DRAFT — PRIVATE LETTER RULING REQUEST — VERSION 2.0
Revision Status: Version 2.0 — Revised draft incorporating responsible partner comments; circulated to client for review
Date of Draft: June 30, 2025 (for target July 1, 2025 client circulation)
Prepared by: Robert Jansen and Garrett Simmons, Calderwood & Harkness LLP
Reviewed and Revised by: Leonard Cross, Responsible Partner, Calderwood & Harkness LLP
Addressed to: Internal Revenue Service, Attn: CC:INTL, 1111 Constitution Avenue NW, Washington, DC 20224
Copies Circulated to: Stefan Dalmqvist (Head of Tax, Solara Digital Infrastructure LP) and Priya Narasimhan (General Counsel, Solara Digital Infrastructure LP) for client review
INTERNAL TRANSMITTAL COVER PAGE
June 30, 2025
MEMORANDUM
TO: Stefan Dalmqvist, Head of Tax, Solara Digital Infrastructure LP Priya Narasimhan, General Counsel, Solara Digital Infrastructure LP
FROM: Leonard Cross, Responsible Partner, Calderwood & Harkness LLP
RE: Private Letter Ruling Request — Version 2.0 — Cross-Border Fund-Platform Reorganization
ENGAGEMENT NO.: 20250527-SDILP-PLR
Stefan and Priya,
Please find enclosed the revised draft of the Private Letter Ruling Request (Version 2.0) to be submitted to the Internal Revenue Service, Office of the Associate Chief Counsel (International), on behalf of Solara Digital Infrastructure LP. This draft incorporates the comments and revisions discussed during our partner review call on June 18, 2025, and reflects additional input from the responsible partner review process.
Summary of Key Changes from Version 1.0 to Version 2.0:
1. Section 7.3 — IRC § 367 Inapplicability Analysis. We have substantially strengthened this section by incorporating detailed legislative history discussion tracing the enactment and evolution of § 367, which was designed to address transfers of appreciated property to foreign corporations in the context of corporate reorganizations and inversions. We have added a textual argument grounded in the plain statutory language, which references "domestic corporation" and "foreign corporation" and has no application to partnership-classified entities. We have also surveyed the regulatory landscape and included discussion of analogous PLR authorities supporting our position that § 367 does not reach partnership-to-partnership contributions.
2. Section 7.5 — IRC § 752 Liability Netting Analysis. We have expanded the netting discussion to address the tiered partnership implications in greater detail under Treasury Regulation § 1.752-1(f). The revised analysis includes a detailed walk-through of how the interposition of the Consolidated Master Fund LP between the Legacy Offshore Vehicles and their limited partners affects liability share calculations. We have included a quantitative illustration using the $1.34 billion aggregate liability pool and representative partner shares, demonstrating that no partner experiences a net decrease in liability share exceeding their basis in their partnership interest.
3. Section 7.10 and Section 8 — Business Purpose Representations. We have added comprehensive, specific business purpose representations, including quantification of the approximately $3.8 million in annual duplicative cost savings; a detailed description of the impact of the OECD Pillar Two GloBE rules on effective tax rates of the Luxembourg SCSp structures beginning FY 2025; FATCA and CRS reporting simplification benefits; and the governance simplification requested by the limited partners at the April 22, 2025 LPAC meeting (78% preliminary consent in interest). We have also referenced the GP board approval dated March 14, 2025.
4. Section 5 — Transaction Description. We have refined the descriptions of asset fair market values and adjusted tax bases to align with the financial data provided by Caldwell Pierce & Co. and the independent valuations prepared by Redstone Advisory Group. Please review these figures carefully against your internal records.
5. Various Conforming Edits. Citation updates, formatting corrections, and conforming edits have been made throughout the document to ensure internal consistency.
Action Items for Client:
We request that your team review the enclosed draft with particular attention to the following:
• Factual accuracy. Please verify all financial data, including fair market values, adjusted tax bases, built-in gain amounts, liability figures, and fund sizes. These figures are presented based on the data packages received from Douglas Wexford's office and the Caldwell Pierce & Co. engagement, but your independent confirmation is essential before submission.
• Portfolio company details. Please confirm the descriptions of the 23 portfolio companies, including the five representative companies discussed in detail (NovaBright Data Systems Inc., Crestline Cloud Solutions LLC, Veridian Edge Computing Corp., Thorngate Fiber Networks LP, and Helix SaaS Holdings Ltd.). Exhibit D will require your team's sign-off on the full schedule.
• Liability amounts. Please confirm the aggregate $1.34 billion in portfolio-level debt and the breakdown among the Legacy Offshore Vehicles. The § 752 analysis is critically dependent on these figures.
• LP information. Please confirm the commitment amounts for the representative investors (Pinnacle State Employees' Retirement System, Grandview University Endowment, Nordhaven Sovereign Wealth Fund, Kestrel Pacific Insurance Group, and Argyle Family Office Holdings LLC).
We request your comments by approximately July 10, 2025 to permit LPAC counsel review by July 15, 2025 and finalization of the submission package in advance of the pre-submission conference.
Pre-Submission Conference. We have requested a pre-submission conference with IRS CC:INTL Branch 1 for July 22, 2025. We anticipate that Branch 1 will coordinate with CC:PSI as necessary given the passthrough entity classification and § 752 issues. We will circulate a preparation memorandum and talking points in advance of that conference.
Please do not hesitate to contact me, Robert Jansen, or Garrett Simmons with any questions or comments.
