82_FR_29034 82 FR 28913 - 1889 BDC, Inc., et al.; Notice of Application

82 FR 28913 - 1889 BDC, Inc., et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 121 (June 26, 2017)

Page Range28913-28917
FR Document2017-13263

Federal Register, Volume 82 Issue 121 (Monday, June 26, 2017) 
[Federal Register Volume 82, Number 121 (Monday, June 26, 2017)]
[Notices]
[Pages 28913-28917]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-13263]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 32687; 812-14682]


1889 BDC, Inc., et al.; Notice of Application

June 21, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    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:  1889 BDC, Inc. (the ``Fund''), 1889 Adviser, LLC (the 
``BDC Adviser''), on behalf of itself and its successors,\1\ Angelo 
Gordon & Co., L.P., (the ``Existing Affiliated Adviser''), on behalf of 
itself and its successors, AG Diversified Credit Strategies Master, 
L.P., AG Diversified Income Master Fund, L.P., AG Super Fund, L.P., AG 
Super Fund International Partners, L.P., AG Direct Lending Fund, L.P., 
AG DLI Investments, L.P., AG GTDL Fund, L.P., AG KFHDL Fund, L.P., AG 
Mountain Laurel Direct Lending Fund, L.P., AG Centre Street 
Partnership, L.P., AG Direct Lending Fund II, L.P., AG Direct Lending 
Fund II (Unlevered), L.P., AG DLI Investments II, L.P., AG DLI 
Investments II (Unlevered), L.P., and AG GTDL Fund II, L.P. 
(collectively, the ``Existing Affiliated Funds'').
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    \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 August 5, 2016 and amended 
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on December 12, 2016, April 21, 2017 and May 11, 2017.

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 July 17, 2017, 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: 245 Park Avenue, 26th 
Floor, New York, NY 10167.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at 
(202) 551-6817 or David J. Marcinkus, Branch Chief, at (202) 551-6821 
(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 generate consistent absolute returns through cash coupons, 
fees and when available equity co-investments, while minimizing the 
risk of loss and to generate consistent absolute returns. The Fund 
invests in senior secured debt second lien loans mezzanine loans, 
senior secured stretch and unitranche facilities as well as, to a 
lesser extent, equity co-investments. The board of directors of the 
Fund (the ``Board'') is comprised of 4 directors, 3 of whom are not 
``interested persons,'' within the meaning of Section 2(a)(19) of the 
1940 Act (the ``Independent Directors''), of the Fund.
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    \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 N-2, 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.
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    2. The BDC Adviser is a Delaware limited liability company which 
will be registered with the Commission as an investment adviser under 
the Investment Advisers Act of 1940 (the ``Advisers Act'') prior to 
commencement of operations of the Fund. The BDC Adviser serves as 
investment adviser to the Fund and is a wholly-owned subsidiary of the 
Existing Affiliated Adviser.
    3. Each Existing Affiliated Fund is an entity that would be an 
investment company but for section 3(c)(1) or 3(c)(7) of the Act. The 
Existing Affiliated Funds pursue strategies focused on investing in a 
variety of fixed income and credit investments.

[[Page 28914]]

    4. The Existing Affiliated Adviser is a Delaware limited 
partnership and is registered as an investment adviser under the 
Advisers Act. The Existing Affiliated Adviser serves as investment 
adviser to each of the Existing Affiliated Funds.
    5. 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 co-invest with each other in securities issued by issuers in 
private placement transactions in which the Adviser to the Regulated 
Fund negotiates terms in addition to price; \6\ and (b) make 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'') 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 and the rules under the 1940 Act. The term ``Co-
Investment Transaction'' means any transaction in which a Regulated 
Fund (or its Wholly-Owned Investment Subsidiary, as defined below) 
participate 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 Subsidiary, as defined 
below) could not participate together with one or more other Regulated 
Funds and/or one or more other Affiliated Funds without obtaining and 
relying on the Order.\7\
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    \4\ The term ``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 the BDC Adviser, the Existing 
Affiliated Adviser and any future investment adviser that (i) 
controls, is controlled by, or is under common control with the 
Existing Affiliated Adviser and (ii) is registered as an investment 
adviser under the Advisers Act.
    \5\ ``Affiliated Fund'' means the Existing Affiliated Funds and 
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 1940 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.
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    6. Applicants state that a Regulated Fund may, from time to time, 
form a Wholly-Owned Investment Subsidiary.\8\ Such a subsidiary would 
be prohibited from investing in a Co-Investment Transaction with any 
other Regulated Fund or Affiliated 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 Subsidiary be permitted to participate in Co-Investment 
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Subsidiary's participation in any such transaction be 
treated, for purposes of the requested Order, as though the parent 
Regulated Fund were participating directly. Applicants represent that 
this treatment is justified because a Wholly-Owned Investment 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.
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    \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.
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    7. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the 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 Adviser expects 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\
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    \9\ The Regulated Funds, however, will not be obligated to 
invest, or co-invest, when investment opportunities are referred to 
them.
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    8. Other than pro rata dispositions and Follow-On Investments as 
provided in conditions 7 and 8, and after making the determinations 
required in conditions 1 and 2(a), the 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.
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    \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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    9. 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.
    10. No Independent Director of a Regulated Fund will have a direct 
or indirect financial interest in any Co-Investment Transaction, other 
than indirectly through share ownership in one of the Regulated Funds.
    11. Applicants also represent that if the Advisers or its principal 
owners (``Principals'') or any person controlling, controlled by, or 
under common control with the Advisers or the Principals, and

