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Starlight Investments Capital LP

2021-01-19 | Decision | 81-102 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/starlight-investments-capital-lp-1

National Instrument 81-102 Investment Funds, ss. 2.2(1)(a), 2.5(2)(a), and 2.5(2)(c) and 19.1.


The Securities Commission has granted an exemption to certain investment funds managed by Starlight Investments Capital LP, allowing them to invest in related underlying investment funds that are not reporting issuers and are not subject to National Instrument 81-102 (NI 81-102). This exemption is subject to several conditions, including third-party valuation of the underlying funds’ private equity investments, approval by an Independent Review Committee (IRC), and compliance with illiquid asset restrictions.

Key points of the decision include:

– The exemption allows the investment funds (referred to as Top Funds) to invest in securities of related underlying pooled funds beyond the typical 10% limit of voting or equity securities and despite the underlying funds not being subject to NI 81-102 or being reporting issuers.
– The underlying pooled funds are primarily invested in illiquid real estate and infrastructure securities and are valued monthly, with quarterly redemption opportunities.
– The exemption is conditional on no duplicate fees being charged, transparency in reporting to investors, and IRC oversight and approval of investments.
– The Top Funds’ prospectus must disclose the potential for investment in the underlying pooled funds, and the funds must maintain detailed records of transactions involving the related underlying pooled funds.

The decision is underpinned by sections 2.2(1)(a), 2.5(2)(a), 2.5(2)(c), and 19.1 of NI 81-102, as well as the requirements of National Instrument 81-107 regarding IRCs. The Ontario Securities Commission is the principal regulator for the application, and the exemption applies across multiple Canadian jurisdictions.