Regulated Entities and/
or one or more Affiliated Investors may also participate, the 
Guggenheim Adviser will present the investment opportunity to the 
Eligible Trustees \10\ of the Regulated Entity prior to the actual 
investment by the Regulated Entity. As to any Regulated Entity, a Co-
Investment Transaction will be consummated only upon approval by a 
required majority of the Eligible Trustees of such Regulated Entity 
within the meaning of section 57(o) of the Act (``Required 
Majority'').\11\
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    \10\ ``Eligible Trustees'' means the trustees or directors of a 
Regulated Entity that are eligible to vote under section 57(o) of 
the Act.
    \11\ In the case of a Regulated Entity that is a registered 
closed-end fund, the trustees or directors that make up the Required 
Majority will be determined as if the Regulated Entity were a BDC 
subject to section 57(o). As defined in section 57(o), ``required 
majority'' means ``both a majority of a business development 
company's directors or general partners who have no financial 
interest in such transaction, plan, or arrangement and a majority of 
such directors or general partners who are not interested persons of 
such company.''
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    11. With respect to the pro rata dispositions and follow-on 
Investments provided in conditions 7 and 8, a Regulated Entity 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 Entity and 
Affiliated Investor 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) each 
Regulated Entity's Board has approved that Regulated Entity's 
participation in pro rata dispositions and follow-on investments as 
being in the best interests of the Regulated Entity. If the Board does 
not so approve, any such disposition or follow-on investment will be 
submitted to the Regulated Entity's Eligible Trustees. The Board of any 
Regulated Entity 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 Trustees.
    12. No Independent Trustee of a Regulated Entity will have a 
financial interest in any Co-Investment Transaction.
    13. Under condition 15, if a Guggenheim Adviser or its principals, 
or any person controlling, controlled by, or under common control with 
the Guggenheim Adviser or its principals, and any Affiliated Investors 
(collectively, the ``Holders'') own in the aggregate more than 25% of 
the outstanding voting securities of a Regulated Entity (``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 Independent 
Trustees will act independently in evaluating the Co-Investment 
Program, because the ability of the Guggenheim Adviser or its 
principals to influence the Independent Trustees by a suggestion, 
explicit or implied, that the Independent Trustees can be removed will 
be limited significantly. Applicants represent that the Independent 
Trustees shall evaluate and approve any such independent third party, 
taking into account its qualifications, reputation for independence, 
cost to the shareholders, and other factors that they deem relevant.

Applicants' Legal Analysis

    1. Section 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 Entities that are 
registered closed-end investment companies. Similarly, with regard to 
BDCs, section 57(a)(4) of the Act makes it unlawful for any person who 
is related to a BDC in a manner described in section 57(b), acting as 
principal, knowingly to effect any transaction in which the BDC (or a 
company controlled by such BDC) is a joint or a joint and several 
participant with that person in contravention of rules as prescribed by 
the Commission. Because the Commission has not adopted any rules 
expressly under section 57(a)(4), section 57(i) provides that the rules 
under section 17(d) applicable to registered closed-end investment 
companies (e.g., rule 17d-1) are, in the interim, deemed to apply to 
transactions subject to section 57(a). 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), as modified by rule 57b-1, from 
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, unless an application 
regarding the joint enterprise, arrangement, or profit-sharing plan has 
been filed with the Commission and has been granted by an order entered 
prior to the submission of the plan or any modification thereof, to 
security holders for approval, or prior to its adoption or modification 
if not so submitted.
    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