Very truly yours,
Leonard Cross Partner Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006 Tel: (202) 555-7100
Email: lcross@calderwoodharkness.com
I. RULING REQUEST LETTER
1. Caption and Addressee Block
[Date of Submission]
Internal Revenue Service Office of the Associate Chief Counsel (International) CC:INTL 1111 Constitution Avenue NW Washington, DC 20224
Secondary Jurisdiction Noted: Office of the Associate Chief Counsel (Passthroughs & Special Industries), CC:PSI
Re: Request for Private Letter Ruling — Solara Digital Infrastructure LP — Cross-Border Fund-Platform Reorganization
Dear Sir or Madam:
On behalf of Solara Digital Infrastructure LP, a Delaware limited partnership ("Solara" or the "Taxpayer"), and pursuant to Revenue Procedure 2025-1, Calderwood & Harkness LLP ("Counsel") respectfully submits this request for a private letter ruling regarding the U.S. federal income tax consequences of a proposed multi-step cross-border fund-platform reorganization (the "Reorganization"), as described more fully herein. This request is submitted by Calderwood & Harkness LLP, 1900 K Street NW, Suite 1100, Washington, DC 20006, as authorized representatives of the Taxpayer.
The authorized representatives designated to act on behalf of the Taxpayer in connection with this ruling request are:
Leonard Cross Responsible Partner Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006 Telephone: (202) 555-7100 Facsimile: (202) 555-7101
Email: lcross@calderwoodharkness.com
Sylvia Hartwell Billing Partner Calderwood & Harkness LLP 600 Lexington Avenue, 38th Floor New York, NY 10022 Telephone: (212) 555-3400 Facsimile: (212) 555-3401
Email: shartwell@calderwoodharkness.com
Executed IRS Form 2848, Power of Attorney and Declaration of Representative, for each of Leonard Cross and Sylvia Hartwell is enclosed with this submission.
2. User Fee
Enclosed herewith is the applicable user fee payment of $38,000 pursuant to the Schedule of User Fees, Appendix A, Revenue Procedure 2025-1. This fee corresponds to the applicable category for a ruling request involving multiple entities with combined assets exceeding $50,000,000. The user fee has been remitted by wire transfer, and confirmation of the wire transfer is enclosed as part of the supporting documentation accompanying this request.
3. Identification of Taxpayer(s)
3.1 Principal Taxpayer
The principal taxpayer requesting this private letter ruling is:
Solara Digital Infrastructure LP A Delaware limited partnership Employer Identification Number (EIN): 82-4917366 Principal Office Address: 1200 Market Street, Suite 3400, Wilmington, DE 19801 Date of Formation: March 17, 2014 Approximate Assets Under Management: $14.7 billion (as of March 31, 2025) Principal Business Activity: Private equity sponsor targeting digital infrastructure (including data centers, fiber-optic networks, and edge computing platforms) and enterprise software-as-a-service ("SaaS") platforms
Solara Digital Infrastructure LP serves as the sponsor and principal management entity for a series of private equity fund vehicles organized across multiple jurisdictions, as described more fully in Section 3.3 below. Solara employs approximately 185 investment and operational professionals across its offices in Wilmington, Delaware; New York, New York; San Francisco, California; and London, United Kingdom.
3.2 General Partner
The general partner of Solara Digital Infrastructure LP is:
Solara Digital Infrastructure GP LLC A Delaware limited liability company EIN: 82-4917365 Registered Agent: Capitol Registered Agents Inc., 850 New Burton Road, Suite 201, Dover, DE 19904 Manager: Viktor Raines, Managing Partner & Founder
Solara Digital Infrastructure GP LLC is classified as a disregarded entity for U.S. federal income tax purposes under Treasury Regulation § 301.7701-3 by reason of having a single owner. It serves as the general partner of Solara Digital Infrastructure LP and of certain of the fund vehicles described below.
3.3 Existing Fund Vehicles (Legacy Offshore Vehicles)
Solara currently sponsors private equity investments through the following six parallel fund vehicles (collectively, the "Fund Vehicles," and the four offshore vehicles described below in subsections (b), (c), (e), and (f) are referred to collectively as the "Legacy Offshore Vehicles"):
(a) Solara Digital Partners Fund IV LP ("Fund IV LP")
Entity Type: Delaware limited partnership EIN: 85-2103748 Fund Size: $4.2 billion Vintage Year: 2021 Deployment Status: Approximately 72% deployed as of March 31, 2025 General Partner: Solara Digital Infrastructure GP LLC Investor Base: U.S. taxable investors
(b) Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman")
Entity Type: Cayman Islands exempted limited partnership U.S. EIN: 98-6241503 CIMA Registration Number: MF-72491 Registered Office: Harborstone Corporate Services Ltd., P.O. Box 2714, 94 Solaris Avenue, George Town, Grand Cayman KY1-1111, Cayman Islands Fund Size: $1.85 billion (parallel fund for non-U.S. and U.S. tax-exempt investors) General Partner: Solara Offshore GP Ltd. (Cayman Islands exempted company) Investor Base: Non-U.S. investors and U.S. tax-exempt investors seeking UBTI blocker benefits through offshore corporate subsidiary holding structures
(c) Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux")
Entity Type: Luxembourg special limited partnership (société en commandite spéciale) U.S. EIN: 98-6241571 RCS Number: B 248193 Registered Office: 14, rue Jean-Pierre Brasseur, L-1258 Luxembourg Fund Size: €1.15 billion (approximately $1.24 billion at 1.08 EUR/USD) General Partner: Solara Luxembourg Management S.à r.l. (RCS B 248194) Investor Base: Non-U.S. investors seeking treaty access benefits and European regulatory alignment
(d) Solara Digital Partners Fund V LP ("Fund V LP")
Entity Type: Delaware limited partnership EIN: 88-3467219 Fund Size: $5.6 billion Vintage Year: 2023 Deployment Status: Approximately 38% deployed as of March 31, 2025 General Partner: Solara Digital Infrastructure GP LLC Investor Base: U.S. taxable investors
(e) Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman")
Entity Type: Cayman Islands exempted limited partnership U.S. EIN: 98-7891234 CIMA Registration Number: MF-89103 Registered Office: Harborstone Corporate Services Ltd., George Town, Grand Cayman, Cayman Islands Fund Size: $2.45 billion General Partner: Solara Offshore GP Ltd. (Cayman Islands exempted company) Investor Base: Non-U.S. investors and U.S. tax-exempt investors
(f) Solara Digital Partners Fund V-B (Luxembourg) SCSp ("Fund V-B Lux")
Entity Type: Luxembourg special limited partnership (société en commandite spéciale) U.S. EIN: 98-7891267 RCS Number: B 271056 Registered Office: 14, rue Jean-Pierre Brasseur, L-1258 Luxembourg Fund Size: €1.38 billion (approximately $1.49 billion at 1.08 EUR/USD) General Partner: Solara Luxembourg Management S.à r.l. (RCS B 248194) Investor Base: Non-U.S. investors seeking treaty access benefits and European regulatory alignment
The aggregate assets under management across all six Fund Vehicles total approximately $14.7 billion. Fund IV LP and Fund V LP are the domestic main funds through which U.S. taxable investors participate. The Legacy Offshore Vehicles — Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux — are the offshore parallel vehicles that are the subject of this Reorganization.
