Delano Spring 2023

#ALTERNATIVEINVESTMENTS

LUXEMBOURG’S NEW GROWTH ENGINE

How are private equity, private debt, infrastructure and real estate funds changing the grand duchy’s financial sector?

Luxembourg’s financial community

EXPAT GUIDE RELEASE PARTY

Still recovering from Delano’s 12th anniversary party? (Don’t worry--so are we.) But it’s not too early to mark your calendars: Delano’s next big event once again takes place at Melusina. This time we’re launching our annual guide for expats, with highlights, tips and listings for both newcomers and long-timers alike.

13 July 2023, 18:30

MELUSINA

Luxembourg pulling ahead

Over the past seven years, the grand duchy’s private market investment fund sector has been edging out European competitors. Nearly half (49%) of private capital funds which invested in Europe-based assets were domiciled in Luxembourg last year, according to the data provider Preqin (see graphic on page 38). That’s up from 19% in 2015 and 33% in 2018.

Private equity remains the largest segment, but private debt and infrastructure are becoming bigger pieces of the pie, Angela Lai, senior research analyst at Preqin, told my colleague Lydia Linna in a recent interview for the weekly Delano Finance newsletter. Those two segments have been growing at a relatively healthier clip, and “Luxembourg funds have been positioned quite well for private debt and infrastructure funds,” Lai stated. “If these are the future growth drivers, Luxembourg is in a pretty good position to capture that growth, because these funds have already been set up there.” Asset managers quite often have a “good experience” with Luxembourg’s ecosystem and then continue to set up investment funds here.

Preqin is not the only outfit who thinks that Luxembourg is well placed to benefit from the growth of private market funds. Most of the people we spoke to for our special report on alternative funds (starting on page 30) were optimistic about the opportunities across the spectrum.

That said, real challenges lie ahead. Questions loom large around recruitment and retention, the cost and complexity of regulatory compliance, operating margin pressures, EU tax rules and the dynamism of Luxembourg’s competitors in the race to be the domicile of choice. And then there’s the small matter of the current inflation and interest rate environment.

Our special report is merely a snapshot of a moment in time. While the trendline is positive, we doubtlessly need to continue tracking these questions as the year unfolds.

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2 years of pandemic?

2 years of home office?

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Ristretto

p.16

12

p.  20

Conversations

16 #FINANCEBIBA

30 Alternative investments

20 #BUSINESSMARC

32 “Luxembourg was the key hub for us” –

36 Open architecture: creating new opportunities

38 End of single book strategies

24

40 A “bumper year” for PE?

44 Private debt in volatile times

47 Investors’ quest for scalability

“€20k would already be a good step”

“Craftspeople, apprentices are still sought out”

“This is the beating heart of democracy”

“Steps forward in the realm of blockchain”

preparing”

“People want to find very simple answers”

Rising cybersecurity threats, climate change: Foyer’s Marc Lauer on how the insurance sector is keeping pace

Lawyer Biba Homsy on blockchain industry trends and challenges

Photos Guy Wolff

49 Digital investing on the rise

52 #RADARSegment still showing signs of strength

54 AIFMD 2: evolution, not revolution

56 What Eltif 2.0 means for Luxembourg

60 Assessing ESG risks

62 How Luxembourg stacks up

64 Bright future for private markets

66 Rapidly growing private markets

68 #PORTFOLIOMeet the finance execs

72 #AGENDAEight essential dates

74 Education: “My number one investment”

78 Election stakes Communes:

Vote local

80 Explainer: What your commune can do for you

84 DP: Invest wisely in infrastructure

85 CSV: Safety must be guaranteed

86 Déi Gréng: Create a green and attractive city

87 LSAP: Liveliness is really important

88 Déi Lénk: Change starts at the local level

89 ADR: A direct vote or say from citizens

90 Piratepartei: Everyone has to take responsibility

Lifestyle

92 10 THINGS TO DO 102 MY FAVES

96 Business club

Brand Voices

28 ARENDT ELTIFs and Part II funds in 2023

42 BIL ASSET SERVICES

Bespoke and personalised asset servicing

50 PWC LUXEMBOURG

The expanse of ELTIFs on the horizon

76 VALUE PARTNERS

The growing allure of private debt

p. 52

What trends are changing private equity, private debt, infrastructure and real estate funds in the grand duchy?

Photo Guy Wolff

“€20k would already be a good step”

I understand that your answer is ‘yes’ to the question of introducing an incentive for people to invest in startups. Why?

It’s a ‘yes’ because the life of a startup is usually supported by individuals (commonly called business angels). And, of course, it’s in the early years when the investments are the most… risky, because you don’t know if the company is going to fly or not. So I think it’s appropriate--to some extent--to incentivise investors to put money in at that early stage and then reward them as well. These tax incentives [are] actually quite common. I mean, the UK has had one for many years, other countries as well--in Luxembourg we’re lagging.

There is a proposal law (no. 8047) for such a tax deduction of up to €5k. What do you make of it?

I honestly think it’s not enough… I actually don’t see the point of doing it just for €5k, to be honest. If you look at other countries, the thresholds are higher. [Editor’s note: as of 2023, Spain allows individuals to deduct up to €50k per year, or half of their investments in startups up to a €100k limit.]

I understand that for the government it’s also a matter of: how much is this doing to reduce our income in terms of taxes? But in this case, to me it’s not an incentive… I would honestly hope that [before voting on the law, the Luxembourg government] would raise the threshold a little bit. I mean, for me, €20k would already be a good step towards something that makes sense.

You’ve said that such a tax incentive would work best as part of a broader set of instruments.

Take the example of Spain… They’ve worked on different areas. One is reducing the tax

rate for startups--once they start making money, obviously--so for a couple of years they have a tax deduction on corporate tax. Then there is the incentive for private investors. But also, very importantly--and this is something that Luxembourg is working on too--the fiscal treatment of stock options. Because companies, startups, don’t always have the means to pay the talent that they need at a good price. And so stock options are a way to go everywhere in the world. In Luxembourg, the regime was slashed some years ago because it was being used not necessarily by startups, but now it has become not attractive enough. Ideally, I mean, if you want to increase your economy by promoting startups, you really need to make it attractive for everyone. Just a fiscal deductibility for investors won’t help much if the startups don’t have a good terrain [on which] to grow and flourish.

Some 90% of startups fail before they turn five years old. Given how high that rate is, how can investors be protected?

What some countries have done--besides [offering a tax deduction on investments]--is to raise the threshold where you can offset your losses, which again will lead to a reduction in your taxation… if the company fails. That’s the way to do it. I would not say secure it completely or else, you know, the entrepreneurial spirit is gone. But the possibility to offset part of the losses would be a good way to go.

Interview JEFF PALMS MATIC ZORMAN

There has been talk in Luxembourg of a tax deduction of up to €5k for individuals who want to invest in startups--but we should be thinking much bigger, says independent director Patrizia Luchetta.

ECOSYSTEM SPECIALIST Patrizia Luchetta is an independent director and co-founder of Charlotte In Red, a platform dedicated to the creative process of women in the arts.

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“Craftspeople, apprentices are still sought out”

Career orientation, training and access to the labour market need reviewal to supply Luxembourg with the craftspeople it needs to tackle future challenges, says president of the Luxembourg’s trades chamber, Tom Oberweis.

2023 is the European Year of Skills, where the accent is put on vocational retraining and further education. The Chamber of Skilled Trades and Crafts has carried out a survey on this subject...

Yes, we did, and we found out that 44% of the companies we surveyed are looking for people with a vocational aptitude diploma [DAP], and 30% are looking for people with qualifications such as a technician’s diploma. It’s clear to see that craftspeople and apprentices are still sought out.

Do you think that the existing education options are sufficient to cope with the labour shortage in Luxembourg?

I think that to support the development of apprenticeships, new apprenticeship models will have to be developed. For example, on-the-job training, parallel training--which we have already proposed to the government--or cross-border training to attract people from abroad to Luxembourg. Our study found that vocational training systems can certainly be improved, but without taking shortcuts.

Shortcuts?

There are competence centres that take people who are not trained, for example. For us, basic training is important.

The trades chamber estimated the artisan short age at 3,800 people. One of the issues often mentioned is communication around this type of career.

The shortage is happening in all types of sectors. But what we need--as we often tell the education ministry--is a profound revision of the guidance counselling of young people. We must work on the orientation of young people and adults towards the key skills needed in our economy.

Trades must not be seen as a path you take when you’ve failed but as a way to promote the potential of young people. This would reduce school drop-out, which is currently sadly high.

In Luxembourg, attracting trade workers is complicated...

That is what we found too. But with the expected demographic and economic growth, there will never be enough local workers in Luxembourg. We really need to think about how to attract border workers, open the borders and train immigrants-including third-country citizens. Luxembourg also needs to become more competitive again too, in terms of digitalisation, for instance. If we want to fix the shortage, our new government will have to make it a priority.

DIFFERENT HATS

Tom Oberweis, together with his brother Jeff, runs the Oberweis bakery founded by his parents in 1964. In 2017, he was elected president of the trades chamber; his mandate was renewed in 2022.

The OECD published a national skills strategy for Luxembourg in February, where it gave tips on how to improve the labour market. One solution was making Luxembourg more accessible for foreigners and their spouses. Administrative processes have been cited as a hurdle by businesses. In the case of my company [Oberweis], we have indeed noticed problems with internationals who, after training with us, want to keep working in Luxembourg. It takes months to get the necessary work permits to hire them. The administrative process is an obstacle. This is the case for any kind of state aid: some companies don’t apply because of the administrative overload.

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“ This is the beating heart of democracy ”

With national elections looming in October, president of the Chamber of Deputies Fernand Etgen (DP) discusses what’s on the agenda and how parliament must represent Luxembourg’s diverse population.

It’s a short year for the chamber. How many projects are still waiting to be voted ? There are a lot of projects in the legislative process. The number of bills has consistently increased over the last years. At the moment, we still have 211 draft laws pending. That’s a lot, but they will be cleared bit by bit as the opinions by the state council come in.

Are there files that have a particular priority ?

Because the constitutional reform was voted at the end of last year, there is a series of measures that must come into effect on 1 July. That’s a top priority for the chamber. There are other texts where there are constraints, for example, because of a court verdict that must be respected. Every minister sees their project as a priority.But the work in the chamber isn’t only legislative. It’s also important that it fulfils its supervisory function, and there are a number of interpellations and debates that should still be held.

What will happen to draft laws that aren’t voted before the summer break ?

It will be up to the next parliament to either continue with them or take them off the agenda. Projects that will stay on the roll call will perhaps be amended. That won’t happen from one day to the next. It takes some time. But that’s up to the next session.

You’ve already said that you’d be interested in holding this mandate again. Why does it tempt you ?

I’ve been lucky to hold different offices. I was a town councillor, alderman, mayor, deputy, minister and chamber president. This is the beating heart of democracy. Having the post of president in this house is very special.

But as for what happens in the next legislative period, first we have elections, then coalition talks that will determine which party puts forward a candidate. It will depend on my result as well. But it’s a great post.

Without wanting to discuss foreigner voting rights, what challenges does the chamber face to engage an international community when most of them cannot get involved in national elections ?

It’s important that we are a parliament that doesn’t only represent citizens but that talks to the people, encourages them to participate. That makes the chamber stronger as an institution but also our society. We are in a country where only a part of the people has the right to vote. That is what it is. But it’s about strengthening citizen engagement. We see the success of the petitions. It’s a way for people to express concerns that would otherwise never be discussed in this building. The representativeness of the chamber is being called into question, and rightly so. We must think about this--how the chamber can represent the country in all its facets, not just nationality but also different sectors of the economy or jobs. It’s complex. More than double the number of people can take part in the elections for the Chamber of Employees than the national elections. It’s an important topic that we must address.

Fernand Etgen was first elected to parliament in 2007. He served as mayor of Feulen from 1994 to 2013, when he joined the government under Xavier Bettel (DP), a post he left to become president of the Chamber of Deputies in 2018.

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Conversation Biba Homsy

“Steps forward in the realm of blockchain”

“Luxembourg has emerged as a major hub for the blockchain and cryptoasset industry,” says Biba Homsy, a lawyer and independent director active in the blockchain space since 2015. Homsy talks about industry trends, challenges and the new digital landscape.

Photo GUY WOLFF Interview JEFF PALMS

Biba Homsy runs a boutique law firm in Switzerland and Luxembourg

Conversation Biba Homsy

What blockchain/crypto trends are defining Luxembourg’s business environment?

Some of the key trends include [the following]. First, security tokens: digital tokens that represent ownership of an asset, such as stocks. Luxembourg has established a legal framework for security tokens, making it more and more a popular location for security token offerings.

Second, digital identity: solutions that use blockchain technology to securely store and manage personal identity information. Luxembourg is exploring the potential of blockchain-based digital identity systems to improve data privacy and security.

Third, carbon credits: tradable certificates that represent the right to emit a certain amount of carbon dioxide or other greenhouse gases. Luxembourg is known for its commitment to sustainability and green energy, and this trend is reflected in the country’s blockchain and crypto space. Several projects are focused on using blockchain to promote sustainable energy practices and reduce carbon emissions.

As more institutional investors enter the crypto space, there is a growing demand for secure custody solutions for digital assets. With its VASP [virtual asset service providers] registration, and Mica [EU-level regulation on markets in cryptoassets] coming this way, Luxembourg has become a hub for digital asset custody services, with several major players choosing the country as their European headquarters.

What investments might Luxembourg financial firms make?

There is a significant opportunity for financial institutions to provide various products and services related to cryptoassets. For instance, we recently heard that a new crypto custodian has announced the registration of its Irish unit with the Luxembourg financial regulator. This move comes as Luxembourg and the EU are taking steps forward in the realm of blockchain and distributed ledger technology (DLT).

In order to facilitate the issuance, trading and post-trading of many finan-

cial instruments, the EU has introduced the DLT Pilot Regime through Regulation (EU) 2022/858 of 30 May 2022. This regime applies to all financial instruments that are issued, recorded, transferred and stored using blockchain or DLT technology, with some limitations. Luxembourg’s legislature is also preparing for the implementation of the DLT Pilot Regime by amending relevant local laws.

What obstacles are there?

One of the main challenges facing Luxembourg in the development of cryptoassets is regulatory uncertainty within Europe, which Mica and the DLT Pilot Regime aim at harmonising. While Luxembourg has made a lot of progress in creating a legal framework for cryptoassets, there is still a lack of clarity and consistency in regulations across the EU’s different jurisdictions, which may sometimes create uncertainty and hinder investment. Additionally, there is a need to build trust and confidence in cryptoassets among investors and the general public. There have been instances of fraud and scams involving cryptoassets, which can damage the reputation of the industry as a whole. In my opinion, building trust and confidence is only a matter of time, steady initiatives and a resilient regulatory framework.

What does the future hold?

In terms of where we are heading, I see a potential convergence of several technologies, such as cryptoassets, Web3, the metaverse and AI, where they have the potential to create a new digital landscape that is more decentralised, user-centric and automated.

One example of how these technologies could converge is through the development of AI-powered metaverse assistants, which could help users navigate and interact with the virtual environments of the metaverse. These assistants could be powered by decentralised AI networks that are built on blockchain technology, providing users with greater control over their data and digital identities.

EVOLVING LEGAL FRAMEWORK

EU Regulation 2022/858

Dated 30 May 2022, this regulation introduces the DLT Pilot Regime, applicable to financial instruments run via blockchain.

Bill 8055

Passed on 9 March 2023 by the Luxembourg Parliament, this bill upgrades the existing DLT legal framework by allowing for the issuance, transfer and safekeeping of dematerialised and fungible securities using DLT.

Amendment to Bill 8055

Amendments include the explicit recognition of instruments issued using DLT in the definition of “financial instruments” under previous Luxembourg acts.

“I see a potential convergence of several technologies

Let’s talk mobility!

Marc Lauer, pictured in Foyer’s premises in Leudelange

Conversation Marc Lauer

“Insurance is not a replacement for not preparing”

Rising cybersecurity threats and climate change catastrophes are bringing massive losses worldwide. Foyer CEO Marc Lauer talks about how the insurance sector is adapting with the times and which priorities he sees as most urgent to keep Luxembourg competitive.

Photo GUY WOLFF

Ransomware attacks cost the global economy some $20bn in 2021--a figure expected to rise. Do you think cyberattacks would, at some point, be uninsurable?

Honestly, I don’t know. I just know that, for the moment, the risk awareness of companies, which potentially could be our clients, is very varied. You have those who have invested quite a lot in cybersecurity, [while others are] very naïve… That’s why it gets extremely difficult. Insurance is not a replacement solution for not preparing against cyberattacks.

Then it depends on whom you’re insuring. Sooner or later, some of the risks which individual clients or small companies are exposed to will always be trouble. If you take, nevertheless, big companies, multinationals, the consequences can be very difficult… If a payment system in between banks [is attacked], it’s even more dramatic. There also has to be an awareness of the potentially insured that they have to do something, otherwise insurance will only give limited guarantees for a very high price.

Climate catastrophes worldwide are bringing insured losses of over $100bn, per Bloomberg. How is Foyer adapting with such times?

Despite the fact that we had this flooding in 2021 and the tornado in 2019, Luxembourg is not considered an extremely highly exposed location… On the other hand, it is quite clear that natural catastrophes will arise more often, and their consequences will be more expensive.

