According to the final regulations, non-U.S. persons, such as non-resident aliens and foreign corporations, may invest in OZ funds. However, as with any investor, he/she needs taxable capital gains for there to be a tax benefit. Finding non-U.S. persons with capital gains gets tricky because non-U.S. persons are generally exempt from capital gains on the sale of investments such as securities or assets located outside the U.S. In general, non-U.S. persons generate taxable capital gains only if these are effectively connected with a U.S. trade or business or through the sale of U.S. real property interests under FIRPTA. In addition, they may have to elect to forgo treaty benefits. As with any investment offering, you also need to follow applicable federal and state securities laws, particularly since those foreign investors looking at OZ funds are likely to have some sort of U.S. presence. This requires consultation with securities counsel. Although you may not find much demand for OZ funds from outside the U.S., you may draw investment for other portions of the capital stack.
