[Federal Register Volume 85, Number 182 (Friday, September 18, 2020)]
[Notices]
[Pages 58413-58415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20562]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34011; 812-15114]


GSO Asset Management LLC and Blackstone Private Credit Fund

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

ACTION:  Notice.

-----------------------------------------------------------------------

    Notice of an application under Section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from Sections 
18(a)(2), 18(c), 18(i) and Section 61(a) of the Act.
    Summary of Application: Applicants request an order to permit 
certain closed-end management investment companies that have elected to 
be regulated as business development companies (``BDCs'') to issue 
multiple classes of shares with varying sales loads and asset-based 
service and/or distribution fees.
    Applicants: GSO Asset Management, LLC (the ``Current Investment 
Adviser'') and Blackstone Private Credit Fund (``BCRED'').

[[Page 58414]]

    Filing Dates: The application was filed on March 26, 2020 and 
amended on July 28, 2020.
    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 5, 2020, and should be accompanied by proof of 
service on the 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: Marisa J. Beeney, GSO 
Capital Partners LP, 345 Park Avenue, 31st Floor, New York, NY 10154.

FOR FURTHER INFORMATION CONTACT:  Rochelle Plesset, Senior Counsel, or 
David Marcinkus, Branch Chief, at (202) 551-6821 (Division of 
Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION:  The following is a summary of the 
application. The complete application may be obtained via the 
Commission's 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.
    Applicants' Representations:
    1. The Current Investment Adviser is registered as an investment 
adviser under the Investment Advisers Act of 1940 and will serve as 
investment adviser to BCRED.
    2. BCRED is a newly organized Delaware statutory trust that intends 
to operate as a non-diversified, closed-end management investment 
company that will elect to be regulated as a BDC under the Act.\1\ 
BCRED has not yet commenced operations or determined its investment 
objective and strategy.
---------------------------------------------------------------------------

    \1\ Section 2(a)(48) of the Act defines a BDC to be any closed-
end investment company that operates for the purpose of making 
investments in securities described in Sections 55(a)(1) through 
55(a)(3) of the Act and makes available significant managerial 
assistance with respect to the issuers of such securities.
---------------------------------------------------------------------------

    3. Applicants seek an order to permit BCRED and other Funds 
(defined below) to offer investors multiple classes of shares of 
beneficial interest (``Shares'') with varying sales loads and asset-
based service and/or distribution fees.
    4. Applicants request that the order also apply to any continuously 
offered registered closed-end management investment company that elects 
to be regulated as a BDC that has been previously organized or that may 
be organized in the future for which the Current Investment Adviser or 
any entity controlling, controlled by, or under common control with the 
Current Investment Adviser, or any successor in interest to any such 
entity,\2\ acts as investment adviser and which operates as an interval 
fund pursuant to Rule 23c-3 under the Act and/or periodically offers to 
repurchase its Shares pursuant to Rule 13e-4 under the Securities 
Exchange Act of 1934 (``Exchange Act'') and Section 23(c)(2) of the Act 
(each, a ``Future Fund'' and together with BCRED, the ``Funds'').\3\
---------------------------------------------------------------------------

    \2\ For purposes of the requested order, ``successor'' is 
limited to any entity that results from a reorganization into 
another jurisdiction or a change in the type of a business 
organization.
    \3\ Any Fund relying on this relief in the future will do so in 
compliance with the terms and conditions of the application.
---------------------------------------------------------------------------

    5. As a BDC, each Fund will be organized as a closed-end investment 
company, but will offer its Shares continuously, similar to an open-end 
management investment company. Shares of the Funds will not be offered 
or traded in a secondary market and will not be listed on any 
securities exchange and do not trade on an over-the-counter system.\4\
---------------------------------------------------------------------------

    \4\ Applicants are not requesting relief with respect to any 
Fund listed on a securities exchange. Any Fund which relies on the 
relief requested herein will cease relying on such relief upon the 
listing of any class of its Shares on a securities exchange.
---------------------------------------------------------------------------

