DRAFT — PRIVATE LETTER RULING REQUEST — VERSION 3.0 (Client-Comment-Revised)
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE — TAX ADVISOR PRIVILEGE — WORK PRODUCT DOCTRINE
Distribution Note: This Version 3.0 incorporates factual corrections and comments received from Solara's in-house team (Stefan Dalmqvist, Head of Tax, and Priya Narasimhan, General Counsel) on Version 2.0, as well as prior internal revisions from Leonard Cross on Version 1.0. This draft is being transmitted to Diana Carruthers, Partner, Whitfield, Carruthers & Doyle LLP, 200 South Biscayne Boulevard, Suite 4000, Miami, FL 33131, in her capacity as counsel to the LP Advisory Committee, for review and comment by July 15, 2025.
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I. COVER LETTER
A. Addressee
Internal Revenue Service
Attn: Office of the Associate Chief Counsel (International)
CC:INTL 1111 Constitution Avenue NW Washington, DC 20224
With a copy to: Office of the Associate Chief Counsel (Passthroughs & Special Industries) CC:PSI 1111 Constitution Avenue NW Washington, DC 20224
B. Re: Request for Private Letter Ruling on Behalf of Solara Digital Infrastructure LP (EIN: 82-4917366) and Related Entities Regarding Tax Treatment of Cross-Border Fund-Platform Reorganization
C. Opening
Ladies and Gentlemen:
Calderwood & Harkness LLP, 1900 K Street NW, Suite 1100, Washington, DC 20006, hereby submits this request for a private letter ruling (this "Ruling Request") on behalf of Solara Digital Infrastructure LP, a Delaware limited partnership ("Solara" or the "Fund Sponsor"), and its affiliated fund vehicles identified herein (collectively, the "Solara Fund Complex"), pursuant to Revenue Procedure 2025-1 (or such other procedural guidance as may be currently applicable at the time of submission). This Ruling Request concerns the U.S. federal income tax treatment of a proposed multi-step cross-border reorganization of the Solara Fund Complex (the "Reorganization"), involving the domestication and consolidation of four legacy offshore fund vehicles into a newly established Delaware-domiciled master fund structure.
The applicable Internal Revenue Service user fee of Thirty-Eight Thousand Dollars ($38,000.00) is enclosed herewith. This fee corresponds to the applicable fee category for a ruling request involving multiple entities with combined assets exceeding $50,000,000, as set forth in the Schedule of User Fees, Appendix A to Rev. Proc. 2025-1. The check is drawn on the client trust account of Calderwood & Harkness LLP and made payable to the United States Treasury.
Enclosed with this Ruling Request are executed IRS Forms 2848 (Power of Attorney and Declaration of Representative) designating Leonard Cross, Partner, Calderwood & Harkness LLP, and Sylvia Hartwell, Partner, Calderwood & Harkness LLP, as authorized representatives of Solara Digital Infrastructure LP and each of the affiliated entities identified in Section II of this Ruling Request. The Forms 2848 authorize Messrs. Cross and Hartwell to represent the Solara Fund Complex before the Internal Revenue Service with respect to all matters relating to this Ruling Request, including the authority to receive and inspect confidential tax information, to execute waivers, consents, and closing agreements, and to receive copies of all correspondence and rulings issued in connection herewith.
We note that a pre-submission conference with the Office of the Associate Chief Counsel (International), CC:INTL, Branch 1, has been requested and is scheduled for July 22, 2025. This Ruling Request will be finalized following the pre-submission conference and will incorporate any considerations or modifications arising from that discussion. The present Version 3.0 is circulated in advance of that conference to the LP Advisory Committee's outside counsel for review and comment.
This Ruling Request seeks eight specific rulings, as set forth in detail in Section VII below, concerning the application of Internal Revenue Code Sections 721, 721(b), 367, 731, 731(c), 752, 704(c), and 1446, as well as the classification of newly formed entities under Treasury Regulation § 301.7701-3, to the proposed Reorganization.
D. Penalties of Perjury Statement
Enclosed as a separate exhibit to this Ruling Request is a declaration under penalties of perjury executed by Viktor Raines, Managing Partner of Solara Digital Infrastructure GP LLC, a Delaware limited liability company that serves as the general partner of Solara Digital Infrastructure LP. Mr. Raines declares, under penalties of perjury, that the facts presented in this Ruling Request are true, correct, and complete to the best of his knowledge and belief. This declaration is made pursuant to the requirements of Revenue Procedure 2025-1, Section 7.01(16), and satisfies the signature and attestation requirements for private letter ruling requests submitted on behalf of partnerships.
II. IDENTIFICATION OF TAXPAYERS AND ENTITIES
A. Requesting Taxpayer
The requesting taxpayer is Solara Digital Infrastructure LP ("Solara" or the "Fund Sponsor"), identified as follows:
Solara Digital Infrastructure LP is a private equity fund sponsor that targets investments in digital infrastructure, including data centers, fiber-optic networks, and edge computing facilities, as well as enterprise software-as-a-service ("SaaS") platforms. Solara operates through a series of parallel fund vehicles established in Delaware, the Cayman Islands, and the Grand Duchy of Luxembourg, as described more fully below. Solara Digital Infrastructure GP LLC, the general partner of Solara, is a Delaware limited liability company managed by Viktor Raines, who serves as Managing Partner and is the principal decision-maker for the Solara Fund Complex.
B. Existing Fund Vehicles (Legacy Offshore Vehicles)
The following six fund vehicles (collectively, the "Existing Fund Vehicles") currently constitute the Solara Fund Complex. Of these, the four offshore vehicles — Fund IV-A Cayman, Fund IV-B Luxembourg, Fund V-A Cayman, and Fund V-B Luxembourg (collectively, the "Legacy Offshore Vehicles") — are the subject of the proposed Reorganization.
