Delano December 2022

Luxembourg in English

Lucienne Andring:

Why private banks are so keen on private equity

The Banque de Luxembourg director on how ‘niche’ private market funds could be key to keeping private banks relevant

I did not smear the wall. I have learned why lipstick is

Sometimes it works. Sometimes you learn. We insure your creativity.

called “lipstick”.

Four critical conversations

In a recent article published on Delano.lu, Federation for Recruitment Search & Selection co-chairs Gwladys Costant and Nathalie Delebois argue that, particularly in the financial centre, there is a tight job market with scarce talent. According to Delebois, “For some jobs, candidates are simply harassed every day.” This, coupled with limits on teleworking for cross-border workers, means the grand duchy “risk[s] losing the battle for talent against neighbouring countries.”

The Chamber of Employees’ 2021 Quality of Work survey echoes some of these sentiments. The Quality of Work index fell to 53.9 points last year (compare this to 2014, at 56.2 out of 100). In addition to mounting pressure at work, those surveyed reported less autonomy, feedback, cooperation and participation in the workplace.

These are tough challenges to tackle, but I’m a proponent that soft skills can really go a long way. I recently recalled a good (and free) tip I learned from my former MBA professor and organisational change expert, Jeffrey Ford. He had challenged our class to capture in an Excel sheet every single conversation we had in the workplace over the course of a normal working week. We were asked to provide the gist of the conversation, the other interlocutor(s) and then to categorise each conversation as one of four types: initiative (introducing a new topic), understanding (when asking for clarification related to processes or concepts), performance (which ask for specific actions) or closure (signalling completion of a task or recognising accomplishments).

What felt at the start like an awkward exercise turned out to be illuminating: tallying our totals, our class realised closure conversations were taking place the least frequently. My own exercise resulted in roughly 35% initiative; 50%, split half between understanding and performance; and 15% closure conversations.

Ford then asked us: could we somehow increase those closure conversations? We redid the exercise the following week, and that time I made sure to thank my colleagues after tasks were completed, or to share praise with others.

As a manager and as someone who regularly speaks with others in the professional world as part of my job, I see many instances where there’s a deficit of feedback or praise, and I’ve come to discover that feedback is something a lot of people cherish, even crave.

It’s more than just checking a “closure” box, however--it’s giving credit where it’s due or offering a free, simple “thank you”--all of which provide feedback and can inject the human element back in the workplace.

Editor-in-chief, Delano magazine NATALIE A. GERHARDSTEIN

“Our goal is to raise awareness that you are part of society”

The Zentrum fir Politesch Bildung (ZPB) promotes citizenship through a better understanding of democracy and the challenges facing society.

Deputy director Michèle Schilt tells us more.

Voting in Luxembourg’s elections is mandatory for all citizens. How do you encourage people, particularly youngsters, to be well informed and engaged in politics?

This is something we do in the long term, not just when elections are coming up. We talk to teachers and create materials and films that they can use to launch discussions. We want to ensure that people, from a very young age, are aware of what is happening. It’s important for everyone to realise they are a part of politics. We don’t only focus on elections but on civic life in general.

In January, we will have a ‘Super-Wal-Kirmes’, or a super election fun fair. Sometimes elections, and politics in general, are seen as being very serious. So we’ll make politics more playful--there will be a wheel of change with questions about elections, duck fishing where you can fish for ideas or popcorn buckets with links to more information.

47% of Luxembourg’s population are foreigners. They can only vote in communal and European elections, not legislative elec tions. Do you think this should be changed? I think we should have a debate about this. As the centre for citizenship education, we’re not here to take a side and say this is the right way to do things. Our aim is to launch a discussion around democracy. Luxembourg has quite a young population, and we could, as well, talk about giving 16-year-olds the right to vote. We want to encourage people to think about these questions.

Social media has become an increasingly impor tant source of news over the past years. But it also allows misinformation to spread quickly. Do you have any thoughts on social media’s role in politics and democracy?

Many people today don’t read traditional media; they get news from social media. But media literacy is something that is really targeted in Luxembourg--there are already many initiatives,

such as courses on algorithms or hate speech.

We want to make sure that people understand what they’re reading, to help them decide whether this is true or false. Our propaganda guide is a way to see if the message you’re getting is trying to influence you.

ZPB organises Den DemokratieLabo, an interactive travelling exhibition that allows visitors to reflect on their ideas and expe riences with democracy. Most recently, it was at the Lycée classique de Diekirch. How did students react?

Students reacted quite well. The exhibition is very playful, and you get to decide what to do with this experience. It promotes dialogue, encourages discussion on controversial topics without being polarising and helps you reflect on where your opinions come from.

But it’s not only for young people. The exhibition is for all ages, from 12 to 99. Next spring, it will be in the theatre in Esch-sur-Alzette, where we will be able to engage more with adults and the general public.

What are some other activities that ZPB is planning to boost interest in elections and civic life next year?

We have videos--made by kids, for kids--that explain a variety of topics, such as how municipalities work. We’ll also work on updating election information, including guides on why to vote and how to mark your ballot in multiple languages, and will conduct a social media campaign on voting early next year. Our goal is to raise awareness that you are part of society, whether you like it or not, and that if you want, this is a way for you to try and change things.

Interview LYDIA LINNA Photo MATIC ZORMAN

Michèle Schilt has been deputy director of Zentrum fir Politesch Bildung since its founding in 2016

“Our best year in 10 years for brewery visits”

Director at Brasserie Nationale Mathias Lentz reflects on a “positive year” following two challenging ones and what’s in store for the brewery heading into 2023, also in terms of international expansion.

Your father, Georges Lentz, had called 2020 a ‘catastrophic year’ for Brasserie Nationale. Have you managed to bounce back? 2020 and 2021 were difficult years. 2022 was a great year. We had an amazing summer, months of pure sun. People wanted to go out and had enough of being locked in at home [and] were just happy to have events. Then with Esch2022, there was a lot going on… a positive year.

To what degree have you been impacted by material supply and energy prices?

For Lodyss water, it’s very local from a well underneath the brewery. For the beer, the hops come from Germany. The malt, [which] we get from Metz, has increased a lot. Electricity prices have increased, which also means the production for bottles, labels has increased. I think next year we’ll have some interesting challenges facing us.

Earlier this year you opened De BrauAtelier microbrewery at your Bascharage site. How has the response been? Successful. It’s our best year in 10 years when it comes to brewery visits. We explain the different types of beer, how to drink it, how to pour it… [At] the actual microbrewery, where people can come and brew, we’re fully booked until February. It’s a small brewery, we’re talking 150l. We also have microbrewers that come [to] scale up a bit.

So there is a rise in artisanal drinks… Yes, it’s very fashionable. It’s something that started around 2010. We saw more breweries coming to Luxembourg. There’s the CBBL [confederation of breweries and brewers] that has 21 members, but this varies from 2,000hl to those that produce a beer once a year for an event… Everyone who is a CBBL member can sell their beer in a Battin or Bofferding bar. Normally, it’s not a beer we produce, [e.g.], an IPA or stout… Luxembourg has traditionally been a big lager

country… You have more people that drink beer, but people are also more aware, so they drink less.

You launched Lodyss water in 2020. Is the current market share living up to your expectations?

It was one of the most successful launches done in [our] group. To be honest, we didn’t expect such a success so quickly… It was a complicated start. We had started the day of the confinement. It’s speculation, but [we think] people spent more time in supermarkets, tried it and got hooked.

What’s your beer-to-water production split? We do 150,000hl beer--split about 50-50, Battin and Bofferding--and this year we’ll do about 50,000hl of water.

What about your international market-any plans to expand into 2023?

We have two markets: the local market, which is the Greater Region. We have the same formula, price, strategy in Belgium and France as we do in Luxembourg…

Then we have global export, which was China [since 2007]--which stopped during covid--and then Wisconsin…

Then we have another one, our bestseller at the moment, which is Cameroon. Those three markets--China, US and Cameroon--are opportunity markets… What happened in Cameroon was the same as in China [and] Wisconsin: people born and raised in Luxembourg, or second-generation Luxembourgers, who went back to their country of origin and then decided to try and bring Bofferding [to their] restaurants or supermarkets.

It’s not sold at Miami University of Ohio? Not yet because the US is a complicated country with different state laws… We’re working on it. I think in 2023 we’re going to go to Ohio--but it wasn’t easy.

