[Federal Register Volume 85, Number 55 (Friday, March 20, 2020)]
[Notices]
[Pages 16166-16170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05828]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33818; File No. 812-15047]


AIP Private Equity Opportunities Fund I A LP, et al.

 March 16, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under section 17(d) of the 
Investment Company Act of 1940 (the ``Act'') and rule 17d-1 under the 
Act to permit certain joint transactions otherwise prohibited by 
section 17(d) of the Act and rule 17d-1 under the Act.

Summary of Application: Applicants request an order to permit certain 
closed-end management investment companies to co-invest in portfolio 
companies with each other and with affiliated investment funds.

Applicants: AIP Private Equity Opportunities Fund I A LP (``AIP Private 
Markets Fund'' or the ``Existing Regulated Entity''); Morgan Stanley 
AIP GP LP (``MSAIP''); WBPE Fund I, LP, WBPE Fund I AIV LP, Climate 
Impact Solutions Fund, LP, Private Markets Fund VII LP, Private Markets 
Fund VII Offshore Investors LP, Diversified Credit Opportunities Fund 
II, LP, Diversified Credit Opportunities Fund II ICAV, Ashbridge 
Transformational Secondaries Fund I, LP, Ashbridge Transformational 
Secondaries Master Fund I A, LP, Ashbridge Transformational Secondaries 
Master Fund I B, LP, Walker Street MKE Fund LP, Private Equity Co-
Investment Opportunities Fund I LP, GTB Capital Partners II LP, Brandon 
Lane Partners Fund LP, NPS Partners (North America) II LP, NPS Partners 
(North America) AIV II LP, PMF Integro Fund I LP, LM Fund LP, VNL LP, 
and VNL (Cayman) Ltd. (collectively, and excluding AIP Private Markets 
Fund and MSAIP, the ``Existing Affiliated Funds'').

Filing Dates: The application was filed on July 15, 2019, and amended 
on December 10, 2019 and March 12, 2020.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on April 10, 2020, 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: Kara Fricke, Esq., 
Morgan Stanley Investment Management Inc., 522 Fifth Avenue, New York, 
NY 10036.

FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202) 
551-6819 or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-
6821 (Division of Investment Management, Chief Counsel's Office).

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. AIP Private Markets Fund is a Delaware limited partnership 
organized as a closed-end management investment company. AIP Private 
Markets Fund's investment objective is to pursue strategies focused on 
investing in a portfolio of professionally managed private equity funds 
and select direct investments in portfolio companies. The board of 
directors (``Board'') \1\ of AIP Private Markets Fund has ten members, 
each of whom is not an ``interested person'' of AIP Markets Fund within 
the meaning of section 2(a)(19) of the Act (each is an ``Independent 
Director'').\2\
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    \1\ The term ``Board'' refers to the board of directors, 
managers or trustees of any Regulated Entity.
    \2\ The term ``Independent Directors'' refers to the independent 
directors, managers or trustees of any Regulated Entity (as defined 
below).
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    2. MSAIP is a Delaware limited partnership that is registered as an 
investment adviser with the Commission under the Investment Advisers 
Act of 1940 (the ``Advisers Act''). MSAIP serves as the investment 
adviser to AIP Private Markets Fund.

[[Page 16167]]

