[Federal Register Volume 85, Number 82 (Tuesday, April 28, 2020)]
[Notices]
[Pages 23553-23557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08942]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33848; File No. 812-14905]


FS Credit Income Fund, et al.

April 22, 2020.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION:  Notice.

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    Notice of an application for an order under section 17(d) of the 
Investment Company Act of 1940 (the ``Act'') and rule 17d-1 under the 
Act permitting 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 investment companies to co-invest in portfolio companies 
with each other and with affiliated investment funds.

Applicants:  FS Credit Income Fund (``FSC''), FS Credit Income Advisor, 
LLC (``FSC Advisor''), GoldenTree Asset Management Credit Advisor LLC 
(``GTAM Credit''), GoldenTree Loan Management LP (``GLM''), GoldenTree 
Asset Management LP (``GTAM''), GoldenTree Master Fund, Ltd., 
GoldenTree Partners, LP, GoldenTree Offshore Fund, Ltd., GoldenTree 
Offshore Intermediate Fund, LP, GoldenTree Select Partners, LP, 
GoldenTree Select Offshore Fund, Ltd., GoldenTree Select Offshore 
Intermediate Fund, LP, GoldenTree Entrust Intermediate Fund SPC 
(Segregated Portfolio I), GoldenTree Entrust Offshore Fund SPC 
(Segregated Portfolio I), GoldenTree Entrust Master Fund SPC 
(Segregated Portfolio I), GT NM, L.P., GoldenTree Credit Opportunities 
Master Fund, Ltd., GoldenTree Credit Opportunities, LP, GoldenTree 
Credit Opportunities, Ltd., GoldenTree Multi-Sector Master Fund ICAV, 
GoldenTree Multi-Sector, LP, GoldenTree Multi-Sector Cayman Ltd., 
GoldenTree NJ Distressed Fund 2015 LP, GoldenTree Emerging Markets 
Master Fund ICAV, GoldenTree Emerging Markets Fund ICAV, GoldenTree 
High Yield Value Master ICAV, GoldenTree High Yield Value Fund Offshore 
(Strategic) Ltd., GoldenTree Multi-Sector Fund Offshore ERISA Ltd., 
GoldenTree Loan Opportunities IX Ltd., GoldenTree Loan Opportunities X 
Ltd., GoldenTree Loan Opportunities XII Ltd., GoldenTree Loan Financing 
I, Ltd., GoldenTree Structured Products Opportunities Offshore Fund 
Extension Holdings LLC, GoldenTree Structured Products Opportunities 
Domestic Fund Extension Holdings LLC, GoldenTree Structured Products 
Opportunities Fund Extension Holdings LLC, GoldenTree Structured 
Products--C LP, Guadalupe Fund, LP, Gresham Multi-Sector Credit Fund, 
Ltd., GoldenTree 2017 K-SC, Ltd, GoldenTree Distressed Master Fund III 
Ltd, GoldenTree Distressed Fund III LP, GoldenTree Distressed Master 
(ECI) Fund III LP, GoldenTree Distressed Fund 2014 LP, GoldenTree 
Distressed Master Fund 2014 Ltd., GoldenTree Distressed Master (ECI) 
Fund 2014 LP, GoldenTree Distressed Debt Master Fund LP, GoldenTree 
Distressed Debt Fund LP, GoldenTree Distressed Debt Master (ECI) Fund 
LP, Laurelin 2016-1 DAC, Ginkgo Tree, LLC, GoldenTree Co-Invest Fund II 
LP, GoldenTree Co-Invest Fund II Ltd., GoldenTree Co-Invest Master Fund 
II Ltd., GoldenTree V1 Fund, LP, GoldenTree V1 Master Fund, LP, GT 
Credit Fund LP (the ``GTAM Private Funds''), GoldenTree Loan Management 
US CLO 1, Ltd., GoldenTree Loan Management US CLO 2, Ltd., GoldenTree 
Loan Management US CLO 3, Ltd., GoldenTree Loan Opportunities XI, Ltd., 
GoldenTree Loan Management EUR CLO 1 DAC, GoldenTree Loan Management 
(US Feeder), LP, GoldenTree Loan Management (Offshore Feeder), LP, GLM 
EUR BAR WH DAC, GLM EUR CB WH DAC, GLM EUR MS WH DAC, GLM MS WH, Ltd., 
GoldenTree Loan Management US CLO 4, Ltd., GoldenTree Loan Management 
US CLO 5, Ltd., GoldenTree Loan Management EUR CLO 2 DAC, GoldenTree 
Loan Management EUR CLO 3 DAC, GoldenTree Distressed Onshore Master 
Fund III LP, GoldenTree Distressed Parallel Fund III LP, GoldenTree 
Loan Management US CLO 6, Ltd., GoldenTree Loan Management US CLO 7, 
Ltd., GoldenTree Loan Management US CLO 8, Ltd., GoldenTree Loan 
Management EUR CLO 4 DAC (the ``GLM Private Funds,'' together with the 
GTAM Private Funds, the ``Private Funds'').

