[Federal Register Volume 82, Number 71 (Friday, April 14, 2017)]
[Notices]
[Pages 18023-18028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07539]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-32597; File No. 812-14548-05]
Excelsior Private Markets Fund II (Master), LLC, et al.
April 10, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of application for an order under section 17(d) of the
Investment Company Act of 1940 (the ``Act'') and rule 17d-1 under the
Act to permit certain joint transactions otherwise prohibited by
section 17(d) of the Act and rule 17d-1 under the Act.
Summary of Application: Applicants request an order to permit certain
closed-end management investment companies to co-invest in portfolio
companies with each other and with affiliated investment funds.
Applicants: Excelsior Private Markets Fund II (Master), LLC
(``Excelsior Private Markets II''); Excelsior Private Markets Fund III
(Master), LLC (``Excelsior Private Markets III''); NB Crossroads
Private Markets Fund IV Holdings LLC (``NB Crossroads''); UST Global
Private Markets Fund, LLC (``UST Global''); Excelsior Venture
[[Page 18024]]
Partners III, LLC (``Excelsior Venture III'' and, collectively with
Excelsior Private Markets II, Excelsior Private Markets III, NB
Crossroads and UST Global, the ``Existing Regulated Entities'');
Neuberger Berman Investment Advisers LLC (``NBIA''); NB Alternatives
Advisers LLC (``NBAA''); NB ASGA Fund Holdings LP, NB Canafund Private
Debt LP, NB Caspian Holdings LP, NB CPEG Fund Holdings LP, NB
Crossroads XXI--LC Holdings LP, NB Crossroads XXI--MC Holdings LP, NB
Crossroads XXI--SS Holdings LP, NB Crossroads XXI--VC Holdings LP, NB
Crystal PE Holdings LP, NB Flamingo Private Debt LP, NB Granite Private
Debt LP, NB--Iowa's Private Universities LP, NB LAOF--Holdings LP, NB
PEP Holdings Limited, NB Pine Private Debt LP, NB Private Debt Fund LP,
NB Private Debt II Holdings LP, NB Private Equity Credit Opportunities
Holdings LP, NB Renaissance Partners Holdings S.a.r.l., NB RP Co-
Investment & Secondary Fund LLC, NB RPPE Partners LP, NB SBS US 1 Fund
LP, NB SOF 2016-A Master LP, NB SOF III Holdings LP, NB SOF IV Holdings
LP, NB SOF IV Cayman Holdings LP, NB-Sompo RA Holdings LP, NB Sonoran
Fund Limited Partnership, NB Strategic Co-Investment Partners III
Holdings LP, NB Wildcats Fund LP, Columbia NB Crossroads Fund II LP,
NorthBound Emerging Manager Fund II--A LP, NorthBound NCRS Fund LP, and
NYSCRF NB Co-Investment Fund LLC (collectively, the ``Existing
Affiliated Funds'').
Filing Dates: The application was filed on September 17, 2015, and
amended on February 4, 2016; September 20, 2016; February 27, 2017; and
March 28, 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 May 5, 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, 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: 1290 Avenue of the
Americas, New York, NY 10104.
FOR FURTHER INFORMATION CONTACT: James D. McGinnis, Senior Counsel, at
(202) 551-3025 or Holly Hunter-Ceci, Acting Assistant Chief Counsel, at
(202) 551-6825 (Chief Counsel's Office, Division of Investment
Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. NB Crossroads is a Delaware limited liability corporation
organized as a closed-end management investment company. NB
Crossroads's investment objective is to provide attractive risk-
adjusted returns through diversified portfolio of professionally
managed private equity funds and select direct investments in portfolio
companies. The board of managers (``Board'') of NB Crossroads has six
members, each of whom is not an ``interested person'' of NB Crossroads
within the meaning of Section 2(a)(19) of the Act (each is an
``Independent Manager'').\1\
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\1\ The term ``Independent Manager'' refers to the independent
managers, directors or trustees of any Regulated Entity (defined
below).
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2. Excelsior Private Markets II is a Delaware limited liability
company organized as a closed-end management investment company.
Excelsior Private Markets II seeks to provide attractive long-term
returns to investors through investments in a diversified portfolio of
professionally managed private equity funds and select direct
investments in portfolio companies. The Board of Excelsior Private
Markets II has six members, each of whom is an Independent Manager.
3. Excelsior Private Markets III is a Delaware limited liability
company organized as a closed-end management investment company.
