Correspondence 0001140361-24-042854 from TORTOISE SUSTAINABLE & SOCIAL IMPACT TERM FUND (TEAF) (CIK 0001704299)
TORTOISE SUSTAINABLE & SOCIAL IMPACT TERM FUND (TEAF) (CIK 0001704299)
Date: Oct. 4, 2024 · CIK: 0001704299 · Accession: 0001140361-24-042854
AI Filing Summary & Sentiment
File numbers found in text: 811-23248
Show Raw Text
CORRESP
1
filename1.htm
Steven F. Carman
Partner
4801 Main Street, Suite 1000
Kansas City, MO 64112
Direct: 816.983.8153
Fax: 516.983.8080
steve.carman@huschblackwell.com
October 4, 2024
Ashley Vroman-Lee, Esq.
Securities and Exchange Commission
Division of Investment Management
100 F. Street, NE
Washington, DC 20549
Re:
Tortoise Sustainable and Social Impact Term Fund (the “Fund”) PRE 14A Comments
:
SEC File No. 811-23248
Dear Ms. Vroman-Lee:
We appreciate the time you spent with us on the phone on Tuesday, September 17. This letter attempts to reflect the comments you provided on the preliminary proxy filed by the Fund on September
11, 2024 (the “Preliminary Proxy”). In this response letter, I have repeated what we understood to be your comments and have separately provided the response of the Fund to each of those comments. Please let me know if we misunderstood any of the
comments.
Comment 1. In reference to the question “Will the proposed new sub-advisory agreement affect the portfolio management and strategy of the Company?” set
forth in the “Answers to Some Important Questions” section of the Preliminary Proxy, please supplementally explain to us and disclose whether the Redwheel-Ecofin Transaction will result in a change in control of RWC.
Response: As more fully reflected in the revised draft of this Question and Answer
presented in response to Comment 2 below, since RWC is an existing subsidiary of Redwheel and RWC is simply acquiring Ecofin’s existing business operations that involve providing sub-advisory services to the Company, the Redwheel-Ecofin
Transaction will not result in any change in control of RWC.
Comment 2. Also in reference to the question “Will the proposed new sub-advisory agreement affect the portfolio management and strategy of the Company?” set
forth in the “Answers to Some Important Questions” section of the Preliminary Proxy, please clarify in the disclosure the current sub-advisor to the Fund and the sub-advisor to the Fund if the Redwheel-Ecofin Transaction is completed.
Securities and Exchange Commission
October 4, 2024
Page 2
Response: The Company will revise the information set forth in the second and third
Question and Answer presented under the heading “ANSWERS TO SOME IMPORTANT QUESTIONS” in its definitive proxy statement for the Meeting by reorganizing such information into three new Questions and Answers that will read as follows, including
clarification that Ecofin is the current sub-advisor for the Company and, as a result of the acquisition of Ecofin by RWC Midco Limited, either RWC or an affiliated entity of RWC will become the new sub-advisor to the Company once the
Redwheel-Ecofin Transaction is completed (though the identity of the individuals providing the sub-advisory services will remain unchanged).
Q. Why am I being asked to approve a new sub-advisory agreement?
A. The entity that provides sub-advisory services to the Company under the current sub-advisory agreement, Ecofin Advisors Limited (“Ecofin”), has entered into an agreement with RWC Partners Midco
Limited, an affiliate of RWC, whereby the RWC affiliate agreed to acquire the material business operations of Ecofin’s sustainable infrastructure public equities asset-management business, including rights to use the name and trademarks of Ecofin
(the “Redwheel-Ecofin Transaction”).
As required by the Investment Company Act of 1940, as amended (the “1940 Act”), a fund’s stockholders are required to vote on and approve a sub-advisory agreement when an advisor to a fund retains
a sub-advisor to manage assets of the fund. This requirement is designed to ensure that stockholders have a say in determining the company or persons that manage their fund. Accordingly, you are being asked to approve the new sub-advisory agreement
that the Company will need to enter into with RWC, to replace the existing sub-advisory agreement with Ecofin, as a result of the Redwheel-Ecofin Transaction.
Q. Will the proposed new sub-advisory agreement affect the portfolio management and strategy of the Company?
A. The portfolio management, investment objectives and policies, and investment processes of the Company will not change as a result of entering into the proposed new sub-advisory agreement and
the Advisor, which is not a party to the Redwheel-Ecofin Transaction, will retain its name and other investment personnel currently providing services to the Company and will remain located at 6363 College Boulevard, Suite 100A, Overland Park,
Kansas 66211. In addition, following the recently completed change in the Company’s name to “Tortoise Sustainable and Social Impact Term Fund” effective as of September 30, 2024, the Company will retain its name and retained its current ticker
symbol.