[[Page 28915]]

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 Independent Directors will act independently in 
evaluating the Co-Investment Program, because the ability of the 
Advisers or the Principals to influence the Independent Directors by a 
suggestion, explicit or implied, that the Independent Directors can be 
removed will be limited significantly. Applicants represent that the 
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' 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.

Applicants' Conditions

    Applicants agree that any order granting the requested relief 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 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

[[Page 28916]]

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.
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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 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 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

[[Page 28917]]

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.
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    \12\ Applicants are not requesting and the staff is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    14. If the Holders own in the aggregate more than 25 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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-13263 Filed 6-23-17; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices 28913 disqualifying events before September Investment Company Act of 1940 (the FOR FURTHER INFORMATION CONTACT: 23, 2013. Of those 19,908 respondents, ‘‘Act’’) and rule 17d–1 under the Act to Bruce R. MacNeil, Senior Counsel, at we estimate that 220 respondents with permit certain joint transactions (202) 551–6817 or David J. Marcinkus, disqualifying events will spend ten otherwise prohibited by sections 17(d) Branch Chief, at (202) 551–6821 (Chief hours to prepare a disclosure statement and 57(a)(4) of the Act and rule 17d–1 Counsel’s Office, Division of Investment describing the matters that would have under the Act. Management). triggered disqualification under SUMMARY OF APPLICATION: Applicants SUPPLEMENTARY INFORMATION: The 506(d)(1) of Regulation D, except that request an order to permit business following is a summary of the these disqualifying events occurred development companies (‘‘BDCs’’) to co- application. The complete application before September 23, 2013, the effective invest in portfolio companies with each may be obtained via the Commission’s date of the Rule 506 amendments. An other and with affiliated investment Web site by searching for the file estimated 2,200 burden hours are funds. number, or for an applicant using the attributed to the 220 respondents with APPLICANTS: 1889 BDC, Inc. (the Company name box, at http:// disqualifying events in addition to the ‘‘Fund’’), 1889 Adviser, LLC (the ‘‘BDC www.sec.gov/search/search.htm or by 19,908 burden hours associated with the Adviser’’), on behalf of itself and its calling (202) 551–8090. one-hour factual inquiry. In sum, the successors,1 Angelo Gordon & Co., L.P., Applicants’ Representations total annual increase in paperwork (the ‘‘Existing Affiliated Adviser’’), on burden for all affected respondents to 1. The Fund is a Delaware corporation behalf of itself and its successors, AG organized as a closed-end management comply with the Rule 506(e) disclosure Diversified Credit Strategies Master, statement is estimated to be investment company that has elected to L.P., AG Diversified Income Master be regulated as a BDC under Section approximately 22,108 hours of company Fund, L.P., AG Super Fund, L.P., AG personnel time. 54(a) of the Act.2 The Fund’s Objectives Super Fund International Partners, L.P., and Strategies 3 are to generate An agency may not conduct or AG Direct Lending Fund, L.P., AG DLI sponsor, and a person is not required to consistent absolute returns through cash Investments, L.P., AG GTDL Fund, L.P., coupons, fees and when available equity respond to, a collection of information AG KFHDL Fund, L.P., AG Mountain unless it displays a currently valid co-investments, while minimizing the Laurel Direct Lending Fund, L.P., AG risk of loss and to generate consistent control number. Centre Street Partnership, L.P., AG The public may view the background