82_FR_61342 82 FR 61096 - BlackRock Capital Investment Corporation, et al.

82 FR 61096 - BlackRock Capital Investment Corporation, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 246 (December 26, 2017)

Page Range61096-61100
FR Document2017-27686

Federal Register, Volume 82 Issue 246 (Tuesday, December 26, 2017) 
[Federal Register Volume 82, Number 246 (Tuesday, December 26, 2017)]
[Notices]
[Pages 61096-61100]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27686]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32943; File No. 812-14582]


BlackRock Capital Investment Corporation, et al.

December 19, 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 permitting certain joint transactions otherwise 
prohibited by sections 17(d) and 57(a)(4) of the Act and under rule 
17d-1 under the Act.

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:  BlackRock Capital Investment Corporation (``Company''), 
Middle Market Senior Fund, L.P. (``MMSF''), and BlackRock Capital 
Investment Advisors, LLC (``BlackRock Capital Advisor''), on behalf of 
itself and its successors.\1\
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    \1\ The term ``successor,'' as applied to each BlackRock Capital 
Advisor, means an entity that results from a reorganization into 
another jurisdiction or change in the type of business organization.

FILING DATES:  The application was filed on November 19, 2015, and 
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amended on February 24, 2016, June 8, 2016 and September 22, 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 January 15, 2018, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES:  Secretary, U.S. Securities and Exchange Commission, 100 F 
St. NE, Washington, DC 20549-1090. Applicants, 40 East 52nd Street, New 
York, NY 10022.

FOR FURTHER INFORMATION CONTACT:  Kaitlin C. Bottock, Senior Counsel, 
at (202) 551-8658, 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 website by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Company, a Delaware corporation, is 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 Company's Objectives and 
Strategies \3\ are to generate both current income and capital 
appreciation through debt and equity investments. The board of

[[Page 61097]]

directors of the Company (the ``Company Board'') is comprised of six 
directors. The Company Board and any board of directors of a Future 
Regulated Fund (defined below) (the ``Boards'' and each a ``Board'') 
will be comprised of directors, a majority of whom will not be 
``interested persons,'' within the meaning of section 2(a)(19) of the 
Act (the ``Non-Interested Directors''), of the Company or any Future 
Regulated 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 
(defined below) 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. MMSF is a Delaware limited partnership that is exempt from 
registration pursuant to section 3(c)(7) of the Act. MMSF's investment 
objective is to generate current income through senior debt 
investments.
    3. BlackRock Capital Advisor, a Delaware limited liability company, 
intends to be registered with the Commission as an investment adviser 
under the Investment Advisers Act of 1940 (the ``Advisers Act''). 
BlackRock Capital Advisor is an indirect wholly-owned subsidiary of 
BlackRock, Inc., a New York based global investment management firm. 
BlackRock Capital Advisor will serve as investment adviser to the 
Company and MMSF.
    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 either or both of 
sections 17(d) and 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 a BRC Advisor negotiates terms in addition to 
price; \6\ and (b) making additional investments in securities, 
including loans, 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, defined below) participated together with 
one or more other Regulated Funds and/or one or more Affiliated Funds 
in reliance on the requested Order. ``Potential Co-Investment 
Transaction'' means any investment opportunity in which a Regulated 
Fund (or its Wholly-Owned Investment Sub) 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 the Company 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 a BRC Advisor, and (c) that intends to participate in the 
Co-Investment Program. The term ``BRC Advisor'' means (a) BlackRock 
Capital Advisor and (b) any future investment adviser that is 
controlled by BlackRock Capital Advisor and is registered as an 
investment adviser under the Advisers Act.
    \5\ ``Affiliated Fund'' means MMSF and any Future Affiliated 
Fund. ``Future Affiliated Fund'' means any entity (a) whose 
investment adviser is a BRC Advisor, (b) that would be an investment 
company but for section 3(c)(1) or 3(c)(7) of the Act, and (c) that 
intends to participate in the Co-Investment Program.
    \6\ The term ``private placement transactions'' means 
transactions in which the offer and sale of securities by the issuer 
are exempt from registration under the Securities Act.
    \7\ All existing entities that currently intend to rely upon the 
requested Order have been named as applicants. Any other existing or 
future entity that subsequently relies on the Order will comply with 
the terms and conditions of the application.
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    5. Applicants state that any of the Regulated Funds may, from time 
to time, form one or more Wholly-Owned Investment Subs.\8\ Such a 
subsidiary would be prohibited from investing in a Co-Investment 
Transaction with any Affiliated Fund or Regulated Fund because it would 
be a company controlled by its parent Regulated Fund for purposes of 
section 57(a)(4) and rule 17d-1. Applicants request that each Wholly-
Owned Investment Sub be permitted to participate in Co-Investment 
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub's participation in any such transaction be 
treated, for purposes of the requested Order, as though the parent 
Regulated Fund were participating directly. Applicants represent that 
this treatment is justified because a Wholly-Owned Investment Sub would 
have no purpose other than serving as a holding vehicle for the 
Regulated Fund's investments and, therefore, no conflicts of interest 
could arise between the Regulated Fund and the Wholly-Owned Investment 
Sub. The Regulated Fund's Board would make all relevant determinations 
under the conditions with regard to a Wholly-Owned Investment Sub's 
participation in a Co-Investment Transaction, and the Regulated Fund's 
Board would be informed of, and take into consideration, any proposed 
use of a Wholly-Owned Investment Sub in the Regulated Fund's place. If 
the Regulated Fund proposes to participate in the same Co-Investment 
Transaction with any of its Wholly-Owned Investment Subs, the Board 
will also be informed of, and take into consideration, the relative 
participation of the Regulated Fund and the Wholly-Owned Investment 
Sub.
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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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    6. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the applicable BRC Advisor will consider only the 
Objectives and Strategies, investment policies, investment positions, 
capital available for investment, and other pertinent factors 
applicable to that Regulated Fund. Before relying on the requested 
Order, the Board of each Regulated Fund, including the Non-Interested 
Directors, will have determined that it is in the best interests of the 
Regulated Fund to participate in the Co-Investment Transactions.\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 BRC Advisor 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