Costs will be more expensive. So, again, if this should be insured in the future, there has to be movement in two directions. One is being more prepared to invest in protection measures--for example, for flooding, that’s very clear: you can avoid some of the flooding in readdressing certain issues, how the rivers run, how water can be accumulated, how to quickly evacuate water… But it’s quite clear too that the cost will be much more expensive. If Luxembourg insurance companies have paid over the last four years more than €250m, at the end of the day that also means that the price for insuring this has to be adapted. There’s

no way around [that]. The more we’re getting aware that new risks are arising, the more everybody has to invest to avoid these risks, and insurers have to price the risk in the right way.

There’s a role to play for the state, in trying to put as much infrastructure in a way that the consequences of an eventual natural hazard will be limited...

With the elections coming up this year, which issues would you, in the insurance sector, like to see prioritised? The first topic, which we’ve seen in the whole economy, is the search and the fight for talents. We have to attract more people coming outside of Luxembourg to grant our economic growth. And all these general problems of the Luxembourgish economy, like housing, are also topics which are very interesting to insurance companies…

Over the last years, there have [also] been some tendencies of several countries being a little more restrictive in the interpretation of the common market, protecting a little more their home market, and that’s not good for Luxembourg. We speak a lot about this with our finance minister [Yuriko Backes, DP], who is trying to help us as much as possible. But at the end of the day, it’s the role of the Commission to protect what we consider one of the four basic rights of the common market.

Then we have topics like subcontracting, cloud computing. We’re still in a situation where today’s legislative framework doesn’t really make it easy for Luxembourgish companies to subcontract or to use cloud computing, especially if it’s a subcontractor not in Luxembourg. We’re not living in a level playing field with our competitors in the financial sector--here in Luxembourg or outside Luxembourg. Again, we’re in discussions with the ministry and are hopeful this might change quite quickly…

We have to give Luxembourgish players the right to play on a level playing field with international and national competitors, and we have to make sure that we still attract the labour force to make our business run.

have to attract more people coming outside of Luxembourg”

BRIEF BIO

Marc Lauer has over 33 years’ experience in the insurance sector.

2022

Lauer places third on the Paperjam Top 100 ranking, organised by Delano’s sister publication and voted by wa jury of seven.

2004

Lauer joins Groupe Foyer as COO. He has been CEO since 15 April 2014. He has served as president of the board of ACA, the professional association of Luxembourg insurers and reinsurers since June 2022--a post he had occupied from 2014 to March 2022.

“We

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“ People want to find very simple answers ”

During the covid-19 pandemic, Luxembourg was rocked by unprecedented protests, clashes with police and threats against ministers and journalists. The demonstrations have disappeared, but a radical movement remains, says Christian Meyers of the University of Luxembourg.

Photo GUY WOLFF

Meyers is a senior lecturer and has studied the pandemic protests

From QAnon and 5G to covid-19, we seem to be living in an age of conspiracy theories. What makes them so appealing?

We are in a new era of conspiracy theories because we are in an era of multicrises. People want to find very simple answers or solutions to very complex questions. It’s also about believing and wanting to believe, to belong to a group of people and feeling strong in a network. In our hypermodern society, individualism is a big problem, being isolated. That’s also part of the success of these conspiracy theories and the groups behind them.

You’ve studied the anti-vaccination movement in Luxembourg. What have you found?

I looked at the Facebook pages of a lot of people and what they were posting. At the beginning, it was anti-system thinking-‘they’re taking our freedoms’--and then it started changing, becoming more radical, antisemitic, anti-Masonic, homophobic.

At the beginning, it was a big movement with people from all sorts of horizons. But then there was a core with some very strong leaders who created a more radicalised group.

There was perhaps a sense that Luxembourg is immune to this kind of thing…

It was the first time that we saw people in the streets and violence, the antisemitic yellow star linked to vaccinations, these nationalistic symbols. And then building up a network is very new. We have people from the extreme left and the extreme right getting together over this anti-system, anti-government thought.

To what extent are we talking about a fringe phenomenon versus something that is in the mainstream?

That’s a difficult question. Some fringe elements become mainstream. We have a crisis, also for the middle classes, and these extreme thoughts enter the middle classes. I cannot say if it’s one or the other, because it’s moving. And that’s very dangerous.

What potential do the cost of living and the energy crisis have for

conspiracy theories to emerge that will have a political impact?

It was similar in the 1930s, pre-Second World War, the Weimar Republic. I don’t know what is coming. But crisis times are always times where people are searching for leaders, for solutions.

We saw what happened in the storming of the Bundestag in Germany, the Capitol in the US, in Brazil. We saw it here in Luxembourg. People were outside parliament in military dress, outside the doors of the private homes of prime minister Xavier Bettel and family minister Corinne Cahen, which is dramatic.

Is it a case of out of sight, out of mind? We forget very fast. But on Facebook you saw videos of people gathering, having meetings, building up these groups, building up even political parties. People who don’t analyse the situation don’t see this. They don’t believe me even. But there is this network with, say, 10 to 15 leaders and maybe around 400 to 500 people, which is not nothing.

You spoke earlier of a search for leaders. Given that we have two elections coming up, what could be the ramifications?

The impact they can have is to join a political party and the democratic process, and that’s what they will do. It’s not so much an impact in the short-term but it will be an impact on political thought in the long-term getting more radicalised.

How do you break someone out of the conspiracy?

It’s like a cult. You’re a believer. As someone coming from the educational sciences, I would look at it this way: we have to make sure that our children, pupils and students get the instruments they need for critical thought, searching for proof, accepting complexity, also social media education. I don’t want to say that people who are in a conspiracy are lost. But it’s really difficult to get them out. We have to make sure that there are no others joining them.

PANDEMIC PROTESTS

4 December 2021

Around 2,000 people gather in Luxembourg City to demonstrate against the government’s covid-19 restrictions. A splinter group storms the Christmas market, and prime minister Xavier Bettel’s home is vandalised.

9 December 2021

A man suspected of sending death threats to Bettel (DP) and health minister Paulette Lenert (LSAP) is arrested.

In June 2022, the man is handed a two-year suspended sentence and €2,500 fine.

20 January 2022

After a spate of threats, justice minister Sam Tanson (déi Gréng) announces harsher punishments for people who make public private information about journalists or officials, such as phone numbers or addresses.

ELTIFs and Part II funds in 2023

An upgraded regulatory framework and a growing appetite to catch the retail market will likely spur a wave of ELTIFs. How will Part II funds fare?

While there is still demand for private equity, many investment strategies are moving toward private credit, infrastructure, and real estate. Several funds are now using a mixed approach, pivoting from a vintage to evergreen strategy. Most of the Part II funds that will be launched in 2023 are primarily open-ended, due in part

to the increased desire among asset managers to bring in retail investors. A host of upgrades to the European Long-Term Investment Fund (ELTIF) framework, voted on 15 February by the European Parliament, should help to lighten some of the burdens on such funds while ensuring protections for retail investors.

Several obstacles have prevented Part II funds from reaching retail investors. While they are very open in terms of strategy and eligible assets – which has not been the case for ELTIFs –, Part II funds have been confronted with the issue of the distribution path. As AIFs, they benefit from the AIMFD passport,

Photo

Marie Russillo (Maison Moderne)

Dr. Stefan Staedter, Partner - Investment Management, and Fiona de Watazzi, Partner - Investment Management, Arendt

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SOME OF THE EXPECTED CHANGES TO ELTIFS

but they are restricted to professional investors. If you want to market such funds to retail investors, you have to do it on a country-by-country basis. Also, Part II funds are less flexible in terms of structuring, which can be a sticky point when promoting them. ELTIFs too have not proved to hugely draw retail investors, mainly due to eligible asset restrictions and investor restrictions such as a high entry ticket and suitability assessments.

ELTIF 2.0, as indicated, should make it easier for such funds to capture the retail market. For one, an ELTIF will be able to more easily invest in private equity, private credit, and real assets, which previously required going through eligibility tests which were often somewhat complicated. Also, minimum entry tickets will be abolished. However, structuring an evergreen fund means dealing with redemption requests from investors, which can be tricky

when you have an illiquid asset class. Therefore, you need to be more operationally prepared and have the right tools in place.

Liquidity measures, redemptions, and transfers

Allowing investors to redeem from a fund that has invested in illiquid types of assets requires liquidity measures. Finding the right balance is key, which is why we are seeing a move toward uniformity, such as with AIMFD II. For ELTIFs, what we often see is the use of the liquid pocket. The ELTIF has to invest majoritively in long-term, ELTIF-eligible assets, but it can also invest up to a certain percentage in UCITS-like assets which are very liquid. Some liquidity management tools include long redemption cycles, notices, and settlement periods, as well as smaller redemption gates. Restrictive as they are, these tools are imperative when you are looking at an open-ended structure and illiquid assets. Another tool, one that is part of ELTIF 2.0, is a matching system in which you pool exit requests with new subscriptions.

Should an investor wish to exit from an ELTIF, they have the possibility of transferring their shares to another investor, a practice that has always been permitted. One obstacle, however, is the lack of platforms to facilitate such transfers. This lack could certainly spawn a new niche market and spur competition, a potential advantage to retail buyers who could then benefit from discounts in the secondary market. Also, under ELTIF 2.0, we are now seeing the possibility of entering into credit facilities for the purpose of providing liquidity, which previously was not allowed.

A broad look at 2023

We expect that 2023 will see a huge number of the open-ended, evergreen variety. Much due to regulatory upgrades, we will likely see growing interest in ELTIFs. There will still be opportunities for Part II funds in the future which do not have the ELTIF label on top, particularly when it comes to third-country funds and whenever you would like to be fully openended and in the liquid sphere. Part II funds would be the only solution in this case.

Wider scope of eligible assets

ELTIF 2.0 will greatly broaden the scope of eligible assets, and it contains a simplified definition of real assets.

Portfolio composition and diversification

The updated framework alters portfolio composition by reducing the ELTIF’s pocket for investments in long-term, illiquid assets.

The suitability of retail investors will be assessed, and documents will be provided that clearly explain a fund’s redemption rules.

Harmonised distribution regime for retail investors ELTIF 2.0 harmonises the distribution regime and removes the former entry ticket, giving retail investors easier access.

“ We’re seeing more openended structures, which are better suited to catch the retail market.”

Fiona de Watazzi Partner - Investment Management, Arendt

“From the view of the fund formation, 2023 seems to be a very promising year.”

Dr. Stefan Staedter Partner - Investment Management, Arendt

Suitability assessment

LUXEMBOURG’S NEW GROWTH ENGINE

ENGINE

Fund services provider Aztec Group’s Luxembourg operations has grown from 20 people in 2007 to more than 600 at the time of publication. It’s been a recruitment and retention challenge, to say the least, as Peter Brown, the firm’s Luxembourg head, explains in the interview on page 32.

In many ways, this story represents the alternative fund sector’s overall trajectory in the grand duchy. Assets under management in Luxembourg alternative funds have more than doubled, from roughly €413bn at the end of 2007 to more than €950bn in February 2023, according to figures from the Luxembourg Financial Sector Supervisory Commission (CSSF).

Such growth comes with change. This section examines how private equity, private debt, infrastructure and real estate funds are changing the grand duchy’s financial sector, and which trends are changing them.

Conversation Peter Brown

“Luxembourg was the key hub for us”

Aztec Group, a services provider for the fund and corporate industry, has seen huge growth in its Luxembourg office--particularly in the last five years. Peter Brown, head of the Luxembourg office, discusses related challenges and skills evolutions.

Interview JEFF PALMS Photo GUY WOLFF

Peter Brown moved to the grand duchy three years ago and has been running Aztec’s Luxembourg office since October 2022

Aztec started in Luxembourg in 2007 with some 20 people… and now you’re over 600. Could you talk us through that change?

We’re really proud of the growth and development of the office here in Luxembourg. If we go back to 2018 there were around 190 colleagues here, so that growth over the last five years has been well over 200%. As a group, all of the offices we’ve opened have been very much client led. Our business has grown organically; we had clients who wanted us in Luxembourg at that point in time. I think a significant growth driver for our Luxembourg office… was the AIFMD [the Alternative Investment Fund Managers Directive]. Our client base is institutionally backed private capital businesses, alternative funds working in private equity, private debt and real assets. And so the regulatory environment, regulatory changes and the infrastructure put in place were really significant drivers for us--and for our clients seeking to raise capital in the European markets. And Luxembourg was the key hub for us in supporting that kind of growth.

What challenges have you met due to this growth?

For us, the most important aspect of our business is the culture, our people. We invest heavily in support, training, development, engagement, activities and [other elements] for that colleague base. And retaining that culture--which is very collaborative, very inclusive--in a business that’s now, across the group, 1,800 becomes an increasing challenge. And so a really big focus for us is ensuring that we retain the cultural bias and values [in] the individuals that we hire into the business. And the aptitude and ability to learn.

Obviously, recruiting to support that level of growth is [another] challenge for us, and for all of our competitors--and for Luxembourg as a country as well: the ability to find people and then the ability of the country to absorb those individuals [and provide] the infrastructure. We spend a huge amount of time from a recruitment perspective.

Any comment on skills changes in Luxembourg?

The increasing regulatory environment has changed, maybe, the shape and skills needed… particularly the risk compliance skill set is highly sought after, given the increasing requirement for substance on the ground and for that kind of risk and oversight. The AIFMD has also driven the need--and [the post-Brexit environment too]--for managers to have either a thirdparty AIFM or create their own AIFM. And when you create that, you need to hire conducting officers with risk portfolio management and other core skills.

[Take] data services, for example. We, like every big organisation, have a huge amount of data kicking around… and we can produce all the backward-looking information, [but] there’s a real shift in the marketplace now to providing benchmarking and insight: how do we drive value and provide something that’s a bit more bespoke and that maybe managers or LPs [limited partners] can’t get elsewhere? That’s a big focus for the industry. At Aztec, we’ve really embraced that. We’ve recently set up a new business within the group, Lantern Limited, which is about shining a light on this.

GROWTH BY YEAR

Between 2017 and 2022, Aztec Group's Luxembourg office grew in personnel by 235%. At the time of writing, its headcount is 617.

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Open architecture: creating new opportunities

What exactly is open architecture, and what are its benefits and challenges? Is there still

Words LYDIA LINNA

Brief explainer

Offering both in-house and external products can bring many benefits, both to investment firms and investors. Daniela Klasen-Martin, CEO of Credit Suisse Fund Management and head of fund platform services of Credit Suisse Asset Management, explains more.

Take, for instance, “a smaller asset manager or a boutique alternative asset manager, say, a PE [private equity] asset manager who does not have a base in Europe,” she says. “If you don’t have a base in Europe, then you cannot sell using the AIFMD [Alternative Investment Fund Managers Directive] passport. Basically, you cannot distribute. To distribute, you need to have a regulated management company and, therefore, if you do not want to invest in your own operations--in Luxembourg or Ireland or wherever in Europe--then you can have an open architecture solution. So you can appoint a third-party manager.”

Continuing with her example, KlasenMartin explains, “The portfolio manager--this PE manager--would launch a fund. They will still control this fund at GP [general partner] level by appointing the members of the board, but they would

appoint this third-party manager to perform all of the regulatory activity as part of their responsibilities as regulated AIFM.”

She adds, “The core functions of the AIFM are portfolio management and risk management. They would generally retain risk management and delegate fully or partially portfolio management back to this portfolio manager, who may be licensed somewhere else.

“And what would that third-party manager retain? They would retain the control. It means that you can delegate that portfolio management activity, but you would retain full responsibility towards the regulator and therefore you need to ensure that you implement a strong oversight function. And that’s really the key of this sort of activity.”

So how does this help investment firms?

Investment firms--for various reasons, such as cost or personnel--may not want to invest in a fully-fledged operation in Europe. “If you are a PE manager and want to establish a regulated AIFM, then you need to have within the AIFM some senior managers who actually understand that asset class,” Klasen-Martin explains.

space for new players?

Daniela Klasen-Martin weighs in.

Using open architecture platforms, a financial institution can offer clients both in-house and third-party products and services. Clients can take advantage of more options, while white label solutions can also decrease conflicts of interest.

“It’s complicated to find the people with the right expertise. So you need to invest,” she adds. But “you may not want to do that, because you want to concentrate on what is your core activity, which is actually managing your portfolio and ensuring that you deliver performance.”

What’s interesting is that “you can have those white label solutions that can take care of all of the regulatory [activities]--they basically constitute this regulatory wrapper that enables you to launch a fund and then to distribute to investors using the EU passport.”

Opening up opportunities

Real estate and PE benefitted a lot, says Klasen-Martin. With the AIFMD and the European passport, “this world was opening, a whole remit of opportunities for portfolio managers, for asset managers to distribute freely in Europe. But to do so, you needed a robust solution. And that’s why it’s been very good for PE and real estate to have those solutions at hand, to be able to tap into those opportunities.”

Open architecture can help investors as well. “It depends a little bit on the models,” she elaborates. White label solutions--with third-party management companies--are “independent.” “This independence actually decreases the conflict of interest that you may have within a fund structure, and throughout the value chain of a fund.”

Investing in the right people

Open architecture has become something that people know. “A few years ago, people wouldn’t understand what this was,” says Klasen-Martin. “Now, people [do]. So I see that it will continue, but it faces challenges.”

A third-party management company works with “a whole remit of portfolio managers”--10, 15, 20 or even more, depending on the size--and works with a variety of fund administrators as well. “The whole challenge is to retain that control, through oversight. And that oversight becomes complex when you have so many different parties, delegates that you need to oversee.”

It is therefore key to “invest in the right people,” as well as in systems and

technology. With the consolidation in the market, there are now “quite a few big conglomerates, and most of them also diversify in offering technology solutions for oversight, production or reporting.”

