[Federal Register Volume 84, Number 235 (Friday, December 6, 2019)]
[Notices]
[Pages 66943-66951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26309]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33707; 812-14967]


Blackstone Alternative Alpha Fund, et al.

December 2, 2019.
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 business 
development companies (``BDCs'') and closed-end management investment 
companies to co-invest in portfolio companies with each other and with 
certain affiliated investment funds and accounts.

Applicants:  Blackstone Alternative Alpha Fund (``BAAF''); Blackstone 
Alternative Alpha Fund II (``BAAF II''); Blackstone Alternative Alpha 
Master Fund (``BAAF Master Fund''); Blackstone Alternative Multi-
Strategy Fund (``BAMSF'', and together with BAAF, BAAF II and the BAAF 
Master Fund, the ``BAAM Regulated Funds''); Blackstone Alternative 
Asset Management, L.P. (``BAAM''), the investment adviser to BAAF, BAAF 
II and BAAF Master Fund; Blackstone Alternative Investment Advisors LLC 
(``BAIA''), the investment adviser to BAMSF; the investment advisers 
set forth in Schedule A to the application (together with BAAM and 
BAIA, the ``BAAM Advisers''); the Existing Affiliated Investors set 
forth on Schedule A to the application.\1\
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    \1\ The Existing Affiliated Investors, together with their 
direct and indirect wholly-owned subsidiaries, are entities (i) 
whose primary investment adviser is a BAAM Adviser and (ii) that 
either (A) would be an investment company but for section 3(c)(1), 
3(c)(5)(C) or 3(c)(7) of the Act or (B) rely on the rule 3a-7 
exemption thereunder from investment company status.

Filing Dates:  The application was filed on October 24, 2018, and 
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amended on June 3, 2019 and September 10, 2019.

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 December 27, 2019, 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.

[[Page 66944]]

Applicants: 345 Park Avenue, New York, New York 10154.

FOR FURTHER INFORMATION CONTACT:  Asen Parachkevov, Senior Counsel, or 
Kaitlin Bottock, 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. BAAF, BAAF II and BAAF Master Fund, each a Massachusetts 
business trust, are externally managed, non-diversified, closed-end 
management investment companies. Each of BAAF's, BAAF II's and BAAF 
Master Fund's investment objective is to seek to earn attractive long-
term risk-adjusted returns by primarily investing in non-traditional or 
``alternative'' strategies. BAAF and BAAF II are ``feeder'' funds that 
invest substantially all of their assets in BAAF Master Fund. Each of 
BAAF, BAAF II and BAAF Master Fund have a six-member Board, of which 
four members are Non-Interested Trustees.\2\
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    \2\ ``Board'' means the board of trustees (or equivalent) of the 
BAAM Regulated Funds and any other Regulated Fund (as defined 
below).
    ``Non-Interested Trustees'' means the Non-Interested Trustees of 
the BAAM Regulated Funds and any other Regulated Fund who are not 
``interested persons'' within the meaning of section 2(a)(19) of the 
Act.
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    2. BAMSF, a Massachusetts business trust, is currently the sole 
series of Blackstone Alternative Investment Funds, and operates as a 
diversified, open-end management investment company. BAMSF's investment 
objective is to seek capital appreciation primarily through investing 
in non-traditional or ``alternative'' strategies. BASMF has a six-
member Board, of which four members are Non-Interested Trustees.
    3. Each Adviser \3\ is a subsidiary of The Blackstone Group, L.P. 
(``Blackstone''). Blackstone is a leading global alternative asset 
manager, whose alternative asset management businesses include 
investment vehicles focused on private equity, real estate, hedge fund 
solutions, non-investment grade credit, secondary private equity funds 
of funds and multi-asset class strategies. Blackstone's four business 
segments are (1) private equity, (2) real estate, (3) hedge fund 
solutions and (4) credit.
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    \3\ The term ``Adviser'' means (i) the BAAM Advisers and (ii) 
any future investment adviser that controls, is controlled by or is 
under common control with a BAAM Adviser and is registered as an 
investment adviser under the Investment Advisers Act of 1940 (the 
``Advisers Act'') that intends to participate in the Co-Investment 
Program (as defined below).
    The term ``Primary Adviser'' means any future investment adviser 
that (i) controls, is controlled by or is under common control with 
an Adviser, (ii) is registered as an investment adviser under the 
Advisers Act, and (iii) is not an Adviser. For the avoidance of 
