81 FR 51523 - Bain Capital Specialty Finance, Inc., et al.; Notice of Application
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 150 (August 4, 2016)
Federal Register Volume 81, Issue 150 (August 4, 2016)
| Page Range | 51523-51527 | |
| FR Document | 2016-18467 |
[Federal Register Volume 81, Number 150 (Thursday, August 4, 2016)] [Notices] [Pages 51523-51527] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-18467] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. IC-32197; File No. 812-14575] Bain Capital Specialty Finance, Inc., et al.; Notice of Application July 29, 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. ----------------------------------------------------------------------- Summary of Application: Applicants request an order to permit business development companies (``BDCs'') to co-invest in portfolio companies with each other and with affiliated investment funds. Applicants: Bain Capital Specialty Finance, Inc. (the ``Fund''); BCSF Advisors, LP (``BCSFA''), on behalf of itself and its successors; \1\ Bain Capital Credit, LP (``Bain''), Bain Capital Credit (Australia), Pty. Ltd, Bain Capital Credit Asia, LLC, Bain Capital Credit (European Advisors), Ltd., Bain Capital Credit, Ltd. (together with BCSFA, the ``Existing Bain Advisers''), on behalf of themselves and their successors; Avery Point II CLO, Limited, Avery Point III CLO, Limited, Avery Point IV CLO, Limited, Avery Point V CLO, Limited, Avery Point VI CLO, Limited, Newhaven II CLO, Designated Activity Company, Race Point IX CLO, Limited, Race Point X CLO, Limited, Race Point V CLO, Limited, Race Point VI CLO, Limited, Race Point VII CLO, Limited, Race Point VIII CLO, Limited, Bain Capital CLO Partners, L.P., Sankaty Credit Opportunities (Offshore Master) IV, L.P., Sankaty Credit Opportunities II, L.P., Sankaty Credit Opportunities III, L.P., Sankaty Credit Opportunities IV, L.P., Bain Capital Distressed and Special Situations 2013 (AIV I), L.P., Bain Capital Distressed and Special Situations 2013 (AIV II Master), L.P., Bain Capital Distressed and Special Situations 2013 (A), L.P., Sankaty Credit Opportunities V-A2 (Master), L.P., Bain Capital Distressed and Special Situations 2013 (B), L.P., Bain Capital Direct Lending 2015 (L), L.P., SDLF (L-A), LLC, Bain Capital Direct Lending 2015 (U), L.P., Sankaty Drawbridge Opportunities, L.P., Sankaty High Income Feeder II, L.P., Sankaty High Income Feeder, Ltd., Bain Capital High Income Partnership, L.P., Bain Capital Credit Managed Account (CalPERS), L.P., Bain Capital Credit Managed Account (E), L.P., Bain Capital Credit Managed Account (Newport Mobile), L.P., Sankaty Managed Account (NZSF), L.P., Bain Capital Credit Managed Account (PSERS), L.P., Bain Capital Credit Managed Account (TCCC), L.P., Bain Capital Credit Managed Account (UCAL), L.P., Sankaty Middle Market Opportunities Fund (Offshore Master II), L.P., Sankaty Middle Market Opportunities Fund (Offshore Master), L.P., Bain Capital Middle Market Credit 2014, L.P., Sankaty Middle Market Opportunities Fund II-A (Master), L.P., Bain Capital Middle Market Credit 2014 (F), L.P., Bain Capital Middle Market Credit 2010, L.P., Bain Capital Credit Rio Grande FMC, L.P., Bain Capital Senior Loan Fund (SRI), L.P., Sankaty Senior Loan Fund Public Limited Company, Bain Capital Senior Loan Fund, L.P., Warehouse Funding Avery Point VII, LLC, Queenscliff Trust, Bain Capital Credit Managed Account (CLO), L.P., Cape Schanck Direct Lending Trust, Bain Capital Distressed and Special Situations 2016 (A), L.P., Bain Capital Distressed and Special Situations 2016 (B Master), L.P., Sankaty Credit Opportunities VI-B, L.P., Sankaty Credit Opportunities VI-EU, L.P., Sankaty Credit Opportunities VI-EU (Master), L.P., Bain Capital Distressed and Special Situations 2016 (F), L.P., Sankaty Credit Opportunities (F) Europe, L.P. (collectively, the ``Existing Affiliated Funds''). --------------------------------------------------------------------------- \1\ The term ``successor,'' as applied to each Adviser (defined below), means an entity that results from a reorganization into another jurisdiction or change in the type of business organization. --------------------------------------------------------------------------- Filing Dates: The application was filed on November 6, 2015 and amended on April 1, 2016 and July 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 August 23, 2016, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. 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 writing to the Commission's Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F St. NE., Washington, DC 20549-1090. Applicants: Ranesh Ramanathan, Esq., General Counsel, Bain Capital Credit, LP, 200 Clarendon Street, 37th Floor, Boston, MA, 02116. FOR FURTHER INFORMATION CONTACT: Elizabeth G. Miller, Senior Counsel, at (202) 551-8707 or Holly Hunter-Ceci, 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 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. The Fund is a Delaware corporation organized as a closed-end management investment company that has elected to be regulated as a BDC under Section 54(a) of the Act.