
[Federal Register Volume 82, Number 184 (Monday, September 25, 2017)]
[Notices]
[Pages 44685-44690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20438]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32822; File No. 812-14689]


Barings Corporate Investors, et al.; Notice of Application

September 20, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under Sections 17(d) and 
57(i) of the Investment Company Act of 1940 (the ``Act'') and Rule 17d-
1 under the Act permitting certain joint transactions otherwise 
prohibited by Sections 17(d) and 57(a)(4) of the Act and Rule 17d-1 
under the Act.

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

APPLICANTS: Barings Corporate Investors (formerly, Babson Capital 
Corporate Investors) (``MCI'') and Barings Participation Investors 
(formerly, Babson Capital Participation Investors) (``MPV'' and 
together with MCI, the ``Existing Regulated Funds''); CI Subsidiary 
Trust (``MCI Sub'') and PI Subsidiary Trust (``MPV Sub''); 
Massachusetts Mutual Life Insurance Company and its successors \1\ 
(``MassMutual''); C.M. Life Insurance Company (``C.M. Life''); Barings 
Finance LLC (formerly, Babson Capital Finance LLC) (``BCF''); Barings 
LLC (formerly, Babson Capital Management, LLC) and its successors 
(``Barings'') and any other person controlling, controlled by, or under 
common control with MassMutual or Barings that is registered as an 
investment adviser under the Investment Advisers Act of 1940, as 
amended (the ``Advisers Act''), and that serves as an investment 
adviser to any Regulated Fund (as defined below) or any Affiliated 
Account (as defined below) relying on the requested order (each an 
``Adviser'' and together with Barings, the ``Advisers''); Tower Square 
Capital Partners, L.P. (``TS Capital''); TSCP Selective, L.P. 
(``TSCP''); Tower Square Capital Partners II, L.P. (``TS Capital II''); 
Tower Square Capital Partners II-A, L.P. (``TS Capital II-A''); Tower 
Square Capital Partners II-B, L.P. (``TS Capital II-B''); Tower Square 
II Holding 06-1, Inc. (``TS Holding 06-1''); Tower Square Capital 
Partners III, L.P. (``TS Capital III''); Tower Square Capital Partners 
III-A, L.P. (``TS Capital III-A''); Tower Square Capital Partners II-B, 
L.P. (``TS Capital III-B''); Tower Square III Holdings 08-1, Inc. (``TS 
Holdings 08-1''); Tower Square Capital Partners IV, L.P. (``TS Capital 
IV''); Tower Square Capital Partners IV-A, L.P. (``TS Capital IV-A''); 
Tower Square IV Holding 14-1, Inc. (``TS Holding 14-1''); Barings 
Global Credit Fund (Lux) SCSp, SICAV-SIF (``Global Credit Fund'' and, 
together with TS Capital, TSCP, TS Capital II, TS Capital II-A, TS 
Capital II-B, TS Holding 06-1, TS Capital III, TS Capital III-A, TS 
Capital III-B, TS Holdings 08-1, TS Capital IV, TS Capital IV-A, TS 
Holding 14-1, and BCF, the ``Existing Private Funds'' and, together 
with MassMutual and C.M. Life, the ``Existing Affiliated Accounts''.
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    \1\ The term ``successor'' means an entity that results from a 
reorganization or change in the type of business organization.

FILING DATES: The application was filed on August 12, 2016 and amended 
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on August 29, 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 October 16, 2017 and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to Rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Brent J. Fields, Secretary, U.S. Securities and Exchange 
Commission, 100 F St. NE., Washington, DC 20549-1090. Applicants: 300 
S. Tryon Street, Suite 2500, Charlotte, NC 28202.

FOR FURTHER INFORMATION CONTACT:  Kyle R. Ahlgren, Senior Counsel, at 
(202) 551-6857, or Holly L. Hunter-Ceci, Assistant Chief Counsel, at 
(202) 551-6825.

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.