doubt, a Primary Adviser will not be treated as an Adviser under the 
requested Order, but will be subject to conditions 2(c)(iv) and 15 
of the requested Order. A Primary Adviser will not rely on the 
requested Order with respect to any investment vehicles it manages 
other than to the extent those vehicles are sub-advised by an 
Adviser.
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    4. The BAAM Advisers operate as a self-contained advisory business 
within Blackstone's hedge fund solutions group. Each BAAM Adviser is 
under common control with BAAM and BAIA, the Adviser to each of the 
BAAM Regulated Funds, and collectively the BAAM Advisers conduct a 
single advisory business for purposes of the requested Order. The BAAM 
Advisers are each either separately registered as investment advisers 
with the Commission, or are relying advisers that rely on the 
registration of another BAAM Adviser. No BAAM Adviser is a relying 
adviser of any Blackstone-affiliated investment adviser from outside of 
the self-contained group.
    5. Applicants seek an order to permit one or more Regulated Funds 
\4\ to be able to participate with one or more other Regulated Funds 
and/or one or more Affiliated Investors \5\ 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) of the Act and rule 17d-1 thereunder (the ``Co-Investment 
Program'').
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    \4\ ``Regulated Fund'' means any of the BAAM Regulated Funds and 
any future closed-end management or future open-end management 
investment company or future series of an open-end investment 
company (i) that has elected to be regulated as a business 
development company (``BDC'') or is registered under the Act, (ii) 
whose investment adviser is an Adviser and (iii) who intends to 
participate in the Co-Investment Program.
     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.
    \5\ ``Affiliated Investor'' means (i) the Existing Affiliated 
Investors, (ii) any Affiliated Proprietary Account and (iii) any 
Future Affiliated Investor.
    ``Future Affiliated Investor'' means an entity (i)(A) whose 
investment adviser is an Adviser or (B) whose investment adviser is 
a Primary Adviser and whose sub-adviser is an Adviser (a ``Sub-
Advised Affiliated Investor''), and (ii) that either (A) would be an 
investment company but for an exemption in section 3(c)(1), 
3(c)(5)(C) or 3(c)(7) of the Act or (B) relies on the rule 3a-7 
exemption thereunder from investment company status, and (iii) that 
intends to participate in the Co-Investment Program.
    ``Affiliated Proprietary Account'' means any account of an 
Adviser or its affiliates or any company that is an indirect, 
wholly- or majority-owned subsidiary of an Adviser or its 
affiliates, which, from time to time, may hold various financial 
assets in a principal capacity. For the avoidance of doubt, none of 
the Regulated Funds, the Existing Affiliated Investors or any Future 
Affiliated Investors shall be deemed to be Affiliated Proprietary 
Accounts for purposes of the requested Order.
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    6. For purposes of the requested Order, ``Co-Investment 
Transaction'' means any transaction in which one or more Regulated 
Funds (or one or more Wholly-Owned Investment Subsidiaries, as defined 
below) participates together with one or more other Regulated Funds (or 
one or more Wholly-Owned Investment Subsidiaries, as defined below) 
and/or one or more Affiliated Investors in reliance on the requested 
Order. ``Potential Co-Investment Transaction'' \6\ means any investment 
opportunity in which a Regulated Fund (or its Wholly-Owned Investment 
Subsidiary, as defined below) could not participate together with one 
or more Affiliated Investors and/or one or more other Regulated Funds 
without obtaining and relying on the requested Order.\7\ Funds that are 
advised or sub-advised by affiliates of Blackstone other than an 
Adviser or Primary Adviser will not participate in the Co-Investment 
Program. No Primary Adviser will be the source of any Potential Co-
Investment Transactions under the requested Order. Potential Co-
Investment Transactions will not be shared outside of the Co-Investment 
Program.
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    \6\ Investment opportunities that are sourced by sub-advisers 
that are not BAAM Advisers are excluded from the definition of 
Potential Co-Investment Transactions. Only investments that are 
sourced by BAAM Advisers will be considered Potential Co-Investment 
Transactions that are subject to condition 1 of the requested Order.
    \7\ 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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    7. Applicants state that a Regulated Fund may, from time to time, 
form a special purpose subsidiary (a ``Wholly-Owned Investment 
Subsidiary'').\8\ A

