81_FR_19721 81 FR 19656 - OHA Investment Corporation, et al.; Notice of Application

81 FR 19656 - OHA Investment Corporation, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 65 (April 5, 2016)

Page Range19656-19660
FR Document2016-07689

Federal Register, Volume 81 Issue 65 (Tuesday, April 5, 2016) 
[Federal Register Volume 81, Number 65 (Tuesday, April 5, 2016)]
[Notices]
[Pages 19656-19660]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-07689]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-32061; File No. 812-14482]


OHA Investment Corporation, et al.; Notice of Application

March 30, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION:  Notice of application for an order under sections 17(d) and 
57(i) of the Investment Company Act of 1940 (the ``Act'') and rule 17d-
1 under the Act to permit certain joint transactions otherwise 
prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 
under the Act.

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    Summary of Application: Applicants request an order to permit 
certain business development companies (``BDCs'') and closed-end 
management investment companies to co-invest in portfolio companies 
with each other and with affiliated investment funds.
    Applicants: OHA Investment Corporation (``OHAI''); Oak Hill 
Advisors, L.P. (``OHA''); OHA Funding GP, LLC, OHA Asset Holdings GP, 
LLC, OHA Asset Holdings, LP, OHA Asset Holdings II, LP, OHA Asset 
Holdings III, LP, OHA Asset Holdings V, LP, OHA Asset Holdings VI, LP, 
OHA Funding, LP, OHA/OCI Investments, LLC, OHA Nevada, LLC, Oak Hill 
Credit Opportunities Master Fund, Ltd., Oak Hill Credit Opportunities 
Fund, L.P., OHA Diversified Credit Strategies Fund Master, L.P., OHA 
Diversified Credit Strategies Fund, L.P., OHA Diversified Credit 
Strategies Fund (Parallel), L.P., OHA Diversified Credit Strategies 
Master Fund (Parallel II), L.P., OHA Diversified Credit Strategies 
Tractor Master Fund, L.P., OHA Structured Products Master Fund C, L.P., 
OHA Asia Customized Credit Fund, L.P., OHA Denmark Customized Credit 
Fund, L.P., OHA Centre Street Partnership, L.P., OHA Custom Multi-
Sector Credit Master Fund, L.P., OHA Custom Multi-Sector Credit Fund, 
Ltd., OHA Finlandia Credit Fund, L.P., OHA Strategic Credit Master Fund 
II, L.P., OHA Strategic Credit Fund II, L.P., OHA AD Customized Credit 
Fund (International), L.P., OHA BCSS SSD, L.P., OHA BCSS SSD, Ltd., OHA 
MPS SSD, L.P. and OHA MPS SSD, Ltd. (together, the ``Existing Co-
Investment Affiliates,'' and the Existing Co-Investment Affiliates 
together with OHAI and OHA, the ``Applicants'').

DATES:  Filing Dates: The application was filed on June 5, 2015 and 
amended on October 19, 2015, December 18, 2015, and March 18, 2016.
    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 22, 2016, 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: 1114 Avenue of the 
Americas, 27th Floor, New York, NY 10036.

FOR FURTHER INFORMATION CONTACT:  Jill Ehrlich, Senior Counsel, at 
(202) 551-6819 or Dalia Osman Blass, Assistant Chief Counsel, 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 Web site 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. OHAI is a Maryland corporation organized as a non-diversified, 
closed-end management investment company that has elected to be 
regulated as a BDC under the Act.\1\ OHAI's investment

[[Page 19657]]