\2\ The Fund's Objectives and Strategies \3\ are to provide risk- [[Page 51524]] adjusted returns and current income to investors. The Fund invests primarily in middle-market companies with between $10 million and $150 million in annual earnings before interest, taxes, depreciation and amortization. The Fund intends to focus on senior investments with a first or second lien on collateral and strong structures and documentation intended to protect the lender. --------------------------------------------------------------------------- \2\ 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. \3\ ``Objectives and Strategies'' means a Regulated Fund's investment objectives and strategies, as described in the Regulated Fund's registration statement on Form 10, other filings the Regulated Fund has made with the Commission under the Securities Act of 1933 (the ``Securities Act''), or under the Securities Exchange Act of 1934 and the Regulated Fund's reports to shareholders. --------------------------------------------------------------------------- 2. The board of directors of the Fund (the ``Board'') is comprised of five directors, three of whom are not ``interested persons,'' within the meaning of Section 2(a)(19) of the 1940 Act (the ``Non-Interested Directors''), of the Fund. 3. BCSFA is registered as an investment adviser under the Investment Advisers Act of 1940 (the ``Advisers Act''). BCSFA serves as investment adviser to the Fund. It is a wholly-owned subsidiary of Bain. 4. Bain is registered as an investment adviser under the Advisers Act. Bain serves as investment adviser to certain Existing Affiliated Funds and either it or another Adviser will serve as the investment adviser to any Future Affiliated Funds (defined below). 5. Bain Capital Credit (Australia), Pty. Ltd., an Australian proprietary company formed in 2012, is authorized and regulated by the Australian Securities and Investments Commission. It is a wholly-owned subsidiary of Bain. 6. Bain Capital Credit (European Advisors), Ltd., a United Kingdom private limited company formed in 2014, and Bain Capital Credit, Ltd., a United Kingdom private limited company formed in 2005, are authorized and regulated by the U.K. Financial Conduct Authority. They are both wholly-owned subsidiaries of Bain. 7. Bain Capital Credit Asia, LLC is a limited liability company organized in the State of Delaware in 2014 that has been registered in Hong Kong under the Hong Kong Companies Ordinance. It is a wholly-owned subsidiary of Bain. 8. As Bain Capital, LP controls Bain, and will control any other Adviser, it may be deemed to control the Regulated Funds and the Affiliated Funds. Applicants state that Bain Capital, LP is a holding company and does not currently offer investment advisory services to any person and is not expected to do so in the future. Applicants state that as a result, Bain Capital, LP has not been included as an Applicant. 9. Applicants seek an order (``Order'') to permit a Regulated Fund \4\ and one or more Regulated Funds and/or one or more Affiliated Funds \5\ 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 section 57(a)(4) and rule 17d-1 by (a) co-investing with each other in securities issued by issuers in private placement transactions in which an Adviser negotiates terms in addition to price; \6\ and (b) making additional investments in securities of such issuers, including through the exercise of warrants, conversion privileges, and other rights to purchase securities of the issuers (``Follow-On Investments''). ``Co- Investment Transaction'' means any transaction in which a Regulated Fund (or its Wholly-Owned Investment Sub, as defined below) participated together with one or more other Regulated Funds and/or one or more Affiliated Funds in reliance on the requested Order. ``Potential Co-Investment Transaction'' means any investment opportunity in which a Regulated Fund (or its Wholly-Owned Investment Sub, as defined below) could not participate together with one or more Affiliated Funds and/or one or more other Regulated Funds without obtaining and relying on the Order.\7\ --------------------------------------------------------------------------- \4\ ``Regulated Fund'' means the Fund and any Future Regulated Fund. ``Future Regulated Fund'' means any closed-end management investment company (a) that is registered under the Act or has elected to be regulated as a BDC, (b) whose investment adviser is an Adviser, and (c) that intends to participate in the Co-Investment Program. The term ``Adviser'' means BCSFA and any Existing Bain Adviser and any future investment adviser that (i) controls, is controlled by or is under common control with Bain Capital, LP, and (ii) is registered as an investment adviser under the Advisers Act and (iii) is not a Regulated Fund or a subsidiary of a Regulated Fund. \5\ ``Future Affiliated Fund'' means any entity (a) whose investment adviser is an Adviser, (b) that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act, and (c) that intends to participate in the Co-Investment Program. \6\ The term ``private placement transactions'' means transactions in which the offer and sale of securities by the issuer are exempt from registration under the Securities Act. \7\ All existing entities that currently intend to rely upon the requested Order have been named as applicants. Any other existing or future entity that subsequently relies on the Order will comply with the terms and conditions of the application. --------------------------------------------------------------------------- 10. Applicants state that a Regulated Fund may, from time to time, form one or more Wholly-Owned Investment Subs.