“Scrutiny is important”

No specific regulations govern open architecture, she notes. “Management companies--whether they are white label solutions or in-house solutions--need to be compliant to the same regulation,” in this case, the AIFMD.

Klasen-Martin doesn’t anticipate any specific regulation either. “There has [been] some focus at Esma [European Securities and Markets Authority] level about white labels at some point in time, as the model has been evolving as a recognised solution. However, clearly the regulatory requirements are the same, whether you are a third-party or an in-house management company.”

But, she adds, “the scrutiny is important. Regulatory-wise, it’s a little bit more complicated for a third-party player, because of the fact that you multiply all of your delegations.”

Looking ahead

So is there still space for open architecture to evolve?

“It’s now more of a mature model, and I see a lot of consolidation. I think it’s going to be very difficult for a new player coming in,” she replies. Substance requirements and competition are high. “I wouldn’t see the interest for smaller, new players to come in. But I think that the model will continue evolving.”

She adds that “there is still space for very specialised third-party managers, possibly. But then they need to be extremely specialised, maybe a specific asset class.”

Cryptoassets present a possibility. “There, you could have some very specialised players, because this is so specific in terms of the knowledge, in terms of the risk that you take as well,” she adds. “So maybe there’s still space for some very specific type of assets where other players may not have the appetite, nor the expertise.”

DANIELA KLASEN-MARTIN CEO Credit Suisse Fund Management

“This independence actually decreases the conflict of interest”

Photo Credit Suisse

End of single book strategies

Over the past five years, there has been a material move in the market: global asset managers have increasingly added private market strategies and core specialised alternative managers, that had been mono-strategy, have increasingly started to diversify.

Global asset managers were simply following investor demand and expanded by snapping up smaller boutiques or building out their own teams, Olivier Carré said during an interview with Delano. Carré is technology and transformation leader and deputy managing partner--and until recently was financial services market leader--at PwC in Luxembourg.

Not so ‘boutique’ anymore

The bigger boutiques, which typically started in one specific asset class, began to dabble in co-investment or fund of funds, before moving head-on into new investment strategies, Carré told Delano. These core alternative players had already grown more sophisticated, managing bigger books of business. Could they even be considered ‘niche’ anymore?

Carré commented that private market fund firms can no longer be considered a nascent industry. The not-so-boutique shops were hitting a glass ceiling, where further growth staying in a single strategy was no longer achievable. However, a private equity firm moving into, say, real estate or a real estate outfit moving into infrastructure provides new business opportunities and can be run using some of the same set of current capabilities in the organisation.

Alternative fund managers who once specialised in a single asset class have shifted to multiple strategies. Here’s why.

Words AARON GRUNWALD

Certainly, some capabilities are quite distinctive, Carré stated during the interview. A deal team that runs private equity investment is very different than a deal team that does infrastructure investment. However, technical teams can be much more scalable. Existing accounting, compliance and risk teams--the type of functions that frequently are based in Luxembourg--tend to be well integrated and capable of handling new strategies. There’s even crossover possible on valuation teams. Senior management often can lead across several sectors.

Investors want to simplify

The flip side of this equation have been investors, particularly institutional investors, who have been moving to limit the number of asset managers that they work with. Managing multiple providers pushes up the cost of investment and soaks up more time and energy, he noted.

A couple decades ago, all an institutional investor needed to onboard a fund firm was to sign an asset management contract. Nowadays, they need to do due diligence, run full-fledged anti-money laundering checks, set and review key performance indicators, and so on. So institutional investors try to cluster their contracts, or at least limit the number of providers in some way. All the better to find an asset manager who can tick several boxes in a single go.

Best of breed

That is not to say there is no room left for highly focused niche players, Carré stated.

They are not by any means a dead category. An asset manager deeply specialised in a particular class can make a good argument. For instance, a renewable energy pure player with a strong track record or a fund focused on logistics in a burgeoning geography has something unique to offer.

On the other hand, a plain vanilla real estate asset manager or any niche outfit that does not bring any ‘distinctiveness’ to the table faces an uphill battle. And the terrain will only get more difficult.

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A “bumper year” for PE?

What does 2023 have in store for venture capital and private equity? Hans-Jürgen Schmitz shares his perspective.

Words JEFF PALMS

“Well, 2023 is a year that, at this moment in time, is difficult to read,” says the managing partner of Mangrove Capital Partners when asked about the firm’s near-term challenges and opportunities. He contextualises his answer by discussing the “breakout years” of 2020 and 2021, when the amounts of money invested were “outright crazy” and which fed into a 2022 marked by a major slowdown in growth, falling stock market values and erosion of confidence in public markets. Such a confidence loss trickles down, says Schmitz, all the way to the VC business.

A silver lining to the recent turbulence, for Schmitz, is the “big cleansing wave” of mass layoffs across the tech industry. “Everybody realised that they had hired way too many people without any discretion during covid,” he says. Investors have told companies to get back to profitable growth, rather than growth at all costs, which Schmitz says is a good thing.

“We’ve gone from exuberance in capital abundance to capital scarcity, [which] is equally unhealthy. We’ll have to see where we find a middle ground.” The challenge for VC companies is thus finding the way through that middle ground, as investors are showing caution. The question will be when and to what extent confidence in the markets is restored.

There is a possibility it will go quickly, he adds. “Since everybody is holding back money, there is a lot [of it] sitting on the sidelines looking to be invested.” He isn’t

sure this is an opportunity, per se, but in his experience a wave of good news can restore confidence and reopen the floodgates of investment. “[Although] hopefully not the same insane (sometimes) portions that we saw in 2020 and 2021.”

A light on PE

What about private equity? “It is likely that the current market environment will impact (the value of) past investments,” says Schmitz. Still, he isn’t worried about the PE industry. “By some measure, they

should have a bumper year on new investments. Their coffers are full (if measured by announcements on newly minted megafunds) [and] valuations are at an all-time low, which should make for an attractive hunting ground for both primary and bolt-on acquisitions.”

“At the same time, though,” he adds, “the heydays of cheap debt are over. At least for the foreseeable future. Expect debt loads and expected returns on equity to recalibrate, this year and in the years to come.”

Mangrove Capital Partners

Founded in 2000 in Luxembourg, Mangrove Capital Partners has €1bn in assets under management and was an early investor in the likes of Skype and Wix. It follows three megatrends: health technologies, education technologies and tools that help small businesses become more efficient.

Regarding its portfolio companies, the firm is open both to core technologies and to existing products. “[It could be] something that is so fundamental,” Schmitz says, “that you’d have to take a crystal ball… and say, 10 years out, there are a lot of drivers that could make this technology turn into relevant applications.” But it could also be a startup whose product has an existing use case and foreseen user type. What’s important here, says the managing partner, is that potential customers immediately understand and want the product.

“The heydays of cheap debt are over. At least for the foreseeable future. Expect debt loads and expected returns on equity to recalibrate”

HANS-JÜRGEN SCHMITZ Managing partner Mangrove Capital Partners

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Bespoke and personalised asset servicing

BIL Asset Services uses the values of a trusted wealth manager to offer bespoke, personalised services to the alternative fund sector.

Oliver Benner and Jürgen Bösken explain their fully integrated solution that encompasses the full range of asset services and beyond.

As a universal bank, Banque Internationale à Luxembourg (BIL) offers its clients access to a full range of products and services in the alternative investments funds sector. “We integrate seamlessly into the processes and operating models of our clients, so that they can focus on their objectives and core competences, which is usually asset management,”

said Oliver Benner, Head of Strategic Development BIL Asset Services.

Partnership that goes beyond a simple contact person

Central to this is a single point of contact in an organisation with low levels of staff turnover. This means that each client works with an experienced,

Photo Marie Russillo (Maison Moderne)

Oliver Benner, Head of Strategic Development BIL Asset Services, and Jürgen Bösken, Senior Business Development Manager, offer their expertise and support.

multilingual relationship manager who is on hand to offer continuous guidance throughout the lifecycle of the fund. This close relationship is key to ensuring that the day-today activities of each fund are handled smoothly.

“We offer a boutique approach, which enables us to focus on providing clients with bespoke solutions and long-term partnerships they are seeking. Clients benefit from BIL being a bank that is deeply rooted in the Luxembourg fund ecosystem, and with decisions being taken locally. This gives us to the ability to find personalised solutions quickly and efficiently,” explained Mr Bösken.

Value-added services and products

The core of BIL Asset Services is its AIFM and depositary services, with central administration services offered by selected preferred partners. To these core fund services

the team adds services and solutions offered by BIL, such as bridge financing, global custody, treasury management, wealth management, and more.

“The combination of these services is a unique strength of the BIL Group and provides a competitive edge, creating true added value for our clients. To successfully implement this strategy we are able to leverage the high level of expertise provided by our colleagues and a vast network of internal experts,” said Mr Bösken.

A dedicated team of specialists

A multilingual team of fund specialists work to ensure clients achieve their goals. “We take pride in having such experienced and talented colleagues within BIL, with each committed to achieving excellence. Even in Luxembourg’s very active job market we at BIL Asset Services experience a very low rate of staff turnover. This is highly beneficial for our clients as they can be

sure they will be able to build and sustain relationships with the same people,” said Mr Benner.

Expertise in alternative investments

For more than ten years, BIL Asset Services has been focusing on alternative investments such as private equity, real estate, private debt and fund of funds. This service focuses on catering for mid-range asset managers, pension funds and family offices.

“Our ambition is to continue growing the business; expanding it with a selected range of clients which particularly value our tailored boutique approach. This ensures a high level of flexibility for their individual business needs,” said Mr Benner. Since it was founded, BIL Asset Services has been operating somewhat under the radar in Luxembourg and has not been actively promoting these services to the market. “We see that the trend of consolidation among fund industry service providers is continuing, and against this background, we are finding that our tailor-made service offering is increasingly in demand by fund initiators. The combination of our core and value-added services offered by the oldest multi-business bank in Luxembourg is truly our Right to Win,” said Mr Bösken.

Services range from AIFM, depositary, bridge financing, agency services, global custody, treasury management and wealth management solutions.

Experienced, multilingual relationship management team provides continuous guidance throughout the lifecycle of the fund.

Vast experience in alternative investments such as private equity, real estate, private debt and fund of funds.

A boutique approach with a focus on clients which are seeking bespoke solutions and long-term partnerships.

“Our ambition is to continue growing the business; expanding it with clients which value our tailored boutique approach.”

Oliver Benner Head of Strategic Development BIL Asset Services

“We offer a boutique approach, which enables us to focus on providing clients with bespoke solutions.”

Jürgen Bösken Head of Strategic Development Manager BIL Asset Services

SECTOR TRENDS

Private debt in volatile times

“The starting point is obviously inflation,” says Antoine Boggini, co-founder of BHB & Partners, when asked about the private debt outlook. “And its direct consequence, which is the increase of interest rates.” This is affecting corporate borrowers but also governments and individuals, he says, mentioning the real estate market and house prices in Luxembourg.

For corporates, he explains, the shortterm impact is a fall in the prices of fixedrate bonds. A little further down the road,

How are high interest rates affecting private debt? Antoine Boggini shares his expertise.

Words JEFF PALMS

however, he foresees more reallocations into private debt, which is already starting to happen: “It’s a completely different environment compared not to five years ago, but to last year.” Investors were getting some 3-4% in recent years for non-risk-free assets, whereas now, he says, two-year government bonds in the US are yielding 5%.

“On the supply side, for the borrowers, that’s tough,” he adds. “Because what company can afford, today, such a higher cost of debt?” Typical lenders used to be banks, even if the proportion has been decreasing since the 2008 financial crisis, but “what we are noticing is that the trend has recently accelerated, with private credit groups ready to provide private loans for larger deals”--which are enabled by significant amounts of dry powder. “I think we’ll have to see how they [private equity firms] grab that opportunity.”

Changing strategies and operations

diffused by the central banks into the economy.” It will take time, he adds: the impact will be felt over years.

For startups, however, the outlook is different. “The question [here] is more about liquidity.” With less liquidity, early-stage entrepreneurs will find it harder to find financing and new investors, says Boggini. “What we can see is that they are adjusting their business plans to actually keep cash.” New financing rounds are being pushed back, for example. “It means less external growth and fewer internal projects.”

& Partners

As a result of this environment, says the BHB & Partners co-founder, established companies are altering their capital structures. “Due to increasing interest rates, they are shifting to less debt and more equity.” Until recently debt was almost free, he explains, whereas nowadays refinancing is more difficult. Companies therefore need new ways to fund their businesses, such as an equity injection from current or new shareholders; or, for cash-rich businesses, cash flows from operations can be used to repay debt.

“These higher interest rates, for me, are like a kind of a new blood [being]

Ultimately, says Boggini, the central banks’ decision to increase interest rates will slow down the economy’s growth, in order to control inflation. Startups may find fundraising harder, but it could be good news for other players like banks: “They can do their intermediation role between short-term lenders and longterm borrowers… [and] a steeper yield curve could have a positive impact on their profitability in the coming years.”

Evolution of valuations

As a valuation expert, Boggini has observed a trend towards sophistication in the field. While core principles and methodologies haven’t really changed, implementation has: he points to a rise in terminology like “calibration”, “back-testing”, “scenario analysis” and “option pricing models” in valuation practices. On the training side, he adds, more and more non-experts such as lawyers or tax specialists want to become more conversant on valuations.

“It’s a completely different environment compared not to five years ago, but to last year”

ANTOINE BOGGINI Partner and co-founder BHB

Photo Alvaro Baudet

The ESG trend in infra funds

The pan-European long-life infrastructure investor Marguerite, where Pilar Gomez is head of ESG, has made “a very conscious decision” to move towards the sustainable and digital transition through its investment projects, focusing, for instance, on recycling projects and sustainable transport instead of waste incineration and airports. This approach “is something that is picked up by the whole industry, especially in Europe.”

Europe’s headstart in sustainable infrastructure investments is, according to Gomez, “what is driving the appetite of investors to find opportunities to invest in that contribute to sustainable economic growth but also provide environmental protection.” Among her firm’s clients, sustainability has become a top priority. The notion has moved from being trendy to becoming criteria in the field, notes Gomez.

ESG data collection--a struggle?

Though infrastructure funds can be careful in selecting the sectors that they target, it’s important to look for “assets that contribute the most to ESG goals,” and to understand the associated risks before closing an investment, advises Gomez.

But as there are many ESG frameworks to take inspiration from--Marguerite uses the UN’s Sustainable Development Goals, for example--it is also necessary to go beyond permits and laws and “make sure that morally, our investments are welcome.”

Another hurdle to look out for is the collection and verification of data. “ESG data

is something that we, as an infrastructure fund, need to collect from our portfolio companies,” acknowledges Gomez. Therefore, staying up to date with the everchanging world of ESG data and regulation and passing down to portfolio companies all their ESG requirements for data collection is crucial. Though “it’s true that sometimes it’s not easy to obtain this data.”

Gomez recommends implementing a strong internal process, although external firms can help analyse and interpret the information received from portfolio companies. “There are also service providers that have developed tools specifically to tackle these deficits and challenges. These helps infrastructure funds almost with scripts of all the questions they need to collect the right data.”

Importance of a robust framework

A sustainable infrastructure fund is therefore only as strong as its ESG framework. It’s crucial to ensure that funds have “a very systematic framework and approach to ESG--starting from a very robust ESG policy and procedure that guide you on how to do investments,” says Gomez.

But it can’t just be the head of ESG that’s on the lookout for potential risks. Instead, a solid strategy requires a lot of internal training to build up the necessary skills to allow “the whole investment team [to be] aware of [the framework] and understand how to identify the best opportunities that score the highest on ESG,” she explains.

An informed team combined with a solid policy will quite naturally allow

infrastructure funds “to provide good quality ESG reporting easily.”

But “how do you know if you’re doing it right? Believe it or not: financial performance of an asset is a metric that will tell you. If you run into trouble with the local communities or authorities, it’s eventually going to have an impact […] on your valuation,” concludes Gomez.

“How do you know if you’re doing it right? Believe it or not: the financial performance of an asset is a metric that will tell you”

PILAR GOMEZ Partner & head of ESG Marguerite

Infrastructure funds are headed down the path of sustainability, and funds need to set up robust internal processes to ensure quality ESG reporting.

Words TRACY HEINDRICHS

Photo Marguerite

“Robust” appetite for RE funds

The range of asset classes in real estate is growing, says KPMG Luxembourg audit partner in real estate, banking and securitisation, Michael Eichmüller de Souza. “But there’s also a blurring of the distinction between asset classes and a move away from single-use real estate,” he adds.

Despite challenges from regulators and staying fit for purpose, not to mention a “buyer-seller disparity” that may persist “until the economy stabilises a little bit”, Eichmüller de Souza anticipates the appetite for real estate funds will be “robust”, with transaction volumes improving in the second half of 2023 and into 2024.

Valuations will be impacted by higher interest rates, he adds, while there will likely be a widening gap between prime and secondary real estate. Furthermore, “new energy infrastructure and operational real estate are trending with investors, allowing them to diversify their portfolios and help the environment and society at the same time.”

ESG focus

Awareness is growing on the impact-and potential--of real estate on both the environment and society.

The built environment has been identified by the European Commission as playing a key role in the reduction of the EU’s carbon footprint, given that around 40% of the EU’s total energy consumption and around 36% of its greenhouse gases are attributed to buildings.

“This has also put pressure on banks,” the KPMG Luxembourg partner adds.

“Environmental sustainability is really driving the market and putting pressure to avoid real estate obsolescence… basically doing nothing is, at the moment, one of the worst things you can do in a building, that you just rely on the rental streams, and then you’re left with a building that’s not fit for purpose anymore.”

