Correspondence 0001193125-25-027367 from CCS IX Portfolio Holdings, LLC (CIK 0002017636)
CCS IX Portfolio Holdings, LLC (CIK 0002017636)
Date: Feb. 14, 2025 · CIK: 0002017636 · Accession: 0001193125-25-027367
AI Filing Summary & Sentiment
File numbers found in text: 000-56718
Referenced dates: January 29, 2025
Letter
Division of Investment Management Attn: Mr. Aaron Brodsky Re: CCS IX Portfolio Holdings, LLC Registration Statement on Form 10 File No. 000-56718
Dear Mr. Brodsky:
On behalf of CCS IX Portfolio Holdings, LLC (the “Company”), this letter responds to comments issued by the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC”) in a letter dated January 29, 2025 relating to the Company’s registration statement on Form 10 that was filed with the SEC on December 31, 2024 (the “Registration Statement”).
For your convenience, the Staff’s comments are included in this letter, and each comment is followed by the responses of the Company. Capitalized terms used in this letter and not otherwise defined herein shall have the meanings specified in the pre-effective amendment to the Registration Statement 10 filed by the Company on the date hereof (such registration statement being referred to herein as the “Amended Registration Statement”).
Pages 1 - EXPLANATORY NOTE
1. Comment: Please include the following in the explanatory note, as applicable:
a. The Company’s common stock is not currently listed on an exchange, and it is uncertain whether a secondary market will develop;
b. Repurchases of common stock by the Company, if any, are expected to be very limited;
February 14, 2025
Page
c. An investment in the Company may not be suitable for investors who may need the money they invest in a specified time frame;
d. Investment in the Company is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity inherent in an investment in the Company;
e. The Company intends to invest primarily in privately-held companies for which very little public information exists. Such companies are also generally more vulnerable to economic downturns and may experience substantial variations in operating results; and
f. The privately-held companies and below-investment-grade securities in which the Company will invest will be difficult to value and are illiquid.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly.
2. Comment: Please confirm supplementally, if accurate, that the number “IX” as used in the Company name does not have any particular meaning in connection with the Company’s strategy.
Response: The Company respectfully acknowledges the Staff’s comment and confirms to the Staff that the number “IX” as used in the Company’s name does not have any particular meaning in connection with the Company’s strategy.
3. Comment: Given the lengthy discussion of risk factors that begins on page 25, please include at the beginning of the filing a series of concise, bulleted or numbered statements that is no more than two pages summarizing the principal risk factors.
Response: The Company respectfully acknowledges the Staff’s comment and has included summary risk factors in the forepart of the Amended Registration Statement in accordance with the requirements of Item 105 of Regulation S-K.
Page 3 – ITEM 1. BUSINESS
4. Comment: Page 3 indicates that the Company intends to elect to be regulated as a BDC. Please disclose when election to be regulated as a BDC will be filed.
February 14, 2025
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Response: The Company respectfully submits to the Staff that it filed an election to be regulated as a BDC on December 31, 2024, and has included disclosure in the Amended Registration Statement accordingly.
5. Comment: The first sentence in the second paragraph on page 3 states that that the investment objective is to provide unitholders with “substantial current income and long-term capital appreciation...” Please disclose how the Company is defining “substantial.”
Response: The Company has deleted the word “substantial” from its investment objective throughout the Registration Statement.
6. Comment: The last sentence in the second paragraph on page 3 states that the Company may also invest in “other debt or equity securities.” Please clarify in disclosure the nature of any such other debt or equity securities.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly, both in the last sentence in the second paragraph on page 3 and in the fifth paragraph under the heading “Investment Strategy” within Item 1. Business.
7. Comment: The third paragraph on page 3 states that the Company’s investment objective is accomplished through, among other things, “originating investments in what we believe to be middle-market companies with strong business fundamentals...” Please briefly explain supplementally the use of the language “what we believe to be” in this sentence, and please clarify in disclosure how the Company is defining/considering “strong business fundamentals.”
