[Federal Register Volume 86, Number 24 (Monday, February 8, 2021)]
[Notices]
[Pages 8667-8675]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02468]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34186; File No. 812-15086]


Muzinich BDC, Inc., et al.

February 2, 2021.
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 17-1 under 
the Act to permit certain joint transactions otherwise prohibited by 
sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.

Summary of Application: Applicants request an order to permit certain 
business development companies (``BDCs'') and closed-end management 
investment companies to co-invest in portfolio companies with each 
other and with certain affiliated investment funds and accounts.

Applicants: Muzinich BDC, Inc. (``Muzinich BDC''), Muzinich BDC 
Adviser, LLC (``Muzinich BDC Adviser''), and Muzinich & Co., Inc. 
(``Muzinich & Co.,'' and together with Muzinich BDC Adviser, the 
``Existing Advisers'').

Filing Dates: The application was filed on December 27, 2019, and 
amended on May 21, 2020, and November 6, 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 emailing the Commission's 
Secretary at Secretarys-Office@sec.gov and serving applicants with a 
copy of the request by email. Hearing requests should be received by 
the Commission by 5:30 p.m. on March 1, 2021, and should be accompanied 
by proof of service on applicants, in the form of an affidavit or, for 
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, 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 emailing the 
Commission's Secretary.

ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicants: Mr. 
Paul Fehre, pfehre@muzinich.com.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at 
(202) 551-6811 or Kaitlin C. Bottock, Branch Chief, 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) 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\ and one or more other Regulated 
Funds and/or one or more Affiliated Funds \2\ to enter into Co-
Investment Transactions with each other. ``Co-Investment Transaction'' 
means any transaction in which a Regulated Fund (or its Wholly-Owned 
Investment Sub (as defined below)) participated together with one or 
more Affiliated Funds, and/or one or more other Regulated Funds (or its 
Wholly-Owned Investment Sub) in reliance on the Order. ``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, and/or one or 
more other Regulated Funds (or its Wholly-Owned Investment Sub) without 
obtaining and relying on the Order.\3\
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    \1\ ``Regulated Funds'' means (a) Muzinich BDC, (b) the Future 
Regulated Funds 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, (b) whose investment adviser (and sub-
adviser(s), if any) are an Adviser, and (c) that intends to 
participate in the Co-investment Program (defined below).
    ``Adviser'' means the Existing Advisers, together with any 
future investment adviser that (i) controls, is controlled by, or is 
under common control with an Existing Adviser, (ii) (a) is 
registered as an investment adviser under the Investment Advisers 
Act of 1940 (``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 an 
Existing Adviser, and (iii) is not a Regulated Fund or a subsidiary 
of a Regulated Fund.
    \2\ ``Affiliated Fund'' means any Muzinich Proprietary Account 
(defined below) and any entity (a) whose investment adviser (and 
sub-adviser(s), if any) are an Adviser, (b) that either (i) would be 
an investment company but for section 3(c)(1) or 3(c)(7) of the Act 
or (ii) relies on rule 3a-7 under the Act, (c) that is not a BDC 
Downstream Fund (together with each such entity's direct and 
indirect wholly-owned subsidiaries), and (d) that intends to 
participate in the Co-Investment Program.
    ``BDC Downstream Fund'' means, with respect to any Regulated 
Fund that is a business development company (``BDC''), an entity (i) 
that the BDC directly or indirectly controls, (ii) 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), 
(iii) that would be an investment company but for section 3(c)(1) or 
3(c)(7) of the Act, (iv) whose investment adviser (and sub-
adviser(s), if any) are an Adviser, (v) that is not a Wholly-Owned 
Investment Sub (as defined below) and (vi) that intends to 
participate in the Co-Investment Program.
    \3\ 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 
its terms and Conditions set forth in the application.
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Applicants

    2. Muzinich BDC is a non-diversified, closed-end management 
investment company incorporated in Delaware that have elected to be 
regulated as a BDC

