82_FR_36989 82 FR 36839 - MVC Capital, Inc., et al.

82 FR 36839 - MVC Capital, Inc., et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 150 (August 7, 2017)

Page Range36839-36843
FR Document2017-16510

Federal Register, Volume 82 Issue 150 (Monday, August 7, 2017) 
[Federal Register Volume 82, Number 150 (Monday, August 7, 2017)]
[Notices]
[Pages 36839-36843]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-16510]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 32769; File No. 812-14720]


MVC Capital, Inc., et al.; Notice of Application

August 1, 2017.
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 permitting certain joint transactions otherwise 
prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 
under the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit a 
business development company (``BDC'') and certain closed-end 
investment companies to co-invest in portfolio companies with each 
other and with affiliated investment funds.

APPLICANTS: MVC Capital, Inc. (``MVC Capital''), TTGA C-I LP Fund, TTGA 
C-I MMF LP Fund and Tokarz Group Advisers LLC (``Tokarz''), on behalf 
of itself and its successors.\1\
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    \1\ The term ``successor'' 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 December 6, 2016, and 
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amended on April 6, 2017, and June 27, 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 August 25, 2017 and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a

[[Page 36840]]

hearing may request notification by writing to the Commission's 
Secretary.

ADDRESSES: Brent J. Fields, Secretary, U.S. Securities and Exchange 
Commission, 100 F St. NE., Washington, DC 20549-1090. Applicants: 287 
Bowman Avenue, 2nd Floor, Purchase, NY 10577.

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. MVC Capital is a Delaware corporation organized as a closed-end 
management investment company that has elected to be regulated as a BDC 
within the meaning of section 2(a)(48) of the Act.\2\ MVC Capital 
participates in the private equity business generally by providing 
negotiated debt instruments and/or equity capital. MVC Capital's 
investments are generally used to fund growth, buyouts, acquisitions, 
recapitalizations note purchases, and/or bridge financing. MVC 
Capital's Objectives and Strategies \3\ are to seek to maximize total 
return from capital appreciation and/or income and it expects to 
achieve this objective be providing equity and or debt financing to 
small and middle-market companies in a variety of industries. The Board 
of MVC Capital is comprised of seven directors, five of whom are not 
``interested persons,'' within the meaning of section 2(a)(19) of the 
1940 Act (the ``Non-Interested Directors''), of MVC Capital.
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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 section 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 with respect to a 
Regulated Fund (defined below), the 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. TTGA C-I MMF LP Fund and TGA C-I LP Fund are each a Delaware 
limited partnership and each would be an investment company but for 
section 3(copyright)(1) of the Act. TTGA C-I LP Fund and TTGA C-I MMF 
LP Fund each have an investment objective is to generate both current 
income and long term capital appreciation. TGA C-I LP Fund is in the 
process of applying for a license from the Small Business 
Administration (``SBA'') to operate under the Small Business Act of 
1958 (``SBA Act''), as a small business investment company (each such 
licensed entity, a ``SBIC Subsidiary'').
    3. Tokarz is registered with the Commission as an investment 
adviser under the Investment Advisers Act of (the ``Advisers Act''). 
Tokarz serves as investment adviser to MVC Capital, TTGA C-I LP and 
TTGA C-I MMF.
    4. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds \4\ 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) 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\
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    \4\ ``Regulated Fund'' means MVC Capital 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 Tokarz and/or any 
future investment adviser that controls, is controlled by or is 
under common control with Tokarz and is registered as an investment 
adviser under the Advisers Act.
    \5\ TTGA I LP, TTGA MMF LP and any Future Affiliated Funds are 
the ``Affiliated Funds. ``Future Affiliated Fund'' means any entity 
(a) whose investment adviser is an Adviser, (b) that would be an 
investment company but for sections 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.
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    5. Applicants state that a Regulated Fund may, from time to time, 
form a 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.
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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 (and, in the 
case of an SBIC Subsidiary, maintain a license under the SBA Act and 
issue debentures guaranteed by the SBA); (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 sections 3(c)(1) or 3(c)(7) of the Act.

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[[Page 36841]]

    6. 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 Funds' 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\
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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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    7. 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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    8. 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.
    9. No Non-Interested Director of a Regulated Fund will have a 
financial interest in any Co-Investment Transaction, other than 
indirectly through share ownership in one of the Regulated Funds.
    10. Applicants also represent that if the Advisers, the principals 
of the Advisers (``Principals''), or any person controlling, controlled 
by, or under common control with an Adviser or the Principals, and the 
Affiliated Funds (collectively, the ``Holders'') own in the aggregate 
more than 25% of the outstanding voting shares of a Regulated Fund (the 
``Shares''), then the Holders will vote such Shares as required under 
condition 14. Applicants believe this condition will ensure that the 
Non-Interested 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 
third party, taking into account its qualifications, reputation for 
independence, cost to the shareholders, and other factors that they 
deem relevant.