MSAIP is an indirect, wholly-owned subsidiary of Morgan Stanley.
    3. The Existing Affiliated Funds pursue strategies focused on 
investing in a portfolio of professionally managed private equity funds 
and select direct investments in portfolio companies. Each Existing 
Affiliated Fund is advised by MSAIP and would be an investment company 
but for section 3(c)(1) or 3(c)(7) of the Act.
    4. Applicants seek an order (``Order'') to permit a Regulated 
Entity \3\ and one or more other Regulated Entities and one or more 
Affiliated Funds \4\ to (a) participate in the same investment 
opportunities through a proposed co-investment program where such 
participation would otherwise be prohibited under section 17 of the 
Act; and (b) make additional investments in securities of such issuers 
(``Follow-On Investments''), including through the exercise of 
warrants, conversion privileges, and other rights to purchase 
securities of the issuers. ``Co-Investment Transaction'' means any 
transaction in which a Regulated Entity (or its Wholly-Owned Investment 
Subsidiary, as defined below) participate together with one or more 
other Regulated Entities and/or Affiliated Funds in reliance on the 
requested Order. ``Potential Co-Investment Transaction'' means any 
investment opportunity in which a Regulated Entity (or its Wholly-Owned 
Investment Subsidiaries) could not participate together with one or 
more other Regulated Entities and/or one or more Affiliated Funds 
without obtaining and relying on the Order.\5\
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    \3\ ``Regulated Entity'' refers to the Existing Regulated Entity 
and any Future Regulated Entity. ``Future Regulated Entity'' means 
any closed-end management investment company formed in the future 
that is registered under the Act and is advised by an Adviser. The 
term ``Adviser'' means (a) MSAIP and (b) any future investment 
adviser that is controlled by MSAIP and is registered as an 
investment adviser under the Advisers Act.
    \4\ ``Affiliated Fund'' means any Existing Affiliated Fund or 
any Future Affiliated Fund. ``Future Affiliated Fund'' means any 
investment fund that would be an ``investment company'' but for 
section 3(c)(1) or 3(c)(7) of the Act, is formed in the future, and 
is advised by an Adviser. No Affiliated Fund is or will be a 
subsidiary of a Regulated Entity.
    \5\ 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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    5. Applicants state that a Regulated Entity may, from time to time, 
form one or more Wholly-Owned Investment Subsidiaries.\6\ Such a 
subsidiary would be prohibited from investing in a Co-Investment 
Transaction with any other Regulated Entity or Affiliated Fund because 
it would be a company controlled by its parent Regulated Entity for 
purposes of 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 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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    \6\ The term ``Wholly-Owned Investment Subsidiary'' means an 
entity: (a) 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); (b) whose sole business 
purpose is to hold one or more investments on behalf of such 
Regulated Entity; (c) with respect to which the board of directors 
of such Regulated Entity has the sole authority to make all 
determinations with respect to the entity's participation under the 
conditions of the application; and (d) that would be an investment 
company but for section 3(c)(1) or 3(c)(7) of the Act. All 
subsidiaries participating in Co-Investment Transactions will be 
Wholly-Owned Investment Subsidiaries and will have Objectives and 
Strategies (as defined below) that are either the same as, or a 
subset of, their parent Regulated Entity's Objectives and 
Strategies.
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    6. When considering Potential Co-Investment Transactions for any 
Regulated Entity, the relevant Adviser will consider only the 
Objectives and Strategies,\7\ investment policies, investment 
positions, capital available for investment, and other pertinent 
factors applicable to that Regulated Entity. The Advisers expect that 
any portfolio company that is an appropriate investment for a Regulated 
Entity should also be an appropriate investment for one or more other 
Regulated Entities and/or one or more Affiliated Funds, with certain 
exceptions based on available capital or diversification.\8\
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    \7\ The term ``Objectives and Strategies'' means a Regulated 
Entity's 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 the Securities 
Exchange Act of 1934, and the Regulated Entity's reports to 
investors.
    \8\ The Regulated Entities, however, will not be obligated to 
invest, or co-invest, when investment opportunities are referred to 
them.
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    7. Other than pro rata dispositions and Follow-On Investments as 
provided in conditions 7 and 8, and after making the determinations 
required in conditions 1 and 2(a), the applicable Adviser will present 
each Potential Co-Investment Transaction and the proposed allocation to 
the directors of the Board eligible to vote on that Co-Investment 
Transaction (the ``Eligible Directors'') \9\ and the majority of such 
directors of the Board who are Independent Directors (a ``Required 
Majority'') will approve each Co-Investment Transaction prior to any 
investment by the participating Regulated Entity.
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    \9\ Eligible Directors may not have a financial interest in such 
transaction, plan, or arrangement.
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    8. 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 
each Affiliated Fund in such disposition is proportionate to its 
outstanding investments in the issuer immediately preceding the 
disposition or Follow-On Investment, as the case may be; and (ii) the 
Board of the Regulated Entity 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 Directors. 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 Directors.
    9. No Independent Director of a Regulated Entity will have a direct 
or indirect financial interest in any Co-Investment Transaction (other 
than indirectly through share ownership in one of the Regulated 
Entities), including