[[Page 8668]]

under the Act.\4\ The Board \5\ of Muzinich BDC currently consists of 
five directors, three of whom are Independent Directors.\6\
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    \4\ 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.
    \5\ ``Board'' means (i) with respect to a Regulated Fund other 
than a BDC Downstream Fund, the board of directors (or the 
equivalent) of the Regulated Fund and (ii) with respect to a BDC 
Downstream Fund, the Independent Party of the BDC Downstream Fund.
    ``Independent Party'' means, with respect to a BDC Downstream 
Fund, (i) if the BDC Downstream Fund has a board of directors (or 
the equivalent), the board or (ii) 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.
    \6\ ``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. Muzinich BDC Adviser, a Delaware limited liability company 
formed under the laws of the state of Delaware, is registered as an 
investment adviser under the Advisers Act. Muzinich & Co., a Delaware 
corporation, is registered as an investment adviser under the Advisers 
Act.
    4. The Advisers, and any direct or indirect, wholly- or majority-
owned subsidiary of an Adviser, may hold various financial assets in a 
principal capacity (the ``Muzinich Proprietary Accounts'').
    5. Applicants state that a Regulated Fund may, from time to time, 
form one or more Wholly-Owned Investment Subs.\7\ 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 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 be permitted to participate in Co-
Investment Transactions in lieu of the Regulated Fund that owns it and 
that the 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.
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    \7\ ``Wholly-Owned Investment Sub'' means any entity (i) that is 
a ``wholly-owned subsidiary'' (as defined in section 2(a)(43) of the 
Act) of a Regulated Fund; (ii) whose sole business purpose is to 
hold one or more investments on behalf of such Regulated Fund and in 
the case of a SBIC Subsidiary (as defined below), maintain a license 
under the Small Business Investment Act of 1958 (``SBA Act'') and 
issue debentures guaranteed by the Small Business Administration); 
(iii) that is wholly-owned by a Regulated Fund (with such Regulated 
Fund at all times holding, beneficially and of record, 100% of the 
voting and economic interests); (iv) 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; and (v) that would be an investment company but for 
section 3(c)(1) or 3(c)(7) of the Act. ``SBIC Subsidiary'' means a 
Wholly-Owned Investment Sub that is licensed by the SBA to operate 
under the SBA Act as a small business investment company.
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Applicants' Representations

A. Allocation Process

    6. Applicants represent that the Advisers have established 
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.
    7. Specifically, applicants state that the Advisers are organized 
and managed such that the teams and/or committees of investment 
professionals and/or members of senior management (``Investment Teams'' 
and ``Investment Committees,'' respectively) responsible for evaluating 
investment opportunities and making investment decisions on behalf of 
clients are promptly notified of the opportunities. Opportunities for 
Potential Co-Investment Transactions may arise when investment advisory 
personnel of an Adviser or a Muzinich Proprietary Account becomes aware 
of investment opportunities that may be appropriate for one or more 
Regulated Funds and/or one or more Affiliated Funds. If the requested 
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 (including any Muzinich 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 \8\ and any Board-Established 
Criteria \9\ of a Regulated Fund, the policies and procedures will 
require that the relevant 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. The Adviser to 
each applicable Regulated Fund, working through the applicable 
Investment Team and/or Investment Committee, 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. 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, working through the applicable Investment 
Team and/or Investment Committee, formulate a recommendation regarding 
the proposed order amount for the Regulated Fund.
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    \8\ ``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'') or under 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).
    \9\ ``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 its 
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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    8. Applicants state that, for each Regulated Fund and Affiliated 
Fund whose Adviser recommends participating in a Potential Co-

[[Page 8669]]

Investment Transaction, such Adviser's Investment Committee will 
approve an investment 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 the applicable Adviser's Investment Committee.\10\ 
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 of any 
participating Regulated Funds in accordance with the Conditions.\11\
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    \10\ The reason for any such adjustment to a proposed order 
amount will be documented in writing and preserved in the records of 
each Adviser.
    \11\ ``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 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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    9. 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.\12\ 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 the Advisers will establish, implement and 
maintain.\13\
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    \12\ 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).
    \13\ 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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B. Follow-On Investments