Excelsior Private Markets III seeks to provide attractive long-term
returns to investors through investments in a diversified portfolio of
professionally managed private equity funds and select direct
investments in portfolio companies. The Board of Excelsior Private
Markets III has six members, each of whom is an Independent Manager.
4. UST Global is a Delaware limited liability company organized as
a closed-end management v company. UST Global seeks long-term capital
appreciation by investing in a diversified group of private equity
funds formed by a fund sponsor or sponsors experienced in making
private equity investments. The Board of UST Global has six members,
each of whom is an Independent Manager.
5. Excelsior Venture III is a Delaware limited liability company
organized as a closed-end management v company. Excelsior Venture III
seeks long-term capital appreciation primarily by investing in private
domestic venture capital companies and other private companies, and, to
a lesser extent, domestic and international private funds, negotiated
private investments in public companies and international direct
investments. The Board of Excelsior Venture III has three members, each
of whom is an Independent Manager.
6. NBIA is a Delaware limited liability company that is registered
as an investment adviser with the Commission under the Investment
Advisers Act of 1940 (the ``Advisers Act''). NBIA serves as the
investment adviser to each Existing Regulated Entity. NBIA is an
indirect, wholly-owned subsidiary of Neuberger Berman Group LLC
(``Neuberger Berman'').
7. NBAA is a Delaware limited liability company that is registered
as an investment adviser with the Commission under the Advisers Act.
NBAA serves as the investment adviser to certain Existing Affiliated
Funds and as the sub-adviser to each Existing Regulated Entity. NBAA is
an indirect, wholly-owned subsidiary of Neuberger Berman.
8. The Existing Affiliated Funds pursue strategies focused on
investing in a portfolio of professionally managed private equity funds
and select direct investments in portfolio companies. Each Existing
Affiliated Fund is advised by an Existing NB Adviser \2\ and would be
an investment company but for section 3(c)(1) or 3(c)(7) of the Act.
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\2\ ``Existing NB Adviser'' means NBIA or NBAA.
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9. Applicants seek an order (``Order'') to permit a Regulated
Entity \3\ and one or more other Regulated Entities and one or more
Affiliated Funds \4\ to (a)
[[Page 18025]]
participate in the same investment opportunities through a proposed co-
investment program where such participation would otherwise be
prohibited under section 17 of the Act; and (b) make additional
investments in securities of such issuers (``Follow-On Investments''),
including through the exercise of warrants, conversion privileges, and
other rights to purchase securities of the issuers. ``Co-Investment
Transaction'' means any transaction in which a Regulated Entity (or its
Wholly-Owned Investment Subsidiary, as defined below) participated
together with one or more other Regulated Entities and/or Affiliated
Funds in reliance on the requested Order. ``Potential Co-Investment
Transaction'' means any investment opportunity in which a Regulated
Entity (or its Wholly-Owned Investment Subsidiaries) could not
participate together with one or more other Regulated Entities and/or
one or more Affiliated Funds without obtaining and relying on the
Order.\5\
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\3\ ``Regulated Entity'' refers to any Existing Regulated Entity
and any Future Regulated Entity. ``Future Regulated Entity'' means
any closed-end management investment company formed in the future
that is registered under the Act and is advised by a Regulated
Entity Adviser and sub-advised by NBAA. ``Regulated Entity Adviser''
means (a) NBIA and (b) any future investment adviser that controls,
is controlled by, or is under common control with NBIA and is
registered as an investment adviser under the Advisers Act.
\4\ ``Affiliated Fund'' means any Existing Affiliated Fund or
any Future Affiliated Fund. ``Future Affiliated Fund'' means any
investment fund that would be an ``investment company'' but for
section 3(c)(1) or 3(c)(7) of the Act, is formed in the future, and
is advised by an Adviser. The term ``Adviser'' means any Existing NB
Adviser or any Regulated Entity Adviser. No Affiliated Fund is or
will be a subsidiary of a Regulated Entity.
