50% increase in private equity funds AuM in 2019

50% INCREASE IN PRIVATE EQUITY FUND AUM IN 2019 AND NUMBER OF €1 BILLION+ FUNDS DOUBLE

The size of the average private equity fund domiciled in Luxembourg has increased by 50% since 2018, with the number of private equity funds holding assets worth more than €1 billion has also doubled to a total of 36 funds in 2019.

The assets under management (AuM) of the average private equity fund domiciled in Luxembourg has increased by 50% since 2018, highlighting the growth within the private equity industry, according to Deloitte research conducted on behalf of ALFI. The average fund size now stands at €200.6 million according to the report, whilst Luxembourg accounts for 4.3% of the global private equity fund industry according to latest figures from McKinsey.

Benjamin Collette, Partner at Deloitte Luxembourg commented: “In a fast-changing environment, BEPS, AIFMD and Brexit have forced fund managers to seek new long-term stable operating solutions and Luxembourg has more often than not been the solution of choice. The appetite for the Luxembourg fund structuring toolbox has increased beyond expectation over the past few years. The diverse range of vehicles, from unregulated to regulated products together with the asset class expertise developed over the years within the professional community and the CSSF are key factors behind this collective success. The third edition of this survey is aimed at giving a snapshot of the Luxembourg PE fund industry as at Q3 2019.”

Camille Thommes, Director General of ALFI commented: “Over the last decade many large international houses with considerable and growing local presence have set up shop and conducted business out of Luxembourg. The AIFMD introduced new organisational requirements and specific disclosure rules regarding AIFMs managing AIFs which acquire control of non-listed companies and issuers. The alternative investment industry has accepted the challenge and is today governed by a framework that has the potential to develop into a brand, just like the UCITS Directive.”

Other results of the research include:

• The AuM of PE funds have increased by 19% year-on-year, bringing the total AuM to €148 billion, out of this total, 57% of PE funds have an investment period of five years or more, in line with the global trend for longer investment horizons.
• PE funds structured under the RAIF regime or as unregulated limited partnerships have increased by 20 points since 2018, representing 51% of all Luxembourg PE funds in 2019.This follows an additional 20 point increase from 2017 to 2018, when PE RAIFs or unregulated limited partnerships represented 31% of all Luxembourg PE funds.
• Large PE houses have embraced Luxembourg as their fund structuring jurisdiction, a particular trend with funds from North American PE houses, who represent 8% of the Luxembourg PE fund population. Luxembourg is increasingly becoming the jurisdiction of choice for North American PE houses to launch parallel vehicles of mega-funds.
• 9 out of the top 10 PE houses established in Luxembourg have reinforced their presence by employing compliance and risk professionals, which was not the case in 2018. Recruitment, talent retention and infrastructure remain key concerns, however.

Camille Thommes commented further: “PE managers appreciate Luxembourg’s business-friendly environment and have embraced the introduction of the RAIF, which created a manager-regulated alternative fund to complete the Luxembourg investment fund toolbox.”

Arnaud Bon, Director at Deloitte Luxembourg, said: “We have been collecting data for three years, so for the first time we are in a position to put industry trends into perspective, and which has confirmed unprecedented growth. We believe that quantifying the trends observed by most Luxembourg financial professionals over the last few years will help bring transparency to this sector and further boost the credibility of Luxembourg as the new European PE hub.”

Download the full ALFI/Deloitte Private Equity and Venture Capital Investment Fund Survey 2019.

For more information, please contact:

Alena Schluenz
Senior Communications and Industry Affairs Advisor, ALFI
Tel: +352 22 30 26 – 1
communications@alfi.lu 

Notes to editors:

The Association of the Luxembourg Fund Industry (ALFI) represents the face and voice of the Luxembourg asset management and investment fund community. The Association is committed to the development of the Luxembourg fund industry by striving to create new business opportunities, and through the exchange of information and knowledge.

Created in 1988, the Association today represents over 1,500 Luxembourg-domiciled investment funds, asset management companies and a wide range of businesses that serve the sector. These include depositary banks, fund administrators, transfer agents, distributors, legal firms, consultants, tax advisory firms, auditors and accountants, specialist IT and communication companies. Luxembourg is the largest fund domicile in Europe and a worldwide leader in cross-border distribution of funds. Luxembourg-domiciled investment funds are distributed in more than 70 countries around the world.

For further information, do not hesitate to consult www.alfi.lu. To keep up with all the news from ALFI and the fund industry in Luxembourg, join us on LinkedIn (The Luxembourg Fund Industry Group by ALFI), Twitter (@ALFIfunds), Youtube and Vimeo.