Occupiers are demanding “the right offices in the right place, with the right

layout, etc. And I think the most attractive way to acquire prime assets is through retrofitting, be it from office to residential or from retail to mixed-use,” Eichmüller de Souza adds.

Repurposing buildings from office to residential, or retail to mixed-use, are ones he envisions will continue. Not only do basic targets need to be met, but there’s also the expectation of “less energy dependency. Buildings need to start basically generating energy that they consume themselves and [ideally] give a surplus back to the grid.”

Other trends

In addition to the retailisation of real estate investment funds, which the KPMG Luxembourg partner also anticipates will grow, “also aided by the Eltif 2.0,” technology can be a disruptor.

Eichmüller de Souza says that in discussions with clients, there are challenges on managing growth and so technology crops up time and again.

“Technology has been a disruptor when you look at real retail and office, but it is also an opportunity to automate and to enhance operational efficiency and unlock data-driven decisions.”

“The most attractive way to acquire prime assets is through retrofitting, be it from office to residential or from retail to mixed-use”

Audit partner KPMG Luxembourg

Real estate funds are expected to grow, as investors can diversify their portfolios while helping the environment.

Words NATALIE A. GERHARDSTEIN

Investors’ quest for scalability

The alternative investments space has been “skyrocketing” over the last 12-15 years, both in terms of fundraising and capital deployment, says Deloitte Luxembourg’s Arnaud Bon. “It has reached levels never seen before, with an approach which has among those managers been extremely entrepreneurial and business-focused, [in terms of] putting capital to work.”

It’s a conscious approach to investing, part of a wider trend also in the increased demand for ESG. Despite an uncertain economic outlook, there’s a realisation that to continue such growth, certain shifts have to happen when it comes to costs, operations and scalability.

Bon says there has been an acceleration into this topic lately, in part due to the economic slowdown. Managers are realising “while [they] are a little less busy with investment capital deployment right now, [they’re] going to have more resources, time and bandwidth to actually consolidate or reinforce the operational backbone so that when things get back to normal or better… it has gained a high level of priority.”

Investor, regulator pressures

The cost pressure is coming from two sides, Bon argues: investors and regulators.

For investors, “It’s more a matter of transparency… They’re all going to have different levels of management fees--per class, strategy, geographies, they’re going to be pretty much standard. But the devil in the details is whatever comes on top of that,” e.g., the fees charged by a manager to operate a fund, or by a third-party, etc. Very often, it’s operational costs that are

creating those additional charges. The partner adds that essentially the middle and backoffice activities are under pressure from operating costs, but the key focus for the industry today is what he calls the “holy quest for scalability: making sure that the additional euro or dollar raised and invested does not translate proportionally in terms of operating costs.”

Drilling down further into action items, process efficiency is one area that can be questioned. “The industry is overall very manual, process based, [which] has to do with the nature of the asset,” Bon explains, adding that while DLT is promising for listed securities, it’s not the same in the alternatives space. And what’s missing for automation is standardisation, given the various sub-strategies, geographies, markets, etc.

And with alternatives opening up more to sophisticated retail investors, new considerations are underway with regards to costs and charges. As Bon notes, although the US Securities and Exchange Commission tackled similar topics a decade ago, “more recently ESMA [European Securities and Markets Authority] has been asking alternative managers to bring more transparency, more governance around the overall fee, remuneration and cost structure of the product.”

In 2020, ESMA issued a paper dealing with “undue cost rules” with mainly two objectives: “Investor protection, making sure that investors are fairly treated [and] not being overcharged, [and] easing up access to financial products by investors with the underlying idea at European policymaker [level] that finan-

cial products overall are too expensive.” The CSSF also issued some recommendations “very much in line” with the ESMA paper. Additionally, a lot of benchmarking is being done to justify normal costs of operations and market prices. Ultimately, however, “We should not ever come to a situation where we have the same cost of managing products on the traditional side of the industry and alternative side, because the performances, cost structure and human-intensive types of cost drivers are totally different.”

Costs in alternatives are coming increasingly into focus, as investors and regulators up the pressure.

Words NATALIE A. GERHARDSTEIN

Photo Deloitte Luxembourg

“ We shouldn’t ever come to a situation where we have the same cost of managing products on the traditional side of the industry and alternative side”

ARNAUD BON Partner, Consulting – IM & PERE Deloitte Luxembourg

Call for Atad 3 carve-out

The EU’s Anti-Tax Avoidance Directive 3 (Atad 3) is dominating tax talk in the private market fund sector this year, according to Giuliano Bidoli.

Bidoli is tax director at BC Partners-which is active in the private equity, private credit and real estate spaces and has roughly $40bn in assets under management globally--and a member of the executive committee and board of directors at the Luxembourg Private Equity and Venture Capital Association (LPEA).

The aim of Atad 3 is to crack down on the use of shell vehicles or letterbox companies for dubious tax purposes and to harmonise the rules on substance--meaning that real decision-making and operations are truly taking place in a jurisdiction--across the single market. The European Commission is expected to finalise the rulebook in the coming months, with Atad taking effect on 1 January 2024.

“It concerns all the EU member states, especially the EU member states which are known as a holding location,” said Bidoli. Under Atad 3, an EU jurisdiction could find that a particular entity does not have sufficient substance in a specific country. That means it would be “considered as a shell company” and blocked from using double-taxation treaties, which reduce--often to 0%--tax rates on dividends in the jurisdiction where investors are located, since they are paid where the entity is based.

“And that’s really the discussion today.” The European Commission is still refining the exact rules on substance and cor-

Private market funds want the European Commission to exclude portfolio companies from the Anti-Tax Avoidance Directive 3.

Words AARON GRUNWALD

porate governance. Organisations like the LPEA, and its counterparts across Europe, are currently making the case to Brussels for “a similar carve-out that’s already included in pillar two [under Atad 2], which take out all the [special purpose vehicles] and all the companies below the investment fund” from the scope of the directive. In other words, asset managers would not have to report down into portfolio companies. That is the “specific carve-out that we want.”

Toolbox working

Atad 1 and Atad 2 have already “really changed how fund structuring is done,” although Luxembourg fund firms have pretty much fully adapted to its requirements. The main consequence is that asset managers have to be sure they set up the right type of investment vehicles before they go to market.

For example, Luxembourg investment vehicles are often structured so “the partnership itself is tax transparent,” Bidoli said. But “some jurisdictions don’t have the concept of tax transparent partnerships; they assimilate that [Luxembourg entity] as tax opaque... it’s called the reverse hybrid issue, because there’s two ways to look at that. It can impact the taxation of the fund,” possibly including the fund becoming taxable in both Luxembourg and the other jurisdiction.

Does that mean that funds avoid taking investors from certain jurisdictions or avoid making investments in certain places? “No, no, no,” Bidoli replied. “In Luxembourg, we have a huge toolbox [of

different] vehicles. So you can use a different vehicle which suits all the needs of the investor, as well as respecting the anti-tax avoidance directive, so that you avoid the negative tax impact. That’s one, I would say, of the advantages of Luxembourg: huge number of different vehicles which can be set up.” Given the Luxembourg toolbox, “no one will say, ‘we don’t accept this investor from that specific jurisdiction.’”

Dac 6, 7 & 8

The EU’s Directive on Administrative Cooperation 6, on mandatory disclosure rules, took full effect in 2021. “It’s more of a reporting” requirement than tax rules, said Giuliano Bidoli of BC Partners and the LPEA. “The idea behind Dac 6 was really to close any loophole there is or there was in the tax [policies across] EU countries.”

The first reporting under Dac 7 is due by 1 January 2024. But Dac 7 focuses on “crypto financing” and does not impact private market funds.

The European Commission introduced a Dac 8 draft in December 2022 and is targeting a 1 January 2026 effective date. “It’s too early,” said Bidoli, to say if “it could have an impact on the alternative investment world.”

Digital investing on the rise

With more than 20 years in the financial sector, Solenne Niedercorn-Desouches has gained a wide experience in VC, fintech and regtech and advises in these areas. She’s also the host of the podcast Finscale, where she interviews guests on innovations happening in those areas. Her goals with the podcast are twofold: first, to help those in traditional finance understand from an operational perspective the paradigm changes happening in finance; and second, supporting those launching tech businesses to understand the constraints faced when building something in the financial sector. “What’s interesting is that it really builds bridges between those companies and my listeners, and that’s my objective: to connect the dots between these different populations.”

Statista estimates that total transaction value in the digital investment segment could reach $3.13trn in 2023 and show a compound annual growth rate over a four-year window of 13.17%, reaching $5.13trn by 2027.

Niedercorn-Desouches is excited about the prospects. “What’s interesting is that something appeared a few years ago that made a sort of competition to investment funds: the rise of digital investment platforms,” she says, adding that among the most renowned is Crowdcube, which enables private individuals to invest in startups directly.

She also cites the democratisation of access to private investments as interesting. “There are more and more platforms providing access to Tier 1 private equity funds--and enabling access with very small tickets.”

Words NATALIE A. GERHARDSTEIN

Moonfire is one example of this. “It’s accessible to private individuals with a certain amount of assets and wealth, so it’s not accessible to retail investors, but the tickets are around €100,000, which is already a very big improvement because, generally, these funds are accessible with huge tickets of €10m or €20m.”

Altaroc and Carbon Equity are among some of the other solutions she names which are improving access to privilege PE funds. Other innovation solutions Niedercorn-Desouches has her eye on are solutions to build one’s own syndicate (Vauban, Odin and Roundtable); Sweep and Impak Analytics for ESG scoring and impact analyses; Dealroom for API growth signals and more. Luxembourg’s own

BlocHome, which allows for the securitising and tokenising assets in a packaged version, is another one on her radar.

Another exciting platform is 73 Strings, which uses augmented reality to calculate asset valuation, ultimately enhancing operational efficiency. “AI is really a game changer in risk management,” she adds.

But even if solutions help in the dayto-day, there’s always going to be the human element. “Most of the time, VCs and PE firms struggle to get access to oversubscribed deals, and this is where humans remain the most important part of the equation.”

And, when it comes to increased regulation and firms needing solutions to fulfil certain requirements, such platforms can also help alleviate some of those burdens. “For instance, with SFDR, you have a lot of new solutions popping up to solve pain points and facilitate, for instance, the calculation of the carbon footprint of the portfolio.”

But even if such tech can help remove pain points and could help reduce operational and cost pressures, “the problem is that, most of the time, firms don’t know they exist, or how it’s working. Sometimes they’re afraid of using them.”

“AI is really a game changer in risk management”

SOLENNE

NIEDERCORNDESOUCHES

Non-executive

director & senior

advisor

in fintech/VC

Solenne Niedercorn-Desouches talks about how private market funds are going digital.

Photo Provided by participant

Alternative Investment Funds

The expanse of ELTIFs on the horizon

Sponsored content by PWC LUXEMBOURG

The 2015 ELTIF regime has been updated. Kai Braun and Mathieu Scodellaro discuss what this means for the industry and retail investors.

Photo

Eva Krins (Maison Moderne)

Kai Braun, Alternatives Advisory Leader, Partner at PwC Luxembourg and Mathieu Scodellaro, Principal, Head of Investment Funds Practice at PwC Legal Luxembourg

“Typically, the alternative investment asset class is a close-ended fund, usually with institutional investors and very large ticket sizes, not within reach of retail investors”, explains Mr Braun. “The idea with the European Long-Term Investment Fund (ELTIF) regulation, implemented in 2015”, he says, “was to open the field of such long-term investments that contribute to the objectives of the European Union to retail investors.” In 2020, there were 25 ELTIFs with around €2.4 billion under management. Currently, there are 84 ELTIFs across the EU, with 48 in Luxembourg alone, and €7 billion of assets under management: just a fraction of the trillions of euros of assets in the alternatives industry. Many believe that, with the framework being upgraded and the changes to be implemented by the end of the year,

THE BENEFITS OF ELTIFS Marketing passport

New liquidity features

ELTIFs will finally catch on and go mainstream.

Benefits of the ELTIF

Mr Scodellaro explains that “the European passport is a key element for the ELTIF. If we look at the other categories of AIFs in Europe, there is no passport to market for retail investors, so you have to rely on a national private placement regime. Another advantage of the ELTIF”, he says, “is the possibility to do loan origination. Until now, if you had wanted to perform that kind of activity in various member states, you would have had to comply with national regulations, which can be tricky. Still, an ELTIF,” he reminds us, “is a European regulation, ‘agnostic of national regulations.’ If you are in Luxembourg and want to create an ELTIF, you still need to consider the regulatory form that it will adopt from a national standpoint and comply with the Luxembourg requirements of the particular regulatory regime adopted.”

Liquidity and redemption

“By definition, ELTIFs are close-ended funds,” Mr Scodellaro says, “and investors do not necessarily have the right to ask for the redemption of their shares. However, following the adoption of the new regulation, broader liquidity possibilities are now possible.”

The new regulation said that if there were enough subscriptions in the fund, existing investors could exit by matching their redemption orders with the new subscriptions. The possibility of such transfers is also important from a liquidity perspective because the investments are in principle illiquid and cannot be sold quickly. “So if there is a crisis situation and some investors want to leave, there has to be a mechanism that allows them to do so,” Mr Braun explained.

In addition to the system of matching, the ability to grant redemptions will exist, Mr Scodellaro states, but this will be limited by the percentage of liquid assets into which the fund has invested. He explains that ELTIFs can generally invest in two pockets, the first of which he calls “ELTIF core assets, such as private equity, real assets, real estate, small caps, all other such alternatives.” The fund may also invest in UCITS-eligible assets, he says, which are most of the liquid and listed assets. At least 55 percent should be invested in illiquid assets, and the rest can be invested in liquid assets. Whenever you offer liquidity to investors, it will be set against a 45 percent limit. “That way, you are not forced to liquidate illiquid assets, which would defy the very purpose of the ELTIF,” he added.

Mr Scodellaro highlighted finally that the listing of ELTIF should be a solution to consider for ELTIF

manager, as it is currently underexploited.

Other Challenges

Mr Scodellaro says that retail investors and the industry as a whole need to be better informed of the benefits of ELTIFs, which will require some work. Mr Braun suggests that opening up an alternative fund to the retail market could increase the number of investors by a factor of a hundred or even a thousand, “which is a very different ball game for service providers,” he said. “Their teams will have to know the world of alternatives Another challenge,” he says, “is more of a technical one. Here, the cash will be in the fund on day one, unlike with private equity or real-estate funds. It could be a challenge to be able to invest as soon as possible after the launch.”

“The unique feature of the ELTIF is the possibility to reach retail investors across the European Union using a marketing passport.”

Mathieu Scodellaro Principal, Head of Investment Funds Practice, PwC Legal Luxembourg

“If they become operationally friendly, ELTIFs will speed up alternatives going mainstream.”

Kai Braun

Alternatives Advisory Leader, Partner, PwC Luxembourg

Allowing an ELTIF to be  marketed to retail investors all across the EU

Facilitating the liquidity offered to retail investors

Segment still showing signs of strength

Top 20 alternative fund managers in Luxembourg

The data provider Preqin crunched the numbers at Delano’s request. Figures as of 23 February 2023.

Total funds raised, $m Estimated dry powder, $m

Despite a rocky market in 2022, Luxembourg’s private market fund sector continued to draw fresh investment flows and maintain a healthy level of assets under management. Here’s a snapshot of those numbers, plus a glance at some of the top players in the grand duchy.

Top 10 by alternative assets under management, $m

Alternative fund flows

Luxembourg has outperformed Europe as a whole in attracting cash into alternative investment funds since the fourth quarter of 2021.

Management Association

European fundraising

For European private equity, real estate, infrastructure and private debt funds (the four most significant alternative asset classes in Luxembourg).

European assets under management,

AIFMD 2: evolution, not revolution

The Alternative Investment Fund Managers Directive (AIFMD), originally implemeneted to better regulate alternative investments following the financial crisis of 2008-09, was designed to protect investors.

But, as Loyens & Loeff partner and member of its investment management practice group, Veronica Aroutiunian, points out, “it’s not unexpected that we are looking into an amendment that was already foreseen in the first version” and, despite changes (and questions) in the pipeline on AIFMD2, “this is not a revolution, this is an evolution.”

Aroutiunian, whose focus centres on structuring and formation of alternative investment funds, especially in the real estate sector, has been keeping a close eye on the changes.

Consultative process

At the time of writing, trilogue discussions with the European Commission, the Council of the EU and the European Parliament were underway, with additional discussions anticipated for endApril for the new directive, amending the previous one.

Of course, member states will have time to implement the changes. “It’s good to discuss now, but the changes will come into force not earlier than January 2025--and maybe even that’s too ambitious. Maybe it’s even July 2025,” the partner added.

“A key point that made everyone nervous in the proposal was the delegation because the European Commission

Words NATALIE A. GERHARDSTEIN

Securities and Markets Authority]; Parliament luckily pushed back. So now where we stand with the current proposal is no fundamental changes to the delegation model--so businesses can breathe. However, a number of requirements imposed on AIFMs, especially third-party AIFMs, will be under the spotlight, which is important for Luxembourg because that’s what we’re selling in our industry.”

Potential impact

At the time of writing, debates were ongoing about delegation and marketing function. Aroutiunian says she hopes it is the Council’s position--“marketing function is not delegation at all, whether or not there is an agreement with the AIFM”--will win out. “But if we go with any marketing and any distribution function is a delegation, that’s huge, potentially in terms of cost--and nerves--for the AIFMs.”

initially was looking into imposing a number of, let’s say, qualitative and quantitative qualifications, on delegation of certain functions by the AIFM, especially to third countries, obviously following Brexit,” she explained.

