Dolat Capital forays into AIF with hedge fund under LLP structure

MUMBAI: Dolat Capital Market Private Limited has forayed into alternative investment fund (AIF) with the launch of a hedge fund under limited liability partnership (LLP) structure. The fund intends to raise ₹250 crore in the initial tranche.

While globally, limited partnerships are quite popular as fund structures for investment in securities, the new fund called Dolat Absolute Return LLP is India’s first hedge fund (category III AIF) launched under LLP structure.

The fund is in the form of an LLP and not a trust, with a plan to provide one of the most efficient and simple taxation structure currently available for investors in a Category III AIF, which is a hedge fund and follows a Derivative trading strategy, said Amit Saxena, director and head, Alternative Investment Funds at Dolat Capital Market Pvt Ltd.

The 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 applicable to a trust (considering the highest slab of income). Any distribution made to the investors/partners out of tax paid income should be exempt in the hands of the investors/partners.

"The fund provides one of the most efficient and simple taxation structure currently available for Cat III investors who invests in Derivative based Hedge funds. 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," a company statement said.

The fund intends to implement variety of sophisticated derivative-based trading strategies. The fund aims to significantly minimise capital risk and generate consistent absolute returns with extremely low correlation with equity and fixed income market. The fund aims to provide stability like debt investments with potential of higher gross returns.