
[Federal Register Volume 79, Number 228 (Wednesday, November 26, 2014)]
[Notices]
[Pages 70582-70588]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27980]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31341; File No. 813-366]


BlackRock, Inc., et al.; Notice of Application

November 20, 2014.
AGENCY: Securities and Exchange Commission.

ACTION: Notice of application for an order under sections 6(b) and 6(e) 
of the Investment Company Act of 1940 (the ``Act'') granting an 
exemption from all provisions of the Act, and the rules and regulations 
thereunder, except sections 9, 17, 30, 36 through 53 and the rules and 
regulations under those sections. With respect to sections 17(a), (d), 
(e), (f), (g) and (j) and 30(a), (b), (e) and (h) of the Act, and the 
rules and regulations thereunder, and rule 38a-1 under the Act, 
applicants request a limited exemption as set forth in the application.

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SUMMARY: Applicants request an order to exempt certain investment 
vehicles formed for the benefit of eligible employees of BlackRock, 
Inc. and its affiliates (``Partnerships'') from certain provisions of 
the Act. Each Partnership will be an ``employees' securities company'' 
within the meaning of section 2(a)(13) of the Act. Applicants: 
BlackRock, Inc. (``BlackRock''), BlackRock Energy Opportunity 
(Employees) Fund, L.P. (the ``Energy Fund''), Vesey Street Employee 
Fund IV, L.P. (the ``Vesey Street Fund''), BlackRock Energy Opportunity 
Fund GP, LLC (the ``Energy Fund GP''), BlackRock DivPEP IV, LLC (the 
``Vesey Street Fund GP''), BlackRock Capital Management, Inc. 
(``BCM''), and BlackRock Investment Management, LLC (``BIM'').

DATES: The application was filed on April 23, 2007, and amended on June 
29, 2010, January 15, 2013, May 17, 2013, October 17, 2013, April 3, 
2014, and November 19, 2014.
    Hearing or Notification of Hearing: An order granting the 
application 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 December 15, 2014, 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 
Street NE., Washington, DC 20549-1090; Applicants, 40 East 52nd Street, 
New York, NY 10022.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at 
(202) 551-6876, or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

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 an applicant 
using the Company's name box, at http://www.sec.gov/search/search.htm 
or by calling (202) 551-8090.
Applicants' Representations
    1. BlackRock, a Delaware corporation, and its affiliates provide 
investment management, risk management and advisory services to 
institutional and retail clients around the world.
    2. The Partnerships have been or will be established primarily for 
the benefit of key employees of BlackRock or of any affiliate within 
the meaning of rule 12b-2 under the Securities Exchange Act of 1934 
(the ``1934 Act'') of BlackRock (all such affiliates are subsidiaries 
of BlackRock, and together with BlackRock are referred to collectively 
as the ``BlackRock Group'' and individually as a ``BlackRock Group 
entity'') as part of a program designed to create capital building 
opportunities that are competitive with those at other financial 
services firms and to facilitate the BlackRock Group's recruitment of 
high caliber professionals. Each of the Partnerships will be structured 
as a limited liability company, limited partnership, corporation, 
business trust or other entity organized under the laws of the state of 
Delaware or another U.S. or non-U.S. jurisdiction or any other 
``issuer'' (as defined in section 2(a)(22) of the Act). Each 
Partnership will be an ``employees' securities company'' within the 
meaning of section 2(a)(13) of the Act and will operate as a 
diversified or non-diversified closed-end management investment 
company.
    3. The Energy Fund was formed on April 9, 2007 as a Delaware 
limited partnership. The Energy Fund GP acts as General Partner (as 
defined below) to the Energy Fund. The Energy Fund invests concurrently 
with BlackRock Energy Opportunity Master Fund, L.P., a BlackRock Third 
Party Fund (as defined below), which seeks to achieve long term capital 
appreciation through various types of non-control investments in 
companies primarily engaged in the energy and natural resource 
industries. The Energy Fund is no longer accepting additional 
investors. BCM, an indirect wholly-owned subsidiary of BlackRock, 
serves as Investment Adviser (as defined below) for the Energy Fund and 
provides portfolio management, research and administrative services for 
the Energy Fund. The Vesey Street Fund was formed on November 3, 2008 
as a Delaware limited partnership. The Vesey Street Fund GP acts as 
General Partner to the Vesey Street Fund. The Vesey Street Fund invests 
concurrently with Vesey Street Fund IV, L.P., a BlackRock Third Party 
Fund, and other

[[Page 70583]]

