[Federal Register Volume 85, Number 13 (Tuesday, January 21, 2020)]
[Notices]
[Pages 3449-3458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00805]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33746; 812-14949]


First Eagle BDC, LLC, et al.

January 14, 2020.
AGENCY: Securities and Exchange Commission (``Commission'')

ACTION: Notice.

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    Notice of application for an order under sections 17(d) and 57(i) 
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1 
under the Act to permit certain joint transactions that otherwise would 
be prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1.

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

APPLICANTS: First Eagle BDC, LLC (``FE BDC''), First Eagle BDC Adviser, 
LLC (``FE BDC Adviser''), First Eagle Private Credit, LLC (``FE Private 
Credit''), First Eagle Private Credit Advisors, LLC (``FE Private 
Credit Advisors''), First Eagle Investment Management, LLC (``First 
Eagle''), and the following funds (referred to collectively as the 
``Existing Affiliated Funds''): First Eagle Direct Lending Fund I, LP 
First Eagle Direct Lending Fund I (EE), LP; First Eagle Direct Lending 
Fund I (Parallel), LP; First Eagle DL Fund I Aggregator LLC; NewStar 
Arlington Senior Loan Program LLC; First Eagle Berkeley Fund CLO LLC; 
First Eagle Clarendon Fund CLO LLC; NewStar Commercial Loan Funding 
2016-1 LLC; NewStar Commercial Loan Funding 2017-1 LLC; First Eagle 
Commercial Loan Originator I LLC; NewStar Exeter Fund CLO LLC; NewStar 
Fairfield Fund CLO Ltd.; First Eagle Warehouse Funding I LLC; and First 
Eagle Dartmouth Holding LLC.

FILING DATES: The application was filed on May 28, 2019 and amended on 
October 17, 2019.

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 February 10, 2020, 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: David O'Connor, First 
Eagle Investment Management, LLC, 1345 Avenue of the Americas, New 
York, NY 10105, and Thomas Friedmann and Stephen Bier, Dechert LLP, One 
International Place, 40th Floor, 100 Oliver Street, Boston, MA 02110.

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 (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 website by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Introduction

    1. The applicants request an order of the Commission under sections 
17(d) and 57(i) of the Act and rule 17d-1 thereunder (the ``Order'') to 
permit, subject to the terms and conditions set forth in the 
application (the ``Conditions''), a Regulated Fund \1\ (or

[[Page 3450]]

any Wholly Owned Investment Sub of such Regulated Fund), on the one 
hand, and one or more other Regulated Funds (or any Wholly Owned 
Investment Sub of such Regulated Fund), one or more Affiliated Funds 
and/or one ore more FE Proprietary Accounts, on the other hand, to 
participate in the same investment opportunities where such 
participation would otherwise be prohibited under section 17(d) or 
57(a)(4) and the rules under the Act.\2\
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    \1\ ``Regulated Funds'' means (a) FE BDC (the ``Existing 
Regulated Fund''), (b) the Future Regulated Funds (defined below) 
and (c) the BDC Downstream Funds (defined below).
     ``Future Regulated Fund'' means a closed-end management 
investment company (a) that is registered under the Act or has 
elected to be regulated as a BDC and (b) whose investment adviser or 
sub-adviser is an Adviser (defined below).
     ``BDC Downstream Fund'' means with respect to any Regulated 
Fund that is a BDC, an entity (a) that the BDC directly or 
indirectly controls, (b) that is not controlled by any person other 
than the BDC (except a person that indirectly controls the entity 
solely because it controls the BDC), (c) that would be an investment 
company but for Section 3(c)(1) or 3(c)(7) of the Act, (d) whose 
investment adviser is an Adviser and (e) that is not a Wholly Owned 
Investment Sub (defined below).
     ``Adviser'' means any Existing Adviser (defined below) and any 
Future Adviser (defined below); provided that an Adviser serving as 
a sub-adviser to an Affiliated Fund (defined below) is included in 
this term only if such Adviser controls the entity. The term Adviser 
does not include any primary investment adviser to an Affiliated 
Fund or a Regulated Fund whose sub-adviser is an Adviser, except 
that such primary investment adviser is deemed to be an Adviser for 
purposes of Conditions 2(c)(iv), 13 and 14 only. The primary 
investment adviser to an Affiliated Fund or a Regulated Fund whose 
sub-adviser is an Adviser will not source any Potential Co-
Investment Transactions (defined below) under the requested Order.
     ``Wholly Owned Investment Sub'' means any entity (i) that is 
wholly owned by an Existing Regulated Fund or a Future Regulated 
Fund (with such Regulated Fund at all times holding, beneficially 
and of record, 100% of the voting and economic interests); (ii) 
whose sole business purpose is to hold one or more investments and 
issue debt on behalf or in lieu of such Regulated Fund; (iii) with 
respect to which such 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 (iv) 
that either (a) would be an investment company but for Section 
3(c)(1) or 3(c)(7) of the Act or (b) relies on Rule 3a-7 under the 
Act .
     ``Existing Adviser'' means First Eagle, FE Private Credit, and 
FE Private Credit Advisors.
     ``Future Adviser'' means any future investment adviser that (i) 
controls, is controlled by or is under common control with First 
Eagle, (ii)(a) is registered as an investment adviser under the 
Advisers Act or (b) is a relying adviser of an investment adviser 
that is registered under the Advisers Act and that controls, is 
controlled by or is under common control with First Eagle, and (iii) 
is not a Regulated Fund or a subsidiary of a Regulated Fund.
     ``Affiliated Fund'' means (a) any Existing Affiliated Fund and 
(b) any entity (i) whose investment adviser or sub-adviser is an 
Adviser, (ii) that either (x) would be an investment company but for 
Section 3(c)(1) or 3(c)(7) of the Act or (y) relies on Rule 3a-7 
under the Act, and (iii) that is not a BDC Downstream Fund (together 
with each such entity's direct and indirect wholly owned 
subsidiaries); provided that an entity sub-advised by an Adviser is 
included in this term only if such Adviser serving as sub-adviser 
controls the entity.
     ``Potential Co-Investment Transaction'' means any investment 
opportunity in which a Regulated Fund (or its Wholly Owned 
Investment Sub) could not participate together with one or more 
Affiliated Funds, one or more FE Proprietary Accounts (defined 
below), and/or one or more other Regulated Funds (or its Wholly 
Owned Investment Sub) without obtaining and relying on the Order.
     ``FE Proprietary Accounts'' means (a) FE Private Credit, (b) FE 
Private Credit Advisors and (c) any entity that (i) is a wholly- or 
majority-owned subsidiary of First Eagle, (ii) is advised by an 
Adviser and (iii) from time to time, may hold various financial 
assets in a principal capacity. For the avoidance of doubt, neither 
the Regulated Funds nor the Affiliated Funds shall be deemed to be 
FE Proprietary Accounts.
    \2\ A ``Co-Investment Transaction'' is any transaction in which 
a Regulated Fund (or its Wholly Owned Investment Sub) participates 
together with one or more Affiliated Funds, one or more FE 
Proprietary Accounts, and/or one or more other Regulated Funds (or 
its Wholly Owned Investment Sub) in reliance on the requested Order. 
All existing entities that currently intend to rely on the Order 
have been named as applicants and any existing or future entities 
that may rely on the Order in the future will comply with the terms 
and Conditions set forth in the application.
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Applicants