Applicants' Legal Analysis

    1. Section 57(a)(4) of the Act prohibits certain affiliated persons 
of a BDC from participating in joint transactions with the BDC or a 
company controlled by a BDC in contravention of rules as prescribed by 
the Commission. Under section 57(b)(2) of the Act, any person who is 
directly or indirectly controlling, controlled by, or under common 
control with a BDC is subject to section 57(a)(4). Applicants submit 
that each of the Regulated Funds and Affiliated Funds could 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 shall 
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/or Affiliated 
Funds, collectively, in the same transaction, exceeds the

[[Page 36842]]

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 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 section 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 Regulated Funds.
    (c) A Regulated Fund may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Fund and each Affiliated Fund in such 
disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Board of the 
Regulated Fund has approved as being in the best interests of the 
Regulated Fund the ability to participate in such dispositions on a pro 
rata basis (as described in greater detail in the application); and 
(iii) the Board of the Regulated Fund is provided on a

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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 
practicable 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 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 (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 \12\ 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% of the 
Shares, then the Holders will vote such Shares as directed by an 
independent third party when voting on (1) the election of directors; 
(2) the removal of one or more directors; or (3) all other matters 
under either the Act or applicable State law affecting the Board's 
composition, size or manner of election.
    15. Each Regulated Fund's chief compliance officer as defined in 
rule 38a-1(a)(4) will prepare an annual report for its Board each year 
that evaluates (and documents the basis of that evaluation) the 
Regulated Fund's compliance with the terms and conditions of the 
Application and the procedures established to achieve such compliance.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-16510 Filed 8-4-17; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 150 / Monday, August 7, 2017 / Notices 36839 Commission may designate, it has change should be approved or For the Commission, by the Division of become effective pursuant to Section disapproved. Trading and Markets, pursuant to delegated 19(b)(3)(A) of the Act and Rule 19b– authority.22 4(f)(6) thereunder. IV. Solicitation of Comments Eduardo A. Aleman, Assistant Secretary. A proposed rule change filed under Interested persons are invited to [FR Doc. 2017–16513 Filed 8–4–17; 8:45 am] Rule 19b–4(f)(6) 17 normally does not submit written data, views and BILLING CODE 8011–01–P become operative prior to 30 days after arguments concerning the foregoing, the date of the filing. However, pursuant including whether the proposed rule to Rule 19b–4(f)(6)(iii),18 the change is consistent with the Act. SECURITIES AND EXCHANGE Commission may designate a shorter Comments may be submitted by any of COMMISSION time if such action is consistent with the the following methods: protection of investors and the public [Release No. 32769; File No. 812–14720] interest. The Exchange has asked the Electronic Comments Commission to waive the 30-day MVC Capital, Inc., et al.; Notice of • Use the Commission’s Internet Application operative delay. The Exchange comment form (http://www.sec.gov/ represents that waiver will allow it to August 1, 2017. rules/sro.shtml); or append promptly, without the need to AGENCY: Securities and Exchange wait for the expiration of the 30-day • Send an email to rule-comments@ Commission (‘‘Commission’’). operative delay period, an Aberrant sec.gov. Please include File Number SR– ACTION: Notice of application for an Report Indicator to trades that occur that IEX–2017–24 on the subject line. order under sections 17(d) and 57(i) of do not reflect the prevailing market, Paper Comments the Investment Company Act of 1940 thereby avoiding confusion regarding (the ‘‘Act’’) and rule 17d–1 under the pricing of those trades. The Commission • Send paper comments in triplicate Act permitting certain joint transactions believes that waiving the 30-day to Secretary, Securities and Exchange otherwise prohibited by sections 17(d) operative delay is