Correspondence 0001104659-23-111788 from Runway Growth Finance Corp. (RWAY, RWAYL, RWAYZ) (CIK 0001653384) (RWAY)
Runway Growth Finance Corp. (RWAY, RWAYL, RWAYZ) (CIK 0001653384)
Date: Oct. 26, 2023 · CIK: 0001653384 · Accession: 0001104659-23-111788
AI Filing Summary & Sentiment
File numbers found in text: 333-274351
Letter
Securities and Exchange Commission Division of Investment Management 100 F Street NE Washington, DC 20549 Re: Runway Growth Finance Corp. Registration Statement on Form N-2 (File No. 333-274351)
Dear Messrs. Greenspan and Ellington:
On behalf of Runway Growth Finance Corp. (the “Company”), set forth below are the Company’s responses to the oral accounting and legal comments provided by the staff of the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the “SEC”) on September 20, 2023, October 6, 2023, October 13, 2023 and October 19, 2023 regarding the Company’s registration statement on Form N-2 (as amended, the “Registration Statement”), including the preliminary prospectus contained therein (the “Prospectus”), which was filed on September 6, 2023 as well as the Company’s annual report on Form 10-K (the “Form 10-K”) for the year end December 31, 2022, which is incorporated by reference to the Registration Statement. The Staff’s comments are set forth below and are followed by the Company’s responses. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Registration Statement.
LEGAL COMMENTS
Prospectus
1. On page 1 of the Prospectus, the Company includes a statement that “We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports.” Please note that you are responsible for the entire contents of the Registration Statement. As such, please revise the disclosure to clarify that you are liable for such information.
Response: The Company respectfully advises the Staff that it has revised the disclosure in the Prospectus in response to the Staff’s comment.
2. On page 4 of the Registration Statement, the Company has described a strategic relationship between Runway Growth Capital, LLC, the Company’s investment adviser (the “Investment Adviser”), the Company and Oaktree Capital Management, L.P. and its affiliates (“Oaktree”), including OCM Growth Holdings, LLC (“OCM Growth”). Please confirm that all material elements of the strategic relationship have been included in the disclosure. In addition, please describe supplementally what makes the relationship between Oaktree, the Investment Adviser and the Company strategic.
Response: The Company respectfully advises the Staff that it has disclosed all material elements of the strategic relationship with Oaktree in the Registration Statement. In addition, the Company believes that the Oaktree nominee serving on the Company’s Board of Directors and Oaktree’s designee on the Investment Adviser’s investment committee has, over the years, provided the Company with additional insight into market conditions, investment and strategic opportunities, industry and borrower diligence, and vendor resources.
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
October 26, 2023
Page 2
3. On page 19 of the Prospectus, the Company included the following additional risk factors:
“The number of shares being registered for sale is significant in relation to the number of our outstanding shares of common stock.”
Please revise this risk factor to add additional details regarding the selling stockholders’ ownership.
Response: The Company respectfully advises the Staff that it has revised this risk factor in the Prospectus in response to the Staff’s comment.
4. On p.64 of the Prospectus, the Company provides the numerical breakdown of selling stockholders’ beneficial ownership. Please confirm supplementally whether the shares included in the table on page 64 are currently held by the selling stockholders or subject to future issuance upon the exercise of options, warrants or other similar securities. In addition, please provide the date(s) such shares were acquired by the selling stockholders.
Response: The Company respectfully confirms that the shares of the Company’s common stock included in the table on page 64 of the Prospectus are held directly by the selling stockholders and currently are issued and outstanding and not subject to future issuance pursuant to the exercise of options, warrants or other similar securities.
