[Federal Register Volume 85, Number 127 (Wednesday, July 1, 2020)]
[Notices]
[Pages 39652-39658]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14122]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33913; File No. 812-15072]
Conversus StepStone Private Markets, et al.
June 25, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
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: Conversus StepStone Private Markets (``Conversus Fund'' or
the ``Existing Regulated Entity''); StepStone Conversus LLC
(``StepStone Conversus''); StepStone Group LP (``StepStone Group'');
2006 Co-Investment Portfolio, L.P., 2007 Co-Investment Portfolio, L.P.,
2008 Co-Investment Portfolio, L.P., Asia Enterprise II Offshore L.P.,
Asia Enterprise II Onshore LLC, Capitol Private Opportunities II
(Parallel) LP, Capitol Private Opportunities II LP, Capitol Private
Opportunities III (Parallel) LP, Capitol Private Opportunities III LP,
Capitol Private Opportunities LP, CGR/PE, LLC, Europe Enterprise II
Offshore, L.P., Europe Enterprise II Offshore, L.P., Europe Enterprise
III Offshore L.P., Europe Enterprise III Onshore L.P., Latin America
Opportunities (Delaware) L.P., Latin America Opportunities L.P.,
Lexington C/RE, LLC, Masters IV Cayman Holdings, L.P., MBKP North Asian
Opportunities Partners Offshore L.P., Mezzanine Co-Investment
Portfolio, L.P., NYSCRF Pioneer Opportunities Fund A, L.P., NYSCRF
Pioneer Partnership Fund B, L.P., Pegasus Multi-Strategy Series (A) LP,
Real Estate Domestic Partnership Fund I, L.P., Real Estate Global
Partnership Fund II, L.P., Real Estate International Partnership Fund
I, L.P., Silverstone I, LLC, Silverstone II, LLC--Series A, Silverstone
II, LLC--Series B, Silverstone II, LLC--Series C, Silverstone II, LLC--
Series D, Silverstone II, LLC--Series E, Silverstone II, LLC--Series F,
Silverstone II, LLC--Series G, Silverstone II, LLC--Series H,
Silverstone II, LLC--Series I, Silverstone II, LLC--Series J,
Silverstone II, LLC--Series K (Class 1), Silverstone II, LLC--Series K
(Class 2), Silverstone III, L.P., SIMA Private Equity 6 GmbH & Co. KG,
SRE Care--Investco, L.P., SRE Colt Devco--Investco, L.P., SRE Colt
Opco--Investco, L.P., SRE Curator--Investco, L.P., SRE Curator-TS, LP,
SRE Encore--Investco, L.P., SRE Freyja--Investco, L.P., SRE Hasso--
Investco, L.P., SRE Magnesia--Investco, L.P., SRE Maple Direct
Investco, LP, SRE Maple REIT Investco, LP, SRE Panther--Investco, L.P.,
SRE Preservation--Investco, L.P., SRE Ripple--Investco LP, SRE Stern
Debt--Investco, L.P., SRE Stern Equity--Investco, L.P., SREP III COLT
OPCO REIT, LLC, SREP III Flight--Investco, L.P., StepStone A
Opportunities Fund, L.P., StepStone Aegon Opportunities Fund, LP.--
Series
[[Page 39653]]
A, StepStone Aegon Opportunities Fund, LP.--Series B, StepStone AMP
Opportunities Fund, L.P., Stepstone AMP Opportunities Fund, L.P.--
Series A, StepStone AP Opportunities Fund, L.P., StepStone Atlantic
Fund, L.P.--Infrastructure Series 1 2011, StepStone Atlantic Fund,
L.P.--Private Equity Series 1 2009, StepStone Atlantic Fund, L.P.--
Private Equity Series 2 2012, StepStone Atlantic Fund, L.P.--Private
Markets Series 2014, StepStone Atlas Opportunities Fund II, L.P.,
StepStone Atlas Opportunities Fund LP, StepStone AZ China and Asia
Opportunities Fund, L.P., StepStone AZ Secondary Opportunities Fund,
L.P., StepStone BVK Opportunities Fund SCSP, StepStone C Strategic Core
Infrastructure Partnership, L.P., StepStone Capital Partners II Cayman
Holdings, L.P., StepStone Capital Partners II Onshore, L.P., StepStone
Capital Partners III Offshore Holdings, L.P., StepStone Capital
Partners III, L.P., StepStone Capital Partners IV Europe Holdings SCSP,