associated BlackRock Group entities to give investors globally 
diversified exposure to the private equity asset class. The Vesey 
Street Fund is no longer accepting additional investors. BIM, an 
indirect, wholly-owned subsidiary of BlackRock, serves as Investment 
Adviser of the Vesey Street Fund and provides portfolio management, 
research and administrative services for the Vesey Street Fund.
    4. The BlackRock Group will control the Partnerships within the 
meaning of section 2(a)(9) of the Act. The General Partner of each 
Partnership is or will be a BlackRock Group entity.\1\ Each BlackRock 
Group entity acting as an investment adviser to a Partnership, 
including, if applicable, the General Partner (each, an ``Investment 
Adviser'') will be registered as an investment adviser under the 
Investment Advisers Act of 1940, if required under applicable law. The 
General Partner will manage, operate and control each of the 
Partnerships and will be authorized to delegate investment management 
responsibility with respect to the acquisition, management and 
disposition of the investments of a Partnership (``Portfolio 
Investments'') only to a BlackRock Group entity or to a committee of 
BlackRock Group employees (``Investment Committee'').
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    \1\ The term ``General Partner'' refers to any BlackRock Group 
entity that acts as the general partner, manager or the equivalent 
of a Partnership.
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    5. All partners or members of, or other investors in 
(``Partners''), the Partnerships other than the applicable general 
partner (the ``Limited Partners'') will be informed that (i) interests 
in the Partnerships will be sold in transactions exempt under section 
4(2) of the Securities Act of 1933 (the ``1933 Act''), or Regulation D 
under the 1933 Act and thus offered without registration under, and 
without the protections afforded by the 1933 Act, and (ii) the 
Partnerships will be exempt from most provisions of the Act and from 
the protections afforded thereby. With the exception of Plan Interest 
Holders (as defined below), Limited Partner interests, membership 
interests or similar ownership interests in Partnerships 
(``Interests'') will be sold only (i) to Eligible Employees (as defined 
below), (ii) at the request of Eligible Employees and in the discretion 
of the General Partner, to Qualified Participants (as defined below) of 
such Eligible Employees and (iii) to BlackRock Group entities. Prior to 
offering Interests to an Eligible Employee or Qualified Participant, 
the General Partner must reasonably believe that each Eligible Employee 
who participates, or requests that a related Qualified Participant be 
permitted to participate, in a Partnership will be a sophisticated 
investor capable of understanding and evaluating the risks of 
participating in the Partnership without the benefit of regulatory 
safeguards. In the case of a Consultant (as defined below) that is an 
entity, the General Partner will make this determination with respect 
to the persons who make the investment decision on behalf of the 
Consultant. Participation in a Partnership will be voluntary on the 
part of Eligible Employees and Qualified Participants.
    6. An ``Eligible Employee'' is either (a) an individual who (i) is 
a current or former employee, officer or director \2\ or current 
Consultant of any member of the BlackRock Group and (ii) except for a 
limited number of Sophisticated Employees \3\ (as defined below) and 
certain individuals who meet the definition of ``knowledgeable 
employee'' in rule 3c-5(a)(4) under the Act as if the Partnerships were 
``Covered Companies'' within the meaning of the rule (``Managing 
Employees''), meets the standards of an ``accredited investor'' under 
rule 501(a) of Regulation D or (b) an entity that (i) is a current 
Consultant of the BlackRock Group and (ii) meets the standards of an 
``accredited investor'' under rule 501(a) of Regulation D.
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    \2\ In order for a current or former officer or director of any 
member of the BlackRock Group to be an ``Eligible Employee,'' such 
current or former officer or director must be an employee or former 
