HPS Investment Partners, LLC (collectively with certain of its affiliates, “HPS”)1, a Delaware limited liability company, was originally formed in March 2007 to focus on managing debt and equity investments, including loan, mezzanine, credit opportunities, private equity, real assets and other investments.

HPS is a subsidiary of HPS Group Holdings II, LLC. Scott Kapnick, Chief Executive Officer of HPS, is a principal owner of HPS through intermediate entities. For information regarding the direct owners, indirect owners and executive officers of HPS, please see Part 1A of this Form ADV.

HPS was originally formed as a subsidiary of Highbridge Capital Management, LLC (“HCM”). HCM is a subsidiary of JPMorgan Asset Management Holdings Inc. (“JPMAM”), which in turn is a subsidiary of JPMorgan Chase & Co. (together with its affiliates, “JPM”). On March 31, 2016, the senior executives of HPS acquired HPS and its subsidiaries from JPMAM and HCM (the “Transaction”). As a result of the Transaction, HPS is treated as independent from, and is no longer a related person of or deemed an affiliate of, JPM, although JPM currently retains, and may for a number of years continue to retain, a non- voting minority interest in HPS. Immediately following the closing of the Transaction, the portfolio managers and other HPS employees responsible for the investment activities of HPS separated from JPM and continued to be employees of HPS.

On June 29, 2018, affiliates of Dyal Capital Partners, a division of Neuberger Berman, became a passive minority investor in HPS.

HPS is a leading global private investment platform that focuses on both private and public credit strategies with the ability to invest across the entire non-investment grade credit landscape. HPS manages assets across a wide range of investment strategies, which include Asia Long/Short credit, CLOs, credit opportunities, European asset value, leveraged loans, liquid loans, mezzanine debt, opportunistic CLO, real estate, core senior loans, special situations, and specialty loans, which are described more fully in Item 8. HPS is headquartered in New York with 10 additional offices globally.

HPS generally provides investment advisory services directly and through its subsidiary advisory entities to: (i) certain private investment vehicles including domestic and foreign partnerships and corporations sponsored and/or organized by HPS (“HPS Funds”); and (ii) separately managed accounts and single- investor vehicles that may be domestic or foreign partnerships or corporations each established by, or on behalf of, a single third party investor (or two or more affiliated third party investors) (collectively, “Third Party Funds” and together with HPS Funds, “Clients”).

HPS provides investment advisory services to the Clients pursuant to the investment objectives, strategies and restrictions, including, if applicable, customized investment guidelines, as set forth in each Client’s governing documents, which are received and agreed to by investors in the Clients prior to their investment in such Client and include, as applicable, an investment management agreement, organizational documents (such as limited partnership agreements or memorandum and articles of association), offering documents, side letter agreements and/or other documentation relevant to an investment in the Client, and together are collectively referred to as “Governing Documents.” 1 HPS was formerly known as Highbridge Principal Strategies, LLC.
HPS has entered into side letter agreements or similar agreements pursuant to which certain investors are granted specific rights, benefits or privileges that are not generally made available to other investors. At the outset of their relationship with HPS, investor(s) in a Third Party Fund consult with HPS to establish customized investment guidelines applicable to HPS’s management of the Third Party Fund’s investment portfolio. Such guidelines typically vary, at times significantly, among Third Party Funds with the same investment objective based on the specific needs of the underlying investor(s). The negotiated and tailored guidelines are agreed to in the relevant Third Party Fund’s Governing Documents. Without prior consultation with existing Clients, HPS will provide investment advisory services to additional Clients. Clients may also be solicited to invest, and do in some cases invest, in one or more HPS Funds.

HPS does not currently, but may in the future, participate in wrap fee programs.

As of December 31, 2018, HPS managed $48,010,312,305 of Client assets on a discretionary basis and $0 of Client assets on a non-discretionary basis. These amounts reflect regulatory assets under management as calculated in Part 1 of our Form ADV. For the avoidance of doubt, all information discussed above regarding the investment advisory services provided by HPS to a Client is qualified in its entirety by reference to the relevant Client’s Governing Documents. please register to get more info

Fees Generally
HPS receives management fees and performance-based compensation for advisory services provided. In addition, Clients may be charged other fees and expenses as described below. The description below is intended to provide a brief summary of the typical compensation received by HPS and is not intended to depict every scenario. Please refer to the Clients’ Governing Documents for specific details.

HPS may rebate, reduce and/or waive some or all of its management fee and/or performance-based compensation, as applicable, with respect to any investor in a Client. HPS intends to rebate, reduce and/or waive some or all of its management fee and/or performance-based compensation with respect to, but not limited to, principals, employees, certain affiliates and sourcing, operating or joint venture partners of HPS as well as certain investment funds and accounts managed by HPS. Certain Clients offer size-based or other fee reductions for investors in such funds.

HPS’s compensation for managing a Third Party Fund may be less than the compensation it receives for managing similar strategies for an HPS Fund. Conversely, investors in Third Party Funds may be subject to higher fees and expenses than what they would incur if they were invested in an HPS Fund where the fees and expenses would be borne by multiple investors. The fees and expenses charged to Third Party Funds are individually negotiated with the underlying investor(s) of the Third Party Fund and are established pursuant to such Third Party Fund’s Governing Documents.

The receipt of any fees that do not offset the management fees discussed in this Item 5 as well as below in Item 6 presents HPS with an incentive to maximize the amount of such fees and to cause applicable Clients to make investments that could generate such fees even if HPS may not have otherwise made such investment for the Clients in the absence of such fees. In addition, because certain of HPS’s Clients typically will not pay compensation until capital is drawn or investments are made, there is an incentive for HPS to call capital or to invest such Clients’ capital earlier in such cases than it would have if management fees were based on capital commitments.

As discussed below, certain Clients, in particular those with structured credit strategies as a part of their investment program, make investments in collateralized loan obligation (“CLO”) securities, particularly in equity or subordinated tranches issued by CLOs for which HPS or an affiliate serves as collateral manager (each, an “HPS CLO”). To the extent a Client purchases CLO equity of an HPS CLO, it is expected that HPS or its affiliate will reduce (or rebate) all or a portion of the fees that would have been paid indirectly by the Client to HPS or its affiliate as the collateral manager at the CLO level or that HPS will reduce (or rebate) the management fees charged to the Client. Conflicts associated with an investment by a Client in an HPS CLO are discussed below in Item 11.
Management Fee
Per the relevant Governing Documents of each Client, HPS is paid a quarterly, monthly or semi-monthly management fee generally at the beginning or end of each such period. The specific payment terms and other conditions of the management fees payable to HPS are set forth in the Governing Documents of each respective Client. Such Governing Documents generally provide for a management fee at an annual rate of up to 2%, based on leveraged or unleveraged invested capital, net assets or total commitments made in respect of the applicable Client. Notwithstanding this Item 5 and Item 6 below, a Client’s Governing Documents may provide for a fee structure pursuant to which HPS is compensated on the basis of different criteria, metrics, or circumstances than those described herein, for example by receiving both a “base management fee” and a “subordinated management fee” based upon the principal amount of collateral obligations held by such Client. In addition, the management fee payment obligation of certain Clients may be designed to change over the duration of such Clients’ investment program, including in the case of a management fee “step-down” at the end of a Client’s investment period.
Performance-Based Compensation
In addition to the management fees described above, HPS generally receives a performance-based allocation or fee of up to 20% of each Client’s net profits, subject in certain but not all cases to a clawback or loss carryforward provision, as applicable. The specific terms and other conditions of such performance-based compensation are set forth in the Governing Documents of each respective Client. Performance-based allocations or fees are based on realized and/or unrealized net profits attributable to a Client, generally subject to or in excess of a hurdle or preferred rate of return to the Client. Generally, performance-based compensation is allocated or paid to HPS, as the case may be, either as of the end of each fiscal year or upon the making of any distribution to investors to which a performance-based allocation or fee relates. With respect to certain Clients, HPS is not entitled to receive any performance- based compensation.

Deduction of Fees
The management fees and/or performance-based fees, as applicable, described under this Item 5 and in Item 6 below are deducted from Clients’ assets for certain Clients, while other Clients, including certain Third Party Funds, are billed for such fees and compensation.

Performance-based allocations, when applicable, are reallocated from the capital account of the underlying investor to the capital account of HPS or its affiliate.

Certain Clients must pay their management fees in advance. Such Clients may terminate their management agreements in accordance with the terms of such agreements and receive a prorated refund of any prepaid management fees.

Additional Fees and Compensation
In addition to fees described above, HPS, for itself or on behalf of its operating partners, may receive, and does receive with respect to an existing HPS Fund, monitoring fees with respect to certain portfolio company investments. Such fees are paid to HPS on a recurring basis for certain consulting services provided in respect of such investments. In addition, HPS receives agency or servicing fees with respect to certain investments. Unless otherwise detailed in the Governing Documents, Clients will generally not share (or economically benefit from) such monitoring, agency or other servicing fees.
Expenses
HPS, each of the Relying Advisers and any affiliated general partners will be generally responsible for all of their respective overhead costs and expenses, to the extent that such costs and expenses are not otherwise borne by one or more Clients. In addition to the foregoing fees, each Client will generally pay the operating and investment expenses related to the affairs of such Client, including, but not limited to: (i) expenses (including any taxes associated therewith) relating to the identifying, sourcing, investigating, making, holding, monitoring, servicing, valuing, sale or proposed sale of any actual or potential investment, such as retainers and success fees and other compensation paid to sourcing, operating or joint venture partners (discussed below in Item 8), deal initiation expenses, professional (including legal, consulting and due diligence) fees and expenses, research and data fees (including news, market and quotation services), fees for pricing services, rating agency fees, due diligence costs and expenses, underwriting fees, fees to agents, clearing and settlement costs, trading commissions, brokerage commissions, dealer spreads, interest expenses and other expenses associated with leverage, custodial fees, bank service fees, legal, accounting and tax expenses relating to investments and other charges for or related to transactions, attending conferences (e.g., for analysts, industries or companies), lodging, travel and travel-related expenses, including transportation, meals and related expenses (whether incurred working at the office after customary work hours or out of the office at any time), entertainment expenses, including any such expense associated with proposed investments that are ultimately not made by the Client (including those expenses allocable to a co-investor’s proposed participation in the relevant investment or that would have been borne directly or indirectly by co-investors if the relevant investment and any co-investment had been completed);

(ii) all ongoing operational and administrative expenses of the Client that are not reimbursed by portfolio companies, including legal, compliance, auditing, accounting, consulting, expert, investment banking, rating agency and other professional fees and financing fees, expenses related to updating the Client’s Governing Documents, maintenance of the Client’s books and records, due diligence costs, taxes, tax returns, tax compliance and expenses relating thereto, the applicable management fee, the fees and other expenses of the Client’s administrator (including middle and back office services as performed), expenses incurred in connection with the dissolution and liquidation of the Client, and expenses associated with the Client’s financial statements, preparation and compliance related thereto, expenses and costs in connection with any government and regulatory filings, limited partner advisory committee meetings, annual meetings, costs of investor communications (including reports to investors), preparation and delivery to the investors of wires, financial reports, valuations, investment summaries and other information pursuant to the Client’s Governing Documents and other administrative expenses of the Client, whether performed by HPS or by one or more third party service providers;

(iii) the costs of all subsidiaries and other vehicles through which investments are made, held or managed for legal, tax, regulatory or other considerations, including costs associated with the establishment of any such subsidiary entities, overhead expenses in connection with the operation, dissolution and liquidation of any such entities and costs associated with establishing and maintaining a permanent residence in certain jurisdictions (such as rent for office space, related overhead and employee salaries and benefits);

(iv) all costs associated with borrowing including without limitation, any costs and expenses incurred in connection with or incidental to the incurrence or refinancing of any credit facility, loan servicing (assets and liabilities), guarantees or other obligations of the Client; (v) all insurance (as further described below in this Item 5), litigation-related and indemnification expenses incurred in accordance with, and subject to the limitations of, the Governing Documents of the Client; (vi) the costs and expenses of organizing the Client, raising capital for the Client, and offering interests in the Client, including fees and expenses of counsel to and agents of the Client, the general partner and the manager, travel and travel-related expenses (including transportation, meal, business entertainment and lodging expenses) and other expenses, in each case, incurred in connection with the formation and marketing of the Client and related entities, the preparation of the Governing Documents, compliance with applicable laws or regulations and the offering of interests in the Client; (vii) unconsummated investment expenses and other charges for transactions as discussed below in this Item 5; (viii) compensation paid to boards of directors, general partners or trustees of the Client, as applicable, and other administrative or operating expenses, including the costs of third-party portfolio analysis products and services (including software packages) and research costs and expenses (including, without limitation, third-party research products and services such as portfolio modeling and analyses, third-party pricing services, price quotation services, data feeds (e.g., Bloomberg) (including any computer hardware and connectivity hardware (e.g., telephone and fiber optic lines) incorporated into the cost of obtaining such research and market data), credit rating services and subscriptions or publications regarding investments) for, or allocated to, the Client, whether utilized by investment or non-investment personnel of HPS.;

(ix) travel and entertainment expenses related to the affairs of the Client, which may include expenses for the use of charter flights, first class or business class travel;

(x) travel and travel-related expenses not related to investments or potential investments (including, without limitation, transportation, meal, entertainment and lodging expenses) incurred in connection with the Client’s business, including, without limitation, meetings with Investors and attending conferences (e.g., for analysts, industries or companies);

(xi) expenses incurred in connection with obtaining legal, compliance, tax, financial and accounting advice and the advice of other consultants and experts on behalf of the Clients, including, without limitation, unaffiliated third-party service providers;

(xii) expenses incurred in connection with the registration and qualification or exemption of the Client under any applicable U.S. federal, state or non-U.S. laws;

(xiii) out-of-pocket expenses incurred in connection with the collection of amounts due to the Client from any person;

(xiv) expenses incurred in connection with the preparation or distribution of any reports, circulars, forms or notices, or any tax preparation expenditures, including any costs or expenses incurred in connection with the preparation or distribution of tax information and tax returns, costs and expenses incurred in connection with compliance with FATCA obligations;