[[Page 44686]]

Applicants' Representations

    1. Applicants seek an order (``Order'') to permit a Regulated Fund 
\2\ and one or more other Regulated Funds and/or one or more Affiliated 
Accounts \3\ to participate in the same investment opportunities 
through a proposed co-investment program (the ``Co-Investment 
Program'') where such participation would otherwise be prohibited under 
Sections 17(d) and 57(a)(4) and Rule 17d-1 by: (a) Co-investing with 
each other in securities issued by issuers in private placement 
transactions in which an Adviser negotiates terms in addition to price 
(``Private Placement Securities''); \4\ and (b) making additional 
investments in securities of such issuers, including through the 
exercise of warrants, conversion privileges, and other rights to 
purchase securities of the issuers (``Follow-On Investments''). ``Co-
Investment Transaction'' means any transaction in which a Regulated 
Fund (or its Wholly-Owned Investment Sub \5\) participates together 
with one or more other Regulated Funds and/or one or more Affiliated 
Accounts in reliance on the requested Order. No Non-Interested Trustee 
\6\ of a Regulated Fund will have a financial interest in any Co-
Investment Transaction, other than indirectly through share ownership 
in one of the Regulated Funds. ``Potential Co-Investment Transaction'' 
means any investment opportunity in which a Regulated Fund (or its 
Wholly-Owned Investment Sub) could not participate together with one or 
more Affiliated Accounts and/or one or more other Regulated Funds 
without obtaining and relying on this order or the Existing Order.\7\ 
The relief requested would also cover any existing and future Wholly-
Owned Investment Sub.
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    \2\ ``Regulated Fund'' means either of the Existing Regulated 
Funds and any Future Regulated Fund. ``Future Regulated Fund'' means 
any closed-end management investment company: (a) That is registered 
under the 1940 Act or has elected to be regulated as a business 
development company; (b) whose investment adviser is an Adviser; and 
(c) that intends to participate in the Co-Investment Program (as 
defined below).
    \3\ ``Affiliated Account'' means any Existing Affiliated Account 
and any future account or entity: (a) Whose investment adviser is an 
Adviser; (b) that would be an investment company but for Sections 
3(a)(1) or 3(c)(7) of the 1940 Act; and (c) that intends to 
participate in the Co-Investment Program.
    \4\ The term ``private placement transactions'' means 
transactions in which the offer and sale of securities by the issuer 
are exempt from registration under the Securities Act of 1933, as 
amended (the ``1933 Act'').
    \5\ The term ``Wholly-Owned Investment Sub'' means any existing 
or future special purpose subsidiary: (a) That is wholly-owned by a 
Regulated Fund (with the Regulated Fund at all times holding, 
beneficially and of record, 100 percent of the voting and economic 
interests); (b) whose sole business purpose is to hold one or more 
investments on behalf of the Regulated Fund; (c) with respect to 
which the Regulated Fund's Board has the sole authority to make all 
determinations with respect to the entity's participation under the 
conditions to this Application; and (d) that would be an investment 
company but for Section 3(c)(1) or 3(c)(7) of the 1940 Act.
    \6\ The term ``Non-Interested Trustees'' means, with respect to 
any Board, the directors or trustees who are not ``interested 
persons'' within the meaning of Section 2(a)(19) of the 1940 Act. 
The term ``Board'' means, with respect to any Regulated Fund, the 
board of directors or trustees of that Regulated Fund (including the 
MCI/MPV Board (defined below) for MCI and MPV).
    \7\ The term ``Existing Order'' refers to Massachusetts Mutual 
Life Ins. Company, et al., Investment Company Act Rel. Nos. 24557 
(Jul. 13, 2000) (notice) and 24595 (Aug. 8, 2000) (order). The 
requested order would supersede the Existing Order.
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    2. MCI and MPV are closed-end diversified management investment 
companies registered under the 1940 Act. MCI's Objectives and 