3.4 Newly Formed Entities (Post-Reorganization)
In connection with the proposed Reorganization, the following new entities are to be formed:
(a) Solara Consolidated Master Fund GP LLC ("Master Fund GP")
Entity Type: Delaware limited liability company Target Formation Date: On or about September 15, 2025 Purpose: To serve as the general partner of the Consolidated Master Fund LP Certificate of Formation to be filed with the Delaware Secretary of State Registered Agent: Capitol Registered Agents Inc., 850 New Burton Road, Suite 201, Dover, DE 19904
(b) Solara Consolidated Master Fund LP (the "Consolidated Master Fund" or "Master Fund")
Entity Type: Delaware limited partnership Target Formation Date: On or about September 15, 2025 General Partner: Solara Consolidated Master Fund GP LLC Purpose: Master fund vehicle consolidating the portfolio assets currently held by the Legacy Offshore Vehicles Intended Entity Classification: Partnership for U.S. federal income tax purposes pursuant to a timely filed IRS Form 8832 check-the-box election under Treasury Regulation § 301.7701-3
(c) Solara International Feeder (Cayman) LP (the "International Feeder")
Entity Type: Cayman Islands exempted limited partnership Target Formation Date: On or about September 15, 2025 Purpose: Feeder vehicle for non-U.S. investors investing into the Consolidated Master Fund LP Formation to be handled by Meridian Offshore Legal, Cayman Islands Registered Office: Harborstone Corporate Services Ltd., George Town, Grand Cayman, Cayman Islands Intended Entity Classification: Partnership for U.S. federal income tax purposes
(d) Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder")
Entity Type: Cayman Islands exempted limited partnership Target Formation Date: On or about September 15, 2025 Purpose: Feeder vehicle for U.S. tax-exempt investors (pension funds, endowments, and similar institutions) to mitigate unrelated business taxable income ("UBTI") concerns Formation to be handled by Meridian Offshore Legal, Cayman Islands Registered Office: Harborstone Corporate Services Ltd., George Town, Grand Cayman, Cayman Islands Intended Entity Classification: Partnership for U.S. federal income tax purposes
3.5 Key Officers and Signatories
The following individuals serve as officers and authorized representatives of Solara and are relevant to this ruling request:
4. Statement of Facts
4.1 Background and Business Description
Solara Digital Infrastructure LP is a Delaware-based private equity sponsor with approximately $14.7 billion in assets under management across digital infrastructure and enterprise SaaS verticals. Since its founding in 2014, Solara has established itself as a leading investor in the digital infrastructure sector, focusing on data center development and operations, fiber-optic network build-outs, edge computing platforms, and enterprise-grade SaaS applications that serve the digital infrastructure ecosystem.
Solara sponsors private equity funds through a series of parallel fund structures established across Delaware, the Cayman Islands, and Luxembourg to accommodate the diverse tax, regulatory, and operational requirements of its investor base, which includes U.S. taxable investors, U.S. tax-exempt institutional investors (such as state pension systems and university endowments), and non-U.S. investors (including sovereign wealth funds, insurance companies, and foreign pension plans).
Currently, Solara operates through six parallel fund vehicles spanning three jurisdictions, as described in Section 3.3 above. This multi-jurisdictional parallel fund structure, while serving important historical purposes, has generated significant operational complexity, duplicative costs, and administrative burdens, as described more fully in Section 4.3 below.
4.2 Existing Fund Structure
The existing fund structure is organized as follows, and is depicted graphically in the Pre-Reorganization Organizational Charts attached hereto as Exhibit A:
U.S. Taxable Investors. U.S. taxable investors invest through the Delaware main funds, Fund IV LP and Fund V LP. These investors receive Schedule K-1 reporting directly from the Delaware funds and are subject to U.S. federal income tax on their allocable share of fund income, gain, loss, and deduction in the ordinary course.
U.S. Tax-Exempt Investors. U.S. tax-exempt investors — including pension funds and endowments — invest through the Cayman parallel vehicles (Fund IV-A Cayman and Fund V-A Cayman) to achieve UBTI blocker benefits via offshore corporate subsidiary holding structures. Representative U.S. tax-exempt investors include:
• Pinnacle State Employees' Retirement System — $275 million commitment to Fund IV-A Cayman; $340 million commitment to Fund V-A Cayman. Pinnacle is a defined benefit pension plan covering approximately 180,000 active and retired state employees.
• Grandview University Endowment — $120 million commitment to Fund IV-A Cayman; $185 million commitment to Fund V-A Cayman. Grandview University Endowment manages approximately $8.5 billion in total endowment assets.