\5\ 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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10. Applicants state that a Regulated Entity may, from time to
time, form one or more Wholly-Owned Investment Subsidiaries.\6\ Such a
subsidiary would be prohibited from investing in a Co-Investment
Transaction with any other Regulated Entity or Affiliated Fund because
it would be a company controlled by its parent Regulated Entity for
purposes of rule 17d-1. Applicants request that each Wholly-Owned
Investment Subsidiary be permitted to participate in Co-Investment
Transactions in lieu of its parent Regulated Entity and that the
Wholly-Owned Investment Subsidiary's participation in any such
transaction be treated, for purposes of the Order, as though the parent
Regulated Entity were participating directly. Applicants represent that
this treatment is justified because a Wholly-Owned Investment
Subsidiary would have no purpose other than serving as a holding
vehicle for the Regulated Entity's investments and, therefore, no
conflicts of interest could arise between the Regulated Entity and the
Wholly-Owned Investment Subsidiary. The Regulated Entity's Board would
make all relevant determinations under the conditions with regard to a
Wholly-Owned Investment Subsidiary's participation in a Co-Investment
Transaction, and the Regulated Entity's Board would be informed of, and
take into consideration, any proposed use of a Wholly-Owned Investment
Subsidiary in the Regulated Entity's place. If the Regulated Entity
proposes to participate in the same Co-Investment Transaction with any
of its Wholly-Owned Investment Subsidiaries, the Board will also be
informed of, and take into consideration, the relative participation of
the Regulated Entity and the Wholly-Owned Investment Subsidiary.
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\6\ The term ``Wholly-Owned Investment Subsidiary'' means an
entity: (a) That is wholly-owned by a Regulated Entity (with such
Regulated Entity at all times holding, beneficially and of record,
100% of the voting and economic interests); (b) whose sole business
purpose is to hold one or more investments on behalf of such
Regulated Entity; (c) with respect to which the board of directors
of such Regulated Entity has the sole authority to make all
determinations with respect to the entity's participation under the
conditions of the application; and (d) that would be an investment
company but for section 3(c)(1) or 3(c)(7) of the Act. All
subsidiaries participating in Co-Investment Transactions will be
Wholly-Owned Investment Subsidiaries and will have Objectives and
Strategies (as defined below) that are either the same as, or a
subset of, their parent Regulated Entity's Objectives and
Strategies.
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11. When considering Potential Co-Investment Transactions for any
Regulated Entity, the relevant Adviser will consider only the
Objectives and Strategies,\7\ investment policies, investment
positions, capital available for investment, and other pertinent
factors applicable to that Regulated Entity. The Advisers expect that
any portfolio company that is an appropriate investment for a Regulated
Entity should also be an appropriate investment for one or more other
Regulated Entities and/or one or more Affiliated Funds, with certain
exceptions based on available capital or diversification.\8\
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\7\ The term ``Objectives and Strategies'' means a Regulated
Entity's investment objectives and strategies as described in the
Regulated Entity's registration statement on Form N-2, other filings
the Regulated Entity has made with the Commission under the
Securities Act of 1933 (the ``Securities Act'') or the Securities
Exchange Act of 1934, and the Regulated Entity's reports to
shareholders.
\8\ The Regulated Entities, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
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12. 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 applicable Adviser will present
each Potential Co-Investment Transaction and the proposed allocation to
the directors of the Board eligible to vote on that Co-Investment
Transaction (the ``Eligible Directors'') \9\ and the majority of such
managers of the Board who are Independent Managers (a ``Required
Majority'') will approve each Co-Investment Transaction prior to any
investment by the participating Regulated Entity.
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\9\ Eligible Directors may not have a financial interest in such
transaction, plan, or arrangement.
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13. With respect to the pro rata dispositions and Follow-On
Investments provided in conditions 7 and 8, a Regulated Entity 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 Entity and
each 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 Entity has approved that Regulated Entity's
participation in pro rata dispositions and Follow-On Investments as
being in the best interests of the Regulated Entity. If the Board does
not so approve, any such disposition or Follow-On Investment will be
submitted to the Regulated Entity's Eligible Directors. The Board of
any Regulated Entity may at any time rescind, suspend or qualify its
approval of pro rata dispositions and Follow-On Investments with the
result that all dispositions and/or Follow-On Investments must be
submitted to the Eligible Directors.
14. No Independent Manager of a Regulated Entity will have a direct
or indirect financial interest in any Co-Investment Transaction (other
than indirectly through share ownership in one of the Regulated
Entities), including any interest in any company whose securities would
be acquired in a Co-Investment Transaction.
15. Under condition 15, if an Adviser, its principals, or any
person controlling, controlled by, or under common control with the
Adviser or its principals, and the Affiliated Funds (collectively, the
``Holders'') own in the aggregate more than 25 percent of the
outstanding voting shares of a Regulated Entity (the ``Shares''), then
the Holders will vote such Shares as directed by an independent third
party when voting on matters specified in the condition. Applicants
believe that this condition will ensure that the Independent Managers
will act independently in evaluating the co-investment program, because
the ability of an Adviser or its principals to influence the
Independent Managers by a suggestion, explicit or implied, that the
Independent Managers can be removed will be limited significantly.