(xv) reasonable out-of-pocket expenses incurred by members of a limited partner advisory committee (or similar body) in connection with attendance at meetings of the limited partner advisory committee; (xvi) expenses of limited partner advisory committee (or similar body) or fund advisory committee meetings and annual (or other) meetings of investors; (xvii) any taxes (and any interest, additions to tax, penalties or expenses relating to any such taxes) directly or indirectly imposed on, or required to be paid or withheld by the Client or any of its affiliates with respect to the Client or any investor (including any entity taxes), but not including any taxes (or any interest, additions to tax, penalties or expenses relating to any such taxes) imposed on income attributable to or distributions made to, an investor as a result of such investor’s residence or domicile or otherwise as a result of the tax status of such investor (which may be treated by the general partner as for the account or sub-account of that investor); and (xviii) extraordinary or non-recurring expenses (including, without limitation, indemnification expenses and advances of fees and expenses to indemnitees that may be subject to a right of indemnification under the Client’s Governing Documents). For the avoidance of doubt, the above expenses are not meant to be an exhaustive list. When allocating expenses, HPS must first determine whether such expenses are the Client’s “own” expenses (for example, because they fall within the categories noted above, are similar to such expenses or are extraordinary expenses of a Client, in each case as determined by HPS in its sole discretion) and therefore are to be borne by the Client or whether such expenses are expenses of HPS. In certain instances where expenses are incurred partially “for the benefit of” HPS and partially “for the benefit of” the Client, such expenses are allocated by HPS in a manner it determines to be fair and equitable, taking into account any factors it deems relevant to the allocation of such expenses. In addition, where a particular expense or category of expenses is incurred by one or more Clients, HPS, at its discretion, generally allocates such expense or category of expense among the Clients in a manner it determines to be fair and equitable. The factors considered by HPS in allocating expenses include, without limitation, the net asset value or capital commitments of each Client, the relative holdings of a specific investment among applicable Clients, and the degree of usage on behalf of, and the relative benefits to, HPS and/or its affiliate and each such Client, in each case as HPS determines in its discretion. Generally, investment-related expenses are allocated taking into account each applicable Client’s net asset value (in the case of an open-end fund Client) or capital commitments (in the case of a closed-end fund Client) or in the case of a specific investment that has been consummated, the relative holdings of such investment among applicable Clients, generally including leveraged borrowings. However, certain investment-related expenses, including certain expenses related to sourcing investment opportunities generally (i.e., not associated with any particular investment) are generally allocated based on the equity capital commitments of the relevant Clients, notwithstanding the fact that the investment itself may have been allocated based on equity commitments plus leveraged borrowings. In such circumstances, Clients that do not utilize leverage in their investment programs may be allocated a larger proportion of investment-related expenses relative to their investment allocation size, due to the effect of leverage enhancing investment allocations. Similarly, broken deal expenses are generally allocated based on facts and circumstances as determined by HPS. For closed-end fund Clients, for example, broken deal expenses are typically allocated based on each Client’s equity capital commitments plus leveraged borrowings as such investment would have had been allocated on such basis had it been consummated. In other cases, for example for open-end fund Clients, broken deal and other investment-related expenses are generally allocated based on net asset value of such Clients, regardless of the degree of leverage utilized by such Clients in their investment programs. Lastly, Clients that are organized to invest only to the extent of available capacity after investment allocations are made to other clients are not allocated certain investment-related and other expenses (such as broken deal expenses or general investment sourcing expenses not associated with any particular investment), as there is no certainty that such Clients will receive an allocation with respect to any particular investment. In some circumstances, expenses may be allocated among all Clients within an investment strategy even if expenses were incurred only with respect to one or more specific Clients. In connection with joint ventures, certain Clients which are members of such joint ventures may incur expenses although other Clients may benefit from transactions resulting from such joint ventures (similarly, certain fees that are earned in connection with joint venture transactions may only be paid to the Clients which are members of such joint ventures while other Clients that participate in transactions resulting from such joint ventures may not receive such fees). Such determinations are inherently subjective, may not be precise and give rise to conflicts of interest. There can be no assurance that a different manner of calculation would not result in certain Clients bearing less (or more) expenses relative to other Clients or the Clients bearing less (or more) expenses relative to HPS and its affiliates. Please see “Co-Investment Allocations” in Item 11 for more detail regarding the allocation of expenses in connection with co-investments made alongside Clients. With respect to certain Clients, HPS has purchased and maintains an omnibus insurance policy that provides coverage to such Clients, certain indemnitees under such Clients’ Governing Documents and HPS and its affiliates. The omnibus insurance policy provides coverage to HPS and its affiliates for events unrelated to Clients. HPS allocates the cost of such insurance policy among itself and the covered Clients in a manner it deems reasonable, and such allocation may change over time. Other Clients continue to maintain their own insurance policies pursuant to the respective Governing Documents. Notwithstanding the foregoing, HPS may allocate any such expense on a basis other than as set forth above if HPS determines that such allocation would be more equitable. Additionally, where a Client owns an equity stake in a portfolio company, the value of its equity investment will be affected by expenses incurred by such portfolio company. Such expenses may include costs incurred by personnel of HPS in connection with board positions and other activities with respect to such portfolio company, including reimbursement for out-of-pocket expenses incurred in connection with such activities and monitoring, agency or other servicing fees HPS may receive from time to time. See Item 12 for more detail on HPS’s brokerage practices. please register to get more info

As described in the response to Item 5 above, HPS and its affiliates receive performance-based compensation from certain Clients. Certain employees of HPS manage both accounts that are charged a performance-based fee and accounts that are charged only a management fee. HPS may have a conflict of interest between its responsibility to act in the best interests of the Clients, on the one hand, and any benefit, monetary or otherwise, that may result to it or its affiliates from the services provided to the Clients, on the other hand. For example, with respect to Clients from which HPS receives only a management fee, HPS may have an interest in engaging in relatively safe investments in order to receive such management fee. For those Clients for which HPS may only collect a management fee calculated based on the invested capital (including or excluding leveraged borrowings, as applicable) regardless of the point in the Client’s investment period, HPS may have an interest in making investments it otherwise may not have made in order to receive such management fee or at a pace which HPS might not otherwise invest if management fees were based on capital commitments.

On the other hand, with respect to Clients from which HPS receives performance-based compensation (including the carried interest or incentive fee paid to the general partners or special limited partners affiliated with HPS), HPS may have an interest in engaging in riskier or more speculative investments than would be engaged in if the performance-based compensation did not exist in order to increase the potential compensation with respect to such Clients. HPS may also be incentivized not to permanently write down or write off or dispose of an investment that has poor prospects for improvement in order to receive ongoing management fees in respect of such investment and potential carried interest or incentive fee distributions if such asset appreciates in the future. In addition, the method of calculating the carried interest or incentive fee may result in conflicts of interest between HPS, on the one hand, and the investors, on the other hand, with respect to the management and disposition of investments. Additionally, the existence of a clawback obligation may create an incentive for HPS to defer the disposition of one or more investments if those investments would result in a realized loss, a return on investment that was less than the preferred return and/or the finalization of dissolution and liquidation of a private fund where a clawback obligation would be owed.

HPS may also have an incentive to favor a Client that pays performance-based compensation over a Client that pays management fees only or pays lower performance-based compensation.

The HPS Funds have different performance-based compensation arrangements, which may subject HPS to other potential conflicts of interest with respect to the allocation of investment opportunities. For example, the performance-based compensation for the open-ended funds is generally based on such funds’ realized and unrealized performance at the end of each fiscal year or other calculation period, while the performance-based compensation for the closed-end funds is generally paid only after the proceeds from their investments have been realized. HPS could be incentivized to favor accounts that pay performance-based compensation sooner than other accounts or that pay higher performance-based compensation than other accounts. HPS may also receive different amounts of management fees and/or performance-based compensation from a Client as compared to one or more Clients investing alongside it. As a result, HPS’s interests with respect to each may not be aligned, and it may be incentivized to favor one or more Clients paying higher management fees and/or performance-based compensation over a Client when allocating investment opportunities. In order to seek to address the potential conflicts with respect to the management of one or more Clients, and as discussed in Item 11 below, HPS has developed policies and procedures that provide that HPS will allocate investment opportunities and make purchase and sale decisions among applicable Clients in a manner that HPS considers, in its sole discretion, to be fair and equitable. In many cases, these policies may result in the pro rata allocation of limited opportunities across Clients, but in many other cases, the allocations may reflect numerous other factors based upon HPS’s good faith assessment of the best use of such limited opportunities relative to the objectives, disclosure to and Governing Documents of applicable Clients including, in certain instances, the expectation that an investment will be allocated to a Client only to the extent available capacity exists, and requirements of each such Client and applying a variety of other factors, including those further described in each Client’s Governing Documents. please register to get more info

As described in the responses to Items 4 and 5 above, HPS provides investment advisory services to: (i) HPS Funds; and (ii) Third Party Funds. Such Clients generally are managed accounts, domestic and foreign limited partnerships, companies, limited liability companies, trusts and other vehicles that are not registered or required to be registered under the U.S. Investment Company Act of 1940, as amended (the “Company Act”). In addition, the securities issued by the Clients are not registered or required to be registered under the Securities Act of 1933, as amended (the “Securities Act”), and are generally privately placed to qualified investors in the United States and elsewhere.

The investors in the Clients are primarily sophisticated investors, which include, but are not limited to, financial institutions, public and corporate pension funds, sovereign wealth funds, funds of funds, endowments, foundations and family offices, as well as individuals. All investors are subject to applicable suitability requirements. Generally, an investor participating in an HPS Fund or Third Party Fund is required to meet certain suitability and net worth qualifications, including that such investor be (i) an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act and (ii) either (a) a “qualified purchaser” as defined in Section 2(a)(51) of the Investment Company Act or (b) a “knowledgeable employee” within the meaning of Rule 3c-5 of the Investment Company Act.

Generally, the minimum initial investment amount for investors in the HPS Funds is between $100,000 and $10,000,000. The minimum initial investment amount generally can be waived at the discretion of the general partner, board of directors, trustees and/or administrator of each HPS Fund, but not below an amount required under applicable law.
Agreements with Certain Investors
Certain investors in the HPS Funds or Third Party Funds have been granted one or more of the following rights with respect to their investments: (i) a reduced management fee and/or performance-based compensation and/or operating expense; (ii) the right to receive improved fees, liquidity, information rights and other terms received by other investors; (iii) the right to receive certain additional information with respect to certain funds, including position-level portfolio information or events related to HPS; (iv) the right to reserved capacity for a certain fund; (v) notification to the investor with respect to the investor’s ownership percentage of a certain fund; (vi) limitation on the investor’s ownership percentage of a certain fund below certain thresholds; (vii) notification to the investor with respect to the ownership by benefit plan investors of a certain fund’s equity classes; (viii) certain limitations on an investor’s confidentiality obligations under a certain fund’s organizational documents pursuant to laws or regulations to which the investor is subject (such as the public information or “sunshine” laws); and (ix) an acknowledgement that such investor is entitled to sovereign status under U.S. federal, state or non-U.S. law.

In addition to the above, certain investors in the HPS Funds or Third Party Funds have been granted one or more additional rights with respect to their investments, including, but not limited to: (i) the right to opt out of the requirement to fund capital calls or otherwise be excused from participating in certain investments due to regulatory, tax or public policy or the investor’s internal considerations; (ii) the right to designate one member of an investor advisory or oversight committee; (iii) rights with respect to distributions in kind; (iv) rights with respect to transfers of interests; (v) the right to receive information regarding the investment and/or disposition strategy of the Client; and, (vi) the right to receive information regarding, and/or participate in, potential co-investment opportunities. please register to get more info

Methods of Analysis
HPS combines a disciplined investment approach with a substantial platform for transaction sourcing. Through this platform, investment professionals expect to identify and invest in a select number of investment opportunities. HPS investment professionals seek to adhere to Clients’ investment guidelines and employ HPS’s core principles of investment analysis, due diligence, active portfolio management and risk management. While the methods of analysis will vary depending on the specific investment strategy, HPS’s investment professionals endeavor to employ the following key tenets as part of their investment due diligence and monitoring process:

Disciplined Screening Process. The investment teams intend to adhere to a disciplined, focused investment screening and selection process with an emphasis on rigorous analysis and appropriate levels of due diligence. HPS’s due diligence and risk management processes utilize and benefit from the substantial resources within HPS. HPS also retains on behalf of its Clients, in certain situations, external consultants, advisors and accountants to augment due diligence.

Global Sourcing Platform. HPS expects its investment selection process to be significantly enhanced by a global sourcing platform and will seek to build a strong pipeline of investment opportunities through the relationships maintained by its investment professionals and HPS.

Focusing on Fundamental Analysis, Due Diligence and Capital Preservation. To an appropriate extent, each investment strategy generally seeks to: (i) pursue investments where HPS’s investment professionals have conducted meaningful due diligence on the sector, the company and its assets; and (ii) utilize information from HPS investment professionals’ relationships with management teams, consultants and industry experts. When deemed appropriate, the investment team will seek to incorporate into the due diligence process: (i) review of historical filings, financial information and other publicly-available information; (ii) assessment of financial projections, as appropriate; (iii) business and industry diligence including, where appropriate, meetings with senior management team, often in conjunction with retained third party experts; (iv) site/plant visits (where relevant and appropriate), in certain cases in conjunction with retained industry-specific independent engineers; (v) accounting and quality of earnings review, often through retention of external accountants; (vi) “channel checks” on the company, industry and management team, utilizing the investment professionals’ relationships as well as the institutional relationships within HPS; (vii) background checks on senior management and members of the board of directors using external providers; and/or (viii) detailed legal analysis of the company and the investment documentation.
Investment Strategies
HPS engages, on behalf of Clients, in one or more of the investment strategies summarized below. Further detail regarding the following investment strategies is included in each Client’s Governing Documents. HPS may and currently does allocate some or all of its management responsibilities to affiliated sub- advisers, including one or more of the Relying Advisers, pursuant to sub-advisory agreements. Asia Long/Short Credit: This strategy focuses in the Asia-Pacific region and seeks to generate attractive risk-adjusted uncorrelated returns with an emphasis on capital preservation, limited market directionality and a view toward liquidity. This strategy invests primarily in corporate and sovereign bonds and credit default swaps. However, this strategy may also include other instruments, including equities, loans and other derivative and credit products. This strategy may also include hedging and leverage. This strategy’s investments will generally fall within the following five areas: short credit, performing credit, capital structure arbitrage, event driven and stressed and distressed credit. CLOs: This strategy consists of structured credit vehicles that invest principally in floating rate secured corporate loans through a leveraged capital structure which seeks to benefit from low cost, long term, stable debt financing. This strategy is subject to certain thresholds, as is typical for CLOs, with respect to collateral quality, asset-type concentration, geographic exposure, ratings, covenant terms and coverage tests.

Core Senior Loans: This strategy seeks to generate current income while preserving capital by investing primarily in newly originated secured debt, focusing on established, stabilized middle market borrowers. The strategy generally expects to pursue a buy and hold strategy, with returns generated primarily from ongoing interest income as well as original issue discount, closing payments, commitment fees, prepayments and related penalties. This strategy is similar to the Specialty Loans strategy described below, save for different asset-level yield targets and specific investment guidelines.

Enhanced Income: The strategy seeks to generate attractive risk-adjusted returns with an emphasis on capital preservation. This strategy seeks to invest primarily in corporate debt instruments, including bank loans and high yield bonds and may also invest in other instruments, including equities, credit default swaps, structured credit instruments and other derivative products. This strategy may also hedge its portfolio to reduce volatility and protect against systemic risks as well as enter into opportunistic short positions in specific circumstances.

European Asset Value: This strategy seeks to invest opportunistically over a cycle in a variety of performing and non-performing single assets, portfolios and platforms with a primary focus on Europe. For performing assets and/or loans, the strategy focuses on acquiring and aggregating like assets with dedicated operating platforms and for non-performing loans, the strategy pursues complex, non- commoditized portfolios and utilizes operating platforms. Utilization of operating platforms provides the strategy with the ability to leverage sector and/or asset specific expertise, benefit from economies of scale, and seek multiple paths to exit scenarios.

Leveraged Loans: This strategy invests primarily in senior secured term loans. The strategy may also invest in: (i) second lien term loans, (ii) senior secured bonds, which typically (a) are first lien debt, (b) have a first lien on certain pieces of the issuer’s assets, (c) have a second lien on all or certain of the issuer’s assets, and/or (d) are a combination of the foregoing, and (iii) unsecured high yield bonds, which are debt obligations that are often subordinate in right of payment to senior secured term loans, senior secured bonds and second lien term loans but are senior to equity in a leveraged capital structure. This strategy is similar to the Liquid Loans strategy described below, save for different exposure targets and specific investment guidelines.

Liquid Loans: This strategy provides exposure to a diversified, actively managed portfolio consisting primarily of broadly syndicated senior secured loans. This strategy is expected to invest mainly in senior secured term loans. The strategy may also invest in: (i) second lien term loans, (ii) senior secured bonds, and (iii) unsecured high yield bonds, which are debt obligations that are often subordinate in right of payment to senior secured term loans, senior secured bonds and second lien term loans but are senior to equity in a leveraged capital structure. This strategy is similar to the Leveraged Loans strategy described above, save for different exposure targets and specific investment guidelines. Media, Communications and Technology Growth Equity: This private equity strategy seeks significant long-term capital appreciation by making early- to late-stage investments in media, communications and technology-based companies both in the United States and internationally. This strategy generally seeks to make equity investments in portfolio companies with a focus on target portfolio companies that fit a specific profile within the media, communications and technology industry sectors. Mezzanine Debt: This strategy focuses on investments in privately offered mezzanine securities, which are fixed-income securities, such as debt or preferred stock, typically in conjunction with an equity component such as common stock, warrants or options. This strategy will consider a variety of transactions, including leveraged buyouts, recapitalizations, refinancings, restructurings and acquisitions. This strategy makes investments in: (i) mezzanine securities, including subordinated debt securities, preferred equity securities, convertible securities, participations and other fixed-income securities and obligations; (ii) equity and equity-related securities, including common stock, warrants and other securities with equity-like features related to the applicable Client’s mezzanine investments; and, (iii) in select situations, in senior debt instruments and other opportunistic investment including unitranche securities, structured debt tranches, convertible debt, convertible preferred stock and equity investments unrelated to these instruments. The majority of investments are expected to be in securities of mid-cap companies in North America and Europe, although investment may be made in Latin America, Asia and elsewhere globally.