[[Page 61098]]

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 through 
share ownership in one of the Regulated Funds.
    10. Applicants also represent that if a BRC Advisor or its 
principals, or any person controlling, controlled by, or under common 
control with a BRC Advisor or its 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' 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 the Order will be subject to the following 
conditions:
    1. Each time a BRC Advisor 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 BRC Advisor 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 BRC Advisor 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 BRC 
Advisor 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 BRC Advisor 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 BRC Advisor 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 participating 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 BRC Advisor 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

[[Page 61099]]

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 BRC Advisors, 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 BRC Advisor 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 BRC Advisors 
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 quarterly basis 
with a list of all dispositions made in accordance with this condition. 
In all other cases, the BRC Advisor 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 BRC Advisors 
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 BRC Advisor 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 BRC Advisor 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-

[[Page 61100]]

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 BRC Advisors 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 a BRC Advisor 
pending consummation of the transaction, the fee will be deposited into 
an account maintained by such BRC Advisor 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 BRC Advisors, 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 BRC Advisor, investment advisory fees paid in 
accordance with the agreement between the BRC Advisor 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.
    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. 2017-27686 Filed 12-22-17; 8:45 am]
 BILLING CODE 8011-01-P

61096 Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices transactions, and underwritings, (ii) persons, securities, or transactions, from February 24, 2016, June 8, 2016 and excessive layering of fees, and (iii) any provision of section 12(d)(1) if the September 22, 2017. overly complex fund structures, which exemption is consistent with the public HEARING OR NOTIFICATION OF HEARING: are the concerns underlying the limits interest and the protection of investors. An order granting the requested relief in sections 12(d)(1)(A) and (B) of the Section 17(b) of the Act authorizes the will be issued unless the Commission Act. Commission to grant an order orders a hearing. Interested persons may 8. Applicants request an exemption permitting a transaction otherwise request a hearing by writing to the from sections 17(a)(1) and 17(a)(2) of the prohibited by section 17(a) if it finds Commission’s Secretary and serving Act to permit persons that are Affiliated that (a) the terms of the proposed applicants with a copy of the request, Persons, or Second Tier Affiliates, of the transaction are fair and reasonable and personally or by mail. Hearing requests Funds, solely by virtue of certain do not involve overreaching on the part should be received by the Commission ownership interests, to effectuate of any person concerned; (b) the by 5:30 p.m. on January 15, 2018, and purchases and redemptions in-kind. The proposed transaction is consistent with should be accompanied by proof of deposit procedures for in-kind the policies of each registered service on applicants, in the form of an purchases of Creation Units and the investment company involved; and (c) affidavit or, for lawyers, a certificate of redemption procedures for in-kind the proposed transaction is consistent service. Pursuant to rule 0–5 under the redemptions of Creation Units will be with the general purposes of the Act. Act, hearing requests should state the the same for all purchases and nature of the writer’s interest, any facts For the Commission, by the Division of redemptions and Deposit Instruments Investment Management, under delegated bearing upon the desirability of a and Redemption Instruments will be authority. hearing on the matter, the reason for the valued in the same manner as those Eduardo A. Aleman, request, and the issues contested. Portfolio Instruments currently held by Persons who wish to be notified of a Assistant Secretary. the Funds. Applicants also seek relief hearing may request notification by [FR Doc. 2017–27649 Filed 12–22–17; 8:45 am] from the prohibitions on affiliated writing to the Commission’s Secretary. BILLING CODE 8011–01–P transactions in section 17(a) to permit a ADDRESSES: Secretary, U.S. Securities Fund to sell its shares to and redeem its and Exchange Commission, 100 F St. shares from a Fund of Funds, and to NE, Washington, DC 20549–1090. SECURITIES AND EXCHANGE engage in the accompanying in-kind Applicants, 40 East 52nd Street, New transactions with the Fund of Funds.2 COMMISSION York, NY 10022. The purchase of Creation Units by a [Investment Company Act Release No. FOR FURTHER INFORMATION CONTACT: Fund of Funds directly from a Fund will 32943; File No. 812–14582] Kaitlin C. Bottock, Senior Counsel, at be accomplished in accordance with the BlackRock Capital Investment (202) 551–8658, or David J. Marcinkus, policies of the Fund of Funds and will Corporation, et al. Branch Chief, at (202) 551–6821 (Chief be based on the NAVs of the Funds. Counsel’s Office, Division of Investment 9. Applicants also request relief to December 19, 2017. Management). permit a Feeder Fund to acquire shares AGENCY: Securities and Exchange of another registered investment SUPPLEMENTARY INFORMATION: The Commission (‘‘Commission’’). following is a summary of the company managed by the Adviser ACTION: Notice. application. The complete application having substantially the same investment objectives as the Feeder may be obtained via the Commission’s Notice of application for an order Fund (‘‘Master Fund’’) beyond the website by searching for the file under sections 17(d) and 57(i) of the limitations in section 12(d)(1)(A) and number, or for an applicant using the Investment Company Act of 1940 (the permit the Master Fund, and any Company name box, at http:// ‘‘Act’’) and rule 17d–1 under the Act principal underwriter for the Master www.sec.gov/search/search.htm or by permitting certain joint transactions Fund, to sell shares of the Master Fund calling (202) 551–8090. otherwise prohibited by sections 17(d) to the Feeder Fund beyond the and 57(a)(4) of the Act and under rule Applicants’ Representations limitations in section 12(d)(1)(B). 17d–1 under the Act. 10. Section 6(c) of the Act permits the 1. The Company, a Delaware SUMMARY OF APPLICATION: Applicants corporation, is organized as a closed- Commission to exempt any persons or request an order to permit a business end management investment company transactions from any provision of the development company (‘‘BDC’’) and that has elected to be regulated as a BDC Act if such exemption is necessary or certain closed end investment under section 54(a) of the Act.2 The appropriate in the public interest and companies to co-invest in portfolio Company’s Objectives and Strategies 3 consistent with the protection of companies with each other and with are to generate both current income and investors and the purposes fairly intended by the policy and provisions of affiliated investment funds. capital appreciation through debt and the Act. Section 12(d)(1)(J) of the Act APPLICANTS: BlackRock Capital equity investments. The board of provides that the Commission may Investment Corporation (‘‘Company’’), exempt any person, security, or Middle Market Senior Fund, L.P. 2 Section 2(a)(48) defines a BDC to be any closed- (‘‘MMSF’’), and BlackRock Capital end investment company that operates for the transaction, or any class or classes of purpose of making investments in securities Investment Advisors, LLC (‘‘BlackRock described in sections 55(a)(1) through 55(a)(3) of the 2 The requested relief would apply to direct sales Capital Advisor’’), on behalf of itself and Act and makes available significant managerial of shares in Creation Units by a Fund to a Fund of its successors.1 assistance with respect to the issuers of such ethrower on DSK3G9T082PROD with NOTICES Funds and redemptions of those shares. Applicants, securities. FILING DATES: The application was filed moreover, are not seeking relief from section 17(a) 3 ‘‘Objectives and Strategies’’ means a Regulated for, and the requested relief will not apply to, on November 19, 2015, and amended on Fund’s (defined below) investment objectives and transactions where a Fund could be deemed an strategies, as described in the Regulated Fund’s Affiliated Person, or a Second-Tier Affiliate, of a 1 The term ‘‘successor,’’ as applied to each registration statement on Form N–2, other filings Fund of Funds because an Adviser or an entity BlackRock Capital Advisor, means an entity that the Regulated Fund has made with the Commission controlling, controlled by or under common control results from a reorganization into another under the Securities Act of 1933 (the ‘‘Securities with an Adviser provides investment advisory jurisdiction or change in the type of business Act’’) or under the Securities Exchange Act of 1934, services to that Fund of Funds. organization. and the Regulated Fund’s reports to shareholders. 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Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices 61097 directors of the Company (the other rights to purchase securities of the Wholly-Owned Investment Sub in the ‘‘Company Board’’) is comprised of six issuers (‘‘Follow-On Investments’’). ‘‘Co- Regulated Fund’s place. If the Regulated directors. The Company Board and any Investment Transaction’’ means any Fund proposes to participate in the board of directors of a Future Regulated transaction in which a Regulated Fund same Co-Investment Transaction with Fund (defined below) (the ‘‘Boards’’ and (or its Wholly-Owned Investment Sub, any of its Wholly-Owned Investment each a ‘‘Board’’) will be comprised of defined below) participated together Subs, the Board will also be informed directors, a majority of whom will not with one or more other Regulated Funds of, and take into consideration, the be ‘‘interested persons,’’ within the and/or one or more Affiliated Funds in relative participation of the Regulated meaning of section 2(a)(19) of the Act reliance on the requested Order. Fund and the Wholly-Owned (the ‘‘Non-Interested Directors’’), of the ‘‘Potential Co-Investment Transaction’’ Investment Sub. Company or any Future Regulated means any investment opportunity in 6. When considering Potential Co- Fund. which a Regulated Fund (or its Wholly- Investment Transactions for any 2. MMSF is a Delaware limited Owned Investment Sub) could not Regulated Fund, the applicable BRC partnership that is exempt from participate together with one or more Advisor will consider only the registration pursuant to section 3(c)(7) Affiliated Funds and/or one or more Objectives and Strategies, investment of the Act. MMSF’s investment objective other Regulated Funds without policies, investment positions, capital is to generate current income through obtaining and relying on the Order.7 available for investment, and other senior debt investments. 