Strategies \8\ are to maintain a portfolio of securities providing a 
fixed yield and at the same time offering an opportunity for capital 
gains. MCI's principal investments are privately placed, below-
investment grade, long-term debt obligations with equity features such 
as common stock, warrants, conversion rights, or other equity features 
and, occasionally, preferred stocks. MCI typically purchases these 
investments, which are not publicly tradable, directly from their 
issuers in private placement transactions. In addition, MCI may invest, 
subject to certain limitations, in marketable investment grade debt 
securities, other marketable debt securities (including high yield 
securities) and marketable common stocks. MPV's Objectives and 
Strategies are to maximize total return by providing a high level of 
current income, the potential for growth of income, and capital 
appreciation. MPV's principal investments are privately placed, below-
investment grade, long-term debt obligations purchased directly from 
their issuers, which tend to be smaller companies. MPV may also invest 
in publicly traded debt securities (including high yield securities) 
with an emphasis on those with equity features, and in convertible 
preferred stocks and, subject to certain limitations, readily 
marketable equity securities. In addition, MPV may invest in high 
quality, readily marketable securities.
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    \8\ ``Objectives and Strategies'' means, for each Regulated 
Fund, the Regulated Fund's investment objectives and strategies and 
investment policies, as described in the Regulated Fund's 
registration statement on Form N-2 and other filings the Regulated 
Fund has made with the Commission, as further supplemented, amended 
or modified in accordance with applicable law, including, without 
limitation, the 1933 Act, the Securities Exchange Act of 1934, and 
the 1940 Act, as amended.
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    3. MCI and MPV are each managed under the direction of a board of 
trustees (the ``MCI/MPV Board''), which consists of seven members, five 
of whom are not ``interested persons'' of MCI or MPV within the meaning 
of Section 2(a)(19) of the 1940 Act (the ``Non-Interested Trustees''). 
MCI Sub and MPV Sub are wholly owned subsidiaries of MCI and MPV, 
respectively. MCI Sub and MPV Sub are each Wholly-Owned Investment 
Subs.
    4. MassMutual is a mutual life insurance company organized under 
the laws of the Commonwealth of Massachusetts. Both C.M. Life, a stock 
life insurance company organized under the laws of Connecticut, and 
BCF, a limited liability company organized under the laws of Delaware 
that makes loans to middle market companies, are wholly-owned 
subsidiaries of MassMutual. Barings is an investment adviser registered 
with the Commission under the Advisers Act and is an indirect, wholly-
owned subsidiary of MassMutual. Barings is the investment adviser to 
the Existing Regulated Funds and the Existing Affiliated Accounts. 
MassMutual, BCF, Barings, and investment advisory clients of MassMutual 
and Barings may from time to time invest in the Regulated Funds and/or 
the Affiliated Accounts.
    5. MassMutual has invested side-by-side with MCI in Private 
Placement Securities since 1971 pursuant to an exemptive order under 
Section 17(d) and Rule 17d-1 thereunder and Section 17(b).\9\ 
Similarly, MassMutual has invested side-by-side with MPV since 1988, 
when the exemptive order was amended to add MPV.\10\ The 1971 and 1988 
orders, as successively amended through the Existing Order, were 
intended to give the Regulated Funds the opportunity to invest in 
Private Placement Securities that MassMutual intended to purchase for 
MassMutual's accounts and that would not otherwise be available to the 
Regulated Funds, but for MassMutual's participation in the investments. 
As a mutual life insurance company regulated by the Massachusetts 
Department of Insurance (the ``MA DOI'') and the self-regulatory 
organization the National Association of Insurance Commissioners, 
MassMutual invests its general investment account to match its 
liabilities with respect to maturity and interest rate risk, including