employee of a BlackRock Group entity.
    \3\ A ``Sophisticated Employee'' is an employee that (a) has a 
graduate degree in business, law or accounting, (b) has a minimum of 
five years of consulting, investment banking or similar business 
experience, and (c) has had reportable income from all sources of at 
least $100,000 in each of the two most recent years and a reasonable 
expectation of income from all sources of at least $140,000 in each 
year in which such person will be committed to make investments in a 
Partnership. In addition, a Sophisticated Employee will not be 
permitted to invest in any year more than 10% of his or her income 
from all sources for the immediately preceding year in the aggregate 
in such Partnership and in all other Partnerships in which he or she 
has previously invested. With respect to any Partnership, up to 35 
employees may be permitted to invest in the Partnership if, at the 
time of the employee's investment in the Partnership, he or she is a 
Managing Employee or a Sophisticated Employee; provided, however, 
that if a Managing Employees meets the standards of an ``accredited 
investor'' under rule 501(a) of Regulation D, such Managing Employee 
will not be counted toward this 35 employee limit.
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    7. In the discretion of the General Partner and at the request of 
an Eligible Employee, Interests may be assigned by such Eligible 
Employee, or sold directly by the Partnership, to a Qualified 
Participant of an Eligible Employee. In order to qualify as a 
``Qualified Participant,'' an individual or entity must (i) be an 
Eligible Family Member or Qualified Investment Vehicle (in each case as 
defined below) and (ii) if purchasing an Interest from a Partnership, 
come within one of the categories of an ``accredited investor'' under 
rule 501(a) of Regulation D. An ``Eligible Family Member'' is a spouse, 
parent, child, spouse of a child, brother, sister or grandchild of an 
Eligible Employee, including step and adoptive relationships. A 
``Qualified Investment Vehicle'' is (i) a trust of which the trustee, 
grantor and/or beneficiary is an Eligible Employee, (ii) a partnership, 
corporation or other entity controlled by an Eligible Employee, or 
(iii) a trust or other entity established solely for the benefit of an 
Eligible Employee and/or one or more Eligible Family Members of an 
Eligible Employee.
    8. Certain employees of the BlackRock Group who do not qualify as 
Eligible Employees may receive Interests as part of an employee benefit 
plan without payment in order to reward and retain these employees 
(``Plan Interest Holders''). The Partnerships will not register 
Interests awarded to Plan Interest Holders under the 1933 Act in 
reliance on an opinion of counsel that the awards of Interests are not 
sales within the meaning of section 2(a)(3) of the 1933 Act. No relief 
from the provisions of the 1933 Act is requested by the BlackRock Group 
with respect to the award of Interests to Plan Interest Holders. Plan 
Interest Holders will not be required to meet the sophistication and 
salary requirements to which Eligible Employees are subject.
    9. It is anticipated that, at the discretion of the General 
Partner, consultants or business or legal advisors of the BlackRock 
Group (``Consultants'') may be offered the opportunity to participate 
in the Partnerships, either directly or through a Qualified Participant 
of such consultant or advisor. In order to participate in the 
Partnerships, Consultants must be currently engaged by the BlackRock 
Group and will be required to be sophisticated investors who qualify as 
``accredited investors'' under rule 501(a) of Regulation D. If a 
Consultant is an entity (such as, for example, a law firm or consulting 
firm), and the Consultant proposes to invest in the Partnership through 
a partnership, corporation or other entity that is controlled by the 
Consultant, the individual participants in such partnership, 
corporation or other entity will be limited to senior level employees, 
members or partners of the Consultant who are responsible for the 
activities of the Consultant or the activities of the Consultant in 
relation to