StepStone Capital Partners IV Offshore Holdings, L.P., StepStone
Capital Partners IV, L.P., StepStone CC Opportunities Fund, LLC,
StepStone CGC Opportunities I, L.P., StepStone Endurance L.P.,
StepStone European Fund SCS, SICAV-FIS--StepStone Capital Partners III
Compartment, StepStone European Fund SCS, SICAV-FIS--StepStone Real
Estate Partners III Compartment, StepStone Ferro Opportunities Fund,
L.P., StepStone FSS Opportunities Fund, L.P., StepStone G
Infrastructure Opportunities, L.P., StepStone H Opportunities Fund,
L.P., StepStone International Investors II, L.P., StepStone
International Investors II-G, L.P., StepStone International Investors
III, L.P., StepStone International Investors IV (Delaware), L.P.,
StepStone International Investors IV (Guernsey), L.P., StepStone JP
Opportunities Fund IA, L.P., StepStone JP Opportunities Fund II, L.P.,
StepStone JP Opportunities Fund, L.P., StepStone K Infrastructure
Opportunities Fund, L.P., StepStone K Real Estate Co-Investment Fund,
L.P., StepStone K Strategic Opportunities Fund II, L.P., StepStone K
Strategic Opportunities Fund III, L.P., StepStone K Strategic
Opportunities Fund, L.P., StepStone KF Infrastructure Fund II, L.P.,
StepStone KF Infrastructure Fund, L.P., StepStone KF Private Equity
Fund II, L.P., StepStone KF Private Equity Fund, L.P., StepStone Maple
Opportunities Fund, L.P., StepStone Masters III L.P., StepStone Masters
III Offshore L.P., StepStone Masters IV L.P., StepStone Masters V
Cayman Holdings, L.P., StepStone Masters V LP, StepStone Mexico I Co-
Investment Opportunities Fund, L.P., StepStone Mexico I SPC, StepStone
Mezzanine Partners (Offshore) I-A L.P., StepStone Mezzanine Partners I-
A L.P., StepStone NL Opportunities Fund II, L.P., StepStone NL
Opportunities Fund, L.P., StepStone NLGI Infrastructure Opportunities
Fund, L.P., StepStone NPS Infrastructure Fund, L.P., StepStone NPS PE
Fund, L.P., StepStone NPS PE Fund, L.P.--Tranche B, StepStone OH
Secondary Opportunities Fund, L.P., StepStone P Opportunities Fund,
L.P., StepStone PA Tap Fund I, LP, StepStone Phoenix Opportunities
Fund, L.P., StepStone PIFSS Real Estate Co-Investment Fund, L.P.,
StepStone Pioneer Capital Buyout Fund I, L.P., StepStone Pioneer
Capital Buyout Fund II, L.P., StepStone Pioneer Capital Europe II, L.P.
Incorporated, StepStone Pioneer Capital Europe Opportunities Fund I,
L.P. Incorporated, StepStone Pioneer Capital Europe Opportunities Fund
I, L.P. Incorporated, StepStone Pioneer Capital Europe Opportunities
Fund IB, L.P. Incorporated, StepStone Pioneer Capital I, L.P.,
StepStone Pioneer Capital II, L.P., StepStone Pioneer Capital III,
L.P., StepStone Pioneer Opportunities Fund II, L.P., StepStone Pioneer
Opportunities Fund, L.P., StepStone PPL Secondary Opportunities Fund,
L.P., StepStone Private Access Partnership, L.P., StepStone Private
Equity Partners II L.P., StepStone Private Equity Partners III Cayman
Holdings, L.P., StepStone Private Equity Partners III L.P., StepStone
Private Equity Partners L.P., StepStone Private Equity Partners
Offshore II L.P., StepStone Private Equity Partners Offshore L.P.,
StepStone Private Equity Portfolio L.P., StepStone R Co-Investment
Partnership, L.P., StepStone Real Estate Partners III Cayman, LP,
StepStone Real Estate Partners III I Opportunities Fund, L.P.,
Stepstone Real Estate Partners III Offshore, L.P., StepStone Real
Estate Partners III TE, L.P., StepStone Real Estate Partners III, L.P.,
StepStone Real Estate Partners IV Parallel, L.P., StepStone Real Estate
Partners IV, L.P., StepStone Rivas Private Equity Fund, L.P., StepStone
Scorpio Infrastructure Opportunities Fund, L.P., StepStone Secondary