[[Page 44687]]

managing duration, liquidity and overall volatility. MassMutual's 
accounts are reviewed by the MA DOI to ensure compliance with various 
legal and accounting rules that, among other things, govern the types 
and amount of assets that an insurance company must maintain to help 
assure its ability to meet its obligations to policy holders.
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    \9\ Massachusetts Mutual Life Ins. Company et al., Investment 
Company Act Rel. No. 6690 (Aug. 19, 1971) (order).
    \10\ Massachusetts Mutual Life Ins. Company et al., Investment 
Company Act Rel. Nos. 16578 (Sept. 28, 1988) (notice) and 16601 
(Oct. 19, 1988) (order).
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    6. MassMutual's accounts are advised by Barings and other 
unaffiliated investment advisers. Barings serves as investment adviser 
to a portion of MassMutual's accounts pursuant to investment advisory 
agreements.
    7. Although MassMutual indirectly owns Barings, Barings has a 
separate Board of Directors, officers and management team from 
MassMutual and operates as a separate, distinct legal entity. Barings' 
portfolio managers' compensation is paid on the same basis with respect 
to managing the MassMutual accounts and any third-party accounts. 
Barings' allocation procedures do not distinguish between MassMutual's 
accounts and third-party accounts. Consequently, despite the 
affiliation between MassMutual and Barings, Barings manages the 
MassMutual accounts at arm's length in the same way it manages third-
party accounts in the relevant asset classes.
    8. TS Capital, TSCP, TS Capital II, TS Capital II-A, TS Capital II-
B, TS Capital III, TS Capital III-A, TS Capital III-B, TS Capital IV, 
and TS Capital IV-A are Delaware limited partnerships for which Barings 
acts as investment manager. These funds invest primarily in direct 
mezzanine and equity investments focused on small and middle market 
companies. Each Existing Private Fund relies on Section 3(c)(7) of the 
1940 Act.
    9. Mezzco LLC acts as the general partner of TS Capital and TSCP. 
Mezzco II LLC acts as the general partner of TS Capital II, TS Capital 
II-A and TS Capital II-B. Mezzco III LLC acts as the general partner of 
TS Capital III, TS Capital III-A and TS Capital III-B, and Mezzco IV 
LLC acts as the general partner of TS Capital IV and TS Capital IV-A.
    10. Global Credit Fund is a Luxembourg special limited partnership 
for which Barings acts as the sub-adviser. Global Credit Fund invests 
in global private corporate loans, including senior secured loans, 
unitranche loans, second lien loans and subordinated debt (including 
mezzanine and payment in kind securities) of private companies 
(primarily in North America, the European Economic Area, Australia, New 
Zealand and other jurisdictions in the Developed Asia-Pacific Region) 
that generally cannot access public capital markets.
    11. Applicants represent that when considering Potential Co-
Investment Transactions for any Regulated Fund, the applicable Adviser 
will consider only the Objectives and Strategies, investment policies, 
investment positions, capital available for investment, and other 
pertinent factors applicable to that Regulated Fund. Applicants further 
represent that the amount of each Regulated Fund's and Affiliated 
Account's capital available for investment will be determined based on 
the amount of cash on hand, existing commitments and reserves, if any, 
the targeted leverage level, targeted asset mix and other investment 
policies and restrictions set from time to time by the Board of the 
applicable Regulated Fund or the directors, or the general partners or 
adviser of the applicable Affiliated Account, or imposed by applicable 
laws, rules, regulations or interpretations. Applicants represent that 
each Adviser, as applicable, undertakes to perform these duties 
consistently for each Regulated Fund, as applicable, regardless of 
which of them serves as investment adviser to these entities, and that 
the participation of a Regulated Fund in a Potential Co-Investment 
Transaction may only be approved by a required majority, as defined in 
Section 57(o) of the Act (a ``Required Majority''), of the trustees of 
the Board eligible to vote on that Co-Investment Transaction under 
Section 57(o) (``Eligible Trustees'').
    12. Applicants represent that at least once each quarter, based on 
several factors, including the requirements set forth by state 
insurance regulations for MassMutual's general investment account, 
relative value determinations among different types of assets, current 
rate and spread environment, asset liability management needs (e.g., 
based on the types of insurance products sold and expected to be sold), 
portfolio liquidity, risk-based capital charges, and long-term 
investment portfolio performance, MassMutual's chief investment officer 
determines MassMutual's capital available for investment in Private 
Placement Securities selected by Barings and communicates its 
commitment to Barings in writing. Applicants further represent that 
these commitments are established prospectively, and not based on the 
investment merits of any particular Co-Investment Transaction, and that 
Barings will, in connection with each Potential Co-Investment 
Transaction, provide the Board of each participating Regulated Fund 
with information showing any material changes in MassMutual's capital 
available for investment and/or the aggregate amount of available 
capital for all participating parties.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and Rule 17d-1 under the Act generally 
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. Section 57(a)(4) of the Act generally prohibits certain 
affiliated persons of a BDC from participating in joint transactions 
with the BDC or a company controlled by a BDC in contravention of rules 
as prescribed by the Commission. Section 57(i) of the Act provides 
that, until the Commission prescribes rules under Section 57(a)(4), the 
Commission's rules under Section 17(d) of the Act applicable to 
registered closed-end investment companies will be deemed to apply to 
transactions subject to Section 57(a)(4). Because the Commission has 
not adopted any rules under Section 57(a)(4), Rule 17d-1 also applies 
to joint transactions with Regulated Funds that are BDCs. Section 17(d) 
of the Act and Rule 17d-1 under the Act are applicable to Regulated 
Funds that are registered closed-end investment companies.
    3. Applicants state that Barings is the investment adviser to the 
Existing Regulated Funds and an Adviser will be the investment adviser 
to each of the Future Regulated Funds. Applicants acknowledge that the 
Regulated Funds may be deemed to be under common control, and thus 
affiliated persons of each other under Section 2(a)(3)(C) of the Act. 
Applicants further acknowledge that because MassMutual controls 
Barings, MassMutual is an affiliated person of Barings under Section 
2(a)(3)(C), and therefore an affiliated person of an affiliated person 
(a ``second-tier affiliate'') of each Existing Regulated Fund. Finally, 
Applicants acknowledge that because Barings or another Adviser will be 
the investment adviser to each Affiliated Account, each Adviser and 
each other Regulated Fund and Affiliated Account may be deemed to be 
under common control with, and therefore an affiliated person of, each 
Regulated Fund under Section 2(a)(3)(C). Applicants note that, as a