    2. FE BDC is a Delaware limited liability company and structured as 
an externally managed, non-diversified closed-end management investment 
company that will elect to be regulated as a business development 
company (``BDC'') under the Act.\3\ FE BDC will be managed by a Board 
\4\ that will be comprised of five directors, three of whom will be 
Independent Directors of FE BDC.\5\
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    \3\ Section 2(a)(48) defines a BDC to be any closed-end 
investment company that operates for the purpose of making 
investments in securities described in section 55(a)(1) through 
55(a)(3) and makes available significant managerial assistance with 
respect to the issuers of such securities.
    \4\ ``Board'' means (a) with respect to a Regulated Fund other 
than a BDC Downstream Fund, the board of directors (or the 
equivalent) of the Regulated Fund and (b) with respect to a BDC 
Downstream Fund, the Independent Party (defined below) of the BDC 
Downstream Fund.
     ``Independent Party'' means, with respect to a BDC Downstream 
Fund, (a) if the BDC Downstream Fund has a board of directors (or 
the equivalent), the board or (b) if the BDC Downstream Fund does 
not have a board of directors (or the equivalent), a transaction 
committee or advisory committee of the BDC Downstream Fund.
    \5\ ``Independent Director'' means a member of the Board of any 
relevant entity who is not an ``interested person'' as defined in 
Section 2(a)(19) of the Act. No Independent Director of a Regulated 
Fund (including any non-interested member of an Independent Party) 
will have a financial interest in any Co-Investment Transaction, 
other than indirectly through share ownership in one of the 
Regulated Funds.
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    3. FE BDC Adviser is a Delaware limited liability company and is 
registered with the Commission as an investment adviser under the 
Advisers Act. FE BDC Adviser will serve as the investment adviser to FE 
BDC. Subject to the general supervision of the FE BDC Board, FE BDC 
Adviser will be responsible for the overall management of FE BDC's 
activities and for the supervision and ongoing monitoring of FE Private 
Credit, but FE Private Credit will be responsible for the day-to-day 
management of FE BDC's investment portfolio.
    4. FE Private Credit is a Delaware limited liability company 
registered with the Commission as an investment adviser under the 
Advisers Act. FE Private Credit serves as the investment adviser to 
certain Existing Affiliated Funds and will serve as the sub-adviser to 
FE BDC. FE Private Credit will be responsible for originating certain 
prospective investments, conducting research and due diligence 
investigations on potential investments, analyzing investment 
opportunities, negotiating and structuring investments and monitoring 
the investments and portfolio companies of FE BDC and certain Existing 
Affiliated Funds that it manages on an ongoing basis.
    5. First Eagle is a Delaware limited liability company registered 
with the Commission as an adviser under the Advisers Act. First Eagle 
is the parent company of each of FE BDC Adviser, FE Private Credit, and 
FE Private Credit Advisors and is a subsidiary of First Eagle Holdings, 
Inc., a holding company.
    6. The Existing Affiliated Funds are the investment funds 
identified in Schedule A to the application. Applicants represent that 
each Existing Affiliated Fund is a separate and distinct legal entity 
and would be an investment company but for section 3(c)(1) or 3(c)(7) 
of the Act. FE Private Credit manages each of the Existing Affiliated 
Funds with the exception of First Eagle Warehouse Funding I LLC and 
First Eagle Dartmouth Holding LLC, which are managed by First Eagle DL 
Fund I Aggregator LLC.
    7. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly Owned Investment Subs. Such a subsidiary may be 
prohibited from investing in a Co-Investment Transaction with a 
Regulated Fund (other than its parent) or any Affiliated Fund or FE 
Proprietary Account because it would be a company controlled by its 
parent Regulated Fund for purposes of section 57(a)(4) and rule 17d-1. 
Applicants request that each Wholly Owned Investment Sub's 
participation in any such transaction be treated, for purposes of the 
Order, as though the parent Regulated Fund were participating directly.

[[Page 3451]]