The process has been open and consultative, and Aroutiunian said “luckily” the Commission dropped underlying changes to the existing AIFMD delegation model. Nevertheless, that doesn’t mean that nothing is changing on the delegation side.

“I think the Commission was trying to give more powers to Esma [the European

The Loyens & Loeff partner also sees the potential with AIFMD 2 in removing barriers for grand duchy loan-originating funds and to bring legal clarity. “In my view, it’s an opportunity especially for Luxembourg funds and managers [because] the whole spirit of the amendment shows there is a recognition of the importance and value of loan-originating funds for the wider economy which, in my view, is good because in certain member states, that wasn’t really recognised.”

“A number of requirements imposed on AIFMs, especially thirdparty AIFMs, will be under the spotlight”

VERONICA AROUTIUNIAN Partner, attorney at law Loyens & Loeff

Photo Loyens & Loeff

Negotiations are underway for the AIFMD 2. Here’s a preview of some of the key points.

What Eltif 2.0 means for Luxembourg

Linklaters

SERGE WEYLAND CEO

Eltifs could become a true panEuropean vehicle solution for onboarding private investors into private asset strategies and as a replacement for some of the more local solutions that exist. Another opportunity for Luxembourg as a domicile is the fund-of-funds space. Eltif provides a flexible tool to increase or broaden the distribution of these fund-of-fund products. They’re a great strategy for private investors or high-net-worth individuals in terms of asset diversification. Eltif 2.0 also presents the opportunity to create secondary markets for retail investors, which can help create liquidity. Blockchain technology and the distributed ledger concept may, for example, open up opportunities for tokenised Eltifs.

Eltif 2.0 will extremely positively impact Luxembourg. What differentiates Luxembourg from other countries is that we have a very flexible toolbox--we have a number of different alternative investment fund vehicles that can be used to build Eltifs. We’ve also built up a real expertise in Eltifs over the last few years. I think it’s fantastic. We have all the tools, the flexibility--you can combine different vehicles with different legal forms, you can build and shape your Eltif as you want--the service providers, the expertise and the knowledge. Almost everybody--the fund industry, sponsors, the CSSF--is looking into Eltif with a lot of appetite. There’s a bright future ahead and a very nice role to be played by Luxembourg.

Thanks to Luxembourg’s experience, from legal advisors to asset management professionals, the country is well prepared for Eltif 2.0 and to become the European hub for distribution. For an Eltif set up in Luxembourg, the average for distribution is 10 countries. We’re just at the beginning--we’ll see more of this as asset managers continue to discover Luxembourg as a pan-European hub for distribution. I’ve also had some interesting discussions about digitalisation and using tokens and blockchain. I think it’s a question of time, but there are very creative solutions looking to accelerate distribution, notably in the retail sphere. Now you need to think in hybrid solutions, and see how traditional services can be transformed into large-scale, adaptable services.

Edmond de Rothschild Asset Management (Luxembourg)

SILKE BERNARD Partner & global head of investment funds

STEFAN STAEDTER Investment management partner Arendt

Photos Edmond de Rothschild (Europe), Bob Voirgard, Arendt

The European Parliament voted to formally approve amendments to the European Long-Term Investment Fund (Eltif) regulation in February 2023. We asked eight industry figures about the impact of these changes.

Words LYDIA LINNA

MARIA LÖWENBRÜCK Managing director Union

Investment Luxembourg

With Eltif 2.0, the European Parliament put forward a crucial milestone to ensure long-term investments in the real economy, as well as the prerequisites for active investments by retail investors to contribute to a green and digitally driven economy in Europe. Luxembourg has top arguments among a few jurisdictions for Eltifs--more than 57% of Eltifs registered with Esma are currently domiciled in Luxembourg.

The country is ready to further strengthen its Eltifs expertise leveraging on Ucits and alternate investment funds. This is most likely to boost the Luxembourg financial industry, offering further opportunities to asset managers, banks and service providers to serve new demand for Eltifs. It will also reinforce the business supply chain. Luxembourg is ready to be the centre of excellence for Eltifs.

EMMANUEL-FRÉDÉRIC HENRION

Investment funds partner

Clifford Chance

Eltif 2.0 presents a better investment proposition than Eltif 1.0--it’s more flexible and straightforward, imposing fewer constraints on investment managers and removing the €10,000 initial minimum entry ticket, the 10% investment limitation in relation to an investor’s financial instrument portfolio and the Eltif-specific suitability test for retail investors.

The success of the Luxembourg Eltif 2.0 will depend even more on the availability of attractive distribution channels in the main EU countries into which they will be passported. The extent to which Eltif 2.0 offers a sufficient level of investor protection not only depends on the Eltif’s intrinsic features, such as eligible assets and quantitative limitations, but also on the distribution channels used to reach retail investors.

ROBERT WHITE

Partner, markets leader

EY Luxembourg

Eltif 2.0 is tangible, demonstrable evidence that regulators have listened to the industry. It has actively sought to address limiting factors--such as eligibility of assets, leverage or access of investors--and is a step towards democratising the industry.

The Luxembourg ecosystem is very well set to cater for the industry. It has long been the domicile of choice for alternative investments and, in particular, real assets. Looking at the track record that the country has in servicing real assets with an income focus--it’s absolutely stellar. I don’t see any other jurisdiction that has that same suite of competencies. I’d expect that Luxembourg will become the domicile of choice for Eltifs for exactly that reason. Those attributes are directly applicable to the servicing of Eltifs.

Photos Matic Zorman, Clifford Chance Luxembourg, EY Luxembourg

SALVATORE SBERNA

Head of alternative investments & conducting officer

Azimut Investments

Eltif 2.0 extends the scope of eligible assets by including EU green bonds, clarifying that an Eltif is subject to Sustainable Finance Disclosure Regulation requirements and providing a clause that examines an Eltif’s contribution to the EU Commission’s Green Deal. Furthermore, the new regulation emphasises the importance of funding the climate transition of the European economy, making it necessary to increase the accessibility of ESG data (through the European Single Access Point project) and the regulation and supervision of the data provider (yet to be proposed).

For Eltif funds managed by Azimut Investments, one of the most important, foreseeable impacts is the possibility of investing in a broader spectrum of asset classes. From a regulatory and strictly operating point of view, we don’t foresee any significant impact so far.

MIKE SOMMER

Head of risk EMEA & conducting officer risk management

Schroder Investment Management (Europe)

We believe the upcoming changes in the Eltif regulation will have a positive impact on capital raising going forward. On the investment side, it introduces additional flexibility on the types of instruments Eltifs can invest into. This will help attract new investors looking for exposure to long-term assets by increasing the range of strategies that can be offered within an Eltif wrapper.

A further positive impact is expected from the changes to the Eltif suitability rules. The changes support a more pragmatic approach in terms of the access criteria that distributors need to adhere to--for example, whether an investor is eligible based on the size of their portfolio and how much they are planning on investing. Feedback from our client-facing business partners indicates the current rules made compliance monitoring very complex and expensive.

They will certainly welcome the changes. Luxembourg’s fund industry, with its extensive capabilities, is well placed to participate from the expected benefits of the adjusted Eltif regulation.

Photos Azimut, Schroders

17 April 2023

The current geopolitical tsunami

How can Luxembourg’s and Europe’s economies stay stable and secure?

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Assessing ESG risks

Much is hanging on the EU’s Sustainable Finance Disclosure Regulation (SFDR), which originally entered into force on 10 March 2021 and the second phase of which entered force on 1 January 2023.

“The implementation phase was already quite complicated,” explains Lisa Klemann, senior associate at Allen & Overy, adding that even though ESG wasn’t something entirely new, in some ways the market wasn’t prepared in the first phase. “We had a lot of discussions when it came to integration of sustainability risks in decision-making processes.”

At the time, she argues, fund managers were taking a “prudent approach”, for various reasons, including at times lacking data to do the relevant checks.

“That has completely changed now because it’s nearly impossible to say that sustainability risks are not relevant anymore,” Klemann says, adding that aspects such as climate change and resource usage cannot be ignored.

She uses an example of a brewery and a tyre company, both located in India: despite two completely different sectors and raw materials, both use significant amounts of water in their production. The World Bank confirms the nation is one of the most water-stressed on the planet; despite accounting for 18% of the world’s population, it only has 4% of its water resources. “So, when investing in an Indian company which is using water as raw material, it’s impossible to say that such an ESG risk is not relevant.”

Areas of expertise

ESG risks are relevant in the context of valuation, but this isn’t always so straightforward. Not only are a number of asset managers still “trying to sort all these ESG-related matters,” but Klemann sees an additional risk in the need to have really specific areas of expertise. “For instance, if you have climate change risks or biodiversity risks, in principle, you’d need to have scientific knowledge [with] your asset manager to really assess, evaluate and monitor those risks.”

As Delano has previously reported, there had also been lack of clarity on funds with a “sustainability purpose” as outlined under article 9, with some funds

being downgraded to article 8 because managers are erring on the side of caution in case the funds do not qualify under article 9. As Klemann notes, an CSSF FAQ guide points out that “an article 8 SFDR financial product may only use exclusion strategy as a key element of the ESG strategy, provided it is detailed to allow investors to understand how the financial product’s environmental and/ or social characteristics are being met. As explained, this is not possible for an article 9 SFDR financial product.”

Avoiding greenwashing

Klemann cites an interesting article by Kim Schumacher titled “Environmental, Social, and Governance (ESG) Factors and Green Productivity: The Impacts of Greenwashing and Competence Greenwashing on Sustainable Finance and ESG Investing”, in which the author argues that the rise of ESG reporting “has gradually led to a growing disconnect among many financial-sector and corporate stakeholders” but that greenwashing and its variants “do not occur in a contextual vacuum but are strongly linked to the increasing appeal of sustainable finance, ESG investing”, etc.

Klemann adds, “Asset managers often lack the scientific background and the personnel that has this scientific expertise, especially when it comes to metrics and PAIs [principal adverse impacts].”

Photo Allen & Overy

“It’s nearly impossible to say that sustainability risks are not relevant anymore”

LISA KLEMANN Senior associate Allen & Overy

Updated ESG and sustainability reporting requirements are putting new pressure on the finance sector.

Words NATALIE A. GERHARDSTEIN

How Luxembourg stacks up

In the alternative investment areas in which the grand duchy plays, the market is still attractive. The country managed to really establish itself and gain a good market share, especially in mid- and back-office specialisations. Keith O’Donnell, founding and managing partner of Atoz Tax Advisers, adds that the market share was “relatively unimpeded by other jurisdictions” for some time, and Luxembourg’s market will see “growing double digits at least for the next probably three to five years.”

But O’Donnell adds that over the last few years, things have shifted. “Other competitors have woken up to the opportunity and stated to compete more in this space, with differing degrees of success.”

Increasing competition

Following Brexit, questions circled as to whether financial firms that had shifted to the EU in the run-up would return to London. Concerns arose as to whether the “Unshell Directive”, or Atad 3, would cause unnecessary burdens for the alternative investment industry, thereby making jurisdictions like the UK more attractive.

“The UK is a competitor, has deep expertise in the front office,” O’Donnell explains. “We do have to be careful that European regulation doesn’t penalise the competitive position of Luxembourg-and all European vehicles.”

Atad 3 has gone through iterations, but O’Donnell hopes “the Commission will take [such concerns] on board and try to make [the directive] a bit more targeted because, at the moment, it’s a

very shotgun approach whereas, in fact, it’s probably targeting a very small subsegment of companies--arguably not at all the alternative investment fund sector.” His view is that part be cut out or focus on the real target--not institutional investors using legal vehicles for normal business reasons.

Another traditional competitor is Ireland, where O’Donnell says not only are “clients very happy” there for historical reasons, but the country is improving its competitive positioning, with its regulator adapting its position in the alternative sector better than five years ago.

“Luxembourg doesn’t have, in any sense, a monopoly on this business,”

O’Donnell explains, adding that Germany and France are doing more to make their markets attractive.

But there are also non-traditional competitors, he adds. “Some of the offshore jurisdictions are trying to kind of re-create a space for themselves in the market, partly because they’ve been forced to align governance standards on more OECD standards or European standards.”

Boost for the grand duchy

O’Donnell sees potential in faster growing areas, for example, like infrastructure and private debt. Eltif 2.0, which was adopted by the European Parliament on 15 February 2023, could provide a further boost for the grand duchy, he adds.

“Infrastructure would be the kind of asset class that would go into that vehicle, and then potentially, it’s available to a broader selection of investors,” O’Donnell explains. “So it’s kind of, to some extent, completing the capital markets union.

And, if that works out well, things could get interesting, “because it opens up a second pool of capital in Europe-besides all the institutions, we now have individuals being able to invest in this asset class,” O’Donnell adds. “I think that could be very attractive, and Luxembourg would be a great place for that.”

“Luxembourg doesn’t have, in any sense, a monopoly on this business”

KEITH O’DONNELL Founding and managing partner Atoz Tax Advisers

Although Luxembourg’s alternative investment fund market is still going strong, it’s a space that’s growing more competitive, argues Atoz’ Keith O’Donnell.

Words NATALIE A. GERHARDSTEIN

Photo Guy Wolff

PME: SCALE ME UP!

FR Colonne vertébrale de l’économie luxembourgeoise, les PME font preuve d’inventivité et de pragmatisme pour accélérer et structurer leur croissance de façon échelonnée. Innover, recruter, produire, vendre, lever des fonds : ces dirigeants cumulent les défis. Ils sont à l’honneur lors de ce 10×6. Cette soirée sera ouverte par un mot de bienvenue de M.Lex Delles, ministre des Classes moyennes et ministre du Tourisme.

EN As the backbone of the Luxembourg economy, SMEs are showing inventiveness and pragmatism in order to accelerate and structure their growth in a staggered way. Innovating, recruiting, producing, selling, raising funds: these leaders face many challenges. They will be particularly highlighted during this 10×6 event. The evening will be opened by a welcome speech from Mr Lex Delles, minister for Small and Medium-Sized Entreprises and minister for Tourism.

25 April 2023 18:30 22:30

Athénée de Luxembourg

24, Bd Pierre Dupong

L-1430 Luxembourg

Damien Chasseur Positive Thinking Company

Genna Elvin Tadaweb

Myriam Filali Rockids Felix Hemmerling Kodehyve

Patrick Kersten Vesperia

Vincent Lyonnet Steel Shed Solutions

Aida Nazari LuxAI

Carolyn Prestat Fiveoffices

Jean-Marc Ueberecken Arendt & Medernach

Clémentine Venck Cocottes

Registration on paperjam.lu/club

Welcome address by Lex Delles, minister for Small and Medium-Sized Entreprises and minister for Tourism

Bright future for private markets

Before looking to Luxembourg, it is first useful to look at the overall market for private funds globally, how it has evolved in recent years and where it is heading.

Preqin reports that assets under management (AUM) in private capital markets has seen significant growth in recent years, increasing at an annual rate of close to 20% between 2018 and 2021 to reach just over $9.3trn at the end of that period. This impressive growth in private markets has largely stemmed from institutional investors who in a global environment of low to negative interest rates have been unable to generate the returns required from traditional equity and bond markets. Though Preqin expects this rate of growth to slow to just under 12% annually in the period from 2021 to 2027, that still implies a doubling in market size to around $18trn.

Several factors contribute to the forecast continued growth in the industry.

Firstly, returns from private market portfolios have consistently outperformed returns on listed equities and bonds. Though such returns require more time to deliver, with investment often referred to as “patient capital”, institutional investors struggle to deliver the overall returns required without it. This has led certain regulators to allow increased allocations to the asset class--a notable recent example being the large New York public pension funds being authorised to increase their allocations from 25% to 35%.

Secondly, whilst retail investors have to date largely been unable to access alternative assets, a recent report by Bain

& Co suggests they account for half of all wealth globally and are therefore being increasingly looked to as a new source of capital by investment managers. Advances in technology have made this easier and more cost effective helping the so-called “democratisation” trend to gather momentum. The new 2.0 version of the European Long-Term Investment Fund (Eltif) is a good example of how regulators are supporting the trend. Finally, both institutional and retail investors are increasingly focused on investing in companies that align with their values around Environment, Social & Governance (ESG), and private markets provide an opportunity to invest through managers committed to such principles. Investment managers looking to raise capital in Europe have traditionally looked and will continue to look to Luxembourg to establish their fund and operating platforms. Simply retaining its current market share would imply a doubling in assets over the five years to 2027. Professionals in the Luxembourg alternatives market, often through industry associations such as L3A, LPEA and Alfi, are more ambitious in their outlook, with an aim that Luxembourg not only retains but expands its market share in Europe. This is principally through leveraging Luxembourg’s traditional core strengths--understanding evolving market trends and rapidly reacting to these through timely and efficient implementation of new market leading products and operating models. It also relies importantly on continuing to attract the best talent, and Luxembourg’s leading role in creating

challenging and rewarding career opportunities in a highly competitive market is a key factor in achieving just that.

The future is bright for private markets over the next five years, the future is Luxembourg!

“Investment managers looking to raise capital in Europe will continue to look to Luxembourg”

ALAN DUNDON President Luxembourg Alternative Administrators Assocation (L3A)

L3A president Alan Dundon thinks several factors will play into private market growth over the next three to five years.

Words ALAN DUNDON

Photo Matic Zorman

Throughout 2023, on the occasion of its th anniversary, Maison Moderne is keen to reaffirm its anti-waste policy.