objective is to generate both current income and capital appreciation 
primarily through debt investments with certain equity components. A 
majority of the board of directors (``Board'') \2\ of OHAI are persons 
who are not ``interested persons,'' as defined in section 2(a)(19) of 
the Act (the ``Independent Directors'') of OHAI.
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    \1\ Section 2(a)(48) defines a BDC to be any closed-end 
investment company that operates for the purpose of making 
investments in securities described in sections 55(a)(1) through 
55(a)(3) of the Act and makes available significant managerial 
assistance with respect to the issuers of such securities.
    \2\ The term ``Board'' refers to the board of directors of any 
Regulated Fund (as defined below).
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    2. Each of the Existing Co-Investment Affiliates would be an 
investment company but for section 3(c)(1) or 3(c)(7) of the Act.
    3. OHA is a Delaware limited liability company that is registered 
as an investment adviser under the Investment Advisers Act of 1940 (the 
``Advisers Act''). OHA serves as the investment adviser to OHAI and the 
Existing Co-Investment Affiliates.
    4. Applicants seek an order (``Order'') to permit a Regulated Fund 
\3\ (or a Wholly-Owned Investment Sub) (as defined below) and one or 
more other Regulated Funds (or a Wholly-Owned Investment Sub) and/or 
one or more Co-Investment Affiliates \4\ to participate in the same 
investment opportunities through a proposed co-investment program (the 
``Co-Investment Program'') where such participation would otherwise be 
prohibited under sections 17(d) and 57(a)(4) and rule 17d-1. ``Co-
Investment Transaction'' means any transaction in which a Regulated 
Fund (or a Wholly-Owned Investment Sub) participated together with one 
or more other Regulated Funds (or a Wholly-Owned Investment Sub) and/or 
one or more Co-Investment Affiliates in reliance on the requested 
Order. ``Potential Co-Investment Transaction'' means any investment 
opportunity in which a Regulated Fund (or a Wholly-Owned Investment 
Sub) could not participate together with one or more other Regulated 
Funds (or a Wholly-Owned Investment Sub) and/or one or more Co-
Investment Affiliates without obtaining and relying on the Order.\5\
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    \3\ ``Regulated Funds'' means OHAI and any future closed-end 
investment companies (a) that are registered under the Act or have 
elected to be regulated as BDCs under the Act, (b) whose investment 
adviser is an Adviser, and (c) that intend to participate in the Co-
Investment Program. The term ``Adviser'' means OHA and any 
investment adviser controlling, controlled by or under common 
control with OHA.
    \4\ ``Co-Investment Affiliates'' means the Existing Co-
Investment Affiliates and any Future Co-Investment Affiliate. 
``Future Co-Investment Affiliate'' means any entity whose (i) 
investment adviser is an Adviser, (ii) that would be an investment 
company but for section 3(c)(1) or 3(c)(7) of the Act, (iii) that is 
not a subsidiary of a Regulated Fund, and (iv) that intends to 
participate in the Co-Investment Program.
    \5\ All existing entities that currently intend to rely on the 
Order have been named as applicants. Any other existing or future 
entity that relies on the Order in the future will comply with the 
terms and conditions of the application.
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    5. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly-Owned Investment Subs.\6\ Such a subsidiary 
would be prohibited from investing in a Co-Investment Transaction with 
any Co-Investment Affiliate or another Regulated Fund because it would 
be a company controlled by the Regulated Fund for purposes of sections 
17(d) and 57(a)(4) and rule 17d-1. Applicants request that each Wholly-
Owned Investment Sub be permitted to participate in Co-Investment 
Transactions in lieu of the Regulated Fund that owns it and that the 
Wholly-Owned Investment Sub's participation in any such transaction be 
treated, for purposes of the requested Order, as though the Regulated 
Fund were participating directly. Applicants represent that this 
treatment is justified because a Wholly-Owned Investment Sub 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 Sub. The 
Board would make all relevant determinations under the conditions with 
regard to a Wholly-Owned Investment Sub's participation in a Co-
Investment Transaction, and the Board would be informed of, and take 
into consideration, any proposed use of a Wholly-Owned Investment Sub 
in the Regulated Fund's place. If a Regulated Fund proposes to 
participate in the same Co-Investment Transaction with any of its 
Wholly-Owned Investment Subs, the Board will also be informed of, and 
take into consideration, the relative participation of the Regulated 
Fund and the Wholly-Owned Investment Sub.
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    \6\ The term ``Wholly-Owned Investment Sub'' 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 on behalf of the Regulated Fund; (iii) with 
respect to which the Board of a Regulated Fund has the sole 
authority to make all determinations with respect to the Wholly-
Owned Investment Sub's participation under the conditions to the 
application; and (iv) that would be an investment company but for 
section 3(c)(1) or 3(c)(7) of the Act.
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    6. In selecting investments for the Regulated Funds, an Adviser 
will consider only the investment objective, investment policies, 
investment position, capital available for investment (``Available 
Capital'') and other factors relevant to each Regulated Fund. Each of 
the Co-Investment Affiliates has or will have investment objectives and 
strategies that are similar to or overlap with the Objectives and 
Strategies \7\ of each Regulated Fund. To the extent there is an 
investment opportunity that falls within the Objectives and Strategies 
of one or more Regulated Funds and the investment objectives and 
strategies of one or more of the Co-Investment Affiliates, the Advisers 
would expect such Regulated Funds and Co-Investment Affiliates to co-
invest with each other, with certain exceptions based on Available 
Capital or diversification.\8\
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    \7\ The term ``Objectives and Strategies,'' with respect to each 
Regulated Fund, means the Regulated Fund's investment objectives and 
strategies, as described in the Regulated Fund's registration 
statement on Form N-2, other filings the Regulated Fund has made 
with the Commission under the Securities Act of 1933 (the ``1933 
Act''), or under the Securities Exchange Act of 1934 and the 
Regulated Fund's report to stockholders.
    \8\ The Regulated Funds, however, will not be obligated to 
invest, or co-invest, when investment opportunities are referred to 
them.
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    7. After making the determinations required in conditions 1 and 
2(a), other than in the case of pro rata Dispositions (as defined 
below) and Follow-On Investments,\9\ as provided in conditions 7 and 8, 
the applicable Adviser will present each Potential Co-Investment 
Transaction and the proposed allocation to the directors of the Board 
that are eligible to vote under section 57(o) of the Act (the 
``Eligible Directors''). The ``required majority,'' as defined in 
section 57(o) of the Act (``Required Majority''),\10\ of a Regulated 
Fund will approve each Co-Investment Transaction prior to any 
investment by the Regulated Fund.
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    \9\ ``Follow-On Investment'' means any additional investment in 
an existing portfolio company, the exercise of warrants, conversion 
privileges or other similar rights to acquire additional securities 
of the portfolio company.
    \10\ In the case of a Regulated Fund that is a registered 
closed-end fund, the Board members that make up the Required 
Majority will be determined as if the Regulated Fund were a BDC 
subject to section 57(o).
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    8. All subsequent activity, meaning either to (a) sell, exchange, 
or otherwise dispose of an investment (collectively, a ``Disposition'') 
or (b) complete a Follow-On Investment, in respect of an investment 
acquired in a Co-Investment Transaction will also be made in accordance 
with the terms and conditions set forth in the application. 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

[[Page 19658]]

obtaining prior approval of the Required Majority if, among other 
things: (i) The proposed participation of each Co-Investment Affiliate 
and Regulated Fund in such Disposition or Follow-On Investment 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.
    9. No Independent Director of a Regulated Fund will have a 
financial interest in any Co-Investment Transaction, other than 
indirectly through share ownership in one of the Regulated Funds.
    10. If an Adviser or its principals, or any person controlling, 
controlled by, or under common control with the Adviser or its 
principals, and the Co-Investment Affiliates (collectively, the 
``Holders'') own in the aggregate more than 25 percent of the 
outstanding voting shares of a Regulated Fund (the ``Shares''), then 
the Holders will vote such Shares as directed by an independent third 
party when voting on (1) the election of directors; (2) the removal of 
one or more directors; or (3) any other matter under either the Act or 
applicable state law affecting the Board's composition, size or manner 
of election. Applicants believe that this condition will ensure that 
the Independent Directors will act independently in evaluating the Co-
Investment Program, because the ability of the 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. The Independent Directors shall evaluate and 
approve any 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 57(a)(4) of the Act prohibits certain affiliated persons 
of a BDC from participating in joint transactions with the BDC or a 
company controlled by a BDC in contravention of rules as prescribed by 
the Commission. Under section 57(b)(2) of the Act, any person who is 
directly or indirectly controlling, controlled by, or under common 
control with a BDC is subject to section 57(a)(4). Applicants submit 
that each of the other Regulated Funds and Co-Investment Affiliates may 
be deemed to be a person related to a Regulated Fund in a manner 
described by section 57(b) by virtue of being under common control. 
Section 57(i) of the Act provides that, until the Commission prescribes 
rules under section 57(a)(4), the Commission's rules under section 
17(d) of the Act applicable to registered closed-end investment 
companies will be deemed to apply to transactions subject to section 
57(a)(4). Because the Commission has not adopted any rules under 
section 57(a)(4), rule 17d-1 also applies to joint transactions with 
Regulated Funds that are BDCs. Section 17(d) of the Act and rule 17d-1 
under the Act are applicable to Regulated Funds that are registered 
closed-end investment companies.
    2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
affiliated persons of a registered investment company from 
participating in joint transactions with the company unless the 
Commission has granted an order permitting such transactions. In 
passing upon applications under rule 17d-1, the Commission considers 
whether the company's participation in the joint transaction is 
consistent with the provisions, policies, and purposes of the Act and 
the extent to which such participation is on a basis different from or 
less advantageous than that of other participants.
    3. Applicants state that 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 any Order of the Commission granting the 
requested relief will be subject to the following conditions:
    1. Each time an Adviser considers a Potential Co-Investment 
Transaction for a Co-Investment Affiliate 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 applicable Adviser deems a Regulated Fund's 
participation in any Potential Co-Investment Transaction to be 
appropriate for the Regulated Fund, the Adviser 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 Co-Investment 
Affiliates, 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 maximum amount proposed to be invested by each. The 
applicable Adviser will provide the Eligible Directors of each 
participating Regulated Fund with information concerning each 
participating party's Available Capital to assist the Eligible 
Directors 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, including the 
amount proposed to be invested by each Regulated Fund and each Co-
Investment Affiliate to the Eligible Directors 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 Co-Investment 
Affiliates 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 stockholders and do not involve overreaching in respect of 
the Regulated