The Company further advises the Staff that of the 21,030,568 shares of the Company’s common stock held by OCM Growth and to be registered under the Registration Statement, 19,177,871 shares were acquired by OCM Growth prior to the Company’s initial public offering in October 2021, in the Company’s private offerings pursuant to capital commitments by OCM Growth (collectively, the “OCM Commitment”) made in December 2016 (as amended in 2017) and July 2019 and pursuant to the Company’s dividend reinvestment plan. In addition, subsequent to the Company’s initial public offering, OCM Growth acquired the additional shares being registered either pursuant to the Company’s dividend reinvestment plan or pursuant to a Rule 10b5-1 plan with the last purchase under the Rule 10b5-1 plan occurring in March 2022. Oaktree Opportunities Fund Xb Holdings (Delaware), LP acquired 24,100 shares in secondary transactions in 2020 and 2022.
5. Given the selling stockholders’ large ownership of shares of the Company’s common stock, approximately 52% of the Company’s issued and outstanding shares, and the fact that Oaktree is an affiliate of the Company, please discuss in correspondence whether the offering contemplated by the Registration Statement should be considered a primary offering rather than a secondary offering and whether the selling stockholders would be considered statutory underwriters for purposes of the Securities Act of 1933 (the “1933 Act”). For guidance, please see Questions 612.09 and 612.12 of the Compliance and Disclosure Interpretations (the “CD&Is”) on the 1933 Act Rules as well as Questions 216.14 and 116.15 of the Compliance and Disclosure Interpretations on the 1933 Act Forms.
Response: The Company respectfully submits to the Staff that it believes that the proposed resale of the shares of the Company’s common stock by the selling stockholders as contemplated in the Registration Statement is not an indirect primary offering and is appropriately characterized as a secondary offering under Rule 415(a)(1)(i) promulgated under the 1933 Act. In addition, the Company respectfully advises the Staff that under the terms of the offering contemplated by the Registration Statement, neither the Company nor the selling stockholders believe that the selling stockholders should be deemed to be statutory underwriters for purposes of the 1933 Act.
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
October 26, 2023
Page 3
Rule 415(a)(1)(i) of the 1933 Act provides that: “Securities may be registered for an offering to be made on a continuous or delayed basis in the future, provided, that: the registration statement pertains only to securities which are to be offered or sold solely by or on behalf of a person or persons other than the registrant, a subsidiary of the registrant or a person of which the registrant is a subsidiary.” Further, the CD&I 216.14 on the 1933 Act Forms, allows for sales by affiliates “under General Instruction I.B.3 to Form S-3, even in cases where the affiliate owns more than 50% of the issuer's securities, unless the facts and circumstances indicate that the affiliate is acting as an underwriter or by or on behalf of the issuer.” Additionally, under CD&I 116.15 on the 1933 Act Rules, “Aside from parents and subsidiaries, affiliates of issuers are not necessarily treated as being the alter egos of the issuers. Under appropriate circumstances, affiliates may make offerings that are deemed to be genuine secondaries.”
The Company also reviewed CD&I 612.09 on the 1933 Act Rules, which provides that “[t]he question of whether an offering styled a secondary one is really on behalf of the issuer is a difficult factual one, not merely a question of who receives proceeds” and that consideration be given to the following factors:
· how long the selling stockholders have held the shares;
· the circumstances under which the selling stockholders acquired the shares;
· the selling stockholder’s relationship to the Company;
· the number of shares being sold;
· whether the selling stockholders are in the business of underwriting securities; and
· whether under all the circumstances it appears that selling stockholders are acting as conduits for the Company.