Filing Dates:  The application was filed on May 15, 2018, and amended 
on December 13, 2018, December 5, 2019 and March 10, 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 emailing the Commission's 
Secretary at [email protected] and serving Applicants with a 
copy of the request email. Hearing requests should be received by the 
Commission by 5:30 p.m. on May 18, 2020, and should be accompanied by 
proof of service on the 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 emailing the 
Commission's Secretary.

ADDRESSES: The Comission: [email protected]. Applicants: FS 
Credit Income Advisor, LLC, Attn: Neal Helbe, 
[email protected]; GoldenTree Asset Management LP, Attn: 
Barry Ritholz, [email protected].

FOR FURTHER INFORMATION CONTACT:  Bruce R. MacNeil, Senior Counsel, at 
(202) 551-6817, or Kaitlin C. Bottock, Branch Chief, at (202) 551-6825 
(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.

[[Page 23554]]

Applicants' Representations

    1. FSC is a Delaware Statutory Trust and is a non-diversified, 
closed-end management investment company that operates as an interval 
fund pursuant to Rule 23c-3 under the Act. FSC's Objectives and 
Strategies \1\ are to provide attractive total returns, which will 
include current income and capital appreciation, by investing, under 
normal market conditions, at least 80% of its assets (including 
borrowings for investment purposes) in debt obligations. FSC has a 
board of trustees, a majority of which is comprised of members who are 
not ``interested persons'' within the meaning of section 2(a)(19) of 
the Act (the ``Non-Interested Trustees''). No Non-Interested Trustee 
will have any direct or indirect financial interest in any Co-
Investment Transaction (as defined below) or any interest in any 
portfolio company, other than indirectly through share ownership (if 
any) in FSC or a Future Regulated Fund (as defined below).
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    \1\ ``Objectives and Strategies'' means, with respect to a 
Regulated Fund (as defined below), the investment objectives and 
strategies of such Regulated Fund, as described in such Regulated 
Fund's registration statement, other filings the Regulated Fund has 
made with the Commission under the Act, under the Securities Act of 
1933, as amended (``1933 Act'') or under the Securities Exchange Act 
of 1934, as amended, or in the Regulated Fund's reports to 
shareholders.
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    2. Each of the GTAM Private Funds and the GLM Private Funds are 
entities that would be an investment company but for section 3(c)(1) or 
3(c)(7) of the Act.
    3. FSC Advisor, a Delaware limited liability company, is an 
investment adviser registered with the Commission under the Investment 
Advisers Act of 1940 (``Advisers Act''). FSC Advisor serves as 
investment adviser to FSC and has engaged GTAM Credit to serve as sub-
adviser to FSC.
    4. GTAM Credit, a Delaware limited liability company, is an 
investment adviser registered under the Advisers Act. GTAM Credit 
identifies investment opportunities and executes on its trading 
strategies for FSC subject to guidelines agreed to by FSC Advisor and 
GTAM Credit. FSC Advisor is not an affiliated person (as defined in 
Section 2(a)(3) of the Act) of GTAM Credit and is not responsible for 
making or ratifying any investment decisions made by GTAM Credit.
    5. GTAM, a Delaware limited partnership, is an investment adviser 
registered with the Commission under the Advisers Act. GTAM serves as 
investment adviser to each of the GTAM Private Funds.
    6. GLM, a Cayman Islands limited partnership, is an investment 
adviser registered with the Commission under the Advisers Act. GLM 
serves as the investment adviser to each of the GLM Private Funds.
    7. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds \2\ and/or one or more Affiliated Funds \3\ to 
participate in the same investment opportunities through a proposed co-
investment program (the ``Co-Investment Program''), where such 
participation would otherwise be prohibited under rule 17d-1, by (a) 
