This content is from: Local Insights

Private equity and venture capital

Luxembourg has gained recognition as an international private equity hub. Existing and new legislation is relied on for the structuring and implementation of major international private equity transactions and/or funds. The number of dedicated risk capital investment funds (SICARs) increased by 60% to reach 173 at the end of the year; 2007 also saw the implementation of the law of February 13 2007 relating to specialised investment funds (SIFs). Since then, we have seen an unbroken thirst for alternative fund structures, with a special focus on the SIF, which offers significant corporate and investment flexibility with the benefit of a favourable tax treatment in an environment with recognised supervision. SIFs have encountered an enormous success, with more than 200 SIFs launched in 2007 alone. A significant number of SIFs have been launched that invest in primary and secondary direct as well as indirect private equity transactions.

Luxembourg is an international fund jurisdiction. As such it usually stays clear of domestic turbulence such as that seen in Germany or the UK in the past two years. Even though the credit crunch that followed the subprime crisis may not have a direct impact on the Luxembourg private equity sector, an international fund centre cannot be completely unaffected by a situation with global implications. It remains too early, though, to determine its impact at the current stage.

The outlook for 2008 is positive. Potential new markets are opening up, and established markets continue to play an important role. Luxembourg will continue to solidify its reputation as a lightly regulated onshore international private-equity structuring hub, modernising the existing SICAR legislation after three years of operation and further building on best practices.

Gilles Dusemon

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