Opportunities Fund II Offshore Holdings, L.P., StepStone Secondary
Opportunities Fund II, L.P., StepStone Secondary Opportunities Fund III
Offshore Holdings SCSP, StepStone Secondary Opportunities Fund III,
L.P., StepStone Secondary Opportunities Fund IV Offshore Holdings,
L.P., StepStone Secondary Opportunities Fund IV, L.P., StepStone
Secondary Opportunities Fund, L.P., StepStone Sedco European
Opportunities Fund, L.P., StepStone Sedco U.S. Opportunities Fund,
L.P., StepStone Tactical Growth Fund II Offshore Holdings, L.P.,
StepStone Tactical Growth Fund II, L.P., StepStone Tactical Growth Fund
Offshore Holdings, L.P., StepStone Tactical Growth Fund, L.P.,
StepStone UWF Secondary Opportunities Fund, L.P.--Series A, StepStone
UWF Secondary Opportunities Fund, L.P.--Series B, StepStone XL
Opportunities Fund II-A, L.P., StepStone XL Opportunities Fund II-B,
L.P., StepStone XL Opportunities Fund, L.P., StepStone-SYN Investments,
L.L.L.P., Sunsira Infrastructure Fund, LLC, Sunstone PE Opportunities
Fund, LLC, Sunstone Real Estate, L.P., T.F. Capital Investors II L.P.,
T.F. Capital Investors II Offshore L.P., Terrace Investment Holdings
SMF, LLC, Terrace Investment Holdings, LLC, UK Canadian Hydro HoldCo A
Limited, Bridge Village Limited, StepStone E Opportunities Fund, L.P.,
StepStone E Offshore Opportunities Fund, L.P., StepStone M
Opportunities Fund, L.P., StepStone LMM Opportunities Fund I, L.P.--
Series A, StepStone LMM Opportunities Fund I, L.P.--Series B,
Multibrand SICAV-SIF--Valida Private Equity Fund, Heathrow Forest Asia
Opportunities Fund, L.P., StepStone NPS PE Fund II, L.P., LCIV
Infrastructure Fund, StepStone B Infrastructure Opportunities Fund,
L.P., StepStone NPS Infrastructure Fund II, L.P., Swiss Capital FPT
Private Debt Fund L.P., Swiss Capital GPIM Private Debt Fund L.P.,
Swiss Capital HPS Private Debt Fund L.P., SC ACM Private Debt Fund
L.P., SC Co-Investments Private Debt Fund L.P., SC NXT Capital Private
Debt Fund L.P., SC ACA Private Debt Fund L.P., Swiss Capital HYS
Private Debt Fund L.P., Swiss Capital KKR Private Debt Fund L.P., Swiss
Capital Capitala Private Debt Fund L.P., SC BTC Private Debt Fund L.P.,
Swiss Capital KA Private Debt Fund L.P., Swiss Capital TLCP Private
Debt Fund L.P., Swiss Capital DCM Private Debt Fund L.P., Swiss Capital
PD (Offshore) Funds SPC, SC FPT Private Debt Offshore SP, SC NXT
Capital Private Debt Offshore SP, SC ACA Private Debt Offshore SP,
Swiss Capital CAPITALA Private Debt Offshore SP, Swiss Capital BTC
Private Debt Offshore SP, Swiss Capital Co-Investments Private Debt
Offshore SP, Swiss Capital HYS Private Debt Offshore SP, Swiss Capital
ASP Private Debt Offshore SP, SC ACM Private Debt Offshore SP, Swiss
Capital KA Private Debt Offshore SP, StepStone Private
[[Page 39654]]
Debt Secondary Funds SPC, SC DCM Secondary SP, Swiss Capital
Alternative Strategies Funds SPC, SC Alternative Strategy 1 SP, SC
Alternative Strategy 2 SP, SC Alternative Strategy 3 SP, SC Alternative
Strategy 4 SP, SC Alternative Strategy 5 SP, SC Alternative Strategy 6
SP, SC Alternative Strategy 7 SP, SC Alternative Strategy 8 SP, SC
Alternative Strategy 9 SP, SC Alternative Strategy 10 SP, SC
Alternative Strategy 11 SP, SC Alternative Strategy 12 SP, SC
Alternative Strategy 13 SP, SC Alternative Strategy 14 SP, StepStone
ADF Opportunities Fund L.P., SC CWMAA Senior Corporate Lending L.P.,
Senior Corporate Lending Enhanced I Fund L.P., SCL XL I Fund L.P., SSG
NLGI Private Debt Funds SPC, SSG NLGI European Direct Lending SP, Swiss
Capital PRO Loan V plc, Swiss Capital PRO Loan VII plc, Swiss Capital
Private Markets Funds, LG Income Fund, SC LV Private Debt Fund, Swiss
Capital Private Markets II Funds, AGON Fund, Senior Corporate Lending