1. Solara Digital Partners Fund IV LP ("Fund IV LP")
Fund IV LP is the domestic flagship vehicle of Solara's fourth institutional fund. It was formed in 2020 and held a final close on June 15, 2021, raising $4.2 billion in aggregate capital commitments from U.S. taxable investors, including family offices, high-net-worth individuals, and certain taxable institutional investors. As of March 31, 2025, Fund IV LP has deployed approximately 72% of its committed capital across 11 portfolio companies in the digital infrastructure and enterprise SaaS sectors. Fund IV LP is not being reorganized in the proposed transaction; U.S. taxable investors will remain directly in Fund IV LP, which will co-invest alongside the Consolidated Master Fund LP following the Reorganization.
2. Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman")
Fund IV-A Cayman is the Cayman Islands parallel vehicle for Solara's Fund IV family. It was formed as an exempted limited partnership under the laws of the Cayman Islands and is registered with the Cayman Islands Monetary Authority ("CIMA") under registration number MF-72491. Its general partner is Solara Offshore GP Ltd., a Cayman Islands exempted company. Fund IV-A Cayman raised $1.85 billion in aggregate capital commitments and invests pari passu alongside Fund IV LP in the same portfolio companies, with ownership percentages allocated across the two domestic and offshore vehicles. The primary purpose of Fund IV-A Cayman is to accommodate non-U.S. investor pools (including sovereign wealth funds and non-U.S. insurance companies) and U.S. tax-exempt investor pools (including pension funds and university endowments), the latter of which benefit from UBTI blocker structures achieved through offshore corporate subsidiary holding arrangements interposed between Fund IV-A Cayman and the underlying portfolio companies.
3. Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux")
Fund IV-B Lux is the Luxembourg parallel vehicle for Solara's Fund IV family. It was formed as a société en commandite spéciale ("SCSp") under the Luxembourg law of July 12, 2013, and is registered with the Luxembourg Register of Commerce and Companies (Registre de Commerce et des Sociétés, or "RCS") under number B 248193. Its general partner is Solara Luxembourg Management S.à r.l., a Luxembourg société à responsabilité limitée registered with the RCS under number B 248194. Fund IV-B Lux raised €1.15 billion (approximately $1.24 billion at an exchange rate of 1.08 EUR/USD) in aggregate capital commitments, primarily from non-U.S. institutional investors based in jurisdictions where Luxembourg treaty access and regulatory familiarity with Luxembourg fund vehicles provide meaningful benefits in terms of withholding tax reduction, regulatory reporting, and investor relations considerations.
4. Solara Digital Partners Fund V LP ("Fund V LP")
Fund V LP is the domestic flagship vehicle of Solara's fifth institutional fund. It was formed in 2022 and held a final close on September 30, 2023, raising $5.6 billion in aggregate capital commitments from U.S. taxable investors. As of March 31, 2025, Fund V LP has deployed approximately 38% of its committed capital across 12 portfolio companies. Like Fund IV LP, Fund V LP is not being reorganized in the proposed transaction; U.S. taxable investors will remain directly in Fund V LP, which will co-invest alongside the Consolidated Master Fund LP following the Reorganization.
5. Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman")
Fund V-A Cayman is the Cayman Islands parallel vehicle for Solara's Fund V family. It serves the same function as Fund IV-A Cayman — namely, to accommodate non-U.S. and U.S. tax-exempt investor pools investing in the Fund V portfolio — and operates on a substantively identical basis, investing pari passu alongside Fund V LP in the same portfolio companies.
6. Solara Digital Partners Fund V-B (Luxembourg) SCSp ("Fund V-B Lux")
Fund V-B Lux is the Luxembourg parallel vehicle for Solara's Fund V family. It serves the same function as Fund IV-B Lux and operates on a substantively identical basis with respect to the Fund V portfolio.
C. Newly Formed Entities (Post-Reorganization)
The following entities will be newly formed in connection with the Reorganization (collectively, the "New Entities"):
1. Solara Consolidated Master Fund GP LLC
2. Solara Consolidated Master Fund LP (the "Consolidated Master Fund" or "Master Fund")
The Consolidated Master Fund LP will be the central holding vehicle for all portfolio assets currently held by the Legacy Offshore Vehicles. Following the Reorganization, the Consolidated Master Fund will hold the combined portfolio of 23 portfolio companies (to the extent currently held by the Legacy Offshore Vehicles) and will serve as the primary investment vehicle through which the two new Cayman feeder partnerships invest in the Solara Fund Complex's portfolio.
3. Solara International Feeder (Cayman) LP (the "International Feeder")
The International Feeder will serve as the dedicated vehicle through which non-U.S. investors (including, without limitation, the Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group) invest indirectly in the Consolidated Master Fund LP's portfolio. By maintaining a Cayman Islands vehicle in the structure, Solara preserves certain regulatory and commercial benefits that non-U.S. investors require, including familiarity with Cayman Islands partnership law, CIMA-regulated fund administration, and related considerations.
4. Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder")
The Tax-Exempt Feeder will serve as the dedicated vehicle through which U.S. tax-exempt investors (including, without limitation, the Pinnacle State Employees' Retirement System and Grandview University Endowment) invest indirectly in the Consolidated Master Fund LP's portfolio. The interposition of this Cayman feeder vehicle preserves the ability of Solara to deploy UBTI blocker structures for the benefit of U.S. tax-exempt limited partners, consistent with the historical approach used through the Legacy Offshore Vehicles.
D. Representative Limited Partners / Investors
The following investors are representative of the limited partner base across the Existing Fund Vehicles and are identified herein for purposes of illustrating the tax consequences of the Reorganization to the various categories of investors in the Solara Fund Complex:
Pinnacle State Employees' Retirement System — A U.S. public pension fund. Pinnacle committed $275 million to Fund IV LP and $340 million to Fund V LP. The Chief Investment Officer is Margaret Faulkner. As a U.S. tax-exempt investor, Pinnacle's participation in the offshore parallel vehicles was designed to mitigate UBTI exposure through the use of blocker corporations. Following the Reorganization, Pinnacle will invest through the Tax-Exempt Feeder (Cayman) LP.