consistent with the Commission, 100 F Street NE., and 57(a)(4) of the Act and rule 17d–1 protection of investors and the public Washington, DC 20549–1090. under the Act. interest. The Commission notes that IEX has represented that its proposal is All submissions should refer to File SUMMARY OF APPLICATION: Applicants substantially similar to the policies of Number SR–IEX–2017–24. This file request an order to permit a business other exchanges 19 that are currently number should be included in the development company (‘‘BDC’’) and operative and therefore the proposal subject line if email is used. To help the certain closed-end investment does not raise any new or novel issues Commission process and review your companies to co-invest in portfolio that have not already been considered comments more efficiently, please use companies with each other and with by the Commission. Allowing IEX to only one method. The Commission will affiliated investment funds. attach Aberrant Report Indicators will post all comments on the Commission’s APPLICANTS: MVC Capital, Inc. (‘‘MVC therefore allow IEX to utilize the Internet Web site (http://www.sec.gov/ Capital’’), TTGA C–I LP Fund, TTGA C– approach used by other exchanges to rules/sro.shtml). Copies of the I MMF LP Fund and Tokarz Group flag that information for investors, submission, all subsequent Advisers LLC (‘‘Tokarz’’), on behalf of which should help protect investors by amendments, all written statements itself and its successors.1 disclosing important information with respect to the proposed rule FILING DATES: The application was filed without delay for any such trades that change that are filed with the on December 6, 2016, and amended on occur on IEX. Accordingly, the Commission, and all written April 6, 2017, and June 27, 2017. Commission hereby waives the 30-day communications relating to the HEARING OR NOTIFICATION OF HEARING: An operative delay requirement and proposed rule change between the order granting the requested relief will designates the proposed rule change Commission and any person, other than be issued unless the Commission orders operative upon filing.20 those that may be withheld from the a hearing. Interested persons may At any time within 60 days of the public in accordance with the request a hearing by writing to the filing of the proposed rule change, the provisions of 5 U.S.C. 552, will be Commission’s Secretary and serving Commission summarily may available for Web site viewing and applicants with a copy of the request, temporarily suspend such rule change if printing in the Commission’s Public personally or by mail. Hearing requests it appears to the Commission that such Reference Section, 100 F Street NE., should be received by the Commission action is necessary or appropriate in the Washington, DC 20549, on official by 5:30 p.m. on August 25, 2017 and public interest, for the protection of business days between the hours of should be accompanied by proof of investors, or otherwise in furtherance of 10:00 a.m. and 3:00 p.m. Copies of the service on applicants, in the form of an the purposes of the Act. If the filing will also be available for affidavit or, for lawyers, a certificate of Commission takes such action, the service. Pursuant to rule 0–5 under the inspection and copying at the principal Commission shall institute proceedings Act, hearing requests should state the office of the Exchange. All comments under Section 19(b)(2)(B) 21 of the Act to nature of the writer’s interest, any facts received will be posted without change; bearing upon the desirability of a determine whether the proposed rule the Commission does not edit personal hearing on the matter, the reason for the mstockstill on DSK30JT082PROD with NOTICES 17 17 identifying information from request, and the issues contested. CFR 240.19b–4(f)(6). 18 17 submissions. You should submit only Persons who wish to be notified of a CFR 240.19b–4(f)(6)(iii). 19 See note 9 supra. information that you wish to make 20 For purposes only of waiving the 30-day available publicly. All submissions 22 17 CFR 200.30–3(a)(12). operative delay, the Commission has considered the should refer to File Number SR–IEX– 1 The term ‘‘successor’’ means an entity that proposed rule’s impact on efficiency, competition, 2017–24 and should be submitted on or results from a reorganization into another and capital formation. See 15 U.S.C. 78c(f). jurisdiction or change in the type of business 21 15 U.S.C. 78s(b)(2)(B). before August 28, 2017. organization. VerDate Sep<11>2014 19:18 Aug 04, 2017 Jkt 241001 PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 E:\FR\FM\07AUN1.SGM 07AUN1