Securities and Exchange Commission
October 4, 2024
Page 3
As part of the Redwheel-Ecofin Transaction, the Ecofin investment team, including the Ecofin portfolio managers for TEAF, will become employees of Redwheel’s existing subsidiary RWC or of an
affiliate entity within Redwheel (including RWC Partners Limited and/or RWC Asset Advisors (US) LLC), and the investment philosophy will remain the same as it relates to TEAF. Accordingly, the individuals currently responsible for the investment
management of that portion of the Company‘s portfolio allocated to Ecofin Advisors Limited under the existing sub-advisory agreement will be the same individuals responsible for the investment management of that allocated portion under the new
sub-advisory agreement.
Q. Will the proposed new sub-advisory agreement have any impact on the fees paid for these sub-advisory services?
A. The amount of the advisory fee paid to the Advisor by the Company under its current investment advisory agreement will not change, and the amount paid to the new Redwheel sub-advisor by the
Advisor will not change under the new sub-advisory agreement. Approval of the new sub-advisory agreement is not expected to change the level, nature or quality of services provided to the Company or its stockholders by the Advisor and the Advisor
will be solely responsible for all fees paid to RWC.
Comment 3. The web site listed in brackets on page 1 of the Preliminary Proxy does not work. Please remove the brackets and confirm that the listed web
site is functioning prior to filing the definitive proxy statement.
Response: Prior to filing its definitive proxy statement for the Meeting, the Company will
remove the brackets surrounding the web site link on page 1 the Preliminary Proxy Statement and will ensure the link is properly functioning and active.
Comment 4. In the section titled “Proposal One”, with regard to the second to last sentence of the second paragraph under the subheading “Background,”
please supplementally explain to us and disclose how RWC will manage the same assets of the Company if, as part of the Redwheel-Ecofin transaction, RWC will be providing sub-advisory services regarding the assets that Ecofin had previously been
advising on.
Response: In the section titled “Proposal One” on page 2 of the Preliminary Proxy
Statement, the Company will restate the material under the subheading “Background” to read as follows:
Pursuant to the terms of the investment advisory agreement between the Company’s current advisor Tortoise Capital Advisors, L.L.C. (the “Advisor”) and the Company in the form attached hereto as
Appendix A (the “Current Investment Advisory Agreement”), the Advisor currently serves as the investment advisor to the Company and is responsible for the portfolio management of the Company. Pursuant to the Current Investment Advisory Agreement,
the Advisor has the authority to select sub-advisors for the Company. A portion of the Company’s assets (the “Allocated Assets”) are managed under the current sub-advisory agreement with Ecofin Advisors Limited (“Ecofin”).
Securities and Exchange Commission
October 4, 2024
Page 4
Ecofin has entered into an agreement with RWC Partners Midco Limited, an affiliate of RWC, whereby the RWC affiliate agreed to acquire the material business operations of Ecofin’s sustainable
infrastructure public equities asset-management business, including rights to use the name and trademarks of Ecofin (the “Redwheel-Ecofin Transaction”). As a result of the pending Redwheel-Ecofin Transaction, the Advisor desires for the Company to
retain RWC Asset Management LLP (“RWC”) as a sub-advisor to assist the Advisor in the provision of a continuous investment program for the Allocated Assets currently managed by Ecofin.
As part of the Redwheel-Ecofin Transaction, the Ecofin investment team, including the Ecofin portfolio managers for TEAF, will become employees of Redwheel’s existing subsidiary RWC or of an
affiliate entity within Redwheel (including RWC Partners Limited and/or RWC Asset Advisors (US) LLC), and the investment philosophy will remain the same as it relates to TEAF. Accordingly, the individuals currently responsible for the investment
management of to the Allocated Assets currently managed by Ecofin under the existing sub-advisory agreement will continue to be the same individuals responsible for the investment management of those Allocated Assets under the new sub-advisory
agreement. The set of assets currently allocated to Ecofin under the existing sub-advisory agreement will be the same set of assets allocated to RWC under the new sub-advisory agreement, so that RWC will provide sub-advisory services only on the
same portion of the Company’s portfolio that Ecofin is currently advising on. Approval of the new sub-advisory agreement will not change the level, nature or quality of services provided to the Company or its stockholders by the Advisor and the
Advisor will be solely responsible for all fees paid to RWC.