Interview NATALIE A. GERHARDSTEIN Photo MATIC ZORMAN

Mathias Lentz took on his director role in the family business just shy of two years ago

swissquote.lu

Swissquote Bank Europe SA – RCS B78729. Bank licensed in Luxembourg under supervision of the CSSF.

“Be aware of what you will find in the company”

What is people due diligence?

People due diligence is basically a leadership assessment of a company where private equity houses or VCs want to invest. So VCs and private equity houses always have a process of due diligence when they are preparing to invest into a company....

They always do it from figures perspectives, but a lot of times, unfortunately, they forget to do it from a people perspective. Although startups and companies in general fail in more than 80% of cases not because of the market, not because of the product, not because of the figures, but because of people.

People due diligence means that we are going into that target company, and we are basically assessing their leadership team to see if they have the core competencies and the right skills that will allow them to put into practice the strategy that the investor established for the company.

How do you check that?

The first step is we sit down with investors.... It’s really a very deep discussion and very honest discussion about the values that they have, about why they want to invest into that particular company, about the strategy that they want to give to the company. And we try to extract from that discussion the skills and competencies that the leaders of the target company need in order to accomplish the strategy. So we have a matrix of skills and core competencies that we have established with the client.

And once we have that, we go into the target company and we talk to their leadership team. We have an individual assessment of every member of the team, but also an assessment of the whole team. And then we benchmark them individually and as a team against the matrix of competencies that we have determined with the investor beforehand. We [then] have a very clear picture of the gaps between what they

have and what they need in order to execute

We go back to the client, we present them the picture that we have taken of the leadership team, and we can tell them, ‘well, this is the situation today’. So be aware of what you will find in the company once you have invested in it. And be aware that probably you will need [to make] some changes, either changing people in the leadership team... either by helping them to reach the level that they need to have in order to execute the strategy [through training].

Do investee companies have access to your reports?

Of course, it’s ethical, every individual has access to his or her

not only with the client, but with every individual who took the assessment.

conducted more often? Is it the cost involved? Do investors think it takes

Actually it doesn’t take too much time. It’s really done at the same time as the economic due diligence, so it takes a couple of weeks. It shouldn’t be a question of money. Of course it has a cost, but you have to consider this as being an investment into your knowledge of the company, in the same way the economic due diligence is an investment. I mean, you wouldn’t invest in a company where you don’t have information about the productivity and the economics of the company. Why would you invest in a company where you don’t have any information about the people that are running the company? I think it’s just a question of investors being very much focused on economics

Photo MATIC ZORMAN

“We put Luxembourg on the map in Romania”

To start with: are there any special historical connections between Romania and Luxembourg?

Certainly. The two countries have had diplomatic relations for 160 years, and Luxembourg City and Sibiu in Romania were joint European capitals of culture in 2007.

Indeed, Sibiu is a city in Transylvania that is very much linked to Luxembourg. Many Luxembourgers migrated to the region, and there are still people there who speak a dialect of Luxembourgish! There are even towns in Transylvania built like villages in the Moselle.

Can you tell us more about RomLux?

Our organisation was founded in 2007, the same year Romania joined the EU. It started with 35 members and now has over 125 members. We bring people, companies and organisations together from both countries.

It’s a community of passionate professionals. Everybody is a volunteer, and RomLux’s events, innovation missions and conferences are thanks to people’s involvement and open hearts.

RomLux has organised over 100 events in 15 years. What are some other major achievements?

We put Luxembourg on the map in Romania, opening the grand duchy to innovators in Romania and promoting Luxembourg as a gateway to Europe and the world. The opportunities and startup ecosystem in the grand duchy are relatively unknown, so we’ve focused on communicating these offers.

In addition, we’ve organised several events to increase awareness of Romania, such as a roadshow for Romanian venture capitalists or an art exhibition featuring LuxembourgishAmerican artist Edward Steichen and Romanian artist Constantin Brancusi. Last year, we hosted a webinar to promote Luxair’s new LuxembourgBucharest route. The direct line encourages sustainable business and cultural connections.

And earlier this year, RomLux received the accreditation for bilateral business clubs

in Luxembourg or abroad (CCBL) from the Chamber of Commerce of Luxembourg.

Are there Romanian companies that have benefitted from opportunities in Luxembourg?

One of the best examples is Finqware, a company that provides open banking. The founder came to ICT Spring [a global technology conference in Luxembourg] in 2018 with just an idea. Now Finqware is accredited by the National Bank of Romania to operate payments. It’s also approved by the [financial watchdog] Commission de Surveillance du Secteur Financier in Luxembourg.

EmailTree is another member of RomLux. They use artificial intelligence to automate answers to emails. The company benefits fully from the bridge between the two countries--EmailTree started in Luxembourg but works with an IT team in Romania. It exploits the best of both worlds!

Any plans for the future?

During our innovation mission to Bucharest on 21-24 November, we will bring a delegation from Luxembourg to discover Romanian entrepreneurs.

A concert at the Philharmonie featuring Luxembourgish and Romanian musicians to celebrate the 15th anniversary of RomLux is planned for 29 November.

And in March 2023, we’re organising a roadshow for Romanian blue-chip companies. Together with the Luxembourg and Romania stock exchanges, we aim to present several companies listed in Bucharest to investors in Luxembourg.

But we’re always having events--fundraising events, football tournaments or the international bazaar, to mention just a few!

As the Romania Luxemburg Business Forum (RomLux) celebrates 15 years of promoting economic relationships between the two countries, president Razvan-Petru Radu discusses its main achievements and upcoming cultural and business events.

Interview LYDIA LINNA Photo MATIC ZORMAN

Razvan-Petru Radu has been RomLux’s president since its founding in 2007

MY TAKE

World Cup of shame

The 2022 Fifa World Cup in Qatar should not be taking place for a huge number of reasons. The awarding of the tournament to the Gulf state was “tainted… by a great gushing spume of individual corruption among Fifa’s executive committee and decisive actors outside the voting room...” as The Guardian’s Barney Ronay puts it. Then there is the terrible human rights record of Qatar and its well-documented mistreatment of migrant workers drafted to build stadia and infrastructure for the event, many of whom died. Efforts by human rights groups to gain compensation have been dismissed by Qatar’s labour minister as a “a publicity stunt”, and Fifa has also done little to help. Vociferous campaigner Steve Cockburn from Amnesty International is astonished. “If Gianni Infantino wants the world to ‘focus on the football’, there is a simple solution: Fifa could finally start tackling the serious human rights issues rather than brushing them under the carpet.”

The football itself may be unmissable for millions of viewers. But think on if you decide to watch.

Words DUNCAN ROBERTS

THE LUXEMBOURG FOOTBALL FEDERATION IN NUMBERS

1 Annual budget: €8n

In the period 2019-2020 the Luxembourg federation received $3.2m from the World Football Federation as part of its $4m entitlement to Fifa Forward funds. $1.5m of that Fifa contribution went to operational costs while a further $0.5m went to covid-19 relief funds.

2 Number of clubs: 122 103 of the clubs field senior men’s teams across five tiers of the league. The women’s league features 36 senior teams in three divisions. In addition to the 122 accredited clubs, a further 26 teams compete in the official corporate league.

3 Certified coaches: 523

Some 523 qualified trainers take charge of senior, youth and veteran teams across the grand duchy. The FLF can also call upon 263 referees to arbitrate matches.

4 FLF staff: 31

The football federation, based in Mondercange, has 31 full-time staff in addition to a number of part-time employees.

Fifa’s revenue for 2022. 56% ($2.64bn) of that comes from television broadcasting rights and a further 29% ($1.35bn) from marketing rights.

Fifa’s investment budget for development and education in 2022. 76% of that ($544m) is paid to member associations and confederations under the Fifa Forward Programme.

Global advertising spend at the 2018 Fifa World Cup in Russia. With 5 billion views expected at Qatar 2022 (compared to 3.5bn in 2018), advertising spend is expected to increase accordingly. Indeed, media agency Magna forecasts a 9.2% growth in global ad revenue to $816 billion by the end of 2022.