5. Applicants state that any of the pertinent factors applicable to that 3. BlackRock Capital Advisor, a Regulated Funds may, from time to Regulated Fund. Before relying on the Delaware limited liability company, time, form one or more Wholly-Owned requested Order, the Board of each intends to be registered with the Investment Subs.8 Such a subsidiary Regulated Fund, including the Non- Commission as an investment adviser would be prohibited from investing in a Interested Directors, will have under the Investment Advisers Act of Co-Investment Transaction with any determined that it is in the best interests 1940 (the ‘‘Advisers Act’’). BlackRock Affiliated Fund or Regulated Fund of the Regulated Fund to participate in Capital Advisor is an indirect wholly- because it would be a company the Co-Investment Transactions.9 owned subsidiary of BlackRock, Inc., a controlled by its parent Regulated Fund 7. Other than pro rata dispositions New York based global investment for purposes of section 57(a)(4) and rule and Follow-On Investments as provided management firm. BlackRock Capital 17d–1. Applicants request that each in conditions 7 and 8, and after making Advisor will serve as investment adviser Wholly-Owned Investment Sub be the determinations required in to the Company and MMSF. permitted to participate in Co- conditions 1 and 2(a), the BRC Advisor 4. Applicants seek an order (‘‘Order’’) Investment Transactions in lieu of its will present each Potential Co- to permit one or more Regulated Funds 4 parent Regulated Fund and that the Investment Transaction and the and/or one or more Affiliated Funds 5 to Wholly-Owned Investment Sub’s proposed allocation to the directors of participate in the same investment participation in any such transaction be the Board eligible to vote under section opportunities through a proposed co- treated, for purposes of the requested 57(o) of the Act (‘‘Eligible Directors’’), investment program (the ‘‘Co- Order, as though the parent Regulated and the ‘‘required majority,’’ as defined Investment Program’’) where such Fund were participating directly. in section 57(o) of the Act (‘‘Required participation would otherwise be Applicants represent that this treatment Majority’’) 10 will approve each Co- prohibited under either or both of is justified because a Wholly-Owned Investment Transaction prior to any sections 17(d) and 57(a)(4) and rule Investment Sub would have no purpose investment by the participating 17d–1 by (a) co-investing with each other than serving as a holding vehicle Regulated Fund. other in securities issued by issuers in for the Regulated Fund’s investments 8. With respect to the pro rata private placement transactions in which and, therefore, no conflicts of interest dispositions and Follow-On Investments a BRC Advisor negotiates terms in could arise between the Regulated Fund provided in conditions 7 and 8, a addition to price; 6 and (b) making and the Wholly-Owned Investment Sub. Regulated Fund may participate in a pro additional investments in securities, The Regulated Fund’s Board would rata disposition or Follow-On including loans, of such issuers, make all relevant determinations under Investment without obtaining prior including through the exercise of the conditions with regard to a Wholly- approval of the Required Majority if, warrants, conversion privileges, and Owned Investment Sub’s participation among other things: (i) The proposed in a Co-Investment Transaction, and the participation of each Regulated Fund 4 ‘‘Regulated Fund’’ means the Company and any Regulated Fund’s Board would be and Affiliated Fund in such disposition Future Regulated Fund. ‘‘Future Regulated Fund’’ means any closed-end management investment informed of, and take into is proportionate to its outstanding company (a) that is registered under the Act or has consideration, any proposed use of a investments in the issuer immediately elected to be regulated as a BDC, (b) whose preceding the disposition or Follow-On investment adviser is a BRC Advisor, and (c) that 7 All existing entities that currently intend to rely Investment, as the case may be; and (ii) intends to participate in the Co-Investment upon the requested Order have been named as Program. The term ‘‘BRC Advisor’’ means (a) the Board of the Regulated Fund has applicants. Any other existing or future entity that BlackRock Capital Advisor and (b) any future subsequently relies on the Order will comply with approved that Regulated Fund’s investment adviser that is controlled by BlackRock the terms and conditions of the application. participation in pro rata dispositions Capital Advisor and is registered as an investment 8 The term ‘‘Wholly-Owned Investment Sub’’ and Follow-On Investments as being in adviser under the Advisers Act. means an entity (i) that is wholly-owned by a 5 ‘‘Affiliated Fund’’ means MMSF and any Future the best interests of the Regulated Fund. Regulated Fund (with the Regulated Fund at all Affiliated Fund. ‘‘Future Affiliated Fund’’ means times holding, beneficially and of record, 100% of If the Board does not so approve, any ethrower on DSK3G9T082PROD with NOTICES any entity (a) whose investment adviser is a BRC the voting and economic interests); (ii) whose sole Advisor, (b) that would be an investment company business purpose is to hold one or more 9 The Regulated Funds, however, will not be but for section 3(c)(1) or 3(c)(7) of the Act, and (c) investments on behalf of the Regulated Fund; (iii) obligated to invest, or co-invest, when investment that intends to participate in the Co-Investment with respect to which the Regulated Fund’s Board opportunities are referred to them. Program. has the sole authority to make all determinations 10 In the case of a Regulated Fund that is a 6 The term ‘‘private placement transactions’’ with respect to the entity’s participation under the registered closed-end fund, the Board members that means transactions in which the offer and sale of conditions of the application; and (iv) that would make up the Required Majority will be determined securities by the issuer are exempt from registration be an investment company but for section 3(c)(1) or as if the Regulated Fund were a BDC subject to under the Securities Act. 3(c)(7) of the Act. section 57(o). VerDate Sep<11>2014 20:21 Dec 22, 2017 Jkt 244001 PO 00000 Frm 00150 Fmt 4703 Sfmt 4703 E:\FR\FM\26DEN1.SGM 26DEN1