\8\ Such a subsidiary would be prohibited from investing in a Co-Investment Transaction with any Affiliated Fund or Regulated Fund because it would be a company controlled by its parent Regulated Fund for purposes of section 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 its parent Regulated Fund and that the Wholly- Owned Investment Sub's participation in any such transaction be treated, for purposes of the requested Order, as though the parent Regulated Fund were participating directly. Applicants represent that this treatment is justified because a Wholly-Owned Investment 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 Regulated Fund's 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 Regulated Fund's 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 the 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. --------------------------------------------------------------------------- \8\ 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 Regulated Fund's Board has the sole authority to make all determinations with respect to the entity's participation under the conditions of the Application; and (iv) that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act. --------------------------------------------------------------------------- 11. When considering Potential Co-Investment Transactions for any Regulated Fund, the applicable Adviser will consider only the Objectives and Strategies, investment policies, investment positions, capital available for investment, and other pertinent factors applicable to that Regulated Fund. The Regulated Fund Advisers expect that any portfolio company that is an appropriate investment for a Regulated Fund should also be an appropriate investment for one or more other Regulated Funds and/or one or more Affiliated Funds, with certain exceptions based on available capital or diversification.\9\ --------------------------------------------------------------------------- \9\ The Regulated Funds, however, will not be obligated to invest, or co-invest, when investment opportunities are referred to them. --------------------------------------------------------------------------- 12. Other than pro rata dispositions and Follow-On Investments as provided in conditions 7 and 8, and after making [[Page 51525]] the determinations required in conditions 1 and 2(a), the Adviser will present each Potential Co-Investment Transaction and the proposed allocation to the directors of the Board eligible to vote under section 57(o) of the Act (``Eligible Directors''), and the ``required majority,'' as defined in section 57(o) of the Act (``Required Majority'') \10\ will approve each Co-Investment Transaction prior to any investment by the participating Regulated Fund. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- 13. With respect to the pro rata dispositions and Follow-On Investments provided in conditions 7 and 8, a Regulated Fund may participate in a pro rata disposition or Follow-On Investment without obtaining prior approval of the Required Majority if, among other things: (i) the proposed participation of each Regulated Fund and Affiliated Fund in such disposition is proportionate to its outstanding investments in the issuer immediately preceding the disposition or Follow-On Investment, as the case may be; and (ii) the Board of the Regulated Fund has approved that Regulated Fund's participation in pro rata dispositions and Follow-On Investments as being in the best interests of the Regulated Fund. If the Board does not so approve, any such disposition or Follow-On Investment will be submitted to the Regulated Fund's Eligible Directors. The Board of any Regulated Fund may at any time rescind, suspend or qualify its approval of pro rata dispositions and Follow-On Investments with the result that all dispositions and/or Follow-On Investments must be submitted to the Eligible Directors. 14. No Non-Interested Director of a Regulated Fund will have a financial interest in any Co-Investment Transaction, other than through share ownership in one of the Regulated Funds. Applicants' Legal Analysis: 1. Section 57(a)(4) of the Act prohibits certain affiliated persons of a BDC from participating in joint transactions with the BDC or a company controlled by a BDC in contravention of rules as prescribed by the Commission. Under section 57(b)(2) of the Act, any person who is directly or indirectly controlling, controlled by, or under common control with a BDC is subject to section 57(a)(4). Applicants submit that each of the Regulated Funds and Affiliated Funds be deemed to be a person related to each 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. 4. Applicants also represent that if the Advisers, certain employees and principals of Bain and its affiliated advisers (collectively, the ``Principals''), any person controlling, controlled by, or under common control with the Advisers or the Principals, and the Affiliated Funds (collectively, the ``Holders'') own in the aggregate more than 25 percent of the outstanding voting securities of a Regulated Fund (``Shares''), then the Holders will vote such Shares as required under Condition 14. Applicants believe that this condition will ensure that the Non-Interested Directors will act independently in evaluating the Co-Investment Program, because the ability of the Advisers or the Principals to influence the Non-Interested Directors by a suggestion, explicit or implied, that the Non-Interested Directors can be removed will be limited significantly. Applicants represent that the Non-Interested Directors will evaluate and approve any such independent party, taking into account its qualifications, reputation for independence, cost to the shareholders, and other factors that they deem relevant. Applicants' Conditions: Applicants agree that the Order will be subject to the following conditions: 1. Each time an Adviser considers a Potential Co-Investment Transaction for an Affiliated Fund or another Regulated Fund that falls within a Regulated Fund's then-current Objectives and Strategies, the Regulated Fund's Adviser will make an independent determination of the appropriateness of the investment for such Regulated Fund in light of the Regulated Fund's then-current circumstances. 