These U.S. tax-exempt investors participate through the Cayman vehicles to ensure that income from portfolio company operations that might otherwise constitute UBTI if held directly or through a domestic partnership is instead received through structures designed to mitigate such exposure.
Non-U.S. Investors. Non-U.S. investors invest through either the Cayman or Luxembourg parallel vehicles depending on treaty access considerations and regulatory requirements applicable to their home jurisdictions. Representative non-U.S. investors include:
• Nordhaven Sovereign Wealth Fund — $380 million commitment to Fund IV-A Cayman; $500 million commitment to Fund V-A Cayman. Nordhaven is a sovereign wealth fund of a Northern European nation with total assets under management of approximately $250 billion.
• Kestrel Pacific Insurance Group (Singapore) — €200 million commitment to Fund IV-B Lux; €275 million commitment to Fund V-B Lux. Kestrel Pacific is a Singapore-domiciled insurance holding company regulated by the Monetary Authority of Singapore. Kestrel Pacific invested through the Luxembourg vehicles to access favorable treaty networks and to satisfy Monetary Authority of Singapore regulatory expectations regarding investment fund domicile.
U.S. Taxable Investors (Additional). In addition to the institutional investors described above, U.S. taxable investors in the Delaware main funds include:
• Argyle Family Office Holdings LLC — $95 million commitment to Fund IV LP; $130 million commitment to Fund V LP. Argyle is a single-family office based in Greenwich, Connecticut.
4.3 Business Rationale for the Reorganization
The proposed Reorganization is driven by the following bona fide business purposes, each of which has independent significance and collectively provide compelling justification for the restructuring:
(i) Operational Cost Reduction. Solara currently incurs approximately $3.8 million annually in duplicative offshore administration, audit, and regulatory fees attributable to the maintenance of the four Legacy Offshore Vehicles. These costs include separate audit engagements in the Cayman Islands and Luxembourg (each requiring local auditors in addition to the consolidated audit performed by Solara's U.S. independent auditors), regulatory filings with the Cayman Islands Monetary Authority ("CIMA") and the Luxembourg Commission de Surveillance du Secteur Financier ("CSSF"), annual registered office and registered agent fees, local legal counsel retainers, and transfer agency and fund administration services that are duplicative of services already provided to the Delaware main funds. The Reorganization is expected to eliminate substantially all of these duplicative costs by consolidating the offshore vehicle assets into a single Delaware-domiciled master fund.
(ii) OECD Pillar Two GloBE Compliance. The forthcoming OECD Pillar Two Global Anti-Base Erosion ("GloBE") rules are effective for Solara's Luxembourg entities commencing fiscal year 2025. These rules impose a minimum effective tax rate of 15% on constituent entities of in-scope multinational enterprise groups. Solara's internal analysis, prepared in consultation with its Luxembourg tax advisors at Vandenberg & Kessler, has concluded that the Pillar Two rules will significantly diminish the tax efficiencies previously achieved through the Luxembourg SCSp structures, thereby eroding the primary historical rationale for maintaining those vehicles. The consolidation of Luxembourg vehicle assets into the Delaware-domiciled Master Fund is a direct response to this changed regulatory environment.
(iii) Simplified FATCA and CRS Compliance. The current multi-jurisdictional structure imposes complex and overlapping reporting obligations under the Foreign Account Tax Compliance Act ("FATCA") and the Common Reporting Standard ("CRS"). The Cayman vehicles are subject to FATCA reporting under the Cayman Islands' Model 1 Intergovernmental Agreement with the United States, and the Luxembourg vehicles are subject to FATCA reporting under the Luxembourg-U.S. IGA, as well as CRS reporting under the Luxembourg implementation of the OECD Standard for Automatic Exchange of Financial Account Information. The consolidation into a single master fund structure will materially simplify these reporting obligations by reducing the number of reporting entities and rationalizing the investor classification and due diligence processes.
(iv) LP-Requested Governance Simplification. At the Limited Partner Advisory Committee ("LPAC") meeting held on April 22, 2025, limited partners representing approximately 78% in interest provided preliminary consent to the exploration and implementation of the proposed Reorganization. The LPAC members expressed strong support for the simplification of the fund governance structure, citing the burden of receiving and reviewing multiple sets of fund reports, financial statements, and capital account statements across parallel vehicles. Several LPAC members specifically noted that the parallel structure created confusion regarding their aggregate exposure and complicated their internal reporting to their own boards and investment committees. The GP board of Solara Digital Infrastructure GP LLC formally approved the exploration of the Reorganization on March 14, 2025, based on a presentation by management outlining these business purposes.
4.4 Description of Portfolio Companies
The Legacy Offshore Vehicles collectively hold interests in a total of 23 portfolio companies — 11 held through the Fund IV vehicles and 12 held through the Fund V vehicles. All 23 portfolio companies are operating businesses in the digital infrastructure sector (including data centers, fiber-optic networks, and edge computing platforms) and the enterprise SaaS sector. None of the portfolio companies is a passive holding vehicle for marketable securities or other investment assets.
A complete schedule of all 23 portfolio companies, including the identity of the contributing vehicle, fair market value, adjusted tax basis, and built-in gain for each, is set forth in Exhibit D attached hereto. The following five representative portfolio company interests are described in detail:
(a) NovaBright Data Systems Inc.
Entity Type: Delaware corporation Business: Data center operator; owns and operates seven hyperscale data centers across the eastern United States and two facilities in the United Kingdom Fair Market Value: $890 million Adjusted Tax Basis: $520 million Built-In Gain: $370 million Holding Structure: Fund IV-A Cayman holds a 60% equity interest; Fund IV LP holds the remaining 40% equity interest
(b) Crestline Cloud Solutions LLC
Entity Type: Delaware limited liability company (classified as a disregarded entity owned by the Luxembourg SCSp) Business: Enterprise SaaS platform providing cloud-based infrastructure management tools to mid-market and enterprise customers Fair Market Value: €340 million ($367 million at 1.08 EUR/USD) Adjusted Tax Basis: €195 million ($211 million) Built-In Gain: €145 million ($156 million) Holding Structure: Fund IV-B Lux holds a 100% interest
(c) Veridian Edge Computing Corp.
