Dividend & Distribution Policy
How Kaelo structures, schedules, and remits investment distributions across fund vehicles and co-investment structures. Waterfall mechanics, preferred returns, carried interest calculation, and the tax-efficient architecture that protects investor economics across jurisdictions.
Kaelo's distribution architecture is engineered to align GP and LP interests at every stage of the capital return cycle. We operate a European-style waterfall as the default across all fund vehicles — carried interest accrues only after the full return of contributed capital and achievement of the preferred return hurdle. This structure imposes maximum discipline on the GP and provides LPs with the clearest path to principal recovery before profit-sharing commences.
01
Return of Capital
100% of net distributable proceeds flow to LPs until the aggregate of all capital contributions has been returned. This includes called capital, recycled capital from interim realisations, and any capitalised fund expenses borne by LPs. No distribution to the GP at this tier. Clawback provisions attach from inception, ensuring that any over-distribution in earlier periods is recoverable upon fund liquidation.
02
Preferred Return
100% to LPs until an 8% per annum compounded preferred return has been achieved on all contributed capital from the date of each capital call. The hurdle rate compounds on a net-funded basis — capital returned through interim distributions reduces the compounding base. This 8% threshold reflects institutional market standard for private equity and real asset strategies, providing LPs with a meaningful time-value-of-money floor before GP economics commence.
03
GP Catch-Up
80% of distributable proceeds to the GP, 20% to LPs, until the GP has received 20% of total profits (the catch-up). This accelerated allocation brings the GP to its full carried interest entitlement in a single compressed phase. The catch-up is calculated on whole-fund aggregate profits, not on a deal-by-deal basis, eliminating the portfolio-netting distortions that arise in American-style waterfalls and preventing GPs from earning carry on winners before losses are crystallised.
04
Profit Split
80% to LPs, 20% to the GP as carried interest. This split governs all distributions above the preferred return and catch-up thresholds. For co-investment vehicles, the carried interest percentage may be reduced to 10-15% or waived entirely depending on the LP's aggregate commitment across the platform. Side letter accommodations for anchor investors, sovereign allocators, and strategic partners are negotiated on a case-by-case basis within the bounds of MFN provisions.
Quarterly Income Distributions
Current income — dividends, interest, rental yields, and coupon payments from performing portfolio positions — is distributed quarterly within 45 days of quarter-end. Distributions are calculated net of fund-level expenses, management fees, and any required reserves established by the fund administrator. Payment is made via wire transfer to the account designated in each LP's subscription agreement. Quarterly distribution notices include a detailed breakdown by income source, enabling LPs to reconcile against their own portfolio monitoring and to prepare for tax reporting obligations in their home jurisdictions.
Semi-Annual Capital Returns
Realisation proceeds — sale of portfolio companies, IPO exits, refinancing events, and partial dispositions — are distributed semi-annually in June and December. This cadence provides the fund administrator with sufficient time to finalise sale accounting, confirm escrow releases, calculate earnout provisions, and determine withholding tax obligations across multiple jurisdictions. Interim distributions from significant realisations may be accelerated at the GP's discretion, subject to advisory committee approval, when holding excess cash would create an unacceptable drag on net returns.
Return of Capital
100% of net distributable proceeds flow to LPs until the aggregate of all capital contributions has been returned. This includes called capital, recycled capital from interim realisations, and any capitalised fund expenses borne by LPs. No distribution to the GP at this tier. Clawback provisions attach from inception, ensuring that any over-distribution in earlier periods is recoverable upon fund liquidation.
Preferred Return
100% to LPs until an 8% per annum compounded preferred return has been achieved on all contributed capital from the date of each capital call. The hurdle rate compounds on a net-funded basis — capital returned through interim distributions reduces the compounding base. This 8% threshold reflects institutional market standard for private equity and real asset strategies, providing LPs with a meaningful time-value-of-money floor before GP economics commence.
