Variant Alternative Income Fund, et al.

CourtSecurities And Exchange Commission
Citation86 FR 74145
Record Number2021-28324
Publication Date29 December 2021
Federal Register, Volume 86 Issue 247 (Wednesday, December 29, 2021)
[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
                [Notices]
                [Pages 74145-74153]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2021-28324]
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                SECURITIES AND EXCHANGE COMMISSION
                [Investment Company Act Release No. 34452; File No. 812-15265]
                Variant Alternative Income Fund, et al.
                December 23, 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 17d-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
                closed-end management investment companies to co-invest in portfolio
                companies with each other and with affiliated investment funds and
                accounts.
                Applicants: Variant Alternative Income Fund (the ``VAIF''), Variant
                Impact Fund (``VIF'' and together with VAIF, the ``Existing Regulated
                Funds''), Variant Investments, LLC (``Variant'')
                Filing Dates: The application was filed on September 21, 2021 and
                amended on December 22, 2021.
                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 [email protected] 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 January 18, 2022, and should be
                accompanied by proof of service on the applicants, in the form of an
                affidavit, or for lawyers,
                [[Page 74146]]
                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 at [email protected].
                ADDRESSES: The Commission: [email protected]. Applicants: Attn:
                Joshua B. Deringer, Esq., [email protected]; Curtis
                Fintel, [email protected].
                FOR FURTHER INFORMATION CONTACT: Toyin Momoh, Senior Counsel, at (202)
                551-3775 or Trace Rakestraw, 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.
                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 one or more Regulated Funds (or its
                Wholly-Owned Investment Sub (defined below)) participated together with
                one or more Affiliated Funds and/or one or more other Regulated Funds
                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 without
                obtaining and relying on the Order.\3\
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                 \1\ ``Regulated Funds'' means the Existing Regulated Funds and
                any Future Regulated Funds. ``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 business
                development company (``BDC''); (b) whose investment adviser is an
                Adviser; and (c) that intends to participate in the co-investment
                program. ``Adviser'' means Variant and any other investment adviser
                that is (i) controlling, under common control with, or controlled by
                Variant, (ii) registered as an investment adviser under the
                Investment Advisers Act of 1940 (the ``Advisers Act''), and (iii)
                not a Regulated Fund or a subsidiary of a Regulated Fund. 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.
                 \2\ ``Affiliated Fund'' means any Future Affiliated Fund or any
                Variant Proprietary Account. ``Future Affiliated Fund'' means any
                entity (a) whose investment adviser is an Adviser; (b) that would be
                an investment company but for section 3(c)(1), 3(c)(5)(C) or 3(c)(7)
                of the Act; and (c) that intends to participate in the co-investment
                program. ``Variant Proprietary Account'' means any account of an
                Adviser or its affiliates or any company that is a direct or
                indirect, wholly- or majority-owned subsidiary of the Adviser or its
                affiliates, which, from time to time, may hold various financial
                assets in a principal capacity.
                 \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
                the terms and conditions of the application.
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                Applicants
                 2. VAIF was organized under the Delaware Statutory Trust Act and is
                a non-diversified, closed-end management investment company registered
                under the Act. VAIF's Board \4\ will be comprised of a majority of
                members who are Independent Trustees.\5\
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                 \4\ ``Board'' means the board of trustees (or the equivalent) of
                a Regulated Fund.
                 \5\ ``Independent Trustee'' 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 Trustee of a Regulated
                Fund will have a direct or indirect financial interest in any Co-
                Investment Transaction or any interest in any portfolio company,
                other than indirectly through share ownership in one of the
                Regulated Funds.
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                 3. VIF was organized under the Delaware Statutory Trust Act and is
                a non-diversified, closed-end management investment company registered
                under the Act. VIF's Board will be comprised of a majority of members
                who are Independent Trustees.
                 4. Variant, an Oregon limited liability company that is registered
                under the Advisers Act, serves as the investment adviser to each of the
                Existing Regulated Funds and either it or another will serve as the
                investment adviser to any Future Regulated Fund or Future Affiliated
                Fund.
                 5. Variant Proprietary Accounts will hold various financial assets
                in a principal capacity. Variant and its affiliates may operate through
                wholly- or majority-owned subsidiaries. Currently, there are no Variant
                Proprietary Accounts or subsidiaries that exist and currently intend to
                participate in the co-investment program.
                 6. Applicants state that a Regulated Fund may, from time to time,
                form one or more Wholly-Owned Investment Subs.\6\ 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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                 \6\ ``Wholly-Owned Investment Sub'' means an entity (i) 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); (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 (defined below), maintain a license under
                the SBA Act (defined below) and issue debentures guaranteed by the
                SBA (defined below)); (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; and (iv)
                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 Small Business Administration
                (the ``SBA'') to operate under the Small Business Investment Act of
                1958, as amended, (the ``SBA Act'') as a small business investment
                company.