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Wholly-Owned Investment Subsidiary would be prohibited from investing 
in a Co-Investment Transaction with another Regulated Fund or any 
Affiliated Investor because it would be a company controlled by its 
parent Regulated Fund for purposes of sections 17(d) and 57(a)(4) of 
the Act and rule 17d-1 thereunder. Applicants request that a Wholly-
Owned Investment Subsidiary be permitted to participate in Co-
Investment Transactions in lieu of the applicable Regulated Fund and 
that the Wholly-Owned Investment Subsidiary's participation in any such 
transaction be treated, for purposes of the requested Order, as though 
the parent Regulated Fund were participating directly.
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    \8\ ``Wholly-Owned Investment Subsidiary'' means an (i) whose 
sole business purpose is to hold one or more investments 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)); (ii) that is wholly-owned by a Regulated Fund (with such 
Regulated Fund at all times holding, beneficially and of record, 
100% of the voting and economic interests); (iii) with respect to 
which the Board of the Regulated Fund has the sole authority to make 
all determinations with respect to the Wholly-Owned Investment 
Subsidiary's participation under the conditions of the requested 
Order; and (iv) that is an entity that would be an investment 
company but for an exemption in 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 (a ``SBIC'').
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    8. When considering Potential Co-Investment Transactions for any 
Regulated Fund, an Adviser will consider only the Objectives and 
Strategies,\9\ Board-Established Criteria,\10\ investment policies, 
investment positions, capital available for investment, and other 
pertinent factors applicable to that Regulated Fund. The participation 
of a Regulated Fund in a Potential Co-Investment Transaction may only 
be approved by a Required Majority, as defined in section 57(o) of the 
Act (a ``Required Majority''), of the trustees of the Board eligible to 
vote on that Co-Investment Transaction under section 57(o) of the Act 
(the ``Eligible Trustees'').\11\ When selecting investments for the 
Affiliated Investors, an Adviser will select investments separately for 
each Affiliated Investor, considering, in each case, only the 
investment objective, investment policies, investment position, capital 
available for investment, and other pertinent factors applicable to 
that particular Affiliated Investor.
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    \9\ The term ``Objectives and Strategies'' means a Regulated 
Fund's investment objectives and strategies, as described in the 
filings made with the Commission by the Regulated Fund under the 
Securities Exchange Act of 1934, as amended, the Securities Act of 
1933, as amended (the ``1933 Act'') and the Act, and the Regulated 
Fund's reports to shareholders.
    \10\ The term ``Board-Established Criteria'' means criteria that 
the Board of the applicable Regulated Fund may establish from time 
to time to describe the characteristics of Potential Co-Investment 
Transactions regarding which an Adviser to the Regulated Fund should 
be notified under condition 1 of the requested Order. The Board-
Established Criteria will be consistent with the Regulated Fund's 
then-current Objectives and Strategies. If no Board-Established 
Criteria are in effect, then the Regulated Fund's Adviser will be 
notified of all Potential Co-Investment Transactions that fall 
within the Regulated Fund's then current Objectives and Strategies. 
Board-Established Criteria will be objective and testable, meaning 
that they will be based on observable information, such as industry/
sector of the issuer, minimum earnings before interest, taxes, 
depreciation, and amortization of the issuer, asset class of the 
investment opportunity or required commitment size, and not on 
characteristics that involve discretionary assessment. The Adviser 
to the Regulated Fund may from time to time recommend criteria for 
the applicable Board's consideration, but Board-Established Criteria 
will only become effective if approved by a majority of the Non-
Interested Trustees. The Non-Interested Trustees of a Regulated Fund 
may at any time rescind, suspend or qualify its approval of any 
Board-Established Criteria, though Applicants anticipate that, under 
normal circumstances, the Board would not modify these criteria more 
often than quarterly.
    \11\ The defined terms Eligible Trustees 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 participation in a Potential Co-Investment 
Transaction by a Regulated Fund, the applicable Adviser will present 
each Potential Co-Investment Transaction and the proposed allocation of 
each investment opportunity to the Eligible Trustees. The Required 
Majority of a Regulated Fund will approve each Co-Investment 
Transaction prior to any investment by the Regulated Fund.
    10. Applicants state that the majority of the BAAM Advisers' 
employees work on matters for Close Affiliates \12\ and information 
about potential investment opportunities is routinely disseminated 
among such Adviser's employees. Other than to satisfy compliance 
obligations, information regarding Potential Co-Investment Transactions 
will not be shared with Remote Affiliates,\13\ which would include 
other investment advisers that operate in other Blackstone business 
groups, except in unusual circumstances, as the Blackstone business 
groups each generally target different investment strategies or asset 
classes and there are information barrier policies in place between the 
Blackstone business groups. Applicants further note within the BAAM 
Advisers, the personnel overlap and coordination among portfolio 
management teams ensures that all relevant investment opportunities 
will be brought to the attention of each Regulated Fund managed by the 
respective Adviser. Applicants submit that the BAAM Advisers will 
receive all information regarding all investment opportunities that 
fall within the then-current Objectives and Strategies and Board-
Established Criteria of each Regulated Fund managed by the respective 
Adviser.
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    \12\ The term ``Close Affiliate'' means the Advisers, the 
Regulated Funds, the Affiliated Investors and any other person 
described in section 57(b) of the Act (after giving effect to rule 
57b-1 thereunder) in respect of any Regulated Fund (treating any 
registered investment company or series thereof as a BDC for this 
purpose) except for limited partners included solely by reason of 
the reference in section 57(b) to section 2(a)(3)(D) of the Act.
    \13\ The term ``Remote Affiliate'' means any person described in 
section 57(e) of the Act in respect of any Regulated Fund (treating 
any registered investment company or series thereof as a BDC for 
this purpose) and any limited partner holding 5% or more of the 
relevant limited partner interests that would be a Close Affiliate 
but for the exclusion in that definition.
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    11. Applicants submit that, in the event that a Potential Co-
Investment Transaction would be within the investment objectives and 
strategies of the Sub-Advised Affiliated Investor, the respective 
Adviser shall have the primary responsibility for the investment, 
including making the initial investment recommendation, and day-to-day 
monitoring of the investment. Applicants further note that the Adviser 
will be responsible for complying with the conditions of the requested 
Order. Applicants state that if the Adviser and Primary Adviser agree 
that the Sub-Advised Affiliated Investor should invest in the Potential 
Co-Investment Transaction and at what size of investment, then the 
Adviser would, consistent with the conditions of the requested Order, 
determine an allocation for the Regulated Funds and Affiliated 
Investors, including such Sub-Advised Affiliated Investor.
    12. Applicants acknowledge that some of the Affiliated Investors 
may not be funds advised by an Adviser because they are Affiliated 
Proprietary Accounts. Applicants do not believe the participation of 
these Affiliated Proprietary Accounts in Co-Investment Transactions 
should raise issues under the conditions of the requested Order because 
allocation policies and procedures of the account owners provide that 
investment opportunities are offered to client accounts before they are 
offered to Affiliated Proprietary Accounts.
    13. Under condition 16, if an Adviser or its principals, or any 
person controlling, controlled by, or under common control with the 
Adviser or its principals, and any Affiliated Investor (collectively, 
the ``Holders'') own in the aggregate more than 25 percent of the 
outstanding voting shares of a Regulated Fund (``Shares''), then the 
Holders will vote such Shares as directed by an independent third party 
when voting on (1) the election of directors; (2) the removal of one or 
more directors; or (3) all other matters under either the Act or 
applicable state law affecting the Board's composition, size or manner 
of election.
    14. Applicants state that from time to time the Regulated Funds and 
Affiliated