co-investing with each other in securities issued by issuers in private 
placement transactions in which an Adviser negotiates terms in addition 
to price; \4\ and (b) making additional investments in securities of 
such issuers, including through the exercise of warrants, conversion 
privileges, and other rights to purchase securities of the issuers 
(``Follow-On Investments''). ``Co-Investment Transaction'' means any 
transaction in which a Regulated Fund (or a Wholly-Owned Investment 
Subsidiary (as defined below)) participates together with one or more 
other Regulated Funds and/or one or more Affiliated Funds in reliance 
on the requested Order. ``Potential Co-Investment Transaction'' means 
any investment opportunity in which a Regulated Fund (or a Wholly-Owned 
Investment Subsidiary (defined below)) could not participate together 
with one or more Affiliated Funds and/or one or more other Regulated 
Funds without obtaining and relying on the Order.\5\
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    \2\ ``Regulated Fund'' means FSC and any Future Regulated Fund. 
``Future Regulated Fund'' means any closed-end investment management 
company (a) that is registered under the Act, (b) whose investment 
adviser (and any sub-adviser, if any) is a GTAM Adviser, and (c) 
that intends to participate in the Co-Investment Program. The term 
``FS Adviser'' means (a) FSC Advisor and (b) any future investment 
adviser that controls, is controlled by or is under common control 
with FSC Advisor, is registered as an investment adviser under the 
Advisers Act and is not a Regulated Fund or a subsidiary of a 
Regulated Fund. The term ``GTAM Adviser'' means (a) GTAM, GTAM 
Credit, or GLM and (b) any future investment adviser that controls, 
is controlled by or is under common control with GTAM, GTAM Credit, 
or GLM, is registered as an investment adviser under the Advisers 
Act and is not a Regulated Fund or a subsidiary of a Regulated Fund. 
The term ``Adviser'' means (a) a FS Adviser or (b) a GTAM Adviser; 
provided that a GTAM Adviser serving as a sub-adviser to an 
Affiliated Fund (defined below) is included in this term only if (i) 
the investment adviser is also a GTAM Adviser and (ii) such Adviser 
controls the entity. Applicants state that the FS Advisers will only 
be subject to conditions 2(c)(iv), 13 and 14 of the application.
    \3\ ``Affiliated Fund'' means the Private Funds and any Future 
Affiliated Fund. ``Future Affiliated Fund'' means any entity (a) 
whose investment adviser (and any sub-adviser, if any) is a GTAM 
Adviser, (b) that would be an investment company but for Section 
3(c)(1) or 3(c)(7) of the Act, and (c) that intends to participate 
in the Co-Investment Program.
    \4\ The term ``private placement transactions'' means 
transactions in which the offer and sale of securities by the issuer 
are exempt from registration under the 1933 Act.
    \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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    8. Applicants state that FSC Advisor has delegated responsibility 
for the Co-Investment Program to GTAM Credit. Applicants further state 
that GTAM Credit has sole responsibility for causing FSC and any 
Affiliated Fund to enter into a Potential Co-Investment Transaction and 
is responsible for ensuring that the GTAM Adviser, the Regulated Funds, 
and any Affiliated Funds comply with the conditions of the application.
    9. Applicants state that a Regulated Fund 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 Affiliated Fund or Regulated Fund because it would 
be a company controlled by its parent Regulated Fund 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 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. 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 
Fund's investments and, therefore, no conflicts of interest could arise 
between the Regulated Fund and the Wholly-Owned Investment Subsidiary. 
The Regulated Fund's Board would make all relevant determinations under 
the conditions with regard to a Wholly-Owned Investment Subsidiary's 
participation in

[[Page 23555]]