Applicants' Representations

A. Allocation Process

    8. Applicants represent that each Existing Adviser has established, 
and each Future Adviser will establish, rigorous processes for 
allocating initial investment opportunities, opportunities for 
subsequent investments in an issuer and dispositions of securities 
holdings reasonably designed to treat all clients fairly and equitably. 
Further, applicants represent that these processes will be extended and 
modified in a manner reasonably designed to ensure that the additional 
transactions permitted under the Order will both (i) be fair and 
equitable to the Regulated Funds and the Affiliated Funds and (ii) 
comply with the Conditions.
    9. Specifically, applicants state that each Existing Adviser is, 
and each Future Adviser will be, organized and managed such that the 
individual portfolio managers, as well as the teams and committees of 
portfolio managers, analysts and senior management (``Investment 
Teams'' and ``Investment Committees''), responsible for evaluating 
investment opportunities and making investment decisions on behalf of 
clients are promptly notified of the opportunities. If the Order is 
granted, the Advisers will establish, maintain and implement policies 
and procedures reasonably designed to ensure that, when such 
opportunities arise, the Advisers to the relevant Regulated Funds are 
promptly notified and receive the same information about the 
opportunity as any other Advisers considering the opportunity for their 
clients or as any FE Proprietary Accounts considering the opportunity 
for themselves. In particular, consistent with Condition 1, if a 
Potential Co-Investment Transaction falls within the then-current 
Objectives and Strategies \6\ and any Board-Established Criteria \7\ of 
a Regulated Fund, the policies and procedures will require that the 
relevant portfolio managers, Investment Teams and/or Investment 
Committees responsible for that Regulated Fund receive sufficient 
information to allow the Regulated Fund's Adviser to make its 
independent determination and recommendations under the Conditions.
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    \6\ ``Objectives and Strategies'' means (i) with respect to any 
Regulated Fund other than a BDC Downstream Fund, its investment 
objectives and strategies, as described in its most current filings 
with the Commission under the Securities Act of 1933 (the 
``Securities Act''), the Securities Exchange Act of 1934, as 
amended, and the Act, and its most current report to stockholders, 
and (ii) with respect to any BDC Downstream Fund, those investment 
objectives and strategies described in its disclosure documents 
(including private placement memoranda and reports to equity 
holders) and organizational documents (including operating 
agreements).
    \7\ ``Board-Established Criteria'' means criteria that the Board 
of a Regulated Fund may establish from time to time to describe the 
characteristics of Potential Co-Investment Transactions regarding 
which the Adviser to the Regulated Fund should be notified under 
Condition 1. The Board-Established Criteria will be consistent with 
the Regulated Fund's Objectives and Strategies. If no Board-
Established Criteria are in effect, then the Regulated Fund's 
Adviser will be notified of all Potential Co-Investment Transactions 
that fall within the Regulated Fund's then-current Objectives and 
Strategies. Board-Established Criteria will be objective and 
testable, meaning that they will be based on observable information, 
such as industry/sector of the issuer, minimum EBITDA of the issuer, 
asset class of the investment opportunity or required commitment 
size, and not on characteristics that involve a discretionary 
assessment. The Adviser to the Regulated Fund may from time to time 
recommend criteria for the Board's consideration, but Board-
Established Criteria will only become effective if approved by a 
majority of the Independent Directors. The Independent Directors of 
a Regulated Fund may at any time rescind, suspend or qualify their 
approval of any Board-Established Criteria, though applicants 
anticipate that, under normal circumstances, the Board would not 
modify these criteria more often than quarterly.
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    10. The Adviser to each applicable Regulated Fund will then make an 
independent determination of the appropriateness of the investment for 
the Regulated Fund in light of the Regulated Fund's then-current 
circumstances.\8\ If the Adviser to a Regulated Fund deems the 
Regulated Fund's participation in such Potential Co-Investment 
Transaction to be appropriate, then it will formulate a recommendation 
regarding the proposed order amount for the Regulated Fund.
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    \8\ With respect to FE Proprietary Accounts other than FE 
Private Credit and FE Private Credit Advisors, Applicants 
acknowledge that such FE Proprietary Accounts are not funds advised 
by Advisers because they are advised by Advisers pursuant to 
investment management agreements. The Applicants do not believe that 
the participation of the FE Proprietary Accounts in Co-Investment 
Transactions would raise any regulatory or mechanical concerns 
different from those discussed with respect to the Affiliated Funds. 
With respect to Potential Co-Investment Transactions within a 
Regulated Fund's Objectives and Strategies and Board-Established 
Criteria that are considered by a FE Proprietary Account, such 
Potential Co-Investment Transactions will be referred to the 
Advisers of the Regulated Funds by the Adviser of the FE Proprietary 
Account to ensure that Condition 1(a) will be satisfied.
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    11. Applicants state that, for each Regulated Fund and Affiliated 
Fund whose Adviser recommends participating in a Potential Co-
Investment Transaction, the Adviser will formulate a proposed order 
amount. Prior to the External Submission (as defined below), each 
proposed order amount may be reviewed and adjusted, in accordance with 
the Advisers' written allocation policies and procedures, by a credit 
opportunity allocation committee to be established by the Advisers on 
which senior management and at least one legal/compliance person 
participate. The order of a Regulated Fund or Affiliated Fund resulting 
from this process is referred to as its ``Internal Order''. The 
Internal Order will be submitted for approval by the Required Majority 
\9\ of any participating Regulated Funds in accordance with the 
Conditions.
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    \9\ ``Required Majority'' means a required majority, as defined 
in section 57(o) of the Act. In the case of a Regulated Fund that is 
a registered closed-end fund, the Board members that make up the 
Required Majority will be determined as if the Regulated Fund were a 
BDC subject to section 57(o). In the case of a Regulated Fund that 
is a registered closed-end fund, the Board members that make up the 
Required Majority will be determined as if the Regulated Fund were a 
BDC subject to Section 57(o). In the case of a BDC Downstream Fund 
with a board of directors (or the equivalent), the members that make 
up the Required Majority will be determined as if the BDC Downstream 
Fund were a BDC subject to Section 57(o). In the case of a BDC 
Downstream Fund with a transaction committee or advisory committee, 
the committee members that make up the Required Majority will be 
determined as if the BDC Downstream Fund were a BDC subject to 
Section 57(o) and as if the committee members were directors of the 
fund.
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    12. If the aggregate Internal Orders for a Potential Co-Investment 
Transaction do not exceed the size of the investment opportunity 
immediately prior to the submission of the orders to the underwriter, 
broker, dealer or issuer, as applicable (the ``External Submission''), 
then each Internal Order will be fulfilled as placed. If, on the other 
hand, the aggregate Internal Orders for a Potential Co-Investment 
Transaction exceed the size of the investment opportunity immediately 
prior to the External Submission, then the allocation of the 
opportunity will be made pro rata on the basis of the size of the 
Internal Orders.\10\ If, subsequent to such External Submission, the 
size of the opportunity is increased or decreased, or if the terms of 
such opportunity, or the facts and circumstances applicable to the 
Regulated Funds' or the Affiliated Funds' consideration of the 
opportunity, change, the participants will be permitted to submit 
revised Internal Orders in accordance with written allocation policies 
and procedures that

[[Page 3452]]

the Advisers will establish, implement and maintain; provided that, if 
the size of the opportunity is decreased such that the aggregate of the 
original Internal Orders would exceed the amount of the remaining 
investment opportunity, then upon submitting any revised order amount 
to the Board of a Regulated Fund for approval, the Adviser to the 
Regulated Fund will also notify the Board promptly of the amount that 
the Regulated Fund would receive if the remaining investment 
opportunity were allocated pro rata on the basis of the size of the 
original Internal Orders. The Board of the Regulated Fund will then 
either approve or disapprove of the investment opportunity in 
accordance with Condition 2, 6, 7, 8 or 9, as applicable.
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    \10\ The Advisers will maintain records of all proposed order 
amounts, Internal Orders and External Submissions in conjunction 
with Potential Co-Investment Transactions. Each applicable Adviser 
will provide the Eligible Directors with information concerning the 
Affiliated Funds' and Regulated Funds' order sizes to assist the 
Eligible Directors with their review of the applicable Regulated 
Fund's investments for compliance with the Conditions.
    ``Eligible Directors'' means, with respect to a Regulated Fund 
and a Potential Co-Investment Transaction, the members of the 
Regulated Fund's Board eligible to vote on that Potential Co-
Investment Transaction under section 57(o) of the Act (treating any 
registered investment company or series thereof as a BDC for this 
purpose).
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B. Follow-On Investments