2. (a) If the Adviser deems a Regulated Fund's participation in any Potential Co-Investment Transaction to be appropriate for the Regulated Fund, it will then determine an appropriate level of investment for the Regulated Fund. (b) If the aggregate amount recommended by the applicable Adviser to be invested by the applicable Regulated Fund in the Potential Co- Investment Transaction, together with the amount proposed to be invested by the other participating Regulated Funds and Affiliated Funds, collectively, in the same transaction, exceeds the amount of the investment opportunity, the investment opportunity will be allocated among them pro rata based on each participant's capital available for investment in the asset class being allocated, up to the amount proposed to be invested by each. The applicable Adviser will provide the Eligible Directors of each participating Regulated 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 participating Regulated Fund and Affiliated Fund) to the Eligible Directors of each participating Regulated Fund for their consideration. A Regulated Fund will co-invest with [[Page 51526]] one or more other Regulated Funds and/or one or more Affiliated Funds only if, prior to the Regulated Fund's participation in the Potential Co-Investment Transaction, a Required Majority concludes that: (i) the terms of the Potential Co-Investment Transaction, including the consideration to be paid, are reasonable and fair to the Regulated Fund and its shareholders and do not involve overreaching in respect of the Regulated Fund or its shareholders on the part of any person concerned; (ii) the Potential Co-Investment Transaction is consistent with: (A) the interests of the shareholders of the Regulated Fund; and (B) the Regulated Fund's then-current Objectives and Strategies; (iii) the investment by any other Regulated Funds or Affiliated Funds would not disadvantage the Regulated Fund, and participation by the Regulated Fund would not be on a basis different from or less advantageous than that of other Regulated Funds or Affiliated Funds; provided that, if any other Regulated Fund or Affiliated Fund, 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 applicable Adviser agrees to, and does, provide periodic reports to the Regulated Fund's Board with respect to the actions of such director or the information received by such board observer or obtained through the exercise of any similar right to participate in the governance or management of the portfolio company; and (C) any fees or other compensation that any Affiliated Fund or any Regulated Fund or any affiliated person of any Affiliated Fund or any Regulated Fund receives in connection with the right of an Affiliated Fund or a Regulated Fund to nominate a director or appoint a board observer or otherwise to participate in the governance or management of the portfolio company will be shared proportionately among the participating Affiliated Funds (who each may, in turn, share its portion with its affiliated persons) and the participating Regulated Funds in accordance with the amount of each party's investment; and (iv) the proposed investment by the Regulated Fund will not benefit the Advisers, the Affiliated Funds or 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 or Affiliated Funds during the preceding quarter that fell within the Regulated Fund's then-current Objectives and Strategies that were not made available to the Regulated Fund, and an explanation of why the investment opportunities were not offered to the Regulated Fund. All information presented to the Board pursuant to this condition will be kept for the life of the Regulated Fund and at least two years thereafter, and will be subject to examination by the Commission and its staff. 5. Except for Follow-On Investments made in accordance with condition 8,\11\ a Regulated Fund will not invest in reliance on the Order in any issuer in which another Regulated Fund, Affiliated Fund, or any affiliated person of another Regulated Fund or Affiliated Fund is an existing investor. --------------------------------------------------------------------------- \11\ This exception applies only to Follow-On Investments by a Regulated Fund in issuers in which that Regulated Fund already holds investments. --------------------------------------------------------------------------- 6. A Regulated Fund will not participate in any Potential Co- Investment Transaction unless the terms, conditions, price, class of securities to be purchased, settlement date, and registration rights will be the same for each participating Regulated Fund and Affiliated Fund. The grant to an Affiliated Fund or another Regulated Fund, but not the Regulated Fund, of the right to nominate a director for election to a portfolio company's board of directors, the right to have an observer on