Opportunistic CLO: This strategy makes investments in CLO tranches generally managed by unaffiliated third party CLO managers in either the primary or secondary market but also has the ability to invest in CLOs managed by HPS or its affiliate. The strategy is focused on providing credit exposure diversification based on the underlying assets of the CLO tranche as well as diversification with respect to manager style due to investments in a variety of CLO managers. This strategy may, at times, focus solely on investing in CLO tranches of a specific rating. The strategy seeks to achieve current income and preservation of capital consistent with investments in rated notes (i.e., unsecured subordinated notes and preference shares and mezzanine notes) of CLOs.

Real Estate: This strategy utilizes a strategic relationship with a third party real estate developer, owner and operator in the United States to invest in real estate debt securities. The strategic relationship primarily pursues investments in debt or debt-like securities related to transitional and stabilized commercial (office, multi-family, retail, industrial, hospitality, specialty-use), and/or for-sale residential real estate assets located in the United States The strategy seeks to invest in the debt instruments of well- established counterparties in order to: (i) finance acquisitions, (ii) refinance existing indebtedness, or (iii) fund value-add and transitional business plans, in connection with projects a majority of which are expected to be sponsored by third party equity partners and/or developers..

Specialty Loans: This strategy primarily invests in newly originated secured debt. Investments made under this strategy are typically floating-rate fixed-income instruments and typically represent the most senior portion of the issuer’s capital structure, ahead of any mezzanine, high yield bonds and equity tranches. The term “secured debt” refers to debt that is secured by a security interest in one or more assets of the issuer, without reference to the legal form of the debt contract (loan, bond, note or otherwise). This strategy is similar to the Core Senior Loans strategy described above, save for different asset-level yield targets and specific investment guidelines. Special Situations: This strategy will primarily focus on distressed situations (including restructurings and special situations). The strategy’s investment objective is to generate long-term returns through capital appreciation and current income with strong downside protection by exploiting market inefficiencies. Investments may take the form of debt and equity and will be focused on distressed private debt, distressed public debt, performing credit in distressed capital structures, liquidation stubs, litigation claims and trade claims, and asset-backed debt. While the strategy will be long biased, it may invest in short positions (both speculative shorts as well as hedging). The strategy will seek situations where principal is protected in a downside scenario and where the investment team believes there are numerous catalysts to unlock value to maximize upside potential. The strategy will seek to influence or control a situation as a means of driving returns, both through scale of holdings and the ability to infuse new capital.
Risk Factors
The investment strategies employed by HPS on behalf of its Clients involve substantial risks, including the risk of loss of an investor’s entire investment. The following is a summary of the material risks associated with the investment strategies employed by HPS. Certain of the risks discussed below apply more specifically to particular investment strategies or investments in different types of securities or other investment types than others that investors should be prepared to bear. The risks involved for each investor will vary depending on the Client’s investment strategy and types of investments in its portfolio based on what has been agreed to within its Governing Documents with HPS. Although it is comprehensive, the below list is not intended to be exhaustive and therefore not all possible risks have been described. More detailed information with respect to the following risk factors and the applicability of the following risks factors to each Client managed by HPS is included in each Client’s Governing Documents.

Risks Related to an Investment in an HPS Fund or Third Party Fund:

Inability of HPS Funds or Third Party Funds to Meet their Investment Objectives. HPS cannot provide assurances that it will be able to identify, choose, make or realize investments of the type targeted for its Clients, or that any Client will be able to invest fully its committed capital. There is also no guarantee that HPS will be able to source attractive investments for its Clients within a reasonable period of time. There can be no assurance that Clients will be able to generate returns for their investors or that returns will be commensurate with the risks of the investments. Clients may not be able to achieve their investment objectives and investors may lose some or all of their invested capital.

Dependence on the Investment Team. The success of Clients depends in substantial part on the skill and expertise of the Clients’ investment team. Although HPS believes the success of its Clients is not dependent upon any particular individual, there can be no assurance that the members of a particular investment team will continue to be affiliated with HPS throughout the life of a Client or will continue to be available to manage said Client. The unavailability of members of a particular investment team to manage a Clients’ investment program could have a material adverse effect on said Client. Further, the success of certain Clients related to a strategy that may not have a significant operating history or investing track record depends in substantial part on the skill and expertise of the investment teams and other relevant investment professionals of the Clients, which are not in all instances solely focused on a single investment strategy.

Prior HPS Funds’ or Third Party Funds’ Results Not Indicative of Future Performance. The performance of earlier investment funds or accounts managed by HPS, including predecessor Clients of established investment strategies, is not indicative of the expected performance of any current or future Client, since Clients will make different investments than earlier Clients. Accordingly, the performance of earlier Clients, including predecessor Clients of established investment strategies, should not be construed as a projection of a Clients’ future performance. In addition, in certain circumstances, a predecessor Client of established investment strategies may not have completed its investment cycle at a time when it is raising a successor Client so actual returns to the investors of such predecessor Clients of established investment strategies may differ materially from those described in a successor Client’s Governing Documents. Competitive Investment Environment. The business of investing in the types of investments contemplated by Clients is highly competitive and involves a high degree of uncertainty. Market competition for investment opportunities includes other mezzanine funds, hedge funds, private equity funds and other private investors. Some of these competitors may have access to greater amounts of capital and to capital that may be committed for longer periods of time or may have different return thresholds than Clients, and thus these competitors may have advantages not shared by Clients. In addition, competitors may have incurred, or may in the future incur, leverage to finance their debt investments at levels or on terms more favorable than those available to Clients. Strong competition for investments could result in fewer investment opportunities for the Clients, as certain of these competitors have established or are establishing investment vehicles that target the same or similar investments that Clients intend to purchase. Over the past several years, many investment funds have been formed with investment objectives similar to those of Clients, and many such existing funds have grown in size. These and other investors may make competing offers for investment opportunities identified by the relevant general partners or investment managers which may affect Clients’ ability to participate in attractive investment opportunities. Moreover, identifying attractive investment opportunities is difficult and involves a high degree of uncertainty. HPS may identify an investment that presents an attractive investment opportunity but may not be able to complete such investment in a manner that meets the objectives of the Clients. As discussed in Item 5 above, Clients may incur significant expenses in connection with the identification of investment opportunities and investigating other potential investments that are ultimately not consummated, including expenses related to due diligence, transportation and legal, accounting and other professional services as well as the fees of other third-party advisors.

Investment Illiquidity; Restrictions on Transfer or Withdrawal. An investment in a Client is suitable only for certain sophisticated investors that have no need for immediate liquidity in respect of their investment and who can accept the risks associated with investing in illiquid investments. Investors will generally not be permitted to transfer their interests without the prior written consent of the applicable general partner, which may be granted or withheld in such general partner’s discretion, and which consent the general partner expects to withhold if it determines that such transfer would result in any risk that the relevant Client would be treated as a “publicly traded partnership” taxable as corporation for U.S. federal income tax purposes or would result in any adverse tax consequences to such Client (or to its investors generally). Furthermore, the transferability of the interests will be subject to certain restrictions contained in the applicable Governing Documents and may be affected by restrictions on resale imposed under applicable securities laws. A public market does not currently exist for the interests and one is not expected to develop.

Indemnification. As applicable, Clients are generally required to indemnify their general partners, their investment managers, members of their investor or limited partner advisory committees and each other person specified in the applicable Governing Documents for liabilities incurred in connection with such Client’s activities, except in certain circumstances. Clients will generally also indemnify certain other Service Providers (as defined below), including the Client’s administrator and auditors, as well as consultants, and sourcing, operating and joint venture partners. Such liabilities may be material and may have an adverse effect on the returns to the investors. The indemnification obligation of the Client would be payable from the assets of the Client, including the unfunded commitments of the investors. If the assets of the Client are insufficient, certain distributions previously made to the investors are subject to recall by the applicable Client in order to satisfy its indemnification obligations. Such distributions may be eligible for recall by the Client even though the distribution had been made in prior years, and such recall is likely to reduce the returns recognized by the investors in the Client. Defaulting Investors. For Clients that are structured as closed-ended funds, the failure of an investor to fund all or any portion of a drawdown (including in respect of fees and/or including, without limitation, indemnification obligations) when due, will cause such investor to be in default. The amount that such investor failed to contribute will generally accrue interest. In addition, the general partner of the applicable Client may exercise other remedies available by law or in equity against a defaulting investor in accordance with the Governing Documents, including, as the case may be, (i) causing the investor to forfeit certain distributions; (ii) excluding the investor from future investments; (iii) reducing the balance of the investor’s capital account in the Client; (iv) causing a forced sale of the investor’s interest; (v) permitting one or more investors of such Client to cover such amount that a defaulting investor failed to contribute; (vi) admitting a new investor to the Client; (vii) causing the Client to borrow in respect of such amount that a defaulting investor failed to contribute; and/or (viii) taking any other action as HPS in good faith deems prudent in such situation, including, but not limited to, liquidating the Client if other remedies are determined to not be reasonably practicable based on legal, regulatory, or other considerations. Furthermore, in the event of a shortfall by one or more investors in a Client, such Client’s general partner may cause other investors in the Client to increase their capital contributions proportionately in respect of such shortfall. In addition, if investors fail to fund their commitments when due, a Client’s ability to complete its investment program or otherwise to continue operations may be substantially impaired. A default by a substantial number of investors or by one or more investors who have made substantial commitments to the Client may limit opportunities for investment diversification and reduce returns to the Client.

Valuation of Assets. Certain securities and other assets in which Clients may directly or indirectly invest, including investments in senior debt, are not expected to have a readily ascertainable market value and, as appropriate, will be valued by HPS in accordance with its established valuation policies. When HPS determines that the market price does not fairly represent the value of an investment, HPS, as appropriate, will value such investment at fair value as it reasonably determines. HPS has a conflict of interest in providing such valuations. In particular, where applicable, a predecessor funds’ performance information related to unrealized investments is based on HPS’s valuation of such investments. Independent appraisals of such investments are typically not obtained. Further, because of the overall size and concentrations in particular markets, the maturities of positions that may be held by Clients from time to time and other factors, the liquidation values of Clients’ investments may differ significantly from the interim valuations of these investments derived from the valuation methods described in HPS’s established valuation policies. If HPS’s valuation should prove to be incorrect, the stated value of the Clients’ investments could be adversely affected. HPS may delegate its valuation responsibilities to any other person in its discretion. Absent bad faith or manifest error, valuation determinations of HPS (or its delegate) will be conclusive and binding on Clients. In addition, the relevant general partners or special limited partners will not receive performance-based compensation until the investors receive distributions equal to their share of permanent write-downs and write-offs. This creates an incentive for the relevant general partners or special limited partners and HPS to avoid writing down the value of assets or writing off assets that are not readily marketable or difficult to value in order to receive performance-based compensation earlier and higher management fees. In certain cases, a Client may hold an investment in an issuer experiencing distress or going through bankruptcy or other restructuring. In such a situation, HPS may continue to place a favorable valuation on such investment due to HPS’s determination that the investment remains well-positioned to recover its value, despite the distressed state or bankruptcy of the issuer. However, no assurances can be given that this assumption is justified or that such valuations will be accurate in the long term. HPS is engaged in advisory and management services for multiple Clients. In connection with these activities, HPS is required to value assets, including in connection with managing or advising Clients. In this regard, certain business units within HPS may share information regarding valuation techniques and models or other information relevant to the valuation of a specific asset or category of assets, although HPS is under no obligation to engage in such information sharing. HPS will value Clients’ investments according to its established valuation policies as disclosed in the relevant Governing Documents, and may value an identical asset differently than other units within HPS (e.g., when different Clients own such assets with historically different expectations on valuation policies (such as valuing a syndicated loan at “bid” as opposed to “mid” prices) or when an asset does not have a readily ascertainable market price). No Right to Control the HPS Funds’ or Third Party Funds’ Operations. Clients will be managed exclusively by HPS or the applicable general partners. Investors (in their capacity as such) will not make decisions with respect to the management, disposition or other realization of any investment, the day-to-day operations of the Clients, or any other decisions regarding the Clients’ business and affairs, except for limited circumstances set forth in the relevant Governing Documents. Specifically, investors will not have an opportunity to evaluate for themselves the relevant economic, financial and other information regarding investments by the Clients. Investors should expect to rely solely on the ability of HPS or the applicable general partners with respect to the Clients’ operations.

Recourse to the HPS Funds’ or Third Party Funds’ Assets. The assets of each Client, including any investments made by and any capital held by such Client, are available to satisfy all liabilities and other obligations of such Client. If any Client becomes subject to a liability, parties seeking to have the liability satisfied may have recourse to such Client’s assets generally and may not be limited to any particular asset, such as the investment giving rise to the liability. In addition, to the extent the borrowings of a Client and one or more other Client are cross-collateralized, such Client (and the partners of such Client) will be required to satisfy the other Clients’ obligations (and vice versa).

Expedited Investment Decisions. Investment analyses and decisions by HPS may frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities. In such cases, the information available to HPS at the time of making an investment decision may be limited or HPS may not have the time to adhere to its typical due diligence process. Therefore, no assurance can be given that HPS will have knowledge of all circumstances that may adversely affect an investment. In addition, HPS may rely upon independent consultants and other sources in connection with its evaluation of proposed investments, and no assurance can be given as to the accuracy or completeness of the information provided by such independent consultants or other sources or to the Clients’ right of recourse against them in the event errors or omissions do occur.

Trade Errors. Although HPS exercises due care in making and implementing investment decisions, employees of HPS may from time to time make errors with respect to trades made on behalf of a Client. Examples of trade errors include: (i) the placement of orders (either purchases or sales) in excess of the amount of securities HPS intended to trade; (ii) the sale of a security when it should have been purchased; (iii) the purchase of a security when it should have been sold; (iv) the purchase or sale of the wrong security; (v) the purchase or sale of a security contrary to explicit regulatory restrictions or portfolio investment guidelines or explicit restrictions; and (vi) incorrect (i.e., over or under) allocations of securities. Errors that do not result in transactions for a portfolio (such as those that result in a loss of an investment opportunity) will not be viewed as trade errors. HPS will not be liable to a portfolio for any trading losses, liabilities, damages, expenses or costs resulting from trade errors by HPS or similar human errors except those losses, liabilities, damages, expenses or costs (i) resulting from HPS’s intentional misconduct, bad faith or gross negligence or (ii) that may not be waived or limited under applicable law. Given the volume of transactions executed by HPS on behalf of a portfolio, Clients should assume that trading errors (and similar errors) will occur and that the Client will be responsible for any resulting losses, even if such losses result from the negligence (but not gross negligence) of HPS. When determining whether a trade error is the result of gross negligence or not, HPS does not determine whether the individual trading error resulted from HPS’s gross negligence per se; rather, HPS considers if its supervisory procedures were inadequate to prevent such trading errors from recurring with any frequency. HPS will be conflicted when making such decision. HPS may be biased when determining whether losses resulting from a trading error will be borne by the Client. From time to time, HPS or its affiliates may elect to voluntarily reimburse the Client for losses suffered as a result of certain trade errors. However, notwithstanding the previous sentence, Clients should not carry the expectation that a reimbursement will ever take place, and, in evaluating a Client, no decisions should be made in reliance on HPS making any reimbursements to the Client for losses suffered as a result of such trade errors. Any decision to reimburse is not precedential and should not create the expectation of any reimbursement in the future. No Registration of the HPS Funds or Third Party Funds or Interests. None of the Clients are registered as investment companies under the Company Act, in reliance upon an exemption available to privately offered investment companies and, accordingly, the provisions of the Company Act are not applicable to the Clients. In addition, none of the interests in any of the Clients have been and will not be registered under the laws of any jurisdiction (including the Securities Act), the laws of any state of the United States, or the laws of any non-U.S. jurisdiction, and are being offered in reliance upon an exemption from such laws. None of the interests in any of the Clients have been recommended by any U.S. federal or state, or any non-U.S., securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of the relevant Client’s Governing Documents. Any representation to the contrary is a criminal offense.