Gianni

RBFAAdidas, Asatur Yesayants/Shutterstock, Source $440m Prize money $322m Operational expenses $247m TV operations

FLF $1,696m Total

Banque de Luxembourg’s

Lucienne Andring has more than 20 years of experience working with alternative investment funds

you want to keep your market share, then you have to offer it”

Providing access to private market funds may be a ‘niche’ part of the alternatives space, but it could be key to keeping private banks relevant, says Lucienne Andring, director and head of business development at Banque de Luxembourg.

People in the industry describe bringing private market funds to new clients as ‘retailisation’. Personally, I don’t think that’s the best word because it implies that the funds are available to retail investors, which is not exactly the case. Would you agree with my whinge, or do you have another perspective?

I would, indeed, agree with your opinion. And indeed, I use the word ‘democrati sation’, and democratisation of private markets is underway. It is a trend that started a couple of years ago, and it is currently accelerating. I see it on two sides, on the product side, with my cli ents in asset servicing--and here, maybe I will step back and put it in context. As you are aware, the historical main busi ness line of Banque de Luxembourg is private banking. But next to that we have another business line, which is asset ser vicing. This is a business that we started in the ’80s, servicing investment funds, administration for investment funds.

I set up a specialised team in servicing private market funds back in 2007. This segment has had very strong growth over the last 10 years. I have a number of cli ents [that are] private equity firms and asset managers that are setting up--next to their product for their institutional client base--dedicated products for cli ents that come from the wealth manage

ment channel, high net worth individuals, family offices, etc. So I clearly see this trend on that side of the business. We also have initiators launching platforms like Moonfare, for example, platforms that are based on technology. Then on the other side, on the demand side, in our private banking department, we have growing interest and also rising demand for private assets products from our private banking clientele, who are looking for diversification of their over all portfolio allocation.

For people who don’t know the subject very well, what are the benefits of retailisation or democratisation of private market funds for asset managers, intermediaries and investors?

Let’s start with investors. Individual inves tors continue to have very low allocation to private equity funds. In Europe, only 3% of private client assets are invested in private equity. The reason for this has been mainly the difficult access to this type of product for this type of clientele, given the very high investment mini mums, but also no access to top-tier managers. This is changing right now. Democratisation is taking place with products requiring, for example, lower minimum [investments], and that is very attractive for individual investors in an

environment where we have high public market volatility... inflation and where they need to look for diversification of their portfolio.

Their motivations are understandable because private markets have delivered solid returns over a longer time horizon. They have outperformed public markets during the last 20 years. And something that is very important is that we are in an environment where companies are staying private longer and even listed companies are delisting. So, there is a lot of value creation that is taking place out side the public market.

Right, because if you’re not a billionaire, you’re not able to just buy out a company, you want to be able to access through a fund?

Through a fund and have part of a com pany or part of a number of companies.

On the other side, if you’re a private market fund, do you really want to switch from dealing with 20 or 30 investors to 200 or 300 investors? Seems like it would make things more complicated. So what is the selling point for them?

It is important to put this in context. Today, institutional investors account for more than 90% of raised capital by pri vate asset funds, and they will continue to provide the majority of capital raised by this type of fund over the next years.

Interview AARON GRUNWALD Photo GUY WOLFF

“If

WHY IT’S CALLED RETAILISATION

Retailisation’ is the correct term for opening up private market funds because “when we lawyers look at things, we look at it in terms of classification of investors,” said Paul Van den Abeele, co-head of the investment funds practice at Clifford Chance in Luxembourg. “High-net-worth individuals, even ultra-highnet-worth individuals don’t always qualify as professional clients.” Thus they are considered retail investors.

“What would be wrong is to think that it’s easy and that you can just quickly access those products,” said Katia Gauzès, managing partner at Clifford Chance in Luxembourg.

“It’s not like a ‘click and go’” offering. Asset managers and investors need to proceed carefully, she warned.

At the same time, fund firms face plenty of scrutiny over the fast growing category. “We see support from the regulator, but we also see a certain ‘prove me this, prove me that’, which I think is what a regulator should do,” said Van den Abeele. “So we are tested. It’s a quite intense sort of regulatory review process... Luxembourg is open for business but not at all costs.”

That’s a given. And at the same time, sig nificant growth is expected from the individual investor channel and asset managers see an opportunity in access ing this growing pool of money. So it makes sense to bring both parties together.

So the capital will be available, and they’re going for this segment because there’s interest there?

There is interest, as there’s demand from the investors. For [fund firms], it’s an opportunity to diversify their fundrais ing, even though the institutional part is much bigger. I mean, the other part is growing, there is demand, so why not go for it?

But this will make their operations more complicated. Are they looking to fintech solutions to handle the shift? As you said before, what is challenging is to have not 20 investors bringing big tickets, but 100 or 200 investors bring ing smaller tickets, and so, from an oper ational point of view, it is very important to get that right. And here, service pro viders come in, or technology platforms could come in. What is very important is to have streamlined processes, auto mated processes. Digitalisation will clearly be important, and there are specialised service providers to help the asset man agers and to bring both offer and demand together.

What are the advantages for private banks and wealth managers? Financial advisors and wealth managers face the demand from their clients. And it is an opportunity for them but also a responsibility to the client to develop a solid and strong private asset product offering. And that’s what we did. We had the demand from our clients, and we have been building a product to meet that demand.

If you have a look at numbers, it is estimated that individual investors will more than double their commitments to private equity funds by 2025, so it is really an important opportunity for wealth managers, for private banks. It allows them to broaden their product range, adds new sources of revenues, and it is a very attractive tool to attract new cli ents or more money from existing clients. That’s, for me, a rather important point when we talk about the benefits of retail isation or democratisation.

What are the drawbacks for investors? Do they understand how liquidity and risks differ from retail funds? What should we warn people about? What is very important is that individual investors have to be aware that private equity investments or private asset invest ments are illiquid investments. That’s very important. A typical PE fund has a [lock-up period] of 10 years, and the inves tor cannot exit their position. Investors have to understand that a long-term com mitment is required. That’s really the crucial point. And here, investor educa tion comes in. I believe that financial intermediaries, private banks, wealth managers have an important role to play in investor education. They have to explain the particularities of this type of prod uct: what is a commitment, a capital call? How is this mechanism working? How are the cash flows working, etc? It is really a new asset class for a private bank ing client. And it’s very important that they get comfortable with the way this product works.

The asset manager probably won’t be able to do this, so is it a bit of challenge for you because you’re investing more time in the same client?

Investing time in a client is really the core business of a private banker. So that’s worth the time that you spend with the client... it’s important for this type of asset class to have trust.

Banque de Luxembourg seems to be focusing mainly on private equity, but are other types of private market funds, like infrastructure or real estate, a good fit for this segment?

KATIA GAUZÈS

Private equity clearly drives the global growth in private markets. That’s overall, the whole industry. Now coming back

“It’s not like a ‘click and go’”

Managing partner, Clifford Chance in Luxembourg

Car-free in Kirchberg –A new way of living together

Living car-free in the heart of Kirchberg: this is the challenge that Codur has taken up with this ecological housing project.

Specialised in ecological property for the past 20 years, Codur is well-known for its alternative sustainable projects proposing new ways of living together. With this particular concept Codur invites us to rethink mobility in the heart of the city centre. Bicycles, scoot ers... More and more workers are using alternative modes of transport on a daily basis. Saving money and time, being in better shape, reducing one’s ecological footprint, tired of traffic jams... There are many reasons to initiate this change.

This ecological project will combine the renovation of an old farmhouse and the construction of a new res idence with a total of 9 flats and 2 duplexes. The histor ic façade of the farmhouse will be preserved to maintain the existing architectural heritage. Both residences will include the latest technological improvements to achieve high energy and environmental quality (targeted certi fication: LENOZ 2 leaves). As with every Codur project, the emphasis is placed on the well-being of the residents.

The two future buildings will have private gardens and terraces – a rarity for the Kirchberg district.

But “living car-free” does not mean “doing without”. Secure bicycle storage areas will be reserved for the future inhabitants. If desired, residents of one of the homes will be able to benefit from parking permits granted by the City of Luxembourg. Kirchberg offers the advantage of excellent connection to the public trans port network with 52 bus stops, the tram, the funicular and 14 vel’OH stations!

Who knows, maybe this new approach could become a new way of living together?