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To make an online donation, scan this QR code.

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The Paperjam + Delano Business Club invites the % of people who make up the ‘no-show’ at its events to make a transfer of € or more to SOS Faim, which also celebrates its th anniversary in 2023.

To make a donation via Payconiq, scan this QR code.

CARTE BLANCHE

Rapidly growing private markets

Words CHRISTINE O’BRIGHT

The private market investment space has been growing rapidly, while public markets have been contracting. In fact, the number of publicly listed US companies has nearly halved in the last 25 years, while companies tend to stay private longer.

In general, investors look to private markets, as they can offer diversification from traditional markets and provide investment options that encompass a broader representation of the economy. They also provide the potential for better income and higher capital growth, an illiquidity premium and possible protection from economic shocks.

Private market funds, such as private equity, private debt, real estate and infrastructure funds, have attracted significant investments from institutional investors in Luxembourg, including pension funds, insurance companies, and sovereign wealth funds. Over the next three to five years, institutional investors will remain a key growth driver; however, the industry is undergoing significant changes, and funding from alternate sources is an emerging trend.

While in the past, private market funds have been reserved for institutional and other well-informed investors, we now find retail investors seeking to enter this space, as they pursue alternative sources of returns and diversification from traditional markets.

Private market funds have conventionally been established as closed-ended

structures. Most private equity funds feature a 10-year term (often longer with fund extensions) during which investors are locked into the fund. As the appetite for retail to invest in private markets increases, so too has the development of open-ended/evergreen fund structures.

Traditionally, the applicable laws available in Luxembourg for private market funds have been the Raif, Sicar and SIF, which are reserved for well-informed investors. We believe access to private markets investing will continue to expand in Luxembourg and the UCI Part II fund vehicle, along with the Eltif label, will play an important role in delivering these solutions. Indeed, the recent changes to the Eltif regime, including allowing the possibility to have redemptions under certain conditions and the removal of the minimum investment, make it more attractive to retail investors.

Despite this positive trend towards retail investment in private markets in Luxembourg, the industry is facing some challenges, one of them being increased regulatory scrutiny. The AIFMD, which regulates the private markets industry in Europe, has led to increased compliance and reporting costs for fund managers. The recent proposals for AIFMD II are likely to enhance these requirements, further increasing costs.

In conclusion, the outlook for private markets funds in Luxembourg over the next three to five years is optimistic.

Although increased regulatory scrutiny coupled with a new era of higher inflation and the possibility of recession are likely to pose challenges, the industry is expected to continue to grow, mainly driven by strong demand from institutional investors. The trend towards retail investment via UCI Part II funds and Eltifs remains an exciting development that could provide a new source of capital for private market fund managers in Luxembourg.

CHRISTINE O’BRIGHT Co-founder Evolve with us

“ Investors look to private markets, as they can offer diversification from traditional markets”

The short-term outlook for private markets is optimistic, says Christine O’Bright, co-founder of e-learning training company Evolve with us.

WHAT ARE THE POLITICAL PARTIES’ PRIORITIES?

With 130,000 inhabitants and a population that doubles on working days, Luxembourg City is the country’s largest municipality and its economic heart. Which figure should lead this municipal flagship? With over 70% foreign residents hailing from over 170

countries, this cultural and social patchwork represents a political challenge that is almost unique in the world. Housing, mobility and cycling in the city, quality of life and safety, social cohesion... what are the priorities for the different parties?

E LYDIE POLFER (DP)

FRANÇOIS BENOY (déi Gréng)

PASCAL CLEMENT (Piratepartei)

ALEX PENNING (ADR) F GABRIEL BOISANTE (LSAP)

SERGE WILMES (CSV)

MEET THE FIN

ANCE EXECS

Delano has recently shifted gears to serve Luxembourg’s finance community. Meet seven individuals making a difference in the sector--and who also make up part of the 32,000+ readers of our weekly finance newsletter.

Chairwoman of Luxflag and former chair of the Association of the Luxembourg Fund Industry (Alfi), Denise Voss is also a sports fan. It might surprise some that she used to referee for the FLNS, Luxembourg’s swimming federation.

Photos GUY WOLFF

It might surprise some to learn that Alfi chair Corinne Lamesch enjoys foraging for mushrooms and Japanese gastronomy. In a recent interview, she said her favourite restaurant in the grand duchy is Ryôdô.

Claus Mansfeldt is chairman and managing director of SwanCap Investment Management. He says he was also a political activist as a teen in Norway, his country of birth, and wore a Nato sticker on his schoolbag from the age of 15.

Independent director and Luxembourg Directors Institute (ILA) chair Carine Feipel, shown here near Munsbach Castle, says she likes “the daily condensed news” Delano provides.

Chairman of the Luxembourg Bankers’ Association, ABBL, Guy Hoffmann says he likes the “concise and outspoken news coverage Delano provides, which helps “explain what makes Luxembourg tick”.

Luxembourg for Finance CEO Nicolas Mackel enjoys reading “longer articles, as they provide more insight.” Fun fact? “My kids claim I only listen to [Bruce] Springsteen,” though he says he also likes Leonard Cohen, Dire Straits and The Rolling Stones…

CEO of Luxembourg

House of Financial Technology (Lhoft), Nasir Zubairi has graced two Delano covers. When he has some down time, “I make jewellery, specifically bracelets, to relax.”

Eight essential dates

TUESDAY 16 MAY

10×6 Alternative investments

Ten private market fund industry experts have six minutes each to share their insights on the challenges and opportunities facing the alternatives space. ESG, the European Long-Term Investment Fund and AIFMD regulatory revamps, retailisation and operational & technical challenges will figure on the bill. Organised by the Paperjam + Delano Business Club, part of the same company that publishes Delano. ↳ club.paperjam.lu

THURSDAY 25 MAY

Cross-Border Distribution Conference

ESG, regulatory reforms and retailisation--among other topics impacting European private market funds distributed cross-border--will be addressed at this summit. Hosted by the law firm Elvinger Hoss Prussen and FT Live.

↳ cross-border.lu

OCTOBER 2023

THURSDAY 19 OCTOBER

LPEA Insights

The Luxembourg Private Equity and Venture Capital Association (LPEA)’s flagship annual conference is “designed by and for general partners and limited partners” and is “the perfect meeting point for all private equity and venture capital practitioners.”

↳ lpea.lu

Luxflag Sustainable Investment Week

LSIW is a series of standalone events, each of which tackles a particular theme or challenge facing asset managers, investors or service providers actively engaged in sustainable investing, such as in climate finance, ESG and impact investing. Organised by Luxflag, the ESG labelling agency.

↳ luxflag.org

TUESDAY 17 OCTOBER

Art & Finance Conference

The 8th “Art & Finance” report will be released at the 15th annual Art & Finance Conference, which covers the art market and art as an asset. Produced by the consulting firm Deloitte.

↳ deloitte.lu

NOVEMBER 2023

ILA Directors’ Day

The mid-month confab is a chance to debate corporate governance issues, discuss coming trends and network with peers. Organised by the Luxembourg Institute of Directors (ILA), a standards and training body for members of both corporate and fund boards of directors.

↳ ila.lu

TUESDAY 21 NOVEMBER

2023 Finance Awards

The awards are a chance to give recognition to those in the finance industry who have continued to show excellence and outstanding expertise. The 2023 Finance Awards celebrate finance professionals in eight categories, determined by peer-to-peer voting. Organised by Paperjam + Delano and Luxembourg for Finance.

↳ club.paperjam.lu

TUESDAY 28 & WEDNESDAY 29 NOVEMBER

Private Assets Conference 2023

Panels and presentations by thought leaders on trends and topics of interest to players in the private equity, private debt, real estate and infrastructure ecosystems. Organised by the Association of the Luxembourg Fund Industry.

↳ events.alfi.lu

Here are some essential informational and networking events not to miss in 2023. Check websites for the latest details and registration info.

SAVE THE DATE!

by PAPERJAM + DELANO and LUXEMBOURG FOR FINANCE

CATEGORIES

Visionary

Banking Personality

Insurance Personality

Funds Personality

ESG Champion

Private Equity Executive

Fintech Entrepreneur

Capital Markets — Leading M&A Expert

The Luxembourg financial centre

Driver of the Luxembourg economy, the financial centre has developed since the 1950s to become a leading European platform for international financial institutions:

— 123 international banks from 26 countries

— 57% global market share in cross-border investment

funds (PwC Global Fund Distribution 2022)

— International portability and a unique level of protection in life insurance

— European leader in international securities listings (39,000 + listed and tradable securities)

— Largest market share of

Recognising outstanding contribution to the financial sector

P aperjam  + Delano and Luxembourg for Finance are delighted to announce their first Finance Awards – another chance for us to give recognition to those in the finance industry who continued to show excellence and outstanding expertise during the year.

This awards ceremony also rewards those who were instrumental in the creation

of the financial centre, its development and the structuring of its products, and those who represent it internationally.

In total, over 150 recognised and influential experts across Luxembourg’s finance sector will be nominated in one of the seven categories and shortlisted by a panel of peerto-peer, high-profile experts.

listed green bonds in the world

— A comprehensive fintech ecosystem and strong start-up support

— EU continental hub for 7 Chinese banks

— 1st Islamic fund centre in the EU, 4th in the world

SOURCE: Luxembourg For Finance

VENUE Casino 2000, Mondorf-les-Bains

DATE & TIME

Tuesday

21 November 2023 from 18:00 to 22:00

Cocktail — International keynote speaker — Awards ceremony — Seated dinner

Education: My number one investment”

Hind El Gaidi

Head of financial information & valuation Astorg

In her role, Hind El Gaidi oversees financial information and valuation activities across funds.

El Gaidi is a board member of the Luxembourg Private Equity and Venture Capital Association (LPEA) and a board member & co-founder of the Luxembourg Valuation Professionals Association (LVPA).

She’s also the leader of the Luxembourg chapter of Lean In Circle, which focuses on coaching and empowering young professionals.

When I ask Hind El Gaidi about her first investment, I must admit that I’m expecting something tangible--an apartment, a painting, a stock portfolio. Her answer, however, surprises me. “From where I stand today, I find education has always been, for me, my number one investment area,” she declares.

But when she talks about education, it’s not just from the angle where one “piles up diplomas,” El Gaidi elaborates. Education isn’t constrained to a classroom and to sitting for exams--it can also involve developing soft skills, acquiring technical knowledge, going somewhere for the network or pursuing a specific certificate.

It’s an unexpected answer, I reply, yet it makes perfect sense. Investing in yourself “has unlocked much more value over time,” continues El Gaidi. “And I feel that it has been one of the best ROIs I’ve invested in so far.” Education is not beneficial at “only one time,” she adds. Instead, the things you learn can be reused many years later.

That being said, education shouldn’t just be an obligation, where, for example,

your company sends you to complete a training, notes El Gaidi. “It’s more of something that falls within a bigger plan, of either your professional journey or your journey as a manager, where you have something in mind--a strategy where you want to be known for a specific skill or competency--and then you invest intentionally into that.”

And, if you’re the one personally paying for the training, that adds “skin in the game!” El Gaidi concludes with a laugh.

For Hind El Gaidi, Astorg’s head of financial information & valuation, investing in education has unlocked value over time. But education shouldn’t just be an obligation, she adds. It should be something that you want to pursue.

Words LYDIA LINNA

Photo Romain Gamba

The growing allure of private debt

Private debt has become a fastgrowing asset class, one that can offer higher and reliable returns.

Meeting with Amélie Frontain, Director at VPsf (the regulated subsidiary of Value Partners), who brings her expertise on the subject.

The emergence of private debt

Private debt emerged in the wake of the subprime crisis when new regulations such as the Dodd-Frank Act and Basel III were put into place. Because banks were no

longer able to loan money as before, especially to small and medium-sized companies, private debt entered the market to fill the gap. Since then, private debt has become one of the fastest-growing alternative investment asset classes, enjoying 45.4 percent growth last year in terms of assets under management. Compared to public debt, private debt offers higher and regular returns.

Commonly, the strategy is either sectorial or geographic. With private debt, the investment manager follows a loan until it reaches maturity. Financial covenants are monitored, and if for example the borrowing entity’s financial health consistently improves, they might be eligible for a decreased interest rate. Such arrangements are not just side incentives; they are at the

Photo

Marie Russillo (Maison Moderne)

Sponsored content by VALUE PARTNERS

Finance

Amélie Frontain, Director at VPsf (a subsidiary of Value Partners), on the premises of the Philharmonie.

center of private debt relationships. Unlike when you borrow from a bank, with private debt, you receive not only monitoring, but also advice from the lender, a specialist in your sector, who will assist you with the financial health of your company.

Managing complex data

Private debtors play a key role during the entire lifecycle of the loan. They monitor and control plenty of financial data, both from the debt investment and also from the borrower. To do their job well, they require high-quality, accurate data as well as portfolio and investor reporting. This is where service providers step in and, ideally, facilitate automation – a necessity in dealing with the enormous volume of information in private debt, and it also lowers the risk of human error while helping a fund to keep costs at a minimum. The less time investment managers spend on gathering and modeling data, the more time they have to focus on the portfolio and the borrowers.

Private debt is a sophisticated asset that involves various investment strategies such as origination, syndication, secondary deals, and distressed debt. Once you take into account the lender’s subordination level, the diversity of financing instruments, fees, interest rates, and the many details spelled out in the covenants and loan agreements, you begin to appreciate the vast amount of data involved in running a private debt fund. For a service provider working in this sector, the bar is set very high. A service provider should have ample expertise in the field of private debt, and they should be able to efficiently collect, manage, and update the data on which the investment manager relies. Of course, having the latest and most powerful IT tools is key.

Other considerations on the future of private debt Adding yet more complexity to private debt is ESG. In the past few years, it has become important to many investment strategies, as investors are eager to put their money into structures that prioritize sustainability. This makes the task of managing and providing services for private debt funds all the more difficult because the ESG strategies of other stakeholders in deals, such as private debt sponsors or other co-lenders, need to be taken into account. For borrowers, an ESG strategy might mean that specific covenants are introduced into the

loan agreements requiring them to meet their lenders’ ESG expectations.

As with all alternative investment fields, the regulatory landscape is ever changing. Private debt will need to adapt to AIFMD II, which has not yet been voted upon, and ELTIF 2.0, which the Council of the EU adopted in early March. These will likely have a significant impact on private debt. AIFMD II could add restrictions on funds doing loan origination, which would in essence result in a close-ended fund. Also, it appears the new version of the regulatory framework will introduce a risk retention amount for funds whose strategy involves origination and selling the debt on the secondary market. AIFMD II may also introduce a maximum 20 percent diversification limit of an alternative investment fund capital invested with financial institution borrowers. ELTIF 2.0, on the other hand, might provide new opportunities for private debt, opening the field to retail investors. Still, it is quite clear that both AIFMD II and ELTIF 2.0 will require an even greater need for secured data and reporting, making the need for a trusted, experienced service provider with the right IT tools even more vital.

WHAT TO LOOK FOR IN A SERVICE PROVIDER FOR PRIVATE DEBT

Expertise in dealing with the complexity of private debt data monitoring such as covenants, interest rates, and contractual clauses.

“ Private debt is a sophisticated asset class with complex data that must be managed well.”

Amélie Frontain Director at VPsf

The right IT tools to automate data management, reduce costs, and limit the risk of human error.

A track record of providing excellent service to private debtors and demanding, HNW investors.

Low staff turnover which is key to building trust, familiarity, and a smooth working relationship.

Luxembourg residents on 11 June 2023 will elect 100 mayors to lead the country’s communes in addition to 1,021 aldermen and town councillors. For the first time, non-nationals--from the EU and overseas--can vote as soon as they have registered in their local municipality after the government and parliament scrapped a five-year residency requirement last year. Local elections are a key way for foreigners in Luxembourg to make their voice heard in politics, yet less than a quarter of non-nationals used their vote in the 2017 ballot.

In this local elections special, Delano delves into what communes do; how they impact housing, transport, business and other areas of daily life; and the political power held by foreigners in the country’s biggest communes. Looking at Luxembourg City--where foreigners vastly outnumber Luxembourgers--parties running in the capital give an overview of their top priorities for change for the 2023 to 2029 mandate.

What your commune can do for you

In numerous Luxembourg communes, foreigners outnumber nationals. Their turnout in municipal elections, however, has historically been low. Integration minister Corinne Cahen (DP) and Emile Eicher, the president of the Syvicol union, discuss what’s at stake and why local matters.

Words CORDULA SCHNUER

On 11 June, Luxembourg heads to the polls to elect local mayors and representatives across the country. For the first time, foreigners living in the grand duchy can vote, regardless of the length of their stay, after a five-year residency requirement was scrapped last year. The move aimed to boost participation by Luxembourg’s large international community in municipal politics after only 22.8% voter turnout in the last local elections in 2017.

“We were the only country in the EU that had this five-year requirement. In other EU countries, you could vote immediately,” said family and integration minister Corinne Cahen (DP). In addition to widening the scope of eligible voters, non-nationals can register to vote up to 55 days before the election, down from 87. This year’s deadline falls on 17 April at 5pm.

Local elections are a rare opportunity for foreigners in Luxembourg to make their voices heard in politics. “In a democracy, everybody must participate,” said Cahen. “We want you to get involved in our country, in our communities. We want you to volunteer, to meet people. We want better living together.”

To those hesitating to get involved because they don’t plan on staying, the

minister said: “Don’t live in the future. You live here today. Participate where you live today. It makes you stronger when you leave--take something with you, perhaps a new language, new life experiences, social experiences--and it makes you stronger if you decide to stay.”