36840 Federal Register / Vol. 82, No. 150 / Monday, August 7, 2017 / Notices hearing may request notification by an investment company but for section could not participate together with one writing to the Commission’s Secretary. 3©(1) of the Act. TTGA C–I LP Fund or more Affiliated Funds and/or one or ADDRESSES: Brent J. Fields, Secretary, and TTGA C–I MMF LP Fund each have more other Regulated Funds without U.S. Securities and Exchange an investment objective is to generate obtaining and relying on the Order.7 Commission, 100 F St. NE., Washington, both current income and long term 5. Applicants state that a Regulated DC 20549–1090. Applicants: 287 capital appreciation. TGA C–I LP Fund Fund may, from time to time, form a one Bowman Avenue, 2nd Floor, Purchase, is in the process of applying for a or more Wholly-Owned Investment NY 10577. license from the Small Business Subs.8 Such a subsidiary would be FOR FURTHER INFORMATION CONTACT: Administration (‘‘SBA’’) to operate prohibited from investing in a Co- Bruce R. MacNeil, Senior Counsel, at under the Small Business Act of 1958 Investment Transaction with any (202) 551–6817, or David J. Marcinkus, (‘‘SBA Act’’), as a small business Affiliated Fund or Regulated Fund Branch Chief, at (202) 551–6821 (Chief investment company (each such because it would be a company Counsel’s Office, Division of Investment licensed entity, a ‘‘SBIC Subsidiary’’). controlled by its parent Regulated Fund 3. Tokarz is registered with the for purposes of section 57(a)(4) and rule Management). Commission as an investment adviser 17d–1. Applicants request that each SUPPLEMENTARY INFORMATION: The under the Investment Advisers Act of Wholly-Owned Investment Sub be following is a summary of the (the ‘‘Advisers Act’’). Tokarz serves as application. The complete application permitted to participate in Co- investment adviser to MVC Capital, Investment Transactions in lieu of its may be obtained via the Commission’s TTGA C–I LP and TTGA C–I MMF. Web site by searching for the file parent Regulated Fund and that the 4. Applicants seek an order (‘‘Order’’) Wholly-Owned Investment Sub’s number, or for an applicant using the to permit one or more Regulated Funds 4 Company name box, at http:// participation in any such transaction be and/or one or more Affiliated Funds 5 to treated, for purposes of the requested www.sec.gov/search/search.htm or by participate in the same investment calling (202) 551–8090. Order, as though the parent Regulated opportunities through a proposed co- Fund were participating directly. Applicants’ Representations investment program (the ‘‘Co- Applicants represent that this treatment Investment Program’’) where such is justified because a Wholly-Owned 1. MVC Capital is a Delaware participation would otherwise be corporation organized as a closed-end Investment Sub would have no purpose prohibited under section 57(a)(4) and other than serving as a holding vehicle management investment company that rule 17d–1 by (a) co-investing with each has elected to be regulated as a BDC for the Regulated Fund’s investments other in securities issued by issuers in and, therefore, no conflicts of interest within the meaning of section 2(a)(48) of private placement transactions in which the Act.2 MVC Capital participates in could arise between the Regulated Fund an Adviser negotiates terms in addition and the Wholly-Owned Investment Sub. the private equity business generally by to price; 6 and (b) making additional providing negotiated debt instruments The Regulated Fund’s Board would investments in securities of such and/or equity capital. MVC Capital’s make all relevant determinations under issuers, including through the exercise investments are generally used to fund the conditions with regard to a Wholly- of warrants, conversion privileges, and growth, buyouts, acquisitions, Owned Investment Sub’s participation other rights to purchase securities of the recapitalizations note purchases, and/or in a Co-Investment Transaction, and the issuers (‘‘Follow-On Investments’’). ‘‘Co- bridge financing. MVC Capital’s Regulated Fund’s Board would be Investment Transaction’’ means any Objectives and Strategies 3 are to