MORE INFORMATION

CÉLINE PERSOON Customer Relationship Manager t. +352 39 59 22 1 / codur.lu/kirchberg

New construction: 3, rue Paul Noesen L-2228 Luxembourg

Renovated farmhouse: 160, rue du Kirchberg L-1858 Luxembourg

Rénovation of old farmhouse

to private banking, most of our private banking clients, and that’s also true across the [financial centre], are looking for pri vate equity, especially those who are new to this asset class. For those who are new, private equity is often the strategy when they like to begin to invest.

Why is that?

Because it is the biggest part of the mar ket, because it is well known, because it’s the real economy, so they can see in what companies they are investing.

Wealthy investors are not particularly interested in real estate funds. That’s a little surprising to me because real estate is a business that should be easier for them to understand.

Yeah, but a lot of private banking clients already have direct real estate invest ments in their portfolio. They do not need to go through a fund. They’re buy ing, you know, a house in south of France or in the Swiss Alps. They are overall

quite exposed to real estate. Private equity is more difficult to get exposed to directly if you are an individual investor.

So does that bode well for infrastructure funds? It’s not easy to buy part of a bridge or solar farm. Or part of a road... when we look at more seasoned investors... there is clearly a demand for infrastructure, and more particularly its sub-sectors, for example, to support energy transition, such as an alternative energy, energy efficiency, cleantech solutions.

Then you also have venture capital. Venture capital is often of particular inter est to investors with an entrepreneurial mindset. Entrepreneurial families are very close to venture capital, they want to participate in an early stage company, in another success story.

Then I would say, for the new gener ation of investors, they are keen to see the impact of their investments in the real economy, and they are actually look

ing for funds with a sustainable strategy. And then something that is a very, very important rule, as in public markets, what we tell our clients is that it’s very important to build a diversified alterna tive portfolio. To diversify on multiple levels, strategies, managers, geography, but also vintage.

There is a lot of excitement in the industry about the democratisation of private market funds. From your perspective, will it become a major segment or remain niche?

It depends how you define niche. What is very clear is the demand for private assets by individual investors will con tinue to grow. As I said before, it is esti mated that their allocation will double by 2025, so there will be strong growth.

We also see at the asset manager level, all larger asset managers are launching new products in this area, with different strategies. They want to respond to the growing demand. Private banks will obvi

ously play an important role, as they have to do the investor education, and they will direct clients to suitable products. That’s what we see.

Now, when we put it at the level of the whole industry, if we look at private market [funds], it’s an industry of $8trn [in 2020 that will nearly] double by 2025, to more than $15trn in assets under man agement globally. And the individual investor share is estimated to be 9% to 10% today [that will rise to] around 10% to 12% in 2025. So, yes, it is a lot of money, but it is a small part of overall assets under management in the whole industry.

3% of $15trn is ‘not nothing’, but is this a more profitable line of business? Private market funds don’t scale as easily and as economically as Ucits funds. Will the margins be healthy enough?

First of all, if there is demand, it’s good to respond to the demand. There is a need, private investors want to diversify their asset allocation. And there has been strong growth and outperformance in private markets, so private investors want to take part in that investment universe.

If there is demand, and if the asset man agers are putting in place products for the private investor, is it profitable? Obvi ously, it is. And it is profitable also for other participants.

Wealth managers are going to struc ture new product offerings around this because the products are quite complex. So it is important for the private inves tor to get the right advice. They should probably speak to someone who is well aware of different types of products and who has the capacity to give them some advice, so probably their private bank or wealth manager can add some value in the whole process. And so it will be profitable. Yes, it will.

But in my view, it’s a different busi ness from the institutional private asset business. If you have a look overall at the private asset industry, the big part will remain the institutional business, maybe it will go from 90% to 88%, but it still will be the big part of the industry.

So if you’re a private bank or wealth advisor or another type of intermediary, if you want to keep your market share, you’ll have to offer this? Exactly... if you want to keep your mar

ket share, if you want to attract new cli ents, then you have to offer it. And it makes sense. Maybe 10 years ago, it was difficult as there were no real products. But today we have products. So it makes sense to offer them and really for a pri vate bank it’s a key differentiator to have this product offering.

Do you think that this concept of retailisation or democratisation has been overhyped?

I would say for sophisticated investors--so high net worth individuals, even maybe to some extent affluent clients--it has not been overhyped. There has been development, and there is a trend that is there and that will stay. For retail clients, I would say yes.

Because it’s probably not suitable for them?

One of the disadvantages is that it is a complicated asset class. And as an inves tor, you really have to be aware that it is not liquid, and you if you need liquidity tomorrow, you will not have the possi bility to exit your position. And if you exited, you will not get the right price. Probably there will be no valuation or you will get a discount.

THE FEEDER FUND ANGLE

One of the hottest digital platforms for retail investors to access private market funds right now is Moonfare. Its clients can make a minimum investment of €50,000, compared to the usual Luxembourg minimum of €125,000. Moonfare’s assets under management jumped from €1bn in September 2021 to €2.1bn in June 2022.

Fidelity International, one of the world’s biggest fund firms, struck an exclusive distribution partnership in several markets that involved taking “a minority stake in Moonfare” last year, according to Sanela Kevric, head of sales Benelux at Fidelity International, based in Kirchberg. (Terms of the deal were not disclosed.)

For Fidelity, “it’s a natural evolution of the business, it’s bringing an additional tool and additional asset class that we can provide our clients with.” While Moonfare has a robust screening process to narrow down the PE funds offered on its platform, Kevric said that Fidelity brings “a fresh pair of eyes on those opportunities.” In other words, it provides a layer of information that is perhaps more digestible for many retail investors.

SANELA KEVRIC Head of sales Benelux, Fidelity International

“A fresh pair of eyes on those opportunities”

Yves Cruchten became president of the LSAP in January 2022. The party wants to push an ambitious tax reform

“We will take a few steps towards a major tax reform”

2023 is the year of elections in Luxembourg. The LSAP wants to push a long-announced tax reform by then. But is there enough time to apply such an ambitious project? LSAP president Yves Cruchten talks about rethinking the current tax system.

Interview LISA CHRISTL Photo GUY WOLFF

The tax reform announced in 2019 has not yet taken place. The LSAP now wants to push this topic as quickly as possible. Why? Because we see that tax revenues are bubbling up, especially on payroll taxes. And we currently don’t have an infla tion-adjusted tax table. The tax burden on workers is constantly rising, and that needs to be corrected.

But we are now one year before the elections. The next elections are due in June and in autumn 2023--is there really enough time? Especially because we are currently in multiple crises? That is, of course, the dilemma we are in. We are in a very unusual situation. In Sep tember, the finance minister [Yuriko Backes, DP] presented us the figures for the cur rent year in the Commission, which could not be better. Over €900m in additional revenue is expected for this year. Of this, about €600m will come from wage tax and €300m from VAT. On the other hand, four weeks later, the same finance min ister came to the Chamber of Deputies and predicted that next year, we will prob ably have a deficit of €2.8bn, and she foresaw a debt that should increase by another €2bn. All this within four weeks.

How do you explain that?

Well, we assume that the budget that was prepared was made very, very, very care fully. Perhaps the expenditure was over

estimated somewhat, and the income underestimated.

You also never know what the eco nomic situation will be like next year. Will we still have growth? Will we fall into a recession? What about energy prices, inflation overall? That makes it difficult to predict, of course. But that is why we, in the coalition, have promised ourselves that we will take a few steps now towards a major tax reform. And that we would then gradually keep an eye on the financial situation of the cen tral state. If this improves compared to what the finance minister has now pre dicted for next year, then we will sit down together again and make further adjust ments to the tax legislation.

Of course, this will partly be a topic for the upcoming elections. We already had a big debate in the Chamber of Deputies

on tax justice in the summer. This involves much more than just adjusting the income tax scale. Much more needs to be done, so we probably won’t be able to imple ment everything. Certainly, the next gov ernment will have to adopt some of these individual reforms.

You mentioned the issue of tax justice. What exactly do you mean by that? What are you demanding?

Our system is not unfair, per se. We have a progressive tax scale. Nevertheless, we still see injustices in our system, and these must be eliminated. One could say: ‘We want everyone to make their fair contri bution.’ But we still see many injustices today. For example, labour is taxed far more than capital. The tax burden is also shifting more and more to households and less and less to companies. So the state draws more revenue from house holds and less from businesses. This must be corrected. And we have made several proposals to this end.