Insurance. HPS may cause the Clients to purchase and maintain insurance coverage that provides coverage to the Clients, certain indemnified persons, a Client’s general partner or HPS, and/or HPS may purchase and maintain an omnibus insurance policy which includes coverage in respect of the Clients, a Client’s general partner, HPS and their affiliates, as well as other clients of HPS and its affiliates, including certain of their respective indemnified persons (which omnibus insurance policy or policies may provide coverage to HPS and its affiliates for events unrelated to the Clients). The premiums for such shared insurance policies would generally be borne by HPS and the Clients covered by such policies, and such shared insurance policies may have an overall cap on coverage for all the insured parties thereunder. To the extent an insurable event results in claims in excess of such cap, the Clients may not receive as much in insurance proceeds as each Client would have received if separate insurance policies had been purchased for each insured party. Similarly, insurable events may occur sequentially in time while subject to a single overall cap. To the extent insurance proceeds for one such event are applied towards a cap and the Clients experience an insurable loss after such event, each Client’s receipts from such insurance policy may also be diminished. Insurance policies covering the Clients, the premiums of which are paid in whole or in part by the Clients, may provide insurance coverage to fund indemnified persons and advisory committee indemnified persons for conduct that would not be covered by indemnification.

Certain Proceedings and Investigations. HPS and its Clients may be subject to claims (or threats of claims), and governmental investigations, examinations, requests for information, audits, inquiries, subpoenas and other regulatory or civil proceedings. The outcome of any investigation, action or proceeding may materially adversely affect the value of its Clients, including by virtue of reputational damage to HPS and may be impossible to anticipate. Any such investigation, action or proceeding may continue without resolution for long periods of time and may consume substantial amounts of HPS’s time and attention, and that time and the devotion of these resources to any investigation, action or proceeding may, at times, be disproportionate to the amounts at stake in such investigation, action or proceeding. The unfavorable resolution of such items could result in criminal or civil liability, fines, settlements, charges, penalties or other monetary or non-monetary remedies or sanctions that could negatively impact HPS and its Clients. In addition, such actions and proceedings may involve claims of strict liability or similar risks against the Clients in certain jurisdictions or in connection with certain types of activities. In some cases, the expense of such investigations, actions or proceedings and paying any amounts pursuant to settlements or judgments would be borne by the appropriate Client. Service Providers Generally. Clients may be dependent upon certain third-party service providers, such as prime brokers, custodians, banks, sourcing or operating partners, and other service providers retained on behalf of or providing services to Clients (referred to within this Item 8 as “Service Providers”). Errors are inherent in the business and operations of any business, and such errors or misconduct could have a material adverse effect on Clients and the investors’ investments therein. At any given time, certain Clients’ securities and other assets may be maintained with brokerage firms which do not separately segregate such assets as would be required in the case of registered investment companies. Under the provisions of the U.S. Securities Investor Protection Act of 1970, as amended, the bankruptcy or failure of any such brokerage firm is likely to have a greater adverse impact on Clients than would be the case if custody of such securities and other assets was maintained in accordance with the requirements applicable to registered investment companies. There is also the risk that a custodian could convert to its own use, assets committed to it by Clients. In addition, service providers may also provide services to other investment firms and investment vehicles with similar investment programs and strategies and, accordingly, may have conflicts of interest in providing services to Clients.

Employee and Service Provider Misconduct. HPS’s reputation is critical to maintaining and developing relationships with existing and prospective investors, as well as with the numerous third parties with which HPS and the Clients do business. In recent years, there have been a number of highly publicized cases involving fraud, conflicts of interest, or other misconduct by individuals in the financial services industry, and there is a risk that an employee of, or contractor to, HPS or its affiliates could engage in misconduct that adversely affects the investment strategies implemented by HPS. It is not always possible to deter such misconduct, and the precautions HPS takes to detect and prevent such misconduct may not be effective in all cases. Misconduct by an employee of, or contractor to, HPS or one of its affiliates, or even unsubstantiated allegations of such misconduct, could result in direct financial harm both to HPS and its Clients as well as harm HPS’s reputation, which would have a materially adverse effect on its Clients. Similar risks may arise from employee misconduct of a service provider to HPS or its Clients.

Rights against Third Parties, including Third Party Service Providers. Clients are reliant on the performance of third party service providers, including HPS, an administrator, auditors and legal advisors. Further information in relation to the duties and roles of certain of these Service Providers is provided in the relevant Governing Documents. In most instances, each investor’s contractual relationship in respect of its investment in a Client is with the applicable Client only and investors of the applicable Client are not in contractual privity with the Service Providers of that HPS Client. Therefore, generally, no investor will have any contractual claim against any Service Provider with respect to such Service Provider’s default or breach. Accordingly, investors must generally rely upon HPS or the relevant general partner to enforce the Clients’ rights against the Service Providers. In certain circumstances, which are generally not expected to prevail, investors may have limited rights to enforce the Clients’ rights on a derivative basis or may have rights against Service Providers if they can establish that such Service Providers owe duties to the investors. In addition, as discussed above, investors will have no right to participate in the day-to-day operation of the Clients and decisions regarding the selection of Service Providers. Rather, HPS or the relevant general partner will select Clients’ Service Providers and determine the retention and compensation of such providers without the review by or consent of the investors. The investors must therefore rely on the ability of HPS and the relevant general partner to select and compensate Service Providers and to make investments and manage and dispose of investments. Counterparty Risk. Clients will be subject to various counterparty risks. For example, the Clients may effect a portion of their transactions in ‘over-the-counter’ or ‘interdealer’ markets or through private transactions. The participants in such markets and the counterparties in such private transactions are typically not subject to credit evaluation and regulatory oversight as are members of ‘exchange based’ markets. This may expose the Clients to the risk that a counterparty will not settle a transaction because of a credit or liquidity problem, thus causing the Clients to suffer losses. Such ‘counterparty risk’ is accentuated for contracts with longer maturities where events may intervene to prevent settlement or where the Clients have concentrated their transactions with a single or small group of counterparties. Furthermore, upon the bankruptcy, insolvency or liquidation of any counterparty, the Clients may be deemed to be a general unsecured creditor of such counterparty and could suffer a total loss with respect to any positions and/or transactions with such counterparty. In the current market conditions, counterparty risk is increased and more difficult to predict. In addition to heightened risk of bankruptcy, there is a risk that counterparties may have their assets frozen or seized as a result of government intervention or regulation. The Clients are not restricted from dealing with any particular counterparty or from concentrating any or all of their transactions with one counterparty.

Action of an Agent. Investments made by certain of the Clients will frequently be negotiated and structured by a syndicate of lenders (the “Lenders”) consisting of commercial banks, investment banks, thrift institutions, insurance companies, finance companies or other financial institutions or industry participants, one or more of which (the “Agent”) will administer such investments on behalf of all of the Lenders. Clients generally will rely on the Agent to collect its portion of the payments on such an investment. Furthermore, Clients will rely on the Agent to use appropriate creditor remedies against the borrower. Typically, the Agent is given broad discretion in enforcing the credit agreement, and is obligated to use only the same care it would use in the management of its own property. In the event that an Agent becomes insolvent, or has a receiver, conservator or similar official appointed for it by the appropriate bank regulatory authority or becomes a debtor in a bankruptcy proceeding, assets held by the Agent under a loan agreement should remain available to Lenders. If, however, assets held by the Agent for the benefit of the Lenders were determined by an appropriate regulatory authority or court to be subject to the claims of the Agent’s general or secured creditors, Clients might incur certain costs and delays in realizing payment on a loan held by an issuer or borrower or suffer a loss of principal or interest.

Risks Associated with Sourcing, Operating or Joint Venture Partners. HPS has historically, and expects in the future to, work with sourcing, operating and/or joint venture partners, including with respect to particular types of investments or particular sectors or regions. These arrangements may be structured as joint ventures or contractual service provider relationships. Sourcing partners and operating partners are independent contractors engaged for particular purposes in connection with the Clients and/or certain of their projects, and are not part of the Affiliated Group (as defined in Item 11 below). Where such a partner is engaged, HPS does not have the opportunity to diligence the individual investments and, instead, relies on its contractual relationship with, and ongoing diligence of, the sourcing or joint venture partner whose interests may differ from those of the Clients. In certain circumstances, HPS commits to invest in a pre-agreed amount of investments negotiated by the sourcing partner and/or joint venture partner subject to pre-agreed criteria and guidelines. Investors should be aware that sourcing, operating and joint venture partners are not expected to owe any fiduciary duties to the Clients. In some cases, employees of operating partners and/or Platforms (defined below) may become employees of a portfolio company or vice versa. In addition, certain of the employees of an operating partner or Platform may formerly have been employees of HPS or its affiliates. Clients may pay retainers, closing, monitoring, performance or other fees to, and/or reimburse expenses incurred by, sourcing, operating and joint venture partners or may share with such parties fees (such as commitment fees) from transaction that would have otherwise been paid to Clients. Such retainer fees may be netted against a closing fee, if applicable, in connection with the related investment. However, if no such investment is consummated, the Client will bear any retainer amounts as an expense. In addition, to the extent the compensation of a sourcing, operating or joint venture partner is based on the performance of the relevant investments, the sourcing, operating or joint venture partner may have an incentive to seek riskier investments than it would have under a different compensation structure. The expenses of sourcing, operating and joint venture partners may be substantial and will be in addition to the relevant management fee and Client expenses. In certain circumstances, the Client or a portfolio company in which the Client invests may pay fees to sourcing, operating and/or joint venture partners in consideration for services, including where HPS may have otherwise provided those services without charge. In other circumstances, sourcing, operating and/or joint venture partners may receive certain third party fees (such as upfront fees, commitment fees, origination fees, amendment fees, ticking fees and break-up fees as well as prepayment premiums) in respect of an investment. While such fees would generally be for the benefit of the Client if received by HPS, any such fees paid to a sourcing, operating and/or joint venture partner will not be shared with the Client. Sourcing, operating and/or joint venture partners invest in certain Clients and HPS reduces or waives the management fee or performance-based compensation for such investors, and includes such investors’ commitments as part of the HPS commitment to the Clients.

Joint ventures may give rise to additional risks, including tax risks, and structures utilized in joint venture contexts, including for legal, tax and regulatory reasons, may adversely affect the Client’s pre-tax returns. In certain circumstances, HPS may co-manage a Client together with a joint venture partner. Such joint venture would continue until the end of the term of such Clients, but could be terminated earlier with the mutual consent of HPS and its joint venture partner or under certain other circumstances. If the joint venture is terminated early, the Client may not (i) fully invest its aggregate capital commitments and/or (ii) achieve its investment objectives. Any disagreements between HPS and its joint venture partner could adversely impact the management of investments held by the Client. In addition, the removal of either HPS or its joint venture partner for cause could terminate the commitment period of the Client and the adversely impact the ability of the remaining manager to manage the existing investments.

In certain circumstances certain sourcing and operating partners are aware of and consulted in advance in relation to certain investments made by the Clients. While sourcing and operating partners will be subject to confidentiality obligations, they are not restricted from engaging in any activities or businesses that may be similar to the business of the Clients or competitive with the Clients. In particular, sourcing and operating partners may use information available to them as sourcing and operating partners of HPS in a manner that conflicts with the interests of the Clients. Except in limited circumstances, the sourcing and operating partners are generally not obligated to account to HPS for any profits or income earned or derived from their activities or businesses or inform HPS of any business opportunity that may be appropriate for the Clients.

Risks Associated with Platforms. Certain Clients are expected to acquire or appoint from time to time platforms (“Platforms”) to act as the servicers of leases and other assets owned by the Clients and to originate new assets or leases. Certain Clients are also expected to acquire leases and other assets that are originated by, or will be serviced by, Platforms owned by another Client. Clients will depend upon the diligence, skill and business relationships of Platforms. Key employees of a Platform may depart at any time, subject to contractual notice periods and non-compete provisions, if any. The departure of a significant number of the employees of a Platform could therefore have a materially adverse effect on the Clients’ ability to achieve their investment objective. Employment practices in certain jurisdictions may also subject Platforms to additional requirements and obligations, including related to pension and severance liabilities, which could have additional adverse effects. Platforms are not expected to provide services to the Clients on an exclusive basis. In addition, the historical performance of a Platform is not indicative of its future performance, and may vary as a result of an adverse development in such Platform’s business, an economic downturn or legal, tax or regulatory changes. Platforms may operate at a loss, may require substantial additional capital to support their operations or to maintain their competitive position, or may otherwise have a weak financial condition or experience financial distress. As part of their compensation, Platforms may receive compensation based on the performance of the assets that they service, as described in the relevant Governing Documents. Transfer of Interests in Platforms. Certain Clients may acquire the ownership interest in a Platform owned by another Client. Similarly, upon or prior to the termination of certain of the Clients, if said Clients hold ownership interests in any Platform, such Clients may transfer such ownership interests to a successor fund or may dispose of such Platform in other ways from time to time, such as by sale to a third-party buyer. Any sale and acquisition of a Platform between Clients will be subject to third-party valuation and consultation with the relevant Client(s) and/or Client advisory committee(s) and limited partner advisory committee (or its equivalent) of such other Client. However, although the relevant Clients may transfer any Platform to a successor fund or a third party, there is no guarantee that such successor fund or third party will purchase the Platforms, or that a Platform will ultimately be purchased at any profit to Clients. As a result, it may be necessary for a Client to hold ownership interests in Platforms for a longer period of time than initially expected. Further, although the acquisition of a Platform by a Client from another Client may result in a gain (in some cases significant) to such other Client, there is no guarantee that a Client will thereafter be able to dispose of such Platform for a gain on a subsequent sale.

Incentive Compensation of Platforms and Operating Partners. Platforms and operating partners may receive compensation based on, among other things, the performance of the assets that they service or the investments that they identify. Therefore, it is possible that certain Platforms or operating partners may receive incentive compensation at the expense of the applicable Clients, even though said Clients, as a whole, do not have net capital appreciation. Such compensation arrangements may create an incentive to make investments or investment decisions that are riskier or more speculative than would be the case if such arrangements were not in effect. In addition, because performance-based compensation may be calculated on a basis which includes unrealized appreciation of Clients’ assets, such performance- based compensation may be greater than if such compensation were based solely on realized gains. In addition, the existence of such incentive fees and other fees, such as management fees based, for example, on the value of assets managed, result in the applicable Clients paying fees twice, once to HPS in the form of management fees and once to the Platforms or operating partner to service or manage the same assets.

Protection of Confidentiality by Investors. Except with respect to certain tax-related matters, investors will be required to keep confidential information relating to the applicable Clients (including information relating to the investors and investments and communications from HPS or the relevant general partner) and/or their investment results and expectations thereof. To protect the sensitive nature of this information, HPS and its affiliates may generally make certain confidential information unavailable to certain or all investors, in some cases based on the status of those investors.