61098 Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices such disposition or Follow-On upon applications under rule 17d–1, the Directors of each participating Investment will be submitted to the Commission considers whether the Regulated Fund with information Regulated Fund’s Eligible Directors. The company’s participation in the joint concerning each participating party’s Board of any Regulated Fund may at any transaction is consistent with the available capital to assist the Eligible time rescind, suspend or qualify its provisions, policies, and purposes of the Directors with their review of the approval of pro rata dispositions and Act and the extent to which such Regulated Fund’s investments for Follow-On Investments with the result participation is on a basis different from compliance with these allocation that all dispositions and/or Follow-On or less advantageous than that of other procedures. Investments must be submitted to the participants. (c) After making the determinations Eligible Directors. 3. Applicants state that in the absence required in conditions 1 and 2(a), the 9. No Non-Interested Director of a of the requested relief, the Regulated applicable BRC Advisor will distribute Regulated Fund will have a financial Funds would be, in some written information concerning the interest in any Co-Investment circumstances, limited in their ability to Potential Co-Investment Transaction Transaction, other than through share participate in attractive and appropriate (including the amount proposed to be ownership in one of the Regulated investment opportunities. Applicants invested by each participating Regulated Funds. believe that the proposed terms and Fund and Affiliated Fund) to the 10. Applicants also represent that if a conditions will ensure that the Co- Eligible Directors of each participating BRC Advisor or its principals, or any Investment Transactions are consistent Regulated Fund for their consideration. person controlling, controlled by, or with the protection of each Regulated A Regulated Fund will co-invest with under common control with a BRC Fund’s shareholders and with the one or more other Regulated Funds and/ Advisor or its principals, and the purposes intended by the policies and or one or more Affiliated Funds only if, Affiliated Funds (collectively, the provisions of the Act. Applicants state prior to the Regulated Fund’s ‘‘Holders’’) own in the aggregate more that the Regulated Funds’ participation participation in the Potential Co- than 25% of the outstanding voting in the Co-Investment Transactions will Investment Transaction, a Required shares of a Regulated Fund (the be consistent with the provisions, Majority concludes that: ‘‘Shares’’), then the Holders will vote policies, and purposes of the Act and on (i) The terms of the Potential Co- such Shares as required under condition a basis that is not different from or less Investment Transaction, including the 14. advantageous than that of other consideration to be paid, are reasonable Applicants’ Legal Analysis participants. and fair to the Regulated Fund and its shareholders and do not involve 1. Section 57(a)(4) of the Act prohibits Applicants’ Conditions overreaching in respect of the Regulated certain affiliated persons of a BDC from Applicants agree that the Order will Fund or its shareholders on the part of participating in joint transactions with be subject to the following conditions: any person concerned; the BDC or a company controlled by a 1. Each time a BRC Advisor considers (ii) the Potential Co-Investment BDC in contravention of rules as a Potential Co-Investment Transaction Transaction is consistent with: prescribed by the Commission. Under for an Affiliated Fund or another (A) The interests of the shareholders section 57(b)(2) of the Act, any person Regulated Fund that falls within a of the Regulated Fund; and who is directly or indirectly controlling, Regulated Fund’s then-current (B) the Regulated Fund’s then-current controlled by, or under common control Objectives and Strategies, the Regulated Objectives and Strategies; with a BDC is subject to section 57(a)(4). Fund’s BRC Advisor will make an (iii) the investment by any other Applicants submit that each of the independent determination of the Regulated Funds or Affiliated Funds Regulated Funds and Affiliated Funds appropriateness of the investment for would not disadvantage the Regulated could be deemed to be a person related such Regulated Fund in light of the Fund, and participation by the to each Regulated Fund in a manner Regulated Fund’s then-current participating Regulated Fund would not described by section 57(b) by virtue of circumstances. be on a basis different from or less being under common control. Section 2. (a) If the BRC Advisor deems a advantageous than that of other 57(i) of the Act provides that, until the Regulated Fund’s participation in any Regulated Funds or Affiliated Funds; Commission prescribes rules under Potential Co-Investment Transaction to provided that, if any other Regulated section 57(a)(4), the Commission’s rules be appropriate for the Regulated Fund, Fund or Affiliated Fund, but not the under section 17(d) of the Act it will then determine an appropriate Regulated Fund itself, gains the right to applicable to registered closed-end level of investment for the Regulated nominate a director for election to a investment companies will be deemed Fund. portfolio company’s board of directors to apply to transactions subject to (b) If the aggregate amount or the right to have a board observer or section 57(a)(4). Because the recommended by the applicable BRC any similar right to participate in the Commission has not adopted any rules Advisor to be invested by the applicable governance or management of the under section 57(a)(4), rule 17d–1 also Regulated Fund in the Potential Co- portfolio company, such event shall not applies to joint transactions with Investment Transaction, together with be interpreted to prohibit the Required Regulated Funds that are BDCs. Section the amount proposed to be invested by Majority from reaching the conclusions 17(d) of the Act and rule 17d–1 under the other participating Regulated Funds required by 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; ethrower on DSK3G9T082PROD with NOTICES 2. Section 17(d) of the Act and rule investment opportunity will be (B) the applicable BRC Advisor agrees 17d–1 under the Act prohibit affiliated allocated among them pro rata based on to, 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 BRC observer or obtained through the permitting such transactions. In passing Advisor will provide the Eligible exercise of any similar right to VerDate Sep<11>2014 20:21 Dec 22, 2017 Jkt 244001 PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 E:\FR\FM\26DEN1.SGM 26DEN1

Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices 61099 participate in the governance or Affiliated Fund, or any affiliated person determines that it is in the Regulated management of the portfolio company; of another Regulated Fund or Affiliated Fund’s best interests. and Fund is an existing investor. (d) Each Affiliated Fund and each (C) any fees or other compensation 6. A Regulated Fund will not Regulated Fund will bear its own that any Affiliated Fund or any participate in any Potential Co- expenses in connection with any such Regulated Fund or any affiliated person Investment Transaction unless the disposition. 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 BRC management of the portfolio company Fund, but not the Regulated Fund, of Advisors 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 BRC (b) A Regulated Fund may participate condition 6, if conditions 2(c)(iii)(A), (B) Advisors, the Affiliated Funds or the in such Follow-On Investment without and (C) are met. other Regulated Funds or any affiliated obtaining prior approval of the Required 7. (a) If any Affiliated Fund or any Majority if: (i) The proposed person of any of them (other than the Regulated Fund elects to sell, exchange parties to the Co-Investment participation of each Regulated Fund or otherwise dispose of an interest in a and each Affiliated Fund in such Transaction), except (A) to the extent security that was acquired in a Co- permitted by condition 13, (B) to the investment is proportionate to its Investment Transaction, the applicable outstanding investments in the issuer extent permitted by section 17(e) or BRC Advisors will: 57(k) of the Act, as applicable, (C) immediately preceding the Follow-On (i) Notify each Regulated Fund that Investment; and (ii) the Board of the indirectly, as a result of an interest in participated in the Co-Investment the securities issued by one of the Regulated Fund has approved as being Transaction of the proposed disposition in the best interests of the Regulated parties to the Co-Investment 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 Follow-On Investments on a pro rata other compensation described in participation by each Regulated Fund in condition 2(c)(iii)(C). basis (as described in greater detail in the disposition. the application). In all other cases, the 3. Each Regulated Fund has the right (b) Each Regulated Fund will have the to decline to participate in any Potential BRC Advisor will provide its written right to participate in such disposition recommendation as to the Regulated Co-Investment Transaction or to invest 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 Directors, and the Regulated Fund will 4. The applicable BRC Advisor will conditions as those applicable to the present to the Board of each Regulated participate in such Follow-On participating Affiliated Funds and Investment solely to the extent that a Fund, on a quarterly basis, a record of Regulated Funds. all investments in Potential Co- Required Majority determines that it is (c) A Regulated Fund may participate in the Regulated Fund’s best interests. Investment Transactions made by any of in such disposition without obtaining the other Regulated Funds or Affiliated (c) If, with respect to any Follow-On prior approval of the Required Majority Investment: Funds during the preceding quarter that if: (i) The proposed participation of each (i) The amount of the opportunity is fell 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 BRC Advisor 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 ethrower on DSK3G9T082PROD with NOTICES 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 BRC Advisor 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 11 This exception applies only to Follow-On Fund’s participation to the Eligible be invested by each. Investments by a Regulated Fund in issuers in Directors, and the Regulated Fund will (d) The acquisition of Follow-On which that Regulated Fund already holds participate in such disposition solely to Investments as permitted by this investments. the extent that a Required Majority condition will be considered a Co- VerDate Sep<11>2014 20:21 Dec 22, 2017 Jkt 244001 PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 E:\FR\FM\26DEN1.SGM 26DEN1

