SecProbe.io

CORRESP
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    1900 K Street, NW

    Washington, DC 20006-1110

    +1 202 261 3300 Main

    +1 202 261 3333 Fax

    www.dechert.com

     

     

        Alexander C. Karampatsos

    alexander.karampatsos@dechert.com

    +1 202 261 3402 Direct

 

February 21, 2025

 

VIA EDGAR

 

Mr. David L. Orlic

U.S. Securities and Exchange Commission

Division of Investment Management

100 F Street, NE

Washington, DC 20549

 

Re: iDirect Private Credit Fund, L.P.

Registration Statement on Form N-2

File Nos. 333-283577 and 811-24031

 

Dear Mr. Orlic:

 

This letter responds to comments that you conveyed
in a letter dated January 3, 2025 with respect to the registration statement filed on Form N-2 (the “Registration Statement”)
under the Securities Act of 1933, as amended (the “Securities Act”), and the Investment Company Act of 1940, as amended (the
 “1940 Act”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 4, 2024 on behalf
of iDirect Private Credit Fund, L.P. (the “Fund”). The Fund has considered your comments and has authorized us to make the
responses and changes discussed below to the Registration Statement on its behalf. Capitalized terms have the meanings attributed to
such terms in the Registration Statement.

 

Concurrently with this letter, the Fund is filing
Pre-Effective Amendment No. 1 to its Registration Statement, which reflects the disclosure changes discussed below.

 

On behalf of the Fund, set forth below are the
comments of the SEC staff (“Staff”) along with our responses to or any supplemental explanations of such comments, as requested.

 

General

 

 1. Comment:     Please
                                            advise whether you have presented any test the waters materials to potential investors in
                                            connection with this offering. If so, we may have additional comments.

 

Response:     The
Fund confirms that it has not presented any test the waters materials to potential investors in connection with this offering.

 

     

     

 

 

 

 2. Comment:     Please
                                            confirm in your response letter that FINRA has reviewed the proposed underwriting terms and
                                            arrangements for the transactions described in the registration statement, including the
                                            amount of compensation to be allowed or paid to the underwriters and any other arrangements
                                            among the Fund, the underwriters, and other broker dealers participating in the distribution,
                                            and that FINRA has issued a statement expressing no objections to the compensation and other
                                            arrangements.

 

Response:     The
Fund confirms that no FINRA review is required in connection with the Registration Statement pursuant to an exemption provided by FINRA
Rule 5110(h)(2)(B).

 

 3. Comment:     Cover
                                            Page. Please supplementally describe the services that will be provided to the Investment
                                            Interests and the Fund by the Core Independent Managers, including whether they are investment
                                            advisers to the Investment Interests. In your response:

 

Response:     The
Core Managers are not subadvisers of the Fund and have no investment decision making authority with respect to the Fund. Each Core Manager
will provide, in its sole discretion, excess deal flow (if any) to the Adviser, but only if there is excess capacity in respect of a
particular loan transaction (“Excess Deal Flow”). While there may be transaction fees associated with purchases of Excess
Deal Flow, each Core Manager is under no obligation to provide such Excess Deal Flow to the Adviser and receives no advisory compensation
from the Fund or the Adviser for providing such Excess Deal Flow. The Adviser will be the sole adviser in making all investment decisions
for the Fund to participate in Excess Deal Flow transactions. Pursuant to the Fund’s investment strategy to focus on transactions
sourced by the three Core Managers, the Fund also will invest in BDCs advised by the Core Managers.

 

 · Please
                                            also supplementally provide your legal analysis as to why the Core Independent Managers would
                                            not be “investment advisers” to the Fund under Section 202(a)(11) of the
                                            Investment Advisers Act of 1940 and/or Section 2(a)(20) of the 1940 Act. It appears
                                            that the Fund generally relies on the Core Independent Managers offering such co-investment
                                            opportunity to perform most of the due diligence on the relevant portfolio company and to
                                            negotiate terms of the co-investment. We note that page 4 that states “The Fund’s
                                            performance depends upon the performance of the Core Independent Managers and selected styles,
                                            the adherence by such Core Independent Managers to such selected styles, the instruments
                                            used by such Core Independent Managers....”