SHORT CV

Yves Cruchten has been a member of the LSAP since 1999. From 2000 to 2005, he was general secretary of the Young Socialists, then he was elected municipal councillor in Käerjeng (formerly Bascharage). In 2010, he took over the general secretariat of the LSAP. Since 2013, he has been a member of the Chamber of Deputies. In January 2022, Cruchten became president of his party.

For example, we have proposed a new tax table that reverses the current tax table. You must know that in today’s table, you pay tax from a certain income and then you move up to a new bracket if you earn more. That’s 2% all the time. But towards the end of this tax scale, it slows down, and you only go up by 1%. We want to reverse that, so that, at the beginning, you enter the tax scale a lit tle slower, and then, later, when you earn

more, it increases by 2%. We believe that this new tax scheme we are proposing would be a good basis for introducing the individualisation that the coalition still wanted to implement.

When we talk about tax justice, we also need to talk about the distribution of wealth. The current law could be considered inadequate now, as there are no real changes. Should a reform of the property tax also be introduced, in your opinion?

The government has recently presented a reform of the property tax and it is going in the right direction. The tax burden is not increased. There are a few adjust ments. But the calculation of this prop erty tax is being completely redone. And the new property tax no longer only looks at the size of the property, but also on the location. Is it closer to the city of Luxem bourg and to the city’s urban belt, or is it more of a rural area? And, above all, it’s about looking at what can be done with the plot of land: can you put a single-fam ily house on it, or is there place to do a 10-flat building? In other words, build ability will be the decisive factor in this new property tax. And, in addition to this tax, the mobilisation tax has now also been announced, which aims to tax unused building land progressively. Over the next 15-20 years, this will bring about a devel opment. Everyone who owns unused and undeveloped building land will have to ask themselves whether they would not be better off doing something with it, i.e., selling it, building on it or living on it.

EVOLUTION OF PUBLIC DEBT

many planned expenditures

have been necessary in the pandemic and the current crisis, the debt extends upwards over the next few years, according to the ministry of finance.

Source Ministry of finance

7%, to be staggered between 4% and 9%, depending on the profit and size of a company. We also believe that the CO2 tax must be progressively increased after 2023. As far as VAT is concerned, we don’t really want to make a big reform.

These are all very concrete measures. What will happen with these measures? As I said, some of these measures will be implemented next year. And we will con tinue to work on that. And if our party is at the negotiating table after the next elec tions, we will take out this paper again and discuss the individual measures with the potential coalition partners in order to implement as many of them as possible.

You have developed 21 concrete proposals. What do you propose to modernise and reform the current tax system?

These 21 proposals are targeted measures. For example, we have made proposals on how to relieve the tax burden on sin gle parents. The same applies to people who are responsible for children who do not live in one’s own household. These two measures will already be implemented in next year’s budget.

But we have also made other propos als. For example, we have proposed a tax credit for young professionals, because we believe that--especially at the begin ning of a professional career--young peo ple often have to shoulder more financially, but wages are usually comparatively low. That is why we proposed a tax credit of up to €200 per month in the first five years of a professional career and up to an annual income of €100,000. This would help young people.

We have made proposals to ease the burden on widows and widowers, who fall out of the favourable tax class 2. There is a waiting period which we want to increase to five years.

And we want greater taxation, for exam ple, fairer taxation between income from capital and income from work. We have made a whole series of proposals, such as the elimination of the rule that only half of the income from dividends has to be taxed. We also want a reform of capital gains. As far as the taxation of companies is concerned, we want soli darity taxes, which are currently around

You have also sat down with trade unions on the issue. What role does the exchange with them play?

It is important to us that we also have an exchange with all the actors, so that they can explain their point of view to us. We have discussed the respective proposals. The trade unions want to adjust the tax scale to inflation; that is justified. But that would immediately cost €700m. Our idea, as I explained, is to introduce a different tax table. That is why we want to discuss this with the trade unions. And we have received a partly positive response to it.

What role does the attractiveness of the financial centre play in connection with a tax reform?

We have hardly made any proposals that would have a major impact on the finan cial centre. We have already introduced taxes in the past. We were always told: ‘If you do that, the Luxembourg financial centre will collapse.’ But none of that has

“ That is why we, That is we, in the coalition, have promised ourselves that we will take a few steps now towards a major tax reform”

“ We still see We injustices in our system, and these must be eliminated”

PUB AUTOPROMO 10×6

Ten CIOs share the main challenges to be faced in 2023 in their respective sectors: financial centre, services, industry, institutions. Cybersecurity and the cloud will undoubtedly be discussed during this 10×6, which will bring together tech experts from large companies and institutions as well as suppliers.

25 January 2023 18:30 - 22:30

LEADING CIOS’ CHALLENGES

happened. The financial centre is, of course, responsible for a good part of the revenue that the state receives every year. And we socialists don’t want to endanger that because with it, we can, of course, also finance politics. In the case of cor porate taxation, however, the banks are, of course, not excluded, but these are not proposals that would in any way reduce the attractiveness of the financial centre.

Do you think that the taxation of remote work should be reviewed, especially regarding cross-border taxation?

Yes. So we need two things. We need agreements with our neighbouring coun

tries--we have already achieved some improvements. But we also need to achieve this with all our neighbours. We have also made the proposal that people should be able to deduct a certain part of their home-office expenses from their taxes. We think that up to €672 per year should be deductible for home offices, just like for other things. I do believe that home office should be encouraged. We see the chaos on our roads every day. We have had good experiences. Maybe not everything is always rosy in the home office, but we have had some good expe riences in the pandemic, and I think we should build on that, and then find the weak points in the home office, fix them. But, in my eyes, this should be promoted.

We have already raised the issue of the budget several times. Is there really enough room in the budget for such an ambitious tax reform?

In the next budget, we have tax reduc tions of about €350m. I believe there will be room for manoeuvre. The govern ment--and we have agreed on this--is doing it carefully and in stages. A major tax reform, as promised with many meas

ures, will not take place. It will be pro gressive. We have also made proposals that will generate tax revenue because we know this must be financed somehow. We don’t know what the situation will be in six months, but we will check it month by month and see how the state finances develop. And as soon as we see possibil ities, we will act. The prime minister [Xavier Bettel, DP] has also announced that as soon as there is room for manoeuvre, individual measures could begin again.

What role will tax reform play in your election campaign?

It will certainly be one of the issues but, in my opinion, not the biggest one. I believe that we will have other topics on the agenda in the election campaign, such as the overall economic development, but also the direction of Luxembourg in the next 20-25 years.

The LSAP sat down with the unions to talk about tax reform. Here with the OGBL

“ The state draws The more revenue from households and less from businesses”

COMMANDEZ-LE sur eshop.maisonmoderne.lu

The rise of B Corps

A DECADE OF GROWTH

Businesses that have received B Lab certifi cation for “high standards of social and environmental performance, transparency and accountability” are known as B Corpora tions or B Corps. The number of B Corps in Europe has been steadily increasing. At the height of the pandemic, Luxembourg also saw growth in the number of new accounts opened. 78 companies are B Corp certified and operate in Luxembourg, while five-Ramborn Cider Co., Farad Group, Innpact, ABG and GoToFreedom--have their head quarters in the grand duchy.

Source B Lab (with input from IMS Luxembourg, the new single point of contact for certified and aspiring B Corp companies in Luxembourg)

Growth of the European B Corp community over the years

Growth of new accounts created in Luxembourg

The B Impact Score for three B Corps in Luxembourg is available on each business report (see p.32, 34 and 36).

The baseline score required for certification is 80. The median score for ordinary businesses is 50.9.

1,200

1 “Anticipating a “Seismic” shift in B Corps”

Seismic cofounder Andy Schmidt on raising the bar for B Corp strategy p. 32

1,000

800

2 “A B Corp with a good score attracts” Innpact director Paola D’Angelo on upcoming trends p. 34

3 “Ethics and transparency in recruitment”

GoToFreedom’s Gwladys Costant and Jérôme Carbonnelle on the people factor p. 36

600

400

Innpact was the first B Corp in Luxembourg certified since November 2015. In 2021, for the fifth time, Innpact was among the Best for the World B Corps under the customers pillar, which indicates B Corps setting the standard for customer service, “offering products and services for the greater good, often focusing on underserved populations”.