a Co-Investment Transaction, and the Regulated Fund's Board would be 
informed of, and take into consideration, any proposed use of a Wholly-
Owned Investment Subsidiary in the Regulated Fund's place. If the 
Regulated Fund proposes to participate in the same Co-Investment 
Transaction with any of its Wholly-Owned Investment Subsidiaries, the 
Board will also be informed of, and take into consideration, the 
relative participation of the Regulated Fund and the Wholly-Owned 
Investment Subsidiary.
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    \6\ The term ``Wholly-Owned Investment Subsidiary'' means an 
entity (i) that is wholly-owned by a Regulated Fund (with the 
Regulated Fund at all times holding, beneficially and of record, 
100% of the voting and economic interests); (ii) whose sole business 
purpose is to hold one or more investments and incur debt (which is 
or would be consolidated with other indebtedness of such Regulated 
Fund for financial reporting or compliance purposed under the Act) 
on behalf of the Regulated Fund; (iii) with respect to which the 
Regulated Fund's board of trustees (``Board'') has the sole 
authority to make all determinations with respect to the entity's 
participation under the conditions of the application; and (iv) that 
would be an investment company but for sections 3(c)(1) or 3(c)(7) 
of the Act.
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    10. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the applicable Adviser will consider only the 
Objectives and Strategies, investment policies, investment positions, 
capital available for investment (``Available Capital''), and other 
pertinent factors applicable to that Regulated Fund. Each Adviser, as 
applicable, undertakes to perform these duties consistently for each 
Regulated Fund, as applicable, regardless of which of them serves as 
investment adviser for these entities. The participation of a Regulated 
Fund in a Potential Co-Investment Transaction may only be approved by 
both a majority of the trustees of the Board who have no financial 
interest in such transaction, plan or arrangement and a majority of 
such trustees who are Non-Interested Trustees (a ``Required 
Majority''),\7\ eligible to vote on that Co-Investment Transaction (the 
``Eligible Trustees'').\8\
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    \7\ ``Required Majority'' has the meaning provided in Section 
57(o) of the Act. The trustees of a Regulated Fund that make up the 
Required Majority will be determined as if the Regulated Fund were a 
business development company (``BDC'') subject to Section 57(o).
    \8\ The term ``Eligible Trustees'' means the trustees who are 
eligible to vote under Section 57(o) as if the Regulated Fund were a 
BDC subject to Section 57(o).
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    11. Other than pro rata dispositions and Follow-On Investments as 
provided in conditions 7 and 8, and after making the determinations 
required in conditions 1 and 2(a), the Regulated Fund's Adviser will 
present each Potential Co-Investment Transaction and the proposed 
allocation to the Regulated Fund's Eligible Trustees, and the Required 
Majority will approve each Co-Investment Transaction prior to any 
investment by the participating Regulated Fund.
    12. With respect to the pro rata dispositions and Follow-On 
Investments provided in conditions 7 and 8, a Regulated Fund may 
participate in a pro rata disposition or Follow-On Investment without 
obtaining prior approval of the Required Majority if, among other 
things: (i) The proposed participation of each Regulated Fund and 
Affiliated Fund in such disposition is proportionate to its outstanding 
investments in the issuer immediately preceding the disposition or 
Follow-On Investment, as the case may be; and (ii) the Board of the 
Regulated Fund has approved that Regulated Fund's participation in pro 
rata dispositions and Follow-On Investments as being in the best 
interests of the Regulated Fund. If the Board does not so approve, any 
such disposition or Follow-On Investment will be submitted to the 
Regulated Fund's Eligible Directors. The Board of any Regulated Fund 
may at any time rescind, suspend or qualify its approval of pro rata 
dispositions and Follow-On Investments with the result that all 
dispositions and/or Follow-On Investments must be submitted to the 
Eligible Directors.
    13. Applicants also represent that if the Advisers, the principals 
of the Advisers (``Principals'') or any person controlling, controlled 
by, or under common control with an Adviser or the Principals, and the 
Affiliated Funds (collectively, the ``Holders'') own in the aggregate 
more than 25% of the outstanding voting shares of a Regulated Fund (the 
``Shares''), then the Holders will vote such Shares as required under 
condition 14. Applicants believe this condition will ensure that the 
Non-Interested Trustees will act independently in evaluating the Co-
Investment Program, because the ability of an Adviser and its 
principals to influence the Non-Interested Trustees by a suggestion, 
explicit or implied, that the Non-Interested Trustees can be removed 
will be limited significantly. Applicants represent that the Non-
Interested Trustees will evaluate and approve any such independent 
third party, taking into account its qualifications, reputation for 
independence, cost to the shareholders, and other factors that they 
deem relevant.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
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 Funds would 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 Fund's shareholders 
and with the purposes intended by the policies and provisions of the 
Act. Applicants state that the Regulated Funds' participation in the 
Co-Investment Transactions will be consistent with the provisions, 
policies, and purposes of the Act and 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 an Affiliated Fund or another Regulated Fund that falls 
within a Regulated Fund's then-current Objectives and Strategies, the 
Regulated Fund's Adviser will make an independent determination of the 
appropriateness of the investment for the Regulated Fund in light of 
the Regulated Fund's then-current circumstances.
    2. (a) If the Adviser deems a Regulated Fund's participation in any 
Potential Co-Investment Transaction to be appropriate for the Regulated 
Fund, it will then determine an appropriate level of investment for the 
Regulated Fund.
    (b) If the aggregate amount recommended by the 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 
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 Available Capital, 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.
    (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

