June 25, 2021
Via E-mail
Mr. John M. Perlowski, President
BlackRock ESG Capital Allocation Trust
55 East 52nd Street
New York, New York 10055
Re: BlackRock ESG Capital Allocation Trust
File Nos. 333-256596 and 811-23701
Dear Mr. Perlowski:
On May 28, 2021, BlackRock ESG Capital Allocation Trust (the Fund
) filed a
registration statement on Form N-2. We have reviewed the registration statement
and have
provided our comments below. Where a comment is made with regard to disclosure
in one
location, it is applicable to all similar disclosure appearing elsewhere in the
registration
statement. All capitalized terms not otherwise defined herein have the meaning
given to them in
the registration statement.
Prospectus
General
1. The Fund s name includes the term ESG. The staff believes this
term suggests a type
of investment and, therefore, the Fund should include an 80% names rule
policy that
covers ESG. Please also clarify that the Fund will mark derivatives to
market for
purposes of this policy.
2. Please tell us if potential investors have been presented with any test
the waters materials
in connection with this offering. If so, please provide us with copies of
such materials.
3. Please confirm in your response letter that FINRA has reviewed the
proposed
underwriting terms and arrangements for the offering, including the
amount of
compensation to be allowed or paid to the underwriters and any other
arrangements
among the Fund, the underwriters, and other broker dealers participating
in the
distribution, and that FINRA has issued a statement expressing no
objections to the
compensation and other arrangements.
Mr. John M. Perlowski, President
BlackRock ESG Capital Allocation Trust
June 25, 2021
Page 2
4. Please disclose that the Fund will comply with Rule 13e-3 under the
Exchange Act in
connection with any Eligible Tender Offer, if the Eligible Tender Offer
will cause the
common shares to be delisted or eligible for termination of registration
under the
Exchange Act, or cause reporting obligations with respect to such class
to become
eligible for termination.
5. We note that portions of the registration statement are incomplete (e.g.,
the seed financial
statements, fee table, hypothetical expense example). We may have
additional comments
on such portions when you complete them in a pre-effective amendment, on
disclosures
made in response to this letter, on information supplied supplementally,
or on exhibits
added in any amendment.
6. Please provide the name of the independent registered public accounting
firm in
correspondence.
Summary of Trust Expenses, page 45
7. Please confirm that the Fund will include a line item for AFFE in the fee
table, as
necessary.
8. Please disclose the actual fee paid to the Sub-Advisor.
Investment Strategy, page 47
9. The Fund uses several exclusionary criteria. The current disclosure notes
that such
criteria includes, but is not limited to, certain items. Please
revise to list all of the
exclusionary criteria the Fund will use. With respect to the criteria
that are listed, please
enhance the disclosure by describing the:
a. specific revenue threshold that will be used to determine when to
exclude
companies with business revenue attributable to controversial
weapons, civilian
firearms, tobacco and certain fossil fuels;
b. the specific fossil fuels that the criteria exclude;
c. criteria that would determine if a company is a UN Global Compact
violator;
d. specific threshold the Advisor will apply to ESG ratings; and
e. minimum low carbon threshold that the Advisor will use.
10. Disclosure states that Fund management then seeks to allocate the Fund
s assets to
issuers based on certain ESG factors. Please enhance this disclosure to
describe:
a. the criteria used by the Advisor to determine that issuers are
ESG sector
leaders. If this varies by sector, please disclose that and
provide examples of
specific criteria in sectors that the Fund expects to invest in;
b. the internal and external data sources that will be used;
Mr. John M. Perlowski, President
BlackRock ESG Capital Allocation Trust
June 25, 2021
Page 3
c. how the Advisor will determine whether a company is aligned with
its social and
environmental criteria and/or revenue associated with the UN
Sustainable
Development goals;
d. what makes a bond Green, Social, and Sustainable ; and
e. how the Advisor will determine whether a company has indicated
decarbonization
strategies.
11. We note that the Fund intends to use one or multiple third party
data/scoring providers in
connection with ESG investing. In the principal strategies, please
identify the provider
that the Fund intends to use, or the primary providers if the Fund
intends to use multiple
providers. Please also briefly summarize each providers
criteria/methodology in the
principal strategies.
12. Please disclose, where appropriate, how the Fund will approach relevant
ESG proxy
issues for its portfolio companies. Alternatively, please advise in
correspondence why the
Fund believes such disclosure is not required.