 

    2

     

 

 

 

Response:     Section 202(a)(11)
of the Advisers Act defines “investment adviser” as any person who, for compensation, engages in the business of advising
others about securities. To fall within this definition a party must: (1) provide advice about securities; (2) engage in the
business of providing such advice; and (3) provide such advice for compensation to others. The Core Managers do not provide any
investment advisory services to Fund. Rather, as discussed above, the Core Managers will provide, in their sole discretion, Excess Deal
Flow to the Fund. Each Core Manager will provide no advice to the Fund or the Adviser as to the desirability of any particular transaction
and will receive no advisory compensation from the Fund or the Adviser for providing any Excess Deal Flow. The decision to invest in
any particular transaction will be made solely by the Adviser. Those investment decisions will be informed by the Adviser’s own
due diligence process which is disclosed on page 3 of the Fund’s prospectus. As a result, there is no advisory relationship
between a Core Manager and the Fund or between a Core Manager and the Adviser.

 

 · Please
                                            explain to the staff how the Fund’s intended investment activities will comply with
                                            Section 17 restrictions on principal and joint transactions with the Core Independent
                                            Managers? In your response, please specifically address whether the Core Independent Managers
                                            would be considered first or second-tier affiliates of the Fund, and how the Core Independent
                                            Managers’ ownership interests in the Adviser impacts your analysis.

 

Response:     The
SEC and its Staff have stated that “Section 17(d) and Rule 17d-1, taken together, are designed to prevent, among
other things, affiliated persons of [funds] from taking undue advantage of a [fund] in transactions in which such persons and the [fund]
participate in a joint undertaking.”1 The principal concern that Congress and the SEC and its Staff were trying to address
through the restrictions on transactions with affiliated persons is one of “overreach” on the part of an affiliated person,
such as an investment adviser.

 

Although written and interpreted broadly,
Section 17(d) and Rule 17d-1 do not prohibit every transaction in which a closed-end fund transacts jointly with an affiliate.
Rather, a transaction subject to this prohibition requires “some element of combination or profit motive” and an “intentional
act of agreement or at least a consensual pattern” (which can be inferred from the parties’ behavior).2 Accordingly,
these two elements—combination or profit motive combined with an intentional act or a consensual pattern—form the core requirements
to establish that a given transaction is a “joint transaction” subject to the general prohibition under Rule 17d-1.

 

 

1 See In
the Matter of Imperial Financial Services, Inc., Rel. No. 34-7684 (Aug. 26, 1965); and Mutual Fund Directors Forum, SEC No-Action Letter
(pub. avail. May 9, 2022).

 

2 See SMC
Capital, Inc., SEC No-Action Letter (pub. avail. Sept. 5, 1985); SEC v. Talley Industries, 399 F.2d 396, 402 (2d Cir. 1968),
cert. denied, 393 U.S. 1015 (1969) (establishing the relevant standard by holding that a transaction must involve “some element
of combination” – beyond mere parallel behavior – to create the requisite joint participation needed to implicate Section
17(d) and finding that a fund and its affiliate had acted in a way such that the fund “was no longer a completely free agent”); In
re Steadman Security Corp., [1974-75 Transfer Binder] Fed. Sec. L. Rep. (CCH) 80,038 (Dec. 20, 1974) (Rule 17d-1 “is
concerned with joint enterprises or joint arrangements that are in the nature of a joint venture, i.e., that involve the element of seeking
to realize a profit or gain through the investment vehicle”); and SEC v. Midwest Technical Dev. Corp. [1961-1964
Transfer Binder] Fed. Sec. L. Rep. (CCH) (1963) 91,252 (D. Minn. 1963); Bloom v. Bradford, 480 F. Supp. 139 (E.D.N.Y.
1979). See also Memorandum of the SEC, Amicus Curiae Br.; Bloom v. Bradford (Aug. 29, 1979).

 

    3

     

 

 

 

The Fund respectfully submits that the
Fund investing in private middle-market credit instruments sourced by, or sponsored or managed by, the Core Managers, and, to a lesser
extent, opportunities to invest in business development companies that are sponsored or managed by the Core Managers does not implicate
concerns of overreach. Rather, only the Adviser will make the decision whether to participate in a particular investment opportunity.