    13. Applicants state that from time to time the Regulated Funds, 
Affiliated Funds and FE Proprietary Accounts may have opportunities to 
make Follow-On Investments \11\ in an issuer in which a Regulated Fund 
and one or more other Regulated Funds, one or more Affiliated Funds 
and/or one or more FE Proprietary Accounts previously have invested.
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    \11\ ``Follow-On Investment'' means an additional investment in 
the same issuer, including, but not limited to, through the exercise 
of warrants, conversion privileges or other rights to purchase 
securities of the issuer.
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    14. Applicants propose that Follow-On Investments would be divided 
into two categories depending on whether the Regulated Funds and 
Affiliated funds (and potentially FE Proprietary Accounts) holding 
investments in the issuer previously participated in a Co-Investment 
Transaction with respect to the issuer and continue to hold any 
securities acquired in a Co-Investment Transaction for that issuer, 
including any Pre-Boarding Investments.\12\ If such Regulated Funds and 
Affiliated Funds (and potentially FE Proprietary Accounts) had 
previously participated in a Co-Investment Transaction with respect to 
the issuer, then the terms and approval of the Follow-On Investment 
would be subject to the process governed by Condition 8 (such Follow-On 
Investments are referred to as ``Standard Review Follow-Ons''). If such 
Regulated Funds and Affiliated Funds have not previously participated 
in a Co-Investment Transaction with respect to the issuer, then the 
terms and approval of the Follow-On Investment would be subject to the 
``onboarding process'' governed by Condition 9 (such Follow-On 
Investments are referred to as ``Enhanced Review Follow-Ons''). All 
Enhanced Review Follow-Ons require the approval of the Required 
Majority. For a given issuer, the participating Regulated Funds and 
Affiliated Funds would need to comply with the requirements of 
Enhanced-Review Follow-Ons only for the first Co-Investment 
Transaction. Subsequent Co-Investment Transactions with respect to the 
issuer would be governed by the requirements applicable to Standard 
Review Follow-Ons.
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    \12\ ``Pre-Boarding Investments'' are investments in an issuer 
held by a Regulated Fund as well as one or more Affiliated Funds, 
one or more FE Proprietary Accounts and/or one or more other 
Regulated Funds that: (i) Were acquired prior to participating in 
any Co-Investment Transaction: (ii) Were acquired in transactions in 
which the only term negotiated by or on behalf of such funds was 
price; and (iii) were acquired either: (x) In reliance on one of the 
JT No-Action Letters (defined below); or (y) in transactions 
occurring at least 90 days apart and without coordination between 
the Regulated Fund and any Affiliated Fund or other Regulated Fund.
    ``JT No-Action Letters'' means SMC Capital, Inc., SEC Staff 
Letter (Sep. 5, 1995) and Massachusetts Mutual Life Insurance 
Company, SEC Staff Letter (Jun. 7, 2000).
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    15. A Regulated Fund would be permitted to invest in Standard 
Review Follow-Ons either with the approval of the Required Majority 
under Condition 8(c) or without Board approval under Condition 8(b) if 
it is (i) a Pro Rata Follow-On Investment \13\ or (ii) a Non-Negotiated 
Follow-On Investment.\14\ Applicants believe that these Pro Rata and 
Non-Negotiated Follow-On Investments do not present a significant 
opportunity for overreaching on the part of any Adviser and thus do not 
warrant the time or the attention of the Board. Pro Rata Follow-On 
Investments and Non-Negotiated Follow-On Investments remain subject to 
the Board's periodic review in accordance with Condition 10.
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    \13\ A ``Pro Rata Follow-On Investment'' is a Follow-On 
Investment (i) in which the participation of each Regulated Fund, 
each Affiliated Fund and each FE Proprietary Account is 
proportionate to its outstanding investments in the issuer or 
security, as appropriate, immediately preceding the Follow-On 
Investment, and (ii) in the case of a Regulated Fund, a majority of 
the Board has approved the Regulated Fund's participation in the pro 
rata Follow-On Investments as being in the best interests of the 
Regulated Fund. The Regulated Fund's Board may refuse to approve, or 
at any time rescind, suspend or qualify, its approval of Pro Rata 
Follow-On Investments, in which case all subsequent Follow-On 
Investments will be submitted to the Regulated Fund's Eligible 
Directors in accordance with Condition 8(c).
    \14\ A ``Non-Negotiated Follow-On Investment'' is a Follow-On 
Investment in which a Regulated Fund participates together with one 
or more Affiliated Funds, one or more FE Proprietary Accounts and/or 
one or more other Regulated Funds (i) in which the only term 
negotiated by or on behalf of the funds is price and (ii) with 
respect to which, if the transaction were considered on its own, the 
funds would be entitled to rely on one of the JT No-Action Letters.
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C. Dispositions

    16. Applicants propose that Dispositions \15\ would be divided into 
two categories. If the Regulated Funds and Affiliated Funds (and 
potentially FE Proprietary Accounts) holding investments in the issuer 
have previously participated in a Co-Investment Transaction with 
respect to the issuer and continue to hold any securities acquired in a 
Co-Investment Transaction for such issuer, then the terms and approval 
of the Disposition would be subject to the process described in 
Condition 6 (such Disposition, a ``Standard Review Disposition''). If 
the Regulated Funds and Affiliated Funds have not previously 
participated in a Co-Investment Transaction with respect to the issuer, 
then the terms and approval of the Disposition would be subject to the 
``onboarding process'' described in Condition 7 (such Disposition, an 
``Enhanced Review Disposition''). Subsequent Dispositions with respect 
to the same issuer would be governed by Condition 6 under the Standard 
Review Dispositions.\16\
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    \15\ ``Disposition'' means the sale, exchange or other 
disposition of an interest in a security of an issuer.
    \16\ However, with respect to an issuer, if a Regulated Fund's 
first Co-Investment Transaction is an Enhanced Review Disposition, 
and the Regulated Fund does not dispose of its entire position in 
the Enhanced Review Disposition, then before such Regulated Fund may 
complete its first Standard Review Follow-On in such issuer, the 
Eligible Directors must review the proposed Follow-On Investment not 
only on a stand-alone basis but also in relation to the total 
economic exposure in such issuer (i.e., in combination with the 
portion of the Pre-Boarding Investment not disposed of in the 
Enhanced Review Disposition), and the other terms of the 
investments. This additional review is required because such 
findings were not required in connection with the prior Enhanced 
Review Disposition, but they would have been required had the first 
Co-Investment Transaction been an Enhanced Review Follow-On.
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    17. A Regulated Fund may participate in a Standard Review 
Disposition either with the approval of the Required Majority under 
Condition 6(d) or without Board approval under Condition 6(c) if (i) 
the Disposition is a Pro Rata Disposition \17\ or (ii) the

[[Page 3453]]

securities are Tradable Securities \18\ and the Disposition meets the 
other requirements of Condition 6(c)(ii). Pro Rata Dispositions and 
Dispositions of a Tradable Security remain subject to the Board's 
periodic review in accordance with Condition 10.
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    \17\ A ``Pro Rata Disposition'' is a Disposition (i) in which 
the participation of each Regulated Fund, each Affiliated Fund and 
each FE Proprietary Account is proportionate to its outstanding 
investment in the security subject to Disposition immediately 
preceding the Disposition; and (ii) in the case of a Regulated Fund, 
a majority of the Board has approved the Regulated Fund's 
participation in pro rata Dispositions as being in the best 
interests of the Regulated Fund. The Regulated Fund's Board may 
refuse to approve, or at any time rescind, suspend or qualify, their 
approval of Pro Rata Dispositions, in which case all subsequent 
Dispositions will be submitted to the Regulated Fund's Eligible 
Directors.
    \18\ ``Tradable Security'' means a security that meets the 
following criteria at the time of Disposition: (i) It trades on a 
national securities exchange or designated offshore securities 
market as defined in rule 902(b) under the Securities Act; (ii) it 
is not subject to restrictive agreements with the issuer or other 
security holders; and (iii) it trades with sufficient volume and 
liquidity (findings as to which are documented by the Advisers to 
any Regulated Funds holding investments in the issuer and retained 
for the life of the Regulated Fund) to allow each Regulated Fund to 
dispose of its entire position remaining after the proposed 
Disposition within a short period of time not exceeding 30 days at 
approximately the value (as defined by section 2(a)(41) of the Act) 
at which the Regulated Fund has valued the investment.
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D. Delayed Settlement

    18. Applicants represent that under the terms and Conditions of the 
application, all Regulated Funds and Affiliated Funds participating in 
a Co-Investment Transaction will invest at the same time, for the same 
price and with the same terms, conditions, class, registration rights 
and any other rights, so that none of them receives terms more 
favorable than any other. However, the settlement date for an 
Affiliated Fund in a Co-Investment Transaction may occur up to ten 
business days after the settlement date for the Regulated Fund, and 
vice versa. Nevertheless, in all cases, (i) the date on which the 
commitment of the Affiliated Funds and Regulated Funds is made will be 
the same even where the settlement date is not and (ii) the earliest 
settlement date and the latest settlement date of any Affiliated Fund 
or Regulated Fund participating in the transaction will occur within 
ten business days of each other.