absolute returns. The Fund invests in Direct Lending Fund II, L.P., AG Direct senior secured debt second lien loans documentation for this information Lending Fund II (Unlevered), L.P., AG mezzanine loans, senior secured stretch collection at the following Web site, DLI Investments II, L.P., AG DLI and unitranche facilities as well as, to www.reginfo.gov. Comments should be Investments II (Unlevered), L.P., and AG a lesser extent, equity co-investments. directed to: (i) Desk Officer for the GTDL Fund II, L.P. (collectively, the The board of directors of the Fund (the Securities and Exchange Commission, ‘‘Existing Affiliated Funds’’). ‘‘Board’’) is comprised of 4 directors, 3 Office of Information and Regulatory Affairs, Office of Management and FILING DATES: The application was filed of whom are not ‘‘interested persons,’’ Budget, Room 10102, New Executive on August 5, 2016 and amended on within the meaning of Section 2(a)(19) Office Building, Washington, DC 20503, December 12, 2016, April 21, 2017 and of the 1940 Act (the ‘‘Independent or by sending an email to: Shagufta_ May 11, 2017. Directors’’), of the Fund. Ahmed@omb.eop.gov; and (ii) Pamela HEARING OR NOTIFICATION OF HEARING: 2. The BDC Adviser is a Delaware Dyson, Director/Chief Information An order granting the requested relief limited liability company which will be Officer, Securities and Exchange will be issued unless the Commission registered with the Commission as an Commission, c/o Remi Pavlik-Simon, orders a hearing. Interested persons may investment adviser under the 100 F Street NE., Washington, DC 20549 request a hearing by writing to the Investment Advisers Act of 1940 (the Commission’s Secretary and serving ‘‘Advisers Act’’) prior to commencement or send an email to: PRA_Mailbox@ applicants with a copy of the request, of operations of the Fund. The BDC sec.gov. Comments must be submitted to OMB personally or by mail. Hearing requests Adviser serves as investment adviser to should be received by the Commission the Fund and is a wholly-owned within 30 days of this notice. by 5:30 p.m. on July 17, 2017, and subsidiary of the Existing Affiliated Dated: June 19, 2017. Adviser. should be accompanied by proof of Eduardo A. Aleman, 3. Each Existing Affiliated Fund is an service on applicants, in the form of an Assistant Secretary. entity that would be an investment affidavit or, for lawyers, a certificate of [FR Doc. 2017–13227 Filed 6–23–17; 8:45 am] company but for section 3(c)(1) or service. Hearing requests should state 3(c)(7) of the Act. The Existing BILLING CODE 8011–01–P the nature of the writer’s interest, the Affiliated Funds pursue strategies reason for the request, and the issues focused on investing in a variety of contested. Persons who wish to be SECURITIES AND EXCHANGE fixed income and credit investments. notified of a hearing may request COMMISSION notification by writing to the 2 Section 2(a)(48) defines a BDC to be any closed- [Release No. 32687; 812–14682] Commission’s Secretary. end investment company that operates for the ADDRESSES: Secretary, U.S. Securities purpose of making investments in securities 1889 BDC, Inc., et al.; Notice of described in sections 55(a)(1) through 55(a)(3) of the and Exchange Commission, 100 F St. Act and makes available significant managerial Application NE., Washington, DC 20549–1090. assistance with respect to the issuers of such sradovich on DSK3GMQ082PROD with NOTICES Applicants: 245 Park Avenue, 26th securities. June 21, 2017. 3 ‘‘Objectives and Strategies’’ means a Regulated AGENCY: Securities and Exchange Floor, New York, NY 10167. Fund’s investment objectives and strategies, as Commission (‘‘Commission’’). described in the Regulated Fund’s registration 1 The term ‘‘successor,’’ as applied to each statement on Form N–2, other filings the Regulated ACTION: Notice. Adviser (defined below), means an entity that Fund has made with the Commission under the results from a reorganization into another Securities Act of 1933 (the ‘‘Securities Act’’), or Notice of application for an order jurisdiction or change in the type of business under the Securities Exchange Act of 1934 and the under sections 17(d) and 57(i) of the organization. Regulated Fund’s reports to shareholders. VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 E:\FR\FM\26JNN1.SGM 26JNN1