GP Catch-Up
80% of distributable proceeds to the GP, 20% to LPs, until the GP has received 20% of total profits (the catch-up). This accelerated allocation brings the GP to its full carried interest entitlement in a single compressed phase. The catch-up is calculated on whole-fund aggregate profits, not on a deal-by-deal basis, eliminating the portfolio-netting distortions that arise in American-style waterfalls and preventing GPs from earning carry on winners before losses are crystallised.
Profit Split
80% to LPs, 20% to the GP as carried interest. This split governs all distributions above the preferred return and catch-up thresholds. For co-investment vehicles, the carried interest percentage may be reduced to 10-15% or waived entirely depending on the LP's aggregate commitment across the platform. Side letter accommodations for anchor investors, sovereign allocators, and strategic partners are negotiated on a case-by-case basis within the bounds of MFN provisions.
Quarterly Income Distributions
Current income — dividends, interest, rental yields, and coupon payments from performing portfolio positions — is distributed quarterly within 45 days of quarter-end. Distributions are calculated net of fund-level expenses, management fees, and any required reserves established by the fund administrator. Payment is made via wire transfer to the account designated in each LP's subscription agreement. Quarterly distribution notices include a detailed breakdown by income source, enabling LPs to reconcile against their own portfolio monitoring and to prepare for tax reporting obligations in their home jurisdictions.
Semi-Annual Capital Returns
Realisation proceeds — sale of portfolio companies, IPO exits, refinancing events, and partial dispositions — are distributed semi-annually in June and December. This cadence provides the fund administrator with sufficient time to finalise sale accounting, confirm escrow releases, calculate earnout provisions, and determine withholding tax obligations across multiple jurisdictions. Interim distributions from significant realisations may be accelerated at the GP's discretion, subject to advisory committee approval, when holding excess cash would create an unacceptable drag on net returns.
Tax-Efficient Distribution Architecture
The single most consequential determinant of net investor returns — after gross performance — is the tax architecture governing distributions. A fund that generates 18% gross IRR but leaks 300-500 basis points annually through suboptimal withholding tax treatment, treaty non-utilisation, or structurally inefficient intermediate holding entities delivers materially less to LPs than a 15% gross performer with institutional-grade tax engineering. Our distribution framework is designed from inception to minimise tax friction at every layer of the fund structure.
Kaelo structures fund vehicles across three jurisdictions — Dubai, Singapore, and Seychelles — each selected for specific tax treaty advantages, regulatory frameworks, and investor-base alignment. The Dubai fund vehicle accesses the UAE's extensive double taxation treaty network (over 130 treaties in force), providing zero or reduced withholding on dividend and interest flows from portfolio companies in treaty jurisdictions. Singapore-domiciled vehicles leverage the city-state's 90+ treaty network and Section 13R/13X tax exemption schemes for qualifying fund structures, particularly advantageous for Asian institutional LPs requiring local fund administration.
Seychelles intermediate holding companies serve a specific structural role: bilateral investment treaty protections for investments in jurisdictions where direct holding by a Dubai or Singapore entity would not qualify for treaty benefits, combined with the absence of capital gains tax, withholding tax on outbound distributions, and the territorial tax system that exempts foreign-sourced income. The three-jurisdiction architecture is not about secrecy — it is about deploying the most efficient legal structure for each investment within a fully transparent, FATCA-compliant, CRS-reporting framework.
Withholding tax on cross-border dividend and interest flows represents the primary source of distribution leakage in multi-jurisdictional fund structures. A Saudi portfolio company distributing dividends to a non-treaty jurisdiction may incur 5-15% withholding; the same distribution routed through a DIFC intermediate holding company with substance requirements satisfied reduces this to 0-5% under the UAE-Saudi DTA. Across a $500 million portfolio generating $40 million in annual dividend income, the difference between 15% and 5% withholding is $4 million per annum — compounded over a 7-10 year fund life, the net impact on LP returns is material.