[[Page 16168]]

any interest in any company whose securities would be acquired in a Co-
Investment Transaction.
    10. Under condition 15, if an Adviser, its principals, or any 
person controlling, controlled by, or under common control with the 
Adviser or its principals, and the Affiliated Funds (collectively, the 
``Holders'') own in the aggregate more than 25 percent of the 
outstanding voting shares of a Regulated Entity (the ``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 Directors 
will act independently in evaluating the co-investment program, because 
the ability of an Adviser or its principals to influence the 
Independent Directors by a suggestion, explicit or implied, that the 
Independent Directors can be removed will be limited significantly. 
Applicants represent that the Independent Directors will evaluate and 
approve any such independent third party, taking into account its 
qualifications, reputation for independence, cost to the investors, 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 
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.
    2. Applicants state that in the absence of the requested relief, 
the Regulated Entities may be, in some circumstances, limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants believe that the proposed terms and 
conditions will ensure that the Co-Investment Transactions are 
consistent with the protection of each Regulated Entity's shareholders 
and with the purposes intended by the policies and provisions of the 
Act. Applicants state that the Regulated Entities' 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' Conditions

    Applicants agree that the Order will be subject to the following 
conditions:
    1. Each time an Adviser considers a Potential Co-Investment 
Transaction for another Regulated Entity or an Affiliated Fund that 
falls within a Regulated Entity's then-current Objectives and 
Strategies, the Regulated Entity's Adviser 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 Adviser deems a Regulated Entity's participation in 
any Potential Co-Investment Transaction to be appropriate for the 
Regulated Entity, the Adviser will then determine an appropriate level 
of investment for the Regulated Entity.
    (b) If the aggregate amount recommended by the applicable Adviser 
to be invested by the applicable Regulated Entity in the Potential Co-
Investment Transaction together with the amount proposed to be invested 
by the other participating Regulated Entities and Affiliated Funds, 
collectively, in the same transaction, exceeds the amount of the 
investment opportunity, the investment opportunity will be allocated 
among them pro rata based on each participant's capital available for 
investment in the asset class being allocated, up to the amount 
proposed to be invested by each. The applicable Adviser will provide 
the Eligible Directors of each participating Regulated Entity with 
information concerning each participating party's available capital to 
assist the Eligible Directors with their review of the Regulated 
Entity's investments for compliance with these allocation procedures.
    (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 Regulated Entity and each 
Affiliated Fund) to the Eligible Directors of each participating 
Regulated Entity for their consideration. A Regulated Entity will co-
invest with another Regulated Entity or an Affiliated Fund only if, 
prior to the Regulated Entity'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 
Entity and its investors and do not involve overreaching in respect of 
the Regulated Entity or its investors on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) The interests of the Regulated Entity's investors; and
    (B) the Regulated Entity's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Entities or any 
Affiliated Funds 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 Entities or 
any Affiliated Funds; provided that, if any other Regulated Entity or 
any Affiliated Fund, 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 the Required 
Majority from reaching the conclusions required by this condition 
(2)(c)(iii), if:
    (A) The Eligible Directors will have the right to ratify the 
selection of such director or board observer, if any; and
    (B) the applicable Adviser agrees to, and does, provide periodic 
reports to the Board of the Regulated Entity 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 Regulated Entity or any 
Affiliated Fund or any affiliated person of any Regulated Entity or any 
Affiliated Fund receives in connection with the right of a Regulated 
Entity or an Affiliated Fund to nominate a director or appoint a board 
observer or otherwise to participate in the governance or management of 
the portfolio company will be shared proportionately among the 
participating Affiliated Funds (who may each, in turn, share its 
portion with its affiliated persons) and the participating Regulated 
Entities in accordance with the amount of each party's investment; and
    (iv) the proposed investment by the Regulated Entity will not 
benefit any Adviser, the other Regulated Entities, the Affiliated Funds 
or any affiliated person of any of them (other than the parties to the 
Co-Investment Transaction), except (A) to the extent permitted by 
condition 13, (B) to the extent permitted by section 17(e) of the Act, 
as applicable, (C) indirectly, as a result of an interest in the 
securities