    10. Applicants state that from time to time the Regulated Funds and 
Affiliated Funds may have opportunities to make Follow-On Investments 
\14\ in an issuer in which a Regulated Fund and/or one or more other 
Regulated Funds, and/or one or more Affiliated Funds previously have 
invested.
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    \14\ ``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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    11. Applicants propose that Follow-On Investments would be divided 
into two categories depending on whether the prior investment was a Co-
Investment Transaction or a Pre-Boarding Investment.\15\ If the 
Regulated Funds and Affiliated Funds 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 
Standard Review Follow-Ons described in Condition 8. If the Regulated 
Funds and Affiliated Funds have not previously participated in a Co-
Investment Transaction with respect to the issuer but hold a Pre-
Boarding Investment, then the terms and approval of the Follow-On 
Investment would be subject to the Enhanced-Review Follow-Ons described 
in Condition 9. 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 of Standard Review Follow-
Ons.
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    \15\ ``Pre-Boarding Investments'' are investments in an issuer 
held by a Regulated Fund as well as one or more Affiliated Funds 
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.
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    12. 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 \16\ or (ii) a Non-Negotiated 
Follow-On Investment.\17\ 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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    \16\ A ``Pro Rata Follow-On Investment'' is a Follow-On 
Investment (i) in which the participation of each Regulated Fund and 
each Affiliated Fund 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).
    \17\ A ``Non-Negotiated Follow-On Investment'' is a Follow-On 
Investment in which a Regulated Fund participates together with one 
or more Affiliated Funds 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.
    ``JT No-Action Letters'' means SMC Capital, Inc., SEC No-Action 
Letter (pub. avail. Sept. 5, 1995) and Massachusetts Mutual Life 
Insurance Company, SEC No-Action Letter (pub. avail. June 7, 2000).
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C. Dispositions

    13. Applicants propose that Dispositions \18\ would be divided into 
two categories. If the Regulated Funds and Affiliated Funds holding 
investments in the issuer had 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 Standard Review 
Dispositions described in Condition 6. If the Regulated Funds and 
Affiliated Funds have not previously participated in a Co-Investment 
Transaction with respect to the issuer but hold a Pre-Boarding 
Investment, then the terms and approval of the Disposition would be 
subject to the Enhanced Review Dispositions described in Condition 7. 
Subsequent

[[Page 8670]]

Dispositions with respect to the same issuer would be governed by 
Condition 6 under the Standard Review Dispositions.\19\
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    \18\ ``Disposition'' means the sale, exchange or other 
disposition of an interest in a security of an issuer.
    \19\ 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 would be required because such 
findings would not have been 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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    14. 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 \20\ or (ii) the securities 
are Tradable Securities \21\ 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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    \20\ A ``Pro Rata Disposition'' is a Disposition (i) in which 
the participation of each Regulated Fund and each Affiliated Fund 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, its approval of Pro Rata Dispositions, in which case all 
subsequent Dispositions will be submitted to the Regulated Fund's 
Eligible Directors.
    \21\ ``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

    15. 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

    16. 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 required under Condition 15.

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 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. Muzinich BDC Adviser will control 
Muzinich BDC and any other Adviser will be, controlling, controlled by 
or under common control with Muzinich BDC Adviser. Each of the 
participating Regulated Funds and Affiliated 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) an Adviser, 
that is either an Existing Adviser or an entity that controls, is 
controlled by, or under common control with an Existing Adviser, will 
be the investment adviser (and sub-adviser, if any) to each of the 
Regulated Funds and the Affiliated Funds (and, in the case of Muzinich 
Propretary Accounts which do not have an investment adviser, such 
Muzinich Proprietary Accounts will nonetheless be controlling, 
controlled by or under common control with an Adviser); (ii) Muzinich 
BDC Adviser is the Adviser to, and may be deemed to control, Muzinich 
BDC; and an Adviser will be the investment adviser and sub-adviser to, 
and may be deemed to control, any Future Regulated Fund; (iii) each BDC 
Downstream Fund will be deemed to be controlled by its BDC parent and/
or its BDC parent's Adviser; and (iv) the Advisers are under common 
control. Thus, each Regulated Fund and each Affiliated Fund may be 
deemed to be a person related to a Regulated Fund or BDC Downstream 
Fund in a manner described by section 57(b) (or section 17(d) in the 
case of Regulated Funds that are registered under the Act); and 
therefore would be prohibited by section 57(a)(4) (or section 17(d) in 
the case of Regulated Funds that are registered under the Act) and rule 
17d-1 from participating in Co-Investment Transactions. Further, 
because the BDC Downstream Funds and Wholly-Owned Investment Subs will 
be controlled by the Regulated Funds, the BDC Downstream Funds and 
Wholly-Owned Investment Subs are subject to section 57(a)(4) (or 
section 17(d) in the case of Wholly-Owned Investment Subs controlled by 
Regulated Funds that are registered under the Act) and thus would also 
be subject to the provisions of rule 17d-1. In addition, the Muzinich 
Proprietary Accounts are entities that are or will be controlling, 
controlled by or under common control with Muzinich BDC Adviser. Thus, 
the

[[Page 8671]]

