Preferred Capital Private Equity Fund
Preferred Capital

Private capital for Puerto Rico businesses.

Preferred Capital Private Equity Fund holds a tax exemption decree as a Puerto Rico Private Equity Fund under Act 60, the Puerto Rico Incentives Code. It invests in private Puerto Rico businesses through dedicated series, each with its own investors and investments.

How the Fund works

The Fund is organized as a series LLC. Investors purchase membership interests in the series of their choosing, that series invests the capital, and returns are distributed to that series' investors. All series share the Fund's Act 60 tax decree and are managed by Preferred Capital Fund Management LLC, the Fund's managing member and investment advisor, which is compensated by fees or a share of each series' profits.

Preferred Capital Fund Management Preferred Capital Private Equity Fund managing member · advisor Series 1 shares the Act 60 decree Series 2 shares the Act 60 decree Other series as opportunities arise Investors limited members Investments of this series only Every series has its own investors and its own investments.

Act 60

The Fund was granted tax exemption as a Puerto Rico Private Equity Fund by the Department of Economic Development and Commerce in 2020, for an exemption period of fifteen years. Compliance with the eligibility requirements is determined for each tax year.

Eligibility requirements

  • Maintain at least 80% of paid-in capital invested in non-public securities, and at least 60% in entities that derive at least 80% of their gross income from Puerto Rico.
  • Investors must qualify as Accredited Investors.
  • Capital or binding commitments of at least $10,000,000 within 24 months of first issuing interests.
  • An investment adviser with an office in Puerto Rico.
  • At least one investor appointed to an advisory board.
  • No more than 50% of contributed capital invested in one business, starting four years after organization.

Tax treatment of Accredited Investors

  • A special fixed income tax rate of 10% on their distributable share of interest and dividends earned by the Fund.
  • A 100% exemption from income taxes on their distributable share of capital gains earned by the Fund.
  • A fixed rate of 5% on capital gains from the sale of their interest in the Fund, or no income tax if the proceeds are reinvested in another Puerto Rico Private Equity Fund within 90 days.
  • Accredited Resident Investors may deduct up to 60% of their equity investment in the Fund within a maximum period of 15 years, with the deduction in any taxable year not to exceed 30% of net income before the deduction.

Summarized from the Fund's tax exemption decree under Act 60-2019. Not tax advice; investors should consult their own tax advisors.

Strategies

Commercial lending

CL Fund series

Lend to established businesses in Puerto Rico against collateral, earning current income from interest and fees while preserving the capital invested.

Private equity

PE Fund series

Purchase equity in established businesses in Puerto Rico and grow them over time, sharing in their profits and in the value created at exit.

Real estate

RE Fund series

Finance the construction and development of real estate in Puerto Rico, as a lender or as an equity partner, earning interest on the loans and sharing in the value of the completed projects.

Special purpose

Deal-specific series

Series formed around a single specialized opportunity, such as the acquisition of a particular company that suits a small group of investors.

Management

The Fund's manager is an exempt reporting adviser with the SEC, owned by four members.

Gabriel Olivera
Gabriel Olivera
Carlos Saltz
Carlos Saltz
Jose Santiago
Jose Santiago
Alan Wagner
Alan Wagner

Contact

Office
Preferred Capital Fund Management
307 F.D. Roosevelt Ave.
San Juan, PR 00918
Mail
PO Box 360216
San Juan, PR
Telephone
787-499-0002
Email
awagner@pcfm.net