For the reasons set forth below, the Company respectfully submits to the Staff that the selling stockholders’ offering pursuant to the Registration Statement is a valid secondary offering and that the selling stockholders should not be deemed statutory underwriters under the 1933 Act:
How long the selling stockholders have held the shares and the circumstances under which the selling stockholders acquired the shares
As described in the Company’s response number 4 above, OCM Growth made an initial capital commitment to the Company approximately seven years ago and acquired the majority of its shares of Company’s common stock pursuant to the OCM Commitment over the next five years. The documents governing the OCM Commitment contained, among other things, customary investment and private placement representations of OCM Growth to the Company. OCM Growth acquired the remainder of the shares, being registered, either pursuant to the Company’s dividend reinvestment plan or pursuant to a Rule 10b5-1 plan following the Company’s initial public offering. As noted above, Oaktree Opportunities Fund Xb Holdings (Delaware) LP acquired its shares that are being registered in secondary transactions in 2020 and 2022. Each of the selling shareholders acquired the shares of the Company’s common stock for investment purposes and not with a view for resale. In addition, the selling stockholders have not entered into any underwriting relationships or arrangements with the Company, have not received any commission or other payment from the Company in connection with the resale of any of its securities, and the Company will receive no proceeds from the resale of the shares, if any are received, by the selling stockholders. These circumstances are quite distinct from those involving a primary offering by or on behalf of the Company.
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
October 26, 2023
Page 4
The selling stockholder’s relationship to the Company
As described in the Company’s response number 2 above, as well as in the Registration Statement, the Company, its Investment Adviser and Oaktree, including OCM Growth (i.e., one of the selling stockholders), entered into strategic relationship in December of 2016. Although the selling stockholders may be deemed “affiliates” of the Company due to the large percentage of shares of common stock held by them; neither Oaktree nor any of the selling stockholders participate in the day-to-day management of the Company.
In addition, based upon the information supplied to the Company by the selling stockholders, each of the selling stockholders purchased the securities for its own account and not with a view to resale or distribution. The Company does not have an underwriting relationship with the selling stockholders or any contractual, legal or other relationship that would control the timing, nature or amount of resales of the shares following the effectiveness of the Registration Statement or even whether any shares are resold at all under the Registration Statement. Further, as noted above in the case of OCM Growth, OCM Growth represented to the Company in the subscription agreements, as amended, entered into between the Company and OCM Growth for the OCM Commitment (collectively, the “Subscription Agreement”), dated as of December 15, 2016 and July 18, 2019, that it was acquiring the securities for its own account and not with a view to resale or distribution.
Further, the selling stockholders are responsible for paying all fees and expenses related to the Registration Statement and any broker-dealer fees or underwriting discounts or commissions directly to any broker-dealers they engage to assist in the sale of any shares. To the extent the selling stockholders sell any shares pursuant to the Registration Statement, the selling stockholders will retain all proceeds from such sales and the Company will not receive any of the proceeds from any resale of the shares.
The number of shares being sold
As disclosed in the registration statement, the selling stockholders own 21,054,668 shares of the Company’s common stock or approximately 52% of the Company’s outstanding common stock as of August 31, 2023. While it is true that the selling stockholders are seeking to register a large number of the Company’s shares, the Staff’s own interpretation in CD&I 612.12 on the 1933 Act Rules, allows for secondary offerings by a control person. Notably, the Staff indicated that,
“A controlling person of an issuer owns a 73% block. That person will sell the block in a registered “at-the-market” equity offering. Rule 415(a)(4) applies only to offerings by or on behalf of the registrant. A secondary offering by a control person that is not deemed to be by or on behalf of the registrant is not restricted by Rule 415(a)(4).”
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
October 26, 2023
Page 5
The Company and the selling stockholders believe that these interpretive provisions make clear that a single holder of in excess of 50% of the public float of a company’s common stock can effect a valid secondary offering of its shares unless other facts, beyond the mere level of ownership, indicate that the selling stockholder is acting as a conduit of the issuer.
The Staff has further acknowledged this conclusion by accepting as valid many secondary offerings where a significant number of shares was being registered but the facts did not otherwise demonstrate that the selling stockholders were acting as conduits for the issuer to effect a primary offering.
Whether the selling stockholders are in the business of underwriting securities
Based upon the information supplied to the Company, the selling stockholders are a part of a leadin
Show Raw Text
CORRESP
1
filename1.htm
Eversheds Sutherland (US) LLP
700 Sixth Street, NW, Suite 700
Washington, DC 20001-3980
D: +1 202.383.0845
F: +1 202.637.3593
stephanihildebrandt@eversheds-sutherland.com
October 26, 2023
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
Securities and Exchange Commission
Division of Investment Management
100 F Street NE
Washington, DC 20549
Re: Runway Growth Finance Corp.
