ALFI
New growth opportunities for an expanding global funds industry By Marc-André Bechet Broadening and diversifying Luxembourg’s footprint as a global funds jurisdiction Luxembourg is in a quite unique position as a global funds jurisdiction compared to other financial centres in the European Union. The country enjoys an unrivalled political and economic stability. It benefits from a triple A rating with a stable outlook, which has been re-confirmed in September by the three rating agencies Fitch, Standard & Poor’s and DBRS Morningstar. Luxembourg is one of the ten countries worldwide with a triple A rating. Debt to GDP, although on the rise as a consequence of the current crisis, will soon reach 26 per cent but remains well below debt levels in the EU. The legal system is combining legal structures which originate from civil law and common law jurisdictions alike. In the “legal toolbox” which asset managers can avail of in the Grand Duchy, the common limited partnership (“SCS”)
and the special limited partnership (“SCSp”), a limited partnership without legal personality, are recent additions which have proven extremely powerful in the structuring of private equity and venture capital investment vehicles. Luxembourg offers a large variety of structuring opportunities for PE/VC vehicles, such as the investment company in risk capital (SICAR), the specialised investment fund (SIF), the reserved alternative investment fund (RAIF), and the limited partnership as just mentioned. The RAIF (Reserved Alternative Investment Fund) structure, introduced by the law of 2016, allows asset managers to set up Luxembourg-domiciled funds that are not subject to regulatory approval by the Luxembourg supervisory authority, the Commission de Surveillance du Secteur Financier (“CSSF”). A RAIF is however “indirectly” supervised as it must be managed by an authorised AIFM. Main benefits are quick time-to-market, flexibility in the categories
6
LUXEMBOURG FUND SERVICES IN FOCUS | Oct 2020