Response: The Company has revised the disclosure in response to the Staff’s comments.
8. Comment: The sixth paragraph on page 3 indicates that the Company may form wholly-owned subsidiaries. To the extent that the Company will have primary control over any entities that primarily engage in investment activities in securities or other assets, please respond to the following comments:
a. Disclose that such subsidiaries include entities that engage in investment activities in securities or other assets that are primarily controlled by the Company;
Response: The Company has revised the disclosure accordingly. The Company confirms to the Staff that it does not currently intend to create or acquire primary control of any entity that primarily engages in investment activities in securities or other assets, other than entities wholly-owned by the Company.
February 14, 2025
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b. Disclose that the Company complies with the provisions of the Investment Company Act governing investment policies (Section 8) on an aggregate basis with the subsidiary;
Response: The Company respectfully notes that business development companies like the Company are not subject to Section 8 of the Investment Company Act. Notwithstanding such fact, the Company confirms that the activities of any of its wholly-owned subsidiaries will be consistent with the investment objective and strategies described in its SEC filings.
c. Disclose that the Company complies with the provisions of the Investment Company Act governing capital structure and leverage (Section 18, as modified by Section 61) on an aggregate basis with the subsidiary so that the Company treats the subsidiary’s debt as its own for purposes of Section 18;
Response: The Company has revised the disclosure accordingly.
d. Disclose that any investment adviser to the subsidiary complies with provisions of the Investment Company Act relating to investment advisory contracts (Section 15 as it applies through Section 59) as if it were an investment adviser to the Company under Section 2(a)(20) of the Investment Company Act;
Response: The Company respectfully advises the Staff that any wholly-owned subsidiaries of the Company through which the Company may engage in investment activities are not expected to be parties to advisory or management contracts with either third-party or affiliated investment advisers, including the Adviser. Rather, the Adviser would manage the investments held by such wholly-owned subsidiaries of the Company on a look-through basis pursuant to the Investment Advisory Agreement.
e. Disclose that each subsidiary complies with provisions relating to affiliated transactions and custody (Section 17 as modified by Section 57). Identify the custodian of the subsidiary, if any;
Response: The Company has revised the disclosure accordingly.
f. Disclose any of the subsidiary’s principal investment strategies or principal risks that constitute principal investment strategies or risks of the Company. The principal investment strategies and principal risk disclosures of a fund that invests in a subsidiary should reflect aggregate operations of the fund and the subsidiary;
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Response: The Company has revised the disclosure accordingly.
g. Explain in correspondence whether the financial statements of the subsidiary will be consolidated with those of the Company. If not, please explain why not;
Response: The Company confirms that it would generally expect to consolidate the financial statements of any subsidiary with the financial statements of the Company.
h. Confirm in correspondence that the subsidiary and its board of directors will agree to inspection by the staff of the subsidiary’s books and records, which will be maintained in accordance with Section 31 of the Investment Company Act and the rules thereunder as modified by Section 64 of the 1940 Act;
Response: The Company confirms that any subsidiary and board of directors thereof that it has will agree to inspection by the Staff of the subsidiary’s books and records.
i. Confirm in correspondence that the wholly-owned subsidiary’s management fee (including any performance fee), if any, will be included in “Management Fees,” and the wholly-owned subsidiary’s expenses will be included in “Other Expenses” in the Company’s fee table, as appropriate; and
Response: The Company confirms the matters set forth in the immediately preceding comment of the Staff.
j. Please disclose that the Company does not/does not currently intend to create or acquire primary control of any entity which primarily engages in investment activities in securities or other assets, other than entities wholly-owned by the Company.
Response: The Company has revised the disclosure accordingly.
9. Comment: Please reconcile the language in the “Base Management Fee” section on page 8 versus the language in the “Investment Advisory and Management Agreement” with respect to how the fee is calculated and payment frequency.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly.
