– Agree. K Walsh concurs.
Sent: Monday, January 09, 2012 7:23 PM
To: Verne, B. Michael; Walsh, Kathryn
Subject: Items 6 and 7 and top level associate Question
Ihave a "top level associate" question related to Items 6 and 7 andalso wanted to confirm the informal interpretation from September 12, 2011 (seebelow link). I am working through a scenario where there are multipleinvestment funds within a firm. Fund 1 is planning to make an investment inTarget. Fund 1 and three other fund entities (the "Other Funds") eachhas an existing minority position in Opco (i.e. 5% or more but less than 50%),and in the aggregate own a majority of Opco. Opco has an overlapping NAICS codewith Target. A natural person ("Principal") has a contractual rightto manage the general partners and investment managers of Fund 1 and the OtherFunds.
Ibelieve that the analysis for determining associates is to follow the controlof Fund 1 and the Other Funds through HSR and investment management principles,which would lead up to the Principal and then back down to Fund 1 and the OtherFunds and to the respective general partners and investment managers. Forreporting under Item 6, though, the "top level associate" of Fund 1in each case would be each of the Other Funds because each is its own UPE forHSR purposes and has the actual ownership of the interest in Opco. Forreporting under Item 7, though, since none of Fund 1 or the Other Funds derivesrevenue from Opco, notwithstanding that the aggregate ownership among Fund 1and the Other Funds is greater than 50%, there would be no reporting ofholdings, associate orotherwise, under Item 7 with respect to Opco.