Fund I, EuroPrima Fund, CWPS Global Infrastructure Fund, Senior
Corporate Lending Europe Fund, Swiss Capital Credit Strategies ICAV, LG
Direct Lending Platform Fund, SC LV Private Debt Platform Fund, Swiss
Capital Credit Strategies II ICAV, 3SC PRIDE Fund, SSG Valluga Fund,
Swiss Capital PRO Colours Funds PLC, SC New Targets Funds, SC Target D
Fund, SC Target O Fund, Oceanic Global Investment Funds plc, Pacific
Ocean Fund, Swiss Capital Non-Traditional Funds, Swiss Capital PRO Non-
Traditional Funds, Swiss Capital PRO Matrix Fund, Swiss Capital PRO
Disintermediation I Fund, Swiss Capital PRO Unicum Fund, Swiss Capital
PRO SST Fund, SC Private Debt Fund III L.P., Swiss Capital European
Private Debt Funds I (SICAV) SCSP, ACM European Private Debt Fund, BLK
European Private Debt Fund, TKH European Private Debt Fund, Co-
Investment European Private Debt Fund, Apera European Private Debt
Fund, CVC CP SSG European Private Debt Fund, TEREF LUX I, HCM European
Private Debt Fund, Bridgepoint European Private Debt Fund, StepStone
Trade Finance ICAV, StepStone Trade Finance Fund, Swiss Capital Credit
Strategies III ICAV, PR Private Debt Fund, Swiss Capital Private
Markets III, PR Private Debt Platform Fund, SSG Credit Strategies IV
ICAV, SSG Gen Credit Fund I, SSG Credit Strategies V ICAV, SSG Gen
Credit Fund II, SSG ME Private Debt Fund LP, Swiss Capital BG OL
Private Debt Fund LP, Swiss Capital Alternative Strategies Funds II
SPC, SC Alternative Strategy A SP, StepStone Real Estate Partners IV
Europe SCS, and StepStone Secondary Opportunities Fund IV Europe
Holdings SCSP (collectively, the ``Existing Affiliated Funds'').
Filing Dates: The application was filed on October 7, 2019, and amended
on January 9, 2020, April 27, 2020, June 22, 2020, and June 23, 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 by email. Hearing requests should be received by
the Commission by 5:30 p.m. on July 20, 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, 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 at [email protected].
ADDRESSES: Secretary, U.S. Securities and Exchange Commission,
[email protected]. Applicants: Robert W. Long, StepStone
Conversus LLC, [email protected].
FOR FURTHER INFORMATION CONTACT: Hae-Sung Lee, Senior Counsel, at
(202) 551-7345 or Trace W. Rakestraw, 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.
Applicants' Representations:
1. Conversus Fund is a Delaware statutory trust organized as a non-
diversified, closed-end management investment company, registered under
the Act. Conversus Fund's investment objectives are to invest in a
broad cross section of private markets assets that will enable the
Conversus Fund to, over time, achieve long-term capital appreciation
and provide regular, current income through quarterly distributions.
The board of directors (``Board'') of the Conversus Fund has five
members, three of whom are not an ``interested person'' of the
Conversus Fund within the meaning of Section 2(a)(19) of the Act (the
``Independent Trustees'').\1\
---------------------------------------------------------------------------
\1\ The term ``Independent Trustees'' refers to the independent
directors, managers, or trustees of any Regulated Entity (defined
below).
---------------------------------------------------------------------------
2. StepStone Conversus is a Delaware limited liability company that
is registered as an investment adviser with the Commission under the
Investment Advisers Act of 1940 (the ``Advisers Act''). StepStone
Conversus serves as the investment adviser to the Existing Regulated
Entity. StepStone Conversus is a wholly-owned subsidiary of StepStone
Group.
