Notice2021-26299
Calamos Hunt Alternative Income Fund, et al.
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 3, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 230 (Friday, December 3, 2021)</title>
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[Federal Register Volume 86, Number 230 (Friday, December 3, 2021)]
[Notices]
[Pages 68691-68695]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-26299]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34428; File No. 812-15204]
Calamos Hunt Alternative Income Fund, et al.
November 30, 2021.
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: Calamos Hunt Alternative Income Fund (``Calamos Hunt
Fund'' or the ``Existing Regulated Entity''), Calamos Advisors LLC
(``Calamos Advisors'') and Hunt Capital Management, LLC (``HCM'').
DATES: The application was filed on February 19, 2021, and amended on
June 24, 2021 and September 30, 2021.
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 emailing the Commission's
Secretary at <a href="/cdn-cgi/l/email-protection#7f2c1a1c0d1a0b1e0d060c52301919161c1a3f0c1a1c51181009"><span class="__cf_email__" data-cfemail="9dcef8feeff8e9fcefe4eeb0d2fbfbf4fef8ddeef8feb3faf2eb">[email protected]</span></a> and serving applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on December 23, 2021, 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 emailing the Commission's Secretary at <a href="/cdn-cgi/l/email-protection#eebd8b8d9c8b9a8f9c979dc3a18888878d8bae9d8b8dc0898198"><span class="__cf_email__" data-cfemail="4310262031263722313a306e0c25252a2026033026206d242c35">[email protected]</span></a>.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission,
<a href="/cdn-cgi/l/email-protection#1b487e78697e6f7a69626836547d7d72787e5b687e78357c746d"><span class="__cf_email__" data-cfemail="87d4e2e4f5e2f3e6f5fef4aac8e1e1eee4e2c7f4e2e4a9e0e8f1">[email protected]</span></a>. Applicants: <a href="/cdn-cgi/l/email-protection#87ebe2e0e6ebe9e8f3eee4e2f4c7e4e6ebe6eae8f4a9e4e8ea"><span class="__cf_email__" data-cfemail="f69a9391979a9899829f959385b695979a979b9985d895999b">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817 or Kaitlin C. Bottock, Branch Chief, at (202) 551-6825
(Chief Counsel's Office, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number, or for an
applicant using the Company name box, at <a href="http://www.sec.gov/search/search.htm">http://www.sec.gov/search/search.htm</a> or by calling (202) 551-8090.
Applicants' Representations:
1. Calamos Hunt Fund is a Delaware statutory trust and is a
diversified, closed-end management investment company operated as an
interval fund and registered under the Act. Calamos Hunt Fund's
investment objective is to produce current income with a secondary
objective of capital appreciation. The board of directors (``Board'')
of the Calamos Hunt Fund has five members, four of whom not an
``interested person'' of the Calamos Hunt Fund within the meaning of
[[Page 68692]]
Section 2(a)(19) of the Act (the ``Independent Trustees'').\1\
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\1\ The term ``Independent Trustees'' refers to the independent
directors, managers, or trustees of any Regulated Entity (defined
below).
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2. Calamos Advisors serves as the investment advisor to the
Existing Regulated Entity. Calamos Advisors is registered as an
investment advisor under the Investment Advisers Act of 1940
(``Advisers Act'').
3. HCM is a Delaware limited liability company that is registered
as an investment adviser under the Advisers Act. HCM serves as the sub-
advisor to the Existing Regulated Entity. Calamos Advisors is not an
affiliated person (as defined in Section 2(a)(3) of the Act) of HCM.
4. Applicants seek an order (``Order'') to permit a Regulated
Entity \2\ and one or more other Regulated Entities and one or more
Affiliated Funds \3\ to (a) 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.\4\
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\2\ ``Regulated Entity'' means the Existing Regulated Entity and
any Future Regulated Entity. ``Future Regulated Entity'' means any
closed-end management investment company formed in the future that
is (a) registered under the Act, (b) whose investment advisor is a
Calamos Affiliated Advisor, (c) whose investment sub-advisor is a
Hunt Affiliated Advisor, and (d) that intends to participate in the
co-investment program described in the Application. The term
``Calamos Affiliated Advisor'' means (a) Calamos Advisors and (b)
any future investment advisor that is controlled by or under common
control with Calamos Advisors and is registered as an investment
advisor under the Advisers Act. The term ``Hunt Affiliated Advisor''
means HCM, any investment advisor controlled by HCM or any future
investment advisor that (i) is controlled by HCM, (ii) is registered
as an investment advisor under the Advisers Act, and (iii) is not a
Regulated Entity or a subsidiary of a Regulated Entity. The term
``Advisor'' means (a) any Calamos Affiliated Advisor or (b) any Hunt
Affiliated Advisor; provided that a Hunt Affiliated Advisor serving
as a sub-advisor to an Affiliated Fund (defined below) is included
in this term only if (i) the investment advisor is also a Hunt
Affiliated Advisor and (ii) such Advisor controls the entity.
Applicants state that the Calamos Affiliated Advisors will only be
subject to Conditions 2(c)(iv), 12 and 13 of the application.