Investor Due Diligence Information. HPS and the applicable general partners will make available, prior to the closing of any applicable Client, to each prospective investor the opportunity to ask questions of, and receive responses from, a representative of HPS and the relevant general partners concerning the terms and conditions of an investment in the applicable Client and to obtain any additional information, if HPS or the relevant general partners possess such information or can acquire it without unreasonable effort or expense. Due to the fact that different potential investors may ask different questions and request different information, HPS or the relevant general partners may provide certain information to one or more prospective investors that they do not provide to all of the prospective investors. None of the responses or additional information provided is or will be integrated into the applicable Governing Documents. Systems Risks. Clients depend on HPS to develop and implement appropriate systems for its activities. Clients may rely on computer programs to evaluate certain securities and other investments, to monitor their portfolios, to trade, clear and settle securities transactions and to generate asset, risk management and other reports that are utilized in the oversight of the Clients’ activities. In addition, certain Clients’ operations interface with or depend upon systems operated by third parties, including loan servicers, custodians and administrators, and HPS may not always be in a position to verify the risks or reliability of such third-party systems. These programs or systems may be subject to certain defects, failures or interruptions, including, but not limited to, those caused by ‘hacking’ or other security breaches, computer ‘worms,’ viruses and power failures. Such failures could cause settlement of trades to fail, lead to inaccurate accounting, recording or processing of trades and cause inaccurate reports, which may affect a Client’s ability to monitor its investment portfolio and its risks. Any such defect or failure could cause Clients to suffer financial loss, disruption of its business, liability to investors or third parties, regulatory intervention or reputational damage. Following the Transaction, HPS has and continues to build new infrastructure to support its businesses. The deployment of new infrastructure and systems creates a risk for unforeseen failures and interruptions.

Systems Risk and Cybersecurity. The Clients depend on HPS to develop and implement appropriate systems for the Clients’ activities. Certain of the Clients’ and the HPS’s operations interfaces are dependent upon systems operated by third parties, including prime broker(s), administrators, market counterparties and their sub-custodians and other service providers. The Clients, HPS and their respective service providers are subject to risks associated with a breach in cybersecurity. Cybersecurity is a generic term used to describe the technology, processes and practices designed to protect networks, systems, computers, programs and data from both intentional cyber-attacks and hacking by other computer users as well as unintentional damage or interruption that, in either case, can result in damage and disruption to hardware and software systems, loss or corruption of data and/or misappropriation of confidential information. For example, information and technology systems are vulnerable to damage or interruption from computer viruses, network failures, computer and telecommunication failures, infiltration by unauthorized persons and security breaches, usage errors by their respective professionals, power outages and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes. Such damage or interruptions to information technology systems may cause losses to the Clients or individual investors by interfering with the processing of investor transactions, affecting the Clients’ ability to calculate net asset value or impeding or sabotaging trading. The Clients may also incur substantial costs as the result of a cybersecurity breach, including those associated with forensic analysis of the origin and scope of the breach, increased and upgraded cybersecurity, identity theft, unauthorized use of proprietary information, litigation, adverse investor reaction, the dissemination of confidential and proprietary information and reputational damage. Any such breach could expose both the Clients and HPS (which in turn may be indemnified by the Clients) to civil liability as well as regulatory inquiry and/or action. In addition, any such breach could cause substantial withdrawals from the Clients. Investors could also be exposed to losses resulting from unauthorized use of their personal information. While HPS has implemented various measures to manage risks associated with cybersecurity breaches, including establishing business continuity plans and systems designed to prevent cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Similar types of cybersecurity risks also are present for issuers of securities in which the Clients invest, which could affect their business and financial performance, resulting in material adverse consequences for such issuers, and causing the Clients’ investments in such securities to lose value. Joint Venture with a Bank. Certain Clients partner with, and other Clients may in the future partner with, one or more banks to make particular investments or types of investments, with, in some instances, such banks having senior exposure to a unitranche loan program and such Clients participating in the junior exposure or vice versa. In doing so, HPS would seek to benefit from the larger combined capital base of working with a partner, as well as the partner’s sourcing channels and expertise. Each Client may be an initial economic participant in such an investment program or may join the investment program after it has begun making investments, in which case the Client may or may not share in the returns of the investments that have already been originated. The structure of this type of investment program will vary on a case by case basis in order to accommodate the nature of the arrangements, applicable bank and other regulatory restrictions, particular considerations applicable to the Clients participating in the investment program, tax considerations and other factors. Where the Clients’ partner is a regulated banking entity, the vehicle established for the Clients’ joint participation with the bank may be subject to bank please register to get more info

HPS does not believe that there have been any legal or disciplinary events that are material to its advisory business or the integrity of its management. please register to get more info

HPS and its management persons are not registered as broker-dealers and do not have any application pending to register with the SEC as a broker-dealer or registered representative of a broker-dealer.
Relying Advisers
The below entities are advisory subsidiaries of HPS (each, a “Relying Adviser” and collectively, the “Relying Advisers”).

HPS, either directly or indirectly, controls the following Relying Advisers:


• HPS Investment Partners (UK) LLP
• HPS Investment Partners (HK), Limited
• HPS ALSC Management, LLC
• HPS Mezzanine Partners, LLC
• HPS Mezzanine Partners II, LLC
• HPS Mezzanine Management III, LLC
• HPS Mezzanine Management 2019, LLC
• HPS Opportunities SL Management, LLC
• HPS RE Management, LLC
• HPS Investment Partners CLO (US), LLC
• HPS Investment Partners CLO (UK) LLP
• HPS EF GP, LLC
• HPS EL SLF 2016 GP, LLC
• CGC, LLC
• CGC III Partners LLC

Each of the Relying Advisers is involved in identifying and monitoring investments recommended or made on behalf of one or more Clients. The Relying Advisers conduct no other investment advisory activities. Principals and employees of the Relying Advisers are subject to HPS’s Code of Ethics.

Principals, employees and certain affiliates of HPS have invested in, and made commitments to invest in, certain HPS Funds and Third Party Funds managed by HPS or a Relying Adviser.

CGC, LLC (“CGC”) has a sub-advisory agreement with Bear Stearns Asset Management Inc. (“BSAM”), an affiliated investment adviser of JPM, to manage certain private equity funds. BSAM also has a revenue sharing arrangement with CGC.
Related General Partners
Certain affiliates of HPS serve in a general partner capacity of certain Clients (the “General Partner Entities”). In reliance on the SEC’s no action letter to the American Bar Association dated January 18, 2012, the General Partner Entities are relying on HPS’s registration with the SEC and are not submitting separate Forms ADV.
Foreign Registrations
HPS operates in Australia pursuant to an exemption from registration granted by the Australian Securities and Investment Commission to those investment advisers already registered with the SEC. HPS Investment Partners (UK) LLP and HPS Investment Partners CLO (UK) LLP are authorized by the Financial Conduct Authority in the United Kingdom. HPS Investment Partners (HK), Limited is authorized and regulated to perform asset management activities with the Hong Kong Securities and Futures Commission.

SEC and CFTC (Commodity Pool Operator and Commodity Trading Advisor)
HPS is registered with the SEC as an investment adviser and is currently exempt from registration with the CFTC as a commodity trading advisor and a commodity pool operator.
Selection of Service Providers
The Clients’ advisors and service providers (including accountants, administrators, lenders, bankers, brokers, attorneys, tax counsel, consultants and investment or commercial banking firms) or their affiliates may provide goods or services to, or have business, personal, financial or other relations with HPS, its employees, affiliates, Clients, and/or portfolio companies. Such advisors and service providers may be investors in one or more of the Clients, sources of investment opportunities or co-investors or commercial counterparties or entities in which HPS or its employees or affiliates have an investment.

Except as required by a Client’s Governing Documents, HPS will generally have the discretion to select service providers independent of review by investors or consent by any relevant Client or limited partner advisory committee. The Clients, unless otherwise specified or agreed, will bear the cost of all such service providers, as appropriate.

The service providers that HPS selects for one or more of the Clients may also provide services to HPS and/or its affiliates, or a portfolio company in a different capacity and/or at different rates. Fee discounts may be granted to HPS, its affiliates in connection with such engagement and not the Clients or a portfolio company, or vice versa. This may create a potential conflict of interest where the interests of the parties may not be aligned where, for example, a law firm may be at the same time engaged to provide services to both HPS and one or more of the Clients or a portfolio company.

Additionally, certain employees of HPS may have family members or relatives employed by such advisors and service providers. These relationships may influence HPS or its affiliates or the applicable general partners in deciding whether to select or recommend such service providers to perform services for the Clients or portfolio companies (the cost of which will generally be borne directly or indirectly by the Clients or such entities, as applicable). In addition, certain Clients are investors in NFP Corp. and its affiliated entities (collectively, “NFP”), a benefits, insurance, and wealth management business. NFP is operated and managed completely separately from HPS. HPS does not have any involvement in the day-to-day business operations of NFP and does not control or direct the consulting recommendations that NFP makes to its clients and all such recommendations in connection with the services provided to such clients are solely made by NFP. However, HPS has retained NFP to serve as its benefits broker. Conflicts of interest associated with the selection of service providers are attempted to be mitigated by the use of reasonable diligence to select such service provider, including without limitation, law firms, taking into account such factors as expertise, availability and quality of service, competitiveness of compensation rates, operational and regulatory controls, and comparing those factors with other similar service providers. Additionally, risks associated with service providers are discussed in Item 8 above.
Diverse Membership; Relationships with Investors
The Clients and their investors may have conflicting investment, tax and other interests with respect to the investments made by the Clients, including as a result of a domestic Client’s participation in and/or sales of certain senior securities. The investors of the Clients are expected to include persons or entities organized in various jurisdictions and different investors may have conflicting investment, tax and other interests in respect of their investments in one or more of the Clients. The conflicting interests of the Clients and of individual investors may relate to or arise from, among other things, the nature of investments made by the Clients, the structuring of the acquisition of the Clients’ investments, and the timing of disposition of investments, which may be more beneficial for one or more of the Clients and their respective investors than for one or more of the other Clients and their respective investors. Such structuring of the Clients’ investments and other factors may result in different returns being realized by different investors. As a consequence, conflicts of interest may arise in connection with decisions made by HPS or the relevant general partners, including in respect of the nature or structuring of investments and the use of AIVs, that may be more beneficial for one investor than for another investor, especially in respect of investors’ individual tax situations. In addition, the Clients, HPS, the relevant general partners and/or their affiliates may face certain tax risks based on positions taken by the Clients, their subsidiaries and/or withholding agents, and HPS and the relevant general partners each reserve the right on behalf of itself and their affiliates to take positions adverse to the Clients and the Clients’ investors, including with respect to withholding of amounts to cover actual or potential tax liabilities.

HPS may enter into strategic partnerships directly or indirectly with investors that commit significant capital to a range of products and investment ideas sponsored by HPS. Such arrangements may include HPS granting certain preferential terms to such investors, including blended advisory fee rates that are lower than those applicable to other investors that invest in one or more of the same products. Such preferential terms are generally not subject to the “most favored nation” provisions of the Governing Documents of a particular Client. Investors may be able to elect to benefit from such arrangements if they comply with the general parameters of the entire strategic partnership.
Business with Portfolio Companies and Investors
Given the collaborative nature of the business HPS and its affiliates conduct with portfolio companies and investors, there could be instances where HPS and one or more of its affiliates transact with a current or past portfolio company or investor in a manner other than in connection with investment activity. Positions with Portfolio Companies HPS investment professionals, including current and former personnel, will from time to time serve on the boards of directors of one or more portfolio companies in connection with the governance rights afforded to the Clients as part of their investment in such portfolio company and, in that capacity, will be required to make decisions that they consider to be in the best interests of such portfolio company. In these scenarios, while the interests of a Client in a portfolio company will generally align with those of investors more broadly, it is possible that the applicable HPS investment professional’s fiduciary duties to the portfolio company as an investor may conflict with those of the applicable HPS investment professional as director of such portfolio company and therefore conflict with the interests of the Clients. In certain circumstances, such as in situations involving bankruptcy or near insolvency of a portfolio company, actions that may be in the best interests of the portfolio company may not be in the best interests of the Clients, and vice versa. Accordingly, in these situations, there may be conflicts of interest between an HPS investment professional’s duties as a member of the investment team or officer or employee of HPS and such HPS investment professional’s duties as a director of the portfolio company. Additionally, the applicable general partners, HPS or their respective affiliates have entered into, and may in the future enter into, additional transactions with one or more portfolio companies (for example, retention of a portfolio company as a service provider to HPS, as further discussed in Item 10) a property lease), which may create a conflict of interest. While it is generally expected that any such transaction would be on terms HPS deems fair and equitable, it is possible that the portfolio company may pay higher fees or receive fewer benefits in the transaction than it would if the counterparty to the transaction were a third party.

Additionally, during their employment with HPS, certain HPS investment professionals serve in interim roles or provide additional services as a secondee or in a similar capacity at portfolio companies from time to time.

Relationships with Portfolio Company and Investors

Portfolio companies or investors may make discounts or other benefits available to HPS, its affiliates, or its employees in connection with products or services provided by such portfolio company or investor. HPS may, from time to time, engage in business opportunities (such as joint ventures or strategic partnerships) with portfolio companies or investors. In certain instances, portfolio companies controlled by HPS or an affiliate may, from time to time, provide services to HPS or certain Clients. An incentive exists for HPS to cause the portfolio company to provide such services at a discount, which could adversely affect the profitability of such portfolio company. HPS and its affiliates have the discretion to utilize the services of investors or portfolio companies on terms they deem fair and equitable in their sole discretion.

Transactions that May Benefit Investors

HPS or its affiliates may from time to time engage in transactions with current or prospective investors that entail business benefits to such investors. Such transactions may be entered into independently or in connection with any such investor’s decision to invest in one or more Clients or at some point during the term of the investment. The type of such transactions can vary greatly and may or may not include benefits to one or more Clients and, potentially, one or more of the portfolio companies or a Client. An example of a transaction that may provide a benefit to an investor is the opportunity to co-invest alongside a Client or invest in a portfolio company of which an investor is an owner, director or officer. Employment and Training Opportunities Consistent with applicable law and internal policies regarding, among other things, anti-corruption and the protection of proprietary information, HPS or its affiliates may, from time to time, hire short- or long- term personnel or interns who are relatives of or otherwise associated with one or more investors, portfolio companies or service providers, or provide extended training sessions or similar educational opportunities to such relatives or associates. HPS has adopted policies and procedures designed to mitigate the potential conflicts of interest that could be associated with any such relationships; however, there can be no guarantee that HPS’s internal policies can account for all possible conflicts of interest that could arise with respect to such activity and, in some circumstances, the appearance of a conflict of interest may exist. HPS does not recommend or select other investment advisers for its Clients and receive compensation from those advisers. please register to get more info

Code of Ethics
HPS has adopted a Code of Ethics (the “Code”), and each of the Relying Advisers has adopted the Code as well. The Code obligates all principals, officers, directors, employees and other persons associated with HPS and the Relying Advisers or as designated by HPS’s Compliance Department (the “Compliance Department”) (all such persons, “Supervised Persons”) to put the interests of the Clients of HPS before their own personal interests in connection with their fiduciary duties. All of the Supervised Persons are also required to comply with all applicable federal securities laws and to report violations of the Code. As part of the Code, HPS has adopted policies and procedures that are designed to mitigate potential conflicts of interest including, but not limited to, those related to insider trading and the misuse of material non-public information, personal trading, political contributions and outside activities. HPS also maintains a gifts and entertainment policy requiring the reporting of gifts and entertainment and restricts the acceptance of certain gifts. On at least an annual basis, but more often quarterly, Supervised Persons are required to complete certifications with respect to their personal accounts, holdings, transactions, political contributions, outside activities and gifts and entertainment for the preceding period.