61100 Federal Register / Vol. 82, No. 246 / Tuesday, December 26, 2017 / Notices Investment Transaction for all purposes may be, in such Co-Investment SECURITIES AND EXCHANGE and subject to the other conditions set Transaction. If any transaction fee is to COMMISSION forth in the application. be held by a BRC Advisor pending 9. The Non-Interested Directors of consummation of the transaction, the [Release No. 34–82350; File No. SR– each Regulated Fund will be provided fee will be deposited into an account NYSEArca–2017–139] quarterly for review all information maintained by such BRC Advisor at a concerning Potential Co-Investment bank or banks having the qualifications Self-Regulatory Organizations; NYSE Transactions and Co-Investment prescribed in section 26(a)(1) of the Act, Arca, Inc.; Notice of Filing of Proposed Transactions, including investments and the account will earn a competitive Rule Change To List and Trade the made by other Regulated Funds or rate of interest that will also be divided Shares of the ProShares Bitcoin ETF Affiliated Funds that the Regulated pro rata among the participating and the ProShares Short Bitcoin ETF Fund considered but declined to Regulated Funds and Affiliated Funds Under NYSE Arca Rule 8.200–E, participate in, so that the Non-Interested based on the amounts they invest in Commentary .02 Directors may determine whether all investments made during the preceding such Co-Investment Transaction. None December 19, 2017. quarter, including those investments of the Affiliated Funds, the BRC that the Regulated Fund considered but Advisors, the other Regulated Funds or Pursuant to Section 19(b)(1) 1 of the declined to participate in, comply with any affiliated person of the Regulated Securities Exchange Act of 1934 (the the conditions of the Order. In addition, Funds or Affiliated Funds will receive ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 the Non-Interested Directors will additional compensation or notice is hereby given that, on December consider at least annually the continued remuneration of any kind as a result of 4, 2017, NYSE Arca, Inc. (the appropriateness for the Regulated Fund or in connection with a Co-Investment ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with of participating in new and existing Co- Transaction (other than (a) in the case the Securities and Exchange Investment Transactions. of the Regulated Funds and the Commission (the ‘‘Commission’’) the 10. Each Regulated Fund will Affiliated Funds, the pro rata proposed rule change as described in maintain the records required by section transaction fees described above and Items I and II below, which Items have 57(f)(3) of the Act as if each of the fees or other compensation described in been prepared by the Exchange. The Regulated Funds were a BDC and each condition 2(c)(iii)(C); and (b) in the case Commission is publishing this notice to of the investments permitted under of an BRC Advisor, investment advisory solicit comments on the proposed rule these conditions were approved by the fees paid in accordance with the change from interested persons. Required Majority under section 57(f) of agreement between the BRC Advisor the Act. I. Self-Regulatory Organization’s and the Regulated Fund or Affiliated 11. No Non-Interested Director of a Statement of the Terms of Substance of Fund. Regulated Fund will also be a director, the Proposed Rule Change general partner, managing member or 14. If the Holders own in the aggregate principal, or otherwise an ‘‘affiliated more than 25 percent of the Shares of The Exchange