In anticipation of the Advisor retaining RWC as a sub-advisor to assist the Advisor due to the pending Redwheel-Ecofin Transaction, the Board of Directors of the Company met in person on August 8,
2024 for purposes of, among other things, considering whether it would be in the best interests of the Company and its stockholders to approve the new sub-advisory agreement between the Advisor and RWC (the “Sub-Advisory Agreement”). A form of the
new Sub-Advisory Agreement is attached hereto as Appendix B.
Securities and Exchange Commission
October 4, 2024
Page 5
Comment 5. Please revise the disclosure in the second paragraph under the heading “Information Concerning the New Sub-Advisory Agreement” on page 2 of the
Preliminary Proxy to comply with Item 22(c) of Schedule 14A in the following respects:
•
With respect to the existing investment advisory agreement and the existing sub-advisory agreement, disclose the dates of these contracts and the date on which each such contract was last submitted to a vote of security holders of the
Fund, including the purpose of such submission. [Schedule 14A Item 22(c)(1)(i)]
•
Briefly describe the terms of the existing and new contracts, including the rate of compensation of the investment advisor and sub-advisor.
[Schedule 14A Item 22(c)(1)(ii)]
•
Disclose the aggregate amount of the investment advisor’s and sub-advisor’s fees and the amount and purpose of any other material payments by the Fund to the investment advisor and sub-advisor, or any affiliated person of the investment
advisor, during the last fiscal year of the Fund. [Schedule 14A Item 22(c)(1)(iii)]
Response. In the section titled “Proposal One”
on page 2 of the Preliminary Proxy Statement, the Company will add the following three additional paragraphs at the beginning of the disclosure under the subheading “Information Concerning the New Sub-Advisory Agreement” as follows:
The current investment advisory agreement was effective as of March 25, 2019, and the existing sub-advisory agreement was effective as of March 25, 2019. After initial two-year terms, each
agreement has remained in effect from year to year thereafter as a result of being approved annually by the Company’s Board of Directors. The continuation of each of these agreements was last approved by the Company’s Board of Directors on November
9, 2023. The current investment advisory agreement and the current sub-advisory agreement were each last submitted to a vote of security holders of the Company on March 22, 2019 for the purpose of approving the agreements.
The Company pays an advisory fee to the Advisor under its current investment advisory agreement, and the Advisor is responsible for payment of the fees of any sub-advisor that it may select out of
the advisory fee that it receives from the Company. The amount of the advisory fee paid to the Advisor by the Company under its current investment advisory agreement will not change, and the amount paid to RWC by the Advisor will not change under
the new sub-advisory agreement. Pursuant to the current investment advisory agreement, the Company pays the Advisor a fee based on the Company’s average monthly total assets (including any assets attributable to leverage and excluding any net
deferred tax asset) minus accrued liabilities (other than net deferred tax liability, debt entered into for purposes of leverage and the aggregate liquidation preference of outstanding preferred stock) (the “Managed Assets”), in exchange for the
investment advisory services provided. Average monthly Managed Assets is the sum of the daily Managed Assets for the month divided by the number of days in the month. Accrued liabilities are expenses incurred in the normal course of the Company’s
operations. Waived fees are not subject to recapture by the Adviser. The annual fee rates paid to the Adviser as of May 31, 2024 are 1.35%.
Securities and Exchange Commission
October 4, 2024
Page 6
The aggregate amount of fees paid to the Advisor by the Company during the last fiscal year totaled $3,282,511. No other material payments were made by the Company to the Advisor, or any affiliated
person of the Advisor, during the last fiscal year.
Comment 6. With respect to the third sentence of the second paragraph under the heading “Information Concerning the New Sub-Advisory Agreement” on page 2 of
the Preliminary Proxy, please disclose whether the fee paid by the Advisor to the Sub-Advisor under the new agreement will be higher.
Response: In the section titled “Proposal One” on page 2 of the Preliminary Proxy
Statement, the Company will restate the third sentence of the second paragraph under the subheading “Information Concerning the New Sub-Advisory Agreement” as follows:
Accordingly, approval of the new sub-advisory agreement will not have any impact on the fees that the Company pays to the Advisor under the current investment advisory agreement. In addition, the
amount of sub-advisory fees paid by the Advisor to Ecofin under the current sub-advisory agreement is the same amount of sub-advisory fees that will be paid by the Advisor to RWC under the