As part of HPS’s personal trading policy, Supervised Persons of HPS and their associated persons as defined in the Code are required to disclose their personal securities holdings. Trading in securities in personal accounts of Supervised Persons as well as the purchase of any private placement or other private investment is subject to pre-clearance by the Compliance Department. Holding periods (generally 60 days) apply to most securities in personal trading accounts. Securities that have been or may be traded for Client accounts may not be traded in personal trading accounts during certain blackout periods. Generally, no Supervised Person may purchase a security in an initial public offering. Trading in employee accounts is reviewed by the Compliance Department on both a pre- and post-trade basis. The Compliance Department may choose to grant exceptions to the personal trading policy in limited circumstances, based on the consideration of individual facts and circumstances.

Current and prospective Clients and investors may obtain access to a copy of the Code by contacting the Compliance Department at (212) 287-6767.
Employee Investments in HPS Funds or Third Party Funds
As noted above, the principals, employees or other related persons of HPS purchase interests directly or indirectly in one or more Clients from time to time.

Under certain circumstances, and subject to applicable law and relevant regulatory requirements, Clients may invest in connection with a transaction in which HPS, its affiliates and their respective officers, directors, members, employees, stockholders, partners, agents and/or representatives (the “Affiliated Group”) have already invested or are expected to invest. Members of the Affiliated Group may trade for their own accounts and may invest in and trade the same securities and instruments that a Client invests in and trades. In addition, the Affiliated Group may manage accounts for other individuals or entities, including entities in which the Affiliated Group or its directors or employees may hold an interest, either directly in Third Party Funds or indirectly through investments in HPS Funds. Any of such accounts may pay different fees, trade with different amounts of leverage or utilize different trading strategies than the Clients. In addition, Clients may enter into transactions with such accounts and the Affiliated Group may invest in and trade the same securities and instruments on behalf of such accounts that a Client invests in and trades. The Affiliated Group or its personnel may have income or other incentives to favor such accounts. HPS, however, will not knowingly or deliberately favor any such accounts over the Clients in its dealings on behalf of such accounts. HPS may recommend that certain Clients invest all of their investable assets in other Clients, either pursuant to a master-feeder fund structure or as a means for one Client to participate in the strategy pursued by another Client. In addition, HPS and its affiliates, on the one hand, and one or more Clients, on the other, may invest in different classes of securities of the same issuer, and the classes in which HPS and its affiliates invest may not have the same rights as the classes in which such Clients invest. Moreover, multiple Clients may pursue or enforce rights with respect to a particular issuer, or HPS or its affiliates may pursue or enforce rights with respect to a particular issuer on behalf of one or more Clients, and such actions may not always be favorable to each of the Clients. Finally, as discussed below, in certain instances, personnel of HPS may obtain information about an issuer that is material to the management of certain Clients’ portfolios and that could limit the ability of personnel of HPS to buy or sell securities of the issuer on behalf of other Clients. These facts are disclosed, when applicable, in the Governing Documents of each Client that are provided to each investor.

The principals, employees or other related persons of HPS may from time to time purchase interests in certain Clients that are “master funds” in which certain other Clients invest pursuant to a master-feeder fund structure. Alternatively, such principals, employees or other related persons may invest through a specially designated “feeder fund” designed solely for investment by such HPS related parties, which feeder fund may have certain specialized terms, including the existence of leverage at such feeder fund level.

Employee Investments in Third Party Entities
In addition, members of the Affiliated Group, including employees of HPS, may make personal investments in third party entities (directly or through investment funds managed by third party managers). Such entities may enter into transactions with one or more of the Clients (including obtaining financing from such Clients), presenting a conflict of interest for HPS between acting in the best interests of the Clients and enhancing the returns of such personal investments.
Information Sharing; Material Non-Public Information
Due to HPS’s investment activities, there are many avenues through which HPS receives material non- public information. As discussed above in Item 8 and elsewhere in this brochure, HPS’s ability to trade for the Clients may be impaired, depending on the specific trading instrument in question, which could impact the investment objectives and returns of such Clients until such time that it has been determined that HPS has been cleansed of all relevant material non-public information.

As such, HPS maintains a restricted list which is composed of companies, among other things, whose securities are subject to certain trading prohibitions due to HPS’s or its affiliates’ business activities.
Employees as Directors of One or More HPS Funds or Third Party Funds
In addition, employees that are invested in one or more Clients may also serve on the board of directors of certain Clients. The Governing Documents of each HPS Fund or Third Party Fund that are provided to each investor discloses such affiliated directorship, where deemed material to such HPS Fund or Third Party Fund, in HPS’s discretion.
Cross Trades and Principal and Agency Cross Transactions
Subject to requirements of applicable law, and without limiting the generality of the foregoing, HPS may from time to time cause a Client to sell or transfer a security or an instrument to another Client. HPS may engage in the practice of cross trading in order to “rebalance” the portfolios, where a particular Client needs liquidity, where investment objectives differ, to reduce or eliminate transaction costs or market impact, in order to combine or liquidate accounts or otherwise. HPS has adopted policies and procedures designed to appropriately manage the conflicts associated with such transactions. Certain Clients may engage in principal transactions or agency cross transactions involving HPS, certain affiliates of HPS and Clients managed by HPS as counterparty, in all cases subject to applicable law, including the Investment Advisers Act of 1940, as amended (the “Advisers Act”). These transactions create a conflict of interest between HPS’s interest in assuring that Clients receive best execution on all transactions and in limiting or reducing the fees paid by the Clients, and HPS’s interest in generating profits and fees for itself and its affiliates. In order for the Clients to enter into certain principal and agency cross transactions with or through HPS or an affiliate of HPS in an efficient manner that is also consistent with Section 206(3) of the Advisers Act, the board of directors, general partner or investment manager of the Client (or their delegate) may seek the relevant Client’s or limited partners’ advisory committee approval of, or select a third party unaffiliated with HPS to review and approve or disapprove, any such transactions consistent with applicable law. If a third party is selected, such unaffiliated party may perform other services for Clients, including valuation services.
Relationship with JPM
HPS was established in 2007 as a subsidiary of HCM, which in turn is a subsidiary of JPMAM. JPMAM is a subsidiary of JPM. On March 31, 2016, the senior executives of HPS acquired HPS and its subsidiaries from HCM and JPMAM and as a result, HPS is no longer deemed affiliated with JPM, and JPM no longer controls or holds any voting interest in HPS. However, JPM currently retains, and may for a number of years continue to retain, a non-voting minority interest in HPS. In connection with the acquisition, HPS incurred borrowings to finance the acquisition, which may adversely affect the continued operation of the HPS business going forward. New and additional risks may arise relating to HPS as a standalone business and the operation of HPS in the future.

JPM’s continuing minority interest in HPS may create certain potential conflicts of interest with respect to the Clients’ transactions or other relationships with JPM. The Clients may enter into certain transactions with JPM as a counterparty, subject to applicable law. Subject to applicable law, HPS may retain JPM as a clearing or executing broker for the Clients or to act as a placement agent for certain Affiliated Group Accounts. JPM may also execute brokerage transactions between a Client and other clients and may receive commissions from both parties to such transactions. In particular, a Client may participate as a counterparty with, or as a counterparty to, JPM in connection with currency and interest rate hedging, other derivatives and other transactions, in all cases subject to applicable law. In this regard, a Client may establish a borrower or other relationship with JPM to facilitate and improve execution with respect to transactions of the Client. These transactions may create a conflict of interest between the interests of HPS in assuring that a Client receives best execution on all transactions and in limiting or reducing the fees paid by the Client, and HPS’s interest (if any) in generating profits and fees for JPM. JPM is actively engaged in advisory, trade support and management services for multiple collective investment vehicles and managed accounts, including those that employ the same or similar trading strategies as the Clients. Such accounts may compete with a Client and invest in different instruments or classes of securities of the same issuer, including short positions. In addition, JPM has, and continues to develop, banking and other financial and advisory relationships with numerous domestic and overseas companies and governments, including potential buyers and sellers of businesses worldwide. For example, JPM may act as originator and/or arranger and receive fees from a Client’s actual or target portfolio companies. JPM may advise, represent or provide financing to other entities that may have invested or wish to invest in such companies. JPM may also make markets and conduct trading activities for itself or its other clients in the same loans as those owned by a Client. It should be recognized that JPM’s activities may compete with or otherwise adversely affect a Client or its investments. JPM is not under obligation to take into account the interests of any Affiliated Group Accounts, including the Clients, in conducting any such activities, or present any investment opportunities to them. If permitted by applicable law, a Client and portfolio companies may make short-term investments of excess cash in money-market funds and other instruments sponsored and/or managed by JPM. In connection with any of these investments, a Client and/or portfolio companies, as the case may be, will pay all fees pertaining to investments in such money-market funds, and, in such event, no portion of any fees otherwise payable by the Client or portfolio companies, as the case may be, will be offset against fees payable in accordance with any of these investments. In these circumstances, as well as in other circumstances in which JPM receives any fees or other compensation in any form relating to the provision of services, no accounting or repayment to the Client and portfolio companies, as the case may be, will be required. A Client may, subject to applicable law and approvals, invest in transactions in which JPM acts as originator and/or arranger and receives fees from these sponsors. In certain of these transactions, the Client may purchase securities and receive representations and warranties directly from the issuer, including in purchases by the Client from or alongside JPM. In other circumstances, the Client may purchase securities from JPM or other parties and in so doing may rely on an offering memorandum rather than direct representations and warranties from the issuer, and may purchase such securities at different times and/or on different terms than other purchasers. If the Client were to purchase securities from JPM, or if JPM were to receive a fee from an issuer for placing securities with the Client, JPM’s minority interest in HPS may create certain conflicts of interest in the transaction.
JPM Special Purpose Vehicles
JPM and its affiliates have established various special purpose vehicles (the “JPM SPVs”) for certain JPM clients to hold interests in certain HPS Funds or Third Party Funds. HPS does not serve as the investment manager of the JPM SPVs.

J.P. Morgan Private Investments Inc. (“JPMPI”), a wholly owned subsidiary of JPM, is the administrator of the JPM SPVs. JPMPI, on behalf of the JPM SPVs, has engaged Harmonic Fund Services (“Harmonic”) to provide certain administrative functions to the JPM SPVs. Harmonic also serves as the administrator for certain HPS Funds. JPMPI has no role in the business, operations, investments or investment decisions of HPS Funds, and JPMPI does not serve as administrator to HPS Funds. HPS expects that, in the future, it will advise other HPS Funds or Third Party Funds and establish and/or advise other investment vehicles.
Conflicts of Interest Generally
From time to time, various potential and actual conflicts of interest arise from the overall investment activities of HPS and its affiliates. The following briefly summarizes some of these conflicts, but is not intended to be an exclusive list of all such conflicts. Investors should consult the applicable Client’s Governing Documents for a more complete listing of applicable conflicts. Any references to HPS in this section will be deemed to include its affiliates, partners, members, shareholders, officers, directors and employees. If any matter arises that HPS determines in its good faith judgment constitutes an actual conflict of interest, HPS will take such actions as it determines in good faith may be necessary or appropriate to ameliorate the conflict (and upon taking such actions HPS will be relieved of any liability for such conflict to the fullest extent permitted by law and shall be deemed to have satisfied applicable fiduciary duties related thereto to the fullest extent permitted by law). These actions include, by way of example and without limitation: (i) presenting a conflict of interest to the respective Client or limited partner advisory committee in accordance with the applicable Governing Documents and either obtaining a waiver or consent from such Client or limited partner advisory committee or acting in a manner, or pursuant to standards or procedures, approved by such Client or limited partner advisory committee with respect to such conflict of interest, (ii) disposing of, or refraining from investing in, the security or investment giving rise to the conflict of interest; (iii) appointing an independent fiduciary to act with respect to the matter giving rise to the conflict of interest; (iv) disclosing the conflict to the investors and Clients, or (v) implementing certain policies and procedures designed to ameliorate such conflict of interest. There can be no assurance that HPS will identify or resolve all conflicts of interest in a manner that is favorable to its Clients. By acquiring an interest in a Client, each investor therein will be deemed to have acknowledged and consented to the existence or resolution of any such actual, apparent or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest. For the avoidance of doubt, in some cases after evaluating such conflict or potential conflict, HPS may determine that no action is required or that taking action may be adverse to the interest of the Clients or the Affiliated Group.

Specified policies and procedures implemented by HPS to mitigate potential conflicts of interest and address certain regulatory requirements and contractual restrictions will from time to time reduce the synergies across HPS’s various business lines and investment strategies that Clients expect to draw on for purposes of pursuing attractive investment opportunities. In addressing these conflicts and regulatory, legal and contractual requirements across its various business lines and investment strategies, HPS has implemented certain policies and procedures that may reduce the positive synergies that Clients could otherwise expect to utilize for purposes of finding attractive investments. For example, as described further below and in Item 8, HPS will from time to time come into possession of material non-public information with respect to companies in which Clients may be considering making an investment. As a consequence, that information, which could be of benefit to a Client, might result in an investment opportunity becoming restricted to other Clients and otherwise being unavailable to such other Clients for investment. Additionally, the terms of confidentiality or other agreements with or related to companies in which any Client has or has considered making an investment will from time to time restrict or otherwise limit the ability of other Clients and/or their portfolio companies and their affiliates to make investments in or otherwise engage in businesses or activities competitive with such companies.

Competition Among the HPS Funds, Third Party Funds and Other Affiliated Group Accounts
Investment Advisory Services to Multiple Clients The Affiliated Group is actively engaged in advisory and management services for multiple collective investment vehicles and managed accounts (each, an “Affiliated Group Account” and together, the “Affiliated Group Accounts”). Those activities include managing assets of employee benefit plans that are subject to ERISA and related regulations. As discussed in Item 4 above, the Affiliated Group may sponsor or manage additional collective investment vehicles and managed accounts in the future. The Affiliated Group may employ the same or different investment strategies for the various Affiliated Group Accounts it manages or otherwise advises. Investment opportunities that may potentially be appropriate for the Clients that pursue one investment strategy may also be appropriate for other Affiliated Group Accounts. Thus, such Affiliated Group Accounts compete with such Clients for positions and may compensate the Affiliated Group better than such Clients. Investments which are within the investment objective of a Client may be allocated to other Affiliated Group Accounts, and there is no assurance that such Client will be allocated those investments it wishes to pursue. In addition, investors should note that such other Affiliated Group Accounts may use leverage, be subject to different fee structures and/or liquidity terms and focus on different investments than such Client. Investments of such other Affiliated Group Accounts and a Client may not, and often will not, be parallel for such and various other reasons, including different inflows and outflows of capital, variations in strategy, liquidity terms, governmental limitations on investment and other differences. The results of the investment activities of a Client may differ significantly from the results achieved by Affiliated Group Accounts that implement the same or a similar investment strategy as such Client.

Under certain circumstances, a Client may invest in connection with a transaction in which Affiliated Group Accounts have already invested or are expected to invest. Under other circumstances, an Affiliated Group Account may invest in a portfolio company in which a Client has already invested or is expected to invest and may invest in a Client itself. In some cases, HPS may invite Affiliated Group Accounts to co-invest with a Client because, for example, the investment opportunity is larger than the target investment amount for the Client or because co-investing with Affiliated Group Accounts may provide the Client or the portfolio company in which the Client invests with certain benefits. In such cases, the amount available for investment by the Clients may be correspondingly reduced to permit the Affiliated Group Accounts the opportunity to co-invest. Where an investment is allocated among a Client as well as one or more Affiliated Group Accounts, such investment opportunity may be allocated based on one or more factors which may include available capital, available leverage, duration of commitment period, applicable investment restrictions and guidelines (including concentration limits), investment objectives (including risk/return objectives), expected investment pipeline, size of the investment opportunity, and legal, tax and regulatory considerations. The Clients may also partner with other entities in which the Affiliated Group holds an investment or with which the Affiliated Group has a significant business relationship.