[[Page 19659]]

Fund or its stockholders on the part of any person concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) the interests of the Regulated Fund's stockholders; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by the other Regulated Funds or any Co-
Investment Affiliates 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 Fund or Co-
Investment Affiliate; provided that, if any other Regulated Fund or Co-
Investment Affiliate, but not the Regulated Fund itself, gains the 
right to nominate a director for election to a portfolio company's 
board of directors or the right to have a board observer or any similar 
right to participate in the governance or management of the portfolio 
company, such event shall not be interpreted to prohibit the Required 
Majority from reaching the conclusions required by this condition 
2(c)(iii), if:
    (A) the Eligible Directors will have the right to ratify the 
selection of such director or board observer, if any;
    (B) the Adviser agrees to, and does, provide periodic reports to 
the Board of the Regulated Fund with respect to the actions of such 
director or the information received by such board observer or obtained 
through the exercise of any similar right to participate in the 
governance or management of the portfolio company; and
    (C) any fees or other compensation that any other Regulated Fund, 
or any Co-Investment Affiliate, or any affiliated person of either 
receives in connection with the right of any other Regulated Fund or a 
Co-Investment Affiliate 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 Co-Investment Affiliates (which each may, in turn, share 
its portion with its affiliated persons) and the participating 
Regulated Funds in accordance with the amount of each party's 
investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
the Advisers, the Co-Investment Affiliates, the 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 sections 17(e) or 57(k) of 
the Act, as applicable, (C) indirectly, as a result of an interest in 
the securities issued by one of the parties to the Co-Investment 
Transaction, or (D) in the case of fees or other compensation described 
in condition 2(c)(iii)(C).
    3. Each Regulated Fund has the right to decline to participate in 
any Potential Co-Investment Transaction or to invest less than the 
amount proposed.
    4. The applicable Adviser will present to the Board of each 
Regulated Fund, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Funds and Co-Investment Affiliates 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 below,\11\ a Regulated Fund will not invest in reliance on 
the Order in any issuer in which another Regulated Fund, Co-Investment 
Affiliate, or any affiliated person of another Regulated Fund or Co-
Investment Affiliate is an existing investor.
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    \11\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that 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 Co-
Investment Affiliate. The grant to a Co-Investment Affiliate 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 Co-Investment Affiliate 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 
Advisers 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 any participating Co-
Investment Affiliates and any other 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 Co-Investment Affiliate and Regulated 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 applicable Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the 
Regulated Fund's Eligible Directors, 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 Co-Investment Affiliate and each Regulated Fund will bear 
its own expenses in connection with any such Disposition.
    8. (a) If any Co-Investment Affiliate or any Regulated Fund desires 
to make a Follow-On Investment in a portfolio company whose securities 
were acquired in a Co-Investment Transaction, the applicable Advisers 
will:
    (i) Notify each Regulated Fund 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 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 Co-Investment Affiliate and each 
Regulated Fund in such investment is proportionate to its outstanding 
investments in the issuer immediately preceding the Follow-On 
Investment; (ii) the Board of the

[[Page 19660]]

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); and 
(iii) the Board of the Regulated Fund is provided on a quarterly basis 
with a list of all Follow-On Investments made in accordance with this 
condition. In all other cases, the applicable Adviser will provide its 
written recommendation as to the Regulated Fund's participation to the 
Regulated Fund's Eligible Directors, 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 Follow-On Investment is not based on the Co-
Investment Affiliates' and the Regulated Funds' outstanding investments 
immediately preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the applicable Adviser to 
be invested by the applicable Regulated Fund in the Follow-On 
Investment, together with the amount proposed to be invested by the 
other participating Regulated Funds and Co-Investment Affiliates, 
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 maximum 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 Fund will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by the Co-Investment Affiliates and the other 
Regulated Funds that the Regulated Fund considered but declined to 
participate in, so that the Independent Directors 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 Independent Directors 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 Independent Director of a Regulated Fund will also be a 
director, general partner, managing member or principal, or otherwise 
an ``affiliated person'' (as defined in the Act), of any Co-Investment 
Affiliate.
    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 advisory 
agreements with the Co-Investment Affiliates and the Regulated Funds, 
be shared by the participating Co-Investment Affiliates and the 
participating Regulated Funds in proportion to the relative amounts of 
the securities held or being acquired or disposed of, as the case may 
be.
    13. Any transaction fee \12\ (including break-up or commitment fees 
but excluding broker's fees contemplated by section 17(e) or 57(k) of 
the Act, as applicable) received in connection with a Co-Investment 
Transaction will be distributed to the participating Co-Investment 
Affiliates and Regulated Funds on a pro rata basis based on the amount 
they each invested or committed, as the case may be, in such Co-
Investment Transaction. If any transaction fee is to be held by an 
Adviser pending consummation of the transaction, the fee will be 
deposited into an account maintained by the Adviser at a bank or banks 
having the qualifications prescribed in section 26(a)(1) of the Act, 
and the account will earn a competitive rate of interest that will also 
be divided pro rata among the participating Co-Investment Affiliates 
and Regulated Funds based on the amount each invests in such Co-
Investment Transaction. None of the Co-Investment Affiliates, the 
Regulated Funds, the Advisers nor any affiliated person of the 
Regulated Funds or Co-Investment Affiliates 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 Co-Investment Affiliates and the Regulated 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 their 
respective investment advisory agreements with the Regulated Funds and 
Co-Investment Affiliates).
---------------------------------------------------------------------------

    \12\ Applicants are not requesting and the staff is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
---------------------------------------------------------------------------

    14. If the Holders own in the aggregate more than 25 percent 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.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-07689 Filed 4-4-16; 8:45 am]
 BILLING CODE 8011-01-P