We structure each investment's holding chain at the time of acquisition, not retroactively. Restructuring after investment — inserting intermediate entities, re-domiciling holding companies — creates disposal events, potential capital gains crystallisation, and regulatory friction that negates the intended benefit. The distribution architecture is determined during investment committee approval and documented in the investment memorandum alongside commercial and operational due diligence.
Interest payments from portfolio companies to fund-level lending entities (shareholder loans, convertible instruments, mezzanine facilities) require separate treaty analysis. Many jurisdictions apply different withholding rates to interest versus dividends, and thin-capitalisation rules in the source country may reclassify interest as dividends for tax purposes if debt-to-equity ratios exceed prescribed thresholds. Our structuring ensures that intra-group financing is within safe-harbour ratios for each relevant jurisdiction, with arm's-length pricing documented in transfer pricing reports prepared concurrently with the financing documentation.
For investors domiciled in jurisdictions that provide foreign tax credits (the United States, United Kingdom, Japan, and most OECD members), the withholding tax paid at source is not necessarily a deadweight loss — it can be credited against domestic tax liability. Our distribution notices are structured to provide the documentary evidence required for LP-level foreign tax credit claims, including certificates of tax withheld, treaty residency confirmations, and allocation of income by source jurisdiction.
Withholding tax on cross-border dividend and interest flows represents the primary source of distribution leakage in multi-jurisdictional fund structures. A Saudi portfolio company distributing dividends to a non-treaty jurisdiction may incur 5-15% withholding; the same distribution routed through a DIFC intermediate holding company with substance requirements satisfied reduces this to 0-5% under the UAE-Saudi DTA. Across a $500 million portfolio generating $40 million in annual dividend income, the difference between 15% and 5% withholding is $4 million per annum — compounded over a 7-10 year fund life, the net impact on LP returns is material.
We structure each investment's holding chain at the time of acquisition, not retroactively. Restructuring after investment — inserting intermediate entities, re-domiciling holding companies — creates disposal events, potential capital gains crystallisation, and regulatory friction that negates the intended benefit. The distribution architecture is determined during investment committee approval and documented in the investment memorandum alongside commercial and operational due diligence.
Interest payments from portfolio companies to fund-level lending entities (shareholder loans, convertible instruments, mezzanine facilities) require separate treaty analysis. Many jurisdictions apply different withholding rates to interest versus dividends, and thin-capitalisation rules in the source country may reclassify interest as dividends for tax purposes if debt-to-equity ratios exceed prescribed thresholds. Our structuring ensures that intra-group financing is within safe-harbour ratios for each relevant jurisdiction, with arm's-length pricing documented in transfer pricing reports prepared concurrently with the financing documentation.
For investors domiciled in jurisdictions that provide foreign tax credits (the United States, United Kingdom, Japan, and most OECD members), the withholding tax paid at source is not necessarily a deadweight loss — it can be credited against domestic tax liability. Our distribution notices are structured to provide the documentary evidence required for LP-level foreign tax credit claims, including certificates of tax withheld, treaty residency confirmations, and allocation of income by source jurisdiction.
Institutional-grade reporting is not a differentiator — it is a threshold requirement. LPs, their consultants, and their regulators require standardised, auditable, and timely information. Kaelo's reporting framework is designed to meet the most demanding institutional LP requirements, including those of US public pension systems, European insurers operating under Solvency II, and sovereign wealth funds with parliamentary oversight obligations.
Q
Quarterly Reports
Delivered within 60 days of quarter-end. Each quarterly report includes portfolio company valuations (conforming to IPEV guidelines and IFRS 13 fair value hierarchy), fund-level NAV calculations, fee and expense breakdowns, cash flow summaries including capital calls and distributions, and a qualitative portfolio review with individual company operating metrics. Valuations for illiquid positions are prepared by the fund administrator and reviewed by the GP's valuation committee, with independent third-party valuations conducted annually.