Where a Client invests in the same issuer as an Affiliated Group Account, the terms of the Client’s investment, or the type of instrument purchased, may be different from the terms of the Affiliated Group Account’s investment or the type of instrument the Affiliated Group Account purchases. The Affiliated Group Accounts may be given certain governance or other rights or may be subject to terms and conditions that are more favorable than those applicable to a particular Client. In addition, the issuer’s performance and the investment’s costs basis may vary among Clients. Conflicts could arise after different Clients make investments in the same issuer related to the issuer’s strategy, growth and financing alternatives and with respect to the manner and timing of the Clients’ exits, especially if the issuer experiences financial or operational difficulties. In such circumstances, HPS will have a conflict of interests in managing divergent interests of different Clients and HPS’s decisions may turn out to be more beneficial to a particular Client than to other Clients. Further, investments may benefit one or more of Clients disproportionately over a Client. Conversely, one or more Clients’ interests in one or more investments may, in the future, be adverse to that of a Client, and HPS may be incentivized not to undertake certain actions on behalf of a Client in connection with such investments, including the exercise of certain rights such Client may have, in view of the investment by other Clients in such investments. Positions taken by Affiliated Group Accounts may also dilute or otherwise negatively affect the values, prices or investment strategies associated with investments held by a Client. For example, this may occur when investment decisions regarding the Client are based on research or other information that is also used to support portfolio decisions for other Affiliated Group Accounts. When an Affiliated Group Account implements a portfolio decision or strategy ahead of, or contemporaneously with, similar portfolio decisions or strategies for a Client (whether or not the portfolio decisions emanate from the same research analysis or other information), market impact, liquidity constraints, or other factors could result in the Client receiving less favorable investment results. The costs of implementing such portfolio decisions or strategies could be increased or the Client could otherwise be disadvantaged. In addition, during the terms of the relevant Clients, HPS may sponsor or manage collective investment vehicles or managed accounts that employ a similar strategy as one or more of the Clients and may permit existing or future funds to have exclusive rights to certain investment opportunities. As a result, the Clients may not be afforded the chance to participate in attractive investment opportunities in which other Affiliated Group Accounts are given the opportunity to participate, or in some cases may be allocated a small part of an investment opportunity within the investment objectives of the Clients when other Affiliated Group Accounts are allocated a larger portion. A Client may be prohibited (due to, for example, regulatory limitations or exclusivity rights granted to other investment funds) from pursuing certain investment opportunities and may find that its ability to participate in any particular opportunity may be substantially limited.
Clients with Conflicting Positions

Certain Clients have in the past made, and are expected to make, investments in companies in which another Client holds an investment in a different class of such company’s debt or equity. In such circumstances, HPS faces certain conflicts in making decisions with respect to such securities given their different rights and economic interests in the company that may have an adverse effect on one or more of the Clients. Generally speaking, HPS expects that a Client will make such investments when, at the time of its investment, HPS in its sole discretion believes that (a) such investment presents an attractive investment opportunity for each eligible Client and (b)(i) the possibility of actual adversity between Clients is remote or (ii) in light of the particular circumstances, HPS believes that such investment is appropriate for the eligible Client, notwithstanding the potential for conflict. In those circumstances where Clients hold investments in different classes of a company’s debt or equity, HPS may, to the fullest extent permitted by applicable law, take steps to reduce the potential for adversity between each Client, including causing the first account to take certain actions that, in the absence of such conflict, it would not take, such as (i) remaining passive in a restructuring or similar situations (including electing not to vote or voting pro rata with other security holders), (ii) investing in the same or similar classes of securities as the second Client in order to align their interests, (iii) divesting investments or (iv) otherwise taking an action designed to reduce adversity. Any such step could have the effect of benefiting one Client or HPS or its affiliates and might not be in the best interests of or may be adverse to another Client. In addition, HPS may cause the Client with the subordinated interest to purchase all of the more senior securities held by the other Client at the par value or other consideration for such securities. In such circumstances, the purchase price received by the Client with the more senior interest may not represent the fair market value of the applicable securities and may result in a premature exit from the investment by such Client, or an additional investment in a portfolio company with an uncertain outlook for the Client with the subordinated interest. In addition, Clients may invest in different instruments or classes of securities of the same issuer where certain Clients own the majority of, or otherwise control, one or more of such different instruments or classes of securities. As a result, one or more Clients may have different investment objectives or pursue or enforce rights with respect to a particular issuer in which another Client has invested, and those activities may have an adverse effect on the Client. For example, where an issuer experiences financial or operational difficulties, if a Client holds subordinated and unsecured debt, and another Client holds senior secured debt instruments, of the same issuer, the latter Client may enforce or help other senior secured creditors enforce their rights against the issuer and as a result, the former Client’s investment may be reduced substantially or to zero. If a Client holds voting instruments with respect to any debt or equity of an issuer and another Client does not hold such power, HPS or its affiliate, acting on behalf of the former Client, may vote on certain matters in a manner that has an adverse effect on the positions held by the latter Client (e.g., regarding whether the Client agrees to waive certain covenants or make certain amendments). Conversely, if a Client holds voting instruments of an issuer, HPS or its affiliate’s vote on behalf of such Client on certain matters may end up benefiting the other Clients and harming the Client with voting instruments, especially with the benefit of hindsight (e.g., if the Client agrees to certain covenant, waivers or amendments, but the issuer and the Client’s investment in such issuer end up getting further impaired). The conflicts of interest associated with investing in multiple layers of an issuer’s capital structure become more acute when the issuer experiences financial or operational challenges.

As described above, to the extent a Client holds securities that are different (including with respect to relative seniority) than those held by another Client in the same issuer, HPS may have conflicting loyalties between its duties to such Clients. There can be no assurance that the term of or return on a Client’s investment in an issuer will be equivalent to or better than the term of or returns obtained by the other Clients participating in such investment. Similarly, the ability of HPS to implement the Client’s strategies effectively may be limited to the extent that contractual obligations entered into in respect of activities of HPS and/or its other Clients impose restrictions on such Client engaging in transactions that HPS may be interested in otherwise pursuing.

The Clients that employ one investment strategy may be negatively impacted by the activities by or on behalf of Clients of another investment strategy, and transactions for the Clients that employ one investment strategy may be impaired or effected at prices or terms that may be less favorable than would otherwise have been the case had a particular course of action not been pursued with respect to the Clients that employ a different investment strategy. In certain instances, personnel of HPS (including in the capacity as a director of a portfolio company of a Client) may obtain information about an issuer thereby limiting HPS’s ability to buy or sell securities of the issuer on behalf of other Clients. These conflicts are magnified with respect to issuers that undergo restructuring or become insolvent. It is possible that in connection with a restructuring, insolvency, bankruptcy or similar proceeding the Clients may be limited (by applicable law, courts or otherwise) in the positions or actions they may be permitted to take due to other interests held or actions or positions taken by Clients of a different investment strategy.

Although it is expected that the Clients will, when they co-invest alongside one or more other Clients, generally dispose of their interests in an investment in the same proportion as, and on the same terms as, the other Clients dispose of their interests in such investment, subject to legal, tax, regulatory or other considerations, as determined by the relevant general partners or investment managers in their sole discretion, there can be no assurance that the interests in an investment held by the Clients will be harvested on as favorable terms as the interests in such investment held by the other Clients. Further, the disposal by another Client may depress the market value of the continuing investment of certain Clients or may reduce the price available to the Clients, which may also be disposing of their investment. In addition, the terms of the Clients’ investment, including the type of security purchased, may be different from the terms of another Client’s investment or the type of security the Client purchases. Conflicts could arise after a Client, on the one hand, and other Clients, on the other hand, make investments in the same issuer with respect to the issuer’s strategy, growth and financing alternatives and with respect to the manner and timing of the one Client’s exit from the investment compared to the other Client’s exit. Should one Client invest in a different type of security from the security purchased by another Client, additional conflicts may arise, particularly if the issuer experiences financial difficulties. Certain Clients may also have short positions in the same security or instrument or a different security or instrument in the same issuer as a security or instrument purchased by other Clients, which may present additional conflicts, particularly if the issuer experiences financial difficulties.
HPS Fund or Third Party Fund Investments in HPS CLOs
As discussed in Item 5 above, certain Clients, in particular those with structured credit strategies as a part of their investment program, have and may continue to invest in one or more HPS CLOs and an affiliate of HPS organized to manage CLOs in compliance with CLO risk retention requirements. There are conflicts of interest associated with a Client’s purchase of CLO securities issued by an HPS CLO. HPS may be incentivized to recommend an investment in an HPS CLO to enable it or its affiliate to launch such HPS CLO and to encourage other market participants to invest in such HPS CLO. Conversely, where an HPS CLO is deemed to be an attractive investment opportunity for a Client, HPS may not be incentivized to invest such Client’s capital in such HPS CLO, due to the fact that such investment would cause a reduction of collateral manager’s fees. Where a Client owns a controlling position of the CLO equity of an HPS CLO, it may be in the Client’s best interest to “call” the deal and cause the redemption of the CLO securities in certain circumstances, but it would be detrimental to the collateral manager of the CLO. Similar conflicts of interest exist in HPS’s exercise (or failure to exercise) such Client’s other rights as holder of such CLO equity. Similarly, a Client’s investment in the HPS CLO manager creates conflicts of interest for HPS. Although HPS believes that the returns of such investment will generally be attractive, the Client’s investments and provision of risk retention capital also enhance HPS’s ability to establish and scale its CLO business.
Allocation of Investment Opportunities
As described in the relevant Governing Documents, HPS expects to allocate investment opportunities to one or more Clients for which the investment is appropriate, considering such Clients’ investment objectives and limitations, available capital, available leverage, investment horizon, applicable investment restrictions, investment objectives, expected investment pipeline, size of investment opportunity, the nature and size of existing portfolio holdings, portfolio cash positions, risk/return objectives (and availability of leverage for certain investments to meet such investment objectives), round-lot position size, availability of counterparty relationships needed to effect the transaction, contractual allocation priority, account size, sourcing, and applicable legal, tax, regulatory and other relevant considerations (such as taking into account target leverage ratio of each Client). However, as disclosed in the relevant Governing Documents, certain investment opportunities are not required to be allocated to all Clients (such as “overflow” Clients established to receive allocation of investment opportunities to the extent of available capacity after allocation to certain other Clients), thus certain Clients will have priority over a particular category of investment opportunities. As a result, investment opportunities that may be appropriate for one or more of the Clients may not be made available to them by HPS. In addition, investment opportunities that are appropriate for multiple Clients shall be allocated between the Clients in accordance with the procedures described in the relevant Governing Documents and as discussed below. After the formation of a successor fund, if the commitment period of the relevant predecessor fund has not yet terminated and such Clients have sufficient available capital to commit to new investments, new investment opportunities will be allocated between the predecessor funds and successor funds in such manner that HPS and the relevant general partners or investment managers of the predecessor funds and successor funds determine in their reasonable discretion is appropriate in light of the circumstances of such investment opportunity, including the expected duration of such proposed investment, the amount of capital expected to be required for such proposed investment and the expected timing of the funding of such required capital. The Clients may also partner with other entities in which the Affiliated Group holds an investment or with which the Affiliated Group has a significant business relationship as discussed in Item 10 above. Subject to applicable law, including, but not limited to, ERISA, HPS has developed policies and procedures that provide that it will allocate investment opportunities and make purchase and sale decisions among Clients in a manner that it considers, in its sole discretion and consistent with its fiduciary obligation to the Clients, to be reasonable over time. In many cases, these policies may result in the pro rata allocation of limited opportunities across Clients’ accounts pursuing similar investment strategies (and to “overflow” Clients’ accounts to the extent of available capacity), generally based on net asset value of the account or available or committed capital (e.g., in the case of a new purchase) or position size held by the applicable Client accounts (e.g., in the case of an add-on investment). In many other cases, however, the allocations may not be pro rata on such basis and may instead reflect numerous other factors based upon HPS’s good faith assessment of the best use of such limited opportunities relative to the investment objectives, limitations, and requirements of each Client and application of a variety of factors, including those described herein. HPS seeks to treat all Clients reasonably in light of all factors relevant to managing an account, and in some cases it is possible that the application of the factors described below may result in allocations in which certain Clients may receive an allocation when other Clients do not. In addition, as noted above, Clients should note that certain Clients have priority with respect to a particular investment strategy and that certain “overflow” Clients that are established to receive an allocation to the extent of investment capacity will not always receive an allocation of an investment opportunity that may be appropriate for its portfolio. Similarly, HPS may cause the liquidation of positions for Clients in its discretion in accordance with the foregoing principles. Such allocations or liquidations may benefit one Client over another or may be detrimental to one or more other Clients. Certain Clients may be restricted from making some types of investments due to: (i) regulatory prohibitions, such as with respect to “new issue” securities; (ii) investment guidelines and restrictions applicable to such clients; or (iii) differing investment objectives, policies or risk parameters.

As mentioned above, due to specific guidelines and investment parameters for individual HPS Funds and any similarly managed Third Party Funds, pro rata allocations are not always appropriate. Allocation decisions are also made dependent upon each HPS Fund’s or similarly managed Third Party Fund’s holdings, positioning and objectives at the specific time an allocation is made. Some of the factors that may be considered during the allocation process include, but are not limited to, investment strategies, investment guidelines and restrictions (with, for example, clients with restrictions not participating in an investment, having a smaller allocation to an investment or larger allocation to an investment (due to the portfolio manager’s judgment that such restrictions result in such narrow investment universe that, in order for such Clients to be as fully invested as other clients, they need larger allocations of eligible investments)), concentration limits, tax and regulatory issues, the nature and size of existing portfolio holdings, portfolio cash positions (with, for example, clients with high cash amounts receiving larger allocations and clients fully invested receiving no or smaller allocations), risk/return objectives, availability of leverage for certain investments to meet such investment objectives (with, for example, clients with a high risk/return profile not receiving an allocation if leverage is not available for such investment or clients with available leverage receiving higher allocation due to their ability to invest greater amounts), liquidity constraints (including the applicable Clients’ wind-down and ramp-up periods, remaining investment period, and termination or redemption terms), round-lot position size, availability of counterparty relationships needed to effect the transaction, management of potential or actual conflicts of interest by HPS, and the portfolio management team’s target allocations to particular sectors, geographies, ratings or investment types, which targets may be adjusted from time to time in HPS’s discretion. Whether one or more of the foregoing factors will apply in the case of a given investment will be determined by HPS, in its sole discretion. It is expected that application of such factors will vary from investment to investment, and the types of allocation considerations used in HPS’s allocation methodology will vary over time. As a result, HPS will exercise a certain level of discretion during the allocation process and will seek to accompany an allocation decision with an appropriate explanation of such decision. Moreover, each HPS portfolio manager (together with his or her respective portfolio management team) are given discretion to construct portfolios for the clients whose assets they manage, and there can be no assurance that accounts with similar objectives and/or investment guidelines will participate in the same investments or participate in investments ratably, particularly in cases where the accounts are managed by different portfolio management teams at HPS with divergent views on particular investments.

