ICI Urges SEC for Flexible Co-Investment Framework to Boost Access

ICI Advocates for Improved Access to Private Markets

The Investment Company Institute (ICI) reached out to the Securities and Exchange Commission (SEC) to promote the establishment of a principles-based co-investment framework. This initiative aims to enhance the accessibility of retail investment products and eliminate unnecessary obstacles, thereby enabling average Americans to invest in private markets more easily.

Importance of the Co-Investment Framework

According to ICI President and CEO Eric Pan, implementing a co-investment relief framework is crucial for expanding retail investors' access to private market opportunities, all while preserving the safeguards inherent in the Investment Company Act. Pan emphasized that adopting this framework represents a significant step towards modernizing regulations concerning private investments and facilitating broader participation from ordinary Americans.

Current Challenges for Retail Investors

In recent years, as the US initial public offering (IPO) market has decelerated, private markets have experienced substantial growth. Unfortunately, numerous complex barriers continue to prevent retail investors from engaging in these lucrative markets, limiting their potential to benefit from the gains available outside public markets. Therefore, ICI requests that the SEC support the co-investment exemptive relief application filed by FS Credit Opportunities Corp., which would alleviate some of these barriers.

The Need for Co-Investment Relief

Co-investment relief has become essential for managers of regulated funds that are looking to invest in privately placed assets. Many of these managers also operate private funds with overlapping investment strategies, complicating their ability to navigate the existing regulatory framework. Under the present structure, there is a lack of flexibility, making it challenging for these investment managers to leverage co-investment opportunities effectively. ICI strongly urges the SEC to approve FS's application, which would grant managers greater leeway to participate in co-investment scenarios.

Benefits of an Updated Co-Investment Framework

Should the SEC grant approval for the application filed by FS Credit Opportunities Corp., it is anticipated that investment managers will be able to engage in co-investment programs more effectively. Furthermore, the SEC is encouraged to extend this revised relief scope to other funds currently operating under similar constraints, fostering a more dynamic investment environment.

Future Engagement with the SEC

ICI expresses optimism about continuing its dialogue with the SEC regarding co-investment opportunities and reinforcing policies that promote broader participation in private market investments. By working collaboratively, ICI and the SEC hope to realize a marketplace that supports retail investors in creating wealth through private market opportunities.

Frequently Asked Questions

What is the co-investment framework proposed by ICI?

The co-investment framework is intended to provide flexibility for retail investment products, making it easier for investors to access private markets.

Why does ICI want the SEC to approve the co-investment application?

ICI believes that approval would remove unnecessary hurdles for retail investors, enabling them to benefit from private market gains.

How has the IPO market impacted private investing?

The slowdown of the IPO market has driven increased activity and interest in private markets, creating more opportunities outside traditional public investing.

What would be the benefits for fund managers if the co-investment relief is approved?

Fund managers would gain greater flexibility to engage in co-investment opportunities, which can help enhance the performance of their funds.

How can regular investors benefit from this proposed framework?

A more flexible co-investment framework allows regular investors access to previously unreached investment opportunities in private markets, fostering financial growth.

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