IPEV-compliant · IFRS 13 · NAV reconciliation
CA
Capital Account Statements
Individual LP capital account statements are generated quarterly and reflect each investor's proportionate share of fund NAV, cumulative capital called, cumulative distributions received, unrealised gains and losses, and the current waterfall position — including accrued preferred return, catch-up status, and carried interest reserve. For multi-class fund structures, capital accounts are maintained separately by class and series, ensuring that economic terms negotiated via side letters are accurately reflected.
Per-LP waterfall tracking · Multi-class support
TX
Tax & Regulatory Reporting
K-1 equivalent schedules for US tax-exempt and taxable LPs, allocating income, gains, losses, and deductions by character and source. FATCA reporting under Model 1 and Model 2 IGA frameworks, with entity classification documentation maintained for all fund vehicles and intermediate holding companies. CRS reporting to the relevant tax authorities in the fund's jurisdiction of establishment, with automatic exchange of financial account information covering all reportable LP accounts.
FATCA · CRS · K-1 equivalents · UBTI analysis
Quarterly Reports
Delivered within 60 days of quarter-end. Each quarterly report includes portfolio company valuations (conforming to IPEV guidelines and IFRS 13 fair value hierarchy), fund-level NAV calculations, fee and expense breakdowns, cash flow summaries including capital calls and distributions, and a qualitative portfolio review with individual company operating metrics. Valuations for illiquid positions are prepared by the fund administrator and reviewed by the GP's valuation committee, with independent third-party valuations conducted annually.
Capital Account Statements
Individual LP capital account statements are generated quarterly and reflect each investor's proportionate share of fund NAV, cumulative capital called, cumulative distributions received, unrealised gains and losses, and the current waterfall position — including accrued preferred return, catch-up status, and carried interest reserve. For multi-class fund structures, capital accounts are maintained separately by class and series, ensuring that economic terms negotiated via side letters are accurately reflected.
Tax & Regulatory Reporting
K-1 equivalent schedules for US tax-exempt and taxable LPs, allocating income, gains, losses, and deductions by character and source. FATCA reporting under Model 1 and Model 2 IGA frameworks, with entity classification documentation maintained for all fund vehicles and intermediate holding companies. CRS reporting to the relevant tax authorities in the fund's jurisdiction of establishment, with automatic exchange of financial account information covering all reportable LP accounts.
"The quality of a fund manager is measured not by capital raised but by capital returned. Every distribution we make carries the same institutional rigour as the investment decision that preceded it."
Additional Distribution Provisions
Clawback obligations are personal to the GP's principals, not merely contractual to the management company. This means that in the event of over-distribution of carried interest — a scenario that can arise when early realisations generate profits subsequently offset by later-vintage losses — the individuals who received the carry are personally obligated to return the excess. This alignment is non-negotiable in Kaelo's fund documentation and represents a commitment to LP protection that many fund sponsors resist.
Distribution reserves — typically 5-10% of realisation proceeds — are held in escrow to cover potential post-closing adjustments, warranty claims, tax assessments, and earnout liabilities. The reserve methodology and release schedule are disclosed in each distribution notice, and reserves are invested in short-term government securities to preserve capital while generating modest yield. Upon expiry of all contingent liabilities, reserve balances are distributed to LPs through the standard waterfall calculation.
In-kind distributions — the transfer of portfolio company securities rather than cash proceeds — are permitted under fund documentation but exercised sparingly and only with advisory committee consent. When portfolio companies complete IPOs and the fund holds listed securities subject to lock-up periods, in-kind distribution allows LPs to manage their own disposition timeline. The valuation basis for in-kind distributions is the volume-weighted average price over the five trading days preceding the distribution date, ensuring a market-reflective transfer value.
Investment
Transparent distributions. Institutional reporting.
Waterfall mechanics, tax efficiency, and capital account precision — engineered for institutional allocators.