Brexit prompts EQT to create Luxembourg fund hub

The Swedish private equity firm will domicile all upcoming funds in Luxembourg to ‘future-proof’ its business.

EQT Partners is creating a fund hub in Luxembourg to avoid Brexit-related uncertainty.
The firm said the move secured “the predictability needed to ensure a top-quality product and service level.”

“We are looking at ways of future-proofing every single part of EQT; consolidating the GP presence is one way,” Peter Veldman, head of fund management at EQT, told pfm. “By having the hub in Luxembourg, we also secure that future funds are managed under the Alternative Investment Fund Managers Directive within the EU which is an important aspect for us. On balance, Luxembourg is the best long-term solution for EQT.”

He added the Brexit referendum has created “non-controlled uncertainty” and was one of the reasons behind the decision. This uncertainty caused the firm to “put the UK on ice” in the run-up to the vote in June.

The firm has closed eight funds across GPs in the UK, the Netherlands and Luxembourg since 2012. While some Swedish private equity firms have been on-shoring their funds recently, as reported by sister title Private Equity International, Veldman says the existing EQT structure drove its decision to domicile in Luxembourg.

“[Luxembourg’s] macro-environment for fund management and ability to offer one-stop solutions for deal structures [suits the EQT structure]. It is an integral part of the EU and we don’t see it as a tax haven at all. For EQT, the most important thing is to offer the client a tax-neutral solution,” he added.