19656 Federal Register / Vol. 81, No. 65 / Tuesday, April 5, 2016 / Notices public interest, for the protection of 2016–026 and should be submitted on Fund II, L.P., OHA AD Customized investors, or otherwise in furtherance of or before April 26, 2016. Credit Fund (International), L.P., OHA the purposes of the Act. If the For the Commission, by the Division of BCSS SSD, L.P., OHA BCSS SSD, Ltd., Commission takes such action, the Trading and Markets, pursuant to delegated OHA MPS SSD, L.P. and OHA MPS Commission will institute proceedings authority.17 SSD, Ltd. (together, the ‘‘Existing Co- to determine whether the proposed rule Robert W. Errett, Investment Affiliates,’’ and the Existing change should be approved or Deputy Secretary. Co-Investment Affiliates together with disapproved. [FR Doc. 2016–07686 Filed 4–4–16; 8:45 am] OHAI and OHA, the ‘‘Applicants’’). IV. Solicitation of Comments BILLING CODE 8011–01–P DATES: Filing Dates: The application was filed on June 5, 2015 and amended Interested persons are invited to on October 19, 2015, December 18, submit written data, views, and SECURITIES AND EXCHANGE 2015, and March 18, 2016. arguments concerning the foregoing, COMMISSION Hearing or Notification of Hearing: An including whether the proposed rule order granting the requested relief will change is consistent with the Act. [Release No. IC–32061; File No. 812–14482] be issued unless the Commission orders Comments may be submitted by any of a hearing. Interested persons may the following methods: OHA Investment Corporation, et al.; Notice of Application request a hearing by writing to the Electronic Comments Commission’s Secretary and serving March 30, 2016. applicants with a copy of the request, • Use the Commission’s Internet AGENCY: Securities and Exchange personally or by mail. Hearing requests comment form (http://www.sec.gov/ Commission (‘‘Commission’’). should be received by the Commission rules/sro.shtml); or by 5:30 p.m. on April 22, 2016, and ACTION: Notice of application for an • Send an email to rule-comments@ should be accompanied by proof of order under sections 17(d) and 57(i) of sec.gov. Please include File Number SR– service on applicants, in the form of an the Investment Company Act of 1940 CBOE–2016–026 on the subject line. affidavit or, for lawyers, a certificate of (the ‘‘Act’’) and rule 17d–1 under the Paper Comments Act to permit certain joint transactions service. Pursuant to rule 0–5 under the otherwise prohibited by sections 17(d) Act, hearing requests should state the • Send paper comments in triplicate nature of the writer’s interest, any facts to Secretary, Securities and Exchange and 57(a)(4) of the Act and rule 17d–1 under the Act. bearing upon the desirability of a Commission, 100 F Street NE., hearing on the matter, the reason for the Washington, DC 20549–1090. Summary of Application: Applicants request, and the issues contested. All submissions should refer to File request an order to permit certain Persons who wish to be notified of a Number SR–CBOE–2016–026. This file business development companies hearing may request notification by number should be included on the (‘‘BDCs’’) and closed-end management writing to the Commission’s Secretary. subject line if email is used. To help the investment companies to co-invest in ADDRESSES: Secretary, U.S. Securities Commission process and review your portfolio companies with each other and and Exchange Commission, 100 F St. comments more efficiently, please use with affiliated investment funds. NE., Washington, DC 20549–1090. only one method. The Commission will Applicants: OHA Investment Applicants: 1114 Avenue of the post all comments on the Commission’s Corporation (‘‘OHAI’’); Oak Hill Americas, 27th Floor, New York, NY Internet Web site (http://www.sec.gov/ Advisors, L.P. (‘‘OHA’’); OHA Funding 10036. rules/sro.shtml). Copies of the GP, LLC, OHA Asset Holdings GP, LLC, submission, all subsequent OHA Asset Holdings, LP, OHA Asset FOR FURTHER INFORMATION CONTACT: Jill amendments, all written statements Holdings II, LP, OHA Asset Holdings III, Ehrlich, Senior Counsel, at (202) 551– with respect to the proposed rule LP, OHA Asset Holdings V, LP, OHA 6819 or Dalia Osman Blass, Assistant change that are filed with the Asset Holdings VI, LP, OHA Funding, Chief Counsel, at (202) 551–6821 Commission, and all written LP, OHA/OCI Investments, LLC, OHA (Division of Investment Management, communications relating to the Nevada, LLC, Oak Hill Credit Chief Counsel’s Office). proposed rule change between the Opportunities Master Fund, Ltd., Oak SUPPLEMENTARY INFORMATION: The Commission and any person, other than Hill Credit Opportunities Fund, L.P., following is a summary of the those that may be withheld from the OHA Diversified Credit Strategies Fund application. The complete application public in accordance with the Master, L.P., OHA Diversified Credit may be obtained via the Commission’s provisions of 5 U.S.C. 552, will be Strategies Fund, L.P., OHA Diversified Web site by searching for the file available for Web site viewing and Credit Strategies Fund (Parallel), L.P., number, or for an applicant using the printing in the Commission’s Public OHA Diversified Credit Strategies Company name box, at http:// Reference Room, 100 F Street NE., Master Fund (Parallel II), L.P., OHA www.sec.gov/search/search.htm or by Washington, DC 20549 on official Diversified Credit Strategies Tractor calling (202) 551–8090. business days between the hours of Master Fund, L.P., OHA Structured Applicants’ Representations 10:00 a.m. and 3:00 p.m. Copies of the Products Master Fund C, L.P., OHA Asia filing also will be available for Customized Credit Fund, L.P., OHA 1. OHAI is a Maryland corporation inspection and copying at the principal Denmark Customized Credit Fund, L.P., organized as a non-diversified, closed- asabaliauskas on DSK3SPTVN1PROD with NOTICES office of the Exchange. All comments OHA Centre Street Partnership, L.P., end management investment company received will be posted without change; OHA Custom Multi-Sector Credit Master that has elected to be regulated as a BDC the Commission does not edit personal Fund, L.P., OHA Custom Multi-Sector under the Act.1 OHAI’s investment identifying information from Credit Fund, Ltd., OHA Finlandia Credit 1 Section 2(a)(48) defines a BDC to be any closed- submissions. You should submit only Fund, L.P., OHA Strategic Credit Master end investment company that operates for the information that you wish to make Fund II, L.P., OHA Strategic Credit purpose of making investments in securities available publicly. All submissions described in sections 55(a)(1) through 55(a)(3) of the should refer to File Number SR–CBOE– 17 17 CFR 200.30–3(a)(12). Act and makes available significant managerial VerDate Sep<11>2014 17:18 Apr 04, 2016 Jkt 238001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 E:\FR\FM\05APN1.SGM 05APN1