[[Page 1082]]

or less advantageous than that of other participants.
    3. Applicants submit that each Regulated Entity may be deemed to be 
an ``affiliated person'' of each other Regulated Entity within the 
meaning of section 2(a)(3) of the Act. Applicants state that the 
Regulated Entities, by virtue of each having a Guggenheim Adviser, may 
be deemed to be under common control, and thus affiliated persons of 
each other under section 2(a)(3)(C) of the Act. Section 17(d) and 
section 57(b) apply to any investment adviser to a closed-end fund or a 
BDC, respectively. Thus, a Guggenheim Adviser and any Affiliated 
Investors that it advises could be deemed to be persons related to 
Regulated Entities in a manner described by sections 17(d) and 57(b) 
and therefore prohibited by sections 17(d) and 57(a)(4) and rule 17d-1 
from participating in the Co-Investment Program. Applicants further 
submit that, because the Guggenheim Advisers are ``affiliated persons'' 
of other Guggenheim Advisers, Affiliated Investors advised by any of 
them could be deemed to be persons related to Regulated Entities (or a 
company controlled by a Regulated Entity) in a manner described by 
sections 17(d) and 57(b) and also prohibited from participating in the 
Co-Investment Program.
    4. Applicants state that they expect that that co-investment in 
portfolio companies by a Regulated Entity, one or more other Regulated 
Entities and/or one or more Affiliated Investors will increase 
favorable investment opportunities for each Regulated Entity.
    5. Applicants submit that the fact that the Required Majority will 
approve each Co-Investment Transaction before investment (except for 
certain dispositions or follow-on investments, as described in the 
conditions), and other protective conditions set forth in the 
application, will ensure that each Regulated Entity will be treated 
fairly. Applicants state that each Regulated Entity'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 
further state that the terms and conditions proposed herein will ensure 
that all such transactions are reasonable and fair to each Regulated 
Entity and the Affiliated Investors and do not involve overreaching by 
any person concerned, including Guggenheim.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following 
conditions:
    1. Each time a Guggenheim Adviser considers a Potential Co-
Investment Transaction for an Affiliated Investor or another Regulated 
Entity that falls within a Regulated Entity's then-current Objectives 
and Strategies, the Guggenheim Adviser to the Regulated Entity will 
make an independent determination of the appropriateness of the 
investment for the Regulated Entity in light of the Regulated Entity's 
then-current circumstances.
    2. a. If the Guggenheim Adviser to a Regulated Entity deems 
participation in any Potential Co-Investment Transaction to be 
appropriate for the Regulated Entity, the Guggenheim Adviser will then 
determine an appropriate level of investment for such Regulated Entity.
    b. If the aggregate amount recommended by the Guggenheim Adviser to 
a Regulated Entity to be invested by the Regulated Entity in the 
Potential Co-Investment Transaction, together with the amount proposed 
to be invested by the other participating Regulated Entities and 
Affiliated Investors, collectively, in the same transaction, exceeds 
the amount of the investment opportunity, the amount of the investment 
opportunity will be allocated among the Regulated Entities and such 
Affiliated Investors, pro rata based on each participant's Available 
Capital \12\ for investment in the asset class being allocated, up to 
the amount proposed to be invested by each. The Advisers to each 
participating Regulated Entity will provide the Eligible Trustees of 
each participating Regulated Entity with information concerning each 
participating party's Available Capital to assist the Eligible Trustees 
with their review of the Regulated Entity's investments for compliance 
with these allocation procedures.
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    \12\ ``Available Capital'' means (a) for each Regulated Entity, 
the amount of capital available for investment 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 Entity or imposed by applicable 
laws, rules, regulations or interpretations and (b) for each 
Affiliated Investor, the amount of capital available for investment 
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 by the 
Affiliated Investor's directors, general partners or adviser or 
imposed by applicable laws, rules, regulations or interpretations.
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    c. After making the determinations required in conditions 1 and 
2(a) above, the Advisers to the Regulated Entity will distribute 
written information concerning the Potential Co-Investment Transaction, 
including the amount proposed to be invested by each Regulated Entity 
and any Affiliated Investor, to the Eligible Trustees of each 
participating Regulated Entity for their consideration. A Regulated 
Entity will co-invest with one or more other Regulated Entities and/or 
an Affiliated Investor only if, prior to the Regulated Entities' and 
the Affiliated Investors' 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 
Entity and its shareholders and do not involve overreaching in respect 
of the Regulated Entity or its shareholders on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (a) The interests of the Regulated Entity's shareholders; and
    (b) the Regulated Entity's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Entity or an Affiliated 
Investor would not disadvantage the Regulated Entity, and participation 
by the Regulated Entity would not be on a basis different from or less 
advantageous than that of any other Regulated Entity or Affiliated 
Investor; provided, that if another Regulated Entity or Affiliated 
Investor, but not the Regulated Entity 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 a Required 
Majority from reaching the conclusions required by this condition 
2(c)(iii), if:
    (a) The Eligible Trustees will have the right to ratify the 
selection of such director or board observer, if any; and
    (b) the Guggenheim Adviser to the Regulated Entity agree to, and 
do, provide periodic reports to the Regulated Entity'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 other Regulated Entity 
or any Affiliated Investor or any affiliated person of any other 
Regulated Entity or an Affiliated Investor receives in connection with 
the right of one or more Regulated Entities or Affiliated Investors