E. Holders

    19. Under Condition 15, if an Adviser, its principals, or any 
person controlling, controlled by, or under common control with the 
Adviser or its principals, and the Affiliated Funds (collectively, the 
``Holders'') own in the aggregate more than 25 percent of the 
outstanding voting shares of a Regulated Fund (the ``Shares''), then 
the Holders will vote such Shares as directed by an independent third 
party when voting on matters specified in the Condition. Applicants 
believe that this Condition will ensure that the Independent Directors 
will act independently in evaluating Co-Investment Transactions, 
because the ability of the Adviser or its principals to influence the 
Independent Directors by a suggestion, explicit or implied, that the 
Independent Directors can be removed if desired by the Holders will be 
limited significantly. The Independent Directors shall evaluate and 
approve any independent party, taking into account its qualifications, 
reputation for independence, cost to the shareholders, and other 
factors that they deem relevant.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
participation by a registered investment company and an affiliated 
person in any ``joint enterprise or other joint arrangement or profit-
sharing plan,'' as defined in the rule, without prior approval by the 
Commission by order upon application. Section 17(d) of the Act and rule 
17d-1 under the Act are applicable to Regulated Funds that are 
registered closed-end investment companies.
    2. Similarly, with regard to BDCs, section 57(a)(4) of the Act 
generally prohibits certain persons specified in section 57(b) from 
participating in joint transactions with the BDC or a company 
controlled by the 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.
    3. Co-Investment Transactions are prohibited by either or both of 
rule 17d-1 and section 57(a)(4) without a prior exemptive order of the 
Commission to the extent that the Affiliated Funds, FE Proprietary 
Accounts and the Regulated Funds participating in such transactions 
fall within the category of persons described by rule 17d-1 and/or 
section 57(b), as modified by rule 57b-1 thereunder, as applicable, 
vis-[agrave]-vis each participating Regulated Fund. Each of the 
participating Affiliated Funds, FE Proprietary Accounts and Regulated 
Funds may be deemed to be affiliated persons vis-[agrave]-vis a 
Regulated Fund within the meaning of section 2(a)(3) by reason of 
common control because (i) First Eagle will control FE BDC and FE 
Private Credit and any other Adviser will be controlling, controlled by 
or under common control with First Eagle, (ii) the BDC Downstream Funds 
\19\ and Wholly Owned Investment Subs will be controlled by the 
Regulated Funds; and (iii) the FE Proprietary Accounts are or will be 
controlling, controlled by or under common control with First Eagle. 
Thus, the Advisers, BDC Downstream Funds, Wholly Owned Investment Subs 
and FE Proprietary Accounts may be deemed to be related to a Regulated 
Fund in a manner described by section 57(b) and/or related to other 
Regulated Funds in a manner described by rule 17d-1; and therefore the 
prohibitions of rule 17d-1 and section 57(a)(4) would apply 
respectively to prohibit the Affiliated Funds from participating in Co-
Investment Transactions with the Regulated Funds. Each Regulated Fund 
would also be related to each other Regulated Fund in a manner 
described by 57(b) or rule 17d-1, as applicable, and thus prohibited 
from participating in Co-Investment Transactions with each other.
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    \19\ ``BDC Downstream Fund'' means, with respect to any 
Regulated Fund that is a BDC, an entity (a) that the BDC directly or 
indirectly controls, (b) that is not controlled by any person other 
than the BDC (except a person that indirectly controls the entity 
solely because it controls the BDC), (c) that would be an investment 
company but for section 3(c)(1) or 3(c)(7) of the Act, (d) whose 
investment adviser is an Adviser and (d) that is not a Wholly Owned 
Investment Sub.
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    4. 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.
    5. Applicants state that in the absence of the requested relief, in 
many circumstances the Regulated Funds would be limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants state that, as required by rule 17d-1(b), the 
Conditions ensure that the terms on which Co-Investment Transactions 
may be made will be consistent with the participation of the Regulated 
Funds being on a basis that it is neither different from nor less 
advantageous than other participants, thus protecting the equity 
holders of any participant from being disadvantaged. Applicants further 
state that the Conditions ensure that all Co-Investment Transactions 
are reasonable and fair to the Regulated Funds and their shareholders 
and do not involve overreaching by any person concerned, including the 
Advisers. Applicants state that the Regulated Funds' participation in 
the Co-Investment Transactions in accordance with the Conditions will 
be consistent

[[Page 3454]]

with the provisions, policies, and purposes of the Act and would be 
done in a manner that is not different from, or less advantageous than, 
that of other participants.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following 
Conditions:
    1. Identification and Referral of Potential Co-Investment 
Transactions.
    (a) The Advisers will establish, maintain and implement policies 
and procedures reasonably designed to ensure that each Adviser is 
promptly notified, for each Regulated Fund the Adviser manages, of all 
Potential Co-Investment Transactions that (i) an Adviser considers for 
any other Regulated Fund or Affiliated Fund and (ii) fall within the 
Regulated Fund's then-current Objectives and Strategies and Board-
Established Criteria.
    (b) When an Adviser to a Regulated Fund is notified of a Potential 
Co-Investment Transaction under Condition 1(a), the Adviser will make 
an independent determination of the appropriateness of the investment 
for the Regulated Fund in light of the Regulated Fund's then-current 
circumstances.
    2. Board Approvals of Co-Investment Transactions.
    (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 Advisers to be 
invested in the Potential Co-Investment Transaction by the 
participating Regulated Funds and any participating Affiliated Funds, 
collectively, exceeds the amount of the investment opportunity, the 
investment opportunity will be allocated among them pro rata based on 
the size of the Internal Orders, as described in section III.A.1.b. of 
the application. Each Adviser to a participating Regulated Fund will 
promptly notify and provide the Eligible Directors with information 
concerning the Affiliated Funds' and Regulated Funds' order sizes to 
assist the Eligible Directors with their review of the applicable 
Regulated Fund's investments for compliance with these Conditions.
    (c) After making the determinations required in Condition 1(b) 
above, each Adviser to a participating Regulated Fund will distribute 
written information concerning the Potential Co-Investment Transaction 
(including the amount proposed to be invested by each participating 
Regulated Fund, each participating Affiliated Fund, and each 
participating FE Proprietary Account) to the Eligible Directors of its 
participating Regulated Fund(s) for their consideration. A Regulated 
Fund will enter into a Co-Investment Transaction with one or more other 
Regulated Funds, Affiliated Fund or FE Proprietary 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 transaction, including the consideration to be 
paid, are reasonable and fair to the Regulated Fund and its equity 
holders and do not involve overreaching in respect of the Regulated 
Fund or its equity holders on the part of any person concerned;
    (ii) the transaction is consistent with:
    (A) The interests of the Regulated Fund's equity holders; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Fund(s), Affiliated 
Fund(s) or FE Proprietary Account(s) 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 any other 
Regulated Fund(s), Affiliated Fund(s) or FE Proprietary Account(s) 
participating in the transaction; provided that the Required Majority 
shall not be prohibited from reaching the conclusions required by this 
Condition 2(c)(iii) if:
    (A) The settlement date for another Regulated Fund or an Affiliated 
Fund in a Co-Investment Transaction is later than the settlement date 
for the Regulated Fund by no more than ten business days or earlier 
than the settlement date for the Regulated Fund by no more than ten 
business days, in either case, so long as: (x) The date on which the 
commitments of the Affiliated Funds and Regulated Funds are made is the 
same; and (y) the earliest settlement date and the latest settlement 
date of any Affiliated Fund or Regulated Fund participating in the 
transaction will occur within ten business days of each other; or
    (B) any other Regulated Fund or Affiliated Fund, but not the 
Regulated Fund itself, gains the right to nominate a director for 
election to a portfolio company's board of directors, the right to have 
a board observer or any similar right to participate in the governance 
or management of the portfolio company so long as: (x) The Eligible 
Directors will have the right to ratify the selection of such director 
or board observer, if any; (y) the 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 (z) any fees or other compensation that any other Regulated Fund or 
Affiliated Fund or any affiliated person of any other Regulated Fund or 
Affiliated Fund receives in connection with the right of one or more 
Regulated Funds or Affiliated Funds 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 any participating Affiliated Funds and FE Proprietary Accounts 
(who may, in turn, share their portion with their affiliated persons) 
and any participating Regulated Fund(s) in accordance with the amount 
of each such party's investment; and
    (iv) the proposed investment by the Regulated Fund will not involve 
compensation, remuneration or a direct or indirect \20\ financial 
benefit to the Advisers, any other Regulated Funds, the Affiliated 
Funds, the FE Proprietary 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 14, (B) to the extent 
permitted by section 17(e) or 57(k), 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)(B)(z).
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    \20\ For example, procuring the Regulated Fund's investment in a 
Potential Co-Investment Transaction to permit an affiliate to 
complete or obtain better terms in a separate transaction would 
constitute an indirect financial benefit.
---------------------------------------------------------------------------