[[Page 70584]]

the BlackRock Group and will be required to qualify as ``accredited 
investors'' under rule 501(a) of Regulation D.
    10. Once a Consultant's engagement with the BlackRock Group is 
terminated, or once an Eligible Family Member of an Eligible Employee 
ceases to be an Eligible Family Member, as of the date of such 
termination or cessation, such Consultant and its Qualified 
Participants, if any, or such Eligible Family Member, will not be 
permitted to contribute any additional capital to a Partnership and the 
existing Interests of such Consultant and its Qualified Participants, 
if any, or such Eligible Family Member, will (i) to the extent the 
governing documents of a Partnership provide for periodic redemptions 
in the ordinary course, be redeemed as of the next regularly scheduled 
redemption date and (ii) to the extent the governing documents of a 
Partnership do not provide for such periodic redemptions (e.g., as a 
result of the vehicle primarily investing in illiquid investments), be 
retained.
    11. If the General Partner elects to recommend that a Partnership 
enter into any side-by-side investment with an unaffiliated entity, the 
General Partner will be permitted to engage as a sub-investment adviser 
the unaffiliated entity (an ``Unaffiliated Subadviser''), which will be 
responsible for the management of such side-by-side investment. If an 
Unaffiliated Subadviser is entitled to receive a carried interest, it 
may also act as an additional General Partner of a Partnership solely 
in order to address certain tax issues relating to such carried 
interest. In all such instances, however, a BlackRock Group entity will 
also be a General Partner of the Partnership and will have exclusive 
responsibility for making the determinations required to be made by the 
General Partner. No Unaffiliated Subadviser will beneficially own any 
outstanding securities of any Partnership.
    12. The terms of a Partnership will be fully disclosed to each 
Eligible Employee or Qualified Participant (or person making the 
investment decision on behalf of the Qualified Participant) at the time 
the Eligible Employee or Qualified Participant is invited to 
participate in the Partnership, or to a Plan Interest Holder at the 
time he or she receives an Interest. Each Eligible Employee, Qualified 
Participant (or person making the investment decision on behalf of the 
Qualified Participant) or Plan Interest Holder will be furnished with a 
copy of the partnership agreement or other organizational document 
(``Partnership Agreement''). The Partnership Agreement will set forth 
whether a Limited Partner's Interests are subject to forfeiture upon 
termination of the relationship of the Limited Partner (or relevant 
Eligible Employee) to the BlackRock Group or the employment of the 
Limited Partner (or relevant Eligible Employee) by a competitor to the 
BlackRock Group or otherwise and, if such forfeiture provisions exist, 
the terms of the repurchase or cancellation of the Limited Partner's 
Interests. Upon any repurchase, cancellation or forfeiture of a former 
Limited Partner's Interest, the Limited Partner will at a minimum be 
paid the lesser of (i) the amount actually paid by or (subject to any 
vesting requirements) on behalf of the Limited Partner to acquire the 
Interest (plus interest, as reasonably determined by the General 
Partner) less any amounts paid to the Limited Partner as distributions, 
and (ii) the fair value, determined at the time of repurchase in good 
faith by the General Partner, of such Interest.
    13. Each Partnership will send its Partners annual financial 
statements within 120 days after the end of the fiscal year of the 
Partnership or as soon as practicable thereafter or, in the case of a 
Partnership that is a fund of funds,\4\ within 180 days after the end 
of the fiscal year of the Partnership. The financial statements of each 
Partnership will be audited by independent certified public 
accountants,\5\ except in the case of Partnerships formed to make a 
single Portfolio Investment.\6\ In addition, to enable Limited Partners 
to determine the U.S. federal income tax consequences of their 
investments, as soon as practicable after end of each tax year of a 
Partnership, a report will be transmitted to each Partner showing such 
Partner's share of income, gains, losses, credits, deductions, and 
other tax items for U.S. federal income tax purposes, resulting from 
the Partnership's operations during that year.
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    \4\ A fund of funds is a pooled investment vehicle that invests 
10 percent or more of its total assets in other pooled investment 
vehicles that are not, and are not advised by, a related person (as 
defined in Form ADV) of the pool, its general partner, or its 
adviser.
    \5\ For purposes of this requirement, ``audit'' shall have the 
meaning defined in rule 1-02(d) of Regulation S-X.
    \6\ In such cases, audited financial statements will be prepared 
for either the Partnership or the entity that is the subject of the 
Portfolio Investment.
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    14. Interests in the Partnerships will be non-transferable except 
with the prior written consent of the General Partner, and, in any 
event, no person or entity will be admitted into a Partnership as a 
Partner or allowed to continue to hold an Interest unless such person 
is (i) an Eligible Employee, (ii) a Plan Interest Holder, (iii) a 
Qualified Participant of an Eligible Employee or (iv) a BlackRock Group 
entity. The Interests in the Partnerships will be sold without a sales 
load.
    15. It is possible that an investment program may be structured in 
which a Partnership will co-invest in a portfolio company (or a pooled 
investment vehicle) with the BlackRock Group or with an investment fund 
or separate account,\7\ organized primarily for the benefit of 
investors that are not affiliated with the BlackRock Group (``Third 
Party Investors'') and over which a BlackRock Group entity exercises 
investment discretion or which is sponsored by a BlackRock Group entity 
(a ``BlackRock Third Party Fund''). Co-investments with a BlackRock 
Third Party Fund or with a BlackRock Group entity in a transaction in 
which the BlackRock Group's investment was made pursuant to a 
contractual obligation to a BlackRock Third Party Fund will not be 
subject to condition 3 below. All other side-by-side investments held 
by BlackRock Group entities will be subject to the restrictions 
contained in condition 3.
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    \7\ A separate account refers to an account of an affiliated 
insurance company, trust company or similar entity where under 
applicable state or other law such separate account provides special 
rights or other special treatment for separate account holders that 
are distinguishable from the rights of the entity's general account.
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    16. Subject to the terms of the applicable Partnership Agreement 
and the application, a Partnership will be permitted to enter into 
transactions involving (i) a BlackRock Group entity, (ii) a portfolio 
company, (iii) any Partner or person or entity affiliated with a 
Partner, (iv) a BlackRock Third Party Fund, or (v) any Third Party 
Investor. With regard to any such transactions that are Section 17 
Transactions (as defined below), the General Partner must make the 
findings and comply with the recordkeeping requirements of condition 1.
    17. Applicants state that a Partnership's investments may be made 
on a side-by-side basis with BlackRock Group entities or indirectly 
through pooled investment vehicles (including private funds relying on 
sections 3(c)(1) and 3(c)(7) of the Act and funds relying on section 
3(c)(5) of the Act) \8\ and/or registered investment companies