HPS may decline an investment opportunity on behalf of a Client to the extent HPS determines, in its discretion, that such investment may (a) have reputational considerations for the Client’s investors, HPS or the Client, (b) implicate considerations under HPS’s or a Client’s investor’s environmental, social and corporate governance policy, (c) to HPS’s knowledge, have been the subject of concern or controversy among financial institutions, institutional investors or the public or (d) give rise to other similar considerations. In certain cases, such an investment may be allocated to other Clients that have consented to the investment or do not, in HPS’s discretion, have such considerations, in lieu of the investment being allocated to the Client.
Co-Investment Allocations
If the amount of an investment opportunity available to the HPS Funds and Third Party Funds that are generally established to receive primary allocation of investment opportunities associated with an investment strategy or similar investment strategies, as determined by HPS (referred to together within this section as the “Primary Funds”) exceeds the amount desired to be invested by the Primary Funds, as determined by HPS and the relevant general partners or investment managers, co-investment opportunities may be made available to one or more HPS Funds or Third Party Funds of a different investment strategy, the Affiliated Group or any third parties, including sourcing partners or operating partners (referred to collectively within this section as “Co-Investors”). In this situation, investments will be allocated among the Primary Funds and any applicable Co-Investors taking into account such factors as the available capital, applicable diversification criteria, investment objectives, expected investment pipeline, size of the investment opportunity, whether the investment represents a follow-on investment for one or more of the entities, and legal, tax and regulatory considerations. Accordingly, the allocation of an investment to the Primary Funds may vary between HPS’s and the relevant general partner’s identification of an investment opportunity and the consummation of such investment opportunity. For example, the allocation to the Primary Funds may increase or decrease depending on HPS’s or the relevant general partner’s ability to identify and consummate co-invest transactions in such timeframe. As explained in the relevant Governing Documents, HPS may, subject to legal, tax, regulatory and other considerations, permit one or more Co-Investors to participate, on a preferred basis, in co-investment opportunities alongside the Primary Funds, where participating Co-Investors will have increased (and potentially disproportionate) exposure to the relevant investment. Such Co-Investors may have significant relationships with HPS or its affiliates, which could present certain conflicts of interest. In particular, it is expected that certain Co-Investors (including entities controlled by or affiliated with the relevant general partners, HPS and their respective affiliates, as well as strategic investors and third parties, including sourcing partners or operating partners) will be granted preferential co-investment rights, especially if such Co-Investors commit capital to co-investment opportunities and grant HPS discretion to select co-investments, are otherwise advisory Clients of HPS or its affiliates focusing on the same or different investment strategy (including “overflow” Clients established to receive allocation of investment opportunities to the extent available following allocation to the Primary Funds and/or certain other Co-Investors), have in the past demonstrated the willingness and ability to review and consummate co-investments within the required timeframe, or have a significant or strategic relationship with the Affiliated Group (such as sourcing or operating partners or strategic investors). In some cases, HPS may invite strategic investors to co-invest with the Primary Funds because, for example, co-investing with a strategic investor may provide the Primary Funds or the portfolio company in which the Primary Funds invest with certain benefits. Strategic investors may include investors controlled or affiliated with the Affiliated Group or investors with large or long-standing relationships with HPS. In such cases, the amount available for investment by the Primary Funds may be correspondingly reduced to permit a strategic investor the opportunity to co-invest. In some cases, co- investment opportunities may be offered on a fee-free basis and in other cases, participation in co- investments may be subject to a management fee and/or performance-based compensation.

HPS has the discretion to grant co-investment rights and to determine the terms of any co-investment by the HPS Funds or Third Party Funds, and the terms on which the Affiliated Group, strategic Co-Investors and other Co-Investors may co-invest in an investment opportunity may be substantially different, and potentially more favorable, than the terms on which the Primary Funds invest. Generally, Co-Investors will invest in a transaction directly alongside the Primary Funds. In some cases, certain Co-Investors, including strategic Co-Investors and sourcing partners and operating partners engaged with respect to the Primary Funds, will have different exposure to a portfolio company than the Primary Funds, for example, by investing in different tranches or instruments of the issuer’s capital structures in varying proportions. In addition, on occasion, one or more of the Primary Funds, particularly, a domestic HPS Fund or Third Party Fund, in order to consummate a transaction and to ensure the Primary Funds are afforded an investment opportunity or otherwise, may fund on behalf of certain Co-Investors and sell down a portion of the investment to such Co-Investors at a later time. The Primary Funds may or may not receive compensation for such activities. In the event that the Co-Investors breach their covenant to purchase the investment from the Primary Funds, the Primary Funds will have an allocation to an investment that is larger than originally anticipated.

Where the Primary Funds co-invest alongside one or more Co-Investors, including the Affiliated Group, HPS will determine the appropriate allocation of investment-related expenses, including broken-deal expenses incurred in respect of unconsummated investments, among the Primary Funds and such Co- Investors. The allocation of such expenses may not be pro rata based on the portion of a particular investment that each vehicle makes or would have made had the deal closed. For example, in a situation where the Co-Investor seeks to participate in an investment on an overflow basis, such Co-Investor generally will not bear broken deal or other expenses related to the investment, in which case the Primary Funds will bear a disproportionately large share of such expenses.
Delayed Draw and Revolver Investment Allocations
As discussed in Item 8 above, the Clients may make delayed draw or revolver investments with funding obligations that extend past the initial date of investment. Later funding obligations related to a delayed draw or revolver investment may not be allocated pro rata among all Clients that participated in the initial funding of an investment. In particular, the Clients may participate in the initial funding of an investment, but may not participate in later funding obligations (i.e., delayed draw portions) related to such investment, including because it is not advisable that such Client reserve additional uninvested capital for future drawdowns, as determined in HPS’s sole discretion based on factors including such Client’s existing unfunded commitments relative to remaining investable capital, investment period, overall duration and risk/return targets. As a result, certain of the Clients will be allocated a smaller or larger portion of delayed draw or revolver investments than other Clients participating in the investment. Clients that participate in the initial funding of an investment may receive certain economic benefits in connection with such initial funding, such as original issue discount, closing payments, or commitment fees and these benefits are expected to be allocated based on participation in the initial funding, regardless of participation in future funding obligations. In addition, where the Clients and any other participating investors have not participated in each funding of an investment on a pro rata basis, conflicts of interest may arise between the Clients and the other investors as the interests of the Clients and the other investors may not be completely aligned with respect to such investment. Such conflicts would become acute if the portfolio company experiences financial or operational challenges by the time a future drawdown occurs.
Follow-On Investment Allocations
As discussed in Item 8 above, the Clients may participate in a follow-on investment of an Affiliated Group Account where the Clients have not previously invested in the applicable portfolio company. Any such follow-on investment would present conflicts of interest, including in HPS or its affiliate’s negotiation of the terms of such follow-on investment, and raises the risk that the Clients’ capital may be used to support an Affiliated Group Account’s existing investment, especially where the portfolio company is experiencing financial or operational difficulties. Where a Client makes a follow-on investment of an Affiliated Group Account’s existing investment, the cost basis among such Clients may differ and they may own different mix of instruments (including in terms of seniority in the portfolio company’s capital tranche), resulting in different (and potentially materially different) investment outcome for such Clients and creating a conflict of interests for HPS in managing and exiting the investments for such Clients. If the follow-on investment is profitable, the Clients with the existing positions may have missed an opportunity to receive more allocations in, and potentially earn greater profits or mitigate losses associate with, such follow-on investment, whereas if the follow-on investment incurs losses, the Clients that newly invested in the portfolio company through the follow-on investment, may have supported other Clients’ portfolio company with poor investment outcome for themselves. In addition, from time to time, the Clients may participate in the recapitalization of a portfolio company in which an Affiliated Group Account has invested. Recapitalization transactions will present conflicts of interest, including determinations of whether the Affiliated Group Account is being redeemed from an investment with a negative outlook (and whether the Clients are supporting such exit with their investment), and whether the Clients are paying a higher or lower price than market value or transacting on terms that are more or less favorable than in other comparable transactions. Conversely, the Clients’ investment may be refinanced by an Affiliated Group Account which may have the effect of shortening the duration of an attractive investment.
Multiple Trading Desks and Similar Strategies
HPS has multiple trading desks, which are utilized by different portfolio managers and managed by different traders. As noted in Item 8 above, HPS employs a variety of trading and investment strategies pursuant to which the Clients are managed. One or more of the portfolio managers of HPS may invest similarly (either by strategy or security type, etc.) to that of one or more of another portfolio manager of HPS. The existence of similar strategies employed by multiple portfolio managers utilizing multiple trading desks may result in the trading desks placing simultaneous competing orders and/or opposite orders for the same or similar securities, which could cause one or more adverse consequences, including, among other things, paying a higher price or receiving a smaller allocation, for the Clients. The existence of similar strategies employed by multiple portfolio managers utilizing multiple trading desks may also result in opposite and/or subordinated positions being held in the same issuer’s securities due to the individual portfolio manager’s conviction and the applicable investment guidelines for the Clients, which may present additional potentially adverse consequences, especially if the issuer experiences financial difficulties.
Conflicts with Portfolio Companies
In certain instances, members of the investment team and officers and employees of the HPS may serve as directors of certain portfolio companies and, in that capacity, will be required to make decisions that they consider to be in the best interests of the portfolio company. In certain circumstances, such as in situations involving bankruptcy or near insolvency of the portfolio company, actions that may be in the best interests of the portfolio company may not be in the best interests of the Client, and vice versa. Accordingly, in these situations, there may be conflicts of interest between an individual’s duties as a member of the investment team or officer or employee of HPS and such individual’s duties as a director of the portfolio company. Additionally, HPS or its affiliates may enter into transactions with a portfolio company (for example, a property lease), which may create a conflict of interest. While it is generally expected that any such transaction would be on terms HPS or its affiliates, as applicable, determine are fair and reasonable, it is possible that the portfolio company may pay higher fees or receive fewer benefits in the transaction than it would if the counterparty to the transaction were a third party. Item 12 - Brokerage Practices
Selection Criteria, Generally
In general, Clients will invest directly or indirectly in securities and other interests. Subject to any limitations set out in the relevant Governing Documents with Third Party Funds, HPS may select any broker or dealer and has established a review process to approve such relationships. HPS, as an investment adviser, is under a duty to obtain “best execution,” which the SEC generally describes as a duty to execute securities transactions so that a Client’s total costs or proceeds in each transaction are the most favorable under the circumstances. This duty generally begins with a requirement that HPS obtain the best price available for the securities in each transaction. However, HPS may not always pay the lowest possible commission or markup or markdown, but may take into account a number of factors when determining best execution, including, but not limited to, a broker’s trading expertise, liquidity, reliability, responsiveness, reputation, execution, clearance, settlement and creditworthiness, willingness to commit capital, access to a particular trading market, access and/or availability to the primary market, availability of securities to borrow or short sales, and the value of research it provides. In certain situations, HPS may pay a brokerage commission or other transaction cost in excess of that which another broker/counterparty might have charged for effecting the same transaction. HPS gives co please register to get more info

The risk exposures, trading activity, and profit and loss of HPS portfolios are reviewed daily by the risk and finance teams who report to HPS’s Chief Financial Officer (who also serves as Chief Risk Officer of HPS). In addition, a detailed valuation process for illiquid assets is conducted on either a monthly or quarterly basis and is audited annually by an independent third party. Depending on the investment strategy, the HPS valuation committee meets either monthly or quarterly to monitor valuation policies and to seek to ensure consistent application of the policies among Clients. HPS investment professionals also conduct portfolio reviews. Additionally, the HPS Risk teams conduct routine reviews of trading activity in Client accounts. Transactions are reviewed to ensure compliance with internal policies and procedures, applicable regulatory limitations and certain investment guidelines.

On a daily basis the Operations teams within HPS are responsible for reconciling transactions executed to ensure the accuracy of the books and records of HPS.

Shareholders or limited partners of HPS Funds and Third Party Funds will generally be sent written monthly and/or quarterly performance statements setting forth customary information and certain additional information as agreed between certain shareholders or limited partners and HPS. In addition, each shareholder and limited partner of the HPS Funds will receive written annual reports containing audited financial statements and other indicia of performance. Certain Third Party Funds receive a daily transaction report for the purposes of daily portfolio reconciliation. HPS may provide Clients with additional information on an as requested basis. Additionally, certain Third Party Funds receive additional reports, the frequency and details of which are set out in the relevant Third Party Fund’s relevant Governing Documents. please register to get more info

HPS does not receive economic benefits from non-clients for providing investment advice and other advisory services. Placement agents, including solicitors, who refer investors to HPS Funds or Third Party Funds, are paid separately by HPS. Such placement agents may include, but are not limited to, JPM and certain affiliates of the brokers of certain Clients, as well as other placement agents. Certain placement agents receive fees directly from certain investors subscribing for shares/interests in HPS Funds or Third Party Funds in addition to any compensation received from HPS as discussed above in Item 10. The cost of such fees will typically be borne by such investors in addition to their capital commitments. However, to the extent permitted by applicable law (including ERISA), the Clients are expected to indemnify such placement agents under certain circumstances.

The potential for placement agents to receive (directly or indirectly) compensation in connection with the investors’ subscriptions for interests in HPS Funds and Third Party Funds creates a conflict of interest in recommending that the potential investors purchase such interests. In addition, JPM, as an owner of a non-voting minority interest in HPS, indirectly benefits from the services of any JPM placement agents which place interests in HPS Funds and Third Party Funds, by increasing the assets upon which HPS receives fees from the Clients. However, because JPM’s interest in HPS has been reduced pursuant to the Transaction discussed in Item 4 above, and JPM and its affiliates no longer benefit to the same degree from the success of such HPS Funds or Third Party Funds, JPM and its affiliates, when engaged as placement agents, may have a reduced incentive to place investors in certain HPS Funds or Third Party Funds. Conversely, the remuneration related to investors’ subscriptions for interests in HPS Funds or Third Party Funds may be greater than that of other products that JPM is offering, and, accordingly, JPM may have a disproportionate incentive to market HPS Funds and Third Party Funds. Compensation to placement agents, if any, will be in accordance with Rule 206(4)-3 under the Advisers Act. please register to get more info

HPS does not generally maintain custody of Client funds or securities except with respect to certain Clients where HPS or its affiliate acts as general partner for such entity. HPS is subject to the audit provision of Rule 206(4)-2 under the Advisers Act with respect to certain of the Clients over which it has custody and delivers audited financial statements to the investors in such Clients within 120 days of the applicable fiscal year-end. In addition, the assets of such Clients over which HPS has custody are held by qualified custodians in accordance with Rule 206(4)-2. Investors should review these audited financial statements carefully. In certain instances, HPS may be deemed to have custody of the assets certain Clients due to its ability to withdraw funds to pay its advisory fees. In such instances, an independent auditor has been engaged for certain of the HPS Funds to verify the funds and securities of said HPS Funds by actual examination at a time chosen by the independent auditor without prior notice to HPS. The independent auditor’s report is publicly available at the website provided on the cover page of this brochure. please register to get more info

HPS has discretionary authority to manage the securities portfolios of its Clients pursuant to investment management agreements with such Clients, which customarily do not place limitations on HPS’s authority to manage a Client’s portfolio, except in limited circumstances where certain Third Party Funds have consent and/or opt out rights with respect to certain investments based on the terms agreed to within their Governing Documents. HPS’s discretionary authority is generally subject to such restrictions as set forth in each Client’s Governing Documents or agreements with such Client and/or the rules and regulations of any exchange or market on which HPS trades securities on behalf of its Clients. For certain Clients, an investment committee exists that collectively has discretionary authority over investment decisions for the applicable Client. please register to get more info

Rule 206(4)-6, “Proxy Voting by Investment Advisers” requires all investment advisers who exercise voting authority over client proxies to: (1) adopt policies and procedures for voting proxies in the best interest of the client; (2) describe the procedures to clients; and (3) inform clients how they may obtain information about how the adviser has actually voted their proxies. Although generally not applicable to HPS’s business, HPS has the authority to vote Client securities on behalf of HPS Funds and certain Third Party Funds. The proxy voting procedures for HPS is designed to address the resolution of any conflicts of interest that may arise in connection with proxy voting. HPS is responsible for voting and handling all proxies in relation to the securities held on behalf of the Clients. HPS will vote proxies or abstain from voting proxies, in each case, in the best interest of its Clients. At times, a portfolio manager may determine to vote a proxy contrary to a proposed vote. In such instances, the portfolio manager is required to confirm to the Compliance Department that no material conflict of interest exists personally or with HPS. Clients may obtain a copy of the procedures for HPS and information about how HPS voted a Client’s proxies by contacting the Compliance Department at (212) 287-6767. please register to get more info

HPS is not required to include a balance sheet for its most recent fiscal year, is not aware of any financial condition reasonably likely to impair its ability to meet contractual commitments to Clients, and has not been the subject of a bankruptcy petition at any time during the past ten years.
Item 19 – Requirements for State-Registered Adviser
Item 19 is not applicable. please register to get more info