28914 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices 4. The Existing Affiliated Adviser is a 6. Applicants state that a Regulated also be an appropriate investment for Delaware limited partnership and is Fund may, from time to time, form a one or more other Regulated Funds and/ registered as an investment adviser Wholly-Owned Investment Subsidiary.8 or one or more Affiliated Funds, with under the Advisers Act. The Existing Such a subsidiary would be prohibited certain exceptions based on available Affiliated Adviser serves as investment from investing in a Co-Investment capital or diversification.9 adviser to each of the Existing Affiliated Transaction with any other Regulated 8. Other than pro rata dispositions Funds. Fund or Affiliated Fund because it and Follow-On Investments as provided 5. Applicants seek an order (‘‘Order’’) would be a company controlled by its in conditions 7 and 8, and after making to permit a Regulated Fund 4 and one or parent Regulated Fund for purposes of the determinations required in more Regulated Funds and/or one or section 57(a)(4) and rule 17d–1. conditions 1 and 2(a), the Adviser will more Affiliated Funds 5 to co-invest Applicants request that each Wholly- present each Potential Co-Investment with each other in securities issued by Owned Investment Subsidiary be Transaction and the proposed allocation issuers in private placement permitted to participate in Co- to the directors of the Board eligible to transactions in which the Adviser to the Investment Transactions in lieu of its vote under section 57(o) of the Act Regulated Fund negotiates terms in parent Regulated Fund and that the (‘‘Eligible Directors’’), and the ‘‘required addition to price; 6 and (b) make Wholly-Owned Investment Subsidiary’s majority,’’ as defined in section 57(o) of additional investments in securities of participation in any such transaction be the Act (‘‘Required Majority’’) 10 will such issuers, including through the treated, for purposes of the requested approve each Co-Investment exercise of warrants, conversion Order, as though the parent Regulated Transaction prior to any investment by privileges, and other rights to purchase Fund were participating directly. the participating Regulated Fund. securities of the issuers (‘‘Follow-On Applicants represent that this treatment 9. With respect to the pro rata Investments’’) through a proposed co- is justified because a Wholly-Owned dispositions and Follow-On Investments investment program (the ‘‘Co- Investment Sub would have no purpose provided in conditions 7 and 8, a Investment Program’’) where such other than serving as a holding vehicle Regulated Fund may participate in a pro participation would otherwise be for the Regulated Fund’s investments rata disposition or Follow-On prohibited under section 57(a)(4) and and, therefore, no conflicts of interest Investment without obtaining prior rule 17d–1 and the rules under the 1940 could arise between the Regulated Fund approval of the Required Majority if, Act. The term ‘‘Co-Investment and the Wholly-Owned Investment Sub. among other things: (i) The proposed Transaction’’ means any transaction in The Regulated Fund’s Board would participation of each Regulated Fund which a Regulated Fund (or its Wholly- make all relevant determinations under and Affiliated Fund in such disposition Owned Investment Subsidiary, as the conditions with regard to a Wholly- is proportionate to its outstanding defined below) participate together with Owned Investment Sub’s participation investments in the issuer immediately one or more other Regulated Funds and/ in a Co-Investment Transaction, and the preceding the disposition or Follow-On or one or more Affiliated Funds in Regulated Fund’s Board would be Investment, as the case may be; and (ii) reliance on the requested Order. informed of, and take into the Board of the Regulated Fund has Potential Co-Investment Transaction’’ consideration, any proposed use of a approved that Regulated Fund’s means any investment opportunity in Wholly-Owned Investment Sub in the participation in pro rata dispositions which a Regulated Fund (or its