[[Page 44688]]

result, these relationships might cause a Regulated Fund and one or 
more Advisers, other Regulated Funds and/or one or more Affiliated 
Accounts participating in the Co-Investment Transactions to be subject 
to Sections 17(d) or 57(a)(4), and thus subject to the provisions of 
Rule 17d-1.
    4. Applicants note that the Commission has stated that Section 
17(d) of the Act, upon which Rule 17d-1 is based, upon which Section 
57(a)(4) of the Act was modeled, was designed to protect investment 
companies from self-dealing and overreaching by insiders. Applicants 
believe that the terms and Conditions of the Application would ensure 
that the conflicts of interest that Section 17(d) and Section 57(a)(4) 
were designed to prevent would be addressed and the standards for an 
order under Rule 17d-1 are met.
    5. Applicants believe that the participation of the Regulated Funds 
in Co-Investment Transactions done in accordance with the Conditions 
would be consistent with the provisions, policies, and purposes of the 
Act, and would be done in a manner that was not different from, or less 
advantageous than, the other participants.
    6. Applicants state that in the absence of the requested relief, in 
some circumstances the Regulated Funds would be limited in their 
ability to participate in attractive and appropriate investment 
opportunities, and that each Regulated Fund's inability to co-invest 
with one or more of the Affiliated Accounts and the other Regulated 
Funds could potentially result in the loss of beneficial investment 
opportunities for such Regulated Fund and, in turn, adversely affect 
such Regulated Fund's shareholders. Applicants further state that the 
ability to participate in Co-Investment Transactions that involve 
committing larger amounts of financing would enable each Regulated Fund 
to participate with one or more of the Affiliated Accounts and the 
other Regulated Funds in larger financing commitments, which would, in 
turn, be expected to obtain discounted prices and increase income, 
expand investment opportunities and provide better access to due 
diligence information for the Regulated Funds.