200 0

In 2021 and 2022, Ramborn was listed among the Best for the World B Corps in environment. The companies listed under this pillar represent B Corps that “excel in environmental performance” and lead “the way towards a more sustainable and regenerative planet”.

B Corp certification requests have risen with currently nearly 6,000 B Corps worldwide, representing nearly 500,000 workers across 158 industries in 86 countries. The Benelux region counts over 200 B Corps, five of which are headquartered in Luxembourg.

Cofounder and chief community officer of Seismic, a consultancy company helping others achieve their B Corp, ESG and net-zero goals, Andy Schmidt predicts a rise in the number of B Corp companies in Luxembourg as they recognise the value of the framework and certification.

Outdoor fashion brand Patagonia made waves this autumn when its billionaire founder, Yvon Chouinard, announced he was giving it to a charitable trust to help flight climate change. B Corp-cer tified since December 2011 and regular ly placing in a “Best for the world” category through B Lab, Patagonia also happens to be one of the more than 100 companies Andy Schmidt and his team at Seismic have worked with in the under two years since the company launched.

After a successful career at Skype and Microsoft, Schmidt decided to go down the advisory and consulting route and, despite knowing about B Corp for some time, he decided “to take a closer look at it myself, do my own due diligence, have a critical lens on it. And I came out of that just convinced that B Corp is a useful management tool at its core. It helps companies look across all of their activities and understand where they're doing well and where they can do better.”

Seismic was born in March 2021 through Schmidt and fellow cofounders Amy Bourbeau and Paul Lewis with the goal of being a partner for change through

“building sustainable relationships for a sustainable world.” The team’s B Corp, ESG and net-zero experts aim to help other companies achieve their goals in these areas. In addition to working with international brands, they have also worked with local ones--Luxexpo and cider pro ducer Ramborn, to name a couple.

Not just a reporting framework

In October 2022, IMS Luxembourg announced it is the official point of con tact for B Corp companies in Luxembourg. Active in 85 countries across 158 indus tries, B Corp certification is something that Schmidt thinks will be on the rise in the grand duchy.

For Schmidt, while other tools (e.g., the GRI indicators) can serve as a reporting framework, B Corp has power in that it’s “less about reporting and more about impact management framework,” he explains.

Anyone can take the online assessment to see how they might fare on the B Corp methodology. “But if you want to be able to communicate to your stakeholders in the market that you’re performing a high level of social and environmental perfor mance, then you ask the standards team at B Lab to review and verify your score,” Schmidt adds. “Then they go through it with a fine-tooth comb and ask for evi dence, discuss with you how you do that in practice.”

A change of mindset

A company, once achieving B Corp cer tification, has to continue working to maintain the certification, as the frame work bar is raised every three years. This means that a company only barely getting the certification the first time around has

to work on making continuous improve ments to keep up with that raised bar.

Schmidt adds that he has already noticed positive movement in terms of local knowledge of the B Corp frame work and the community around it. Just a year ago, he says, he had to explain to companies what the framework was. “Now it seems like people are coming to us, and they’ve got that foundational knowledge already, and they’re asking for help on how to do it in a way that will get the most benefit for their business out of it,” Schmidt explains. “And to make sure that it’s an effective, enjoyable process, done in a way that embeds it into the organi sation as opposed to being some tickthe-box exercise.”

Words NATALIE A. GERHARDSTEIN

Andy Schmidt

Innpact specialises in offering cutting-edge impact financing solutions and received certification as a B Corp in 2015, making it the first B Corp in Luxembourg. Since then, the company has been named a “Best for the World” B Corp 10 times.

The management of Innpact, whose first three letters stand for “innovation”, worked with the certification idea sug gested by a staff as the B Corp philoso phy, which prioritises business as a force

An audit system

“A B Corp with a good score attracts”

for good for people and the planet. The suggestion resonated with the compa ny’s ambitions, explains D’Angelo. “It required us to look critically at how we do things in terms of business, clients, customers, but also in terms of how we treat people and opportunities given to the team [for example],” she explains.

An ongoing process

Every three years, certification needs to be renewed, and this has become more challenging, likely due to growth and increased professionalism, D’Angelo adds. However, this reinforces the legitimacy of certifications. “It’s kind of an audit system. It’s just that you don’t audit your financials, but you audit everything--your community input, your workers, [etc.].

So as a company, when you start, it is a learning curve, a continuous gap analy sis,” says D’Angelo.

“We saw that even though we’ve been certified in 2015 [and] then in 2017, and now we are still working on the 2020 data… we need to continuously ask our selves [whether] we are doing the right thing with the best possible level of trans parency and professionalism,” continues D’Angelo, stressing that being a B Corp is a commitment to the team and clients, but also in terms of time and resources. “Our score has been changing because questions change, because they become stricter, and I have to say, also because others become better. And then you think: I could do better as well.”

Resulting gains

Commendations and recommendations are made based on the responses provid ed during the evaluation process. Innpact’s current employee shareholder programme

is one example. “Having employees investing makes you even more account able.” These suggestions are not compul sory and remain “a company’s decision”, she adds.

Joining a network of businesses with a B Corp mindset is another benefit. D’An gelo also highlights the certification’s “traction or attraction” on people. “To see that a financial advisory company is a B Corp with a good score and not just the basics--that attracts. We’ve had a number of employees join [because of] that.” However, this attraction comes with high expectations. “Because they say: if you manage a B Corp, you must be really good at what you do.”

Setting an example

Becoming the first B Corp is exemplary. “We were the first, and many others then came. And we were the first in financial services,” says D’Angelo. The decision to change the legal and governance struc ture of the company but also the “articles of constitution of the company” helped embody this commitment, she adds.

Prior to becoming a B Corp, the com pany’s social contract entailed setting aside a portion of its annual revenue for donations or investments in impact-gen erating initiatives. While this practice may have existed before, D’Angelo says, “what B Corps helped us accomplish was to formalise [that]”.

Company values, partnership, open ness, transparency and adaptability are some ingredients that help the company maintain excellence, says D’Angelo. Also “being impact-focused and not themefocused allows us to span to so many dif ferent initiatives”.

Paola D’Angelo, director of Innpact, the first B Corp headquartered in Luxembourg, explains the story behind the company’s certification, the benefits it provides and how Innpact continues to set the trend for future B Corps.

Paola D’Angelo

Companies from a variety of industries are certified B Corps. For executive search and recruitment company GoToFreedom, joining the B Corp community in October this year proved that it is possible to run an ethical and profitable recruitment business.

Partner at GoToFreedom, Jérôme Car bonnelle explains that while B Corp cer tification for recruitment firms might be uncommon because “that’s not the first image that people have about recruiters”, it does have an impact on the way com panies run their businesses because they advise on candidates in line with com pany branding to attract suitable profiles and strive to improve the way people and corporations render business.

The founder of the company Gwladys Costant adds that the decision to become a B Corp was a logical step in the com pany’s development and aligns with its values. “B Corp is not just another mar keting [campaign but] proof that it is possible to run a recruitment business and make it prosper in an ethical man ner. It is also a fair extension of the com mitments already made within Fr2s [Federation for Recruitment, Search and Selection, under the auspices of Fedil], of which I am the co-chair.”

A new way of doing business

The B Corp movement is gaining traction in Luxembourg because it is “not just a certification, [but] the emergence of a new way of doing business,” says Costant. “We currently see a growing demand for impact investments, driven by global trends like the ongoing transfer of wealth to women

“Ethics and transparency in recruitment”

and millennials. These same trends are also boosting the supply of impactful invest ment opportunities--by supporting the rise of a new generation of enterprises that are actively pursuing social and environ mental impact alongside financial goals.”

Raising awareness

But, in practice, what does it entail for a recruitment firm to be a B Corp? Costant states that the company intends to con tribute to the improvement of society at its level because its employees believe that business should also be about mak ing a positive difference in the world. “Millennials are [increasingly] rejecting

Milton Friedman’s old notion that businesses’ only social responsibility is to maximise profits. This is now a pri ority for [both] them and us! To make the world a better place. And this is quite right: Why should we stop caring about what matters to us when we go to work?”