Applicants represent that the Independent Managers will evaluate
[[Page 18026]]
and approve any such independent third party, taking into account its
qualifications, reputation for independence, cost to the Regulated
Entity's shareholders, and other factors that they deem relevant.
Applicants' Legal Analysis
1. 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 Entities may 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 Entity's shareholders
and with the purposes intended by the policies and provisions of the
Act. Applicants state that the Regulated Entities' 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 an Adviser considers a Potential Co-Investment
Transaction for another Regulated Entity or an Affiliated Fund that
falls within a Regulated Entity's then-current Objectives and
Strategies, the Regulated Entity's Adviser will make an independent
determination of the appropriateness of the investment for the
Regulated Entity in light of the Regulated Entity's then-current
circumstances.
2. (a) If the Adviser deems a Regulated Entity's participation in
any Potential Co-Investment Transaction to be appropriate for the
Regulated Entity, the Adviser will then determine an appropriate level
of investment for the Regulated Entity.
(b) If the aggregate amount recommended by the applicable Adviser
to be invested by the applicable Regulated Entity in the Potential Co-
Investment Transaction together with the amount proposed to be invested
by the other participating Regulated Entities and Affiliated Funds,
collectively, in the same transaction, exceeds the amount of the
investment opportunity, the investment opportunity will be allocated
among them pro rata based on each participant's capital available for
investment in the asset class being allocated, up to the amount
proposed to be invested by each. The applicable Adviser will provide
the Eligible Directors of each participating Regulated Entity with
information concerning each participating party's available capital to
assist the Eligible Directors with their review of the Regulated
Entity's investments for compliance with these allocation procedures.
(c) After making the determinations required in conditions 1 and
2(a), the applicable Adviser will distribute written information
concerning the Potential Co-Investment Transaction (including the
amount proposed to be invested by each Regulated Entity and each
Affiliated Fund) to the Eligible Directors of each participating
Regulated Entity for their consideration. A Regulated Entity will co-
invest with another Regulated Entity or an Affiliated Fund only if,
prior to the Regulated Entity'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
Entity and its investors and do not involve overreaching in respect of
the Regulated Entity or its investors on the part of any person
concerned;
(ii) the Potential Co-Investment Transaction is consistent with:
(A) The interests of the Regulated Entity's investors; and
(B) the Regulated Entity's then-current Objectives and Strategies;
(iii) the investment by any other Regulated Entities or any
Affiliated Funds would not disadvantage the Regulated Entity, and
participation by the Regulated Entity would not be on a basis different
from or less advantageous than that of any other Regulated Entities or
any Affiliated Funds; provided that, if any other Regulated Entity or
any Affiliated Fund, but not the Regulated Entity 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; and
(B) the applicable Adviser agrees to, and does, provide periodic
reports to the Board of the Regulated Entity 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 Regulated Entity or any
Affiliated Fund or any affiliated person of any Regulated Entity or any
Affiliated Fund receives in connection with the right of a Regulated
Entity or an Affiliated 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 may each, in turn, share its
portion with its affiliated persons) and the participating Regulated
Entities in accordance with the amount of each party's investment; and
(iv) the proposed investment by the Regulated Entity will not
benefit any Adviser, the other Regulated Entities, the Affiliated 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) 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 Entity 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 Entity, on a quarterly basis, a record of all investments in
Potential Co-Investment Transactions made by any of the other Regulated
Entities or Affiliated Funds during the preceding quarter that fell
within the Regulated Entity's then-current Objectives and Strategies
that were not made available to the Regulated Entity, and an
explanation of why the investment opportunities were not offered to the
Regulated Entity. All information presented to the Board pursuant to
this condition will be kept for the life of the Regulated Entity and at
least two years thereafter, and will be
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subject to examination by the Commission and its staff.
5. Except for Follow-On Investments made in accordance with
condition 8,\10\ a Regulated Entity will not invest in reliance on the
Order in any issuer in which another Regulated Entity, Affiliated Fund,
or any affiliated person of another Regulated Entity or Affiliated Fund
is an existing investor.
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\10\ This exception applies only to Follow-On Investments by a
Regulated Entity in issuers in which that Regulated Entity already
holds investments.
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6. A Regulated Entity 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 Entity and Affiliated
Fund. The grant to another Regulated Entity or an Affiliated Fund, but
not the Regulated Entity, 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 Regulated Entity or an Affiliated Fund elects to
sell, exchange or otherwise dispose of an interest in a security that
was acquired in a Co-Investment Transaction, the applicable Adviser
will:
(i) Notify each Regulated Entity 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 Entity in the disposition.