Registration Statement on Form N-2
(File No. 333-274351)
Dear Messrs. Greenspan and Ellington:
On behalf of Runway Growth Finance Corp. (the
“Company”), set forth below are the Company’s responses to the oral accounting and legal comments provided
by the staff of the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission
(the “SEC”) on September 20, 2023, October 6, 2023, October 13, 2023 and October 19, 2023
regarding the Company’s registration statement on Form N-2 (as amended, the “Registration Statement”),
including the preliminary prospectus contained therein (the “Prospectus”), which was filed on September 6,
2023 as well as the Company’s annual report on Form 10-K (the “Form 10-K”) for the year end
December 31, 2022, which is incorporated by reference to the Registration Statement. The Staff’s comments are set forth below
and are followed by the Company’s responses. Capitalized terms used but not defined herein have the meanings ascribed to such terms
in the Registration Statement.
LEGAL COMMENTS
Prospectus
1. On page 1 of the Prospectus, the
Company includes a statement that “We have not independently verified the accuracy
or completeness of the data contained in these industry publications and reports.”
Please note that you are responsible for the entire contents of the Registration Statement.
As such, please revise the disclosure to clarify that you are liable for such information.
Response: The Company respectfully
advises the Staff that it has revised the disclosure in the Prospectus in response to the Staff’s comment.
2. On page 4 of the Registration Statement,
the Company has described a strategic relationship between Runway Growth Capital, LLC, the
Company’s investment adviser (the “Investment Adviser”),
the Company and Oaktree Capital Management, L.P. and its affiliates (“Oaktree”),
including OCM Growth Holdings, LLC (“OCM Growth”). Please confirm that
all material elements of the strategic relationship have been included in the disclosure.
In addition, please describe supplementally what makes the relationship between Oaktree,
the Investment Adviser and the Company strategic.
Response: The Company respectfully
advises the Staff that it has disclosed all material elements of the strategic relationship with Oaktree in the Registration Statement.
In addition, the Company believes that the Oaktree nominee serving on the Company’s Board of Directors and Oaktree’s designee
on the Investment Adviser’s investment committee has, over the years, provided the Company with additional insight into market
conditions, investment and strategic opportunities, industry and borrower diligence, and vendor resources.
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
October 26, 2023
Page 2
3. On page 19 of the Prospectus, the
Company included the following additional risk factors:
“The number of shares being
registered for sale is significant in relation to the number of our outstanding shares of common stock.”
Please revise this risk factor to add
additional details regarding the selling stockholders’ ownership.
Response: The Company respectfully
advises the Staff that it has revised this risk factor in the Prospectus in response to the Staff’s comment.
4. On p.64 of the Prospectus, the Company
provides the numerical breakdown of selling stockholders’ beneficial ownership. Please
confirm supplementally whether the shares included in the table on page 64 are currently
held by the selling stockholders or subject to future issuance upon the exercise of options,
warrants or other similar securities. In addition, please provide the date(s) such shares
were acquired by the selling stockholders.
Response: The Company respectfully
confirms that the shares of the Company’s common stock included in the table on page 64 of the Prospectus are held directly
by the selling stockholders and currently are issued and outstanding and not subject to future issuance pursuant to the exercise of options,
warrants or other similar securities.