    3. Right to Decline. Each Regulated Fund has the right to decline 
to participate in any Potential Co-Investment Transaction or to invest 
less than the amount proposed.
    4. General Limitation. Except for Follow-On Investments made in 
accordance with Conditions 8 and 9 below,\21\ a Regulated Fund will not 
invest in reliance on the Order in any issuer in which a Related Party 
has an investment.\22\
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    \21\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
    \22\ ``Related Party'' means (i) any Close Affiliate and (ii) in 
respect of matters as to which any Adviser has knowledge, any Remote 
Affiliate.
     ``Close Affiliate'' means the Advisers, the other Regulated 
Funds, the Affiliated Funds and any other person described in 
section 57(b) (after giving effect to rule 57b-1) in respect of any 
Regulated Fund (treating any registered investment company or series 
thereof as a BDC for this purpose) except for limited partners 
included solely by reason of the reference in section 57(b) to 
section 2(a)(3)(D).
     ``Remote Affiliate'' means any person described in section 
57(e) in respect of any Regulated Fund (treating any registered 
investment company or series thereof as a BDC for this purpose) and 
any limited partner holding 5% or more of the relevant limited 
partner interests that would be a Close Affiliate but for the 
exclusion in that definition.

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[[Page 3455]]

    5. Same Terms and Conditions. A Regulated Fund will not participate 
in any Potential Co-Investment Transaction unless (i) the terms, 
conditions, price, class of securities to be purchased, date on which 
the commitment is entered into and registration rights (if any) will be 
the same for each participating Regulated Fund, Affiliated Fund and FE 
Proprietary Account and (ii) the earliest settlement date and the 
latest settlement date of any participating Regulated Fund or 
Affiliated Fund will occur as close in time as practicable and in no 
event more than ten business days apart. The grant to one or more 
Regulated Funds or Affiliated Funds, but not the respective 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 5, if Condition 2(c)(iii)(B) is met.
    6. Standard Review Dispositions.
    (a) General. If any Regulated Fund, Affiliated Fund or FE 
Proprietary Account elects to sell, exchange or otherwise dispose of an 
interest in a security and one or more Regulated Funds, Affiliated 
Funds and FE Proprietary Accounts have previously participated in a Co-
Investment Transaction with respect to the issuer:
    (i) The Adviser to such Regulated Fund, Affiliated Fund or FE 
Proprietary Account, as applicable, will notify each Regulated Fund 
that holds an investment in the issuer of the proposed Disposition at 
the earliest practical time; and
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to participation by such 
Regulated Fund in the Disposition.
    (b) Same Terms and Conditions. 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 Affiliated Funds, FE Proprietary Accounts and any other 
Regulated Funds.
    (c) No Board Approval Required. A Regulated Fund may participate in 
such a Disposition without obtaining prior approval of the Required 
Majority if:
    (i) (A) The participation of each Regulated Fund, Affiliated Fund 
and FE Proprietary Account in such Disposition is proportionate to its 
then-current holding of the security (or securities) of the issuer that 
is (or are) the subject of the Disposition; \23\ (B) 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 (C) 
the Board of the Regulated Fund is provided on a quarterly basis with a 
list of all Dispositions made in accordance with this Condition; or
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    \23\ In the case of any Disposition, proportionality will be 
measured by each participating Regulated Fund's, Affiliated Fund's 
and FE Proprietary Accounts' outstanding investment in the security 
in question immediately preceding the Disposition.
---------------------------------------------------------------------------

    (ii) each security is a Tradable Security and (A) the Disposition 
is not to the issuer or any affiliated person of the issuer; and (B) 
the security is sold for cash in a transaction in which the only term 
negotiated by or on behalf of the participating Regulated Funds, 
Affiliated Funds and FE Proprietary Accounts is price.
    (d) Standard Board Approval. In all other cases, the Adviser will 
provide its written recommendation as to the Regulated Fund's 
participation to the Eligible Directors and the Regulated Fund will 
participate in such Disposition solely to the extent that a Required 
Majority determines that it is in the Regulated Fund's best interests.
    7. Enhanced Review Dispositions.
    (a) General. If any Regulated Fund, Affiliated Fund or FE 
Proprietary Account elects to sell, exchange or otherwise dispose of a 
Pre-Boarding Investment in a Potential Co-Investment Transaction and 
the Regulated Funds, Affiliated Funds and FE Proprietary Accounts have 
not previously participated in a Co-Investment Transaction with respect 
to the issuer:
    (i) The Adviser to such Regulated Fund, Affiliated Fund or FE 
Proprietary Account, as applicable, will notify each Regulated Fund 
that holds an investment in the issuer of the proposed Disposition at 
the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to participation by such 
Regulated Fund in the Disposition; and
    (iii) the Advisers will provide to the Board of each Regulated Fund 
that holds an investment in the issuer all information relating to the 
existing investments in the issuer of the Regulated Funds, Affiliated 
Funds and FE Proprietary Accounts, including the terms of such 
investments and how they were made, that is necessary for the Required 
Majority to make the findings required by this Condition.
    (b) Enhanced Board Approval. The Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Directors, and the Regulated Fund will participate in such Disposition 
solely to the extent that a Required Majority determines that:
    (i) The Disposition complies with Condition 2(c)(i), (ii), 
(iii)(A), and (iv).
    (ii) the making and holding of the Pre-Boarding Investments were 
not prohibited by section 57 or rule 17d-1, as applicable, and records 
the basis for the finding in the Board minutes.
    (c) Additional Requirements. The Disposition may only be completed 
in reliance on the Order if:
    (i) Same Terms and Conditions. Each Regulated Fund has 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 
Affiliated Funds, the FE Proprietary Accounts and any other Regulated 
Funds;
    (ii) Original Investments. All of the Affiliated Funds', Regulated 
Funds' and FE Proprietary Accounts' investments in the issuer are Pre-
Boarding Investments;
    (iii) Advice of counsel. Independent counsel to the Board advises 
that the making and holding of the investments in the Pre-Boarding 
Investments were not prohibited by section 57 (as modified by rule 57b-
1) or rule 17d-1, as applicable;
    (iv) Multiple Classes of Securities. All Regulated Funds, 
Affiliated Funds and FE Proprietary Accounts that hold Pre-Boarding 
Investments in the issuer immediately before the time of completion of 
the Co-Investment Transaction hold the same security or securities of 
the issuer. For the purpose of determining whether the Regulated Funds, 
Affiliated Funds and FE Proprietary Accounts hold the same security or 
securities, they may disregard any security held by some but not all of 
them if, prior to relying on the Order, the Required Majority is 
presented with all information necessary to make a finding, and finds, 
that: (x) Any Regulated Fund's, Affiliated Fund's or FE Proprietary 
Accounts' holding of a different class of securities (including for 
this purpose a security with a different maturity date)