seek to informed of, and take into transaction in which a Regulated Fund maximize total return from capital consideration, any proposed use of a (or its Wholly-Owned Investment Sub) appreciation and/or income and it Wholly-Owned Investment Sub in the participated together with one or more expects to achieve this objective be Regulated Fund’s place. If the Regulated other Regulated Funds and/or one or providing equity and or debt financing Fund proposes to participate in the more Affiliated Funds in reliance on the to small and middle-market companies same Co-Investment Transaction with requested Order. ‘‘Potential Co- in a variety of industries. The Board of any of its Wholly-Owned Investment Investment Transaction’’ means any MVC Capital is comprised of seven Subs, the Board will also be informed investment opportunity in which a directors, five of whom are not of, and take into consideration, the Regulated Fund (or its Wholly-Owned ‘‘interested persons,’’ within the relative participation of the Regulated Investment Sub, as defined below) meaning of section 2(a)(19) of the 1940 Fund and the Wholly-Owned Act (the ‘‘Non-Interested Directors’’), of 4 ‘‘Regulated Fund’’ means MVC Capital and any Investment Sub. MVC Capital. Future Regulated Fund. ‘‘Future Regulated Fund’’ 2. TTGA C–I MMF LP Fund and TGA means any closed-end management investment 7 All existing entities that currently intend to rely company (a) that is registered under the Act or has upon the requested Order have been named as C–I LP Fund are each a Delaware elected to be regulated as a BDC, (b) whose applicants. Any other existing or future entity that limited partnership and each would be investment adviser is an Adviser, and (c) that subsequently relies on the Order will comply with intends to participate in the Co-Investment the terms and conditions of the application. 2 Section 2(a)(48) defines a BDC to be any closed- Program. The term ‘‘Adviser’’ means Tokarz and/or 8 The term ‘‘Wholly-Owned Investment Sub’’ end investment company that operates for the any future investment adviser that controls, is means an entity (i) that is wholly-owned by a purpose of making investments in securities controlled by or is under common control with Regulated Fund (with the Regulated Fund at all described in section 55(a)(1) through 55(a)(3) of the Tokarz and is registered as an investment adviser times holding, beneficially and of record, 100% of Act and makes available significant managerial under the Advisers Act. the voting and economic interests); (ii) whose sole assistance with respect to the issuers of such 5 TTGA I LP, TTGA MMF LP and any Future business purpose is to hold one or more securities. Affiliated Funds are the ‘‘Affiliated Funds. ‘‘Future investments on behalf of the Regulated Fund (and, mstockstill on DSK30JT082PROD with NOTICES 3 ‘‘Objectives and Strategies’’ means with respect Affiliated Fund’’ means any entity (a) whose in the case of an SBIC Subsidiary, maintain a to a Regulated Fund (defined below), the investment adviser is an Adviser, (b) that would be license under the SBA Act and issue debentures investment objectives and strategies, as described in an investment company but for sections 3(c)(1) or guaranteed by the SBA); (iii) with respect to which the Regulated Fund’s registration statement on 3(c)(7) of the Act, and (c) that intends to participate the Regulated Fund’s Board has the sole authority Form N–2, other filings the Regulated Fund has in the Co-Investment Program. to make all determinations with respect to the made with the Commission under the Securities 6 The term ‘‘private placement transactions’’ entity’s participation under the conditions of the Act of 1933 (the ‘‘Securities Act’’), or under the means transactions in which the offer and sale of application; and (iv) that would be an investment Securities Exchange Act of 1934 and the Regulated securities by the issuer are exempt from registration company but for sections 3(c)(1) or 3(c)(7) of the Fund’s reports to shareholders. under the Securities Act. Act. VerDate Sep<11>2014 18:14 Aug 04, 2017 Jkt 241001 PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 E:\FR\FM\07AUN1.SGM 07AUN1