In many ways, communes are the beating heart of the country. Town halls have an important say on the development of housing and infrastructure, transport and essential services, such as water and waste management. They manage preand primary school education, daycare facilities and playgrounds but also sports, culture and tourism infrastructure.

“Communes are closest to the people and very often the first port of call. In everyday life, you are permanently dealing with your commune, directly or indirectly,” said Emile Eicher, president of Syvicol, an interest group representing Luxembourg cities and communes.

Municipalities can also make or break business projects. Sanem and Differdange, for example, opposed plans in 2018 for a rockwool factory to start production in their communes, despite government support at the time. The company eventually set up shop across the border in France.

“There are national, regional and municipal zones for big companies,”

Photo Romain Gamba

CORINNE CAHEN (DP)

Family and integration minister

“We want you to get involved in our country, in our communities. We want you to volunteer, to meet people. We want better living together”

explained Eicher. “The time is over where we said we welcome as many businesses as possible to the country.”

The sleeping giant Luxembourg’s foreign voters are a sleeping giant. In the last local elections in Luxembourg City, there were 37,706 Luxembourg residents in the capital compared to 90,698 foreigners. While 27,722 Luxembourgers went to vote--with voting compulsory for them--only 6,677 foreigners turned out, a rate lower than the national average. More than 80,000 non-nationals are eligible to cast their ballot this year.

“When you have nearly 72% of non-Luxembourgish residents in Luxembourg City, of course we don’t want a minority to decide for the majority,” said Cahen. “The nationality isn’t what matters. What matters is what you want for your city.”

Voting is one thing, running for office another. Out of 3,575 candidates who ran for election in 2017, just 270 were non-nationals. But only 15 out of 1,119 elected officials in the last municipal elections were foreigners. As a result, while the international community makes up 47% of the country’s population, they account for just 1.3% of local politicians.

“A lot of parties have international sections. But a lot of people have double nationality, so they are registered as Luxembourgers, which perhaps makes the statistics not quite right,” said Cahen. “I don’t care if you are Dutch, Danish or Syrian. If you have ideas, work in your party. And, if you want, become a candidate. It’s about getting involved.”

Housing

While the housing ministry manages rent subsidies, some communes run additional welfare programmes and affordable housing schemes. By voting on general and special development plans--known as PAG and PAP--town councils impact growth although they are subject to a national land use plan, which sets out areas for urban development in the country. Through the so-called “pacte logement”, communes develop housing in agreement with the government.

Transport

The government sets the agenda for country-wide mobility strategies, including motorways and country roads, the rail network and overland bus services. But communes play an important role in developing their local infrastructure, such as cycling paths, parking, car-free zones or pedestrian areas. They also work to make infrastructure accessible, for example designing lowered pavements for persons with disabilities or adding tactile paving.

Schools

Communes manage pre- and primary school infrastructure as well as the “maison relais” daycare facilities. They also decide how school buildings are designed, opening up pathways for different learning styles versus traditional classroom teaching. Communes ensure enrollment, school transport and the general smooth organisation of day-to-day operations. Education policy, including curricula, is the authority of the government.

Business

Commune budgets are fed by the state but also financed through local business tax revenue. While the government grants business licences, communes have some say on land use as well as operating permits for classified establishments, such as restaurants, night clubs, office buildings or technical facilities. Communes can also team up to form regional industrial zones, co-developing infrastructure and the use of resources.

The government, as in previous election cycles, has launched the I Can Vote campaign to encourage non-nationals to sign up and political parties, too, are vying for expat votes. Déi

Lénk in Luxembourg

City in January launched a door-to-door campaign to sign up foreigners in districts they said are underserved, such as Bonnevoie, the Gare and Hollerich.

It is the larger communes in particular that are struggling to attract voters.

“First of all, Luxembourg City has the highest rate of non-Luxembourg residents. Secondly, people who come to Luxembourg often first move to the city.

Luxembourg City population versus voter turnout

And we see in the statistics that people who have been in Luxembourg for less than five years and young people are registered much less. So here you get all of these things together in Luxembourg City.”

Key issues

While the intricacies of party politics can be overwhelming, it is worth taking the time to get clued up about what communes, current leaders and hopeful candidates are planning on doing about some of the key issues facing the country.

Luxembourg City, for example, is one of the biggest landowners in the grand duchy. An analysis by the Observatoire de l’habitat--a housing market monitoring body--last year revealed the commune as owning more than 50 hectares of buildable land. One hectare is roughly the size of one football field.

“There are communes that should grow, others that aren’t supposed to. This is specified in the land use plan,” said Eicher. “These communes are on the frontline. It’s not enough to build housing but everything around it too--schools, daycare, the logistics...”

And while the government sets the agenda for country-wide transport plans, communes have some autonomy in designing roads and cycling paths on their ter-

ritory, parking opportunities and the space they grant to different modes of transport.

“It’s not just about cycling paths but also pavements and accessibility,” said Eicher. “A lot of pavements aren’t accessible for persons with disabilities. This needs a lot of investment.”

Voting is a right, which has been granted to more people in Luxembourg than ever before in this upcoming local election. It is also a responsibility, and in a country where it is compulsory for nationals to vote, it is widely considered a civic duty.

“I don’t know it differently,” said Cahen about turning out on election day. “It’s part of democracy. Even if you give a blank sheet of paper, that’s also an expression of something. Election is a nice day. You see your neighbours, meet a lot of people. It’s a bit like a national holiday. So, be part of it.”

To paraphrase and slightly amend John F. Kennedy’s famous words: ask what you can do for your commune, and what your commune is doing for you.

How to register

To register to vote, non-nationals can either visit their local town hall or sign up via MyGuichet.lu by providing their Luxembourg matriculation number, current address and last foreign address.

Voting is mandatory once registered. Postal voting is available, and exemptions apply in case of last-minute professional or personal affairs taking the registered voter outside of the country. Registered voters who move commune before election day will automatically have their vote transferred to their new place of residence.

Icanvote.lu provides information about voting and how it works.

Denise Voss, Luxflag

Invest wisely in infrastructure

As Luxembourg City grows, so must its infrastructure, says the DP, which has been in power in the capital for more than 50 consecutive years. The party wants a city that is open, sustainable and future-proof, and where the international community can integrate and make an impact.

Words CORDULA SCHNUER

TOP 3 PRIORITIES

An open city

“We’re dedicated to making all our residents feel at home in our cosmopolitan capital,” says mayor Lydie Polfer who is running for office again. The capital wants to be “open and welcoming to all,” she says, by offering “a wide range of high-quality services that strengthen community ties and make it easier for residents to come together and meet,” for example, through cultural and sports activities and green spaces.

A sustainable city

The city targets becoming CO2 neutral by 2035, says Polfer, “and keeping the quality of life in the city as high as possible.” Over the coming years, the DP wants to renovate the 190 buildings owned by the city to make them more energy efficient and to reach 80% of electric vehicles in the public bus network, among other initiatives.

A city that’s future-proof

“As a municipality that looks to the future, it is vital to view urban development as a long-term endeavour,” says Polfer. “It is therefore essential to invest wisely in infrastructure to cope with demographic growth but also future demands and challenges.” Schools, cultural facilities, parks, sports grounds and buildings but also technical and underground infrastructure must keep in step with the city’s expansion. “This also applies to the development of all mobility-related infrastructure,” from sustainable mobility to the tram and individual transport. “Last but not least, the development of the existing real estate and housing infrastructure is of utmost importance,” says the incumbent, adding that thousands of homes will be created in new developments, such as StadePark, Nei Hollerich and Porte de Hollerich.

INTEGRATION MATTERS

Have an impact

Camilla Cuppini has been a member of the City of Luxembourg’s integration commission since 2014. “I decided to take a step forward by running as a candidate for the DP, hoping to have a greater impact in the local community’s life,” she said after joining the Democratic Party for the upcoming election.

Intercultural integration

“The fight against isolation and the promotion of contacts between residents from diverse cultural backgrounds is the challenge that our society faces, especially after the pandemic.” To help bring people closer together, “intercultural integration actions at the local level will be essential for creating a welcoming society where everyone can thrive and contribute to the community.”

CAMILLA CUPPINI Town council candidate

LYDIE POLFER Incumbent mayor

Photos Matic Zorman, Romain Gamba

Safety must be guaranteed

The CSV has no small aim: making Luxembourg City the best place to live. That includes improving security but also focusing more on the capital’s different neighbourhoods, making them more modern and ensuring they offer everything citizens need in daily life.

Words CORDULA SCHNUER

INTEGRATION MATTERS

Defend ideas

As a business owner in the Gare district, Angélique Bartolini has been in regular contact with city officials to discuss the situation of independent shops but also security issues. “It’s therefore natural that I accepted the offer to be candidate for the CSV,” she said, adding that she wants to “defend ideas and also propose them.”

Mutual understanding

“Integration policy and political participation must rest on mutual understanding,” said Bartolini. Language can be a barrier, and par ties should offer more information in French and English. A French native, she says the city’s multiculturalism makes it “interesting and open.” Foreigners, she says, should “get involved in the life of our commune” and use their vote.

TOP 3 PRIORITIES

1 3

Local police force

“For our life and living together in the city to be the best possible, our personal and collective safety must be guaranteed,” says Serge Wilmes, deputy mayor and candidate for the top job. The CSV plans to introduce a municipal police force under the authority of the mayor and college of aldermen. But more offers of support for vulnerable and disadvantaged persons will also be needed, adds Wilmes.

Neighbourhood living

“First and foremost, we live in one of the city’s 24 neighbourhoods,” says Wilmes. In the first year following the election, the CSV wants to develop a “neighbourhood development plan with concrete measures” together with citizens to make sure that the capital’s districts offer everything that people need on a daily basis, from shops and services to playgrounds and transports.

Best use of available space

The CSV wants to “build new, sustainable and mixed districts with affordable housing of the highest quality, which protect resources and optimally use space.” As examples, Wilmes cites the Porte de Hollerich and the Faïencerie development in Rollingergrund and Muhlenbach, where first housing blocks are going up together with a new neighbourhood centre and a link to Limpertsberg and Bambësch. Elsewhere a new recycling centre is planned for Merl and an athletics stadium in Hamm before construction on the new district at the former Josy Barthel stadium can begin. “This is the vision and ambition of my team and me for our city: to make it the place with the best quality of life,” says Wilmes. “A modern, sustainable and multicultural city in which our whole life has room. A city of short distances, that creates proximity and strengthens the neighbourhood.”

Photos

Romain Gamba

ANGÉLIQUE BARTOLINI Town council candidate

SERGE WILMES Alderman & candidate for mayor

DÉI GRÉNG

Create a green and attractive city

Words CORDULA SCHNUER

TOP 3 PRIORITIES

INTEGRATION MATTERS

1 2

Improving quality of life

“We’ll create more space for pedestrians and children, better mobility and more terraces,” says François Benoy, the Green party’s candidate for mayor in the capital. It’s only part of the plan to improve the quality of life in the city centre but also the neighbourhoods around it. “With more greenery and trees, we’ll increase biodiversity and prevent heat in the summer months. This will help to create a green and attractive city.”

Sustainable, efficient mobility

“The city must allow everyone to travel safely in everyday life, be it on the way to work, to school or to go shopping.” After the successful arrival of the tram, “we now want to extend this vision of sustaina ble and efficient mobility.” That includes further extending the tram, an interconnected network of safe cycling paths and making carsharing and e-mobility more attractive.

3

A climate-neutral city

“In order to face the climate crisis, we want Luxembourg City to become climate-neutral in the next 10 to 20 years,” says Benoy. Updated building regulations, support for energy cooperatives and more solar panels will “help citizens move away from fossil fuels.” The party wants to invest into the energy efficiency of public buildings and switch the municipality’s fleet to electric cars. “We’ll also implement a zero-waste strategy.” That includes hosting green and sustainable events in the city, offering reusa ble materials like cups and cutlery, as well as the washing facilities to go with them, to organising associa tions. “As a result, we’ll increase quality of life in our city and strengthen the independence

Breath of fresh air

“As an Italian, mother of four, EU jurist and co-founder of a societal impact company, I have been active in Luxembourg City for 20 years,” says Stefania FiliceLorenzen. “We need to move forward in order to bring fresh air into our city” following a “standstill” over the last years after déi Gréng lost power in the 2017 election.

No more parallel lives

“Foreign citizens tend to isolate in parallel societal lives.” A proactive integration and civic participation policy for déi Gréng would include a “reception officer” who will help newcomers settle in.

“By offering real citizen participation in different languages, instead of just informing the citizens, we will involve residents in shaping our intercultural city.”

It’s all in the name, with déi Gréng putting a greener city at the top of its agenda, including making mobility more sustainable and efficient, and creating more space for citizens to enjoy a better quality of life and participate in the city.

STEFANIA FILICE-LORENZEN Town council candidate

FRANÇOIS BENOY Town councillor & candidate for mayor

Photos Romain Gamba

Liveliness is really important

Luxembourg City must come alive, says the LSAP as one of its top priorities for the capital, alongside investments in affordable housing and making sure that more foreigners make their voice heard in politics and understand the impact of local decision-making.

Words CORDULA SCHNUER

TOP 3 PRIORITIES Invest in housing

1 2

“The City of Luxembourg has financial reserves of around €1.1bn,” says Maxime Miltgen, who is running for mayor in the capital. The LSAP wants to invest €100m per year into housing, which would remain in public hands. “One in five working people in Luxembourg live below the poverty line,” she says, highlighting the pressure to create affordable housing and adding that the DP--which has been in power for 54 years--has simply not done enough.

Combatting the democratic deficit

“I speak to many people, and they don’t know that they’re not registered or that they have that right.” Residents can register to vote throughout the year and between elections, with Miltgen saying more should be done every year to keep citizens engaged--for example, setting targets for annual voter signups, “so that once you get to election day, a majority is already registered.”

3

Making the city lively

“I live in the city centre and if I open my window after 9pm on a weekday, the streets are empty.” While it’s good that there are districts in the capital that are quieter, also for families, “in the city centre, at the Gare, liveliness is really important.” Busier streets will contribute to a greater sense of safety. “Streets have to be designed so that there is life.” Shopping, restaurants, housing must exist side by side to prevent the capital becoming a ghost town. “It’s also about culture and sports happening in the city. People need to have a reason to come to the city and stay for different things.” But for that to work, the city must also become greener and more sustain able. Creating urban heat islands, for example, will keep people away in the summer. “It goes hand in hand.”

INTEGRATION MATTERS Changing lives

“I joined the party shortly before the previous local elections,” says Gabriel Boisante, a French dual national who is jointly running for mayor with Miltgen. “I was always interested in politics, from a very young age.” Getting involved at the local level made sense to the businessman. “Local politics is how we can change and improve the lives of citizens.”

Giving a voice

Following the 2015 referendum, in which 78% of Luxembourg voters spoke out against national foreigner voting rights, “I felt, for the first time, really weird about being a part of Luxembourg,” says Boisante. Voting is a way to become more integrated, he explains, and to have a say on funding for schools or housing.

GABRIEL BOISANTE Town councillor & candidate for mayor

MAXIME MILTGEN Candidate for mayor

Photos Guy Wolff

DÉI LÉNK

Change starts at the local level

Affordable rental housing, reducing carbon emissions and building a more child- and teen-friendly city rank among déi Lénk’s top priorities for the capital. Change starts in the neighbourhood, it says, with plans to integrate nonnationals through more local spaces.

Words CORDULA SCHNUER

INTEGRATION MATTERS

Optimism and anger

“I’ve been active in déi Lénk since 2013,” says Ana Correia Da Veiga. Becoming involved “was the result of both optimism and anger. My anger came from the realisation that the parties in power are not interested in reducing inequalities. My optimism is based on the belief that the change starts at the local level, in the neighbourhood.”

Schools, diversity, languages

To better integrate foreigners, public elementary schools should be “vectors of social unity and equal opportunities,” she says. There should be more neigh bourhood spaces to create and disseminate cultural diver sity, and council meetings should be translated from Luxembourgish to French and vice versa.

TOP 3 PRIORITIES

1 2

Increase the share of affordable rental housing

“We want to rapidly increase the share of affordable rental housing from 2.5% to 10%,” says Guy Foetz, who currently represents déi Lénk on the Luxembourg City council. New neighbourhoods at Porte de Hollerich and the former Josy Barthel stadium should “serve as incubators for this change.” The city, he says, “has the means to invest in affordable housing,” with budget reserves and surpluses totalling more than €1bn.

Reduce carbon emissions

Carbon emissions from buildings account for 12% of the capital’s car bon footprint. “We will start with the city’s own buildings” to retro fit them and switch to renewable energies. Tenants and land lords should be systematically informed and encouraged to do the same but also supported, taking into consideration their financial means.

3

A child- and teen-friendly city

Introducing a 30km/h speed limit across the capital, “except a limited number of arterial roads,” and 20km/h near schools should make the capital’s streets safer for children and teenagers. Déi Lénk want to have “at least one public crèche in each neighbourhood” and enough places in school daycare. Also part of the plan is encouraging better collaboration between different institutions, such as daycare centres, music schools and club, “to guarantee access and transport.” A city app for teens would help to bring youth together and “give teenagers an overview of the offers available to them.” Children and teenagers should also “feel at home in the city’s cultural institutions,” says Foetz, “regardless of their backgrounds.” Having more local libraries with books in different languages and stories from different cultures would help this process, he adds.