Grandview University Endowment — A U.S. tax-exempt endowment organized in the Commonwealth of Massachusetts. Grandview committed $120 million to Fund IV LP and $185 million to Fund V LP. The Director of Investments is Harold Kingsley. As a U.S. tax-exempt endowment, Grandview has similar UBTI concerns as Pinnacle and will similarly invest through the Tax-Exempt Feeder following the Reorganization.
Nordhaven Sovereign Wealth Fund — A non-U.S. sovereign wealth fund organized under the laws of the Kingdom of Nordhaven. Nordhaven committed $380 million to Fund IV-A Cayman and $500 million to Fund V-A Cayman. The Head of Alternative Investments is Anders Bjørkman. As a non-U.S. sovereign investor, Nordhaven will invest through the International Feeder (Cayman) LP following the Reorganization.
Kestrel Pacific Insurance Group — A non-U.S. insurance company organized in the Republic of Singapore. Kestrel committed €200 million to Fund IV-B Lux and €275 million to Fund V-B Lux. The Senior Portfolio Manager is Christine Leung. As a non-U.S. institutional investor, Kestrel will invest through the International Feeder (Cayman) LP following the Reorganization.
Argyle Family Office Holdings LLC — A U.S. taxable family office organized as a Delaware limited liability company. Argyle committed $95 million to Fund IV LP and $130 million to Fund V LP. The Principal is Elliot Argyle. As a U.S. taxable investor, Argyle will remain directly in Fund IV LP and Fund V LP following the Reorganization and will not participate in the master-feeder structure.
Additional limited partners invest in each fund vehicle; the foregoing are representative and are identified herein to illustrate the tax treatment of the Reorganization for each category of investor (U.S. taxable, U.S. tax-exempt, and non-U.S.).
E. Tax Year and Accounting Information
All entities identified in this Ruling Request — both existing and to-be-formed — use (or will use) a calendar tax year ending December 31.
The independent accounting firm for all Solara Fund Complex entities is Caldwell Pierce & Co. LLP, 400 Renaissance Center, Suite 2500, Detroit, MI 48243 (engagement partner: Helen Okamoto). Caldwell Pierce provides annual financial statement audits and tax compliance services (including the preparation of IRS Forms 1065, Schedules K-1, and related filings) for all fund vehicles in the Solara Fund Complex.
The fund administrator for the offshore vehicles is Clarendon Fund Services Ltd., Windward 3, Regatta Office Park, West Bay Road, George Town, Grand Cayman KY1-1108 (Client Relationship Director: Rachel Okonkwo). Clarendon provides net asset value calculations, investor accounting, capital call and distribution processing, and regulatory reporting services for the Cayman and Luxembourg fund vehicles.
F. Authorized Representatives
The following individuals are designated as authorized representatives of Solara Digital Infrastructure LP and each of the affiliated entities identified in this Ruling Request, as reflected in the enclosed IRS Forms 2848:
Leonard Cross, Partner, Calderwood & Harkness LLP, 1900 K Street NW, Suite 1100, Washington, DC 20006. Mr. Cross has twenty-eight (28) years of experience in international tax, partnership tax, and fund formation matters. He has represented numerous private equity sponsors, real asset funds, and infrastructure platforms in connection with private letter ruling requests, IRS examinations, and cross-border fund structuring.
Sylvia Hartwell, Partner, Calderwood & Harkness LLP, 600 Lexington Avenue, 38th Floor, New York, NY 10022. Ms. Hartwell has twenty-four (24) years of experience in cross-border restructurings and investment fund taxation. She has advised on more than one hundred cross-border fund reorganizations and has significant experience with the application of Subchapter K to multi-jurisdictional fund platforms.
Executed IRS Forms 2848 for each of Mr. Cross and Ms. Hartwell are enclosed.
III. STATEMENT OF FACTS
A. Background and Business of Solara
Solara Digital Infrastructure LP was formed on March 17, 2014, as a Delaware limited partnership by Viktor Raines (age 52), formerly a managing director in the infrastructure investment group at Havensgate Capital Partners, a New York-based alternative asset manager. Mr. Raines founded Solara to pursue a differentiated investment strategy focused on the rapidly growing digital infrastructure sector, which at that time was beginning to experience transformative demand growth driven by the expansion of cloud computing, enterprise SaaS adoption, and the increasing need for high-capacity data transmission and processing infrastructure.
Solara's senior leadership team consists of the following individuals:
• Viktor Raines — Managing Partner and founder. Mr. Raines serves as the Managing Partner of Solara Digital Infrastructure GP LLC, the general partner of Solara Digital Infrastructure LP. He is the principal decision-maker for all investment and strategic matters across the Solara Fund Complex.
• Meredith Tsao — Chief Operating Officer (age 47). Ms. Tsao oversees day-to-day operations, including fund administration, investor relations, and portfolio monitoring.
• Douglas Wexford — Chief Financial Officer (age 50). Mr. Wexford is responsible for financial reporting, treasury management, and the Solara Fund Complex's relationships with lending institutions and fund administrators.
• Priya Narasimhan — General Counsel (age 44). Ms. Narasimhan oversees legal affairs across the Solara Fund Complex, including transaction structuring, regulatory compliance, and litigation management.
• Stefan Dalmqvist — Head of Tax (age 46). Mr. Dalmqvist manages all tax planning, compliance, and structuring for the Solara Fund Complex, including coordination with Calderwood & Harkness LLP and Caldwell Pierce & Co. LLP.
Since its founding, Solara has grown to manage approximately $14.7 billion in assets under management as of March 31, 2025. Solara sponsors institutional private equity funds that invest primarily in digital infrastructure assets — including data centers, fiber-optic network systems, and edge computing facilities — and enterprise SaaS platforms with recurring subscription-based revenue models. Solara's investment strategy is characterized by control-oriented investments in mid-market and upper-mid-market operating companies, with a focus on value creation through operational improvements, strategic acquisitions, and technology platform buildouts.
