SEC Staff Grants No-Action Relief for Warehousing Arrangements for Closed-End Funds and BDCs

Who may be interested: Registered Investment Companies; Directors of Registered Investment Companies; Investment Advisers; Broker-Dealers; Compliance Officers

Quick Take: The Division of Investment Management issued a no-action letter establishing a framework for third-party warehousing arrangements for newly organized closed-end funds, as well as, substantially similar arrangements involving future closed-end funds and BDCs.

On October 29, 2026, the Division of Investment Management issued a no-action letter to Goldman Sachs Asset Management, L.P. (“GSAM”) regarding a proposed warehousing arrangement for G-X Private Markets, a newly organized registered closed-end fund. Under the arrangement, an unaffiliated warehouse provider may acquire investments identified by GSAM prior to the fund’s commencement of operations, with the fund expected to acquire the warehoused portfolio once specified fundraising and board approval conditions are satisfied.

The SEC Staff stated that it would not recommend enforcement action under Section 17(d) of the 1940 Act and Rule 17d-1, subject to the conditions described in the request letter. Notably, the Staff expressly limited its position to warehousing arrangements used in connection with a fund’s commencement of operations.

Background

Warehousing arrangements are commonly used in connection with the launch of closed-end funds and BDCs to assemble an initial portfolio before a fund commences operations. According to GSAM, such arrangements can facilitate portfolio construction, capital deployment, and fundraising efforts. Because warehousing arrangements may raise affiliate and joint transaction concerns, they can implicate Section 17(d), Rule 17d-1, and other co-investment issues.

Key Features of the Approved Warehousing Framework

Unaffiliated Warehouse Counterparty

The no-action position was premised on the warehouse provider being unaffiliated with the fund and GSAM. In addition, the warehouse provider could not acquire portfolio investments from fund affiliates or accounts managed by GSAM affiliates.

Board Oversight and Approval

The fund’s board must approve the facility agreement and determine that any acquisition of warehoused investments is fair to the fund, does not involve overreaching, is in the fund’s best interests, and is consistent with the fund’s investment objectives and strategies. The framework also incorporates approval standards modeled on the “required majority” protections applicable to BDC affiliated transactions under Section 57 of the 1940 Act.

Pricing and Economic Protections

The fund may acquire warehoused investments only at the warehouse provider’s cost, adjusted for distributions received, financing fees, and certain limited tax and foreign currency adjustments. These pricing limitations were an important component of the arrangement presented to the Staff and were intended to help ensure that the fund’s acquisition of warehoused investments occurs on terms that are fair to the fund.

Enhanced Disclosure Obligations

The fund agreed to disclose the warehoused portfolio, key terms of the facility agreement, valuation methodologies, material conflicts of interest, and related risks, providing investors with transparency regarding the arrangement before the fund commences operations.

Application of Co-Investment Order Protections

With respect to investments that would otherwise be subject to a fund’s co-investment exemptive order, GSAM represented that the applicable co-investment framework would be applied substantially as though the fund had participated directly in the transaction.

GSAM represented that transactions would comply with the applicable co-investment order conditions, that the warehouse provider would be treated as if it were the fund for purposes of opportunity allocation and dispositions while holding warehoused assets, and that the board would receive ongoing reporting regarding those investments.

The Staff’s relief was expressly conditioned on compliance with a co-investment order containing provisions substantially identical to GSAM’s existing order.

Relief Extended Beyond the GSAM Fund

Importantly, the Staff confirmed that its position applies not only to G-X Private Markets, but also to substantially similar warehousing arrangements involving future registered closed-end funds and BDCs.

Practical Implications

Although limited to its facts, the letter provides a useful framework for advisers seeking to utilize warehousing arrangements in connection with the launch of closed-end funds and BDCs. The Staff emphasized the importance of an unaffiliated warehouse provider, robust board oversight, pricing and disclosure protections, and adherence to applicable co-investment requirements.

The no-action letter is available here.