Applicants' Conditions

    Applicants agree that any order granting the requested relief shall 
be subject to the following conditions:
    1. Each time an Adviser considers a Potential Co-Investment 
Transaction for an Affiliated Account or another Regulated Fund that 
falls within a Regulated Fund's then-current Objectives and Strategies, 
the Regulated Fund's Adviser will make an independent determination of 
the appropriateness of the investment for such Regulated Fund in light 
of the Regulated Fund's then-current circumstances.
    2. (a) If the Adviser deems a Regulated Fund's participation in any 
Potential Co-Investment Transaction to be appropriate for the Regulated 
Fund, it will then determine an appropriate level of investment for the 
Regulated Fund.
    (b) If the aggregate amount recommended by the applicable Adviser 
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be 
invested by the other participating Regulated Funds and Affiliated 
Accounts, 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 Trustees of each participating Regulated Fund with 
information concerning each participating party's available capital to 
assist the Eligible Directors with their review of the Regulated Fund's 
investments for compliance with these allocation procedures.
    (c) After making the determinations required in conditions 1 and 
2(a), the applicable Adviser will distribute written information 
concerning the Potential Co-Investment Transaction (including the 
amount proposed to be invested by each participating Regulated Fund and 
Affiliated Account) to the Eligible Trustees of each participating 
Regulated Fund for their consideration. A Regulated Fund will co-invest 
with one or more other Regulated Funds and/or one or more Affiliated 
Accounts only if, prior to the Regulated Fund's participation in the 
Potential Co-Investment Transaction, a Required Majority concludes 
that:
    (i) The terms of the Potential Co-Investment Transaction, including 
the consideration to be paid, are reasonable and fair to the Regulated 
Fund and its shareholders and do not involve overreaching in respect of 
the Regulated Fund or its shareholders on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) The interests of the shareholders of the Regulated Fund; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Funds or Affiliated 
Accounts would not disadvantage the Regulated Fund, and participation 
by the Regulated Fund would not be on a basis different from or less 
advantageous than that of other Regulated Funds or Affiliated Accounts; 
provided that, if any other Regulated Fund or Affiliated Account, but 
not the Regulated Fund itself, gains the right to nominate a director 
for election to a portfolio company's board of directors or the right 
to have a board observer or any similar right to participate in the 
governance or management of the portfolio company, such event shall not 
be interpreted to prohibit the Required Majority from reaching the 
conclusions required by this condition (2)(c)(iii), if:
    (A) The Eligible Trustees will have the right to ratify the 
selection of such director or board observer, if any;
    (B) the applicable Adviser agrees to, and does, provide periodic 
reports to the Regulated Fund's Board with respect to the actions of 
such director or the information received by such board observer or 
obtained through the exercise of any similar right to participate in 
the governance or management of the portfolio company; and
    (C) any fees or other compensation that any Affiliated Account or 
any Regulated Fund or any affiliated person of any Affiliated Account 
or any Regulated Fund receives in connection with the right of an 
Affiliated Account or a Regulated Fund to nominate a director or 
appoint a board observer or otherwise to participate in the governance 
or management of the portfolio company will be shared proportionately 
among the participating Affiliated Accounts (who each may, in turn, 
share its portion with its affiliated persons) and the participating 
Regulated Funds in accordance with the amount of each party's 
investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
the Advisers, the Affiliated Accounts or the other Regulated Funds or 
Affiliated Accounts or any affiliated person of any of them (other than 
the parties to the Co-Investment Transaction), except (A) to the extent 
permitted by condition 13, (B) to the extent permitted by Section 17(e) 
or 57(k) of the Act, as applicable, (C) indirectly, as a result of an 
interest in the securities issued by one of the parties to the Co-
Investment Transaction, or (D) in the case of fees or other 
compensation described in condition 2(c)(iii)(C).
    3. Each Regulated Fund has the right to decline to participate in 
any Potential

[[Page 44689]]