To accommodate the diverse tax and regulatory profiles of its global investor base, Solara operates through a series of parallel fund structures established across three jurisdictions — Delaware, the Cayman Islands, and the Grand Duchy of Luxembourg. The rationale for this multi-jurisdictional approach is as follows:
(i) U.S. taxable investors invest through the Delaware main funds (Fund IV LP and Fund V LP), which provide straightforward pass-through partnership treatment under Subchapter K of the Internal Revenue Code.
(ii) U.S. tax-exempt investors (including pension funds such as the Pinnacle State Employees' Retirement System and endowments such as the Grandview University Endowment) invest through the Cayman Islands parallel vehicles (Fund IV-A Cayman and Fund V-A Cayman). The Cayman vehicles historically interposed offshore corporate blocker subsidiaries between the fund-level partnership and the underlying portfolio company investments, thereby converting what would otherwise be unrelated business taxable income ("UBTI") under IRC § 512 into dividend income not subject to the unrelated business income tax under IRC § 511.
(iii) Non-U.S. investors invest through either the Cayman Islands or Luxembourg parallel vehicles, depending on the particular investor's treaty access requirements and regulatory preferences. Non-U.S. sovereign wealth funds (such as the Nordhaven Sovereign Wealth Fund) and non-U.S. insurance companies (such as Kestrel Pacific Insurance Group) have historically been directed to the vehicle that provides the most favorable combination of withholding tax treatment, bilateral income tax treaty access, and regulatory reporting familiarity.
This three-jurisdiction, six-vehicle parallel fund structure has served Solara's investor base well over the past several years. However, as described more fully in Section III.D below, a number of developments — including increasing offshore administrative costs, the introduction of the OECD's Pillar Two Global Anti-Base Erosion ("GloBE") rules, expanded FATCA and CRS compliance obligations, and LP-driven governance simplification requests — have made the current structure suboptimal, prompting the proposed Reorganization.
B. Existing Fund Structure (Six Parallel Vehicles)
The existing Solara Fund Complex consists of six parallel fund vehicles organized into two fund families — the Fund IV family and the Fund V family — each of which comprises one domestic Delaware vehicle and two offshore parallel vehicles (one Cayman, one Luxembourg). These six vehicles are identified and described in detail in Section II.B above and are summarized below for convenience:
Fund IV Family:
Fund V Family:
Each set of parallel funds co-invests in the same portfolio companies on a pari passu basis, with ownership percentages allocated across the domestic and offshore vehicles in proportion to their respective capital commitments. The co-investment is governed by co-investment and parallel investment agreements that ensure economic parity across all three vehicles in each fund family. Investment decisions are made centrally by Solara Digital Infrastructure GP LLC, and the parallel vehicles do not independently source or evaluate investment opportunities.
C. Portfolio Company Holdings (Representative)
Across all six fund vehicles, the Solara Fund Complex holds interests in a total of twenty-three (23) portfolio companies — eleven (11) in the Fund IV vehicles and twelve (12) in the Fund V vehicles. All twenty-three portfolio companies are operating businesses in the digital infrastructure and enterprise SaaS sectors. None of these portfolio companies is a passive investment vehicle, and none holds primarily stocks, securities, or other investment assets. Each portfolio company has substantial operations, employees, physical or technological infrastructure, and operating revenues independent of passive investment activity.
The key portfolio company holdings that will be transferred in the Reorganization (i.e., the holdings of the Legacy Offshore Vehicles) are as follows:
1. NovaBright Data Systems Inc.
NovaBright is one of the flagship portfolio companies in the Fund IV family. It operates seven enterprise-grade Tier IV data center facilities across the United States, providing colocation, managed hosting, and cloud interconnection services to Fortune 500 enterprises and hyperscale cloud providers. NovaBright employs approximately 1,400 individuals and generated approximately $412 million in revenue for the fiscal year ended December 31, 2024.
2. Crestline Cloud Solutions LLC
Crestline is a disregarded entity wholly owned by Fund IV-B Lux. It operates an enterprise SaaS platform providing cloud-based enterprise resource planning ("ERP") solutions to mid-market companies in the manufacturing, logistics, and retail sectors. Crestline employs approximately 620 individuals and generated approximately €128 million in revenue for the fiscal year ended December 31, 2024.
3. Veridian Edge Computing Corp.
Veridian is the largest single portfolio company investment in the Fund V family. It deploys and manages a network of over 250 micro data centers and edge computing nodes across North America, providing ultra-low-latency computing infrastructure for autonomous vehicle systems, Internet of Things ("IoT") applications, and real-time content delivery networks. Veridian employs approximately 980 individuals and generated approximately $378 million in revenue for the fiscal year ended December 31, 2024.
4. Thorngate Fiber Networks LP
Thorngate owns and operates an extensive fiber-optic network infrastructure spanning approximately 28,000 route-miles across the southeastern United States, providing dark fiber, lit transport, and managed wavelength services to telecommunications carriers, enterprise customers, and data center operators. Thorngate employs approximately 510 individuals and generated approximately $198 million in revenue for the fiscal year ended December 31, 2024.
5. Helix SaaS Holdings Ltd.
Helix is a holding company that owns three operating subsidiaries, each of which operates an enterprise SaaS platform in the cybersecurity, regulatory compliance management, and business intelligence/data analytics verticals. The Helix group collectively employs approximately 870 individuals across offices in New York, London, and Singapore, and generated aggregate revenue of approximately $267 million for the fiscal year ended December 31, 2024.
6. Additional Portfolio Companies. The remaining eighteen (18) portfolio companies held by the Legacy Offshore Vehicles, together with their respective fair market values, adjusted tax bases, built-in gains, and ownership percentages, are set forth in detail in Exhibit D attached hereto. In the aggregate, these eighteen portfolio companies have a combined fair market value of approximately $2.258 billion, an aggregate adjusted tax basis of approximately $1.719 billion, and aggregate built-in gain of approximately $539 million. Each of these portfolio companies is an operating business in the digital infrastructure or enterprise SaaS sectors, with substantial operations, employees, and operating revenues.
The nature of operations across the entire portfolio is consistent: the Solara Fund Complex invests in and operates data center facilities, fiber-optic network infrastructure, edge computing installations, and SaaS platforms with recurring enterprise subscription revenue. None of the portfolio companies is primarily engaged in the business of investing in stocks, securities, or other investment assets, and none constitutes a passive investment vehicle.