Carbonnelle estimates that about 20% to 30% of staff’s time is spent helping people trying to make a pivot, while around 80% of candidates interviewed say they want to have an impact. “If we [consider this] as what is important, then that’s a great opportunity for us to help them,” he adds.

In practice, Costant explains it will entail raising clients’ awareness about rethinking their organisation to create jobs that make sense to people, rather than generating production roles that create employee disengagement; recon sidering their way of recruitment with a focus on the potential of candidates, rather than recruiting someone who did the same job at a competitor; minimising managers’ bias in the assessment of can didates and ensuring they are properly trained; and focusing on human and soft skills for their recruitment, which will in turn contribute to a more equitable and sustainable job market. It will also entail increasing candidates’ awareness of “the sense of their career management--what job do they really want to do rather than looking at the short-term next step that improves largely their package but not their employability, [and] choosing the right company for them in line with their values, in order to create a true and sus tainable working relationship.”

Gwladys Costant

Jérôme Carbonnelle

Private equity certification gets critical boost

A new and improved PE certification, with double accreditation, kicks off in January 2023, as part of the newly created MBA programme through HEC Liège Luxembourg. Head of academy Zoltan Horvath and adjunct professor Jens Hoellermann explain.

Words NATALIE A. GERHARDSTEIN Photo MATIC ZORMAN

Jens Hoellermann (l.) and Zoltan Horvath (r.) say the enhanced PE certification helps to address a skills gap

When Sacred Heart University made the snap decision to close its in-person pro gramme in Luxembourg in May, the board of regents indicated a solution would be provided: students could complete their training remotely or switch to an HEC Liège offer.

The latter school joined forces with the Luxembourg Chamber of Commerce and the House of Training to create HEC Liège Luxembourg, which now fills that gap by offering an international MBA in the grand duchy.

This was a welcome announcement for many, including Jens Hoellermann, former SHU adjunct professor, who now will hold the same professional title at HEC Liège Luxembourg. His private equity (PE) certification course will kick off in January 2023--part of the planned expansion of offerings through the MBA programme into next year--and be sim ilar to the one he previously ran through SHU. It will include a wide range of top ics and guest speakers from the field, constantly adjusted to account for new market trends.

When it comes to PE, “We had a lack of talent and fierce competition [previ ously], but this has very much increased over the last year,” Hoellermann explains. “We see that for all actors, be they the Big Four, law firms, service providers, asset managers...”

Accreditation offered by <1% of B-schools

Participants wanting to get their PE cer tification are required to take Hoeller man’s obligatory PE course--worth five European credits (ECTS)--and then select from a range of other electives offered through HEC Liège Luxembourg to earn a total of 12-15 ECTS.

Such elective options include courses (ranging from two to five ECTs each) in blockchain and big data, corporate finance, financial management, mergers and acqui sitions (M&A), portfolio management, fundamental investment, advanced risk management and sustainable finance.

Participants have 12 months to do so, and courses through the broader pro gramme are flexible for those working, taking place on weekday evenings and sometimes weekends.

What’s particularly unique about the PE certification now, as HEC Liège Lux embourg head of academy Zoltan Horvath

PE CERTIFICATION DETAILS Requirements

To earn the certificate, a participant is required to earn 12-15 European credits (ECTS). Five of these ECTS must be taken with the obligatory private equity and other alternative asset classes course, but there are a range of other electives, ranging from M&A to blockchain and big data, sustainable finance and plenty more.

Double accreditation The certification is AACSB and EQUIS accredited. Cost €7,900 for PE certification only; coursework can then be extended for additional costs to complete an MBA.

Moreover, the certification--as well as the MBA programme itself--has a dou ble accreditation: through the American organisation Association to Advance Col legiate Schools of Business (AACSB) and the European Foundation for Manage ment Development (EFMD) Quality Improvement System, or EQUIS.

“[Fewer] than 1% of business schools have these two accreditations together,” Horvath adds. “That’s a stamp of quality, which is really powerful.”

Talent management

Both Hoellermann and Horvath are convinced having this level of certifica tion, for both the PE certification and the MBA, in the grand duchy will be a boost not just for local PE players but for the country itself.

Horvath says such aspects should “be a key advantage for talent attraction”, but not just. “When we talk to corporate partners, we talk about the complete tal ent management, with three main things: talent attraction, talent development and talent retention. For a company to man age the talent, you need to have all three working together.”

A recent event held by Luxembourg for Finance was even focused on this topic. Its “Focus on skills” conference echoed these sentiments, bringing together actors from across the financial sector to tackle the challenges linked to future skills and jobs, from “green jobs” to fin tech talent and more.

explains, is that participants receive cer tification through them and the Luxem bourg Private Equity & Venture Capital Association (LPEA). “But, on top of it, they receive an official document called a uni versity certificate from the University of Liège which is a legal document,” he adds-meaning that even if those earning a cer tificate wish to leave the grand duchy, they should be able to have the certificate rec ognised or certified in other countries.

“As far as I’m aware, there’s no other kind of university certificate for PE in Europe,” Hoellermann adds. “There are a lot of courses that receive a kind of cer tification that you have completed the course with success and even a grade, but then on top [a certification] from a uni versity? I’m not aware…”

The challenges are even more com plex, as Luxembourg can compete with other cities, like London or Paris, as grad uates sometimes prefer staying in those cities. The high price of housing in the grand duchy doesn’t necessarily ease this issue either. But even within firms, there might be competition internally when a firm in one location tries pinching qual ified candidates from a location where one of their other offices is based.

It’s a concern Hoellermann already had when interviewed by Delano one year ago. Even then, he was already sound ing the alarm about the “fierce compe tition for talent” when it came to PE, but the situation has worsened over the last year, he attests. He hopes the PE certi fication will be one part of the solution in the skills gap.

Attracting tomorrow’s doctors

The workforce shortage in Luxembourg hasn’t spared the healthcare sector. As doctors are leaving hospitals or retiring, the grand duchy will have to find ways to bring in more doctors to keep up with a growing demand.

In 2022, Luxembourg had more than 645,000 inhabitants, a year-on-year growth of 1.7%. The country between 2001 and 2020 saw its population increase by more than 20%, and by 2050, it should reach close to 1m. But who will take care of these residents?

A shrinking medical pool

According to a government publication from 2020, which analysed Luxembourg’s healthcare system, Luxembourg has about three doctors per 1,000 inhabitants, and future prospects for Luxembourg’s health care system seem less than promising if nothing changes.

Indeed, a 2019 OECD study revealed that 55% of the grand duchy’s doctors were older than 54. The median age, accord ing to the government, stands at 52 years for GPs. While statistics are similar in neighbouring countries, only 5% of Lux embourg doctors are under the age of 35, in comparison to Belgium (10%), France (15%), Germany (20%) and the Nether lands (30%).

Fewer doctors means more work for the rest if new recruits don’t join. The ones who stay--especially those working in hospitals--struggle to keep their heads up and, in turn, might reconsider their options. In October 2022, for instance, six cardi ologists handed in their resignation notices to the Ettelbruck hospital complex, citing working conditions.

While the health ministry tells Delano that doctors aren’t fleeing the country, the shortage is clear. Exacerbated by tensions between the Luxembourg medical asso ciation AMMD and the ministry, it leads to a stalemate that makes it difficult to attract new or foreign talent [PB1] to Lux embourg. “Action is needed now,” says the national medical student union Alem. “There needs to be sustainable measures so that we don’t stay stuck.”

A tale of two systems

For one, the grand duchy needs to accel erate its move towards a digitalised health care system. “Given the shortages and the size of the country, we should be focusing on digitalisation,” says regular Delano guest contributor and trained ophthalmologist, Dr Lilani Abeywickra ma, who also has experience in the field of health and medical management in the grand duchy. Yet by the first quarter of 2022, only 39 doctors signed up to a

HOW LUXEMBOURG STACKS UP TO NEIGHBOURING COUNTRIES

Doctors per 1,000 residents (2014-2018). Source

replace doctors. It’s an adjunct--you can’t replace a human being.”

A well-implemented system--made uniform across the entire country--could save doctors time on paperwork and com munications, avoiding unnecessary admin istrative work. “I think that what people fear is that it overplays the doctor, but we’re really not at that stage where we fol low AI blindly,” reassures Abeywickrama.

digital reimbursement tool that speeds up procedures for patients. According to the health ministry, there are around 4,000 authorised doctors in Luxembourg, 1,800 of which are GPs.