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Investors may have opportunities to make Follow-On Investments \14\ in 
an issuer in which a Regulated Fund and one or more other Regulated 
Funds and/or Affiliated Investors previously have invested.
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    \14\ ``Follow-On Investment'' means an additional investment in 
the same issuer, including, but not limited to, through the exercise 
of warrants, conversion privileges or other rights to purchase 
securities of the issuer.
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    15. Applicants propose that Follow-On Investments would be divided 
into two categories depending on whether the prior investment was a Co-
Investment Transaction or a Pre-Boarding Investment.\15\ If the 
Regulated Funds and Affiliated Investors had previously participated in 
a Co-Investment Transaction with respect to the issuer, then the terms 
and approval of the Follow-On Investment would be subject to the 
Standard Review Follow-Ons described in Condition 9. If the Regulated 
Funds and Affiliated Investors have not previously participated in a 
Co-Investment Transaction with respect to the issuer but hold a Pre-
Boarding Investment, then the terms and approval of the Follow-On 
Investment would be subject to the Enhanced-Review Follow-Ons described 
in Condition 10. All Enhanced Review Follow-Ons require the approval of 
the Required Majority. For a given issuer, the participating Regulated 
Funds and Affiliated Investors would need to comply with the 
requirements of Enhanced-Review Follow-Ons only for the first Co-
Investment Transaction. Subsequent Co-Investment Transactions with 
respect to the issuer would be governed by the requirements of Standard 
Review Follow-Ons.
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    \15\ ``Pre-Boarding Investments'' are investments in an issuer 
held by a Regulated Fund as well as one or more Affiliated Investors 
and/or one or more other Regulated Funds that were acquired prior to 
participating in any Co-Investment Transaction: (i) In transactions 
in which the only term negotiated by or on behalf of such funds was 
price in reliance on one of the JT No-Action Letters (defined 
below); or (ii) in transactions occurring at least 90 days apart and 
without coordination between the Regulated Fund and any Affiliated 
Investor or other Regulated Fund.
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    16. A Regulated Fund would be permitted to invest in Standard 
Review Follow-Ons either with the approval of the Required Majority 
under Condition 9(c) or without Board approval under Condition 9(b) if 
it is (i) a Pro Rata Follow-On Investment \16\ or (ii) a Non-Negotiated 
Follow-On Investment.\17\ Applicants believe that these Pro Rata and 
Non-Negotiated Follow-On Investments do not present a significant 
opportunity for overreaching on the part of any Adviser and thus do not 
warrant the time or the attention of the Board. Pro Rata Follow-On 
Investments and Non-Negotiated Follow-On Investments remain subject to 
the Board's periodic review in accordance with Condition 11.
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    \16\ A ``Pro Rata Follow-On Investment'' is a Follow-On 
Investment (i) in which the participation of each Affiliated 
Investor and each Regulated Fund is proportionate to its outstanding 
investments in the issuer or security, as appropriate, immediately 
preceding the Follow-On Investment, and (ii) in the case of a 
Regulated Fund, a majority of the Board has approved the Regulated 
Fund's participation in the pro rata Follow-On Investments as being 
in the best interests of the Regulated Fund. The Regulated Fund's 
Board may refuse to approve, or at any time rescind, suspend or 
qualify, its approval of Pro Rata Follow-On Investments, in which 
case all subsequent Follow-On Investments will be submitted to the 
Regulated Fund's Eligible Trustees in accordance with Condition 
9(c). ``Proportionality,'' as used in this context, is discussed in 
greater detail in footnote 29 below.
    \17\ A ``Non-Negotiated Follow-On Investment'' is a Follow-On 
Investment in which a Regulated Fund participates together with one 
or more Affiliated Investors and/or one or more other Regulated 
Funds (i) in which the only term negotiated by or on behalf of the 
funds is price and (ii) with respect to which, if the transaction 
were considered on its own, the funds would be entitled to rely on 
one of the Joint Transaction No-Action Letters.
    ``Joint Transaction No-Action Letters'' means SMC Capital, Inc., 
SEC No-Action Letter (pub. avail. Sept. 5, 1995) and Massachusetts 
Mutual Life Insurance Company, SEC No-Action Letter (pub. avail. 
June 7, 2000).
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    17. Applicants propose that Dispositions \18\ would be divided into 
two categories. If the Regulated Funds and Affiliated Investors holding 
investments in the issuer had previously participated in a Co-
Investment Transaction with respect to the issuer, then the terms and 
approval of the Disposition would be subject to the Standard Review 
Dispositions described in Condition 7. If the Regulated Funds and 
Affiliated Investors have not previously participated in a Co-
Investment Transaction with respect to the issuer but hold a Pre-
Boarding Investment, then the terms and approval of the Disposition 
would be subject to the Enhanced Review Dispositions described in 
Condition 8. Subsequent Dispositions with respect to the same issuer 
would be governed by Condition 7 under the Standard Review 
Dispositions.\19\
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    \18\ ``Disposition'' means the sale, exchange or other 
disposition of an interest in a security of an issuer.
    \19\ However, with respect to an issuer, if a Regulated Fund's 
first Co-Investment Transaction is an Enhanced Review Disposition, 
and the Regulated Fund does not dispose of its entire position in 
the Enhanced Review Disposition, then before such Regulated Fund may 
complete its first Standard Review Follow-On in such issuer, the 
Eligible Trustees must review the proposed Follow-On Investment not 
only on a stand-alone basis but also in relation to the total 
economic exposure in such issuer (i.e., in combination with the 
portion of the Pre-Boarding Investment not disposed of in the 
Enhanced Review Disposition), and the other terms of the 
investments. This additional review would be required because such 
findings would not have been required in connection with the prior 
Enhanced Review Disposition, but they would have been required had 
the first Co-Investment Transaction been an Enhanced Review Follow-
On.
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    18. A Regulated Fund may participate in a Standard Review 
Disposition either with the approval of the Required Majority under 
Condition 7(d) or without Board approval under Condition 7(c) if (i) 
the Disposition is a Pro Rata Disposition \20\ or (ii) the securities 
are Tradable Securities \21\ and the Disposition meets the other 
requirements of Condition 7(c)(ii). Pro Rata Dispositions and 
Dispositions of a Tradable Security remain subject to the Board's 
periodic review in accordance with Condition 11.
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    \20\ A ``Pro Rata Disposition'' is a Disposition (i) in which 
the participation of each Affiliated Investor and each Regulated 
Fund is proportionate to its outstanding investment in the security 
subject to Disposition immediately preceding the Disposition; and 
(ii) in the case of a Regulated Fund, a majority of the Board has 
approved the Regulated Fund's participation in pro rata Dispositions 
as being in the best interests of the Regulated Fund. The Regulated 
Fund's Board may refuse to approve, or at any time rescind, suspend 
or qualify, its approval of Pro Rata Dispositions, in which case all 
subsequent Dispositions will be submitted to the Regulated Fund's 
Eligible Trustees. ``Proportionality,'' as used in this context, is 
discussed in greater detail in footnote 27 below.
    \21\ ``Tradable Security'' means a security that meets the 
following criteria at the time of Disposition: (i) It trades on a 
national securities exchange or designated offshore securities 
market as defined in rule 902(b) under the 1933 Act; (ii) it is not 
subject to restrictive agreements with the issuer or other security 
holders; and (iii) it trades with sufficient volume and liquidity 
(findings as to which are documented by the Advisers to any 
Regulated Funds holding investments in the issuer and retained for 
the life of the Regulated Fund) to allow each Regulated Fund to 
dispose of its entire position remaining after the proposed 
Disposition within a short period of time not exceeding 30 days at 
approximately the value (as defined by section 2(a)(41) of the Act) 
at which the Regulated Fund has valued the investment.
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    19. No Eligible Trustee will have a financial interest in any Co-
Investment Transaction, other than indirectly through share ownership 
in one of the Regulated Funds.