D. Business Rationale for the Reorganization
The proposed Reorganization is motivated by four primary business considerations, each of which has independent significance and constitutes a bona fide non-tax business purpose:
1. Operational Cost Reduction
Solara currently incurs approximately $3.8 million annually in duplicative offshore administration, audit, regulatory, and compliance fees associated with the maintenance of the four Legacy Offshore Vehicles. These costs include, but are not limited to:
(a) Annual registered office and corporate services fees payable to Harborstone Corporate Services Ltd. (Cayman Islands) for Fund IV-A Cayman and Fund V-A Cayman;
(b) Annual registered office fees and management company costs payable with respect to the Luxembourg SCSps (Fund IV-B Lux and Fund V-B Lux), including fees payable to Solara Luxembourg Management S.à r.l. and third-party service providers in Luxembourg;
(c) Annual CIMA registration fees for Fund IV-A Cayman (MF-72491) and Fund V-A Cayman (MF-89103);
(d) Duplicative audit fees payable to Caldwell Pierce & Co. LLP for separate financial statement audits of each of the four Legacy Offshore Vehicles, over and above the audits of Fund IV LP and Fund V LP;
(e) Fund administration fees payable to Clarendon Fund Services Ltd. for separate NAV calculations, investor accounting, and capital activity processing for each offshore vehicle;
(f) Local Luxembourg tax compliance and regulatory filing fees, including CSSF reporting obligations for the Luxembourg SCSps; and
(g) Incremental legal fees for the maintenance of parallel vehicle documentation, including side letters, subscription agreements, and regulatory filings in multiple jurisdictions.
Consolidation of the four Legacy Offshore Vehicles into a single Consolidated Master Fund LP, with two streamlined Cayman feeder vehicles, is projected to reduce these duplicative costs by approximately 60-65%, representing annualized savings of approximately $2.3 million to $2.5 million. Over the remaining projected fund life of Fund IV (approximately 3-4 years) and Fund V (approximately 6-7 years), the cumulative cost savings are estimated at approximately $12 million to $16 million.
2. OECD Pillar Two GloBE Rules
The OECD's Pillar Two Global Anti-Base Erosion ("GloBE") rules, adopted into EU law via Council Directive (EU) 2022/2523 and transposed into Luxembourg domestic law, become effective for Solara's Luxembourg entities beginning with fiscal year 2025. Under the GloBE rules, the Luxembourg SCSps — which have historically benefited from Luxembourg's favorable treatment of certain income flows through fiscally transparent partnership structures — may become subject to top-up taxation designed to ensure a minimum effective tax rate of 15% on income arising in low-tax jurisdictions.
While the precise application of the GloBE rules to the Solara Luxembourg SCSps depends on a number of technical factors (including the application of the substance-based income exclusion, the treatment of fiscally transparent entities under the GloBE Model Rules, and the interaction between the GloBE rules and existing tax treaty obligations), the introduction of these rules materially diminishes the historical tax-efficiency rationale for maintaining the Luxembourg SCSp structures. Solara's Head of Tax, Stefan Dalmqvist, in consultation with Veldhuis & Gérard S.à r.l., Solara's Luxembourg legal advisors, has determined that the cost-benefit analysis of maintaining the Luxembourg vehicles no longer supports the continuation of these structures given the incremental compliance burden and potential top-up tax exposure under Pillar Two.
3. FATCA and CRS Simplification
The current six-vehicle parallel fund structure creates substantial compliance burden under both the Foreign Account Tax Compliance Act ("FATCA") (IRC §§ 1471-1474) and the OECD Common Reporting Standard ("CRS"). Each of the four Legacy Offshore Vehicles is required to maintain its own FATCA classification, designate a responsible officer, register with the IRS as a participating or deemed-compliant foreign financial institution (or, in the case of the Luxembourg SCSps, comply with the applicable intergovernmental agreement), and file annual FATCA reports (IRS Form 8966) and CRS reports with the relevant local tax authorities. Consolidation of the Legacy Offshore Vehicles into the Consolidated Master Fund LP — a domestic entity — and two streamlined Cayman feeder vehicles will substantially reduce the number of FATCA- and CRS-reporting entities and simplify the compliance architecture across the Solara Fund Complex.
4. LP-Requested Governance Simplification
The LP Advisory Committee ("LPAC") of the Solara Fund Complex has formally requested structural simplification of the parallel fund architecture. At the LPAC meeting held on April 22, 2025, limited partners holding approximately 78% in aggregate interest across all fund vehicles expressed support for a reorganization that would simplify the governance structure, reduce the number of parallel vehicle governing documents, streamline reporting, and improve transparency. The LPAC's request reflects a broader trend among institutional limited partners favoring simpler fund structures that facilitate more efficient monitoring, reporting, and governance oversight.
The Reorganization directly responds to these LP requests and is expected to enhance investor relations, reduce the volume of side letter renegotiations associated with parallel vehicle restructurings, and provide a more streamlined governance framework through a consolidated master-feeder structure.
E. Subscription Credit Facilities
Fund IV LP maintains a $1.1 billion revolving subscription credit facility (the "Fund IV Credit Facility") with Ashford National Bank, N.A., 225 West Wacker Drive, Suite 5000, Chicago, IL 60606 (contact: Thomas Greenleaf, Managing Director, Fund Finance). The Fund IV Credit Facility is secured by the uncalled capital commitments of the limited partners of Fund IV LP and the Fund IV parallel vehicles.
Fund V LP maintains a $1.5 billion revolving subscription credit facility (the "Fund V Credit Facility") with Ashford National Bank, N.A. and Sentinel Capital Markets LLC, One Bryant Park, 42nd Floor, New York, NY 10036 (contact: Laura Pak, Vice President), acting as co-lender and administrative agent, respectively. The Fund V Credit Facility is similarly secured by uncalled capital commitments of the limited partners of Fund V LP and the Fund V parallel vehicles.