    6. Each Fund is seeking the ability to offer multiple classes of 
Shares that may charge differing front-end sales loads, contingent 
deferred sales charges (``CDSCs''), an early withdrawal charge 
(``Repurchase Fee''), and/or annual asset-based service and/or 
distribution fees. Each class of Shares will comply with the provisions 
of Rule 2310 of the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') Manual (``FINRA Rule 2310'').\5\
---------------------------------------------------------------------------

    \5\ Any reference to FINRA Rule 2310 includes any successor or 
replacement rule that may be adopted by FINRA.
---------------------------------------------------------------------------

    7. Any Share of a Fund that is subject to asset-based service or 
distribution fees shall convert to a class with no asset based service 
or distribution fees upon such Share reaching the applicable sales 
charge cap determined in accordance with FINRA Rule 2310. Further, if a 
class of Shares were to be listed on an exchange in the future, all 
other then-existing classes of Shares of the listing Fund will be 
converted into the listed class, without the imposition of any sales 
load, fee or other charge.
    8. In order to provide a limited degree of liquidity to 
shareholders, Applicants state that each Fund may from time to time 
offer to repurchase Shares in accordance with the requirements of Rule 
23c-3 under the Act and/or Rule 13e-4 under the Exchange Act and 
Section 23(c)(2) of the Act. Applicants state further that repurchases 
of each Fund's Shares will be made at such times, in such amounts and 
on such terms as may be determined by the applicable Fund's board of 
trustees in its sole discretion.
    9. Each Fund will disclose in its prospectus the fees, expenses and 
other characteristics of each class of Shares offered for sale by the 
prospectus, as is required for open-end, multiple-class funds under 
Form N-1A. As if it were an open-end management investment company, 
each Fund will disclose fund expenses in shareholder reports,\6\ and 
disclose in its prospectus any arrangements that result in breakpoints 
in, or elimination of, sales loads.\7\ Each Fund will also comply with 
any requirements the Commission or FINRA may adopt regarding disclosure 
at the point of sale and in transaction confirmations about the costs 
and conflicts of interest arising out of the distribution of open-end 
management investment company shares, and regarding prospectus 
disclosure of sales loads and revenue sharing arrangements as if those 
requirements applied to the Fund.\8\ Each Fund will contractually 
require that any distributor of a Fund's Shares comply with such 
requirements in connection with the distribution of such Fund's shares.
---------------------------------------------------------------------------

    \6\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Co. Act 
Rel. No. 26372 (Feb. 27, 2004) (adopting release).
    \7\ See Disclosure of Breakpoint Discounts by Mutual Funds, 
Investment Co. Act Rel. No. 26464 (June 7, 2004) (adopting release).
    \8\ See Confirmation Requirements and Point of Sale Disclosure 
Requirements for Transactions in Certain Mutual Funds and Other 
Securities, and Other Confirmation Requirement Amendments, and 
Amendments to the Registration Form for Mutual Funds, Investment Co. 
Act Rel. No. 26341 (Jan. 29, 2004) (proposing release).
---------------------------------------------------------------------------

    10. Distribution fees will be paid pursuant to a plan of 
distribution adopted by each Fund in compliance with Rules 12b-1 and 
17d-3 under the Act, as if those rules applied to closed-end funds 
electing to be regulated as BDCs, with respect to a class (a 
``Distribution Plan'').

[[Page 58415]]