Applicants' Legal Analysis

    1. 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 a BDC in contravention of rules as prescribed by 
the Commission. 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) of the Act. Section 
57(i) of the Act provides that, until the Commission prescribes rules 
under section 57(a)(4) of the Act, the Commission's rules under section 
17(d) of the Act

[[Page 66947]]

applicable to registered investment companies will be deemed to apply 
to transactions subject to section 57(a)(4) of the Act. Because the 
Commission has not adopted any rules under section 57(a)(4) of the Act, 
rule 17d-1 thereunder applies.
    2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
affiliated persons of a registered investment company from 
participating in joint transactions with the company unless the 
Commission has granted an order permitting such transactions. In 
passing upon applications under rule 17d-1, the Commission 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. Applicants state that certain transactions effected as part of 
the Co-Investment Program may be prohibited by sections 17(d) and 
57(a)(4) of the Act and rule 17d-1 thereunder without a prior exemptive 
order of the Commission to the extent that the Affiliated Investors 
fall within the category of persons described by section 17(d) or 
section 57(b) of the Act, as modified by rule 57b-1 thereunder with 
respect to a Regulated Fund. Applicants believe that the proposed terms 
and conditions will ensure would ensure that the conflicts of interest 
that section 17(d) and section 57(a)(4) of the Act were designed to 
prevent would be addressed and the standards for an order under rule 
17d-1 under the Act are met.

Applicants' Conditions

    Applicants agree that any Order granting the requested relief shall 
be subject to the following conditions:
    1. (a) Each Adviser will establish, maintain and implement policies 
and procedures reasonably designed to ensure that each Adviser is 
promptly notified, for each Regulated Fund the Adviser manages, of all 
Potential Co-Investment Transactions \22\ that (i) an Adviser considers 
for any other Regulated Fund or Affiliated Investor and (ii) fall 
within the Regulated Fund's then-current Objectives and Strategies and 
Board-Established Criteria.
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    \22\ No Primary Adviser will be the source of any Potential Co-
Investment Transactions under the requested Order.
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    (b) When an Adviser to a Regulated Fund is notified of a Potential 
Co-Investment Transaction under condition 1(a), such 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 applicable Adviser 
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be 
invested by the other participating Regulated Funds and Affiliated 
Investors, collectively, in the same transaction, exceeds the amount of 
the investment opportunity, then the investment opportunity will be 
allocated among them pro rata based on each participant's Available 
Capital \23\ up to the amount proposed to be invested by each. The 
applicable Adviser will provide the Eligible Trustees of each 
participating Regulated Fund with information concerning each 
participating party's Available Capital to assist the Eligible Trustees 
with their review of the Regulated Fund's investments for compliance 
with these allocation procedures.
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    \23\ ``Available Capital'' means (a) for each Regulated Entity, 
the amount of capital available for investment determined based on 
the amount of cash on hand, liquidity considerations, existing 
commitments and reserves, if any, the targeted leverage level, 
targeted asset mix, risk return and target-return profile, tax 
implications, regulatory or contractual restrictions or consequences 
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, liquidity 
considerations, existing commitments and reserves, if any, the 
targeted leverage level, targeted asset mix, risk return and target-
return profile, tax implications, regulatory or contractual 
restrictions or consequences and other investment policies and 
restrictions set from time to time by the Affiliated Investors' 
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), the applicable Adviser will distribute written information 
concerning the Potential Co-Investment Transaction (including the 
amount proposed to be invested by each participating Regulated Fund and 
Affiliated Investor) to the Eligible Trustees 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 
Investors 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 Affiliated 
Investors 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 
Investors; provided that, if any other Regulated Fund or Affiliated 
Investor, 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 Trustees will have the right to ratify the 
selection of such director or board observer, if any;
    (B) the applicable Adviser agrees to, and does, provide periodic 
reports to the Regulated Fund's Board with respect to the actions of 
such director or the information received by such board observer or 
obtained through the exercise of any similar right to participate in 
the governance or management of the portfolio company; and
    (C) any fees or other compensation that any Affiliated Investor or 
any Regulated Fund or any affiliated person of any Affiliated Investor 
or any Regulated Fund receives in connection with the right of an 
Affiliated Investor 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 Investors (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 Investors, the