Federal Register / Vol. 81, No. 65 / Tuesday, April 5, 2016 / Notices 19657 objective is to generate both current more Co-Investment Affiliates without position, capital available for income and capital appreciation obtaining and relying on the Order.5 investment (‘‘Available Capital’’) and primarily through debt investments 5. Applicants state that a Regulated other factors relevant to each Regulated with certain equity components. A Fund may, from time to time, form one Fund. Each of the Co-Investment majority of the board of directors or more Wholly-Owned Investment Affiliates has or will have investment (‘‘Board’’) 2 of OHAI are persons who are Subs.6 Such a subsidiary would be objectives and strategies that are similar not ‘‘interested persons,’’ as defined in prohibited from investing in a Co- to or overlap with the Objectives and section 2(a)(19) of the Act (the Investment Transaction with any Co- Strategies 7 of each Regulated Fund. To ‘‘Independent Directors’’) of OHAI. Investment Affiliate or another the extent there is an investment Regulated Fund because it would be a opportunity that falls within the 2. Each of the Existing Co-Investment company controlled by the Regulated Objectives and Strategies of one or more Affiliates would be an investment Fund for purposes of sections 17(d) and Regulated Funds and the investment company but for section 3(c)(1) or 57(a)(4) and rule 17d–1. Applicants objectives and strategies of one or more 3(c)(7) of the Act. request that each Wholly-Owned of the Co-Investment Affiliates, the 3. OHA is a Delaware limited liability Investment Sub be permitted to Advisers would expect such Regulated company that is registered as an participate in Co-Investment Funds and Co-Investment Affiliates to investment adviser under the Transactions in lieu of the Regulated co-invest with each other, with certain Investment Advisers Act of 1940 (the Fund that owns it and that the Wholly- exceptions based on Available Capital ‘‘Advisers Act’’). OHA serves as the Owned Investment Sub’s participation or diversification.8 investment adviser to OHAI and the in any such transaction be treated, for 7. After making the determinations Existing Co-Investment Affiliates. purposes of the requested Order, as required in conditions 1 and 2(a), other 4. Applicants seek an order (‘‘Order’’) though the Regulated Fund were than in the case of pro rata Dispositions to permit a Regulated Fund 3 (or a participating directly. Applicants (as defined below) and Follow-On Wholly-Owned Investment Sub) (as represent that this treatment is justified Investments,9 as provided in conditions defined below) and one or more other because a Wholly-Owned Investment 7 and 8, the applicable Adviser will Regulated Funds (or a Wholly-Owned Sub would have no purpose other than present each Potential Co-Investment Investment Sub) and/or one or more Co- serving as a holding vehicle for the Transaction and the proposed allocation Investment Affiliates 4 to participate in Regulated Fund’s investments and, to the directors of the Board that are the same investment opportunities therefore, no conflicts of interest could eligible to vote under section 57(o) of through a proposed co-investment arise between the Regulated Fund and the Act (the ‘‘Eligible Directors’’). The program (the ‘‘Co-Investment Program’’) the Wholly-Owned Investment Sub. The ‘‘required majority,’’ as defined in where such participation would Board would make all relevant section 57(o) of the Act (‘‘Required otherwise be prohibited under sections determinations under the conditions Majority’’),10 of a Regulated Fund will 17(d) and 57(a)(4) and rule 17d–1. ‘‘Co- with regard to a Wholly-Owned approve each Co-Investment Investment Transaction’’ means any Investment Sub’s participation in a Co- Transaction prior to any investment by transaction in which a Regulated Fund Investment Transaction, and the Board the Regulated Fund. would be informed of, and take into 8. All subsequent activity, meaning (or a Wholly-Owned Investment Sub) consideration, any proposed use of a either to (a) sell, exchange, or otherwise participated together with one or more Wholly-Owned Investment Sub in the dispose of an investment (collectively, a other Regulated Funds (or a Wholly- Regulated Fund’s place. If a Regulated ‘‘Disposition’’) or (b) complete a Follow- Owned Investment Sub) and/or one or Fund proposes to participate in the On Investment, in respect of an more Co-Investment Affiliates in same Co-Investment Transaction with investment acquired in a Co-Investment reliance on the requested Order. Transaction will also be made in ‘‘Potential Co-Investment Transaction’’ any of its Wholly-Owned Investment Subs, the Board will also be informed accordance with the terms and means any investment opportunity in conditions set forth in the application. which a Regulated Fund (or a Wholly- of, and take into consideration, the relative participation of the Regulated With respect to the pro rata Dispositions Owned Investment Sub) could not and Follow-On Investments provided in participate together with one or more Fund and the Wholly-Owned Investment Sub. conditions 7 and 8, a Regulated Fund other Regulated Funds (or a Wholly- may participate in a pro rata Disposition Owned Investment Sub) and/or one or 6. In selecting investments for the Regulated Funds, an Adviser will or Follow-On Investment without assistance with respect to the issuers of such consider only the investment objective, 7 The term ‘‘Objectives and Strategies,’’ with securities. investment policies, investment respect to each Regulated Fund, means the 2 The term ‘‘Board’’ refers to the board of directors Regulated Fund’s investment objectives and of any Regulated Fund (as defined below). 5 All existing entities that currently intend to rely strategies, as described in the Regulated Fund’s 3 ‘‘Regulated Funds’’ means OHAI and any future on the Order have been named as applicants. Any registration statement on Form N–2, other filings closed-end investment companies (a) that are other existing or future entity that relies on the the Regulated Fund has made with the Commission registered under the Act or have elected to be Order in the future will comply with the terms and under the Securities Act of 1933 (the ‘‘1933 Act’’), regulated as BDCs under the Act, (b) whose conditions of the application. or under the Securities Exchange Act of 1934 and investment adviser is an Adviser, and (c) that 6 The term ‘‘Wholly-Owned Investment Sub’’ the Regulated Fund’s report to stockholders. intend to participate in the Co-Investment Program. means an entity (i) that is wholly-owned by a 8 The Regulated Funds, however, will not be The term ‘‘Adviser’’ means OHA and any Regulated Fund (with the Regulated Fund at all obligated to invest, or co-invest, when investment investment adviser controlling, controlled by or opportunities are referred to them. asabaliauskas on DSK3SPTVN1PROD with NOTICES times holding, beneficially and of record, 100% of under common control with OHA. the voting and economic interests); (ii) whose sole 9 ‘‘Follow-On Investment’’ means any additional 4 ‘‘Co-Investment Affiliates’’ means the Existing business purpose is to hold one or more investment in an existing portfolio company, the Co-Investment Affiliates and any Future Co- investments on behalf of the Regulated Fund; (iii) exercise of warrants, conversion privileges or other Investment Affiliate. ‘‘Future Co-Investment with respect to which the Board of a Regulated similar rights to acquire additional securities of the Affiliate’’ means any entity whose (i) investment Fund has the sole authority to make all portfolio company. adviser is an Adviser, (ii) that would be an determinations with respect to the Wholly-Owned 10 In the case of a Regulated Fund that is a investment company but for section 3(c)(1) or Investment Sub’s participation under the conditions registered closed-end fund, the Board members that 3(c)(7) of the Act, (iii) that is not a subsidiary of a to the application; and (iv) that would be an make up the Required Majority will be determined Regulated Fund, and (iv) that intends to participate investment company but for section 3(c)(1) or as if the Regulated Fund were a BDC subject to in the Co-Investment Program. 3(c)(7) of the Act. section 57(o). VerDate Sep<11>2014 17:18 Apr 04, 2016 Jkt 238001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 E:\FR\FM\05APN1.SGM 05APN1