proposes to list and person’’ (as defined in the Act) of an a Regulated Fund, then the Holders will trade the shares of the following under Affiliated Fund. vote such Shares as directed by an NYSE Arca Rule 8.200–E, Commentary 12. The expenses, if any, associated independent third party when voting on .02 (‘‘Trust Issued Receipts’’): The with acquiring, holding or disposing of (1) the election of directors; (2) the ProShares Bitcoin ETF and the any securities acquired in a Co- removal of one or more directors; or (3) ProShares Short Bitcoin ETF. The Investment Transaction (including, any other matter under either the Act or proposed change is available on the without limitation, the expenses of the applicable State law affecting the Exchange’s website at www.nyse.com, at distribution of any such securities Board’s composition, size or manner of the principal office of the Exchange, and registered for sale under the Securities election. at the Commission’s Public Reference Act) will, to the extent not payable by 15. Each Regulated Fund’s chief Room. the BRC Advisors under their respective compliance officer, as defined in rule II. Self-Regulatory Organization’s investment advisory agreements with 38a–1(a)(4), will prepare an annual Statement of the Purpose of, and Affiliated Funds and the Regulated report for its Board each year that Statutory Basis for, the Proposed Rule Funds, be shared by the Regulated Funds and the Affiliated Funds in evaluates (and documents the basis of Change proportion to the relative amounts of the that evaluation) the Regulated Fund’s compliance with the terms and In its filing with the Commission, the securities held or to be acquired or conditions of the application and the self-regulatory organization included disposed of, as the case may be. procedures established to achieve such statements concerning the purpose of, 13. Any transaction fee 12 (including break-up or commitment fees but compliance. and basis for, the proposed rule change excluding broker’s fees contemplated by and discussed any comments it received For the Commission, by the Division of section 17(e) or 57(k) of the Act, as on the proposed rule change. The text Investment Management, under delegated applicable), received in connection with authority. of those statements may be examined at a Co-Investment Transaction will be the places specified in Item IV below. Eduardo A. Aleman, distributed to the participating The Exchange has prepared summaries, Assistant Secretary. ethrower on DSK3G9T082PROD with NOTICES Regulated Funds and Affiliated Funds set forth in sections A, B, and C below, [FR Doc. 2017–27686 Filed 12–22–17; 8:45 am] of the most significant parts of such on a pro rata basis based on the amounts they invested or committed, as the case BILLING CODE 8011–01–P statements. 12 Applicants are not requesting and the staff is 1 15 U.S.C. 78s(b)(1). not providing any relief for transaction fees 2 15 U.S.C. 78a. received in connection with any Co-Investment Transaction. 3 17 CFR 240.19b–4. VerDate Sep<11>2014 20:21 Dec 22, 2017 Jkt 244001 PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 E:\FR\FM\26DEN1.SGM 26DEN1


Document Created: 2017-12-23 03:08:12
Document Modified: 2017-12-23 03:08:12
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 November 19, 2015, and
ContactKaitlin C. Bottock, Senior Counsel, at (202) 551-8658, or David J. Marcinkus, Branch Chief, at (202) 551- 6821 (Chief Counsel's Office, Division of Investment Management).
FR Citation82 FR 61096 
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