Professional team
with 20+ years of work in the market

Our investment portfolio includes more than 70 different projects, such as,

• development projects
• financial and industrial holdings
• rental and commercial real estate
• industrial production
• IT companies
• Fintech companies
• E-commerce
• venture projects
• investment projects

A multitude of analogous real estate ventures are currently in various stages of development. Typically, these are structured as limited liability companies (LLCs), with developers securing bank loans to fund construction projects. Upon completion and sale, these projects generate profits, which can then be allocated as a dividend to fund.

However, when such projects are numerous, a phenomenon occurs wherein the total free cash flows are accumulated within the close-end fund (CEF), and subsequently reinvested into new projects without the payment of corporate income tax fees or dividends tax fees.

At the same time, the project partners are involved in subsidiaries of CEF.

Multidisciplinary production holdings generally comprise real estate units, operating companies, and profit and cost offices.

The CEF structure enables the separation of operational activities from real estate assets, with the latter being transferred to the direct ownership of CEF. Operating companies, in turn, lease real estate from CEF, with the entire holding being transferred to CEF, thereby facilitating effective reinvestment of funds.

The CEF makes it possible classically to separate operational activities from real estate, real estate is transferred to the direct ownership of the Private Investment Fund and realizes all the advantages of the close-end fund in owning rental real estate.

Operating companies lease real estate from close-end fund. The entire holding is going under the close-end fund and allows you to effectively reinvest funds.

The participants of CEF have the option to allocate funds from CEF to the acquisition of personal property, with the primary focus being on immovable assets such as houses and flats. In some cases, holding companies that service the personal property of beneficiaries may also be included in the close-end fund.

The CEF has been demonstrated to be effective for businesses of a considerable size, with assets ranging from 2-3 billion rubles in market value.

AB Capital, JSC provides services for the establishment and management of close-end funds (CEFs).

We have successfully established and assumed management responsibility for 40 CEFs to date, with ongoing plans for growth in this area.

The CEF is a strategic investment instrument that combines a variety of assets.

The property of CEF is owned by the participants in proportional parts, and the fund is managed by a JSC.

The CEF is not an entity in its own right, but it does have a flexible structure that provides with a number of unique advantages.

We specialize in the establishment of CEFs for a variety of purposes, including asset structuring, confidentiality assurance and enhanced tax efficiency. Our services are tailored towards:

• Owners of assets requiring legal protection or risk mitigation
• Partners engaged in joint asset or project ownership
• Owners of assets seeking alternative asset or business ownership structures
• Owners of assets which are subject to intricate or protracted procedural requirements
• Owners of assets controlled by foreign companies as an alternative to offshore structures
• Owners of assets aiming to exercise control over the tax payment period and minimize the tax burden on the business

A wide variety of assets are encompassed within the category of close-end fund property, for example,

• real estate and property rights to real estate;
• land plots;
• securities;
• shares and bonds of Russian companies and foreign commercial organizations;
• investment securities of funds;
• claim rights to monetary obligations, which include both present and future obligations.

Basically, close-end funds (CEFs) are utilized for investment in assets that do not possess a recognized market price updated periodically by the trade organizer, as is the case with other financial instruments.

The CEFs evince a greater degree of flexibility in this regard. For instance, they have the capacity to invest in shares of limited liability companies (LLCs) or joint-stock companies (JSCs), in real estate or claim rights. By virtue of their particular characteristics, these assets do not have a price set based on supply and demand.

However, it is imperative to recognize that any investment must possess value. The valuation of such investments is determined by an independent appraiser. The appraiser's role is to evaluate the assets of the fund, which is then used to calculate the value of net assets.

According to Russian law, funds are obligated to evaluate assets at least biannually, unless a market price has been ascertained.

The CEFs can be used as the head structure of the holding. In this case, subsidiaries are structured in the form of JSCs and LLCs that conduct normal business. They engage in the production of goods, the procurement of materials, the sale of finished products, capital raising from a banking institutions or through bond loans, and the potential initiation of an IPO.

A significant component of the management of CEFs is the Investment Committee, which may comprise the participants of funds and their designated representatives, who may receive compensation from the fund for their services The Committee is responsible for the approval of all transactions involving the fund's assets, thereby serving as an effective collegial management mechanism for the holding. In the absence of a decision by the Committee, transactions are subject to oversight by a specialized depository, bank, The Federal Service for State Registration, Cadastre and Cartograph, notary, Federal Tax Service or registrar. The level of legal protection is multilateral and effective. The fifteen-year history of Close-end funds in Russia corroborates this assertion.

The Investment Committee also approves resolutions passed by shareholders or partners of subsidiaries, thus ensuring end-to-end corporate control of the holding.