Each of the Fund IV Credit Facility and the Fund V Credit Facility contains change-of-control and assignment provisions that require the consent of the lending institutions prior to any material structural reorganization of the fund vehicles that serve as borrowers or whose uncalled capital commitments secure the facilities. Solara has been in preliminary discussions with both Ashford National Bank and Sentinel Capital Markets regarding the proposed Reorganization, and lender consent will be separately obtained prior to the consummation of the Reorganization. The obtaining of lender consent is not a condition to the issuance of the requested rulings but is noted here for completeness.
F. Insurance
Directors' and officers' liability and errors and omissions ("D&O/E&O") coverage for the Solara Fund Complex is provided by Hawkstone Specialty Insurance Co., 100 Constitution Plaza, Hartford, CT 06103 (Senior Underwriter: Neil Braddock). The current policy provides an aggregate limit of $50 million and covers Solara Digital Infrastructure GP LLC, Solara Offshore GP Ltd., Solara Luxembourg Management S.à r.l., and all fund entities in the Solara Fund Complex. An endorsement to the existing policy will be requested to extend coverage to the newly formed entities (Solara Consolidated Master Fund GP LLC, Solara Consolidated Master Fund LP, Solara International Feeder (Cayman) LP, and Solara Tax-Exempt Feeder (Cayman) LP) upon their formation.
IV. DESCRIPTION OF PROPOSED TRANSACTION (THE REORGANIZATION)
A. Overview
The proposed Reorganization is a multi-step integrated transaction planned for execution during the fourth quarter of 2025, with a target effective date of December 1, 2025. The Reorganization consists of five integrated steps, described in detail below, and is designed to accomplish the following:
(i) Domesticate and merge the four Legacy Offshore Vehicles (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux) into a newly established Delaware-domiciled master fund structure — Solara Consolidated Master Fund LP;
(ii) Establish two new Cayman Islands feeder partnerships — the International Feeder and the Tax-Exempt Feeder — through which non-U.S. and U.S. tax-exempt investors, respectively, will invest indirectly in the Consolidated Master Fund LP;
(iii) Dissolve and deregister the four Legacy Offshore Vehicles following the transfer of their portfolio assets to the Consolidated Master Fund LP; and
(iv) Preserve the existing direct investment structure for U.S. taxable investors, who will remain in Fund IV LP and Fund V LP, which will co-invest alongside the Consolidated Master Fund LP.
Following the Reorganization, the Solara Fund Complex will consist of four active fund vehicles (Fund IV LP, Fund V LP, the Consolidated Master Fund LP, and the two Cayman feeder vehicles), rather than the current six parallel vehicles. The resulting structure is a streamlined master-feeder arrangement in which all portfolio assets previously held by the Legacy Offshore Vehicles are consolidated into the single Consolidated Master Fund LP.
The five steps of the Reorganization are described in detail below:
B. Step 1 — Formation of New Entities (Target: September 15, 2025)
The first step of the Reorganization involves the formation of 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. Its registered agent will be Capitol Registered Agents Inc., 850 New Burton Road, Suite 201, Dover, DE 19904. This entity 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. Solara Consolidated Master Fund GP LLC will serve as its general partner, and its registered agent will be Capitol Registered Agents Inc. at the address set forth above. Upon formation, an IRS Form 8832 (Entity Classification Election) will be filed under Treasury Regulation § 301.7701-3 to confirm classification of the Consolidated Master Fund LP as a partnership for U.S. federal income tax purposes, effective as of the date of formation.
(c) Solara International Feeder (Cayman) LP will be formed as a Cayman Islands exempted limited partnership under the Exempted Limited Partnership Act (As Revised) of the Cayman Islands. Formation will be coordinated through Meridian Offshore Legal (engagement partner: Fiona McAllister, Partner; Caledonia House, 69 Dr. Roy's Drive, George Town, Grand Cayman KY1-1103). The registered office will be at Harborstone Corporate Services Ltd. An IRS Form 8832 will be filed to elect partnership classification for U.S. federal income tax purposes.
(d) Solara Tax-Exempt Feeder (Cayman) LP will be formed as a Cayman Islands exempted limited partnership, through the same formation process and with the same registered office as the International Feeder. An IRS Form 8832 will be filed to elect partnership classification for U.S. federal income tax purposes.
The formation of all four new entities is targeted for September 15, 2025, to allow sufficient time for the subsequent Steps 2 through 5 to be executed prior to the target effective date of December 1, 2025.
C. Step 2 — Contribution of Fund IV-A Cayman Assets (Target: October 1, 2025)
In the second step of the Reorganization, Solara Digital Partners Fund IV-A (Cayman) LP will contribute all of its portfolio assets to Solara Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The contribution will be effected pursuant to a Contribution Agreement between Fund IV-A Cayman and the Consolidated Master Fund LP.
The aggregate fair market value of the assets to be contributed by Fund IV-A Cayman is approximately $2.31 billion. The aggregate adjusted tax basis of such assets is approximately $1.62 billion, resulting in aggregate built-in gain of approximately $690 million. The key assets to be contributed include:
(i) A 60% equity interest in NovaBright Data Systems Inc. (proportionate FMV of approximately $534 million, proportionate basis of approximately $312 million, proportionate built-in gain of approximately $222 million);
(ii) A 100% limited partnership interest in Thorngate Fiber Networks LP (FMV of $670 million, basis of $490 million, built-in gain of $180 million);
(iii) Interests in additional portfolio company assets as set forth in Exhibit D.
The intended U.S. federal income tax treatment of the Step 2 contribution is as a tax-free contribution of property to a partnership under IRC § 721(a). No gain or loss will be recognized by Fund IV-A Cayman or by any of its partners on the contribution. The Consolidated Master Fund LP will take a carryover basis in each contributed property equal to Fund IV-A Cayman's adjusted tax basis in such property, in accordance with IRC § 723. The Consolidated Master Fund LP's holding period for each contributed property will include Fund IV-A Cayman's holding period, in accordance with IRC § 1223(2).