(b) Each Regulated Entity 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
Regulated Entities and Affiliated Funds.
(c) A Regulated Entity may participate in such disposition without
obtaining prior approval of the Required Majority if: (i) The proposed
participation of each Regulated Entity 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 Entity has approved as being in the best interests of the
Regulated Entity 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 Entity is provided on a quarterly
basis with a list of all dispositions made in accordance with this
condition. In all other cases, the Adviser will provide its written
recommendation as to the Regulated Entity's participation to the
Regulated Entity's Eligible Directors, and the Regulated Entity will
participate in such disposition solely to the extent that a Required
Majority determines that it is in the Regulated Entity's best
interests.
(d) Each Regulated Entity and each Affiliated Fund will bear its
own expenses in connection with any such disposition.
8. (a) If a Regulated Entity or an Affiliated Fund desires to make
a Follow-On Investment in a portfolio company whose securities were
acquired in a Co-Investment Transaction, the applicable Adviser will:
(i) Notify each Regulated Entity 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 Entity.
(b) A Regulated Entity may participate in such Follow-On Investment
without obtaining prior approval of the Required Majority if: (i) The
proposed participation of each Regulated Entity 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 Entity has approved as being in the best
interests of the Regulated Entity 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 Entity's participation to
the Eligible Directors, and the Regulated Entity will participate in
such Follow-On Investment solely to the extent that a Required Majority
determines that it is in the Regulated Entity's best interests.
(c) If, with respect to any Follow-On Investment:
(i) The amount of a Follow-On Investment is not based on the
Regulated Entities' 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 Entity 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 party'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 Independent Managers of each Regulated Entity will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including
investments made by other Regulated Entities and the Affiliated Funds
that the Regulated Entity considered but declined to participate in, so
that the Independent Managers may determine whether all investments
made during the preceding quarter, including those investments which
the Regulated Entity considered but declined to participate in, comply
with the conditions of the Order. In addition, the Independent Managers
will consider at least annually the continued appropriateness for the
Regulated Entity of participating in new and existing Co-Investment
Transactions.
10. Each Regulated Entity will maintain the records required by
section 57(f)(3) of the Act as if each of the Regulated Entities were a
business development company (as defined in section 2(a)(48) of the
Act) and each of the investments permitted under these conditions were
approved by the Required Majority under section 57(f) of the Act.
11. No Independent Manager of a Regulated Entity 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 an Adviser under the investment advisory
agreements with the Regulated Entities and the Affiliated Funds, be
shared by the Affiliated Funds and the Regulated Entities in proportion
to the relative amounts of the securities held or to be acquired or
disposed of, as the case may be.
[[Page 18028]]
13. Any transaction fee \11\ (including break-up or commitment fees
but excluding broker's fees contemplated by section 17(e) of the Act,
as applicable), received in connection with a Co-Investment Transaction
will be distributed to the participating Regulated Entities 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 the Adviser pending consummation
of the transaction, the fee will be deposited into an account
maintained by the Adviser at a bank or banks having the qualifications
prescribed in section 26(a)(1) of the Act, and the account will earn a
competitive rate of interest that will also be divided pro rata among
the participating Regulated Entities and Affiliated Funds based on the
amounts they invest in such Co-Investment Transaction. None of the
Affiliated Funds, the Advisers, the other Regulated Entities or any
affiliated person of the Regulated Entities 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 Entities 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 the
Advisers, investment advisory fees paid in accordance with the
agreements between the Advisers and the Regulated Entities or the
Affiliated Funds).
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\11\ 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. The Advisers will each maintain policies and procedures
reasonably designed to ensure compliance with the foregoing conditions.
These policies and procedures will require, among other things, that
the applicable Regulated Entity Adviser will be notified of all
Potential Co-Investment Transactions that fall within a Regulated
Entity's then-current Objectives and Strategies and will be given
sufficient information to make its independent determination and
recommendations under conditions 1, 2(a), 7 and 8.
15. If the Holders own in the aggregate more than 25 percent of the
Shares of a Regulated Entity, 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.
16. Each Regulated Entity's chief compliance officer, as defined in
Rule 38a-1(a)(4) under the 1940 Act, will prepare an annual report for
its Board each year that evaluates (and documents the basis of that
evaluation) the Regulated Entity'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. 2017-07539 Filed 4-13-17; 8:45 am]
BILLING CODE 8011-01-P