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sponsored by the BlackRock Group or by third parties. One Partnership 
may invest in another Partnership in a ``master-feeder'' or similar 
structure. A Partnership will not acquire any security issued by a 
registered investment company if, immediately after the acquisition, 
such Partnership will own more than 3% of the outstanding voting stock 
of the registered investment company.
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    \8\ Applicants are not requesting any exemption from any 
provision of the Act or any rule thereunder that may govern a 
Partnership's eligibility to invest in a Portfolio Investment 
relying on section 3(c)(1) or 3(c)(7) of the Act or the Portfolio 
Investment's status under the Act.
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Applicants' Legal Analysis
    1. Section 6(b) of the Act provides, in part, that the Commission 
will exempt employees' securities companies from the provisions of the 
Act if and to the extent that the exemption is consistent with the 
protection of investors. Section 6(b) provides that the Commission will 
consider, in determining the provisions of the Act from which the 
company should be exempt, the company's form of organization and 
capital structure, the persons owning and controlling its securities, 
the price of the company's securities and the amount of any sales load, 
how the company's funds are invested, and the relationship between the 
company and the issuers of the securities in which it invests. Section 
2(a)(13) defines an employees' securities company, in relevant part, as 
any investment company all of whose securities (other than short-term 
paper) are beneficially owned (a) by current or former employees, or 
persons on retainer, of one or more affiliated employers, (b) by 
immediate family members of such persons, or (c) by such employer or 
employers together with any of the persons in (a) or (b).
    2. Section 7 of the Act generally prohibits investment companies 
that are not registered under section 8 of the Act from selling or 
redeeming their securities. Section 6(e) of the Act provides that, in 
connection with any order exempting an investment company from any 
provision of section 7, certain provisions of the Act, as specified by 
the Commission, will be applicable to the company and other persons 
dealing with the company as though the company were registered under 
the Act. Applicants request an order under sections 6(b) and 6(e) of 
the Act exempting the Partnerships from all provisions of the Act, and 
the rules and regulations thereunder, except sections 9, 17, 30, 36 
through 53 and the rules and regulations under those sections. With 
respect to sections 17(a), (d), (e), (f), (g) and (j) and 30(a), (b), 
(e) and (h) of the Act, and the rules and regulations thereunder, and 
rule 38a-1 under the Act, applicants request a limited exemption as set 
forth in the application.
    3. Section 17(a) generally prohibits any affiliated person of a 
registered investment company, or any affiliated person of an 
affiliated person, acting as principal, from knowingly selling or 
purchasing any security or other property to or from the investment 
company. Applicants request an exemption from section 17(a) to the 
extent necessary to permit a BlackRock Group entity or a BlackRock 
Third Party Fund (or any affiliated person of such entity or BlackRock 
Third Party Fund), or any affiliated person of a Partnership (or 
affiliated persons of such persons), acting as principal, to engage in 
any transaction directly or indirectly with any Partnership or any 
company controlled by such Partnership. Applicants state that the 
relief is requested to permit each Partnership the flexibility to deal 
with its Portfolio Investments in the manner the General Partner deems 
most advantageous to all Limited Partners in the Partnership, including 
borrowing funds from a BlackRock Group entity, restructuring its 
Portfolio Investments, having its Portfolio Investments redeemed, 
tendering such Partnership's securities or negotiating options or 
implementing exit strategies with respect to its Portfolio Investments. 
Applicants state the requested exemption is sought to ensure that a 
BlackRock Third Party Fund or a Third Party Investor will not directly 
or indirectly become subject to a burden, restriction, or other adverse 
effect by virtue of a Partnership's participation in an investment 
opportunity.
    4. Applicants submit that an exemption from section 17(a) is 
consistent with the policy of each Partnership and the protection of 
investors and is necessary to promote the basic purpose of such 
Partnership. Applicants state that the Limited Partners in each 
Partnership will be fully informed of the possible extent of 
Partnership's dealings with the BlackRock Group and of the potential 
conflicts of interest that may exist. As professionals employed in the 
investment management and securities businesses, the Limited Partners 
will be able to understand and evaluate the attendant risks. Applicants 
assert that the community of interest among the Limited Partners in 
each Partnership and the BlackRock Group is the best insurance against 
any risk of abuse. Applicants acknowledge that the requested relief 
will not extend to any transactions between a Partnership and an 
Unaffiliated Subadviser or an affiliated person of the Unaffiliated 
Subadviser, or between a Partnership and any person who is not an 
employee, officer or director of the BlackRock Group or is an entity 
outside of the BlackRock Group and is an affiliated person of the 
Partnership as defined in section 2(a)(3)(E) of the Act (``Advisory 
Person'') or any affiliated person of such person. In addition, 
applicants on behalf of the Partnerships represent that any 
transactions otherwise subject to section 17(a) of the Act, for which 
exemptive relief has not been requested, would require approval of the 
Commission.
    5. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
any affiliated person of a registered investment company, or any 
affiliated person of such person, acting as principal, from 
participating in any joint arrangement with the company unless 
authorized by the Commission. Applicants request relief to permit 
affiliated persons of each Partnership or affiliated persons of such 
persons to participate in, or effect any transaction in connection 
with, any joint enterprise or joint arrangement or profit-sharing plan 
in which such Partnership or a company controlled by the Partnership is 
a participant. Applicants acknowledge that the requested relief will 
not extend to any transaction in which an Unaffiliated Subadviser or an 
Advisory Person or an affiliated person of either has an interest.
    6. Applicants assert that compliance with section 17(d) would cause 
a Partnership to forego investment opportunities simply because a 
Limited Partner or any other affiliated person of such Partnership (or 
any affiliated person of such a person) also had, or contemplated 
making, a similar investment. Applicants further assert that attractive 
investment opportunities of the types considered by a Partnership often 
require each participant in the transaction to make funds available in 
an amount that may be substantially greater than those the Partnership 
would be able to provide on its own. Applicants contend that, as a 
result, the only way in which a Partnership may be able to participate 
in such opportunities may be to co-invest with other persons, including 
its affiliates. Applicants assert that the flexibility to structure co-
investments and joint investments will not involve abuses of the type 
section 17(d) and rule 17d-1 were designed to prevent.
    7. Co-investments with a BlackRock Third Party Fund, or with a 
BlackRock Group entity in a transaction in which the BlackRock Group's 
investment was made pursuant to a contractual obligation to a BlackRock 
Third Party Fund, will not be subject to condition 3 below. All other 
side-by-side