19658 Federal Register / Vol. 81, No. 65 / Tuesday, April 5, 2016 / Notices obtaining prior approval of the Required the BDC or a company controlled by a relief will be subject to the following Majority if, among other things: (i) The BDC in contravention of rules as conditions: proposed participation of each Co- prescribed by the Commission. Under 1. Each time an Adviser considers a Investment Affiliate and Regulated section 57(b)(2) of the Act, any person Potential Co-Investment Transaction for Fund in such Disposition or Follow-On who is directly or indirectly controlling, a Co-Investment Affiliate or another Investment is proportionate to its controlled by, or under common control Regulated Fund that falls within a outstanding investments in the issuer with a BDC is subject to section 57(a)(4). Regulated Fund’s then-current immediately preceding the Disposition Applicants submit that each of the other Objectives and Strategies, the Regulated or Follow-On Investment, as the case Regulated Funds and Co-Investment Fund’s Adviser will make an may be; and (ii) the Board of the Affiliates may be deemed to be a person independent determination of the Regulated Fund has approved that related to a Regulated Fund in a manner appropriateness of the investment for Regulated Fund’s participation in pro described by section 57(b) by virtue of the Regulated Fund in light of the rata Dispositions and Follow-On being under common control. Section Regulated Fund’s then-current Investments as being in the best 57(i) of the Act provides that, until the circumstances. interests of the Regulated Fund. If the Commission prescribes rules under 2. (a) If the applicable Adviser deems Board does not so approve, any such section 57(a)(4), the Commission’s rules a Regulated Fund’s participation in any Disposition or Follow-On Investment under section 17(d) of the Act Potential Co-Investment Transaction to will be submitted to the Regulated applicable to registered closed-end be appropriate for the Regulated Fund, Fund’s Eligible Directors. The Board of investment companies will be deemed the Adviser will then determine an any Regulated Fund may at any time to apply to transactions subject to appropriate level of investment for the rescind, suspend or qualify its approval section 57(a)(4). Because the Regulated Fund. of pro rata Dispositions and Follow-On Commission has not adopted any rules (b) If the aggregate amount Investments with the result that all under section 57(a)(4), rule 17d–1 also recommended by the applicable Adviser Dispositions and/or Follow-On applies to joint transactions with to be invested by the applicable Investments must be submitted to the Regulated Funds that are BDCs. Section Regulated Fund in the Potential Co- Eligible Directors. 17(d) of the Act and rule 17d–1 under Investment Transaction, together with 9. No Independent Director of a the Act are applicable to Regulated the amount proposed to be invested by Regulated Fund will have a financial Funds that are registered closed-end the other participating Regulated Funds interest in any Co-Investment investment companies. and Co-Investment Affiliates, Transaction, other than indirectly 2. Section 17(d) of the Act and rule collectively, in the same transaction, through share ownership in one of the 17d–1 under the Act prohibit affiliated exceeds the amount of the investment Regulated Funds. persons of a registered investment opportunity, then the investment 10. If an Adviser or its principals, or company from participating in joint opportunity will be allocated among any person controlling, controlled by, or transactions with the company unless them pro rata based on each under common control with the Adviser the Commission has granted an order participant’s Available Capital, up to the or its principals, and the Co-Investment permitting such transactions. In passing maximum amount proposed to be Affiliates (collectively, the ‘‘Holders’’) upon applications under rule 17d–1, the invested by each. The applicable own in the aggregate more than 25 Commission considers whether the Adviser will provide the Eligible percent of the outstanding voting shares company’s participation in the joint Directors of each participating of a Regulated Fund (the ‘‘Shares’’), then transaction is consistent with the Regulated Fund with information the Holders will vote such Shares as provisions, policies, and purposes of the concerning each participating party’s directed by an independent third party Act and the extent to which such Available Capital to assist the Eligible when voting on (1) the election of participation is on a basis different from Directors with their review of the directors; (2) the removal of one or more or less advantageous than that of other Regulated Fund’s investments for directors; or (3) any other matter under participants. compliance with these allocation either the Act or applicable state law 3. Applicants state that in the absence procedures. affecting the Board’s composition, size of the requested relief, the Regulated (c) After making the determinations or manner of election. Applicants Funds would be, in some required in conditions 1 and 2(a), the believe that this condition will ensure circumstances, limited in their ability to applicable Adviser will distribute that the Independent Directors will act participate in attractive and appropriate written information concerning the independently in evaluating the Co- investment opportunities. Applicants Potential Co-Investment Transaction, Investment Program, because the ability believe that the proposed terms and including the amount proposed to be of the Adviser or its principals to conditions will ensure that the Co- invested by each Regulated Fund and influence the Independent Directors by Investment Transactions are consistent each Co-Investment Affiliate to the a suggestion, explicit or implied, that with the protection of each Regulated Eligible Directors of each participating the Independent Directors can be Fund’s shareholders and with the Regulated Fund for their consideration. removed will be limited significantly. purposes intended by the policies and A Regulated Fund will co-invest with The Independent Directors shall provisions of the Act. Applicants state one or more other Regulated Funds and/ evaluate and approve any independent that the Regulated Funds’ participation or one or more Co-Investment Affiliates third party, taking into account its in the Co-Investment Transactions will only if, prior to the Regulated Fund’s participation in the Potential Co- asabaliauskas on DSK3SPTVN1PROD with NOTICES qualifications, reputation for be consistent with the provisions, independence, cost to the shareholders, policies, and purposes of the Act and on Investment Transaction, a Required and other factors that they deem a basis that is not different from or less Majority concludes that: relevant. advantageous than that of other (i) The terms of the Potential Co- participants. Investment Transaction, including the Applicants’ Legal Analysis consideration to be paid, are reasonable 1. Section 57(a)(4) of the Act prohibits Applicants’ Conditions and fair to the Regulated Fund and its certain affiliated persons of a BDC from Applicants agree that any Order of the stockholders and do not involve participating in joint transactions with Commission granting the requested overreaching in respect of the Regulated VerDate Sep<11>2014 17:18 Apr 04, 2016 Jkt 238001 PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 E:\FR\FM\05APN1.SGM 05APN1

