Dolat Capital enters AIF space, announces launch of India’s First Hedge Fund under LLP Structure

MUMBAI: Dolat Capital has announced the launch of its first Hedge fund, Dolat Absolute Return LLP, India’s first Hedge Fund (Category III AIF) launched under a LLP structure. The fund intends to raise about Rs 250 crore in the initial tranche.

Dolat Absolute Return LLP (“Fund”), is a SEBI registered Category III AIF is constituted as an LLP, general taxation principles applicable to an LLP will govern the taxability of income earned by the Fund, the company said in a note.

The Fund is set-up in the form of a LLP and not a Trust, with an endeavor to provide one of the most efficient and simple taxation structures currently available for investors in a Category III AIF, which is a hedge fund and follows a Derivative trading strategy.

The Fund intends to generate stable and consistent absolute returns, at all points in time irrespective of equity and fixed income market conditions. The annualized gross target return of the fund is 12%-14% CAGR irrespective of equity and fixed income market conditions.

As a hedge fund, the Fund would aim to generate stable and consistent absolute returns whilst significantly minimizing the capital risk at all points in time, irrespective of equity and fixed income market conditions, by implementing a variety of sophisticated derivative based trading strategies.

The Fund, constituted as an LLP, shall attract general taxation principles applicable to a LLP. Accordingly, the business income earned by the Fund will be taxed at the Fund level at applicable tax rates of 34.94% as against 42.74% that is otherwise applicable to a trust (considering the highest slab of income). Further, any distributions made to the investors or partners out of tax paid income should be exempt in the hands of the investors or partners.