Federal Register / Vol. 82, No. 150 / Monday, August 7, 2017 / Notices 36841 6. When considering Potential Co- Investments must be submitted to the Funds that are registered closed-end Investment Transactions for any Eligible Directors. investment companies. Regulated Fund, the applicable Adviser 9. No Non-Interested Director of a 2. Section 17(d) of the Act and rule will consider only the Objectives and Regulated Fund will have a financial 17d–1 under the Act prohibit affiliated Strategies, investment policies, interest in any Co-Investment persons of a registered investment investment positions, capital available Transaction, other than indirectly company from participating in joint for investment, and other pertinent through share ownership in one of the transactions with the company unless factors applicable to that Regulated Regulated Funds. the Commission has granted an order Fund. The Regulated Funds’ Advisers 10. Applicants also represent that if permitting such transactions. In passing expect that any portfolio company that the Advisers, the principals of the upon applications under rule 17d–1, the is an appropriate investment for a Advisers (‘‘Principals’’), or any person Commission considers whether the Regulated Fund should also be an controlling, controlled by, or under company’s participation in the joint appropriate investment for one or more common control with an Adviser or the transaction is consistent with the other Regulated Funds and/or one or Principals, and the Affiliated Funds provisions, policies, and purposes of the more Affiliated Funds, with certain (collectively, the ‘‘Holders’’) own in the Act and the extent to which such exceptions based on available capital or aggregate more than 25% of the participation is on a basis different from diversification.9 outstanding voting shares of a Regulated or less advantageous than that of other Fund (the ‘‘Shares’’), then the Holders participants. 7. Other than pro rata dispositions will vote such Shares as required under 3. Applicants state that in the absence and Follow-On Investments as provided condition 14. Applicants believe this of the requested relief, the Regulated in conditions 7 and 8, and after making condition will ensure that the Non- Funds would be, in some the determinations required in Interested Directors will act circumstances, limited in their ability to conditions 1 and 2(a), the Adviser will independently in evaluating the Co- participate in attractive and appropriate present each Potential Co-Investment Investment Program, because the ability investment opportunities. Applicants Transaction and the proposed allocation of the Advisers or the Principals to believe that the proposed terms and to the directors of the Board eligible to influence the Non-Interested Directors conditions will ensure that the Co- vote under section 57(o) of the Act by a suggestion, explicit or implied, that Investment Transactions are consistent (‘‘Eligible Directors’’), and the ‘‘required the Non-Interested Directors can be with the protection of each Regulated majority,’’ as defined in section 57(o) of removed will be limited significantly. Fund’s shareholders and with the the Act (‘‘Required Majority’’) 10 will Applicants represent that the Non- purposes intended by the policies and approve each Co-Investment Interested Directors will evaluate and provisions of the Act. Applicants state Transaction prior to any investment by approve any such independent third that the Regulated Funds’ participation the participating Regulated Fund. party, taking into account its in the Co-Investment Transactions will 8. With respect to the pro rata qualifications, reputation for be consistent with the provisions, dispositions and Follow-On Investments independence, cost to the shareholders, policies, and purposes of the Act and on provided in conditions 7 and 8, a and other factors that they deem a basis that is not different from or less Regulated Fund may participate in a pro relevant. advantageous than that of other rata disposition or Follow-On participants. Investment without obtaining prior Applicants’ Legal Analysis approval of the Required Majority if, 1. Section 57(a)(4) of the Act prohibits Applicants’ Conditions among other things: (i) The proposed certain affiliated persons of a BDC from Applicants agree that any order participation of each Regulated Fund participating in joint transactions with granting the requested relief shall be and Affiliated Fund in such disposition the BDC or a company controlled by a subject to the following conditions: is proportionate to its outstanding BDC in contravention of rules as 1. Each time an Adviser considers a investments in the issuer immediately prescribed by the Commission. Under Potential Co-Investment Transaction for preceding the disposition or Follow-On section 57(b)(2) of the Act, any person an Affiliated Fund or another Regulated Investment, as the case may be; and (ii) who is directly or indirectly controlling, Fund that falls within a Regulated the Board of the Regulated Fund has controlled by, or under common control Fund’s then-current Objectives and approved that Regulated Fund’s with a BDC is subject to section 57(a)(4). Strategies, the Regulated Fund’s Adviser participation in pro rata dispositions Applicants submit that each of the will make an independent and Follow-On Investments as being in Regulated Funds and Affiliated Funds determination of the appropriateness of the best interests of the Regulated Fund. could be deemed to be a person related the investment for such Regulated Fund If the Board does not so approve, any to each Regulated Fund in a manner in light of the Regulated Fund’s then- such disposition or Follow-On described by section 57(b) by virtue of current circumstances. Investment will be submitted to the being under common control. Section 2. (a) If the Adviser deems a Regulated Regulated Fund’s Eligible Directors. The 57(i) of the Act provides that, until the Fund’s participation in any Potential Board of any Regulated Fund may at any Commission prescribes rules under Co-Investment Transaction to be time rescind, suspend or qualify its section 57(a)(4), the Commission’s rules appropriate for the Regulated Fund, it approval of pro rata dispositions and under section 17(d) of the Act will then determine an appropriate level Follow-On Investments with the result applicable to registered closed-end of investment for the Regulated Fund. that all dispositions and/or Follow-On investment companies will be deemed (b) If the aggregate amount to apply to transactions subject to recommended by the applicable Adviser mstockstill on DSK30JT082PROD with NOTICES 9 The Regulated Funds, however, will not be section 57(a)(4). Because the to be invested by the applicable obligated to invest, or co-invest, when investment Commission has not adopted any rules Regulated Fund in the Potential Co- opportunities are referred to them. under section 57(a)(4), rule 17d–1 also Investment Transaction, together with 10 In the case of a Regulated Fund that is a applies to joint transactions with the amount proposed to be invested by registered closed-end fund, the Board members that make up the Required Majority will be determined Regulated Funds that are BDCs. Section the other participating Regulated Funds as if the Regulated Fund were a BDC subject to 17(d) of the Act and rule 17d–1 under and/or Affiliated Funds, collectively, in section 57(o). the Act are applicable to Regulated the same transaction, exceeds the VerDate Sep<11>2014 18:14 Aug 04, 2017 Jkt 241001 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 E:\FR\FM\07AUN1.SGM 07AUN1