the board of directors or similar rights to participate in the governance or management of the portfolio company will not be interpreted so as to violate this condition 6, if conditions 2(c)(iii)(A), (B) and (C) are met. 7. (a) If any Affiliated Fund or any Regulated Fund elects to sell, exchange or otherwise dispose of an interest in a security that was acquired in a Co-Investment Transaction, the applicable 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 the participating Affiliated Funds and any other Regulated Fund. (c) A Regulated Fund may participate in such disposition without obtaining prior approval of the Required Majority if: (i) The proposed participation of each Regulated Fund and each Affiliated Fund in such disposition is proportionate to its outstanding investments in the issuer immediately preceding the disposition; (ii) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in such dispositions on a pro rata basis (as described in greater detail in the application); and (iii) the Board of the Regulated Fund is provided on a quarterly basis with a list of all dispositions made in accordance with this condition. In all other cases, the Adviser will provide its written recommendation as to the Regulated Fund's participation to the Eligible 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 Affiliated Fund and each Regulated Fund will bear its own expenses in connection with any such disposition. 8. (a) If any Affiliated Fund 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 [[Page 51527]] the amount of the proposed Follow-On Investment, by each Regulated Fund. (b) A Regulated Fund may participate in such Follow-On Investment without obtaining prior approval of the Required Majority if: (i) The proposed participation of each Regulated Fund and each Affiliated Fund in such investment is proportionate to its outstanding investments in the issuer immediately preceding the Follow-On Investment; and (ii) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in Follow-On Investments on a pro rata basis (as described in greater detail in the application). In all other cases, the Adviser will provide its written recommendation as to the Regulated Fund's participation to the Eligible 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 opportunity is not based on the Regulated Funds' and the Affiliated Funds' outstanding investments immediately preceding the Follow-On Investment; and (ii) the aggregate amount recommended by the Adviser to be invested by each Regulated Fund 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 participant'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 Non-Interested 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 other Regulated Funds or Affiliated Funds that the Regulated Fund considered but declined to participate in, so that the Non-Interested 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 Non-Interested 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 Non-Interested 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 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 the Advisers under their respective investment advisory agreements with Affiliated Funds and the Regulated Funds, be shared by the Regulated Funds and the Affiliated Funds in proportion to the relative amounts of the securities held or to be acquired or disposed of, as the case may be. 13. Any transaction fee \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 Regulated Funds and Affiliated Funds on a pro rata basis based on the amounts they invested or committed, as the case may be, in such Co-Investment Transaction. If any transaction fee is to be held by an Adviser pending consummation of the transaction, the fee will be deposited into an account maintained by such Adviser at a bank or banks having the qualifications prescribed in section 26(a)(1) of the Act, and the account will earn a competitive rate of interest that will also be divided pro rata among the participating Regulated Funds and Affiliated Funds based on the amounts they invest in such Co-Investment Transaction. None of the Affiliated Funds, the Advisers, the other Regulated Funds or any affiliated person of the Regulated Funds or Affiliated Funds will receive additional compensation or remuneration of any kind as a result of or in connection with a Co-Investment Transaction (other than (a) in the case of the Regulated Funds and the Affiliated Funds, the pro rata transaction fees described above and fees or other compensation described in condition 2(c)(iii)(C); and (b) in the case of an Adviser, investment advisory fees paid in accordance with the agreement between the Adviser and the Regulated Fund or Affiliated Fund. --------------------------------------------------------------------------- \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. 2016-18467 Filed 8-3-16; 8:45 am] BILLING CODE 8011-01-P
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Applicant states that at a meeting on CLO, Limited, Avery Point IV CLO, (F) Europe, L.P. (collectively, the
February 27, 2016 its Board of Trustees Limited, Avery Point V CLO, Limited, ‘‘Existing Affiliated Funds’’).
determined that it was in the best Avery Point VI CLO, Limited, Filing Dates: The application was
interests of applicant to seek an order Newhaven II CLO, Designated Activity filed on November 6, 2015 and amended
declaring that it has ceased to be an Company, Race Point IX CLO, Limited, on April 1, 2016 and July 18, 2016.