10. Comment: Please confirm whether the Company will utilize leverage during the first year of investment operations.
February 14, 2025
Page
Response: The Company respectfully acknowledges the Staff’s comment and confirms that it intends to utilize leverage during the first year of its investment operations. The Company respectfully submits to the Staff that the Company discloses that it intends to use leverage in the Registration Statement, including under “Item 2. Financial Information – Credit Facilities.”
Pages 4-7 – Investment Strategy
11. Comment: The first sentence under the “Investment Strategy” subheading on page 4 indicates that the Company’s strategy will seek to generate “substantial current income and meaningful long-term capital gains.” Please disclose how the Company defines “substantial” and “meaningful” in this context.
Response: Please see the Company’s response to Comment 5 above.
12. Comment: The second sentence of the second paragraph under the “Investment Strategy” subheading on page 4 indicates that the Adviser’s strategy seeks to, among other things, “provide for enhanced controls...” Please clarify in disclosure what the Company means by “enhanced controls.”
Response: The Company has deleted the phrase referenced in the Staff’s comment.
13. Comment: Does the Company currently hold any investments, or intend to hold any investments, prior to effectiveness of the registration statement? Has the Company entered into, or does the Company intend to enter into, any warehousing transaction for purposes of establishing the initial investment portfolio of the Company?
Response: The Company respectfully submits that it intends to hold investments prior to the effectiveness of the registration statement. The Company confirms that it did not enter into any warehousing transactions for purposes of establishing the initial investment portfolio of the Company.
Page 7 – Private Offering of Common Units
14. Comment: Will the terms of the Subscription Agreements referenced on page 7 materially differ depending on the investor? We may have further comments. Please also see Comment 33 below.
Response: The Company respectfully confirms that the terms of the Subscription Agreement will not differ materially depending on the investor.
February 14, 2025
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Page 8 – Investment Advisory Agreement
15. Comment: The disclosure on page 8 under “Investment Advisory Agreement” states that the Company “intends” to enter into an advisory agreement with the Adviser. Please supplementally explain when the Company intends to enter into such an agreement. If the Company does not enter into such an agreement prior to offering shares, please supplementally explain how the Company will be managed.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement to reflect that the Company executed the Investment Advisory Agreement on December 31, 2024.
16. Comment: Please consider including a fee table that complies with the requirements of Form N-2.
Response: The Company respectfully submits that it is not aware of any affirmative requirement to include a fee table that conforms to the requirements of Item 3 of Form N-2 in a registration statement on Form 10. As a result, the Company has not elected to do so in the Registration Statement.
17. Comment: Please confirm in correspondence whether the Company has any incentive fee arrangements. If there is an incentive arrangement, please include details of the incentive compensation and include an example of how the calculations work.
Response: The Company confirms that it has no incentive fee arrangement and has revised the Amended Registration Statement to remove references to incentive fees.
Pages 25-52 – ITEM 1A. RISK FACTORS
18. Comment: Please ensure that each strategy disclosed in the Company’s principal investment strategy is addressed in the principal risk section, and vice versa. Specifically, please be sure the following investment types, which appear to be addressed in the principal risk section, are also discussed in the Company’s principal strategy section: floating rate debt; illiquid loans/securities; unrated/high-yield/junk debt; CLOs; covenant-lite loans; first-lien senior secured loans/unitranche loans; syndicated loans; and debt of leveraged companies.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly.
February 14, 2025
Page
19. Comment: Disclose the cost of ‘34 Act reporting as an additional risk, or direct us to such disclosure.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly.
20. Comment: Please disclose how long it is expected to take to fully invest net proceeds in accordance with the Company’s investment objectives and policies, the reasons for any anticipated lengthy delay in investing the net proceeds, and the consequences of any delay.