At the heart of the issue is a disagree ment between the doctors’ lobby and the government agency eSanté. “During the pandemic, we developed a programme [called DHN] to facilitate reimbursements and make information exchanges between doctors more dynamic,” recounts AMMD lobby group president Alain Schmit. For him, eSanté’s electronic healthcare record project (DSP) isn’t placing the patient at the centre, among other issues.

“Our project is complementary to what the agency developed, but the latter sadly isn’t taking us into account,” he says. On its end, eSanté told Delano’s sister publi cation Paperjam at the start of November that it was still waiting for the technical specifications of the doctor-led programme.

Saving time through digitalisation

The slow resolution of this conflict “is a big issue because political actors don’t agree on it,” explains Alem president Anne Eyschen. The union represents the interests of Luxembourg medicine stu dents at home and abroad. Aiming to encourage the latter to work in Luxem bourg, Alem considers the lack of digi talisation as one of the deterrents for potential doctors.

Having witnessed its implementation in the UK’s national health service NHS, Abeywickrama explains that there needs to be a mentality shift about digitalising healthcare. “Digitalisation is not here to

Secure digital health records that are accessible to various specialists have many advantages. “As a patient, you get to have your records in your hands, you get to understand a condition better--it’s not fragmented,” explains Abeywickrama. For the doctors, “digitalisation keeps things in one place, it keeps things safe, it allows better communication between different specialists. It gives access to your blood tests, patient records, or even one day maybe prescriptions.” Something eSanté promises for 2023.

Investing in the future

Aside from an approach to health records that doesn’t keep up with the times, Lux embourg’s educational offer may also deter potential talent. While the Univer sity of Luxembourg has offered a full bachelor’s degree in medicine since Sep tember 2020, the possibility of a master’s degree is still under discussion. At the earliest, a master’s degree could be offered in 2023, which Alem’s vice president for external affairs and communications Katrin Frisch considers “too late”.

“Without a master’s degree, the bache lor’s degree just isn’t interesting,” says Eyschen. Unlike other degrees, a bache lor’s in medicine doesn’t lead to concrete opportunities. A 2020 Alem study found that 30% of Luxembourg students didn’t plan on returning to the grand duchy after their studies, having become accommo dated to their university’s system and oppor tunities.

The majority would only consider return ing to Luxembourg for personal reasons. As students tend to settle down during and after earning their master’s degrees, it’s “crucial to attract and retrieve people in the 27-32 age bracket.” After this, it might be more difficult to bring them to Luxembourg.

A university hospital for specialisation Not all is bad in Luxembourg for pro spective students, though. On top of a

PHYSICIANS

liberal system in hospitals, “career-wise, what’s interesting and advantageous in Luxembourg is that it has a very flat hier archy compared to neighbouring coun tries,” says Eyschen.

But more career-driven students might not find their luck. “For us, a university hospital would be a major plus because there are more career opportunities in a university clinic, which again attracts more people,” says Frisch.

Luxembourg, aside from general prac titioners, also has a small proportion of specialists, with, for example, 16.4 children’s doctors and 16.9 obstetricians/gynaecolo gists per 100,000 residents. Currently, the University of Luxembourg offers special ised courses in general medicine, oncology and neurology, and “further consideration is being given to introducing additional specialisations,” per the health ministry.

A university hospital could offer a wider variety of specialisations, attracting more foreign specialists but also allowing local students to complete their training in the grand duchy.

For now, it isn’t on the cards. Until it is, Abeywickrama suggests an alternative: “Maybe we should team up with other uni versities in the Greater Region.”

Streamlined medical guidelines and paid internships for medical students in their sixth year--a common practice in neighbouring countries that has yet to be adopted in Luxembourg--could also raise the country’s appeal.

A generational need to consider The structure of Luxembourg’s health care system has another challenge: the evolution of science and medical prac tices over time. Young specialists “aren’t trained like before,” says AMMD’s pres ident Schmit. “They’re much more spe cialised in specific topics, whereas old doctors have a more general knowledge.”

The issue is that by hiring young staff that is too specialised for general roles--in hospitals, for example--these might see their interest and development wane. For the AMMD, the solution to this would be to restructure Luxembourg’s medical system.

“We need congregations where doctors with different specialities within a branch can collaborate,” Schmit says. In theory, these communities would decide by them selves the profiles needed to complete their offer in a given field.

Hospitals would not be left aside, as these communities would have to cover hospital shifts, says Schmit. In certain domains, not all hospitals need an on-duty specialist, so instead of seeing some doc tors being underemployed, “these com munities would look at the grand duchy’s needs on a national level and not [at] each hospital [level].

These communities would also allow for a more developed ambulatory care system, and thus more efficiently distrib ute the workload between hospitals and external centres.

For Schmit, “we’ve never developed our hospital infrastructures in a way that allows external ambulatory care,” so that if Luxembourg recruited the doctors it needs, it wouldn’t be able to accommo date them. Current government efforts for an ambulatory service centred around hospitals are not sustainable for the long term, says Schmit.

Finding a common ground

In the end, “we have to figure out how to attract the good doctors and not just the ones that nobody else wants,” says Schmit. Offering talent a clear, enriching and understandable concept that won’t collapse under the growing demand of Luxembourg’s population might help. More potential to evolve within one’s career and a swift adoption of digitali sation are also crucial for this goal.

While the ministry of health continues to develop its strategy--it, for instance, created a bill allowing young doctors to create doctor companies to be able to get started--the issue seems to lie in the com munication.

“I think the doctors should have more of a say because they’re in a better posi tion to create what would be the future healthcare system,” says Abeywickrama.

Schmit concurs: “If you don’t allow young, competent doctors who are ready for modern medicine to be creative, we will end up in situations like the one we’re in now.”

Alem’s Eyschen shares this sentiment: “[Students] have access to experiences abroad and see what works and what doesn’t. We will be the ones who have to work in this system, so please listen to us.”

“Given the shortages and the size of the country, we should be focusing on digitalisation”

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What do you collect and why?

A passion for collecting

How many of these objects do you own?

I collect everything related to the company Apple, such as gadgets and computers.

For over 25 years, I’ve been collecting Fendt tractors dating from 1928 to around 1990.

I like sports and collect the sportswear and items that go with it. This requires different gear and types for each season.

I collect musical instruments and other items that trace the origins of the electric guitar and rock’n’roll.

Right now, around 300 computers and about 50 gadgets, like shirts, key chains, etc.

About 300 of them, as well as several implements and trailers.

I’m not counting anymore. Way too many. I am running, cycling, swim ming, playing basketball and volleyball. I have the adapted clothing for every occasion and season.

How did you get started?

My first collector’s item was a friend’s Apple II which he wanted to recycle, and I thought it would be a shame to waste it.

So I took and cleaned it.

The restoration of the first tractor was a father-son project. This was followed by many others, and my passion for tractors has remained.

What advice would you give to someone starting out?

Stay persistent. Often, many pieces seem to be unattainable, but by exploring several ways, you can reach your goal.

A passion for tractors, and it is important to get value out of buying one. It was nice to see how much knowledge my son was able to acquire by restoring them.

I started when I began to play basketball, I was around 16 years old. And more deeply when I got to Luxembourg and could af ford some nicer and proper items for each activity.

My collection consists of about 700 instruments, and mainly electric guitars.

My passion for music got me into it. I like stories of guitar makers who designed and built the instruments, and of musicians who brought them to life by playing.

Go with the flow.

You must have a passion for collecting. You also have to set a goal or a purpose. Otherwise, you get carried away, and it becomes difficult to tell the story of the collection.

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The fever you get when you see an item you want and finally receive it.

Plus, around 95% of my collection is still working.

What I like best is that I regularly get to present my collection to a very interested audience as part of our company tours.

It’s light and fun... I like my basketball hoodies and hoodies in general. If I could go to meetings in hoodies and trainers, I’d be the happiest person...

The collection allows me to meet other music lovers. Sharing a musical moment with them is a privilege that is extremely enriching.

Luc Henzig

Josy Reiff

Marc Teusch

Melanie Delannoy

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Anyone can collect stamps. But tractors, Apple products, guitars or sportswear? That’s what these collectors do.

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