\3\ ``Affiliated Fund'' means any Future Affiliated Fund or any
Hunt Proprietary Account. ``Future Affiliated Fund'' means any
investment fund that would be an ``investment company'' but for
Section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act, is formed in the
future, and whose investment advisor (and any sub-advisor, if any)
is a Hunt Affiliated Advisor. No Affiliated Fund is or will be a
subsidiary of a Regulated Entity. ``Hunt Proprietary Account'' means
HCM in a principal capacity, and any direct or indirect, wholly-
owned subsidiary of HCM that, from time to time, invests in and
holds, in a principal capacity, financial assets of the type and
nature pursued by the Calamos Hunt Fund.
\4\ 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. No Regulated Entity or
Affiliated Fund that relies on this Order will rely on any other
order of the Commission authorizing Co-Investment Transactions
pursuant to section 17(d) and 57(i) of the 1940 Act and no entity
that relies on another such order of the Commission will rely on
this Order.
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5. Applicants state that Calamos Advisors has delegated
responsibility for the co-investment program to HCM and cannot cause
the Calamos Hunt Fund or any Affiliated Fund to enter into a Potential
Co-Investment Transaction. Applicants further state that (a) HCM has
sole responsibility for causing a Regulated Entity to enter into a
Potential Co-Investment Transaction and (b) a Hunt Affiliated Advisor
is responsible for ensuring that the Regulated Entities and any
Affiliated Funds comply with the conditions of the application, subject
to oversight of the applicable Board.
6. Applicants state that a Regulated Entity may, from time to time,
form one or more Wholly-Owned Investment Subsidiaries.\5\ 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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\5\ 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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7. When considering Potential Co-Investment Transactions for any
Regulated Entity, the relevant Advisor will consider only the
Objectives and Strategies,\6\ investment policies, investment
positions, capital available for investment, and other pertinent
factors applicable to that Regulated Entity. The Advisors 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.\7\
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\6\ 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.
\7\ The Regulated Entities, however, will not be obligated to
invest, or co-invest, when investment opportunities are referred to
them.
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8. Other than pro rata dispositions and Follow-On Investments as
provided in conditions 7 and 8, and after making the determinations
required in conditions 1 and 2(a), the applicable
[[Page 68693]]
Advisor 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 Trustees'') \8\ and the
majority of such directors of the Board who are Independent Trustees (a
``Required Majority'') will approve each Co-Investment Transaction
prior to any investment by the participating Regulated Entity.
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\8\ Eligible Trustees may not have a financial interest in such
transaction, plan, or arrangement.
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9. 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 Trustees. 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 Trustees.
10. No Independent Trustee 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.
11. Under condition 15, if an Advisor, its principals, or any
person controlling, controlled by, or under common control with the
Advisor 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 required under Condition 15.
Applicants believe that this condition will ensure that the Independent
Trustees will act independently in evaluating the co-investment
program, because the ability of an Advisor or its principals to
influence the Independent Trustees by a suggestion, explicit or
implied, that the Independent Trustees can be removed will be limited
significantly. Applicants represent that the Independent Trustees will
evaluate 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.
2. 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 Advisor 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 Advisor 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 Advisor deems a Regulated Entity's participation in
any Potential Co-Investment Transaction to be appropriate for the
Regulated Entity, the Advisor will then determine an appropriate level
of investment for the Regulated Entity.
(b) If the aggregate amount recommended by the applicable Advisor
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 Advisor will provide
the Eligible Trustees of each participating Regulated Entity with
information concerning each participating party's available capital to
assist the Eligible Trustees 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 Advisor 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 Trustees 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
[[Page 68694]]
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 Trustees will have the right to ratify the
selection of such director or board observer, if any; and
(B) the applicable Advisor 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 Advisor, 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 Advisor 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 subject to examination by the
Commission and its staff.
5. Except for Follow-On Investments made in accordance with
condition 8,\9\ 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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\9\ 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 Advisor
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.\10\
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\10\ Any Hunt Proprietary Account that is not advised by an
Advisor is itself deemed to be an Advisor for purposes of Conditions
7(a)(i) and 8(a)(i).
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(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 Advisor will provide its written
recommendation as to the Regulated Entity's participation to the
Regulated Entity's Eligible Trustees, 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 Advisor 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 Advisor will provide its
written recommendation as to the Regulated Entity's participation to
the Eligible Trustees, 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
[[Page 68695]]
Funds' outstanding investments immediately preceding the Follow-On
Investment; and
(ii) the aggregate amount recommended by the Advisor 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 Trustees 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 Trustees 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 Trustees
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 Trustee 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 Advisor 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.
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 Advisor pending consummation
of the transaction, the fee will be deposited into an account
maintained by the 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 Entities and Affiliated Funds based on the
amounts they invest in such Co-Investment Transaction. None of the
Affiliated Funds, the Advisors, 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 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
Advisors, investment advisory fees paid in accordance with the
agreements between the Advisors 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 Advisors 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 Advisor 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 in
the same percentages as the Regulated Entity's other shareholders (not
including the Holders) 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), will prepare an annual report for its Board 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.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26299 Filed 12-2-21; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on December 3, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.