36842 Federal Register / Vol. 82, No. 150 / Monday, August 7, 2017 / Notices amount of the investment opportunity, (A) The Eligible Directors will have 5. Except for Follow-On Investments the investment opportunity will be the right to ratify the selection of such made in accordance with condition 8,11 allocated among them pro rata based on director or board observer, if any; a Regulated Fund will not invest in each participant’s capital available for (B) the applicable Adviser agrees to, reliance on the Order in any issuer in investment in the asset class being and does, provide periodic reports to which another Regulated Fund, allocated, up to the amount proposed to the Regulated Fund’s Board with respect Affiliated Fund, or any affiliated person be invested by each. The applicable to the actions of such director or the of another Regulated Fund or Affiliated Adviser will provide the Eligible information received by such board Fund is an existing investor. Directors of each participating observer or obtained through the 6. A Regulated Fund will not Regulated Fund with information exercise of any similar right to participate in any Potential Co- concerning each participating party’s participate in the governance or Investment Transaction unless the available capital to assist the Eligible management of the portfolio company; terms, conditions, price, class of Directors with their review of the and; securities to be purchased, settlement Regulated Fund’s investments for (C) any fees or other compensation date, and registration rights will be the compliance with these allocation that any Affiliated Fund or any same for each participating Regulated procedures. Regulated Fund or any affiliated person Fund and Affiliated Fund. The grant to of any Affiliated Fund or any Regulated an Affiliated Fund or another Regulated (c) After making the determinations Fund receives in connection with the Fund, but not the Regulated Fund, of required in conditions 1 and 2(a), the right of an Affiliated Fund or a the right to nominate a director for applicable Adviser will distribute Regulated Fund to nominate a director election to a portfolio company’s board written information concerning the or appoint a board observer or otherwise of directors, the right to have an Potential Co-Investment Transaction to participate in the governance or (including the amount proposed to be observer on the board of directors or management of the portfolio company similar rights to participate in the invested by each participating Regulated will be shared proportionately among Fund and Affiliated Fund) to the governance or management of the the participating Affiliated Funds (who portfolio company will not be Eligible Directors of each participating each may, in turn, share its portion with Regulated Fund for their consideration. interpreted so as to violate this its affiliated persons) and the condition 6, if conditions 2(c)(iii)(A), (B) A Regulated Fund will co-invest with participating Regulated Funds in one or more other Regulated Funds and/ and (C) are met. accordance with the amount of each 7. (a) If any Affiliated Fund or any or one or more Affiliated Funds only if, party’s investment; and prior to the Regulated Fund’s Regulated Fund elects to sell, exchange (iv) the proposed investment by the participation in the Potential Co- or otherwise dispose of an interest in a Regulated Fund will not benefit the Investment Transaction, a Required security that was acquired in a Co- Advisers, the Affiliated Funds or the Majority concludes that: Investment Transaction, the applicable other Regulated Funds or any affiliated Advisers will: (i) The terms of the Potential Co- person of any of them (other than the (i) Notify each Regulated Fund that Investment Transaction, including the parties to the Co-Investment participated in the Co-Investment consideration to be paid, are reasonable Transaction), except (A) to the extent Transaction of the proposed disposition and fair to the Regulated Fund and its permitted by condition 13, (B) to the at the earliest practical time; and shareholders and do not involve extent permitted by section 17(e) or (ii) formulate a recommendation as to overreaching in respect of the Regulated 57(k) of the Act, as applicable, (C) participation by each Regulated Fund in Fund or its shareholders on the part of indirectly, as a result of an interest in the disposition. any person concerned; the securities issued by one of the (b) Each Regulated Fund will have the (ii) the Potential Co-Investment parties to the Co-Investment right to participate in such disposition Transaction is consistent with: Transaction, or (D) in the case of fees or on a proportionate basis, at the same (A) The interests of the shareholders other compensation described in price and on the same terms and of the Regulated Fund; and condition 2(c)(iii)(C). 3. Each Regulated Fund has the right conditions as those applicable to the (B) the Regulated Fund’s then-current to decline to participate in any Potential participating Affiliated Funds and Objectives and Strategies; Co-Investment Transaction or to invest Regulated Funds. (iii) the investment by any other less than the amount proposed. (c) A Regulated Fund may participate Regulated Funds or Affiliated Funds 4. The applicable Adviser will present in such disposition without obtaining would not disadvantage the Regulated to the Board of each Regulated Fund, on prior approval of the Required Majority Fund, and participation by the a quarterly basis, a record of all if: (i) The proposed participation of each Regulated Fund would not be on a basis investments in Potential Co-Investment Regulated Fund and each Affiliated different from or less advantageous than Transactions made by any of the other Fund in such disposition is that of other Regulated Funds or Regulated Funds or Affiliated Funds proportionate to its outstanding Affiliated Funds; provided that, if any during the preceding quarter that fell investments in the issuer immediately other Regulated Fund or Affiliated within the Regulated Fund’s then- preceding the disposition; (ii) the Board Fund, but not the Regulated Fund itself, current Objectives and Strategies that of the Regulated Fund has approved as gains the right to nominate a director for were not made available to the being in the best interests of the election to a portfolio company’s board Regulated Fund, and an explanation of Regulated Fund the ability to participate of directors or the right to have a board why the investment opportunities were in such dispositions on a pro rata basis mstockstill on DSK30JT082PROD with NOTICES observer or any similar right to not offered to the Regulated Fund. All (as described in greater detail in the participate in the governance or information presented to the Board application); and (iii) the Board of the management of the portfolio company, pursuant to this condition will be kept Regulated Fund is provided on a such event shall not be interpreted to for the life of the Regulated Fund and 11 This exception applies only to Follow-On prohibit the Required Majority from at least two years thereafter, and will be Investments by a Regulated Fund in issuers in reaching the conclusions required by subject to examination by the which that Regulated Fund already holds this condition (2)(c)(iii), if: Commission and its staff. investments. VerDate Sep<11>2014 18:14 Aug 04, 2017 Jkt 241001 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 E:\FR\FM\07AUN1.SGM 07AUN1