Entity Type: Delaware corporation Business: Edge computing infrastructure provider; operates a distributed network of micro data centers at the network edge, serving telecommunications carriers and content delivery networks Fair Market Value: $1.12 billion Adjusted Tax Basis: $780 million Built-In Gain: $340 million Holding Structure: Fund V-A Cayman holds a 55% equity interest; Fund V LP holds the remaining 45% equity interest
(d) Thorngate Fiber Networks LP
Entity Type: Delaware limited partnership Business: Fiber-optic network operator; owns and operates approximately 14,000 route miles of dark fiber and lit fiber-optic networks serving enterprise and wholesale customers in the Mid-Atlantic and Southeast regions Fair Market Value: $670 million Adjusted Tax Basis: $490 million Built-In Gain: $180 million Holding Structure: Fund IV-A Cayman holds a 100% interest
(e) Helix SaaS Holdings Ltd.
Entity Type: Cayman Islands exempted company Business: SaaS holding company; holds controlling interests in three enterprise SaaS businesses focused on network management, cybersecurity analytics, and data center operations software Fair Market Value: $445 million Adjusted Tax Basis: $310 million Built-In Gain: $135 million Holding Structure: Fund V-A Cayman holds a 100% interest
The remaining 18 portfolio companies are described in the comprehensive schedule set forth in Exhibit D, which includes the identity, entity type, business description, fair market value, adjusted tax basis, built-in gain, and holding structure for each portfolio company.
4.5 Aggregate Financial Summary
The following table summarizes the aggregate financial data for the assets proposed to be transferred to the Consolidated Master Fund LP in connection with the Reorganization:
The $1.34 billion in aggregate liabilities consists of portfolio-level indebtedness across the Legacy Offshore Vehicles, including subscription credit facilities, asset-level acquisition financing, and working capital facilities at the portfolio company level. A detailed schedule of liabilities, including the allocation among the Legacy Offshore Vehicles and the pre- and post-reorganization liability share computations under IRC § 752, is set forth in Exhibit E attached hereto.
5. Description of the Proposed Transaction — Multi-Step Reorganization
5.1 Overview. The proposed Reorganization consists of five integrated steps, planned for execution in the fourth quarter of 2025 with a target effective date of December 1, 2025 for the final step. Each step is described in detail below. Diagrammatic depictions of each step, including pre- and post-step entity structures and asset flows, are provided in Exhibit C (Step Transaction Diagrams) attached hereto.
The overall objective of the Reorganization is to consolidate the portfolio assets currently held by the four Legacy Offshore Vehicles (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux) into a single Delaware-domiciled master fund (the Consolidated Master Fund LP), and then to dissolve the Legacy Offshore Vehicles and migrate their limited partners into the appropriate feeder vehicles (the International Feeder for non-U.S. investors and the Tax-Exempt Feeder for U.S. tax-exempt investors). The Delaware main funds (Fund IV LP and Fund V LP) will continue to exist and will co-invest alongside the Consolidated Master Fund LP in the portfolio companies.
5.2 Step 1 — Formation of New Entities (Target: September 15, 2025)
In Step 1, Solara will cause the formation of the following four new entities:
(a) Solara Consolidated Master Fund GP LLC will be formed as a Delaware limited liability company by filing a Certificate of Formation with the Delaware Secretary of State. The registered agent will be Capitol Registered Agents Inc., 850 New Burton Road, Suite 201, Dover, DE 19904. The Master Fund GP will serve as the general partner of the Consolidated Master Fund LP.
(b) Solara Consolidated Master Fund LP will be formed as a Delaware limited partnership by filing a Certificate of Limited Partnership with the Delaware Secretary of State. The general partner of the Master Fund will be Solara Consolidated Master Fund GP LLC. The Master Fund will be the vehicle into which the Legacy Offshore Vehicle assets are consolidated.
(c) Solara International Feeder (Cayman) LP will be formed as a Cayman Islands exempted limited partnership. Formation will be handled by Meridian Offshore Legal in the Cayman Islands, and the registered office will be Harborstone Corporate Services Ltd., George Town, Grand Cayman, Cayman Islands. The International Feeder will serve as the vehicle through which non-U.S. investors will invest into the Consolidated Master Fund LP.
(d) Solara Tax-Exempt Feeder (Cayman) LP will be formed as a Cayman Islands exempted limited partnership, also through Meridian Offshore Legal, with its registered office at Harborstone Corporate Services Ltd. The Tax-Exempt Feeder will serve as the vehicle through which U.S. tax-exempt investors (including pension funds and endowments such as Pinnacle State Employees' Retirement System and Grandview University Endowment) will invest into the Consolidated Master Fund LP to mitigate UBTI concerns.
Contemporaneously with the formation of each new entity, Solara will cause IRS Form 8832 check-the-box elections to be filed for each new entity electing classification as a partnership for U.S. federal income tax purposes under Treasury Regulation § 301.7701-3. Each election will be effective as of the date of entity formation (September 15, 2025 for the Master Fund and the Master Fund GP, or such later date as applicable for the Cayman feeder entities), and in all events prior to the commencement of Step 2 on October 1, 2025.
5.3 Step 2 — Contribution of Fund IV-A Cayman Assets (Target: October 1, 2025)
In Step 2, Fund IV-A (Cayman) LP will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Master Fund. This contribution will encompass all equity interests and other property held by Fund IV-A Cayman in its portfolio companies, including its 60% equity interest in NovaBright Data Systems Inc., its 100% interest in Thorngate Fiber Networks LP, and all other portfolio company interests held by Fund IV-A Cayman, as described in Exhibit D.