[[Page 1083]]

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 
Investors (who may, in turn, share their portion with their affiliated 
persons) and any participating Regulated Entity in accordance with the 
amount of each party's investment; and
    (iv) the proposed investment by the Regulated Entity will not 
benefit the Guggenheim Adviser, any other Regulated Entity or the 
Affiliated Investors 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 under 
sections 17(e) and 57(k) of the Act, as applicable, (C) in the case of 
fees or other compensation described in condition 2(c)(iii)(c), or (D) 
indirectly, as a result of an interest in the securities issued by one 
of the parties to the Co-Investment Transaction.
    3. Each Regulated Entity will have the right to decline to 
participate in any Potential Co-Investment Transaction or to invest 
less than the amount proposed.
    4. The Guggenheim Adviser will present to the Board of each 
Regulated Entity, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Entities or any of the Affiliated Investors during the preceding 
quarter that fell within the Regulated Entity's then-current Objectives 
and Strategies that were not made available to the Regulated Entity, 
and an explanation of why the investment opportunities were not offered 
to the Regulated Entity. All information presented to the Board 
pursuant to this condition will be kept for the life of the Regulated 
Entity 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,\13\ a Regulated Entity will not invest in reliance on the 
Order in any issuer in which another Regulated Entity or an Affiliated 
Investor or any affiliated person of another Regulated Entity or an 
Affiliated Investor is an existing investor.
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    \13\ This exception applies only to follow-on investments by a 
Regulated Entity in issuers in which that Regulated Entity already 
holds investments.
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    6. A Regulated Entity 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 Entity and Affiliated 
Investor. The grant to one or more Regulated Entities or Affiliated 
Investors, but not the Regulated Entity itself, 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 Regulated Entity or Affiliated Investor elects to 
sell, exchange or otherwise dispose of an interest in a security that 
was acquired by one or more Regulated Entities and/or Affiliated 
Investors in a Co-Investment Transaction, the Guggenheim Adviser will:
    (i) Notify each Regulated Entity 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 Entity in the disposition.
    b. Each Regulated Entity 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 Affiliated Investors 
and any other Regulated Entity.
    c. A Regulated Entity may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Entity and each Affiliated Investor in 
such disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Regulated 
Entity's Board has approved as being in the best interests of the 
Regulated Entity the ability to participate in such dispositions on a 
pro rata basis (as described in greater detail in the application); and 
(iii) the Regulated Entity's Board is provided on a quarterly basis 
with a list of all dispositions made in accordance with this condition. 
In all other cases, the Guggenheim Adviser will provide its written 
recommendation as to the Regulated Entity's participation to the 
Eligible Trustees, and the Regulated Entity will participate in such 
disposition solely to the extent that a Required Majority determines 
that it is in the Regulated Entity's best interests.
    d. Each Regulated Entity and each Affiliated Investor will bear its 
own expenses in connection with the disposition.
    8. a. If any Regulated Entity or Affiliated Investor desires to 
make a ``follow-on investment'' (i.e., an additional investment in the 
same entity, including through the exercise of warrants or other rights 
to purchase securities of the issuer) in a portfolio company whose 
securities were acquired by the Regulated Entity and the Affiliated 
Investor in a Co-Investment Transaction, the Advisers will:
    (i) Notify each Regulated Entity 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 Entity.
    b. A Regulated Entity may participate in such follow-on investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Entity and each Affiliated 
Investor in such investment is proportionate to its outstanding 
investments in the issuer immediately preceding the follow-on 
investment; and (ii) the Regulated Entity's Board has approved as being 
in the best interests of such Regulated Entity 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 
Guggenheim Adviser will provide its written recommendation as to such 
Regulated Entity's participation to the Eligible Trustees, and the 
Regulated Entity will participate in such follow-on investment solely 
to the extent that the Required Majority determines that it is in such 
Regulated Entity's best interests.
    c. If, with respect to any follow-on investment:
    (i) The amount of a follow-on investment is not based on the 
Regulated Entities' and the Affiliated Investors' outstanding 
investments immediately preceding the follow-on investment; and
    (ii) the aggregate amount recommended by the Guggenheim Adviser to 
be invested by the Regulated Entity in the follow-on investment, 
together with the amount proposed to be invested by the other 
participating Regulated Entities and the Affiliated Investors 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 Available Capital 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