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investments held by BlackRock Group entities will be subject to 
condition 3. Applicants assert that in structuring a BlackRock Third 
Party Fund, it is common for the unaffiliated investors of such fund to 
require that the BlackRock Group invests its own capital in BlackRock 
Third Party Funds' investments, and that such BlackRock Group 
investments be subject to similar terms as those applicable to the 
BlackRock Third Party Fund's investments. Applicants state that it is 
important that the interests of the BlackRock Third Party Fund take 
priority over the interests of the Partnerships, and that the 
activities of the BlackRock Third Party Fund not be burdened or 
otherwise affected by activities of the Partnerships.
    8. Section 17(e) of the Act and rule 17e-1 under the Act limit the 
compensation an affiliated person may receive when acting as agent or 
broker for a registered investment company. Applicants request an 
exemption from section 17(e) to permit a BlackRock Group entity 
(including the General Partner) that acts as an agent or broker to 
receive placement fees, advisory fees, brokerage fees, or other 
compensation from a Partnership in connection with the purchase or sale 
by the Partnership of securities, provided that the fees or other 
compensation are deemed ``usual and customary.'' Applicants state that 
for purposes of the application, fees or other compensation that are 
charged or received by a BlackRock Group entity will be deemed ``usual 
and customary'' only if (a) the Partnership is purchasing or selling 
securities alongside other unaffiliated third parties, including 
BlackRock Third Party Funds or Third Party Investors, (b) the fees or 
compensation being charged to the Partnership are also being charged to 
the unaffiliated third parties, BlackRock Third Party Funds or Third 
Party Investors, and (c) the amount of securities being purchased or 
sold by the Partnership does not exceed 50% of the total amount of 
securities being purchased or sold by the Partnership and the 
unaffiliated third parties, BlackRock Third Party Funds or Third Party 
Investors. Applicants assert that, because the BlackRock Group does not 
wish to appear to be favoring the Partnerships, compliance with section 
17(e) would prevent a Partnership from participating in transactions 
where the Partnership is being charged lower fees than unaffiliated 
third parties. Applicants assert that the fees or other compensation 
paid by a Partnership to a BlackRock Group entity will be the same as 
those negotiated at arm's length with unaffiliated third parties.
    9. Rule 17e-1(b) under the Act requires that a majority of 
directors who are not ``interested persons'' (as defined in section 
2(a)(19) of the Act) take actions and make approvals regarding 
commissions, fees, or other remuneration. Rule 17e-1(c) under the Act 
requires each investment company relying on the rule to satisfy the 
fund governance standards defined in rule 0-1(a)(7) under the Act. 
Applicants request an exemption from rule 17e-1 to the extent necessary 
to permit each Partnership to comply with the rule without having a 
majority of the directors of the Partnership who are not interested 
persons take actions and make determinations as set forth in paragraph 
(b) of the rule, and without having to satisfy the standards set forth 
in paragraph (c) of the rule. Applicants state that because all the 
directors of the General Partner will be affiliated persons, without 
the relief requested, a Partnership could not comply with rule 17e-1. 
Applicants state that each Partnership will comply with rule 17e-1 by 
having a majority of the directors of the Partnership or the General 
Partner take actions and make approvals as set forth in the rule. 
Applicants state that each Partnership will otherwise comply with rule 
17e-1.
    10. Section 17(f) of the Act provides that the securities and 
similar investments of a registered management investment company must 
be placed in the custody of a bank, a member of a national securities 
exchange or the company itself in accordance with Commission rules. 
Rule 17f-1 under the Act specifies the requirements that must be 
satisfied for a registered management investment company to maintain 
custody of its securities and similar investments with a company that 
is a member of a national securities exchange. Applicants request 
relief from section 17(f) and subsections (a), (b) (to the extent such 
subsection refers to contractual requirements), (c) and (d) of rule 
17f-1 under the Act to permit a BlackRock Group entity to act as 
custodian for a Partnership's assets without a written contract and to 
permit ratification of that arrangement by members of the governing 
body of the General Partner or Investment Adviser, if applicable, of 
the Partnership in lieu of ratification by the governing body of the 
Partnership. In addition, an exemption is requested from the terms of 
rule 17f-1(b)(4) that an independent accountant periodically verify the 
Partnership's assets held by the custodian, and from the terms of rule 
17f-1(c) that requires the Partnership to transmit to the Commission a 
copy of any contract pursuant to rule 17f-1. Applicants state that, 
because of the community of interest between the Partnerships and the 
BlackRock Group, applicants do not believe these requirements are 
warranted. Applicants will comply with rule 17f-1(d) provided that 
ratification by the General Partner or Investment Adviser, if 
applicable, of a Partnership will be deemed to be ratification by a 
majority of the governing body of the Partnership. Except as set forth 
above, each Partnership will otherwise comply with all the provisions 
of rule 17f-1.
    11. Rule 17f-2 under the Act specifies the requirements that must 
be satisfied for a registered management investment company to act as a 
custodian of its own investments. Applicants request an exemption from 
section 17(f) and rule 17f-2 to permit the following exceptions from 
the requirements of rule 17f-2: (a) A Partnership's investments may be 
kept in the locked files of the General Partner or the Investment 
Adviser for purposes of paragraph (b) of the rule; (b) for purposes of 
paragraph (d) of the rule, (i) employees of the BlackRock Group will be 
deemed to be employees of the Partnerships, (ii) officers or managers 
of the General Partner of a Partnership will be deemed to be officers 
of the Partnership, and (iii) the General Partner or its board of 
directors will be deemed to be the board of directors of the 
Partnership; and (c) in place of the verification procedure under 
paragraph (f) of the rule, verification will be effected quarterly by 
two employees of the General Partner who are also employees of the 
BlackRock Group responsible for the administrative, legal and/or 
compliance functions for funds managed or sponsored by the BlackRock 
Group and who have specific knowledge of custody requirements, policies 
and procedures of the Partnerships. With respect to certain 
Partnerships, applicants expect that many of their investments may be 
evidenced only by partnership agreements, participation agreements or 
similar documents, rather than by negotiable certificates that could be 
misappropriated. Applicants assert that, for such a Partnership, these 
instruments are most suitably kept in the files of the General Partner 
or its Investment Adviser, where they can be referred to as necessary. 
Applicants will comply with all other provisions of rule 17f-2.
    12. Section 17(g) of the Act and rule 17(g)-1 under the Act 
generally require the bonding of officers and employees of a registered 
investment company who have access to its securities or funds.

