Is Luxembourg gaining or losing interest as a fund domicile?
Over the years, we have seen an increased interest in Luxembourg due to the continuous development of the Luxembourg toolbox, the economic environment, as well as Brexit, which have contributed to the rise in fund structures being set up in Luxembourg.
What is the attraction compared with other domiciles?
Luxembourg’s structuring toolbox offers a wide range of investment vehicles, which could be established as unregulated, indirectly regulated or fully regulated alternative investment funds. It also benefits from political stability, an established knowledge center, and a large network of highly qualified service providers.
What is the fund structure of choice?
The most commonly used vehicle is the special limited partnership (‘société en commandite spéciale’ or SCSp), which may be used as a regulated or unregulated fund vehicle. These benefit from flexibility, confidentiality and speed of establishment, and most are directly under the scope of AIFMD.
Which investors does it appeal to?
It depends on whether the structure is regulated or unregulated, but Luxembourg generally appeals to institutional and well-informed investors.
What is its weakness/downside compared with other domiciles?
Luxembourg is a favorable jurisdiction for private equity, real estate, private debt or infra funds, but hedge funds and very liquid funds may work best in other countries with a more established industry.