investment company. Applicant states Race Point X CLO, Limited, Race Point Hearing or Notification of Hearing: An
that it is an instrumentality of the State V CLO, Limited, Race Point VI CLO, order granting the requested relief will
of Iowa. Applicant further states that if Limited, Race Point VII CLO, Limited, be issued unless the Commission orders
an order for deregistration is granted it Race Point VIII CLO, Limited, Bain a hearing. Interested persons may
will continue to operate in reliance on Capital CLO Partners, L.P., Sankaty request a hearing by writing to the
the Section 2(b) exemption from Credit Opportunities (Offshore Master) Commission’s Secretary and serving
registration under the Act. IV, L.P., Sankaty Credit Opportunities II, applicants with a copy of the request,
Filing Date: The application was filed L.P., Sankaty Credit Opportunities III, personally or by mail. Hearing requests
on July 21, 2016. L.P., Sankaty Credit Opportunities IV, should be received by the Commission
Applicant’s Address: 1415 28th L.P., Bain Capital Distressed and Special by 5:30 p.m. on August 23, 2016, and
Street, Suite 200, West Des Moines, Situations 2013 (AIV I), L.P., Bain should be accompanied by proof of
Iowa 50266. Capital Distressed and Special service on applicants, in the form of an
For the Commission, by the Division of Situations 2013 (AIV II Master), L.P., affidavit or, for lawyers, a certificate of
Investment Management, pursuant to Bain Capital Distressed and Special service. Hearing requests should state
delegated authority. Situations 2013 (A), L.P., Sankaty Credit the nature of the writer’s interest, the
Robert W. Errett, Opportunities V–A2 (Master), L.P., Bain reason for the request, and the issues
Deputy Secretary. Capital Distressed and Special contested. Persons who wish to be
[FR Doc. 2016–18468 Filed 8–3–16; 8:45 am] Situations 2013 (B), L.P., Bain Capital notified of a hearing may request
BILLING CODE 8011–01–P Direct Lending 2015 (L), L.P., SDLF (L– notification by writing to the
A), LLC, Bain Capital Direct Lending Commission’s Secretary.
2015 (U), L.P., Sankaty Drawbridge ADDRESSES: Secretary, U.S. Securities
SECURITIES AND EXCHANGE Opportunities, L.P., Sankaty High and Exchange Commission, 100 F St.
COMMISSION Income Feeder II, L.P., Sankaty High NE., Washington, DC 20549–1090.
[Release No. IC–32197; File No. 812–14575] Income Feeder, Ltd., Bain Capital High Applicants: Ranesh Ramanathan, Esq.,
Income Partnership, L.P., Bain Capital General Counsel, Bain Capital Credit,
Bain Capital Specialty Finance, Inc., et Credit Managed Account (CalPERS), LP, 200 Clarendon Street, 37th Floor,
al.; Notice of Application L.P., Bain Capital Credit Managed Boston, MA, 02116.
Account (E), L.P., Bain Capital Credit FOR FURTHER INFORMATION CONTACT:
July 29, 2016.
Managed Account (Newport Mobile), Elizabeth G. Miller, Senior Counsel, at
AGENCY: Securities and Exchange (202) 551–8707 or Holly Hunter-Ceci,
L.P., Sankaty Managed Account (NZSF),
Commission (‘‘Commission’’). Branch Chief, at (202) 551–6825 (Chief
L.P., Bain Capital Credit Managed
ACTION: Notice of application for an Account (PSERS), L.P., Bain Capital Counsel’s Office, Division of Investment
order under sections 17(d) and 57(i) of Credit Managed Account (TCCC), L.P., Management).
the Investment Company Act of 1940 Bain Capital Credit Managed Account SUPPLEMENTARY INFORMATION: The
(the ‘‘Act’’) and rule 17d–1 under the (UCAL), L.P., Sankaty Middle Market following is a summary of the
Act to permit certain joint transactions Opportunities Fund (Offshore Master II), application. The complete application
otherwise prohibited by sections 17(d) L.P., Sankaty Middle Market may be obtained via the Commission’s
and 57(a)(4) of the Act and rule 17d–1 Web site by searching for the file
Opportunities Fund (Offshore Master),
under the Act. number, or for an applicant using the
L.P., Bain Capital Middle Market Credit
Summary of Application: Applicants 2014, L.P., Sankaty Middle Market Company name box, at http://
request an order to permit business Opportunities Fund II–A (Master), L.P., www.sec.gov/search/search.htm or by
development companies (‘‘BDCs’’) to co- Bain Capital Middle Market Credit 2014 calling (202) 551–8090.