GUY FOETZ Town councillor & candidate

Photos Romain Gamba

A direct vote or say from citizens

Words CORDULA SCHNUER

TOP 3 PRIORITIES

INTEGRATION MATTERS

1 2

Safe and clean public spaces

“Safety and cleanliness have notably decreased over the last years, but the responsible parties are in denial,” says Tom Weidig, vice-president of the ADR. “We have pushed to give the police and municipal agents more power to fight crime more effectively,” he says, adding that these requests have fallen on deaf ears with the parties in power and accusing them of preventing the public from knowing who commits which kinds of offences.

Stop reducing parking spaces

“We definitely want spaces for pedestrians and cyclists and we love our pedestrian shopping streets,” says Weidig. At the same time, however, the ADR is critical of the continuous disappearance of parking spaces in the capital.

“Every new construction site seems to magically swal low up a few parking spaces,” he says, adding that residents, too, are complaining.

“Too much is too much. There should be balance.”

3

Direct democracy

Citizens should be directly involved in local politics, says Weidig. For example, they should have had a say on major infrastructure projects. “The city has spent hundreds of millions on prestige projects without a direct vote or say from its citizens.” For example, an e-voting platform could help residents cast their vote even on smaller issues, such as the naming of infrastructure. Instead of French titled Stade de Luxembourg, the national stadium could have been called De Roude Léiw, if the choice had been left up to football fans, says Weidig. “The ADR believes in direct democracy. The 2015 referendum showed how very much out of touch the political and opiniongenerating class were.” Government proposals to introduce foreigner voting rights, lower the voting age to 16 and limit government man dates to two terms were all shot down by a significant majority of voters.

Propose alternatives

“I joined the ADR after the 2013 elections, because I felt that the ruling coalition only offered a laissez-faire approach towards integration,” says Goulnora Soultanova who came to Luxembourg nearly 30 years ago from Uzbekistan. “Explosive population growth, lack of affordable housing and the abandonment of children to daycare were not even talked about. The ADR is not afraid to address these topics and propose good alternatives.”

Learning Luxembourgish

“We must improve the visibility of Lëtzebuergesch.” Her true integration came through learning the local language, she says, adding that it should not only be up to Luxembourgers to adapt to newcomers. “Respect towards the local culture is close to my heart.”

A digital voting platform could help citizens have a greater and direct say in the decisions of the city, says the ADR, which also wants to see more transparency on crime and powers for police and municipal agents, as well as respect for the local culture and language.

GOULNORA SOULTANOVA Treasurer of the ADR’s Luxembourg City chapter

TOM WEIDIG Co-candidate for mayor

Photos Romain Gamba

Everyone has to take responsibility

The Pirate Party in Luxembourg City wants to involve citizens more in the day-to-day running of the capital, proposing a citizens’ council but also local representatives in each district as measures for social inclusion and to shape a city for everyone.

TOP 3 PRIORITIES

Shaping the city together

“Everyone should be able to decide when, where and how our city grows, what infrastructures we need and which problems to address,” says Pascal Clement, adding that the Pirates’ founding mission is to enable more citizen participation and more transparency. “That is exactly what we want to bring to the town hall.” A citizen’s council, representing people of different ages and nationalities, would be a step in that direction.

Public spaces for all

“We want to promote the equal use of public space for everyone,” says Clement, adding that the use of cars and above-ground parking lots “must be questioned.” People who cannot afford a car, or do not want one, should be taken into account just as much as motorists, the party says, with the necessary infrastructure available to everyone, even if that means taking away space for cars.

Social inclusion

“We want a city for everyone,” says Clement, “where no one is left behind, but where everyone has to take responsibility for their life.” To achieve this goal, the Pirates want to make mobility easier and create more affordable housing. Another step is “the creation of the post of a citizen representative and activity coordinator for each district.” This representative would be a port of call for residents in the area and should “actively welcome the new residents and explain to them the infrastructure and coexistence in the municipality and the district, the who, what, where and when.” This district coordi nator could also medi ate in case of minor conflicts and make “coexistence in the district more pleas ant and worth living.”

INTEGRATION MATTERS

Fundamental needs

“I recently joined the Pirate Party for its innovative programme, concrete and inclusive,” said Danielle Choucroun, a French national running for the party in the June election. “As a doctor, I see that the basic needs of people remain insufficiently taken into account,” she said, because they don’t speak the language, are in economic difficulty or in poor health.

Social fabric

Priority objectives to improve the integration of foreigners include the “recognition of professional qualifications for all, housing assistance and the possibility of building a supportive social fabric,” says Choucroun, adding that they will all help reduce social inequalities.

DANIELLE CHOUCROUN Candidate for the Pirate Party

Words CORDULA SCHNUER

Photos Romain Gamba

Corinne Lamesch, Alfi

See

1

Throughout May and beyond, venues across the country will be taking part in the European Month of Photography. Around two dozen events and exhibitions are planned with artists representing a range of styles and subjects.

1-31 May

Various venues

↳ emoplux.lu

2

Discover flamenco

Experience the voice, dance and guitar of flamenco at the FlamencoFestival. Performances, workshops and a film screening await visitors, with a fourperformance pass available in addition to individual tickets.

16-20 May

Various venues

↳ kulturfabrik.lu

Run a

photography marathon

3

Runners and revellers will take to the streets of the capital for this year’s ING Night Marathon, which includes full- and half-marathon options, a team run and children’s courses through Luxembourg City.

20 May

Luxembourg City ↳ ing-night-marathon.lu

Explore European design

4 solo plays Watch

The European Design Festival comes to venues across Luxembourg in the spring, with talks, studio visits, pop-up shops, workshops, a creators’ market and exhibitions by artists and designers from Luxembourg and further afield.

31 May-4 June Luxembourg City ↳ designluxembourg.lu

5

Celebrate national day

6

One-actor shows take centre stage at the 13th Monodrama Festival. The line-up of plays is set to include a diverse array of performances in different languages and artistic formats.

9-18 June

Banannefabrik ↳ fundamental.lu

TO DO

Raise a glass to Grand Duke Henri to celebrate the monarch’s birthday, which is actually on 16 April. Luxembourg City will turn into a street party with fireworks and all the trimmings on 22 June, with the military parade and other official proceedings the following day.

22-23 June Luxembourg City ↳ vdl.lu

Find more things to do on our agenda: delano.lu/agenda

Spend summer in the city by art show

The City of Luxembourg’s annual summer line-up promises a programme chock-full of events, from concerts in the Kinnekswiss park to outdoor cinema, flea markets, children’s activities and more.

15 June-15 September Luxembourg City ↳ vdl.lu

Make

A flurry of music festivals awaits this summer, from Luxembourg Open Air in Esch-sur-Alzette on 5 and 6 May and Usina23 hosted at Neischmelz in Dudelange on 3 and 4 June, to the Fête de la Musique on 21 June and the Blues Express on 8 and 9 July.

Villa Vauban is dedicating an exhibition to Dominique Lang. Largely unknown during his lifetime, the painter from Dudelange is today considered one of Luxembourg’s leading impressionists.

1 July-15 October Villa Vauban ↳ villavauban.lu

Mudam is the first venue in Europe to host a solo exhibition--Pleasure and Pollinator--by US artist, writer and transgender activist Tourmaline, who won the Baloise Art Prize in 2022.

Ongoing until 15 October Mudam

↳ mudam.com

Take pleasure

Be impressed

Photos Tatsuo Suzuki, Nader Ghavami, Kulturfabrik, European Design Festival, Thomas Aurin, Philharmonie, Alfonso Salgueiro, Les Musées de la ville de Luxembourg , Marc Lazzarini, Courtesy of the artist

Welcome to the club

Dear members,

Three events marked the first quarter of the year for the Club:

Ten CIOs met in January to talk about their challenges in 2023: management, people, risk, management and technology were in the spotlight, in a variety of sectors.

Delano celebrated its 12th anniversary with a colourful party where 900 people from the expat community were invited. The event was hosted by Nickie Nicole, the MC of the evening, where our guests enjoyed an amazing show and danced to the rhythms of mixes from DJ Ben Leo. Also, more than 500 people attended the ten inspiring women’s testimonies on the importance of inclusion on boards through diversity, barriers, opportunities... during the event 10×6 Women on board. What about the months to come?

On 25 April, discover 10 SME managers and their stories during our next 10×6 PME: Scale me up! Innovation, development, fundraising... They will explain the best practices implemented to develop their scalability. Mr Lex Delles, minister of Middle Classes and Minister of Tourism, will open the evening with a welcome speech. Discover a new political round table on the municipal elections and the priorities of the different parties. With some 130,000 inhabitants, and a population that increases considerably on working days, the capital is the economic lung of the country. Who is ready to lead this municipal flagship? Make your mind up on Thursday 4 May.

On 16 May, a new 10×6 event will be held on alternative investments, where ten experts from investment funds will talk about the advantages of the financial ecosystem in Luxembourg, its challenges and cross-border opportunities.

Looking forward to seeing you at the Club’s events.

MICHEL GREVESSE-SOVET Director Paperjam + Delano Business Club

“Diversity on boards boosts their appreciation of risks and opportunities, thus heightening organisations’ financial, environmental and social sustainability”

Karen Wauters Canadian consulate

HOW TO ATTEND

PAPERJAM + DELANO BUSINESS CLUB EVENTS ?

You’re already a member

Please check the Club section on our website delano.lu. Select, among all the digital and on-site events listed, the ones you would be interested in, fill in the registration form at the bottom page and register.

You’re not a member yet

Please email the Paperjam + Delano Business Club via club@paperjam.lu and an account manager will be in touch to introduce you to all the perks offered by the largest business club in Luxembourg.

1 Luc Brucher (Deloitte)

2 Patrizia Luchetta (Charlotte in Red)

3 Vincent Lekens (diego Luxembourg)

4 Vania Henry (Automobile Club du Luxembourg – ACL)

5 Anne-Sophie Preud’homme (PwC Luxembourg)

6 Guido Savi (FEBIAC)

7 Aaron Grunwald (Maison Moderne)

8 Fleur Thomas (British Embassy)

9 Steve Sabatier (Chenavari Investments)

10 Julie Becker (Bourse de Luxembourg)

11 Robert Scharfe (Odgers Berndtson)

“Invest in people, technology and growth”

Nataliia Iskra Deutsche Börse AG

Photos Eva Krins, Marie Russillo

AGENDA: TALKS & SHOWS

Tuesday 25 April 2023

Athénée de Luxembourg

18:30 to 22:30

10×6 PME: Scale me up!

With the participation of Lex Delles, minister for the Middle Classes and minister for Tourism, and experts Damien Chasseur (Collaboration Betters The World), Genna Elvin (Tadaweb), Myriam Filali (Rockids), Felix Hemmerling (Kodehyve), Patrick Kersten (Vesperia), Vincent Lyonnet (Steel Shed Solutions), Aida Nazari (Lux AI), Carolyn Prestat (Five Offices), Jean-Marc Ueberecken (Arendt & Medernach) and Clémentine Venck (Cocottes).

GOLD SPONSOR: ING

Thursday 4 May 2023

Chambre de commerce

18:30 to 21:30

Municipal elections: what are the political parties’ priorities?

Round table with the participation of Lydie Polfer (DP), François Benoy (déi Gréng), Gabriel Boisante (LSAP), Pascal Clement (Piratenpartei), Alex Penning (ADR), Serge Wilmes (CSV), and a representative of the political party déi Lénk.

Tuesday 16 May 2023

Forum Geesseknäppchen

18:30 to 22:30

10×6 Alternative investments

With the participation of Pascal Bouvier (Middlegame Ventures), Olivier Carré (PwC), Fabrice Coste (Invesco Management), Hind El Gaidi (Astorg), Constanze Jacobs (Commerz Real), Daniela Klasén-Martin (Credit Suisse) and Maria Samuelsson von Oldenskiöld (EQT Group).

AGENDA: SOCIAL EVENTS

31 March

Carrousel Lunch

31 March SOLD OUT

Thank God It’s Friday: Leadership Lunch

06 April SOLD OUT

Let’s Taste: chocolate

21 April

Thank God It’s Friday: HR Lunch

28 April

Carrousel Lunch

28 April

Thank God It’s Friday: Marketing Lunch

5 May

Thank God It’s Friday: Under 50 lunch

12 May

Thank God It’s Friday: Leadership lunch

25 May

Let’s Taste: Wine – Expats-Only

AGENDA: PARTNERSHIP

17 April

JE 2023 – The current geopolitical tsunami: How can Luxembourg’s and Europe’s economies stay stable and secure?

AGENDA: ACADEMY

5 April

ADVANCED TRAINING: Boostez votre middle management (4/6)

12 April

ADVANCED TRAINING: Développer votre stratégie commerciale (3/4)

12 April

WEBINAR

13

20 April

26

27

2

3

10 May

ADVANCED TRAINING:

un recruteur efficace (3/3)

10 May

WEBINAR

Comprendre le management transversal

GOLD SPONSORS: ING, PWC LEGAL Find

Guy Hoffmann, ABBL

Editorial

Phone (+352) 20 70 70-150

E-mail news@delano.lu

JOURNALISTS

Tracy Heindrichs (-164)

Lydia Linna (-165)

Jeffrey Palms (-156)

Cordula Schnuer (-163)

COMMUNITY MANAGER

Christophe Lemaire (-118)

PROOFREADING & FACTCHECKING

Pauline Berg, Lisa Cacciatore, Sarah Lambolez, Manon Méral

PHOTOGRAPHY

Romain Gamba

Guy Wolff

Matic Zorman

PUBLISHING DIRECTOR

Mike Koedinger

EDITOR-IN-CHIEF, DELANO MAGAZINE

Natalie Gerhardstein (-154)

EDITOR-IN-CHIEF, DELANO DIGITAL

Aaron Grunwald (-152)

COVER

Serge Ricco (art direction)

Brand Studio

Phone (+352) 20 70 70-300

E-mail brandstudio@maisonmoderne.com

DIRECTOR

Youcef Damardji

HEAD OF MARKETS & BUSINESS

Florence Christmann

HEAD OF CLIENTS AND MEDIA STRATEGY

Kevin Bultez

COMMERCIAL ASSISTANT

Céline Bayle (-303)

MEDIA ADVISORS

Nicolas Galtier (-318)

Mélanie Juredieu (-317)

Aline Puget (-323)

Léo Santoro (-335)

Mikaël Spezzacatena (-326)

BUSINESS CLUB ADVISOR

Virginie Laurent (-322)

HEAD OF CONTENT STRATEGY

Emmanuelle Thivollard

STUDIO MANAGER

Sandrine Papadopoulos

LAYOUT

Sophie Melai (coordination), Stéphane Cognioul, Juliette Noblot

Publisher

www.maisonmoderne.com

Phone (+352) 20 70 70

E-mail publishing@maisonmoderne.com

CHAIRMAN

Hugues Delcourt

FOUNDER, CEO AND PUBLISHING DIRECTOR

Mike Koedinger COO

Etienne Velasti

DIRECTOR BRAND STUDIO

Youcef Damardji

DIRECTOR, BUSINESS CLUB

Michel Grevesse-Sovet

CHIEF DIGITAL OFFICER

Viktor Dick

HR MANAGER

Pauline Vogel

ADMINISTRATIVE MANAGER

Sylvia Leplang

DIGITAL PROJECT MANAGERS

Meryem Alamy

DISTRIBUTION MANAGER

Quentin Marenic

All rights reserved. Any reproduction, or translation, in whole or in part, is prohibited without the prior written consent of the publisher. © MM Publishing and Media S.A. (Luxembourg). Delano™ and Maison Moderne™ are trademarks used under licence by MM Publishing and Media S.A. ISSN 2220-5535

Maison Moderne is committed to reducing its ecological footprint. Delano magazine uses CO2 neutral printing, Blauer Engel recycled paper for its cover and FSC® certified sustainable paper for interior pages. Please recycle. Have you finished reading this magazine? Save it, pass it on or recycle it!

In accordance with article 66 of the law of 08.06.2004 on the freedom of expression in the media, the following statement is obligatory “one time per year, in the first edition distributed”. We have decided to publish it each month. The company that publishes Delano is directly held, by a 100% stake, by Mike Koedinger, a publisher registered in Luxembourg. He is chartered with general and daily management.

DO Recruitment Advisors director O’Donnell likes the cosy atmosphere and the view over the Grand-Rue. Whether enjoying a drink while people-watching or tasting the tuna tataki or beef carpaccio, “you can feel miles away from the real world.”

44 GRAND-RUE L-1660 LUXEMBOURG

The BSP partner says she enjoys Amore’s “pink and tonic, and their finger food is easy to eat.”

11 RUE DU MARCHÉ-AUX-HERBES L-1728 LUXEMBOURG

The founding partner of Ilavska Vuillermoz Capital, shown here with his pup Otto Éclair, is “happy to be in a place where I can feel home” after travelling. He also praises the “heterogenic mix of people” who frequent the bistrot.

20 PLACE GUILLAUME II L-1648 LUXEMBOURG

The founder of Pink Not Red says the sushi and nibbles are good, and the ambience is “cosy and elegant [yet] not too uptight and over the top.” Bonus: it’s next to the grand ducal palace.

4 RUE DE L’EAU L-1449 LUXEMBOURG

Afterwork hangouts

ISABEL HØG-JENSEN at AMORE

ZUZA REDA-JAKIMA at KOBE

LAURENT HENGESCH at BEIM RENERT

SINÉAD O’DONNELL at POP/UP HERTZ

Photos Guy Wolff

SUSTAINABLE FINANCE

Grow your savings while supporting responsible companies and projects that foster ethical, environmental and / or social values

For more information, visit sustainable-finance.lu or contact your financial advisor