[[Page 66948]]

other Regulated Funds or any Primary Adviser 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 15;
    (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 applicable Adviser will present to the Board of each 
Regulated Fund, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Funds or Affiliated Investors during the preceding quarter that fell 
within the Regulated Fund's then-current Objectives and Strategies and 
Board Established Criteria that were not made available to the 
Regulated Fund, and an explanation of why the investment opportunities 
were not offered to the Regulated Fund. All information presented to 
the Board pursuant to this condition will be kept for the life of the 
Regulated Fund and at least two years thereafter, and will be subject 
to examination by the Commission and its staff.
    5. Except for Follow-On Investments made in accordance with 
Condition 9 and 10,\24\ a Regulated Fund will not invest in reliance on 
the Order in any issuer in which a Related Party \25\ has an 
investment. The Adviser will maintain books and records that 
demonstrate compliance with this condition for each Regulated Fund.
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    \24\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
    \25\ The term ``Related Party'' means (i) any Close Affiliate 
and (ii) in respect of matters as to which any Adviser has 
knowledge, any Remote Affiliate.
---------------------------------------------------------------------------

    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 
Investor. The grant to an Affiliated Investor 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. Standard Review Dispositions
    (a) If any Regulated Fund or any Affiliated Investor elects to 
sell, exchange or otherwise dispose of an interest in a security and 
one or more Regulated Funds and Affiliated Investors have previously 
participated in a Co-Investment Transaction with respect to the issuer, 
then:
    (i) The Adviser to such Regulated Fund or Affiliated Investor \26\ 
will notify each Regulated Fund that holds an investment in the issuer 
of the proposed Disposition at the earliest practical time; and
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    \26\ Any Affiliated Proprietary Account that is not advised by 
an Adviser is itself deemed to be an Adviser for purposes of 
Conditions 7(a)(i), 8(a)(i), 9(a)(i) and 10(a)(i).
---------------------------------------------------------------------------

    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to participation by such 
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 Affiliated Investors 
and any other Regulated Fund.
    (c) A Regulated Fund may participate in such a Disposition without 
obtaining prior approval of the Required Majority if:
    (i) (A) The participation of each Regulated Fund and Affiliated 
Investor in such Disposition is proportionate to its then-current 
holding of the security (or securities) of the issuer that is (or are) 
the subject of the Disposition; \27\ (B) 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 (C) the Board of 
the Regulated Fund is provided on a quarterly basis with a list of all 
Dispositions made in accordance with this Condition; or
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    \27\ In the case of any Disposition, proportionality will be 
measured by each participating Regulated Fund's and Affiliated 
Investor's outstanding investment in the security in question 
immediately preceding the Disposition.
---------------------------------------------------------------------------

    (ii) each security is a Tradable Security and (A) the Disposition 
is not to the issuer or any affiliated person of the issuer; and (B) 
the security is sold for cash in a transaction in which the only term 
negotiated by or on behalf of the participating Regulated Funds and 
Affiliated Investors is price.
    (d) In all other cases, the Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Trustees 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. Each Affiliated Investor and each 
Regulated Fund will bear its own expenses in connection with any such 
disposition.
    8. Enhanced Review Dispositions.
    (a) If any Regulated Fund or Affiliated Investor elects to sell, 
exchange or otherwise dispose of a Pre-Boarding Investment in a 
Potential Co-Investment Transaction and the Regulated Funds and 
Affiliated Investors have not previously participated in a Co-
Investment Transaction with respect to the issuer:
    (i) The Adviser to such Regulated Fund or Affiliated Investor will 
notify each Regulated Fund that holds an investment in the issuer of 
the proposed Disposition at the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to participation by such 
Regulated Fund in the Disposition; and
    (iii) the Advisers will provide to the Board of each Regulated Fund 
that holds an investment in the issuer all information relating to the 
existing investments in the issuer of the Regulated Funds and 
Affiliated Investors, including the terms of such investments and how 
they were made, that is necessary for the Required Majority to make the 
findings required by this condition.
    (b) The Adviser will provide its written recommendation as to the 
Regulated Fund's participation to the Eligible Trustees, and the 
Regulated Fund will participate in such Disposition solely to the 
extent that a Required Majority determines that:
    (i) The Disposition complies with Condition 2(c)(i), (ii), 
(iii)(A), and (iv).
    (ii) the making and holding of the Pre-Boarding Investments were 
not prohibited by section 57 or rule 17d-1, as applicable, and records 
the basis for the finding in the Board minutes.
    (c) The Disposition may only be completed in reliance on the Order 
if:
    (i) Each Regulated Fund has 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 Fund;
    (ii) All of the Affiliated Investors' and Regulated Funds' 
investments in the issuer are Pre-Boarding Investments;

[[Page 66949]]