invest in portfolio companies with each (F), L.P., Bain Capital Middle Market Applicants’ Representations:
other and with affiliated investment Credit 2010, L.P., Bain Capital Credit 1. The Fund is a Delaware corporation
funds. Rio Grande FMC, L.P., Bain Capital organized as a closed-end management
Applicants: Bain Capital Specialty Senior Loan Fund (SRI), L.P., Sankaty investment company that has elected to
Finance, Inc. (the ‘‘Fund’’); BCSF Senior Loan Fund Public Limited be regulated as a BDC under Section
Advisors, LP (‘‘BCSFA’’), on behalf of Company, Bain Capital Senior Loan 54(a) of the Act.2 The Fund’s Objectives
itself and its successors; 1 Bain Capital Fund, L.P., Warehouse Funding Avery and Strategies 3 are to provide risk-
Credit, LP (‘‘Bain’’), Bain Capital Credit Point VII, LLC, Queenscliff Trust, Bain
2 Section 2(a)(48) defines a BDC to be any closed-
(Australia), Pty. Ltd, Bain Capital Credit Capital Credit Managed Account (CLO),
end investment company that operates for the
Asia, LLC, Bain Capital Credit L.P., Cape Schanck Direct Lending purpose of making investments in securities
(European Advisors), Ltd., Bain Capital Trust, Bain Capital Distressed and described in sections 55(a)(1) through 55(a)(3) of the
Credit, Ltd. (together with BCSFA, the Special Situations 2016 (A), L.P., Bain Act and makes available significant managerial
‘‘Existing Bain Advisers’’), on behalf of Capital Distressed and Special assistance with respect to the issuers of such
sradovich on DSK3GMQ082PROD with NOTICES
securities.
themselves and their successors; Avery Situations 2016 (B Master), L.P., 3 ‘‘Objectives and Strategies’’ means a Regulated
Point II CLO, Limited, Avery Point III Sankaty Credit Opportunities VI–B, L.P., Fund’s investment objectives and strategies, as
Sankaty Credit Opportunities VI–EU, described in the Regulated Fund’s registration
1 The term ‘‘successor,’’ as applied to each statement on Form 10, other filings the Regulated
L.P., Sankaty Credit Opportunities VI–
Adviser (defined below), means an entity that Fund has made with the Commission under the
results from a reorganization into another
EU (Master), L.P., Bain Capital Securities Act of 1933 (the ‘‘Securities Act’’), or
jurisdiction or change in the type of business Distressed and Special Situations 2016 under the Securities Exchange Act of 1934 and the
organization. (F), L.P., Sankaty Credit Opportunities Regulated Fund’s reports to shareholders.
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![Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Notices 51527
the amount of the proposed Follow-On the Non-Interested Directors will remuneration of any kind as a result of
Investment, by each Regulated Fund. consider at least annually the continued or in connection with a Co-Investment
(b) A Regulated Fund may participate appropriateness for the Regulated Fund Transaction (other than (a) in the case
in such Follow-On Investment without of participating in new and existing Co- of the Regulated Funds and the
obtaining prior approval of the Required Investment Transactions. Affiliated Funds, the pro rata
Majority if: (i) The proposed 10. Each Regulated Fund will transaction fees described above and
participation of each Regulated Fund maintain the records required by section fees or other compensation described in
and each Affiliated Fund in such 57(f)(3) of the Act as if each of the condition 2(c)(iii)(C); and (b) in the case
investment is proportionate to its Regulated Funds were a BDC and each of an Adviser, investment advisory fees
outstanding investments in the issuer of the investments permitted under paid in accordance with the agreement
immediately preceding the Follow-On these conditions were approved by the between the Adviser and the Regulated
Investment; and (ii) the Board of the Required Majority under section 57(f) of Fund or Affiliated Fund.
Regulated Fund has approved as being the Act. 14. If the Holders own in the aggregate
in the best interests of the Regulated 11. No Non-Interested Director of a more than 25 percent of the Shares of
Fund the ability to participate in Regulated Fund will also be a director, a Regulated Fund, then the Holders will
Follow-On Investments on a pro rata general partner, managing member or vote such Shares as directed by an
basis (as described in greater detail in principal, or otherwise an ‘‘affiliated independent third party when voting on
the application). In all other cases, the person’’ (as defined in the Act), of an (1) the election of directors; (2) the
Adviser will provide its written Affiliated Fund. removal of one or more directors; or (3)
recommendation as to the Regulated 12. The expenses, if any, associated any other matter under either the Act or
Fund’s participation to the Eligible with acquiring, holding or disposing of applicable State law affecting the
Directors, and the Regulated Fund will any securities acquired in a Co- Board’s composition, size or manner of
participate in such Follow-On Investment Transaction (including, election.
Investment solely to the extent that a without limitation, the expenses of the For the Commission, by the Division of
Required Majority determines that it is distribution of any such securities Investment Management, under delegated
in the Regulated Fund’s best interests. registered for sale under the Securities authority.
