ALFI new podcasts: Focus on real estate, hedge and private equity funds: Luxembourg is AIFMD ready

Please note that the views and opinions expressed are the speakers own and do not reflect necessarily those of ALFI.

Johan Terblanche, Partner, Loens & Loeff Luxembourg

The key results of the ALFI Real Estate Investment Funds Survey 2014 show that Luxembourg continues to increase its market share in global RE funds.  In terms of numbers, 22 new RE funds were set up in 2012 and an additional 26 RE funds were launched during the first 10 months of 2013. Mr Terblanche points out that Luxembourg domiciled RE funds have reached EUR 40 bn of AuM on a net basis. Total growth in these funds since 2004 is 241%.

The main reason why investors and asset managers choose Luxembourg is that this jurisdiction enables them to meet the objectives of all the different players in the market (investors, asset managers, initiators). Nowadays, investors are looking for both predictable returns and an understandable asset class; real estate meets these criteria.

Jérôme Wigny, Partner, Elvinger, Hoss & Prussen

Mr Wigny comments on how the AIFMD is perceived by European and non-European hedge fund managers. He also explains when a US HF Manager should make use of AIFMD and when a non-EU Hedge Fund manager needs to establish an entity in Europe in order to market funds in the European Union.

Mr Wigny expects that, in future, investors will prefer to invest in a regulated fund and will therefore require a fund to be set up in Luxembourg.

Herman Beythan, Partner, Linklaters Luxembourg

Mr Beythan states that the Limited Partnership regime is indispensable to the Luxembourg alternatives tool box Anglo-Saxon institutions are already familiar with the structure.  Moreover, the LP regime is of interest for all types of asset class and asset managers because of its flexibility and tax efficiency. It is also particularly favourable for PE Asset Managers as they need a vehicle that can be both regulated and unregulated at a product level. Mr Beythan explains that about 40 LPs have been set up since its introduction (as at November 2013): 50% are common LPs with a legal personality and 50% are special LPs without a legal personality.  Whilst not all of these LPs are AIFs, Mr Beythan believes that the number of AIFs using the LP regime will increase considerably in the future.