[[Page 23556]]

(including the amount proposed to be invested by each participating 
Regulated Fund and Affiliated Fund) 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 Funds only if, prior to the Regulated Fund's 
participation in the Potential Co-Investment Transaction, a Required 
Majority concludes that:
    (i) The terms of the Potential Co-Investment Transaction, including 
the consideration to be paid, are reasonable and fair to the Regulated 
Fund and its shareholders and do not involve overreaching in respect of 
the Regulated Fund or its shareholders on the part of any person 
concerned;
    (ii) The Potential Co-Investment Transaction is consistent with:
    (A) The interests of the Regulated Fund's shareholders; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Funds or Affiliated 
Funds would not disadvantage the Regulated Fund, and participation by 
the Regulated Fund would not be on a basis different from or less 
advantageous than that of any other Regulated Funds or Affiliated 
Funds; provided that if any other Regulated Funds or Affiliated Funds, 
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) He 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 Fund or any 
Regulated Fund or any affiliated person of any Affiliated Fund or any 
Regulated Fund receives in connection with the right of the Affiliated 
Fund or Regulated Fund to nominate a director or appoint a board 
observer or otherwise to participate in the governance or management of 
the portfolio company will be shared proportionately among the 
participating Affiliated Funds (who each may, in turn, share its 
portion with its affiliated persons) and the participating Regulated 
Fund in accordance with the amount of each party's investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
the Advisers, any Affiliated Funds or other Regulated Funds or any 
affiliated person of any of them (other than the parties to the Co-
Investment Transaction), except (A) to the extent permitted by 
condition 13, (B) to the extent permitted by section 17(e) 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 Funds during the preceding quarter that fell within 
the Regulated Fund's then-current Objectives and Strategies that were 
not made available to the Regulated Fund, and an explanation of why the 
investment opportunities were not offered to the Regulated Fund. All 
information presented to the Board pursuant to this condition will be 
kept for the life of the Regulated Fund and at least two years 
thereafter, and will be subject to examination by the Commission and 
its staff.
    5. Except for Follow-On Investments made in accordance with 
condition 8,\9\ a Regulated Fund will not invest in reliance on the 
Order in any issuer in which another Regulated Fund, an Affiliated Fund 
or any affiliated person of another Regulated Fund or Affiliated Fund 
is an existing investor.
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    \9\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which the Regulated Fund already holds 
investments.
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    6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of 
securities to be purchased, settlement date, and registration rights 
will be the same for each participating Regulated Fund and Affiliated 
Fund. The grant to an Affiliated Fund or another Regulated Fund, but 
not the Regulated Fund, of the right to nominate a director for 
election to a portfolio company's board of directors, the right to have 
an observer on the board of directors or similar rights to participate 
in the governance or management of the portfolio company will not be 
interpreted so as to violate this condition 6, if conditions 
2(c)(iii)(A), (B) and (C) are met.
    7. (a) If any Affiliated Fund or any Regulated Fund elects to sell, 
exchange or otherwise dispose of an interest in a security that was 
acquired in a Co-Investment Transaction, the applicable Adviser will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest 
practical time; and
    (ii) formulate a recommendation as to participation by each 
Regulated Fund in the disposition.
    (b) Each Regulated Fund will have the right to participate in such 
disposition on a proportionate basis, at the same price and on the same 
terms and conditions as those applicable to the participating 
Affiliated Funds and Regulated Funds.
    (c) A Regulated Fund may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Fund and each Affiliated Fund in such 
disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Board of the 
Regulated Fund has approved as being in the best interests of the 
Regulated Fund the ability to participate in such dispositions on a pro 
rata basis (as described in greater detail in the application); and 
(iii) the Board of the Regulated Fund is provided on a quarterly basis 
with a list of all dispositions made in accordance with this condition. 
In all other cases, the Adviser 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.
    (d) Each Affiliated Fund and each Regulated Fund will bear its own 
expenses in connection with any such disposition.
    8. (a) If any Affiliated Fund or Regulated 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 Fund that participated in the co-
investment