 

Further, the Core Managers are not first-
or second-tier affiliates of the Fund. Section 2(a)(3)(D) of the 1940 Act states that an affiliate of a person is “any
officer, director, partner, copartner, or employee of such other person . . . .” The Core Managers are not officers, directors,
partners, copartners or employees of the Adviser and therefore are not an affiliate of the Adviser pursuant to Section 2(a)(3)(D).
In addition, affiliation is not established under Section 2(a)(3)(A) or Section 2(a)(3)(B) because the Core Managers
do not hold any voting securities of the Adviser. Each Core Manager holds a non-voting economic interest in the Adviser (below
25% of the Adviser’s outstanding economic interests in each case) and does not have any control or voting rights. The Core Managers
do not have the right to elect, appoint, approve or remove the managing member of the Adviser nor any other persons occupying a management
role at the Adviser. In addition, based on the entire definition of “affiliate” in Section 2(a)(3), the Core Managers
and their affiliates do not meet the definition of an affiliated person of the Fund or an affiliated person of an affiliated person of
the Fund.

 

 · Please
                                            supplementally explain the basis for the Fund paying Core Independent Managers a management
                                            fee and/or incentive fee. Advise us whether these fees are included in the fee table and,
                                            if so, in which line item(s). If there would be restrictions on the Fund charging such fees
                                            directly, please tell us why it is appropriate to indirectly charge such fees.

 

Response:     Again,
the Fund confirms that, while there may be transaction fees associated with purchases of Excess Deal Flow, each Core Manager will receive
absolutely no advisory compensation from the Fund or the Adviser for providing Excess Deal Flow. While the Core Managers may serve as
advisers to BDCs the Fund may invest in and receive a management fee and incentive fees from the BDCs, the Fund will be a shareholder
in those BDCs just like any other shareholder. The appropriate fees and expenses of these BDCs will be reflected in the Fund’s
 “Acquired Fund Fees and Expenses” row of the fee table.

 

 · Please
                                            include in the disclosure a plain English explanation, a graphic, and examples demonstrating
                                            the operation of an incentive fee by the Core Independent Managers. We may have additional
                                            comments.

 

Response:     Based
on the explanations above and the fact that the Core Managers receive no incentive fees from the Fund, the Fund respectfully declines
to make any disclosure updates in response to this comment.

 

    4

     

 

 

 

Prospectus

 

Cover Page

 

 4. Comment:     Please
                                            modify the offering table to reflect minimum and maximum offering amounts. Please also include
                                            the termination date of the offering and disclose if funds will be held in escrow.

 

Response:     The
Fund respectfully notes that the cover page discloses that the “Fund is offering an unlimited number of shares on a continuous
basis.” The Fund confirms that there are no applicable minimum or maximum offerings amounts and that there is no applicable termination
date. For these reasons, the Fund respectfully declines to make any changes in response to this comment.

 

 5. Comment:     Please
                                            include a specific cross reference to the risk of using leverage, including a page number.

 

Response:     The
Fund has revised the disclosure accordingly.

 

 6. Comment:     Please
                                            modify the final bolded bullet point to include offering expenses in addition to sales load.

 

Response:     The
Fund has revised the disclosure accordingly.

 

The Fund, page 1

 

 7. Comment:     If
                                            the Fund has commenced investment operations, please provide additional disclosure regarding
                                            the history of the Fund.

 

Response:     The
Fund has revised the disclosure accordingly.

 

Risk Factors, page 4

 

 8. Comment:     Disclosure
                                            on page 5 states, “Because the Fund allocates assets mainly to private credit
                                            investments alongside the Core Independent Managers, the Core Independent Managers’
                                            economic interest in the Adviser may create an incentive for the Adviser to favor the interests
                                            of the Core Independent Managers over the interests of the Fund in the assessment and selection
                                            of Investment Interests, the negotiation of terms, and the exercise of the Fund’s rights
                                            in Investment Interests associated with the Core Independent Managers.” Please further
                                            clarify in the disclosure why there “may be an incentive for the Advisor to favor the
                                            interests of the Core Independent Managers over the interests of the Fund.” Also, explain
                                            to the staff how this is consistent with the Adviser’s fiduciary duty to the Fund.