    11. Each Fund will allocate all expenses incurred by it among the 
various classes of Shares based on the respective net assets of the 
Fund attributable to each such class, except that the net asset value 
and expenses of each class will reflect the expenses associated with 
the Distribution Plan of that class (if any), shareholder servicing 
fees attributable to a particular class (including transfer agency 
fees, if any) and any other incremental expenses of that class. 
Expenses of the Fund allocated to a particular class of the Fund's 
Shares will be borne on a pro rata basis by each outstanding Share of 
that class. Applicants state that each Fund will comply with the 
provisions of Rule 18f-3 under the Act as if it were an open-end 
management investment company.
    12. Any Fund that imposes a CDSC will comply with the provisions of 
Rule 6c-10 (except to the extent a Fund will comply with FINRA Rule 
2310 rather than FINRA Rule 2341, as such rule may be amended (``FINRA 
Rule 2341'')), as if that rule applied to BDCs. With respect to any 
waiver of, scheduled variation in, or elimination of the CDSC, a Fund 
will comply with the requirements of Rule 22d-1 under the Act as if the 
Fund were an open-end management investment company. Each Fund also 
will disclose CDSCs in accordance with the requirements of Form N-1A 
concerning CDSCs as if the Fund were an open-end management investment 
company.
    13. Funds may impose a Repurchase Fee at a rate no greater than 2% 
of the shareholder's repurchase proceeds if the interval between the 
date of purchase of the Shares and the valuation date with respect to 
the repurchase of such Shares is less than a specified period. Any 
Repurchase Fee will apply equally to all shareholders of the applicable 
Fund, regardless of class, consistent with Section 18 of the Act and 
Rule 18f-3 under the Act. To the extent a Fund determines to waive, 
impose scheduled variations of, or eliminate any Repurchase Fees, it 
will do so consistently with the requirements of Rule 22d-1 under the 
Act as if the Repurchase Fee were a CDSC and as if the Fund were an 
open-end investment company and the Fund's waiver of, scheduled 
variation in, or elimination of, the Repurchase Fee will apply 
uniformly to all shareholders of the Fund.
    Applicants' Legal Analysis:
Multiple Classes of Shares
    1. Section 18(a)(2) of the Act provides that a closed-end 
investment company may not issue or sell a senior security that is a 
stock unless certain requirements are met. Applicants state that the 
creation of multiple classes of shares of the Funds may violate Section 
18(a)(2), which is made applicable to BDCs through Section 61(a) of the 
Act, because the Funds may not meet such requirements with respect to a 
class of shares that may be a senior security.
    2. Section 18(c) of the Act provides, in relevant part, that a 
closed-end investment company may not issue or sell any senior security 
if, immediately thereafter, the company has outstanding more than one 
class of senior security. Applicants state that the creation of 
multiple classes of Shares of the Funds may be prohibited by Section 
18(c), which is made applicable to BDCs through Section 61(a) of the 
Act, as a class may have priority over another class as to payment of 
dividends because shareholders of different classes would pay different 
fees and expenses.
    3. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that multiple classes of shares of the Funds 
may violate Section 18(i) of the Act, which is made applicable to BDCs 
through Section 61(a) of the Act, because each class would be entitled 
to exclusive voting rights with respect to matters solely related to 
that class.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction or any class or classes of persons, 
securities or transactions from any provision of the Act, or from any 
rule or regulation under the Act, if and to the extent such exemption 
is necessary or appropriate in the public interest and consistent with 
the protection of investors and the purposes fairly intended by the 
policy and provisions of the Act. Applicants request an exemption under 
Section 6(c) from Sections 18(a)(2), 18(c) and 18(i) (which are made 
applicable to BDCs by Section 61(a) of the Act) to permit the Funds to 
issue multiple classes of Shares.
    5. Applicants submit that the proposed allocation of expenses 
relating to distribution and voting rights among multiple classes is 
equitable and will not discriminate against any group or class of 
shareholders. Applicants submit that the proposed arrangements would 
permit a Fund to facilitate the distribution of its Shares and provide 
investors with a broader choice of fee options. Applicants assert that 
the proposed BDC multiple class structure does not raise the concerns 
underlying Section 18 of the Act to any greater degree than open-end 
management investment companies' multiple class structures that are 
permitted by Rule 18f-3 under the Act.
    Applicants' Condition:
    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    1. Each Fund will comply with the provisions of Rules 6c-10 (except 
to the extent a Fund will comply with FINRA Rule 2310 rather than FINRA 
Rule 2341), 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 
under the 1940 Act, as amended from time to time, or any successor 
rules thereto, as if those rules applied to BDCs. In addition, each 
Fund will comply with FINRA Rule 2310, as amended from time to time, or 
any successor rule thereto, and will make available to any distributor 
of a Fund's shares all of the information necessary to permit the 
distributor to prepare client account statements in compliance with 
FINRA Rule 2231.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20562 Filed 9-17-20; 8:45 am]
BILLING CODE 8011-01-P