Response: As disclosed in the Registration Statement, the Company will raise funds on a capital commitment basis and will call capital from its investors on an as-needed basis for the purposes set forth in the Registration Statement, including to “complete portfolio investments.” The disclosure in the Registration Statement also discloses the time periods during which investors will be required to fund their capital commitments when called by the Company. As a result,
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CORRESP 1 filename1.htm CORRESP 1900 K Street, NW Washington, DC 20006-1110 +1 202 261 3300 Main +1 202 261 3333 Fax www.dechert.com Matthew J. Carter matthew.carter@dechert.com +1 202 261 3395 Direct +1 202 261 3184 Fax February 14, 2025 Via Email U.S. Securities and Exchange Commission Division of Investment Management 100 F Street N.E. Washington, DC 20549 Attn: Mr. Aaron Brodsky Re: CCS IX Portfolio Holdings, LLC Registration Statement on Form 10 File No. 000-56718 Dear Mr. Brodsky: On behalf of CCS IX Portfolio Holdings, LLC (the “Company”), this letter responds to comments issued by the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “SEC”) in a letter dated January 29, 2025 relating to the Company’s registration statement on Form 10 that was filed with the SEC on December 31, 2024 (the “Registration Statement”). For your convenience, the Staff’s comments are included in this letter, and each comment is followed by the responses of the Company. Capitalized terms used in this letter and not otherwise defined herein shall have the meanings specified in the pre-effective amendment to the Registration Statement 10 filed by the Company on the date hereof (such registration statement being referred to herein as the “Amended Registration Statement”). Pages 1 - EXPLANATORY NOTE 1. Comment: Please include the following in the explanatory note, as applicable: a. The Company’s common stock is not currently listed on an exchange, and it is uncertain whether a secondary market will develop; b. Repurchases of common stock by the Company, if any, are expected to be very limited; February 14, 2025 Page 2 c. An investment in the Company may not be suitable for investors who may need the money they invest in a specified time frame; d. Investment in the Company is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity inherent in an investment in the Company; e. The Company intends to invest primarily in privately-held companies for which very little public information exists. Such companies are also generally more vulnerable to economic downturns and may experience substantial variations in operating results; and f. The privately-held companies and below-investment-grade securities in which the Company will invest will be difficult to value and are illiquid. Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly. 2. Comment: Please confirm supplementally, if accurate, that the number “IX” as used in the Company name does not have any particular meaning in connection with the Company’s strategy. Response: The Company respectfully acknowledges the Staff’s comment and confirms to the Staff that the number “IX” as used in the Company’s name does not have any particular meaning in connection with the Company’s strategy. 3. Comment: Given the lengthy discussion of risk factors that begins on page 25, please include at the beginning of the filing a series of concise, bulleted or numbered statements that is no more than two pages summarizing the principal risk factors. Response: The Company respectfully acknowledges the Staff’s comment and has included summary risk factors in the forepart of the Amended Registration Statement in accordance with the requirements of Item 105 of Regulation S-K. Page 3 – ITEM 1. BUSINESS 4. Comment: Page 3 indicates that the Company intends to elect to be regulated as a BDC. Please disclose when election to be regulated as a BDC will be filed. February 14, 2025 Page 3 Response: The Company respectfully submits to the Staff that it filed an election to be regulated as a BDC on December 31, 2024, and has included disclosure in the Amended Registration Statement accordingly. 5. Comment: The first sentence in the second paragraph on page 3 states that that the investment objective is to provide unitholders with “substantial current income and long-term capital appreciation...” Please disclose how the Company is defining “substantial.” Response: The Company has deleted the word “substantial” from its investment objective throughout the Registration Statement. 6. Comment: The last sentence in the second paragraph on page 3 states that the Company may also invest in “other debt or equity securities.” Please clarify in disclosure the nature of any such other debt or equity securities. Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly, both in the last sentence in the second paragraph on page 3 and in the fifth paragraph under the heading “Investment Strategy” within Item 1. Business. 7. Comment: The third paragraph on page 3 states that the Company’s investment objective is accomplished through, among other things, “originating investments in what we believe to be middle-market companies with strong business fundamentals...” Please briefly explain supplementally the use of the language “what we believe to be” in this sentence, and please clarify in disclosure how the Company is defining/considering “strong business fundamentals.” Response: The Company has revised the disclosure in response to the Staff’s comments. 