The aggregate financial parameters of the Step 2 contribution are as follows:
Intended Tax Treatment. The contribution of portfolio assets by Fund IV-A Cayman to the Consolidated Master Fund LP in exchange for a limited partnership interest is intended to be treated as a tax-free contribution under IRC § 721(a), with no gain or loss recognized by Fund IV-A Cayman or any of its partners. The Consolidated Master Fund LP will take a carryover basis in the contributed assets under IRC § 723, and Fund IV-A Cayman will take a basis in its Master Fund LP interest equal to its basis in the contributed assets under IRC § 722. The holding period of the contributed assets in the hands of the Master Fund will include the holding period of Fund IV-A Cayman under IRC § 1223(2).
The application of the IRC § 721(b) investment company exception requires analysis, as discussed in Section 7.2 below, and a ruling is requested that the exception does not apply.
5.4 Step 3 — Contribution of Fund IV-B Luxembourg Assets (Target: October 15, 2025)
In Step 3, Fund IV-B (Luxembourg) SCSp will contribute all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Master Fund. This contribution will encompass all equity interests and other property held by Fund IV-B Lux in its portfolio companies, including its 100% interest in Crestline Cloud Solutions LLC and all other portfolio company interests held by Fund IV-B Lux, as described in Exhibit D.
The aggregate financial parameters of the Step 3 contribution are as follows:
Intended Tax Treatment. The contribution of portfolio assets by Fund IV-B Lux to the Consolidated Master Fund LP is intended to be treated as a tax-free contribution under IRC § 721(a), consistent with the treatment of the Step 2 contribution.
IRC § 367 Analysis. Because Fund IV-B Lux is a Luxembourg SCSp — an entity organized under foreign law — a ruling is specifically requested that IRC § 367 does not apply to this contribution. As discussed in detail in Section 7.3 below, § 367 by its express terms applies only to transfers to or from corporations, and the Consolidated Master Fund LP is classified as a partnership for U.S. federal income tax purposes. Neither Fund IV-B Lux (which is classified as a partnership) nor the Master Fund (also classified as a partnership) is a corporation within the meaning of § 367.
Luxembourg Withholding Tax Analysis. Based on advice from Solara's Luxembourg tax counsel at Vandenberg & Kessler, no Luxembourg capital gains tax is expected to arise at the SCSp level on the transfer of portfolio assets by Fund IV-B Lux to the Master Fund, pursuant to Article 3(2) of the Luxembourg law of July 12, 2013, which provides that a Luxembourg SCSp is fiscally transparent and is not itself subject to Luxembourg corporate income tax or municipal business tax.
Section 1446 Withholding Analysis. A ruling is requested that no withholding under IRC § 1446 is required in connection with this contribution, as discussed in Section 7.7 below, on the basis that the contribution is a nonrecognition transaction generating no effectively connected taxable income.
5.5 Step 4 — Contribution of Fund V Offshore Assets (Target: November 1, 2025)
In Step 4, the Fund V Legacy Offshore Vehicles will contribute all of their respective portfolio assets to the Consolidated Master Fund LP in exchange for limited partnership interests in the Master Fund.
(a) Fund V-A (Cayman) LP Contribution. Fund V-A Cayman will contribute all of its portfolio assets to the Master Fund, including its 55% equity interest in Veridian Edge Computing Corp., its 100% interest in Helix SaaS Holdings Ltd., and all other portfolio company interests held by Fund V-A Cayman.
(b) Fund V-B (Luxembourg) SCSp Contribution. Fund V-B Lux will contribute all of its portfolio assets to the Master Fund.
Intended Tax Treatment. The contributions of portfolio assets by Fund V-A Cayman and Fund V-B Lux to the Consolidated Master Fund LP are intended to receive the same tax-free treatment under IRC § 721(a) as described with respect to Steps 2 and 3. The same IRC § 367 inapplicability argument applies to the contribution by Fund V-B Lux, as the statutory limitation of § 367 to transfers involving corporations is equally applicable here.
5.6 Step 5 — Dissolution of Legacy Offshore Vehicles and LP Migration (Target: December 1, 2025)
In Step 5, each of the four Legacy Offshore Vehicles — Fund IV-A (Cayman) LP, Fund IV-B (Luxembourg) SCSp, Fund V-A (Cayman) LP, and Fund V-B (Luxembourg) SCSp — will dissolve in accordance with the applicable governing law of its jurisdiction of organization. Upon dissolution, each Legacy Offshore Vehicle will distribute its sole remaining asset — its limited partnership interest in the Consolidated Master Fund LP — to its existing limited partners in complete liquidation.
Following the dissolution distributions, the limited partners of the Legacy Offshore Vehicles will be migrated into the appropriate feeder vehicles:
• Non-U.S. investors (including Nordhaven Sovereign Wealth Fund, Kestrel Pacific Insurance Group, and other non-U.S. limited partners) will contribute their distributed Master Fund LP interests to the Solara International Feeder (Cayman) LP in exchange for limited partnership interests in the International Feeder.
• U.S. tax-exempt investors (including Pinnacle State Employees' Retirement System, Grandview University Endowment, and other U.S. tax-exempt limited partners) will contribute their distributed Master Fund LP interests to the Solara Tax-Exempt Feeder (Cayman) LP in exchange for limited partnership interests in the Tax-Exempt Feeder.
Intended Tax Treatment. The distributions by the Legacy Offshore Vehicles of their partnership interests in the Consolidated Master Fund LP to their respective LPs are intended to be treated as tax-free distributions under IRC § 731(a). No gain is recognized to the distributee partners because the distributed property consists solely of partnership interests (not money), and the distributions do not involve "marketable securities" within the meaning of IRC § 731(c), as discussed in detail in Section 7.4 below. The Master Fund LP interests are not actively traded on an established securities market and are not readily tradable on a secondary market or the substantial equivalent thereof. They are illiquid private fund interests subject to customary transfer restrictions.