13. Please disclose how the ESG definition and methodology applies to
municipal bonds,
government sponsored ABS/MBS, and government securities (e.g., U.S.
Treasuries).
Investment Policies, page 48
14. Please disclose that the Subsdiary complies with provisions relating to
affiliated
transactions and custody (Section 17) of the Investment Company Act.
Please also
identify the custodian of the Subsidiary.
15. Please confirm in correspondence that: (1) the Subsidiary s management
fee will be
included in Management Fees , (2) the Subsidiary and its board of
directors will agree
to designate an agent for service of process in the United States; and
(3) the Subsidiary
and its board of directors will agree to inspection by the staff of the
Subsidiary s books
and records, which will be maintained in accordance with Section 31 of
the Investment
Company Act and the rules thereunder.
Duration and Maturity Risk, page 77
16. Please explain the concept of duration in the disclosure and include a
brief example.
Sovereign Governmental and Supranational Debt Risk, page 98
17. Please disclose if the Fund intends to invest greater than 25% of net
assets in sovereign
debt of a single foreign country.
Mr. John M. Perlowski, President
BlackRock ESG Capital Allocation Trust
June 25, 2021
Page 4
Dividend Reinvestment Plan, page 124
18. Please disclose the income tax consequences of participation in the plan
(i.e., that capital
gains and income are realized, although cash is not received by the
shareholder).
Common Shares, page 125
19. Disclosure states that the Board has the power to cause shareholders to
pay certain
expenses of the Fund by reducing the number of common shares owned by
each
respective shareholder. Please advise us of the legal basis for the
trust acquiring shares in
this manner.
Certain Provisions in the Agreement and Declaration of Trust and the Bylaws,
page 127
20. Please discuss the factors that the Board will consider in determining
whether to propose
a conversion.
21. Disclosure on page 128 describes a control share acquisition provision
in the
Agreement and Declaration of Trust that does not follow any statute that
applies
to the Fund as a Maryland statutory trust. Please explain how this
provision is
consistent with the staff s statement issued on May 27, 2020
withdrawing the
Boulder no-action letter and with the voting requirements under Section
18 of the
Investment Company Act. Please also address the implications under the
MCSAA and the Investment Company Act of the distinction between the
common shares and any preferred shares that might be issued.
Statement of Additional Information
Investment Restrictions, page S-1
22. Please confirm that the Fund will look through a private activity
municipal debt security
whose principal and interest payments are derived principally from the
assets and
revenues of a nongovernmental entity in order to determine the industry
to which the
investments should be allocated when determining the Fund s compliance
with its
concentration policies.
Exhibits
Agreement and Declaration of Trust
23. Please revise Section 12.4 to state that the provision forcing a
shareholder suit to be
brought first in state court does not apply to claims arising under the
federal securities
laws. Please also disclose in an appropriate location in the prospectus
the provision and
Mr. John M. Perlowski, President
BlackRock ESG Capital Allocation Trust
June 25, 2021
Page 5
corresponding risks of such a provision even as to non-federal
securities law claims (e.g.,
that shareholders may have to bring suit in an inconvenient and less
favorable forum) and
that the provision does not apply to claims arising under the federal
securities laws.
24. Please disclose in an appropriate location in the prospectus or SAI
that shareholders
waive the right to a jury trial.
* * * * *
We note that portions of the filing are incomplete. We may have
additional comments on
those portions when you complete them in a pre-effective amendment, on
disclosures made in
response to this letter, on information supplied in your response letter, or on
exhibits added in
any pre-effective amendments.
A response to this letter should be in the form of a pre-effective
amendment filed
pursuant to Rule 472 under the Securities Act. The pre-effective amendment
should be
accompanied by a supplemental letter that includes your responses to each of
these comments.
Where no change will be made in the filing in response to a comment, please
indicate this fact in
your supplemental letter and briefly state the basis for your position.
We remind you that the Fund and its management are responsible for the
accuracy and
adequacy of their disclosures, notwithstanding any review, comments, action, or
absence of
action by the staff.
You may contact me at (202) 551-3503 if you have any questions.
Sincerely,
/s/ David L.
Orlic
David L. Orlic
Senior Counsel
cc: Keith OConnell, Branch Chief
Michael J. Spratt, Assistant Director
Disclosure Review and Accounting Office