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                Applicants' Representations
                A. Allocation Process
                 7. Applicants state that the Adviser is presented with a
                substantial number of investment opportunities each year on behalf of
                its clients, and that the Adviser must determine how to allocate those
                opportunities in a manner that, over time, is fair and equitable to all
                of its clients. Such investment opportunities may be Potential Co-
                Investment Transactions.
                 8. Applicants represent that the Adviser has established processes
                for allocating initial investment opportunities, opportunities for
                subsequent investment 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 Affiliated Funds and (ii) comply
                with the Conditions. In particular, consistent
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                with Condition 1, if a Potential Co-Investment Transaction falls within
                the then-current Objectives and Strategies \7\ and any Board-
                Established Criteria \8\ of a Regulated Fund, the policies and
                procedures will require that the Adviser to such Regulated Fund
                receives sufficient information to allow such Adviser's investment
                committee to make its independent determination and recommendations
                under the Conditions.
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                 \7\ ``Objectives and Strategies'' means with respect to any
                Regulated Fund, its investment objectives and strategies, as
                described in its most current registration statement on Form N-2,
                other 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 its most current report to
                stockholders.
                 \8\ ``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 Trustees. The Independent Trustees 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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                 9. 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. 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.
                 10. Applicants state that, for each Regulated Fund and Affiliated
                Fund whose Adviser recommends participating in a Potential Co-
                Investment Transaction, the Adviser will submit a proposed order amount
                to an internal investment committee which the Adviser will establish to
                handle the allocation of investment opportunities in Potential Co-
                Investment Transactions. Applicants state further that, at this stage,
                each proposed order amount may be reviewed and adjusted, in accordance
                with the Adviser's written allocation policies and procedures, by the
                Adviser's investment committee.\9\ 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.\10\
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                 \9\ The reason for any such adjustment to a proposed order
                amount will be documented in writing and preserved in the records of
                the Adviser.
                 \10\ ``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).
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                 11. 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.\11\ 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 an Adviser will establish, implement and maintain.
                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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                 \11\ Each Adviser 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 Trustees with information concerning the
                Affiliated Fund's and Regulated Funds' order sizes to assist the
                Eligible Trustees with their review of the applicable Regulated
                Fund's investments for compliance with the Conditions. ``Eligible
                Trustees'' 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
                 12. Applicants state that from time to time the Regulated Funds and
                Affiliated Funds may have opportunities to make Follow-On Investments
                \12\ in an issuer in which a Regulated Fund and one or more other
                Regulated Funds and/or Affiliated Funds previously have invested.
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                 \12\ ``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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                 13. 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.\13\ 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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                 \13\ ``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 were acquired prior to
                participating in any Co-Investment Transaction in transactions: (i)
                In which the only term negotiated by or on behalf of such funds was
                price in reliance on one of the JT No-Action Letters (defined
                below); or (ii) 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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                 14. 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 \14\ or (ii) a Non-
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                Negotiated Follow-On Investment.\15\ 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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                 \14\ A ``Pro Rata Follow-On Investment'' is a Follow-On
                Investment (i) in which the participation of each Affiliated Fund
                and each Regulated 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 Trustees in accordance with Condition
                8(c).
                 \15\ 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
                 15. Applicants propose that Dispositions \16\ would be divided into
                two categories. If the Regulated Funds and the 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 Dispositions with respect to the same issuer would be
                governed by Condition 6 under the Standard Review Dispositions.\17\
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                 \16\ ``Disposition'' means the sale, exchange or other
                disposition of an interest in a security of an issuer.
                 \17\ 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 Trustees 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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                 16. 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 \18\ or (ii) the securities
                are Tradable Securities \19\ 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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                 \18\ A ``Pro Rata Disposition'' is a Disposition (i) in which
                the participation of each Affiliated Fund and each Regulated 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 Trustees.
                 \19\ ``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 Adviser 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
                 17. 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
                 18. 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 in the same percentages as the
                Regulated Fund's other shareholders (not including the Holders) when
                voting on matters specified in the Condition.
                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 applicable,
                vis-[agrave]-vis each participating Regulated Fund. Each of the
                participating Regulated Funds and Affiliated Funds may be deemed to be
                affiliated persons vis-[agrave]-vis a Regulated
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                Fund within the meaning of section 2(a)(3) by reason of common control
                because (i) Variant is the investment adviser to, and may be deemed to
                control, each of the Existing Regulated Funds and an Adviser to the
                Regulated Funds will be the investment adviser to, and may be deemed to
                control, any Future Regulated Fund; (ii) any Affiliated Fund will be
                managed by, and may be deemed to be controlled by, an Adviser to
                Affiliated Funds; and (iii) an Adviser to Affiliated Funds and an
                Adviser to Regulated Funds are under common control. Thus, each
                Regulated Fund would be related to each other 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. Each of
                the Affiliated Funds could also be deemed to be a person related to the
                Regulated Funds in a manner described by section 57(b) and related to
                the 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.