Federal Register / Vol. 82, No. 150 / Monday, August 7, 2017 / Notices 36843 quarterly basis with a list of all invested by each such party will be distributed to the participating dispositions made in accordance with allocated among them pro rata based on Regulated Funds and Affiliated Funds this condition. In all other cases, the each participant’s capital available for on a pro rata basis based on the amounts Adviser will provide its written investment in the asset class being they invested or committed, as the case recommendation as to the Regulated allocated, up to the amount proposed to may be, in such Co-Investment Fund’s participation to the Eligible be invested by each. Transaction. If any transaction fee 12 is Directors, and the Regulated Fund will (d) The acquisition of Follow-On to be held by an Adviser pending participate in such disposition solely to Investments as permitted by this consummation of the transaction, the the extent that a Required Majority condition will be considered a Co- fee will be deposited into an account determines that it is in the Regulated Investment Transaction for all purposes maintained by such Adviser at a bank or Fund’s best interests. and subject to the other conditions set banks having the qualifications (d) Each Affiliated Fund and each forth in the application. prescribed in section 26(a)(1) of the Act, Regulated Fund will bear its own 9. The Non-Interested Directors of and the account will earn a competitive expenses in connection with any such each Regulated Fund will be provided rate of interest that will also be divided disposition. quarterly for review all information pro rata among the participating 8. (a) If any Affiliated Fund or any concerning Potential Co-Investment Regulated Funds and Affiliated Funds Regulated Fund desires to make a Transactions and Co-Investment based on the amounts they invest in Follow-On Investment in a portfolio Transactions, including investments such Co-Investment Transaction. None company whose securities were made by other Regulated Funds or of the Affiliated Funds, the Advisers, acquired in a Co-Investment Affiliated Funds that the Regulated the other Regulated Funds or any Transaction, the applicable Advisers Fund considered but declined to affiliated person of the Regulated Funds will: participate in, so that the Non-Interested or Affiliated Funds will receive (i) Notify each Regulated Fund that Directors may determine whether all additional compensation or participated in the Co-Investment investments made during the preceding remuneration of any kind as a result of Transaction of the proposed transaction quarter, including those investments or in connection with a Co-Investment at the earliest practicable time; and that the Regulated Fund considered but (ii) formulate a recommendation as to Transaction other than (a) in the case of declined to participate in, comply with the proposed participation, including the Regulated Funds and the Affiliated the conditions of the Order. In addition, the amount of the proposed Follow-On Funds, the pro rata transaction fees the Non-Interested Directors will Investment, by each Regulated Fund. described above and fees or other consider at least annually the continued (b) A Regulated Fund may participate compensation described in condition appropriateness for the Regulated Fund in such Follow-On Investment without 2(c)(iii)(C); and (b) in the case of an of participating in new and existing Co- obtaining prior approval of the Required Adviser, investment advisory fees paid Investment Transactions. Majority if: (i) The proposed 10. Each Regulated Fund will in accordance with the agreement participation of each Regulated Fund maintain the records required by section between the Adviser and the Regulated and each Affiliated Fund in such 57(f)(3) of the Act as if each of the Fund or Affiliated Fund. investment is proportionate to its Regulated Funds were a BDC and each 14. If the Holders own in the aggregate outstanding investments in the issuer of the investments permitted under more than 25% of the Shares, then the immediately preceding the Follow-On these conditions were approved by the Holders will vote such Shares as Investment; and (ii) the Board of the Required Majority under section 57(f) of directed by an independent third party Regulated Fund has approved as being the Act. when voting on (1) the election of in the best interests of the Regulated 11. No Non-Interested Director of a directors; (2) the removal of one or more Fund the ability to participate in Regulated Fund will also be a director, directors; or (3) all other matters under Follow-On Investments on a pro rata general partner, managing member or either the Act or applicable State law basis (as described in greater detail in principal, or otherwise an ‘‘affiliated affecting the Board’s composition, size the application). In all other cases, the person’’ (as defined in the Act) of an or manner of election. Adviser will provide its written Affiliated Fund. 15. Each Regulated Fund’s chief recommendation as to the Regulated 12. The expenses, if any, associated compliance officer as defined in rule Fund’s participation to the Eligible with acquiring, holding or disposing of 38a–1(a)(4) will prepare an annual Directors, and the Regulated Fund will any securities acquired in a Co- report for its Board each year that participate in such Follow-On Investment Transaction (including, evaluates (and documents the basis of Investment solely to the extent that a without limitation, the expenses of the that evaluation) the Regulated Fund’s Required Majority determines that it is distribution of any such securities compliance with the terms and in the Regulated Fund’s best interests. registered for sale under the Securities conditions of the Application and the (c) If, with respect to any Follow-On Act) will, to the extent not payable by procedures established to achieve such Investment: the Advisers under their respective compliance. (i) The amount of the opportunity is investment advisory agreements with not based on the Regulated Funds’ and Affiliated Funds and the Regulated For the Commission, by the Division of the Affiliated Funds’ outstanding Funds, be shared by the Regulated Investment Management, under delegated investments immediately preceding the Funds and the Affiliated Funds in authority. Follow-On Investment; and proportion to the relative amounts of the Eduardo A. Aleman, (ii) the aggregate amount securities held or to be acquired or mstockstill on DSK30JT082PROD with NOTICES Assistant Secretary. recommended by the Adviser to be disposed of, as the case may be. [FR Doc. 2017–16510 Filed 8–4–17; 8:45 am] invested by each Regulated Fund in the 13. Any transaction fee (including BILLING CODE 8011–01–P Follow-On Investment, together with break-up or commitment fees but the amount proposed to be invested by excluding broker’s fees contemplated by 12 Applicants are not requesting and the staff is the participating Affiliated Funds in the section 17(e) or 57(k) of the Act, as not providing any relief for transaction fees same transaction, exceeds the amount of applicable), received in connection with received in connection with any Co-Investment the opportunity; then the amount a Co-Investment Transaction will be Transaction. VerDate Sep<11>2014 18:14 Aug 04, 2017 Jkt 241001 PO 00000 Frm 00116 Fmt 4703 Sfmt 9990 E:\FR\FM\07AUN1.SGM 07AUN1


Document Created: 2017-08-05 02:59:44
Document Modified: 2017-08-05 02:59:44
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ``Act'') and rule 17d- 1 under the Act permitting certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
DatesThe application was filed on December 6, 2016, and
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 36839 
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