[[Page 3456]]

is immaterial \24\ in amount, including immaterial relative to the size 
of the issuer; and (y) the Board records the basis for any such finding 
in its minutes. In addition, securities that differ only in respect of 
issuance date, currency, or denominations may be treated as the same 
security; and
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    \24\ In determining whether a holding is ``immaterial'' for 
purposes of the Order, the Required Majority will consider whether 
the nature and extent of the interest in the transaction or 
arrangement is sufficiently small that a reasonable person would not 
believe that the interest affected the determination of whether to 
enter into the transaction or arrangement or the terms of the 
transaction or arrangement.
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    (v) No control. The Affiliated Funds, the FE Proprietary Accounts, 
the other Regulated Funds and their affiliated persons (within the 
meaning of section 2(a)(3)(C) of the Act), individually or in the 
aggregate, do not control the issuer of the securities (within the 
meaning of section 2(a)(9) of the Act).
    8. Standard Review Follow-Ons.
    (a) General. If any Regulated Fund, Affiliated Fund or FE 
Proprietary Account desires to make a Follow-On Investment in an issuer 
and the Regulated Funds, Affiliated Funds and FE Proprietary Accounts 
holding investments in the issuer previously participated in a Co-
Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund, Affiliated Fund or FE 
Proprietary Account, as applicable, will notify each Regulated Fund 
that holds securities of the portfolio company of the proposed 
transaction at the earliest practical time; and
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to the proposed 
participation, including the amount of the proposed investment, by such 
Regulated Fund.
    (b) No Board Approval Required. A Regulated Fund may participate in 
the Follow-On Investment without obtaining prior approval of the 
Required Majority if:
    (i) (A) The proposed participation of each Regulated Fund, each 
Affiliated Fund and each FE Proprietary Account in such investment is 
proportionate to its outstanding investments in the issuer or the 
security at issue, as appropriate,\25\ immediately preceding the 
Follow-On Investment; and (B) 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); or
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    \25\ To the extent that a Follow-On Investment opportunity is in 
a security or arises in respect of a security held by the 
participating Regulated Funds, Affiliated Funds and FE Proprietary 
Accounts proportionality will be measured by each participating 
Regulated Fund's, Affiliated Fund's and FE Proprietary Account's 
outstanding investment in the security in question immediately 
preceding the Follow-On Investment using the most recent available 
valuation thereof. To the extent that a Follow-On Investment 
opportunity relates to an opportunity to invest in a security that 
is not in respect of any security held by any of the participating 
Regulated Funds, Affiliated Funds or FE Proprietary Accounts, 
proportionality will be measured by each participating Regulated 
Fund's, Affiliated Fund's and FE Proprietary Account's outstanding 
investment in the issuer immediately preceding the Follow-On 
Investment using the most recent available valuation thereof.
---------------------------------------------------------------------------

    (ii) it is a Non-Negotiated Follow-On Investment.
    (c) Standard Board Approval. In all other cases, the Adviser will 
provide its written recommendation as to the Regulated Fund's 
participation to the Eligible Directors and the Regulated Fund will 
participate in such Follow-On Investment solely to the extent that a 
Required Majority makes the determinations set forth in Condition 2(c). 
If the only previous Co-Investment Transaction with respect to the 
issuer was an Enhanced Review Disposition the Eligible Directors must 
complete this review of the proposed Follow-On Investment both on a 
stand-alone basis and together with the Pre-Boarding Investments in 
relation to the total economic exposure and other terms of the 
investment.
    (d) Allocation. If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to 
any Regulated Fund is not based on the Regulated Funds', the Affiliated 
Funds' and the FE Proprietary Account's outstanding investments in the 
issuer or the security at issue, as appropriate, immediately preceding 
the Follow-On Investment; and
    (ii) the aggregate amount recommended by the Advisers to be 
invested in the Follow-On Investment by the participating Regulated 
Funds and any participating Affiliated Funds and FE Proprietary 
Accounts, collectively, exceeds the amount of the investment 
opportunity, then the Follow-On Investment opportunity will be 
allocated among them pro rata based on the size of the Internal Orders, 
as described in section III.A.1.b. of the application.
    (e) Other Conditions. 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. Enhanced Review Follow-Ons.
    (a) General. If any Regulated Fund, Affiliated Fund or FE 
Proprietary Account desires to make a Follow-On Investment in an issuer 
that is a Potential Co-Investment Transaction and the Regulated Funds, 
Affiliated Funds and FE Proprietary Accounts holding investments in the 
issuer have not previously participated in a Co-Investment Transaction 
with respect to the issuer:
    (i) The Adviser to each such Regulated Fund, Affiliated Fund or FE 
Proprietary Account, as applicable, will notify each Regulated Fund 
that holds securities of the portfolio company of the proposed 
transaction at the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in 
the issuer will formulate a recommendation as to the proposed 
participation, including the amount of the proposed investment, by such 
Regulated Fund; and
    (iii) the Advisers will provide to the Board of each Regulated Fund 
that holds an investment in the issuer all information relating to the 
existing investments in the issuer of the Regulated Funds, Affiliated 
Funds, and FE Proprietary Accounts including the terms of such 
investments and how they were made, that is necessary for the Required 
Majority to make the findings required by this Condition.
    (b) Enhanced Board Approval. The Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Directors, and the Regulated Fund will participate in such Follow-On 
Investment solely to the extent that a Required Majority reviews the 
proposed Follow-On Investment both on a stand-alone basis and together 
with the Pre-Boarding Investments in relation to the total economic 
exposure and other terms and makes the determinations set forth in 
Condition 2(c). In addition, the Follow-On Investment may only be 
completed in reliance on the Order if the Required Majority of each 
participating Regulated Fund determines that the making and holding of 
the Pre-Boarding Investments were not prohibited by section 57 (as 
modified by rule 57b-1) or rule 17d-1, as applicable. The basis for the 
Board's findings will be recorded in its minutes.
    (c) Additional Requirements. The Follow-On Investment may only be 
completed in reliance on the Order if:
    (i) Original Investments. All of the Affiliated Funds', Regulated 
Funds' and FE Proprietary Accounts' investments in the issuer are Pre-
Boarding Investments;
    (ii) Advice of counsel. Independent counsel to the Board advises 
that the making and holding of the investments in the Pre-Boarding 
Investments were

