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Federal Register / Vol. 86, No. 24 / Monday, February 8, 2021 / Notices
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under the Act.4 The Board 5 of Muzinich BDC currently consists of five directors, three of whom are Independent Directors.6
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, whollyor 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 CoInvestment Transaction with a Regulated Fund other than its parent or any Affiliated Fund because it would be a company controlled by its parent 4 Section 2a48 defines a BDC to be any closedend investment company that operates for the purpose of making investments in securities described in section 55a1 through 55a3 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 2a19 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.
7 Wholly-Owned Investment Sub means any entity i that is a wholly-owned subsidiary as defined in section 2a43 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 Funds Board has the sole authority to make all determinations with respect to the entitys participation under the Conditions; and v that would be an investment company but for section 3c1 or 3c7 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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Regulated Fund for purposes of section 57a4 and rule 17d1. 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 WhollyOwned Investment Subs participation in any such transaction be treated, for purposes of the Order, as though the parent Regulated Fund were participating directly.
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
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and Strategies 8 and any BoardEstablished 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 Funds 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 Funds then-current circumstances. If the Adviser to a Regulated Fund deems the Regulated Funds 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.
8. Applicants state that, for each Regulated Fund and Affiliated Fund whose Adviser recommends participating in a Potential Co8 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 Funds Objectives and Strategies. If no BoardEstablished Criteria are in effect, then the Regulated Funds Adviser will be notified of all Potential CoInvestment Transactions that fall within the Regulated Funds 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 Boards 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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