The Company further advises the Staff
that of the 21,030,568 shares of the Company’s common stock held by OCM Growth and to be registered under the Registration Statement,
19,177,871 shares were acquired by OCM Growth prior to the Company’s initial public offering in October 2021, in the Company’s
private offerings pursuant to capital commitments by OCM Growth (collectively, the “OCM Commitment”) made in
December 2016 (as amended in 2017) and July 2019 and pursuant to the Company’s dividend reinvestment plan. In addition,
subsequent to the Company’s initial public offering, OCM Growth acquired the additional shares being registered either pursuant
to the Company’s dividend reinvestment plan or pursuant to a Rule 10b5-1 plan with the last purchase under the Rule 10b5-1
plan occurring in March 2022. Oaktree Opportunities Fund Xb Holdings (Delaware), LP acquired 24,100 shares in secondary transactions
in 2020 and 2022.
5. Given the selling stockholders’
large ownership of shares of the Company’s common stock, approximately 52% of the Company’s
issued and outstanding shares, and the fact that Oaktree is an affiliate of the Company,
please discuss in correspondence whether the offering contemplated by the Registration Statement
should be considered a primary offering rather than a secondary offering and whether the
selling stockholders would be considered statutory underwriters for purposes of the Securities
Act of 1933 (the “1933 Act”). For guidance, please see Questions
612.09 and 612.12 of the Compliance and Disclosure Interpretations (the “CD&Is”)
on the 1933 Act Rules as well as Questions 216.14 and 116.15 of the Compliance and Disclosure
Interpretations on the 1933 Act Forms.
Response: The Company respectfully
submits to the Staff that it believes that the proposed resale of the shares of the Company’s common stock by the selling stockholders
as contemplated in the Registration Statement is not an indirect primary offering and is appropriately characterized as a secondary offering
under Rule 415(a)(1)(i) promulgated under the 1933 Act. In addition, the Company respectfully advises the Staff that under
the terms of the offering contemplated by the Registration Statement, neither the Company nor the selling stockholders believe that the
selling stockholders should be deemed to be statutory underwriters for purposes of the 1933 Act.
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
October 26, 2023
Page 3
Rule 415(a)(1)(i) of the
1933 Act provides that: “Securities may be registered for an offering to be made on a continuous or delayed basis in the future,
provided, that: the registration statement pertains only to securities which are to be offered or sold solely by or on behalf of a person
or persons other than the registrant, a subsidiary of the registrant or a person of which the registrant is a subsidiary.” Further,
the CD&I 216.14 on the 1933 Act Forms, allows for sales by affiliates “under General Instruction I.B.3 to Form S-3, even
in cases where the affiliate owns more than 50% of the issuer's securities, unless the facts and circumstances indicate that the affiliate
is acting as an underwriter or by or on behalf of the issuer.” Additionally, under CD&I 116.15 on the 1933 Act Rules, “Aside
from parents and subsidiaries, affiliates of issuers are not necessarily treated as being the alter egos of the issuers. Under appropriate
circumstances, affiliates may make offerings that are deemed to be genuine secondaries.”
The Company also reviewed CD&I
612.09 on the 1933 Act Rules, which provides that “[t]he question of whether an offering styled a secondary one is really on behalf
of the issuer is a difficult factual one, not merely a question of who receives proceeds” and that consideration be given to the
following factors:
· how long the selling stockholders
have held the shares;
· the circumstances under which the
selling stockholders acquired the shares;
· the selling stockholder’s relationship
to the Company;
· the number of shares being sold;
· whether the selling stockholders
are in the business of underwriting securities; and
· whether under all the circumstances
it appears that selling stockholders are acting as conduits for the Company.
For the reasons set forth below, the
Company respectfully submits to the Staff that the selling stockholders’ offering pursuant to the Registration Statement is a valid
secondary offering and that the selling stockholders should not be deemed statutory underwriters under the 1933 Act:
How long the selling stockholders
have held the shares and the circumstances under which the selling stockholders acquired the shares
As described in the Company’s
response number 4 above, OCM Growth made an initial capital commitment to the Company approximately seven years ago and acquired the
majority of its shares of Company’s common stock pursuant to the OCM Commitment over the next five years. The documents governing
the OCM Commitment contained, among other things, customary investment and private placement representations of OCM Growth to the Company.