(c) If, with respect to any Follow-On Act) will, to the extent not payable by Robert W. Errett,
Investment: the Advisers under their respective
(i) The amount of the opportunity is Deputy Secretary.
investment advisory agreements with
not based on the Regulated Funds’ and Affiliated Funds and the Regulated
[FR Doc. 2016–18467 Filed 8–3–16; 8:45 am]
the Affiliated Funds’ outstanding Funds, be shared by the Regulated BILLING CODE 8011–01–P
investments immediately preceding the Funds and the Affiliated Funds in
Follow-On Investment; and proportion to the relative amounts of the
(ii) the aggregate amount SECURITIES AND EXCHANGE
securities held or to be acquired or COMMISSION
recommended by the Adviser to be
disposed of, as the case may be.
invested by each Regulated Fund in the [Release No. 34–78441; File No. 4–698]
13. Any transaction fee 12 (including
Follow-On Investment, together with
break-up or commitment fees but
the amount proposed to be invested by Joint Industry Plan; Notice of
excluding broker’s fees contemplated by
the participating Affiliated Funds in the Designation of Longer Period for
section 17(e) or 57(k) of the Act, as
same transaction, exceeds the amount of Commission Action on the Proposed
applicable) received in connection with
the opportunity; then the amount National Market System Plan
a Co-Investment Transaction will be
invested by each such party will be Governing the Consolidated Audit Trail
distributed to the participating
allocated among them pro rata based on by BATS Exchange, Inc., BATS–Y
Regulated Funds and Affiliated Funds
each participant’s capital available for Exchange, Inc., BOX Options
on a pro rata basis based on the amounts
investment in the asset class being Exchange LLC, C2 Options Exchange,
they invested or committed, as the case
allocated, up to the amount proposed to Incorporated, Chicago Board Options
may be, in such Co-Investment
be invested by each. Exchange, Incorporated, Chicago
(d) The acquisition of Follow-On Transaction. If any transaction fee is to
be held by an Adviser pending Stock Exchange, Inc., EDGA
Investments as permitted by this Exchange, Inc., EDGX Exchange, Inc.,
condition will be considered a Co- consummation of the transaction, the
fee will be deposited into an account Financial Industry Regulatory
Investment Transaction for all purposes Authority, Inc., International Securities
and subject to the other conditions set maintained by such Adviser at a bank or
banks having the qualifications Exchange, LLC, the Investors’
forth in the application. Exchange, LLC, ISE Gemini, LLC, ISE
9. The Non-Interested Directors of prescribed in section 26(a)(1) of the Act,
and the account will earn a competitive Mercury, LLC, Miami International
each Regulated Fund will be provided Securities Exchange LLC, NASDAQ
quarterly for review all information rate of interest that will also be divided
pro rata among the participating OMX BX, Inc., NASDAQ OMX PHLX
concerning Potential Co-Investment LLC, The NASDAQ Stock Market LLC,
Transactions and Co-Investment Regulated Funds and Affiliated Funds
based on the amounts they invest in National Stock Exchange, Inc., New
Transactions, including investments York Stock Exchange LLC, NYSE MKT
made by other Regulated Funds or such Co-Investment Transaction. None
of the Affiliated Funds, the Advisers, LLC, and NYSE Arca, Inc.
Affiliated Funds that the Regulated
Fund considered but declined to the other Regulated Funds or any July 29, 2016.
sradovich on DSK3GMQ082PROD with NOTICES
participate in, so that the Non-Interested affiliated person of the Regulated Funds On February 27, 2015, BATS
Directors may determine whether all or Affiliated Funds will receive Exchange, Inc., BATS–Y Exchange, Inc.,
investments made during the preceding additional compensation or BOX Options Exchange LLC, C2 Options
quarter, including those investments 12 Applicants are not requesting and the staff is
Exchange, Incorporated, Chicago Board
that the Regulated Fund considered but not providing any relief for transaction fees
Options Exchange, Incorporated,
declined to participate in, comply with received in connection with any Co-Investment Chicago Stock Exchange, Inc., EDGA
the conditions of the Order. In addition, Transaction. Exchange, Inc., EDGX Exchange, Inc.,
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Document Created: 2016-08-04 02:53:35
Document Modified: 2016-08-04 02:53:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| 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. | |
| Dates | The application was filed on November 6, 2015 and amended on April 1, 2016 and July 18, 2016. | |
| Contact | Elizabeth G. Miller, Senior Counsel, at (202) 551-8707 or Holly Hunter-Ceci, Branch Chief, at (202) 551-6825 (Chief Counsel's Office, Division of Investment Management). | |
| FR Citation | 81 FR 51523 |
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