    (iii) Independent counsel to the Board advises that the making and 
holding of the investments in the Pre-Boarding Investments were not 
prohibited by section 57 (as modified by rule 57b-1) or rule 17d-1, as 
applicable;
    (iv) All Regulated Funds and Affiliated Investors that hold Pre-
Boarding Investments in the issuer immediately before the time of 
completion of the Co-Investment Transaction hold the same security or 
securities of the issuer. For the purpose of determining whether the 
Regulated Funds and Affiliated Investors hold the same security or 
securities, they may disregard any security held by some but not all of 
them if, prior to relying on the Order, the Required Majority is 
presented with all information necessary to make a finding, and finds, 
that: (A) Any Regulated Fund's or Affiliated Investor's holding of a 
different class of securities (including for this purpose a security 
with a different maturity date) is immaterial \28\ in amount, including 
immaterial relative to the size of the issuer; and (B) the Board 
records the basis for any such finding in its minutes. In addition, 
securities that differ only in respect of issuance date, currency, or 
denominations may be treated as the same security; and
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    \28\ In determining whether a holding is ``immaterial'' for 
purposes of the Order, the Required Majority will consider whether 
the nature and extent of the interest in the transaction or 
arrangement is sufficiently small that a reasonable person would not 
believe that the interest affected the determination of whether to 
enter into the transaction or arrangement or the terms of the 
transaction or arrangement.
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    (d) The Affiliated Investors, the other Regulated Funds and their 
affiliated persons (within the meaning of section 2(a)(3)(C) of the 
Act), individually or in the aggregate, do not control the issuer of 
the securities (within the meaning of section 2(a)(9) of the Act).
    9. Standard Review Follow-Ons.
    (a) If any Regulated Fund or Affiliated Investor desires to make a 
Follow-On Investment in an issuer and the Regulated Funds and 
Affiliated Investors holding investments in the issuer previously 
participated in a Co-Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund or Affiliated Investor 
will notify each Regulated Fund that holds securities of the portfolio 
company of the proposed transaction at the earliest practical time; and
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to the proposed 
participation, including the amount of the proposed investment, by such 
Regulated Fund.
    (b) A Regulated Fund may participate in the Follow-On Investment 
without obtaining prior approval of the Required Majority if:
    (i) (A) The proposed participation of each Regulated Fund and each 
Affiliated Investor in such investment is proportionate to its 
outstanding investments in the issuer or the security at issue, as 
appropriate,\29\ immediately preceding the Follow-On Investment; and 
(B) 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); or
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    \29\ To the extent that a Follow-On Investment opportunity is in 
a security or arises in respect of a security held by the 
participating Regulated Funds and Affiliated Investors, 
proportionality will be measured by each participating Regulated 
Fund's and Affiliated Investor's outstanding investment in the 
security in question immediately preceding the Follow-On Investment 
using the most recent available valuation thereof. To the extent 
that a Follow-On Investment opportunity relates to an opportunity to 
invest in a security that is not in respect of any security held by 
any of the participating Regulated Funds or Affiliated Investors, 
proportionality will be measured by each participating Regulated 
Fund's and Affiliated Investor's outstanding investment in the 
issuer immediately preceding the Follow-On Investment using the most 
recent available valuation thereof.
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    (ii) it is a Non-Negotiated Follow-On Investment.
    (c) In all other cases, the Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Trustees and the Regulated Fund will participate in such Follow-On 
Investment solely to the extent that a Required Majority makes the 
determinations set forth in Condition 2(c). If the only previous Co-
Investment Transaction with respect to the issuer was an Enhanced 
Review Disposition the Eligible Trustees must complete this review of 
the proposed Follow-On Investment both on a stand-alone basis and 
together with the Pre-Boarding Investments in relation to the total 
economic exposure and other terms of the investment.
    (d) If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to 
any Regulated Fund is not based on the Regulated Funds' and the 
Affiliated Investors' outstanding investments in the issuer or the 
security at issue, as appropriate, immediately preceding the Follow-On 
Investment; and
    (ii) if the aggregate amount recommended by the applicable Adviser 
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be 
invested by the other participating Regulated Funds and Affiliated 
Investors, collectively, in the same transaction, exceeds the amount of 
the investment opportunity;
    then the Follow-On Investment opportunity will be allocated among 
them pro rata based on Available Capital (as described in greater 
detail in this Application) up to the amount proposed to be invested by 
each.
    (e) 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 this 
application.
    10. Enhanced Review Follow-Ons.
    (a) If any Regulated Fund or Affiliated Investor desires to make a 
Follow-On Investment in an issuer that is a Potential Co-Investment 
Transaction and the Regulated Funds and Affiliated Investors holding 
investments in the issuer have not previously participated in a Co-
Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund or Affiliated Investor 
will notify each Regulated Fund that holds securities of the portfolio 
company of the proposed transaction at the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to the proposed 
participation, including the amount of the proposed investment, by such 
Regulated Fund; and
    (iii) the Advisers will provide to the Board of each Regulated Fund 
that holds an investment in the issuer all information relating to the 
existing investments in the issuer of the Regulated Funds and 
Affiliated Investors, including the terms of such investments and how 
they were made, that is necessary for the Required Majority to make the 
findings required by this Condition.
    (b) The applicable Adviser will provide its written recommendation 
as to the Regulated Fund's participation to the Eligible Trustees, and 
the Regulated Fund will participate in such Follow-On Investment solely 
to the extent that a Required Majority reviews the proposed Follow-On 
Investment both on a stand-alone basis and together with the Pre-
Boarding Investments in relation to the total economic exposure and 
other terms and makes the determinations set forth in Condition 2(c). 
In addition, the Follow-On Investment may only be completed in reliance 
on the Order if the Required Majority of each