D. Step 3 — Contribution of Fund IV-B Luxembourg Assets (Target: October 15, 2025)
In the third step, Solara Digital Partners Fund IV-B (Luxembourg) SCSp will contribute all of its portfolio assets to Solara Consolidated Master Fund LP in exchange for a limited partnership interest in the Consolidated Master Fund LP. The contribution will be effected pursuant to a Contribution Agreement between Fund IV-B Lux and the Consolidated Master Fund LP.
The aggregate fair market value of the assets to be contributed by Fund IV-B Lux is approximately €1.07 billion (approximately $1.16 billion at an exchange rate of 1.08 EUR/USD). The aggregate adjusted tax basis of such assets is approximately €782 million (approximately $844.6 million). The aggregate built-in gain is approximately €288 million (approximately $311 million). The key assets to be contributed include:
(i) A 100% membership interest in Crestline Cloud Solutions LLC (FMV of €340 million / $367 million; basis of €195 million / $211 million; built-in gain of €145 million / $156 million);
(ii) Interests in additional portfolio company assets as set forth in Exhibit D.
The intended U.S. federal income tax treatment of the Step 3 contribution is as a tax-free contribution under IRC § 721(a), on the same basis as described with respect to Step 2 above.
With respect to Luxembourg taxation, no Luxembourg capital gains tax is expected to arise at the SCSp level on the transfer of portfolio assets from Fund IV-B Lux to the Consolidated Master Fund LP. Under Article 3(2) of the Luxembourg law of July 12, 2013 (the "loi du 12 juillet 2013 relative aux gestionnaires de fonds d'investissement alternatifs"), the Luxembourg SCSp is treated as a fiscally transparent entity for Luxembourg tax purposes, and gains realized by the SCSp are attributed directly to its partners rather than taxed at the entity level. Solara's Luxembourg counsel, Veldhuis & Gérard S.à r.l. (Marc Gérard, Managing Partner; 22, boulevard Royal, L-2449 Luxembourg), has confirmed this analysis in a separate memorandum.
The cross-border aspects of the Step 3 contribution are addressed in the IRC § 367 analysis set forth under Ruling 3 in Section VI.C below.
E. Step 4 — Contribution of Fund V Offshore Assets (Target: November 1, 2025)
In the fourth step, the two Fund V offshore vehicles will each contribute all of their portfolio assets to Solara Consolidated Master Fund LP in exchange for limited partnership interests in the Consolidated Master Fund LP:
Fund V-A (Cayman) LP:
Key assets include a 55% equity interest in Veridian Edge Computing Corp. (proportionate FMV of approximately $616 million, proportionate basis of approximately $429 million, proportionate built-in gain of approximately $187 million) and a 100% equity interest in Helix SaaS Holdings Ltd. (FMV of $445 million, basis of $310 million, built-in gain of $135 million), together with interests in additional portfolio company assets as set forth in Exhibit D.
Fund V-B (Luxembourg) SCSp:
The intended U.S. federal income tax treatment of the Step 4 contributions is as tax-free contributions under IRC § 721(a), on the same basis as described with respect to Steps 2 and 3 above.
F. Step 5 — Dissolution of Legacy Offshore Vehicles and LP Migration (Target: December 1, 2025)
In the fifth and final step of the Reorganization, each of the four Legacy Offshore Vehicles will dissolve and distribute its respective partnership interest in the Consolidated Master Fund LP to its existing limited partners:
(a) Fund IV-A (Cayman) LP will dissolve and distribute its limited partnership interest in the Consolidated Master Fund LP to its limited partners pro rata in accordance with their respective partnership interest percentages.
(b) Fund IV-B (Luxembourg) SCSp will dissolve and distribute its limited partnership interest in the Consolidated Master Fund LP to its limited partners pro rata.
(c) Fund V-A (Cayman) LP will dissolve and distribute its limited partnership interest in the Consolidated Master Fund LP to its limited partners pro rata.
(d) Fund V-B (Luxembourg) SCSp will dissolve and distribute its limited partnership interest in the Consolidated Master Fund LP to its limited partners pro rata.
Following these liquidating distributions, the limited partners of the Legacy Offshore Vehicles will be re-allocated into the new structure as follows:
(i) Non-U.S. limited partners (e.g., Nordhaven Sovereign Wealth Fund, Kestrel Pacific Insurance Group) will contribute their newly received partnership interests in the Consolidated Master Fund LP to Solara International Feeder (Cayman) LP, in exchange for limited partnership interests in the International Feeder.
(ii) U.S. tax-exempt limited partners (e.g., Pinnacle State Employees' Retirement System, Grandview University Endowment) will contribute their newly received partnership interests in the Consolidated Master Fund LP to Solara Tax-Exempt Feeder (Cayman) LP, in exchange for limited partnership interests in the Tax-Exempt Feeder.
(iii) U.S. taxable limited partners (e.g., Argyle Family Office Holdings LLC) will remain directly in Fund IV LP and Fund V LP, which are not being reorganized. To the extent any U.S. taxable investors were invested in the Legacy Offshore Vehicles (which would be atypical), such investors would receive their pro rata share of the Consolidated Master Fund LP partnership interest and would hold such interest directly.
The intended U.S. federal income tax treatment of the Step 5 liquidating distributions is as tax-free distributions under IRC § 731(a). No gain will be recognized because the limited partners will receive only partnership interests in the Consolidated Master Fund LP — not money or marketable securities in excess of their respective adjusted bases in their partnership interests in the distributing Legacy Offshore Vehicles. The analysis of the marketable securities exception under IRC § 731(c) is set forth under Ruling 4 in Section VI.E below.
The dissolution of the Cayman Islands vehicles will be coordinated through Meridian Offshore Legal (Fiona McAllister, Partner), including the filing of dissolution documents with the Cayman Islands Registrar of Exempted Limited Partnerships and the deregistration of CIMA registrations MF-72491 (Fund IV-A Cayman) and MF-89103 (Fund V-A Cayman).