Resulting Post-Reorganization Structure. Following the completion of all five steps, the resulting structure (depicted in Exhibit B, Post-Reorganization Organizational Charts) will consist of:
• The Consolidated Master Fund LP (Delaware LP), which will hold the portfolio assets previously held by the four Legacy Offshore Vehicles;
• The International Feeder (Cayman LP), through which non-U.S. investors will hold interests in the Master Fund;
• The Tax-Exempt Feeder (Cayman LP), through which U.S. tax-exempt investors will hold interests in the Master Fund;
• Fund IV LP and Fund V LP (Delaware LPs), which will continue to hold their existing direct portfolio company interests and will co-invest alongside the Master Fund; and
• U.S. taxable investors will remain directly in Fund IV LP and Fund V LP, as applicable.
This consolidated structure eliminates the duplicative offshore parallel vehicles while preserving the tax attributes and economic positions of all investors.
6. Specific Rulings Requested
Based on the facts set forth above and the legal analysis presented in Section 7 below, Solara respectfully requests the following private letter rulings:
6.1 Ruling 1 — IRC § 721(a): Tax-Free Contributions
The contributions of portfolio assets by the Legacy Offshore Vehicles (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux) to the Consolidated Master Fund LP in Steps 2 through 4 of the Reorganization constitute tax-free contributions of property to a partnership in exchange for partnership interests under IRC § 721(a), and no gain or loss is recognized by the contributing partnerships or their respective partners as a result of such contributions.
6.2 Ruling 2 — IRC § 721(b): Investment Company Exception Does Not Apply
The Consolidated Master Fund LP does not constitute an "investment company" within the meaning of IRC § 721(b) and Treasury Regulation § 1.351-1(c)(1)(ii), because the assets contributed to the Master Fund consist exclusively of equity interests in operating companies engaged in the digital infrastructure and enterprise SaaS sectors, rather than "stocks, securities, or other investment assets" as contemplated by § 721(b). All 23 portfolio companies held by the Legacy Offshore Vehicles are actively managed operating businesses, and none is a passive holding vehicle for marketable securities or other investment assets. Accordingly, the exception to nonrecognition treatment set forth in IRC § 721(b) does not apply to the contributions described in Steps 2 through 4.
6.3 Ruling 3 — IRC § 367 Inapplicability
IRC § 367 does not apply to the contributions described in Steps 2 through 4 of the Reorganization. IRC § 367(a) and § 367(b) apply, by their express terms, only to transfers to or from corporations, and neither the contributing Legacy Offshore Vehicles nor the Consolidated Master Fund LP is classified as a corporation for U.S. federal income tax purposes. Each contributing vehicle is classified as a partnership under Treasury Regulation § 301.7701-3, and the Master Fund is a Delaware limited partnership that will elect and maintain partnership classification under § 301.7701-3. Accordingly, the nonrecognition provisions of IRC § 721(a) are not overridden or limited by § 367.
6.4 Ruling 4 — IRC § 731(a): Tax-Free Distributions in Step 5
The distributions by the Legacy Offshore Vehicles of their partnership interests in the Consolidated Master Fund LP to their respective limited partners in Step 5 of the Reorganization constitute tax-free distributions under IRC § 731(a), and no gain is recognized to the distributee partners. IRC § 731(c) does not apply because the distributed Master Fund LP interests are not "marketable securities" as defined in § 731(c)(2) — they are not actively traded on an established securities market, are not readily tradable on a secondary market or the substantial equivalent thereof, and are illiquid private fund interests subject to customary transfer restrictions.
6.5 Ruling 5 — IRC § 752: Liability Shifting
The shifts in partner-level shares of liabilities resulting from the Reorganization — including the assumption by the Consolidated Master Fund LP of the $1.34 billion in aggregate liabilities previously allocated among the Legacy Offshore Vehicles — do not trigger deemed contributions or deemed distributions under IRC §§ 752(a) and 752(b) that would result in gain recognition under IRC § 731. When the increases and decreases in each partner's share of liabilities are netted pursuant to Treasury Regulation § 1.752-1(f), no partner experiences a net decrease in its share of liabilities exceeding such partner's adjusted basis in its partnership interest, and accordingly, no gain is recognized under IRC § 731(a)(1) as a result of the liability shifts.
6.6 Ruling 6 — IRC § 704(c): Built-In Gain Carryover and Remedial Allocation Method
The built-in gain and loss accounts tracked under IRC § 704(c) by the Legacy Offshore Vehicles with respect to contributed properties carry over to the Consolidated Master Fund LP upon the contributions described in Steps 2 through 4. The total built-in gain of $1.72 billion — including $370 million attributable to NovaBright Data Systems Inc., $340 million attributable to Veridian Edge Computing Corp., $180 million attributable to Thorngate Fiber Networks LP, $156 million attributable to Crestline Cloud Solutions LLC, $135 million attributable to Helix SaaS Holdings Ltd., and the remaining built-in gain attributable to the other 18 portfolio companies — carries over to the Master Fund and must be respected in the allocation of tax items. The Consolidated Master Fund LP may continue to use the remedial allocation method under Treasury Regulation § 1.704-3(d) for each contributed property, consistent with the elections previously made by the Legacy Offshore Vehicles.
6.7 Ruling 7 — IRC § 1446: No Withholding Required
No withholding under IRC § 1446(a) is required on the contributions described in Steps 2 through 4 or the distributions described in Step 5 of the Reorganization because (a) the contributions are nonrecognition transactions under IRC § 721(a) that generate no effectively connected taxable income allocable to foreign partners, and (b) the distributions are nonrecognition events under IRC § 731(a) that do not constitute "amounts subject to withholding" under Treasury Regulations §§ 1.1446-1 through 1.1446-6. This ruling is particularly relevant to the treatment of non-U.S. investors in the Reorganization, including Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group.