3. StepStone Group is a Delaware limited partnership that is
registered as an investment adviser with the Commission under the
Advisers Act. StepStone Group serves as the sub-adviser to the Existing
Regulated Entity and controls StepStone Conversus.
4. The Existing Affiliated Funds pursue strategies focused on
investing in a portfolio of professionally managed private markets
funds and select direct private markets investments. Each Existing
Affiliated Fund is advised by an Existing Adviser \2\ and would be an
investment company but for section 3(c)(1) or 3(c)(7) of the Act.
---------------------------------------------------------------------------
\2\ ``Existing Adviser'' means StepStone Group or StepStone
Conversus.
---------------------------------------------------------------------------
5. 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
[[Page 39655]]
which a Regulated Entity (or its Wholly-Owned Investment Subsidiary, as
defined below) participated 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\
---------------------------------------------------------------------------
\3\ ``Regulated Entity'' refers to any 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 whose investment adviser (and sub-
adviser(s), if any) is an Adviser. ``Future Adviser'' means any
future investment adviser that controls, is controlled by, or is
under common control with StepStone Conversus 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
whose investment adviser (and sub-adviser(s), if any) is an Adviser.
The term ``Adviser'' means any Existing Adviser or any Future
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.
---------------------------------------------------------------------------
6. 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
7. 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\
---------------------------------------------------------------------------
\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
shareholders.
\8\ The Regulated Entities, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
---------------------------------------------------------------------------
8. 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 Trustees'') \9\ and the majority of such
directors of the Board who are Independent Trustees (a ``Required
Majority'') will approve each Co-Investment Transaction prior to any
investment by the participating Regulated Entity.
---------------------------------------------------------------------------
\9\ Eligible Trustees may not have a financial interest in such
transaction, plan, or arrangement.
---------------------------------------------------------------------------
9. 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 Trustees. The Board of any
Regulated Entity may at any time rescind, suspend or qualify its
approval of pro rata dispositions and Follow-On Investments with the
result that all dispositions and/or Follow-On Investments must be
submitted to the Eligible Trustees.
10. No Independent Trustee 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 any interest in any company whose securities would
be acquired in a Co-Investment Transaction.
11. 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 Trustees
will act independently in evaluating the co-investment program, because
the ability of an Adviser or its principals to influence the
Independent Trustees by a suggestion, explicit or implied, that the
Independent Trustees can be removed will be limited significantly.
Applicants represent that the Independent Trustees will evaluate and
approve any such independent third party, taking into account its
qualifications, reputation for independence, cost to the Regulated
Entity's 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
[[Page 39656]]
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 Trustees of each participating Regulated Entity with
information concerning each participating party's available capital to
assist the Eligible Trustees with their review of the Regulated
Entity's investments for compliance with these allocation procedures.
(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 Trustees 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 Trustees 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 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.
---------------------------------------------------------------------------
\10\ This exception applies only to Follow-On Investments by a
Regulated Entity in issuers in which that Regulated Entity already
holds investments.
---------------------------------------------------------------------------
6. A Regulated Entity will not participate in any Potential Co-
[[Page 39657]]
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 Trustees, and the Regulated Entity will
participate in such disposition solely to the extent that a Required
Majority determines that it is in the Regulated Entity's best
interests.
(d) Each Regulated Entity and each Affiliated 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 Trustees, 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 Trustees of each Regulated Entity will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Entities and the Affiliated Funds
that the Regulated Entity considered but declined to participate in, so
that the Independent Trustees may determine whether all investments
made during the preceding quarter, including those investments which
the Regulated Entity considered but declined to participate in, comply
with the conditions of the Order. In addition, the Independent Trustees
will consider at least annually the continued appropriateness for 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 Required Majority under section 57(f) of the Act.
11. No Independent Trustee 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
[[Page 39658]]
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 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 the Affiliated Funds).
---------------------------------------------------------------------------
\11\ Applicants are not requesting and the staff is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
---------------------------------------------------------------------------
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), will prepare an annual report for its Board that
evaluates (and documents the basis of that evaluation) the Regulated
Entity's compliance with the terms and conditions of the application
and the procedures established to achieve such compliance.
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-14122 Filed 6-30-20; 8:45 am]
BILLING CODE 8011-01-P