[[Page 70587]]

Rule 17g-1 requires that a majority of the directors who are not 
``interested persons'' of a registered investment company take certain 
actions and give certain approvals relating to the fidelity bonding. 
Rule 17g-1(g) sets forth certain materials relating to the fidelity 
bond that must be filed with the Commission and certain notices 
relating to the fidelity bond that must be given to each member of the 
investment company's board of directors. Rule 17g-1(h) provides that an 
investment company must designate one of its officers to make the 
filings and give the notices required by paragraph (g). Rule 17g-1(j) 
exempts a joint insured bond provided and maintained by an investment 
company and one or more parties from section 17(d) of the Act and the 
rules thereunder. Rule 17g-1(j)(3) requires that the board of directors 
of an investment company satisfy the fund governance standards defined 
in rule 0-1(a)(7). Because all the directors of the General Partner or 
other governing body of the General Partner will be affiliated persons, 
without the relief requested, a Partnership could not comply with rule 
17g-1. Applicants request an exemption from rule 17g-1 to the extent 
necessary to permit each Partnership to comply with rule 17g-1 by 
having the General Partner of the Partnership take such actions and 
make such approvals as are set forth in rule 17g-1. Applicants also 
request an exemption from the requirements of rule 17g-1(g) and (h) 
relating to the filing of copies of fidelity bonds and related 
information with the Commission and the provision of notices to the 
board of directors and from the requirements of rule 17g-1(j)(3). The 
General Partner of the Partnership will maintain the materials 
otherwise required to be filed with the Commission by rule 17g-1(g) and 
all such material will be subject to examination by the Commission and 
its staff. The General Partner of the Partnership will designate a 
person to maintain the records otherwise required to be filed with the 
Commission under rule 17g-1(g). Applicants state that the fidelity bond 
of the Partnerships will cover all employees of the BlackRock Group who 
have access to the securities or funds of the Partnerships. Each 
Partnership will comply with all other requirements of rule 17g-1.
    13. Section 17(j) of the Act and paragraph (b) of rule 17j-1 under 
the Act make it unlawful for certain enumerated persons to engage in 
fraudulent or deceptive practices in connection with the purchase or 
sale of a security held or to be acquired by a registered investment 
company. Rule 17j-1 also requires that every registered investment 
company adopt a written code of ethics and that every access person of 
a registered investment company report personal securities 
transactions. Applicants request an exemption from the provisions of 
rule 17j-1, except for the anti-fraud provisions of paragraph (b), 
because they are unnecessary and burdensome as applied to the 
Partnerships. The relief requested will extend only to entities within 
the BlackRock Group and is not requested with respect to any 
Unaffiliated Subadviser or Advisory Person.
    14. Applicants request an exemption from the requirements in 
sections 30(a), 30(b), and 30(e) of the Act, and the rules under those 
sections, that registered investment companies prepare and file with 
the Commission and mail to their shareholders certain periodic reports 
and financial statements. Applicants contend that the forms prescribed 
by the Commission for periodic reports have little relevance to a 
Partnership and would entail administrative and legal costs that 
outweigh any benefit to the Limited Partners of the Partnership. 
Applicants request relief to the extent necessary to permit each 
Partnership to report annually to its Limited Partners. Applicants also 
request an exemption from section 30(h) of the Act to the extent 
necessary to exempt (i) the General Partner and Investment Adviser of 
each Partnership, (ii) directors, officers, or any affiliated persons 
of the General Partner and Investment Adviser, (iii) the members of any 
Investment Committee or board of managers or directors of a 
Partnership, (iv) any other persons who may be deemed to be members of 
an advisory board of a Partnership, and (v) any BlackRock Group entity 
or other Limited Partner who may be deemed to be a beneficial owner of 
10% or greater of the outstanding securities of a Partnership, from 
filing Forms 3, 4, and 5 under section 16(a) of the 1934 Act with 
respect to their ownership of Interests. Applicants assert that, 
because there will be no trading market and the transfers of Interests 
will be severely restricted, these filings are unnecessary for the 
protection of investors and burdensome to those required to make them.
    15. Rule 38a-1 requires investment companies to adopt, implement 
and periodically review written policies reasonably designed to prevent 
violation of the federal securities laws and to appoint a chief 
compliance officer. Each Partnership will comply will rule 38a-1(a), 
(c) and (d), except that (a) because the Partnership does not have a 
board of directors, the board of directors of the General Partner will 
fulfill the responsibilities assigned to the Partnership's board of 
directors under the rule, (b) because the board of directors or other 
governing body of the General Partner does not have any disinterested 
members, approval by a majority of the disinterested board members 
required by rule 38a-1 will not be obtained, and (c) because the board 
of directors or other governing body of the General Partner does not 
have any independent members, the Partnerships will comply with the 
requirement in rule 38a-1(a)(4)(iv) that the chief compliance officer 
meet with the independent directors by having the chief compliance 
officer meet with the board of directors or other governing body of the 
General Partner as constituted.
Applicants' Conditions
    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Each proposed transaction otherwise prohibited by section 17(a) 
or section 17(d) and rule 17d-1 to which a Partnership is a party (the 
``Section 17 Transactions'') will be effected only if the General 
Partner determines that:
    (a) the terms of the Section 17 Transaction, including the 
consideration to be paid or received, are fair and reasonable to the 
Partnership and the Partners and do not involve overreaching of such 
Partnership or its Partners on the part of any person concerned; and
    (b) the Section 17 Transaction is consistent with the interests of 
the Partnership and the Partners, such Partnership's organizational 
documents and such Partnership's reports to its Partners.
    In addition, the General Partner will record and preserve a 
description of all Section 17 Transactions, the General Partner's 
findings, the information or materials upon which the General Partner's 
findings are based and the basis for such findings. All such records 
will be maintained for the life of the Partnership and at least six 
years thereafter, and will be subject to examination by the Commission 
and its staff. Each Partnership will preserve the accounts, books and 
other documents required to be maintained in an easily accessible place 
for the first two years.
    2. The General Partner will adopt, and periodically review and 
update, procedures designed to ensure that reasonable inquiry is made, 
prior to the consummation of any Section 17 Transaction, with respect 
to the possible involvement in the transaction of any