6.8 Ruling 8 — Entity Classification Under Treas. Reg. § 301.7701-3
The Consolidated Master Fund LP, the Solara International Feeder (Cayman) LP, and the Solara Tax-Exempt Feeder (Cayman) LP are each properly classified as partnerships for U.S. federal income tax purposes under Treasury Regulation § 301.7701-3. Each entity is an "eligible entity" within the meaning of § 301.7701-3(a) that is not per se classified as a corporation under § 301.7701-2(b), each has at least two members (a general partner and one or more limited partners), and a timely IRS Form 8832 check-the-box election will be filed for each entity electing partnership classification effective as of the date of entity formation.
7. Legal Analysis
7.1 Analysis of Ruling 1 — IRC § 721(a)
Statement of the General Rule. IRC § 721(a) provides that "[n]o gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership." This provision reflects Congress's determination that the contribution of property to a partnership in exchange for a partnership interest represents a change in the form of ownership that should not be treated as a taxable event. The nonrecognition rule of § 721(a) applies regardless of whether the contribution is made at the formation of the partnership or at any subsequent time, and regardless of whether the contributor is an individual, a corporation, or another partnership.
Application to Steps 2 Through 4. In each of Steps 2 through 4 of the Reorganization, a Legacy Offshore Vehicle contributes all of its portfolio assets to the Consolidated Master Fund LP in exchange for a limited partnership interest in the Master Fund. Each contributing entity — Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux — is itself a partnership for U.S. federal income tax purposes. Each contributing entity is therefore a "partner" making a "contribution of property" to a "partnership" (the Master Fund) in exchange for "an interest in the partnership" within the plain meaning of § 721(a).
The property contributed consists of equity interests in the 23 portfolio companies, which are tangible and intangible assets constituting "property" within the meaning of § 721(a). The contributing partnerships are not receiving any consideration other than partnership interests in the Master Fund — there is no boot, no cash consideration, and no assumption of liabilities in excess of basis that would trigger gain under § 752(b) and § 731 (as discussed in Section 7.5 below).
Carryover Basis Under IRC § 723. IRC § 723 provides that the basis of property contributed to a partnership by a partner shall be the adjusted basis of such property to the contributing partner at the time of the contribution, increased by the amount of gain recognized to the contributing partner at the time of the contribution. Because no gain is recognized under § 721(a), the Consolidated Master Fund LP will take a carryover basis in each contributed asset equal to the adjusted tax basis of that asset in the hands of the contributing Legacy Offshore Vehicle. The aggregate carryover basis of all contributed assets will be $6.03 billion, preserving the $1.72 billion in aggregate built-in gain for future recognition upon disposition.
Holding Period Tacking Under IRC § 1223(2). IRC § 1223(2) provides that in determining the period for which a taxpayer has held property received in a transaction in which the taxpayer's basis is determined by reference to the basis of the property in the hands of the transferor, the holding period of the property in the hands of the transferor is included. Because the Master Fund's basis in each contributed asset is determined by reference to the basis of that asset in the hands of the contributing Legacy Offshore Vehicle under § 723, the Master Fund's holding period in each contributed asset will include the holding period of the contributing vehicle.
Conclusion. Each of the contributions described in Steps 2 through 4 satisfies the requirements of IRC § 721(a), and no gain or loss is recognized by any contributing partnership or any of its partners as a result of such contributions.
7.2 Analysis of Ruling 2 — IRC § 721(b) Investment Company Exception
Statement of the Exception. IRC § 721(b) provides that § 721(a) "shall not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the meaning of section 351) if the partnership were incorporated." This exception was enacted to prevent taxpayers from using the partnership contribution mechanism to achieve tax-free diversification of investment portfolios — a result that would not be available if the contributing parties incorporated their contributions, because § 351(e) denies nonrecognition treatment to transfers that result in diversification of the transferors' interests in an investment company.
Cross-Reference to Treasury Regulation § 1.351-1(c)(1)(ii). The determination of whether the Master Fund would be treated as an "investment company" if it were incorporated is made by reference to Treasury Regulation § 1.351-1(c)(1)(ii). Under that regulation, a transfer results in the creation of an investment company if (i) the transfer results in diversification of the transferors' interests and (ii) the transferee is a regulated investment company, a real estate investment trust, or a corporation more than 80 percent of the value of whose assets (excluding cash and nonconvertible debt obligations) are "stocks, securities, or other investment assets" as defined in § 1.351-1(c)(1)(iii).
Argument — Operating Company Interests, Not Investment Assets. The portfolio assets contributed by the Legacy Offshore Vehicles to the Master Fund consist entirely of equity interests in 23 operating companies engaged in the digital infrastructure and enterprise SaaS sectors. These are not "stocks, securities, or other investment assets" within the meaning of § 351(e) and § 1.351-1(c)(1)(iii). Each portfolio company is an actively managed operating business:
• NovaBright Data Systems Inc. is a data center operator that owns and operates nine hyperscale data center facilities, employs approximately 850 full-time employees, and generated approximately $420 million in revenue in fiscal year 2024.
• Crestline Cloud Solutions LLC is a SaaS platform providing cloud-based infrastructure management tools, with approximately 3,200 enterprise customers and 510 employees.
• Veridian Edge Computing Corp. is an edge computing infrastructure provider operating a distributed network of micro data centers, with approximately 1,100 employees and capital expenditures exceeding $200 million in fiscal year 2024.
• Thorngate Fiber Networks LP is a fiber-optic network operator owning approximately 14,000 route miles of dark fiber and lit fiber, with approximately 620 employees and a customer base consisting of telecommunications carriers, enterprise customers, and government agencies.