2506006 Informal Interpretation

I am writing to confirm whether an HSR filing would be required for the transaction described below.

Background: The target is a portfolio company (“Target Portco”) whose equity interests are majority-owned by a limited partnership (“Seller Fund A”) that is part of a broader family of commonly managed funds. The remainder of the equity interests of Target Portco (less than 50%) are owned by another limited partnership (“Seller Fund B”), which is part of the same broader family of funds. All funds involved are managed by the same investment adviser (“Fund Manager”). Seller Fund A and Seller Fund B (each individually, a “Seller Fund,” and collectively, the “Seller Funds”) have some overlap in the identity of their limited partners, but each Seller Fund is its own UPE for HSR purposes because they are each a limited partnership for which no one person or entity has the right to 50% or more of the entity’s profits or assets upon dissolution.

Transaction: Fund Manager intends to transfer both Seller Funds’ equity interests in Target Portco from the Seller Funds to a subsidiary of a different fund (“Buyer Fund”) that is also part of the same broader family of funds and managed by Fund Manager. Buyer Fund likewise has some overlap in limited partners with each Seller Fund, but is its own UPE. Although the Fund Manager views this as an administrative, internal transfer of Target Portco from one of its funds to another, a fair market valuation of Target Portco was performed for tax purposes, and Buyer Fund will pay consideration to the Seller Funds that is above the size-of-transaction threshold. While Buyer Fund is a new entity that was established within the past year, it has acquired other entities prior to the contemplated acquisition of Target Portco. Buyer Fund’s previous acquisitions were of non-US entities with no US business activities, but because Buyer Fund acquired them before it will acquire Target Portco, Buyer Fund will meet one prong of the size-of-person test at the time the transfer of Target Portco closes. The other prong will be met by Seller Fund A.

Analysis: Our understanding is that the transaction would not qualify as an intraperson transaction under 802.30 because each fund is its own UPE and therefore the acquiring person and acquired person are not the same, despite the fact that all funds involved are functionally under common management by the Fund Manager. The size-of-transaction and size-of-person thresholds are met, and in the absence of any other exemption it appears that a filing is required. Before we conclude that a filing is required, is there any room for applying the intraperson transaction exemption where two related funds that are the acquiring and acquired person are formally each their own UPE but functionally under common management by the same fund manager and have certain limited partners in common?