                 4. Because the Variant Proprietary Accounts will be controlled by
                the Adviser or its affiliates and, therefore, may be under common
                control with the Existing Regulated Funds, any future Adviser, and any
                Future Regulated Funds, the Variant Proprietary Accounts could be
                deemed to be persons related to the Regulated Funds (or a company
                controlled by the Regulated Funds) in a manner described by section
                17(d) or section 57(b) and also prohibited from participating in the
                co-investment program.
                 5. In passing upon applications under rule 17d-1, the Commission
                considers whether a 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.
                 6. 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
                Adviser. 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) Each Adviser will establish, maintain and implement policies
                and procedures reasonably designed to ensure that the Adviser is
                promptly notified of all Potential Co-Investment Transactions that fall
                within the then-current Objectives and Strategies and Board-Established
                Criteria of any Regulated Fund the Adviser manages.
                 (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 an 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 an Adviser 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 Trustees with information
                concerning the Affiliated Funds' and Regulated Funds' order sizes to
                assist the Eligible Trustees 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
                Trustees 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 the 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
                shareholders and do not involve overreaching in respect of the
                Regulated Fund or its shareholders on the part of any person concerned;
                 (ii) the transaction is consistent with:
                 (A) The interests of the Regulated Fund's shareholders; 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
                commitment of the Affiliated Fund and Regulated Funds is 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
                [[Page 74150]]
                right to participate in the governance or management of the portfolio
                company so long as: (x) The Eligible Trustees 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 or indirect \20\ financial
                benefit to an Adviser, any other Regulated Fund, 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).
                ---------------------------------------------------------------------------
                 \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\
                ---------------------------------------------------------------------------
                 \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 an Adviser, the 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.
                ---------------------------------------------------------------------------
                 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 Affiliated Funds have previously
                participated in a Co-Investment Transaction with respect to the issuer,
                then:
                 (i) The Adviser to such Regulated Fund or Affiliated Fund \23\ will
                notify each Regulated Fund that holds an investment in the issuer of
                the proposed Disposition at the earliest practical time; and
                ---------------------------------------------------------------------------
                 \23\ Any Variant 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).
                ---------------------------------------------------------------------------
                 (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 Fund.
                 (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; \24\ (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
                ---------------------------------------------------------------------------
                 \24\ 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 Trustees and the Regulated Fund will
                participate in such Disposition solely to the extent that a Required
                Majority determines that it is in the Regulated Fund's best interests.
                 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 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
                [[Page 74151]]
                 (iii) each Adviser 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 Fund, 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
                Trustees, 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 as those applicable to the
                Affiliated Funds and any other Regulated Fund;
                 (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 \25\ 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
                ---------------------------------------------------------------------------
                 \25\ 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.
                ---------------------------------------------------------------------------
                 (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 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,\26\
                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
                ---------------------------------------------------------------------------
                 \26\ 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 any Affiliated Fund,
                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 any Affiliated Fund,
                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.
                ---------------------------------------------------------------------------
                 (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 Trustees 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 Trustees 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 an Adviser 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 any Affiliated Funds
                holding investments in the issuer have not previously
                [[Page 74152]]
                participated in a Co-Investment Transaction with respect to the issuer:
                 (i) The Adviser to each such Regulated Fund or Affiliated Fund 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 Adviser 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
                Trustees, 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' 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 an Adviser 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
                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 any Affiliated Funds that the Regulated Fund considered but
                declined to participate in, so that the Independent Trustees, 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 -z6(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.
                 (d) The Independent Trustees 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. Trustee Independence. No Independent Trustee 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
                [[Page 74153]]
                distribution of any such securities registered for sale under the
                Securities Act) will, to the extent not payable by an Adviser under its
                respective advisory agreements with the Regulated Funds and the
                Affiliated Funds, be shared by the Regulated Funds and any
                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.\27\ 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 an 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 Adviser, 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 Adviser, investment advisory compensation paid in
                accordance with investment advisory agreements between the applicable
                Regulated Fund(s) or Affiliated Fund(s) and its Adviser.
                ---------------------------------------------------------------------------
                 \27\ Applicants are not requesting and the Commission is not
                providing any relief for transaction fees received in connection
                with any Co-Investment Transaction.
                ---------------------------------------------------------------------------
                 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 same 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.
                Eduardo A. Aleman,
                Deputy Secretary.
                [FR Doc. 2021-28324 Filed 12-28-21; 8:45 am]
                BILLING CODE 8011-01-P
                

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