[[Page 70588]]

affiliated person or promoter of or principal underwriter for such 
Partnership, or any affiliated person of such a person, promoter or 
principal underwriter.
    3. The General Partner will not cause the funds of any Partnership 
to be invested in any investment in which a ``Co-Investor'' (as defined 
below) has acquired or proposes to acquire the same class of securities 
of the same issuer, where the investment involves a joint enterprise or 
other joint arrangement within the meaning of rule 17d-1 in which the 
Partnership and a Co-Investor are participants, unless prior to such 
investment any such Co-Investor agrees, prior to disposing of all or 
part of its investment, to: (a) Give the General Partner sufficient, 
but not less than one day's, notice of its intent to dispose of its 
investment; and (b) refrain from disposing of its investment unless the 
Partnership has the opportunity to dispose of the Partnership's 
investment prior to or concurrently with, on the same terms as, and on 
a pro rata basis with, the Co-Investor. The term ``Co-Investor'' with 
respect to any Partnership means any person who is: (a) An ``affiliated 
person'' (as defined in section 2(a)(3) of the Act) of the Partnership 
(other than a BlackRock Third Party Fund); (b) the BlackRock Group 
(except when a BlackRock Group entity co-invests with a Partnership and 
a BlackRock Third Party Fund pursuant to a contractual obligation to 
the BlackRock Third Party Fund); (c) an officer or director of a 
BlackRock Group entity; (d) an entity (other than a BlackRock Third 
Party Fund) in which the BlackRock Group acts as a general partner or 
has a similar capacity to control the sale or other disposition of the 
entity's securities. The restrictions contained in this condition, 
however, shall not be deemed to limit or prevent the disposition of an 
investment by a Co-Investor: (a) To its direct or indirect wholly-owned 
subsidiary, to any company (a ``parent'') of which the Co-Investor is a 
direct or indirect wholly-owned subsidiary or to a direct or indirect 
wholly-owned subsidiary of its parent; (b) to immediate family members 
of the Co-Investor, including step or adoptive relationships, or a 
trust or other investment vehicle established for any Co-Investor or 
any such family member; or (c) when the investment is comprised of 
securities that are (i) listed on a national securities exchange 
registered under section 6 of the 1934 Act; (ii) NMS stocks, pursuant 
to section 11A(a)(2) of the 1934 Act and rule 600(b) of Regulation NMS 
thereunder; (iii) government securities as defined in section 2(a)(16) 
of the Act; (iv) ``Eligible Securities'' as defined in rule 2a-7 under 
the Act, or (v) listed or traded on any foreign securities exchange or 
board of trade that satisfies regulatory requirements under the law of 
the jurisdiction in which such foreign securities exchange or board of 
trade is organized similar to those that apply to a national securities 
exchange or a national market system for securities.
    4. Each Partnership and its General Partner will maintain and 
preserve, for the life of such Partnership and at least six years 
thereafter, such accounts, books, and other documents as constitute the 
record forming the basis for the audited financial statements that are 
to be provided to the Limited Partners in such Partnership, and each 
annual report of such Partnership required to be sent to such Limited 
Partners, and agree that all such records will be subject to 
examination by the Commission and its staff. Each Partnership will 
preserve the accounts, books and other documents required to be 
maintained in an easily accessible place for the first two years.
    5. Within 120 days after the end of the fiscal year of the 
Partnership or as soon as practicable thereafter or, in the case of a 
Partnership that is a fund of funds, within 180 days after the end of 
the fiscal year of the Partnership, the General Partner of each 
Partnership will send to each Limited Partner in such Partnership who 
had an interest in any capital account of the Partnership, at any time 
during the fiscal year then ended, Partnership financial statements 
audited by the Partnership's independent accountants, except in the 
case of a Partnership formed to make a single Portfolio Investment. In 
such cases, financial statements will be unaudited, but each Limited 
Partner will receive financial statements of the single Portfolio 
Investment audited by such entity's independent accountants. At the end 
of each fiscal year and at other times as necessary in accordance with 
customary practice, the General Partner will make a valuation or have a 
valuation made of all of the assets of the Partnership as of the fiscal 
year end. In addition, as soon as practicable after the end of each tax 
year of a Partnership, the General Partner of such Partnership will 
send a report to each person who was a Limited Partner in such 
Partnership at any time during the fiscal year then ended, setting 
forth such tax information as shall be necessary for the preparation by 
the Limited Partner of his, her or its U.S. federal and state income 
tax returns and a report of the investment activities of the 
Partnership during that fiscal year.
    6. If a Partnership makes purchases or sales from or to an entity 
affiliated with the Partnership by reason of an officer, director or 
employee of the BlackRock Group (a) serving as an officer, director, 
general partner or investment adviser of the entity, or (b) having a 5% 
or more investment in the entity, such individual will not participate 
in the Partnership's determination of whether or not to effect the 
purchase or sale.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27980 Filed 11-25-14; 8:45 am]
BILLING CODE 8011-01-P


