Private Equity Firm Seeks Relief to Allow Co-Investments

A private equity firm has submitted an exemptive application to the SEC seeking permission to allow multiple funds that it advises to co-invest in the same investment opportunities.  The firm submitted the application because the Investment Company Act would have otherwise prohibited co-investment by the applicant’s Business Development Company with other unregistered funds.  Relevant conditions would include fair allocation of opportunities based on available capital and approval by independent directors. 

 
OUR TAKE: Newly registered private equity managers may not be aware that the SEC restricts co-investment by multiple funds.  Although this situation involved a registered BDC, the SEC will scrutinize how registered investment advisers allocate investment opportunities among client funds. 

 

 

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