Muzinich Proprietary Accounts may be deemed to be persons related to a 
Regulated Fund in a manner described by section 57(b) (or section 17(d) 
in the case of Regulated Funds that are registered under the Act) and 
rule 17d-1 from participating in the Co-Investment Program.
    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 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 and each participating Affiliated Fund) 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 or Affiliated Funds 
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) or Affiliated 
Fund(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) or Affiliated 
Fund(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 (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

[[Page 8672]]

or indirect \22\ financial benefit to the Advisers, any other Regulated 
Funds, the Affiliated Funds or any affiliated person of any of them 
(other than the parties to the Co-Investment Transaction), except (A) 
to the extent permitted by Condition 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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    \22\ 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.
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    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,\23\ a Regulated Fund will not 
invest in reliance on the Order in any issuer in which a Related Party 
has an investment.\24\
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    \23\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
    \24\ ``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 Regulated Funds and 
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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    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 and Affiliated Fund 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 or Affiliated Fund elects to 
sell, exchange or otherwise dispose of an interest in a security and 
one or more Regulated Funds and/or Affiliated Funds have previously 
participated in a Co-Investment Transaction with respect to the issuer:
    (i) The Adviser to such Regulated Fund or Affiliated Fund,\25\ as 
applicable, will notify each Regulated Fund that holds an investment in 
the issuer of the proposed Disposition at the earliest practical time; 
and
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    \25\ Any Muzinich Proprietary Account that is not advised by an 
Adviser is itself deemed to be an Adviser for purposes of Conditions 
6(a)(i), 7(a)(i), 8(a)(i) and 9(a)(i).
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    (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 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 and Affiliated 
Fund 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; \26\ (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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    \26\ In the case of any Disposition, proportionality will be 
measured by each participating Regulated Fund's and Affiliated 
Fund's 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 and 
Affiliated Funds 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 or Affiliated Fund elects to 
sell, exchange or otherwise dispose of a Pre-Boarding Investment in a 
Potential Co-Investment Transaction and the Regulated Funds and 
Affiliated Funds have not previously participated in a Co-Investment 
Transaction with respect to the issuer:
    (i) The Adviser to such Regulated Fund or Affiliated Fund, 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 and 
Affiliated Funds, 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); and
    (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

[[Page 8673]]

as those applicable to the Affiliated Funds and any other Regulated 
Funds;
    (ii) Original Investments. All of the Affiliated Funds' and 
Regulated Funds' 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 and 
Affiliated Funds 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 and Affiliated Funds 
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 or Affiliated Fund's 
holding of a different class of securities (including for this purpose 
a security with a different maturity date) is immaterial \27\ 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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    \27\ 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 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 or Affiliated Fund desires to 
make a Follow-On Investment in an issuer and the Regulated Funds and 
Affiliated Funds 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 or Affiliated Fund, 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 and each 
Affiliated Fund in such investment is proportionate to its outstanding 
investments in the issuer or the security at issue, as appropriate,\28\ 
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
---------------------------------------------------------------------------

    \28\ 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 and Affiliated Funds, proportionality 
will be measured by each participating Regulated Fund's and 
Affiliated Fund'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 or Affiliated Funds, proportionality 
will be measured by each participating Regulated Fund's and 
Affiliated Fund's outstanding investment in the issuer immediately 
preceding the Follow-On Investment using the most recent available 
valuation thereof.
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    (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' and the 
Affiliated Funds' 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, 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 or Affiliated Fund desires to 
make a Follow-On Investment in an issuer that is a Potential Co-
Investment Transaction and the Regulated Funds and Affiliated Funds 
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 or Affiliated Fund, 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 and 
Affiliated Funds, 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

[[Page 8674]]

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' and 
Regulated Funds' 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 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 and 
Affiliated Funds 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 and Affiliated Funds 
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 or Affiliated Fund's 
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 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' and the 
Affiliated Funds' 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, 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 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, or Affiliated Funds 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 whether 
continued participation in new and existing Co-Investment Transactions 
is in the Regulated Fund's best interests.
    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.
    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 in proportion to the relative amounts of 
the securities held or being acquired or disposed of, as the case may 
be.
    14. Transaction Fees.\29\ 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

[[Page 8675]]

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 other Regulated Funds or any affiliated person of 
the Affiliated Funds or 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, and the Affiliated Funds, 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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    \29\ 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 in the percentages as the Regulated Fund's other 
shareholders (not including the Holders) when voting on (1) the 
election of directors; (2) the removal of one or more directors; or (3) 
any other matter under either the Act or applicable State law affecting 
the Board's composition, size or manner of election.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02468 Filed 2-5-21; 8:45 am]
BILLING CODE 8011-01-P


