Frequently Asked Questions Regarding Ownership and Transferability of Our Common Units and RDUs
The common units of KKR Private Equity Investors, L.P.
(“KPE”) and related restricted depositary units (“RDUs”)
are subject to a number of ownership and transfer restrictions. Although
the following information may answer some of the questions that you
may have regarding ownership and transferability of the common units
and RDUs, it is not intended to be all-inclusive or to constitute specific
legal advice. The effect of these limitations may depend on the individual
circumstances of each investor. Unitholders and prospective unitholders
should consult their own financial and legal advisors prior to acquiring
or transferring common units or RDUs.
General |
|
| Q1: | Why did KPE impose restrictions on the ownership and transferability of its common units and RDUs? |
| A: | KPE imposed restrictions on the ownership and transferability
of its common units and RDUs principally so that (1) it would
qualify for applicable exemptions from registration as an investment
company under the U.S. Investment Company Act of 1940, as amended
(the “U.S. Investment Company Act”) and related rules
and (2) it would avoid the risk of potential adverse implications
to itself and unitholders that could arise under the U.S. Employee
Retirement Income Security Act of 1974, as amended (“ERISA”),
and similar laws. |
| Q2: | How long will these restrictions remain in effect? |
| A: | You should expect that the ownership and transfer restrictions applicable to both the common units and the RDUs will remain in effect indefinitely. |
| Q3: | Do the restrictions vary depending on whether you are a holder of common units or RDUs? |
| A: | Yes. Please see below. |
| Q4: | Are there legends on the common units and RDUs that identify the applicable ownership and transfer restrictions? |
| A: | Yes. The common units and RDUs each bear legends that identify
the ownership and transfer restrictions set forth herein. |
| Q5: | Why are there different restrictions applicable to the common units and RDUs? |
| A: | The common units have been offered and sold only outside of
the United States and to non-U.S. persons in reliance on an exemption
from registration provided by Regulation S under the U.S. Securities
Act of 1933, as amended (the “U.S. Securities Act”).
The RDUs have been offered and sold within the United States
and to U.S. persons pursuant to other exemptions from registration
under the U.S. Securities Act. |
| Q6: | Who is a “U.S. person”? |
| A: | A “U.S. person” is any natural person resident
in the United States, any partnership or corporation organized
or incorporated under the laws of the United States, any estate
of which any executor or administrator is a U.S. person, any trust
of which any trustee is a U.S. person, any agency or branch of
a foreign entity located in the United States, any nondiscretionary
account of similar account (other than an estate or trust) held
by a dealer or fiduciary for the benefit or account of a U.S.
person and any discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States.
A partnership or organization is also a U.S. person if organized
or incorporated under the laws of any foreign jurisdiction and
formed by a U.S. person principally for the purpose of investing
in unregistered securities, unless it is organized or incorporated,
and owned, by accredited investors who are not natural persons,
estates or trusts.Please refer to Rule 902(k) of the U.S. Securities Act for a
complete definition of a U.S. person. |
| Q7: | I am a U.S. person. Am I permitted to hold either common units or RDUs? |
| A: | U.S. persons should hold their ownership interests in KPE in
the form of RDUs. Non-U.S. persons may hold their ownership interests
directly in the form of common units. |
| Q8: | Can any U.S. person acquire RDUs? |
| A: | No. Any U.S. person seeking to acquire RDUs (i) must be a “qualified purchaser” (as defined in the U.S. Investment
Company Act and related rules); (ii) must be a “qualified
institutional buyer” (as defined in Rule 144A under the
U.S. Securities Act) or must acquire the RDUs through an alternative
exemption from registration under the U.S. Securities Act; and