Federal Register / Vol. 81, No. 65 / Tuesday, April 5, 2016 / Notices 19659 Fund or its stockholders on the part of parties to the Co-Investment Transaction of the proposed Disposition any person concerned; Transaction, or (D) in the case of fees or at the earliest practical time; and (ii) the Potential Co-Investment other compensation described in (ii) formulate a recommendation as to Transaction is consistent with: condition 2(c)(iii)(C). participation by each Regulated Fund in (A) the interests of the Regulated 3. Each Regulated Fund has the right the Disposition. Fund’s stockholders; and to decline to participate in any Potential (b) Each Regulated Fund will have the (B) the Regulated Fund’s then-current Co-Investment Transaction or to invest right to participate in such Disposition Objectives and Strategies; less than the amount proposed. on a proportionate basis, at the same (iii) the investment by the other 4. The applicable Adviser will present price and on the same terms and Regulated Funds or any Co-Investment to the Board of each Regulated Fund, on conditions as those applicable to any Affiliates would not disadvantage the a quarterly basis, a record of all participating Co-Investment Affiliates Regulated Fund, and participation by investments in Potential Co-Investment and any other Regulated Funds. the Regulated Fund would not be on a Transactions made by any of the other (c) A Regulated Fund may participate basis different from or less advantageous Regulated Funds and Co-Investment in such Disposition without obtaining than that of any other Regulated Fund Affiliates during the preceding quarter prior approval of the Required Majority or Co-Investment Affiliate; provided that fell within the Regulated Fund’s if: (i) The proposed participation of each that, if any other Regulated Fund or Co- then-current Objectives and Strategies Co-Investment Affiliate and Regulated Investment Affiliate, but not the that were not made available to the Fund in such Disposition is Regulated Fund itself, gains the right to Regulated Fund, and an explanation of proportionate to its outstanding nominate a director for election to a why the investment opportunities were investments in the issuer immediately portfolio company’s board of directors not offered to the Regulated Fund. All preceding the Disposition; (ii) the Board or the right to have a board observer or information presented to the Board of the Regulated Fund has approved as any similar right to participate in the pursuant to this condition will be kept being in the best interests of the governance or management of the for the life of the Regulated Fund and Regulated Fund the ability to participate portfolio company, such event shall not at least two years thereafter, and will be in such Dispositions on a pro rata basis be interpreted to prohibit the Required subject to examination by the (as described in greater detail in the Majority from reaching the conclusions Commission and its staff. application); and (iii) the Board of the required by this condition 2(c)(iii), if: 5. Except for Follow-On Investments Regulated Fund is provided on a (A) the Eligible Directors will have the quarterly basis with a list of all made in accordance with condition 8 right to ratify the selection of such Dispositions made in accordance with below,11 a Regulated Fund will not director or board observer, if any; this condition. In all other cases, the (B) the Adviser agrees to, and does, invest in reliance on the Order in any issuer in which another Regulated applicable Adviser will provide its provide periodic reports to the Board of written recommendation as to the the Regulated Fund with respect to the Fund, Co-Investment Affiliate, or any affiliated person of another Regulated Regulated Fund’s participation to the actions of such director or the Regulated Fund’s Eligible Directors, and information received by such board Fund or Co-Investment Affiliate is an existing investor. the Regulated Fund will participate in observer or obtained through the such Disposition solely to the extent 6. A Regulated Fund will not exercise of any similar right to that a Required Majority determines that participate in any Potential Co- participate in the governance or it is in the Regulated Fund’s best Investment Transaction unless the management of the portfolio company; interests. terms, conditions, price, class of and (d) Each Co-Investment Affiliate and (C) any fees or other compensation securities to be purchased, settlement date, and registration rights will be the each Regulated Fund will bear its own that any other Regulated Fund, or any expenses in connection with any such Co-Investment Affiliate, or any affiliated same for each participating Regulated Fund and Co-Investment Affiliate. The Disposition. person of either receives in connection 8. (a) If any Co-Investment Affiliate or with the right of any other Regulated grant to a Co-Investment Affiliate or any Regulated Fund desires to make a Fund or a Co-Investment Affiliate to another Regulated Fund, but not the Follow-On Investment in a portfolio nominate a director or appoint a board Regulated Fund, of the right to nominate company whose securities were observer or otherwise to participate in a director for election to a portfolio acquired in a Co-Investment the governance or management of the company’s board of directors, the right Transaction, the applicable Advisers portfolio company will be shared to have an observer on the board of will: proportionately among the participating directors or similar rights to participate (i) Notify each Regulated Fund that Co-Investment Affiliates (which each in the governance or management of the participated in the Co-Investment may, in turn, share its portion with its portfolio company will not be Transaction of the proposed transaction affiliated persons) and the participating interpreted so as to violate this at the earliest practical time; and Regulated Funds in accordance with the condition 6, if conditions 2(c)(iii)(A), (B) (ii) formulate a recommendation as to amount of each party’s investment; and and (C) are met. the proposed participation, including (iv) the proposed investment by the 7. (a) If any Co-Investment Affiliate or the amount of the proposed Follow-On Regulated Fund will not benefit the any Regulated Fund elects to sell, Investment, by each Regulated Fund. Advisers, the Co-Investment Affiliates, exchange or otherwise dispose of an (b) A Regulated Fund may participate the other Regulated Funds or any interest in a security that was acquired in such Follow-On Investment without asabaliauskas on DSK3SPTVN1PROD with NOTICES affiliated person of any of them (other in a Co-Investment Transaction, the obtaining prior approval of the Required than the parties to the Co-Investment applicable Advisers will: Majority if: (i) The proposed Transaction), except (A) to the extent (i) Notify each Regulated Fund that participation of each Co-Investment permitted by condition 13, (B) to the participated in the Co-Investment Affiliate and each Regulated Fund in extent permitted by sections 17(e) or 11 This exception applies only to Follow-On such investment is proportionate to its 57(k) of the Act, as applicable, (C) Investments by a Regulated Fund in issuers in outstanding investments in the issuer indirectly, as a result of an interest in which that Regulated Fund already holds immediately preceding the Follow-On the securities issued by one of the investments. Investment; (ii) the Board of the VerDate Sep<11>2014 17:18 Apr 04, 2016 Jkt 238001 PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 E:\FR\FM\05APN1.SGM 05APN1