Co-Investment Transaction or to invest less than the amount proposed.
    4. The applicable Adviser will present to the Board of each 
Regulated Fund, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Funds or Affiliated Accounts during the preceding quarter that fell 
within the Regulated Fund's then-current Objectives and Strategies that 
were not made available to the Regulated Fund, and an explanation of 
why the investment opportunities were not offered to the Regulated 
Fund. All information presented to the Board pursuant to this condition 
will be kept for the life of the Regulated Fund and at least two years 
thereafter, and will be subject to examination by the Commission and 
its staff.
    5. Except for Follow-On Investments made in accordance with 
condition 8,\11\ a Regulated Fund will not invest in reliance on the 
Order in any issuer in which another Regulated Fund, Affiliated 
Account, or any affiliated person of another Regulated Fund or 
Affiliated Account is an existing investor.
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    \11\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
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    6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of 
securities to be purchased, settlement date, and registration rights 
will be the same for each participating Regulated Fund and Affiliated 
Account. The grant to an Affiliated Account or another Regulated Fund, 
but not the Regulated Fund, of the right to nominate a director for 
election to a portfolio company's board of directors, the right to have 
an observer on the board of directors or similar rights to participate 
in the governance or management of the portfolio company will not be 
interpreted so as to violate this condition 6, if conditions 
2(c)(iii)(A), (B) and (C) are met.
    7. (a) If any Affiliated Account or any Regulated Fund elects to 
sell, exchange or otherwise dispose of an interest in a security that 
was acquired in a Co-Investment Transaction, the applicable Advisers 
will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest 
practical time; and
    (ii) formulate a recommendation as to participation by each 
Regulated Fund in the disposition.
    (b) Each Regulated Fund will have the right to participate in such 
disposition on a proportionate basis, at the same price and on the same 
terms and conditions as those applicable to the participating 
Affiliated Accounts and Regulated Funds.
    (c) A Regulated Fund may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Fund and each Affiliated Account in 
such disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Board of the 
Regulated Fund has approved as being in the best interests of the 
Regulated Fund the ability to participate in such dispositions on a pro 
rata basis (as described in greater detail in the application); and 
(iii) the Board of the Regulated Fund is provided on a quarterly basis 
with a list of all dispositions made in accordance with this condition. 
In all other cases, the Adviser will provide its written recommendation 
as to the Regulated Fund's participation to the Eligible Trustees, and 
the Regulated Fund will participate in such disposition solely to the 
extent that a Required Majority determines that it is in the Regulated 
Fund's best interests.
    (d) Each Affiliated Account and each Regulated Fund will bear its 
own expenses in connection with any such disposition.
    8. (a) If any Affiliated Account or any Regulated Fund desires to 
make a Follow-On Investment in a portfolio company whose securities 
were acquired in a Co-Investment Transaction, the applicable Advisers 
will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest 
practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including the amount of the proposed Follow-On Investment, by each 
Regulated Fund.
    (b) A Regulated Fund may participate in such Follow-On Investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Fund and each Affiliated 
Account in such investment is proportionate to its outstanding 
investments in the issuer immediately preceding the Follow-On 
Investment; and (ii) the Board of the Regulated Fund has approved as 
being in the best interests of the Regulated Fund the ability to 
participate in Follow-On Investments on a pro rata basis (as described 
in greater detail in the application). In all other cases, the Adviser 
will provide its written recommendation as to the Regulated Fund's 
participation to the Eligible Trustees, and the Regulated Fund will 
participate in such Follow-On Investment solely to the extent that a 
Required Majority determines that it is in the Regulated Fund's best 
interests.
    (c) If, with respect to any Follow-On Investment:
    (i) The amount of the opportunity is not based on the Regulated 
Funds' and the Affiliated Accounts' outstanding investments immediately 
preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the Adviser to be invested 
by each Regulated Fund in the Follow-On Investment, together with the 
amount proposed to be invested by the participating Affiliated Accounts 
in the same transaction, exceeds the amount of the opportunity; then 
the amount invested by each such party will be allocated among them pro 
rata based on each participant's capital available for investment in 
the asset class being allocated, up to the amount proposed to be 
invested by each.
    (d) The acquisition of Follow-On Investments as permitted by this 
condition will be considered a Co-Investment Transaction for all 
purposes and subject to the other conditions set forth in the 
application.
    9. The Non-Interested Trustees of each Regulated Fund will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by other Regulated Funds or Affiliated Accounts that 
the Regulated Fund considered but declined to participate in, so that 
the Non-Interested Trustees may determine whether all investments made 
during the preceding quarter, including those investments that the 
Regulated Fund considered but declined to participate in, comply with 
the conditions of the Order. In addition, the Non-Interested Trustees 
will consider at least annually the continued appropriateness for the 
Regulated Fund of participating in new and existing Co-Investment 
Transactions.
    10. Each Regulated Fund will maintain the records required by 
Section 57(f)(3) of the Act as if each of the Regulated Funds were a 
BDC and each of the investments permitted under these conditions were 
approved by the Required Majority under Section 57(f) of the Act.
    11. No Non-Interested Trustee of a Regulated Fund will also be a 
director, general partner, managing member or principal, or otherwise 
an ``affiliated person'' (as defined in the Act) of an Affiliated 
Account.