Wholly- Regulated Fund’s place. If the Regulated and Follow-On Investments as being in Owned Investment Subsidiary, as Fund proposes to participate in the the best interests of the Regulated Fund. defined below) could not participate same Co-Investment Transaction with If the Board does not so approve, any together with one or more other any of its Wholly-Owned Investment such disposition or Follow-On Regulated Funds and/or one or more Subs, the Board will also be informed Investment will be submitted to the other Affiliated Funds without of, and take into consideration, the Regulated Fund’s Eligible Directors. The obtaining and relying on the Order.7 relative participation of the Regulated Board of any Regulated Fund may at any Fund and the Wholly-Owned time rescind, suspend or qualify its 4 The term ‘‘Regulated Fund’’ means the Fund Investment Sub. approval of pro rata dispositions and and any Future Regulated Fund. ‘‘Future Regulated Fund’’ means any closed-end management 7. When considering Potential Co- Follow-On Investments with the result investment company (a) that is registered under the Investment Transactions for any that all dispositions and/or Follow-On Act or has elected to be regulated as a BDC, (b) Regulated Fund, the Adviser will Investments must be submitted to the whose investment adviser is an Adviser, and (c) consider only the Objectives and Eligible Directors. that intends to participate in the Co-Investment Program. Strategies, investment policies, 10. No Independent Director of a The term ‘‘Adviser’’ means the BDC Adviser, the investment positions, capital available Regulated Fund will have a direct or Existing Affiliated Adviser and any future for investment, and other pertinent indirect financial interest in any Co- investment adviser that (i) controls, is controlled factors applicable to that Regulated Investment Transaction, other than by, or is under common control with the Existing indirectly through share ownership in Affiliated Adviser and (ii) is registered as an Fund. The Adviser expects that any investment adviser under the Advisers Act. portfolio company that is an appropriate one of the Regulated Funds. 5 ‘‘Affiliated Fund’’ means the Existing Affiliated investment for a Regulated Fund should 11. Applicants also represent that if Funds and any entity (a) whose investment adviser the Advisers or its principal owners is an Adviser, (b) that would be an investment 8 The term ‘‘Wholly-Owned Investment Sub’’ (‘‘Principals’’) or any person controlling, company but for Section 3(c)(1) or 3(c)(7) of the means an entity (i) that is wholly-owned by a 1940 Act, and (c) that intends to participate in the controlled by, or under common control Regulated Fund (with the Regulated Fund at all Co-Investment Program. times holding, beneficially and of record, 100% of with the Advisers or the Principals, and sradovich on DSK3GMQ082PROD with NOTICES 6 The term ‘‘private placement transactions’’ the voting and economic interests); (ii) whose sole means transactions in which the offer and sale of business purpose is to hold one or more 9 The Regulated Funds, however, will not be securities by the issuer are exempt from registration investments on behalf of the Regulated Fund; (iii) obligated to invest, or co-invest, when investment under the Securities Act. with respect to which the Regulated Fund’s Board opportunities are referred to them. 7 All existing entities that currently intend to rely has the sole authority to make all determinations 10 In the case of a Regulated Fund that is a upon the requested Order have been named as with respect to the entity’s participation under the registered closed-end fund, the Board members that applicants. Any other existing or future entity that conditions of the Application; and (iv) that would make up the Required Majority will be determined subsequently relies on the Order will comply with be an investment company but for section 3(c)(1) or as if the Regulated Fund were a BDC subject to the terms and conditions of the application. 3(c)(7) of the Act. Section 57(o). VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\26JNN1.SGM 26JNN1

Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices 28915 the Affiliated Funds (collectively, the participation is on a basis different from compliance with these allocation ‘‘Holders’’) own in the aggregate more or less advantageous than that of other procedures. than 25 percent of the outstanding participants. (c) After making the determinations voting securities of a Regulated Fund 3. Applicants state that in the absence required in conditions 1 and 2(a), the (‘‘Shares’’), then the Holders will vote of the requested relief, the Regulated applicable Adviser will distribute such Shares as required under Funds would be, in some written information concerning the Condition 14. Applicants believe that circumstances, limited in their ability to Potential Co-Investment Transaction this condition will ensure that the participate in attractive and appropriate (including the amount proposed to be Independent Directors will act investment opportunities. Applicants invested by each participating Regulated independently in evaluating the Co- believe that the proposed terms and Fund and Affiliated Fund) to the Investment Program, because the ability conditions will ensure that the Co- Eligible Directors of each participating of the Advisers or the Principals to Investment Transactions are consistent Regulated Fund for their consideration. influence the Independent Directors by with the protection of each Regulated A Regulated Fund will co-invest with a suggestion, explicit or implied, that Fund’s shareholders and with the one or more other Regulated Funds and/ the Independent Directors can be purposes intended by the policies and or one or more Affiliated Funds only if, removed will be limited significantly. provisions of the Act. Applicants state prior to the Regulated Fund’s Applicants represent that the Non- that the Regulated Funds’ participation participation in the Potential Co- Interested Directors will evaluate and in the Co-Investment Transactions will Investment Transaction, a Required approve any such independent party, be consistent with the provisions, Majority concludes that: taking into account its qualifications, policies, and purposes of the Act and on (i) The terms of the Potential Co- reputation for independence, cost to the a basis that is not different from or less Investment Transaction, including the shareholders, and other factors that they advantageous than that of other consideration to be paid, are reasonable deem relevant. participants. and fair to the Regulated Fund and its shareholders and do not involve Applicants’ Legal Analysis Applicants’ Conditions overreaching in respect of the Regulated 1. Section 57(a)(4) of the Act prohibits Applicants agree that any order Fund or its shareholders on the part of certain affiliated persons of a BDC from granting the requested relief will be any person concerned; participating in joint transactions with (ii) the Potential Co-Investment subject to the following conditions: the BDC or a company controlled by a Transaction is consistent with: 1. Each time an Adviser considers a BDC in contravention of rules as (A) The interests of the shareholders Potential Co-Investment Transaction for prescribed by the Commission. Under of the Regulated Fund; and section 57(b)(2) of the Act, any person an Affiliated Fund or another Regulated (B) the Regulated Fund’s then-current who is directly or indirectly controlling, Fund that falls within a Regulated Objectives and Strategies; controlled by, or under common control Fund’s then-current Objectives and (iii) the investment by any other with a BDC is subject to section 57(a)(4). Strategies, the Regulated Fund’s Adviser Regulated Funds or Affiliated Funds Applicants submit that each of the will make an independent would not disadvantage the Regulated Regulated Funds and Affiliated Funds determination of the appropriateness of Fund, and participation by the be deemed to be a person related to each the investment for such Regulated Fund Regulated Fund would not be on a basis Regulated Fund in a manner described in light of the Regulated Fund’s then- different from or less advantageous than by section 57(b) by virtue of being under current circumstances. that of other Regulated Funds or common control. Section 57(i) of the 2. (a) If the Adviser deems a Regulated Affiliated Funds; provided that, if any Act provides that, until the Commission Fund’s participation in any Potential other Regulated Fund or Affiliated prescribes rules under section 57(a)(4), Co-Investment Transaction to be Fund, but not the Regulated Fund itself, the Commission’s rules under section appropriate for the Regulated Fund, it gains the right to nominate a director for 17(d) of the Act applicable to registered will then determine an appropriate level election to a portfolio company’s board closed-end investment companies will of investment for the Regulated Fund. of directors or the right to have a board be deemed to apply to transactions (b) If the aggregate amount observer or any similar right to subject to section 57(a)(4). Because the recommended by the applicable Adviser participate in the governance or Commission has not adopted any rules to be invested by the applicable management of the portfolio company, under section 57(a)(4), rule 17d–1 also Regulated Fund in the Potential Co- such event shall not be interpreted to applies to joint transactions with Investment Transaction, together with prohibit the Required Majority from Regulated Funds that are BDCs. Section the amount proposed to be invested by reaching the conclusions required by 17(d) of the Act and rule 17d–1 under the other participating Regulated Funds this condition 2(c)(iii), if: the Act are applicable to Regulated and Affiliated Funds, collectively, in the (A) The Eligible Directors will have Funds that are registered closed-end same transaction, exceeds the amount of the right to ratify the selection of such investment companies. the investment opportunity, the director or board observer, if any; 2. Section 17(d) of the Act and rule investment opportunity will be (B) the applicable Adviser agrees to, 17d–1 under the Act prohibit affiliated allocated among them pro rata based on and does, provide periodic reports to persons of a registered investment each participant’s capital available for the Regulated Fund’s Board with respect company from participating in joint investment in the asset class being to the actions of such director or the transactions with the company unless allocated, up to the amount proposed to information received by such board the Commission has granted an order be invested by each. The applicable sradovich on DSK3GMQ082PROD with NOTICES observer or obtained through the permitting such transactions. In passing Adviser will provide the Eligible exercise of any similar right to upon applications under rule 17d–1, the Directors of each participating participate in the governance or Commission considers whether the Regulated Fund with information management of the portfolio company; company’s participation in the joint concerning each participating party’s and transaction is consistent with the available capital to assist the Eligible (C) any fees or other compensation provisions, policies, and purposes of the Directors with their review of the that any Affiliated Fund or any Act and the extent to which such Regulated Fund’s investments for Regulated Fund or any affiliated person VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\26JNN1.SGM 26JNN1