19660 Federal Register / Vol. 81, No. 65 / Tuesday, April 5, 2016 / Notices Regulated Fund has approved as being and existing Co-Investment or in connection with a Co-Investment in the best interests of the Regulated Transactions. Transaction (other than (a) in the case Fund the ability to participate in 10. Each Regulated Fund will of the Co-Investment Affiliates and the Follow-On Investments on a pro rata maintain the records required by section Regulated Funds, the pro rata basis (as described in greater detail in 57(f)(3) of the Act as if each of the transaction fees described above and the application); and (iii) the Board of Regulated Funds were a BDC and each fees or other compensation described in the Regulated Fund is provided on a of the investments permitted under condition 2(c)(iii)(C), and (b) in the case quarterly basis with a list of all Follow- these conditions were approved by the of the Advisers, investment advisory On Investments made in accordance Required Majority under section 57(f) of fees paid in accordance with their with this condition. In all other cases, the Act. respective investment advisory the applicable Adviser will provide its 11. No Independent Director of a agreements with the Regulated Funds written recommendation as to the Regulated Fund will also be a director, and Co-Investment Affiliates). Regulated Fund’s participation to the general partner, managing member or 14. If the Holders own in the aggregate Regulated Fund’s Eligible Directors, and principal, or otherwise an ‘‘affiliated more than 25 percent of the Shares of the Regulated Fund will participate in person’’ (as defined in the Act), of any a Regulated Fund, then the Holders will such Follow-On Investment solely to the Co-Investment Affiliate. vote such Shares as directed by an extent that a Required Majority 12. The expenses, if any, associated independent third party when voting on determines that it is in the Regulated with acquiring, holding or disposing of (1) the election of directors; (2) the Fund’s best interests. any securities acquired in a Co- removal of one or more directors; or (3) (c) If, with respect to any Follow-On Investment Transaction (including, any other matter under either the Act or Investment: without limitation, the expenses of the applicable state law affecting the (i) The amount of the Follow-On distribution of any such securities Board’s composition, size or manner of Investment is not based on the Co- registered for sale under the 1933 Act) election. Investment Affiliates’ and the Regulated will, to the extent not payable by the For the Commission, by the Division of Funds’ outstanding investments Advisers under their respective advisory Investment Management, under delegated immediately preceding the Follow-On agreements with the Co-Investment authority. Investment; and Affiliates and the Regulated Funds, be Robert W. Errett, (ii) the aggregate amount shared by the participating Co- Deputy Secretary. recommended by the applicable Adviser Investment Affiliates and the [FR Doc. 2016–07689 Filed 4–4–16; 8:45 am] to be invested by the applicable participating Regulated Funds in BILLING CODE 8011–01–P Regulated Fund in the Follow-On proportion to the relative amounts of the Investment, together with the amount securities held or being acquired or proposed to be invested by the other disposed of, as the case may be. SECURITIES AND EXCHANGE participating Regulated Funds and Co- 13. Any transaction fee 12 (including COMMISSION Investment Affiliates, collectively, in break-up or commitment fees but the same transaction, exceeds the excluding broker’s fees contemplated by Sunshine Act Meeting amount of the investment opportunity; section 17(e) or 57(k) of the Act, as applicable) received in connection with Notice is hereby given, pursuant to then the investment opportunity will be a Co-Investment Transaction will be the provisions of the Government in the allocated among them pro rata based on distributed to the participating Co- Sunshine Act, Public Law 94–409, that each participant’s Available Capital, up Investment Affiliates and Regulated the Securities and Exchange to the maximum amount proposed to be Funds on a pro rata basis based on the Commission will hold a Closed Meeting invested by each. amount they each invested or on Thursday, April 7, 2016 at 4 p.m. (d) The acquisition of Follow-On Commissioners, Counsel to the Investments as permitted by this committed, as the case may be, in such Co-Investment Transaction. If any Commissioners, the Secretary to the condition will be considered a Co- Commission, and recording secretaries Investment Transaction for all purposes transaction fee is to be held by an Adviser pending consummation of the will attend the Closed Meeting. Certain and subject to the other conditions set staff members who have an interest in forth in the application. transaction, the fee will be deposited into an account maintained by the the matters also may be present. 9. The Independent Directors of each The General Counsel of the Regulated Fund will be provided Adviser at a bank or banks having the qualifications prescribed in section Commission, or her designee, has quarterly for review all information certified that, in her opinion, one or concerning Potential Co-Investment 26(a)(1) of the Act, and the account will earn a competitive rate of interest that more of the exemptions set forth in 5 Transactions and Co-Investment U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) Transactions, including investments will also be divided pro rata among the participating Co-Investment Affiliates and 17 CFR 200.402(a)(3), (a)(5), (a)(7), made by the Co-Investment Affiliates (a)(9)(ii) and (a)(10), permit and the other Regulated Funds that the and Regulated Funds based on the amount each invests in such Co- consideration of the scheduled matter at Regulated Fund considered but declined the Closed Meeting. to participate in, so that the Investment Transaction. None of the Co- Investment Affiliates, the Regulated Commissioner Piwowar, as duty Independent Directors may determine officer, voted to consider the items whether all investments made during Funds, the Advisers nor any affiliated asabaliauskas on DSK3SPTVN1PROD with NOTICES person of the Regulated Funds or Co- listed for the Closed Meeting in closed the preceding quarter, including those session. investments that the Regulated Fund Investment Affiliates will receive The subject matter of the Closed considered but declined to participate additional compensation or Meeting will be: in, comply with the conditions of the remuneration of any kind as a result of Institution and settlement of Order. In addition, the Independent 12 Applicants are not requesting and the staff is injunctive actions; Directors will consider at least annually not providing any relief for transaction fees Institution and settlement of the continued appropriateness for the received in connection with any Co-Investment administrative proceedings; Regulated Fund of participating in new Transaction. Resolution of litigation claims; and VerDate Sep<11>2014 17:18 Apr 04, 2016 Jkt 238001 PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 E:\FR\FM\05APN1.SGM 05APN1


Document Created: 2018-02-07 13:53:51
Document Modified: 2018-02-07 13:53:51
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ``Act'') and rule 17d- 1 under the Act to permit certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
DatesFiling Dates: The application was filed on June 5, 2015 and amended on October 19, 2015, December 18, 2015, and March 18, 2016.
ContactJill Ehrlich, Senior Counsel, at (202) 551-6819 or Dalia Osman Blass, Assistant Chief Counsel, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation81 FR 19656 
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