The dissolution of the Luxembourg SCSps will be coordinated through Veldhuis & Gérard S.à r.l. (Marc Gérard, Managing Partner; 22, boulevard Royal, L-2449 Luxembourg), including the filing of dissolution documents with the Luxembourg Register of Commerce and Companies (deregistration of RCS numbers B 248193 for Fund IV-B Lux and B 271056 for Fund V-B Lux) and notification to the Commission de Surveillance du Secteur Financier ("CSSF").
G. Resulting Structure (Post-Reorganization)
Following the completion of the five-step Reorganization, the Solara Fund Complex will be organized as follows:
(i) Solara Consolidated Master Fund LP — a Delaware limited partnership — will hold all portfolio assets previously held by the four Legacy Offshore Vehicles.
(ii) Solara International Feeder (Cayman) LP — a Cayman Islands exempted limited partnership — will serve as the investment vehicle for non-U.S. investors and will hold a limited partnership interest in the Consolidated Master Fund LP.
(iii) Solara Tax-Exempt Feeder (Cayman) LP — a Cayman Islands exempted limited partnership — will serve as the investment vehicle for U.S. tax-exempt investors and will hold a limited partnership interest in the Consolidated Master Fund LP.
(iv) Fund IV LP and Fund V LP — the existing Delaware limited partnerships — will continue to serve as the investment vehicles for U.S. taxable investors and will co-invest directly alongside the Consolidated Master Fund LP. Fund IV LP and Fund V LP are not being reorganized.
(v) Solara Consolidated Master Fund GP LLC — a Delaware limited liability company — will serve as the general partner of the Consolidated Master Fund LP.
The resulting structure is a master-feeder arrangement in which the two Cayman feeder vehicles invest into the Consolidated Master Fund LP, and the two domestic funds (Fund IV LP and Fund V LP) co-invest directly alongside the Consolidated Master Fund. Organizational charts depicting the resulting structure are set forth in Exhibit B attached hereto.
H. Aggregate Financial Summary
The following table summarizes the aggregate financial impact of the Reorganization:
V. REPRESENTATIONS
The following representations are made by Solara Digital Infrastructure LP, through its general partner, Solara Digital Infrastructure GP LLC, and by each of the other entities identified in Section II of this Ruling Request, as applicable. These representations are made in support of the rulings requested herein and are incorporated into the declaration under penalties of perjury executed by Viktor Raines, Managing Partner of Solara Digital Infrastructure GP LLC.
A. Entity Classification Representations
1. Each of the Existing Fund Vehicles — specifically, Fund IV LP (EIN 85-2103748), Fund IV-A Cayman (EIN 98-6241503), Fund IV-B Lux (EIN 98-6241571), Fund V LP (EIN 88-3467219), Fund V-A Cayman (EIN 98-7891234), and Fund V-B Lux (EIN 98-7891267) — is currently classified as a partnership for U.S. federal income tax purposes. Each such entity has either elected partnership classification under Treasury Regulation § 301.7701-3 by filing IRS Form 8832 or is classified as a partnership under the default classification rules applicable to its organizational form and jurisdiction.
2. Each of the newly formed entities — specifically, Solara Consolidated Master Fund LP, Solara International Feeder (Cayman) LP, and Solara Tax-Exempt Feeder (Cayman) LP — will elect partnership classification for U.S. federal income tax purposes by filing IRS Form 8832 under Treasury Regulation § 301.7701-3, effective as of its date of formation.
3. No entity involved in the Reorganization is or will be classified as a corporation or as an association taxable as a corporation for U.S. federal income tax purposes at any relevant time during or following the Reorganization.
B. Operating Company Representations (IRC § 721(b))
4. The Consolidated Master Fund LP's portfolio will consist entirely of operating company interests in digital infrastructure businesses (including data centers, fiber-optic networks, and edge computing facilities) and enterprise SaaS platforms. Each of the twenty-three (23) portfolio companies whose interests will be held by the Consolidated Master Fund LP following the Reorganization is an operating company with substantial business operations, employees, and operating revenues.
5. None of the portfolio companies is primarily engaged in the business of investing in stocks, securities, or other investment assets within the meaning of IRC § 721(b) and Treasury Regulation § 1.351-1(c)(1)(ii). Each portfolio company derives substantially all of its revenue from the active conduct of a trade or business in the digital infrastructure or enterprise SaaS sectors.
6. The Consolidated Master Fund LP will not be an "investment company" within the meaning of IRC § 721(b) and Treasury Regulation § 1.351-1(c)(1)(ii). Well more than eighty percent (80%) — and, in fact, one hundred percent (100%) — of the Consolidated Master Fund LP's assets, by value, will consist of interests in operating companies rather than "stocks, securities, or other investment assets" as those terms are used in IRC § 351(e) and the regulations thereunder.
7. Each of the twenty-three (23) portfolio companies has substantial operations, employees, and operating revenues independent of passive investment activity. None constitutes a passive investment vehicle or a holding company whose primary asset is a portfolio of stocks, securities, or other passive investment assets.
C. Business Purpose Representations
8. The Reorganization is motivated by the following bona fide business purposes: (i) the elimination of approximately $3.8 million in annual duplicative administration, audit, and regulatory costs associated with the maintenance of the four Legacy Offshore Vehicles; (ii) compliance with and adaptation to the OECD Pillar Two Global Anti-Base Erosion ("GloBE") rules, which become effective for Solara's Luxembourg entities beginning with fiscal year 2025 and materially diminish the historical tax-efficiency rationale for the Luxembourg SCSp structures; (iii) simplification of cross-border information reporting obligations under both FATCA (IRC §§ 1471-1474) and the OECD Common Reporting Standard ("CRS"); and (iv) governance simplification requested by the LP Advisory Committee, which obtained preliminary LP consent of approximately 78% in interest at the April 22, 2025 LPAC meeting.
9. The Reorganization is not motivated by tax avoidance or tax evasion. The primary motivations are operational efficiency, regulatory compliance, and investor-relations-driven governance simplification.
10. Each step of the Reorganization has independent economic substance and an independent business purpose. No step is circular, and no step would be undertaken solely for tax reasons.