28916 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices of any Affiliated Fund or any Regulated terms, conditions, price, class of 8. (a) If any Affiliated Fund or any Fund receives in connection with the securities to be purchased, settlement Regulated Fund desires to make a right of an Affiliated Fund or a date, and registration rights will be the Follow-On Investment in a portfolio Regulated Fund to nominate a director same for each participating Regulated company whose securities were or appoint a board observer or otherwise Fund and Affiliated Fund. The grant to acquired in a Co-Investment to participate in the governance or an Affiliated Fund or another Regulated Transaction, the applicable Advisers management of the portfolio company Fund, but not the Regulated Fund, of will: will be shared proportionately among the right to nominate a director for (i) Notify each Regulated Fund that the participating Affiliated Funds (who election to a portfolio company’s board participated in the Co-Investment each may, in turn, share its portion with of directors, the right to have an Transaction of the proposed transaction its affiliated persons) and the observer on the board of directors or at the earliest practical time; and participating Regulated Funds in similar rights to participate in the (ii) formulate a recommendation as to accordance with the amount of each governance or management of the the proposed participation, including party’s investment; and portfolio company will not be the amount of the proposed Follow-On (iv) the proposed investment by the interpreted so as to violate this Investment, by each Regulated Fund. Regulated Fund will not benefit the condition 6, if conditions 2(c)(iii)(A), (B) (b) A Regulated Fund may participate Advisers, the Affiliated Funds or the and (C) are met. in such Follow-On Investment without other Regulated Funds or any affiliated 7. (a) If any Affiliated Fund or any obtaining prior approval of the Required person of any of them (other than the Regulated Fund elects to sell, exchange Majority if: (i) The proposed parties to the Co-Investment or otherwise dispose of an interest in a participation of each Regulated Fund Transaction), except (A) to the extent security that was acquired in a Co- and each Affiliated Fund in such permitted by condition 13, (B) to the Investment Transaction, the applicable investment is proportionate to its extent permitted by sections 17(e) or Advisers will: outstanding investments in the issuer 57(k) of the Act, as applicable, (C) immediately preceding the Follow-On (i) Notify each Regulated Fund that indirectly, as a result of an interest in Investment; and (ii) the Board of the participated in the Co-Investment the securities issued by one of the Regulated Fund has approved as being Transaction of the proposed disposition parties to the Co-Investment in the best interests of the Regulated at the earliest practical time; and Transaction, or (D) in the case of fees or Fund the ability to participate in (ii) formulate a recommendation as to other compensation described in Follow-On Investments on a pro rata participation by each Regulated Fund in condition 2(c)(iii)(C). basis (as described in greater detail in the disposition. 3. Each Regulated Fund has the right the application). In all other cases, the (b) Each Regulated Fund will have the to decline to participate in any Potential Adviser will provide its written right to participate in such disposition Co-Investment Transaction or to invest recommendation as to the Regulated on a proportionate basis, at the same less than the amount proposed. Fund’s participation to the Eligible price and on the same terms and 4. The applicable Adviser will present Directors, and the Regulated Fund will conditions as those applicable to the to the Board of each Regulated Fund, on participate in such Follow-On participating Affiliated Funds and any a quarterly basis, a record of all Investment solely to the extent that a other Regulated Fund. investments in Potential Co-Investment Required Majority determines that it is (c) A Regulated Fund may participate in the Regulated Fund’s best interests. Transactions made by any of the other in such disposition without obtaining Regulated Funds or Affiliated Funds (c) If, with respect to any Follow-On prior approval of the Required Majority Investment: during the preceding quarter that fell if: (i) The proposed participation of each (i) The amount of the opportunity is within the Regulated Fund’s then- Regulated Fund and each Affiliated not based on the Regulated Funds’ and current Objectives and Strategies that Fund in such disposition is the Affiliated Funds’ outstanding were not made available to the proportionate to its outstanding investments immediately preceding the Regulated Fund, and an explanation of investments in the issuer immediately Follow-On Investment; and why the investment opportunities were preceding the disposition; (ii) the Board (ii) the aggregate amount not offered to the Regulated Fund. All of the Regulated Fund has approved as recommended by the Adviser to be information presented to the Board being in the best interests of the invested by each Regulated Fund in the pursuant to this condition will be kept Regulated Fund the ability to participate Follow-On Investment, together with for the life of the Regulated Fund and in such dispositions on a pro rata basis the amount proposed to be invested by at least two years thereafter, and will be (as described in greater detail in the the participating Affiliated Funds in the subject to examination by the application); and (iii) the Board of the same transaction, exceeds the amount of Commission and its staff. Regulated Fund is provided on a the opportunity; then the amount 5. Except for Follow-On Investments quarterly basis with a list of all invested by each such party will be made in accordance with condition 8,11 dispositions made in accordance with allocated among them pro rata based on a Regulated Fund will not invest in this condition. In all other cases, the each participant’s capital available for reliance on the Order in any issuer in Adviser will provide its written investment in the asset class being which another Regulated Fund, recommendation as to the Regulated allocated, up to the amount proposed to Affiliated Fund, or any affiliated person Fund’s participation to the Eligible be invested by each. of another Regulated Fund or Affiliated Directors, and the Regulated Fund will (d) The acquisition of Follow-On Fund is an existing investor. participate in such disposition solely to sradovich on DSK3GMQ082PROD with NOTICES Investments as permitted by this 6. A Regulated Fund will not the extent that a Required Majority condition will be considered a Co- participate in any Potential Co- determines that it is in the Regulated Investment Transaction for all purposes Investment Transaction unless the Fund’s best interests. and subject to the other conditions set 11 This exception applies only to Follow-On (d) Each Affiliated Fund and each forth in the application. Investments by a Regulated Fund in issuers in Regulated Fund will bear its own 9. The Non-Interested Directors of which that Regulated Fund already holds expenses in connection with any such each Regulated Fund will be provided investments. disposition. quarterly for review all information VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 E:\FR\FM\26JNN1.SGM 26JNN1

Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices 28917 concerning Potential Co-Investment banks having the qualifications Authority, Inc. (‘‘FINRA’’) filed with the Transactions and Co-Investment prescribed in section 26(a)(1) of the Act, Securities and Exchange Commission Transactions, including investments and the account will earn a competitive (‘‘Commission’’) the proposed rule made by other Regulated Funds or rate of interest that will also be divided change as described in Items I and II Affiliated Funds that the Regulated pro rata among the participating below, which Items have been prepared Fund considered but declined to Regulated Funds and Affiliated Funds by FINRA. FINRA filed the proposed participate in, so that the Non-Interested based on the amounts they invest in rule change pursuant to Section Directors may determine whether all such Co-Investment Transaction. None 19(b)(3)(A)(iii) of the Act 3 and Rule investments made during the preceding of the Affiliated Funds, the Advisers, 19b–4(f)(6) thereunder.4 The quarter, including those investments the other Regulated Funds or any Commission is publishing this notice to that the Regulated Fund considered but affiliated person of the Regulated Funds solicit comments on the proposed rule declined to participate in, comply with or Affiliated Funds will receive change from interested persons. the conditions of the Order. In addition, additional compensation or I. Self-Regulatory Organization’s the Non-Interested Directors will remuneration of any kind as a result of Statement of the Terms of Substance of consider at least annually the continued or in connection with a Co-Investment the Proposed Rule Change appropriateness for the Regulated Fund Transaction (other than (a) in the case of participating in new and existing Co- of the Regulated Funds and the FINRA is proposing to establish an Investment Transactions. Affiliated Funds, the pro rata implementation date for certain trade 10. Each Regulated Fund will transaction fees described above and modifiers required on trade reports to maintain the records required by section fees or other compensation described in the Transaction Reporting and 57(f)(3) of the Act as if each of the condition 2(c)(iii)(C); and (b) in the case Compliance Engine (‘‘TRACE’’) Regulated Funds were a BDC and each of an Adviser, investment advisory fees involving U.S. Treasury Securities. The of the investments permitted under paid in accordance with the agreement proposed rule change does not make these conditions were approved by the between the Adviser and the Regulated any changes to the text of FINRA rules. Required Majority under section 57(f) of Fund or Affiliated Fund. II. Self-Regulatory Organization’s the Act. 14. If the Holders own in the aggregate Statement of the Purpose of, and 11. No Non-Interested Director of a more than 25 percent of the Shares of Statutory Basis for, the Proposed Rule Regulated Fund will also be a director, a Regulated Fund, then the Holders will Change general partner, managing member or vote such Shares as directed by an independent third party when voting on In its filing with the Commission, principal, or otherwise an ‘‘affiliated FINRA included statements concerning person’’ (as defined in the Act), of an (1) the election of directors; (2) the removal of one or more directors; or (3) the purpose of and basis for the Affiliated Fund. proposed rule change and discussed any 12. The expenses, if any, associated any other matter under either the Act or applicable State law affecting the comments it received on the proposed with acquiring, holding or disposing of rule change. The text of these statements any securities acquired in a Co- Board’s composition, size or manner of election. may be examined at the places specified Investment Transaction (including, in Item IV below. FINRA has prepared without limitation, the expenses of the For the Commission, by the Division of summaries, set forth in sections A, B, distribution of any such securities Investment Management, under delegated authority. and C below, of the most significant registered for sale under the Securities aspects of such statements. Act) will, to the extent not payable by Eduardo A. Aleman, the Advisers under their respective Assistant Secretary. A. Self-Regulatory Organization’s investment advisory agreements with [FR Doc. 2017–13263 Filed 6–23–17; 8:45 am] Statement of the Purpose of, and the Affiliated Funds and the Regulated BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule Funds, be shared by the Regulated Change Funds and the Affiliated Funds in 1. Purpose proportion to the relative amounts of the SECURITIES AND EXCHANGE securities held or to be acquired or COMMISSION On October 18, 2016, the Commission disposed of, as the case may be. approved a proposed rule change to [Release No. 34–80975; File No. SR–FINRA– require FINRA members to report 13. Any transaction fee 12 (including 2017–018] break-up or commitment fees but certain transactions in U.S. Treasury excluding broker’s fees contemplated by Self-Regulatory Organizations; Securities to TRACE.5 The new rules section 17(e) or 57(k) of the Act, as Financial Industry Regulatory included two new trade modifiers, applicable) received in connection with Authority, Inc.; Notice of Filing and which are described below, for use on a Co-Investment Transaction will be Immediate Effectiveness of a Proposed certain types of trades in U.S. Treasury distributed to the participating Rule Change Relating to the Securities reported to TRACE. On Regulated Funds and Affiliated Funds Implementation Date for Trade October 19, 2016, FINRA announced on a pro rata basis based on the amounts Modifiers When Reporting that the reporting requirements would they invested or committed, as the case Transactions in U.S. Treasury 3 15 U.S.C. 78s(b)(3)(A)(iii). may be, in such Co-Investment Securities 4 17 CFR 240.19b–4(f)(6). Transaction. If any transaction fee is to 5 See Securities Exchange Act Release No. 79116 June 20, 2017. be held by an Adviser pending (October 18, 2016), 81 FR 73167 (October 24, 2016) sradovich on DSK3GMQ082PROD with NOTICES Pursuant to Section 19(b)(1) of the consummation of the transaction, the (Notice of Filing of Amendment No. 1 and Order Securities Exchange Act of 1934 Granting Accelerated Approval of File No. SR– fee will be deposited into an account (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 FINRA–2016–027) (‘‘Original Filing’’). The Original maintained by such Adviser at a bank or Filing stated that the implementation date for the notice is hereby given that on June 12, new rules would be no later than 365 days 12 Applicants are not requesting and the staff is 2017, Financial Industry Regulatory following Commission approval. FINRA is filing the not providing any relief for transaction fees current proposed rule change to extend the 1 15 U.S.C. 78s(b)(1). received in connection with any Co-Investment implementation date for the trade modifiers beyond Transaction. 2 17 CFR 240.19b–4. the 365-day period set forth in the Original Filing. VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 E:\FR\FM\26JNN1.SGM 26JNN1


Document Created: 2018-11-14 10:10:22
Document Modified: 2018-11-14 10:10:22
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.
DatesThe application was filed on August 5, 2016 and amended
ContactBruce R. MacNeil, Senior Counsel, at (202) 551-6817 or David J. Marcinkus, Branch Chief, at (202) 551-6821 (Chief Counsel's Office, Division of Investment Management).
FR Citation82 FR 28913 
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