[[Page 23557]]

transaction of the proposed Follow-On Investment at the earliest 
practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including the amount of the proposed Follow-On Investment, by each 
Regulated Fund.
    (b) A Regulated Fund may participate in such Follow-On Investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Fund and each Affiliated Fund 
in such investment is proportionate to its outstanding investments in 
the issuer immediately preceding the Follow-On Investment; and (ii) the 
Board of the Regulated Fund has approved as being in the best interests 
of the Regulated Fund the ability to participate in Follow-On 
Investments on a pro rata basis (as described in greater detail in the 
application). In all other cases, the Adviser 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 determines 
that it is in the Regulated Fund's best interests.
    (c) If, with respect to any Follow-On Investment:
    (i) The amount of the opportunity is not based on the Regulated 
Funds' and the Affiliated Funds' outstanding investments immediately 
preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the applicable GTAM 
Adviser to be invested by the applicable Regulated Fund in the Follow-
On Investment, together with the amount proposed to be invested by 
other participating Regulated Funds and Affiliated Funds, 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, up to the 
amount proposed to be invested by each.
    (d) The acquisition of Follow-On Investments as permitted by this 
condition will be considered a Co-Investment Transaction for all 
purposes and subject to the other conditions set forth in the 
application.
    9. The Non-Interested Trustees of each Regulated Fund will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by any other Regulated Funds or Affiliated Funds that 
the Regulated Fund considered but declined to participate in, so that 
the Non-Interested Trustees may determine whether all investments made 
during the preceding quarter, including those investments that the 
Regulated Fund considered but declined to participate in, comply with 
the conditions of the Order. In addition, the Non-Interested Trustees 
will consider at least annually the continued appropriateness for the 
Regulated Fund of participating in new and existing Co-Investment 
Transactions.
    10. Each Regulated Fund will maintain the records required by 
section 57(f)(3) of the Act as if each of the Regulated Funds were a 
BDC and each of the investments permitted under these conditions were 
approved by the Required Majority under section 57(f) of the Act.
    11. No Non-Interested 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 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 1933 Act) will, to the 
extent not payable by the Advisers under their respective investment 
advisory agreements with Affiliated Funds and the Regulated Funds, be 
shared by the Regulated Funds and the Affiliated Funds in proportion to 
the relative amounts of the securities held or to be acquired or 
disposed of, as the case may be.
    13. Any transaction fee \10\ (including break-up or commitment fees 
but excluding broker's fees contemplated section 17(e) of the Act) 
received in connection with a Co-Investment Transaction will be 
distributed to the participating Regulated Funds and Affiliated Funds 
on a pro rata basis based on the amounts they invested or committed, as 
the case may be, in such Co-Investment Transaction. If any transaction 
fee is to be held by an Adviser pending consummation of the Co-
Investment Transaction, the fee will be deposited into an account 
maintained by such Adviser at a bank or banks having the qualifications 
prescribed in section 26(a)(1) of the Act, and the account will earn a 
competitive rate of interest that will also be divided pro rata among 
the participating Regulated Funds and Affiliated Funds based on the 
amounts they invest in such Co-Investment Transaction. None of the 
Affiliated Funds, the Advisers, the other Regulated Funds, or any 
affiliated person of the Regulated Funds or Affiliated Funds will 
receive additional compensation or remuneration of any kind as a result 
of or in connection with a Co-Investment Transaction (other than (a) in 
the case of the Regulated Funds and 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 an Adviser, 
investment advisory fees paid in accordance with the investment 
advisory agreements between such Adviser and the Regulated Fund or 
Affiliated Fund).
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    \10\ The 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. If the Holders own in the aggregate more than 25% of the Shares 
of a Regulated Fund, 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) any other 
matter under either the Act or applicable state law affecting the 
Board's composition, size or manner of election.
    15. Each Regulated Fund's chief compliance officer, as defined in 
rule 38a-1(a)(4) under the Act, will prepare an annual report for the 
Board of such Regulated Fund that evaluates (and documents the basis of 
that evaluation) the Regulated Fund's compliance with the terms and 
conditions of the application and 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. 2020-08942 Filed 4-27-20; 8:45 am]
 BILLING CODE 8011-01-P