OCM Growth acquired the remainder of the shares, being registered, either pursuant to the Company’s dividend reinvestment plan
or pursuant to a Rule 10b5-1 plan following the Company’s initial public offering. As noted above, Oaktree Opportunities Fund
Xb Holdings (Delaware) LP acquired its shares that are being registered in secondary transactions in 2020 and 2022. Each of the selling
shareholders acquired the shares of the Company’s common stock for investment purposes and not with a view for resale. In addition,
the selling stockholders have not entered into any underwriting relationships or arrangements with the Company, have not received any
commission or other payment from the Company in connection with the resale of any of its securities, and the Company will receive no
proceeds from the resale of the shares, if any are received, by the selling stockholders. These circumstances are quite distinct from
those involving a primary offering by or on behalf of the Company.
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
October 26, 2023
Page 4
The selling stockholder’s
relationship to the Company
As described in the Company’s
response number 2 above, as well as in the Registration Statement, the Company, its Investment Adviser and Oaktree, including OCM Growth
(i.e., one of the selling stockholders), entered into strategic relationship in December of 2016. Although the selling stockholders
may be deemed “affiliates” of the Company due to the large percentage of shares of common stock held by them; neither Oaktree
nor any of the selling stockholders participate in the day-to-day management of the Company.
In addition, based upon the information
supplied to the Company by the selling stockholders, each of the selling stockholders purchased the securities for its own account and
not with a view to resale or distribution. The Company does not have an underwriting relationship with the selling stockholders or any
contractual, legal or other relationship that would control the timing, nature or amount of resales of the shares following the effectiveness
of the Registration Statement or even whether any shares are resold at all under the Registration Statement. Further, as noted above
in the case of OCM Growth, OCM Growth represented to the Company in the subscription agreements, as amended, entered into between the
Company and OCM Growth for the OCM Commitment (collectively, the “Subscription Agreement”), dated as of December 15,
2016 and July 18, 2019, that it was acquiring the securities for its own account and not with a view to resale or distribution.
Further, the selling stockholders
are responsible for paying all fees and expenses related to the Registration Statement and any broker-dealer fees or underwriting discounts
or commissions directly to any broker-dealers they engage to assist in the sale of any shares. To the extent the selling stockholders
sell any shares pursuant to the Registration Statement, the selling stockholders will retain all proceeds from such sales and the Company
will not receive any of the proceeds from any resale of the shares.
The number of shares
being sold
As disclosed in the registration statement,
the selling stockholders own 21,054,668 shares of the Company’s common stock or approximately 52% of the Company’s outstanding
common stock as of August 31, 2023. While it is true that the selling stockholders are seeking to register a large number of the
Company’s shares, the Staff’s own interpretation in CD&I 612.12 on the 1933 Act Rules, allows for secondary offerings
by a control person. Notably, the Staff indicated that,
“A controlling person of an
issuer owns a 73% block. That person will sell the block in a registered “at-the-market” equity offering. Rule 415(a)(4) applies
only to offerings by or on behalf of the registrant. A secondary offering by a control person that is not deemed to be by or on behalf
of the registrant is not restricted by Rule 415(a)(4).”
Daniel Greenspan, Senior Counsel
Ken Ellington, Staff Accountant
October 26, 2023
Page 5
The Company and the selling stockholders
believe that these interpretive provisions make clear that a single holder of in excess of 50% of the public float of a company’s
common stock can effect a valid secondary offering of its shares unless other facts, beyond the mere level of ownership, indicate that
the selling stockholder is acting as a conduit of the issuer.
The Staff has further acknowledged
this conclusion by accepting as valid many secondary offerings where a significant number of shares was being registered but the facts
did not otherwise demonstrate that the selling stockholders were acting as conduits for the issuer to effect a primary offering.
Whether the selling
stockholders are in the business of underwriting securities
Based upon the information supplied
to the Company, the selling stockholders are a part of a leadin