[[Page 66950]]

participating Regulated Fund determines that the making and holding of 
the Pre-Boarding Investments were not prohibited by section 57 (as 
modified by rule 57b-1) or rule 17d-1, as applicable. The basis for the 
Board's findings will be recorded in its minutes.
    (c) The Follow-On Investment may only be completed in reliance on 
the Order if:
    (i) All of the Affiliated Investors' and Regulated Funds' 
investments in the issuer are Pre-Boarding Investments;
    (ii) Independent counsel to the Board of each Regulated Fund that 
holds an investment in the issuer advises that the making and holding 
of the investments in the Pre-Boarding Investments were not prohibited 
by section 57 (as modified by rule 57b-1) or rule 17d-1, as applicable;
    (iii) All Regulated Funds and Affiliated Investors that hold Pre-
Boarding Investments in the issuer immediately before the time of 
completion of the Co-Investment Transaction hold the same security or 
securities of the issuer. For the purpose of determining whether the 
Regulated Funds and Affiliated Investors hold the same security or 
securities, they may disregard any security held by some but not all of 
them if, prior to relying on the Order, the Required Majority is 
presented with all information necessary to make a finding, and finds, 
that: (A) Any Regulated Fund's or Affiliated Investor's holding of a 
different class of securities (including for this purpose a security 
with a different maturity date) is immaterial in amount, including 
immaterial relative to the size of the issuer; and (B) the Board 
records the basis for any such finding in its minutes. In addition, 
securities that differ only in respect of issuance date, currency, or 
denominations may be treated as the same security; and
    (iv) The Affiliated Investors, the other Regulated Funds and their 
affiliated persons (within the meaning of section 2(a)(3)(C) of the 
Act), individually or in the aggregate, do not control the issuer of 
the securities (within the meaning of section 2(a)(9) of the Act).
    (d) If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to 
any Regulated Fund is not based on the Regulated Funds' and the 
Affiliated Investors' outstanding investments in the issuer or the 
security at issue, as appropriate, immediately preceding the Follow-On 
Investment; and
    (ii) the aggregate amount recommended by the Advisers to be 
invested in the Follow-On Investment by the participating Regulated 
Funds and any participating Affiliated Investors, collectively, exceeds 
the amount of the investment opportunity,
    then the Follow-On Investment opportunity will be allocated among 
them pro rata based on Available Capital (as described in greater 
detail in this application).
    (e) 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.
    11. The Non-Interested Trustees of each Regulated Fund will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions that fell within the Regulated Fund's then-
current Objectives and Strategies and Board-Established Criteria, 
including investments in Potential Co-Investment Transactions made by 
other Regulated Funds or Affiliated Investors that the Regulated Fund 
considered but declined to participate in, and concerning Co-Investment 
Transactions in which the Regulated Fund participated, so that the Non-
Interested Trustees may determine whether all Potential Co-Investment 
Transactions and Co-Investment Transactions during the preceding 
quarter, including those Potential Co-Investment Transactions which the 
Regulated Fund considered but declined to participate in, comply with 
the conditions of the Order. In addition, the Non-Interested Trustees 
will consider at least annually: (a) The continued appropriateness for 
the Regulated Fund of participating in new and existing Co-Investment 
Transactions, and (b) the continued appropriateness of any Board-
Established Criteria.
    12. 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.
    13. No Non-Interested Trustee of a Regulated Fund will also be a 
director, general partner, managing member or principal, or otherwise 
an ``affiliated person'' (as defined in the Act) of any of the 
Affiliated Investors.
    14. The expenses, if any, associated with acquiring, holding or 
disposing of any securities acquired in a Co-Investment Transaction 
(including, without limitation, the expenses of the distribution of any 
such securities registered for sale under the 1933 Act) will, to the 
extent not payable by the Advisers under their respective investment 
advisory agreements with Affiliated Investors and the Regulated Funds, 
be shared by the Regulated Funds 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.
    15. Any transaction fee \30\ (including break-up, structuring, 
monitoring or commitment fees but 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 Investors 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 the Adviser at a bank 
or banks having the qualifications prescribed in section 26(a)(1) of 
the Act, and the account will earn a competitive rate of interest that 
will also be divided pro rata among the participating Regulated Funds 
and Affiliated Investors based on the amount they invest in such Co-
Investment Transaction. None of the Advisers, the Primary Advisers, the 
Affiliated Investors, the other Regulated Funds nor any affiliated 
person of the Regulated Funds or 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 Funds 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 an Adviser 
or Primary Adviser, investment advisory fees paid in accordance with 
their respective agreements between the Advisers and the Regulated Fund 
or Affiliated Investor).
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    \30\ Applicants are not requesting and the staff is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    16. If the Holders own in the aggregate more than 25% of the 
Shares, then the Holders will vote such Shares as directed by an 
independent third party when voting on (1) the election of trustees; 
(2) the removal of one or more trustees; or (3) all other matters under 
either the Act or applicable state law affecting the Board's 
composition, size or manner of election.
    17. Each Regulated Fund's chief compliance officer, as defined in 
rule 38a-1(a)(4) under the Act, will prepare an annual report for its 
Board each year

[[Page 66951]]

that evaluates (and documents the basis of that evaluation) the 
Regulated Fund's compliance with the terms and conditions of the 
application and the procedures established to achieve such compliance.
    18. The Affiliated Proprietary Accounts will not be permitted to 
invest in a Potential Co-Investment Transaction except to the extent 
the aggregate demand from the Regulated Funds and the other Affiliated 
Investors is less than the total investment opportunity.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-26309 Filed 12-5-19; 8:45 am]
 BILLING CODE 8011-01-P