[[Page 3457]]

not prohibited by section 57 (as modified by rule 57b-1) or rule 17d-1, 
as applicable;
    (iii) Multiple Classes of Securities. All Regulated Funds, 
Affiliated Funds and FE Proprietary Accounts that hold Pre-Boarding 
Investments in the issuer immediately before the time of completion of 
the Co-Investment Transaction hold the same security or securities of 
the issuer. For the purpose of determining whether the Regulated Funds, 
Affiliated Funds and FE Proprietary Accounts hold the same security or 
securities, they may disregard any security held by some but not all of 
them if, prior to relying on the Order, the Required Majority is 
presented with all information necessary to make a finding, and finds, 
that: (x) Any Regulated Fund's, Affiliated Fund's or FE Proprietary 
Accounts' holding of a different class of securities (including for 
this purpose a security with a different maturity date) is immaterial 
in amount, including immaterial relative to the size of the issuer; and 
(y) the Board records the basis for any such finding in its minutes. In 
addition, securities that differ only in respect of issuance date, 
currency, or denominations may be treated as the same security; and
    (iv) No control. The Affiliated Funds, the FE Proprietary Accounts, 
the other Regulated Funds and their affiliated persons (within the 
meaning of section 2(a)(3)(C) of the Act), individually or in the 
aggregate, do not control the issuer of the securities (within the 
meaning of section 2(a)(9) of the Act).
    (d) Allocation. If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to 
any Regulated Fund is not based on the Regulated Funds', the Affiliated 
Funds', and FE Proprietary Accounts' outstanding investments in the 
issuer or the security at issue, as appropriate, immediately preceding 
the Follow-On Investment; and
    (ii) the aggregate amount recommended by the Advisers to be 
invested in the Follow-On Investment by the participating Regulated 
Funds and any participating Affiliated Funds and FE Proprietary 
Accounts, collectively, exceeds the amount of the investment 
opportunity, then the Follow-On Investment opportunity will be 
allocated among them pro rata based on the size of the Internal Orders, 
as described in section III.A.1.b. of the application.
    (e) Other Conditions. 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.
    10. Board Reporting, Compliance and Annual Re-Approval.
    (a) Each Adviser to a Regulated Fund will present to the Board of 
each Regulated Fund, on a quarterly basis, and at such other times as 
the Board may request, (i) a record of all investments in Potential Co-
Investment Transactions made by any of the other Regulated Funds or any 
of the Affiliated Funds or FE Proprietary Accounts during the preceding 
quarter that fell within the Regulated Fund's then-current Objectives 
and Strategies and Board-Established Criteria that were not made 
available to the Regulated Fund, and an explanation of why such 
investment opportunities were not made available to the Regulated Fund; 
(ii) a record of all Follow-On Investments in and Dispositions of 
investments in any issuer in which the Regulated Fund holds any 
investments by any Affiliated Fund or other Regulated Fund during the 
prior quarter; and (iii) all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by other Regulated Funds, Affiliated Funds or FE 
Proprietary Accounts that the Regulated Fund considered but declined to 
participate in, so that the Independent Directors, may determine 
whether all Potential Co-Investment Transactions and Co-Investment 
Transactions during the preceding quarter, including those investments 
that the Regulated Fund considered but declined to participate in, 
comply with the Conditions.
    (b) All information presented to the Regulated Fund's 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.
    (c) 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. 
In the case of a BDC Downstream Fund that does not have a chief 
compliance officer, the chief compliance officer of the BDC that 
controls the BDC Downstream Fund will prepare the report for the 
relevant Independent Party.
    (d) The Independent Directors (including the non-interested members 
of each Independent Party) will consider at least annually (a) whether 
continued participation in new and existing Co-Investment Transactions 
is in the Regulated Fund's best interests and (b) the continued 
appropriateness of any Board-Established Criteria.
    11. Record Keeping. 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).
    12. Director Independence. No Independent Director (including the 
non-interested members of any Independent Party) of a Regulated Fund 
will also be a director, general partner, managing member or principal, 
or otherwise be an ``affiliated person'' (as defined in the Act) of any 
Affiliated Fund or FE Proprietary Account.
    13. Expenses. The expenses, if any, associated with acquiring, 
holding or disposing of any securities acquired in a Co-Investment 
Transaction (including, without limitation, the expenses of the 
distribution of any such securities registered for sale under the 
Securities Act) will, to the extent not payable by the Advisers under 
their respective advisory agreements with the Regulated Funds and the 
Affiliated Funds, be shared by the Regulated Funds and the 
participating Affiliated Funds and FE Proprietary Accounts in 
proportion to the relative amounts of the securities held or being 
acquired or disposed of, as the case may be.
    14. Transaction Fees.\26\ Any transaction fee (including break-up, 
structuring, monitoring or commitment fees but excluding brokerage or 
underwriting compensation permitted by section 17(e) or 57(k)) received 
in connection with any Co-Investment Transaction will be distributed to 
the participants 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 the Adviser at a bank or banks having the qualifications prescribed 
in section 26(a)(1), and the account will earn a competitive rate of 
interest that will also be divided pro rata among the participants. 
None of the Advisers, the Affiliated Funds, the FE Proprietary 
Accounts, the other Regulated Funds or any affiliated person of the 
Affiliated Funds, the FE Proprietary Accounts or

[[Page 3458]]

the Regulated Funds will receive any additional compensation or 
remuneration of any kind as a result of or in connection with a Co-
Investment Transaction other than (i) in the case of the Regulated 
Funds, the Affiliated Funds and the FE Proprietary Accounts, the pro 
rata transaction fees described above and fees or other compensation 
described in Condition 2(c)(iii)(B)(z), (ii) brokerage or underwriting 
compensation permitted by section 17(e) or 57(k) or (iii) in the case 
of the Advisers, investment advisory compensation paid in accordance 
with investment advisory agreements between the applicable Regulated 
Fund(s) or Affiliated Fund(s) and its Adviser.
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    \26\ Applicants are not requesting and the Commission is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    15. Independence. If the Holders own in the aggregate more than 25 
percent of the Shares of a Regulated Fund, then the Holders will vote 
such Shares as directed by an independent third party when voting on 
(1) the election of directors; (2) the removal of one or more 
directors; or (3) any other matter under either the Act or applicable 
State law affecting the Board's composition, size or manner of 
election.
    16. FE Proprietary Accounts. The FE Proprietary Accounts will not 
be permitted to invest in a Potential Co-Investment Transaction except 
to the extent that the aggregate Internal Orders for a Potential Co-
Investment Transaction, as described in section III.A.1.b of the 
application, are less than the total investment opportunity.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-00805 Filed 1-17-20; 8:45 am]
BILLING CODE 8011-01-P