(iii) must not utilize assets of any Plan (as defined below)
to acquire or hold the RDUs or any beneficial interest therein. |
| Q9: | Do I make any representations and acknowledgements when I acquire RDUs? |
| A: | Yes. Persons acquiring RDUs are required to execute and deliver
either a “U.S. Transferee’s Letter” (in the case
of a transfer of RDUs) or a “Depositor’s Letter”
(in the case of a transfer of common units to a person who takes
delivery of the securities in the form of RDUs). The U.S. Transferee’s
Letter and the Depositor’s Letter include certain written
representations, agreements and acknowledgements relating to the
ownership and transfer restrictions applicable to the RDUs. Forms
of these documents are available elsewhere on this website. |
| Q10: | Do I make any representations and acknowledgements when I acquire common units? |
| A: | Yes. Each person acquiring common units will be deemed to have
represented, agreed and acknowledged that (1) it is either (a)
outside the United States and not a U.S. person or (b) a qualified
purchaser, (2) it will not offer, resell, pledge or otherwise
transfer the common units or a beneficial interest therein in
the United States or to a U.S. person other than to a qualified
purchaser and (3) no portion of the assets used by it to acquire
or hold the common units or a beneficial interest therein constitutes
or will constitute the assets of a Plan (as defined below). |
Ownership
Restrictions—U.S. Investment Company Act and U.S. Securities
Act |
|
| Q11: | Who are qualified purchasers? |
| A: | Subject to certain exceptions, to be a qualified purchaser,
a natural person must have at least $5 million in “investments”
and an institution must have at least $25 million in “investments,” in
each case as defined in Rule 2a51-l under the U.S. Investment Company
Act. Please refer to Section 2(a)(51)(A) of the U.S. Investment
Company Act for a complete definition of a qualified purchaser. |
| Q12: | Who are qualified institutional buyers? |
| A: | Qualified institutional buyers primarily refers to institutions
that manage at least $100 million in securities including banks,
savings and loans institutions, insurance companies, investment
companies, employee benefit plans or an entity owned entirely by
qualified investors. Qualified institutional buyers also include
registered broker-dealers owning and investing, on a discretionary
basis, $10 million in securities of non-affiliates. Please refer
to Rule 144A under the U.S. Securities Act for a complete definition
of a qualified institutional buyer. |
| Q13: | I am a U.S. person but not a qualified purchaser. May I acquire common units or RDUs? |
| A: | No. Investing in KPE is not permitted by any U.S. person who
is not a qualified purchaser. |
| Q14: | What if I acquire common units or RDUs in violation of this requirement? |
| A: | To the extent that KPE becomes aware that any U.S. person
is not a qualified purchaser at the time it acquires common units
or RDUs, it is permitted to require the transfer of such securities to
an authorized person. Pending such transfer, KPE is authorized
to suspend the exercise of any special consent rights, any rights to receive
notice of, or attend, a meeting of KPE’s partnership and
any rights to receive distributions with respect to such securities. |
Ownership Restrictions—ERISA |
|
| Q15: | Are there any limitations on the types of assets that a person may use to acquire common units or RDUs? |
| A: | Yes. Each purchaser of common units will be deemed to have
represented, agreed and acknowledged that no portion of the assets
used to acquire
or hold the common units or a beneficial interest therein constitutes
or will constitute the assets of an “employee benefit plan”
(within the meaning of Section 3(3) of ERISA) that is subject to
Title I of ERISA, a plan, individual retirement account or other
arrangement that is subject to Section 4975 of the U.S. Internal
Revenue Code or provisions under any Similar Law (as defined below)
or an entity whose assets underlying assets are considered to include
“plan assets” of any such plan, account or arrangement
(each, a “Plan”). Each purchaser of RDUs will be required
to make these same representations and acknowledgments in a U.S.