8. Comment: The sixth paragraph on page 3 indicates that the Company may form wholly-owned subsidiaries. To the extent that the Company will have primary control over any entities that primarily engage in investment activities in securities or other assets, please respond to the following comments: a. Disclose that such subsidiaries include entities that engage in investment activities in securities or other assets that are primarily controlled by the Company; Response: The Company has revised the disclosure accordingly. The Company confirms to the Staff that it does not currently intend to create or acquire primary control of any entity that primarily engages in investment activities in securities or other assets, other than entities wholly-owned by the Company. February 14, 2025 Page 4 b. Disclose that the Company complies with the provisions of the Investment Company Act governing investment policies (Section 8) on an aggregate basis with the subsidiary; Response: The Company respectfully notes that business development companies like the Company are not subject to Section 8 of the Investment Company Act. Notwithstanding such fact, the Company confirms that the activities of any of its wholly-owned subsidiaries will be consistent with the investment objective and strategies described in its SEC filings. c. Disclose that the Company complies with the provisions of the Investment Company Act governing capital structure and leverage (Section 18, as modified by Section 61) on an aggregate basis with the subsidiary so that the Company treats the subsidiary’s debt as its own for purposes of Section 18; Response: The Company has revised the disclosure accordingly. d. Disclose that any investment adviser to the subsidiary complies with provisions of the Investment Company Act relating to investment advisory contracts (Section 15 as it applies through Section 59) as if it were an investment adviser to the Company under Section 2(a)(20) of the Investment Company Act; Response: The Company respectfully advises the Staff that any wholly-owned subsidiaries of the Company through which the Company may engage in investment activities are not expected to be parties to advisory or management contracts with either third-party or affiliated investment advisers, including the Adviser. Rather, the Adviser would manage the investments held by such wholly-owned subsidiaries of the Company on a look-through basis pursuant to the Investment Advisory Agreement. e. Disclose that each subsidiary complies with provisions relating to affiliated transactions and custody (Section 17 as modified by Section 57). Identify the custodian of the subsidiary, if any; Response: The Company has revised the disclosure accordingly. f. Disclose any of the subsidiary’s principal investment strategies or principal risks that constitute principal investment strategies or risks of the Company. The principal investment strategies and principal risk disclosures of a fund that invests in a subsidiary should reflect aggregate operations of the fund and the subsidiary; February 14, 2025 Page 5 Response: The Company has revised the disclosure accordingly. g. Explain in correspondence whether the financial statements of the subsidiary will be consolidated with those of the Company. If not, please explain why not; Response: The Company confirms that it would generally expect to consolidate the financial statements of any subsidiary with the financial statements of the Company. h. Confirm in correspondence that the subsidiary and its board of directors will agree to inspection by the staff of the subsidiary’s books and records, which will be maintained in accordance with Section 31 of the Investment Company Act and the rules thereunder as modified by Section 64 of the 1940 Act; Response: The Company confirms that any subsidiary and board of directors thereof that it has will agree to inspection by the Staff of the subsidiary’s books and records. i. Confirm in correspondence that the wholly-owned subsidiary’s management fee (including any performance fee), if any, will be included in “Management Fees,” and the wholly-owned subsidiary’s expenses will be included in “Other Expenses” in the Company’s fee table, as appropriate; and Response: The Company confirms the matters set forth in the immediately preceding comment of the Staff. j. Please disclose that the Company does not/does not currently intend to create or acquire primary control of any entity which primarily engages in investment activities in securities or other assets, other than entities wholly-owned by the Company. Response: The Company has revised the disclosure accordingly. 9. Comment: Please reconcile the language in the “Base Management Fee” section on page 8 versus the language in the “Investment Advisory and Management Agreement” with respect to how the fee is calculated and payment frequency. Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly. 10. Comment: Please confirm whether the Company will utilize leverage during the first year of investment operations. February 14, 2025 Page 6 Response: The Company respectfully acknowledges the Staff’s comment and confirms that it intends to utilize leverage during the first year of its investment operations. The Company respectfully submits to the Staff that the Company discloses that it intends to use leverage in the Registration Statement, including under “Item 2. Financial Information – Credit Facilities.” Pages 4-7 – Investment Strategy 11. Comment: The first sentence under the “Investment Strategy” subheading on page 4 indicates that the Company’s strategy will seek to generate “substantial current income and meaningful long-term capital gains.” Please disclose how the Company defines “substantial” and “meaningful” in this context. Response: Please see the Company’s response to Comment 5 above. 12. Comment: The second sentence of the second paragraph under the “Investment Strategy” subheading on page 4 indicates that the Adviser’s strategy seeks to, among other things, “provide for enhanced controls...” Please clarify in disclosure what the Company means by “enhanced controls.” Response: The Company has deleted the phrase referenced in the Staff’s comment. 13. Comment: Does the Company currently hold any investments, or intend to hold any investments, prior to effectiveness of the registration statement? Has the Company entered into, or does the Company intend to enter into, any warehousing transaction for purposes of establishing the initial investment portfolio of the Company? Response: The Company respectfully submits that it intends to hold investments prior to the effectiveness of the registration statement. The Company confirms that it did not enter into any warehousing transactions for purposes of establishing the initial investment portfolio of the Company. Page 7 – Private Offering of Common Units 14. Comment: Will the terms of the Subscription Agreements referenced on page 7 materially differ depending on the investor? We may have further comments. Please also see Comment 33 below. Response: The Company respectfully confirms that the terms of the Subscription Agreement will not differ materially depending on the investor. February 14, 2025 Page 7 Page 8 – Investment Advisory Agreement 15. Comment: The disclosure on page 8 under “Investment Advisory Agreement” states that the Company “intends” to enter into an advisory agreement with the Adviser. Please supplementally explain when the Company intends to enter into such an agreement. If the Company does not enter into such an agreement prior to offering shares, please supplementally explain how the Company will be managed. Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement to reflect that the Company executed the Investment Advisory Agreement on December 31, 2024. 16. Comment: Please consider including a fee table that complies with the requirements of Form N-2. Response: The Company respectfully submits that it is not aware of any affirmative requirement to include a fee table that conforms to the requirements of Item 3 of Form N-2 in a registration statement on Form 10. As a result, the Company has not elected to do so in the Registration Statement. 17. Comment: Please confirm in correspondence whether the Company has any incentive fee arrangements. If there is an incentive arrangement, please include details of the incentive compensation and include an example of how the calculations work. Response: The Company confirms that it has no incentive fee arrangement and has revised the Amended Registration Statement to remove references to incentive fees. Pages 25-52 – ITEM 1A. RISK FACTORS 18. Comment: Please ensure that each strategy disclosed in the Company’s principal investment strategy is addressed in the principal risk section, and vice versa. Specifically, please be sure the following investment types, which appear to be addressed in the principal risk section, are also discussed in the Company’s principal strategy section: floating rate debt; illiquid loans/securities; unrated/high-yield/junk debt; CLOs; covenant-lite loans; first-lien senior secured loans/unitranche loans; syndicated loans; and debt of leveraged companies. Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly. February 14, 2025 Page 8 19. Comment: Disclose the cost of ‘34 Act reporting as an additional risk, or direct us to such disclosure. Response: The Company respectfully acknowledges the Staff’s comment and has revised the Amended Registration Statement accordingly. 20. Comment: Please disclose how long it is expected to take to fully invest net proceeds in accordance with the Company’s investment objectives and policies, the reasons for any anticipated lengthy delay in investing the net proceeds, and the consequences of any delay. Response: As disclosed in the Registration Statement, the Company will raise funds on a capital commitment basis and will call capital from its investors on an as-needed basis for the purposes set forth in the Registration Statement, including to “complete portfolio investments.” The disclosure in the Registration Statement also discloses the time periods during which investors will be required to fund their capital commitments when called by the Company. As a result,