[[Page 1084]]

condition will be considered a Co-Investment Transaction for all 
purposes and be subject to the other conditions set forth in the 
application.
    9. The Independent Trustees of each Regulated Entity will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by other Regulated Entities or Affiliated Investors 
that a Regulated Entity considered but declined to participate in, so 
that the Independent Trustees may determine whether all investments 
made during the preceding quarter, including those investments which 
the Regulated Entity considered but declined to participate in, comply 
with the conditions of the Order. In addition, the Independent Trustees 
will consider at least annually the continued appropriateness for such 
Regulated Entity of participating in new and existing Co-Investment 
Transactions.
    10. Each Regulated Entity will maintain the records required by 
section 57(f)(3) of the Act as if each of the Regulated Entities were a 
BDC and each of the investments permitted under these conditions were 
approved by a Required Majority under section 57(f).
    11. No Independent Trustee of a Regulated Entity will also be a 
trustee, director, general partner, managing member or principal, or 
otherwise an ``affiliated person'' (as defined in the Act) of any 
Affiliated Investor.
    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) shall, to 
the extent not payable by the Guggenheim Advisers under their 
respective advisory agreements with the Regulated Entities and the 
Affiliated Investors, be shared by the Regulated Entities and the 
Affiliated Investors 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 break-up or commitment fees but 
excluding brokers' fees contemplated by section 17(e) or 57(k) of the 
Act, as applicable) \14\ received in connection with a Co-Investment 
Transaction will be distributed to the participating Regulated Entities 
and Affiliated Investors on a pro rata basis based on the amount they 
invested or committed, as the case may be, in such Co-Investment 
Transaction. If any transaction fee is to be held by a Guggenheim 
Adviser pending consummation of the transaction, the fee will be 
deposited into an account maintained by the Guggenheim 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 
Entities and Affiliated Investors based on the amount they invest in 
the Co-Investment Transaction. None of the other Regulated Entities, 
Affiliated Investors, the Guggenheim Advisers nor any affiliated person 
of the Regulated Entities or the Affiliated Investors 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 Entities and the Affiliated Investors, 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 
Guggenheim Advisers, investment advisory fees paid in accordance with 
the Regulated Entities' and the Affiliated Investors' investment 
advisory agreements).
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    \14\ Applicants are not requesting and the Commission is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    14. If the Holders own in the aggregate more than 25 percent of the 
shares of a Regulated Entity, then the Holders will vote such shares as 
directed by an independent third party when voting on (1) the election 
of directors or trustees; (2) the removal of one or more directors or 
trustees; 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.
    15. Each Regulated Entity's chief compliance officer, as defined in 
Rule 38a-1(a)(4), will prepare an annual report for its Board that 
evaluates (and documents the basis of that evaluation) the Regulated 
Entity's compliance with the terms and conditions of the application 
and the procedures established to achieve such compliance.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00162 Filed 1-8-18; 8:45 am]
BILLING CODE 8011-01-P