Transferee’s Letter or Depositor’s Letter as mentioned
above. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering acquiring the common units on behalf of, or with the assets of, any employee benefit plan, consult with their counsel to determine whether such employee benefit plan is subject to Title I of ERISA, Section 4975 of the U.S. Internal Revenue Code or any Similar Law. |
| Q16: | What is a Similar Law? |
| A: | A Similar Law refers to governmental plans, certain church
plans and non-U.S. plans, while not subject to Title I of ERISA
or Section
4975 of the U.S. Internal Revenue Code, may nevertheless be subject
to other state, local, non-U.S. or other laws or regulations
that
would have the same effect as Title I of ERISA or Section 4975
of the U.S. Internal Revenue Code, pursuant to U.S. Department
of Labor
regulations promulgated under ERISA by the U.S. Department of Labor
and codified at 29 C.F.R. Section 2510.3-101 (the “Plan Asset
Regulations”) so as to cause the underlying assets of KPE
to be treated as assets of an investing entity by virtue of its
investment (or any beneficial interest) in KPE and thereby subject
it and its managing general partner or its managing investment partner
(or other persons responsible for the investment and operation of
KPE’s assets) to laws or regulations that are similar to
the fiduciary responsibility or prohibited transaction provisions
contained
in Title I of ERISA or Section 4975 of the U.S. Internal Revenue
Code. |
| Q17: | What are the consequences if I use the assets of a Plan to acquire or hold common units or RDUs in violation of the foregoing restrictions? |
| A: | Transfers of the common units or RDUs, or beneficial interests
therein, to a person using the assets of a Plan will be void and
have no force and effect and will not operate to transfer any rights
to such person notwithstanding any instruction to the contrary to
KPE or any of its agents. Notwithstanding the foregoing, if any
such transfer is not treated as being void for any reason (including
as a result of acquisition on any exchange on which those securities
are listed), the security will automatically be transferred to a
charitable trust for the benefit of a charitable beneficiary and
the purported holder will have no right in the common units. Transfer
Restrictions Applicable to the RDUs. |
Transfer
Restrictions Applicable to the RDUs |
|
| Q18: | Who is permitted to be a transferee of the RDUs? |
| A: | RDUs and any beneficial interest therein may be transferred to
(1) a non-U.S. person in an offshore transaction pursuant to Regulation
S or (2) to a person that is within the United States or that is
a U.S. person and who is a qualified purchaser, provided that such
person does not and will not use the assets of any Plan to acquire
or hold the RDUs or any beneficial interest therein. |
| Q19: | What do I need to deliver in order to transfer my RDUs? |
| A: | In the case of a transfer of RDUs to a person who is within
the United States or a U.S. person, the transferee will be required
to execute and deliver a U.S. Transferee’s Letter in the form
set forth on this website. In the case of a transfer of RDUs to
a non-U.S. person in an offshore transaction pursuant to Regulation
S, the transferor will be required to surrender the Restricted Depositary
Receipts (“RDRs”) evidencing such RDUs and will be required
to agree and acknowledge in writing that the transferee is a person
outside the United States and not known by the transferor to be
a U.S. person by executing and delivering a “Surrender Letter” in
the form set forth on this website. |
| Q20: | I am a U.S. person who is a qualified purchaser and I am seeking to acquire RDUs. I have executed and delivered a U.S. Transferee’s Letter or Depositor’s Letter. Are there any other certifications or information that I am required to provide relating to the transfer of the RDUs? |
| A: | If you are a qualified institutional buyer that is acquiring RDUs
pursuant to Rule 144A, no. If you are not a qualified institutional
buyer, KPE and the designated depositary may require the delivery
of an opinion of counsel or other certifications or information
in order to become satisfied that the transfer will occur pursuant
to an applicable exemption from the U.S. Securities Act. |
Transfer Restrictions Applicable to the Common Units |
|
| Q21: | Who is permitted to be a transferee of the common units? |
| A: | Common units, or any beneficial interest therein, may be transferred
to either (1) a person who is outside the United States and not
a U.S. person or (2) a qualified purchaser, provided in each case
that such person does not and will not use the assets of any Plan
to acquire or hold the common units or any beneficial interest therein. |
| Q22: | What do I need to deliver in order to transfer my common units? |
| A: | You do not need to deliver any certifications if you are transferring
common units. If the transferee takes delivery of the securities
in the form of common units, the transferee will be deemed to have
represented, agreed and acknowledged that (1) it is either (a)
outside the United States and not a U.S. person or (b) a qualified purchaser,
(2) it will not offer, resell, pledge or otherwise transfer the
common units or a beneficial interest therein in the United States or to a U.S. person other
than to a qualified purchaser and (3) no portion of the assets used by it to acquire or hold the common units or a beneficial interest therein constitutes or will constitute the assets of a Plan (as defined below). If the transferee takes delivery of the securities in the form of RDUs, the transferee will be required to execute
and deliver a Depositor’s Letter in the form set forth elsewhere on this website. The Depositor’s Letter includes certain written
representations, agreements and acknowledgements relating to the
ownership and transfer restrictions applicable to the RDUs. |