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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 Entity 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 Entity, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Entities or Affiliated Funds 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,\10\ a Regulated Entity will not invest in reliance on the 
Order in any issuer in which another Regulated Entity, Affiliated Fund, 
or any affiliated person of another Regulated Entity or Affiliated Fund 
is an existing investor.
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    \10\ 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 
Fund. The grant to another Regulated Entity or an Affiliated Fund, but 
not the Regulated Entity, 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 an Affiliated Fund elects to 
sell, exchange or otherwise dispose of an interest in a security that 
was acquired in a Co-Investment Transaction, the applicable 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 participating 
Regulated Entities and Affiliated Funds.
    (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 Fund in such 
disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Board of the 
Regulated Entity 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 Board of the Regulated Entity is provided on a quarterly 
basis with a list of all dispositions made in accordance with this 
condition. In all other cases, the Adviser will provide its written 
recommendation as to the Regulated Entity's participation to the 
Regulated Entity's Eligible Directors, 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 Fund will bear its 
own expenses in connection with any such disposition.
    8. (a) If a Regulated Entity or an Affiliated Fund desires to make 
a Follow-On Investment in a portfolio company whose securities were 
acquired in a Co-Investment Transaction, the applicable Adviser will:
    (i) Notify each Regulated Entity that participated in the Co-
Investment Transaction of the proposed transaction at the earliest 
practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including the amount of the proposed Follow-On Investment, by each 
Regulated 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 
Fund in such investment is proportionate to its outstanding investments 
in the issuer immediately preceding the Follow-On Investment; and (ii) 
the Board of the Regulated Entity has approved as being in the best 
interests of the 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 Adviser will provide its 
written recommendation as to the Regulated Entity's participation to 
the Eligible Directors, and the Regulated Entity will participate in 
such Follow-On Investment solely to the extent that a Required Majority 
determines that it is in the 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 Funds' outstanding investments 
immediately preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the Adviser to be invested 
by each Regulated Entity in the Follow-On Investment, together with the 
amount proposed to be invested by the participating Affiliated Funds in 
the same transaction, exceeds the amount of the opportunity; then the 
amount invested by each such party will be allocated among them pro 
rata based on each party's capital available 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 
condition will be considered a Co-Investment Transaction for all 
purposes and subject to the other conditions set forth in the 
application.
    9. The Independent Directors of each Regulated 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 and the Affiliated Funds 
that the Regulated Entity considered but declined to participate in, so 
that the Independent Directors 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 
Directors will consider at least annually the continued appropriateness 
for the 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 
business development company (as defined in section 2(a)(48) of the 
Act) and each of the investments permitted under these conditions were 
approved by the

[[Page 16170]]

Required Majority under section 57(f) of the Act.
    11. No Independent Director of a Regulated Entity will also be a 
director, general partner, managing member or principal, or otherwise 
an ``affiliated person'' (as defined in the Act) of an Affiliated Fund.
    12. The expenses, if any, associated with acquiring, holding or 
disposing of any securities acquired in a Co-Investment Transaction 
(including, without limitation, the expenses of the distribution of any 
such securities registered for sale under the Securities Act) will, to 
the extent not payable by an Adviser under the investment advisory 
agreements with the Regulated Entities and the Affiliated Funds, be 
shared by the Affiliated Funds and the Regulated Entities 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 \11\ (including break-up or commitment fees 
but excluding broker's fees contemplated by section 17(e) of the Act, 
as applicable), received in connection with a Co-Investment Transaction 
will be distributed to the participating Regulated Entities and 
Affiliated Funds on a pro rata basis based on the amounts they invested 
or committed, as the case may be, in such Co-Investment Transaction. If 
any transaction fee is to be held by the Adviser pending consummation 
of the transaction, the fee will be deposited into an account 
maintained by the Adviser at a bank or banks having the qualifications 
prescribed in section 26(a)(1) 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 Funds based on the 
amounts they invest in such Co-Investment Transaction. None of the 
Affiliated Funds, the Advisers, the other Regulated Entities or any 
affiliated person of the Regulated Entities or Affiliated Funds will 
receive additional compensation or remuneration of any kind as a result 
of or in connection with a Co-Investment Transaction (other than (a) in 
the case of the Regulated Entities and the Affiliated Funds, the pro 
rata transaction fees described above and fees or other compensation 
described in condition 2(c)(iii)(C); and (b) in the case of the 
Advisers, investment advisory fees paid in accordance with the 
agreements between the Advisers and the Regulated Entities or 
Affiliated Funds).
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    \11\ 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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    14. The Advisers will each maintain policies and procedures 
reasonably designed to ensure compliance with the foregoing conditions. 
These policies and procedures will require, among other things, that 
the applicable Adviser will be notified of all Potential Co-Investment 
Transactions that fall within a Regulated Entity's then-current 
Objectives and Strategies and will be given sufficient information to 
make its independent determination and recommendations under conditions 
1, 2(a), 7 and 8.
    15. If the Holders own in the aggregate more than 25 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; (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.
    16. Each Regulated Entity'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 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.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05828 Filed 3-19-20; 8:45 am]
 BILLING CODE 8011-01-P