[[Page 44690]]

    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 1933 Act) will, to the 
extent not payable by the Advisers under their respective investment 
advisory agreements with Affiliated Accounts and the Regulated Funds, 
be shared by the Regulated Funds and the Affiliated Accounts in 
proportion to the relative amounts of the securities held or to be 
acquired or disposed of, as the case may be.
    13. Any transaction fee \12\ (including break-up or commitment fees 
but excluding broker's fees contemplated by Section 17(e) or 57(k) of 
the Act, as applicable), received in connection with a Co-Investment 
Transaction will be distributed to the participating Regulated Funds 
and Affiliated Accounts 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 an Adviser pending 
consummation of the transaction, the fee will be deposited into an 
account maintained by such Adviser at a bank or banks having the 
qualifications prescribed in Section 26(a)(1) of the Act, and the 
account will earn a competitive rate of interest that will also be 
divided pro rata among the participating Regulated Funds and Affiliated 
Accounts based on the amounts they invest in such Co-Investment 
Transaction. None of the Affiliated Accounts, the Advisers, the other 
Regulated Funds or any affiliated person of the Regulated Funds or 
Affiliated Accounts will receive additional compensation or 
remuneration of any kind as a result of or in connection with a Co-
Investment Transaction (other than (a) in the case of the Regulated 
Funds and the Affiliated Accounts, the pro rata transaction fees 
described above and fees or other compensation described in condition 
2(c)(iii)(C); and (b) in the case of an Adviser, investment advisory 
fees paid in accordance with the agreement between the Adviser and the 
Regulated Fund or Affiliated Account.
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    \12\ Applicants are not requesting and the staff is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    14. If the Holders \13\ own in the aggregate more than 25 percent 
of the Shares \14\ of a Regulated Fund, then the Holders will vote such 
Shares as directed by an independent third party when voting on (1) the 
election of trustees; (2) the removal of one or more trustees; or (3) 
any other matter under either the Act or applicable State law affecting 
the Board's composition, size or manner of election.
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    \13\ ``Holders'' means the Advisers, certain employees and 
principals of MassMutual and its affiliated advisers (collectively, 
the ``Principals''), and any person controlling, controlled by, or 
under common control with the Advisers or the Principals, and the 
Affiliated Accounts.
    \14\ ``Shares'' means the outstanding voting shares of a 
Regulated Fund.
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    15. Each Regulated Fund's chief compliance officer, as defined in 
Rule 38a-1(a)(4), will prepare an annual report for its Board each year 
that evaluates (and documents the basis of that evaluation) the 
Regulated Fund's compliance with the terms and conditions of the 
Application and the procedures established to achieve such compliance.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-20438 Filed 9-22-17; 8:45 am]
BILLING CODE 8011-01-P


