Most Read Contributor in Luxembourg, February 2017
Since the 2008 crisis, mid-sized companies have often come up
short when it comes to growth finance, due to banks lowering their
levels of debt financing and opting instead for more established
borrowers. Combine this with the high price of assets nowadays, and
the low-interest-rate environment, and we find companies—and
indeed everyone—looking high and low for new sources of
The fruits of these searches are increasingly in the same area:
Debt funds are on a serious uptick in Europe, with more and more
deals each year since 2008. But why debt? Its success seems to have
come about by a convergence of private equity and real estate:
those in private equity have the experience in debt financing,
while those in real estate are finding real estate too pricey to
get to their desired yield and have thus also sought refuge in debt
investment. Debt investment can also be less risky than owning the
real estate outright if done properly, which has further driven
them in this direction.
Further enticing new investors in debt has been the void left in
the market by banks, who are stepping out of the real estate game
on account of the changing regulatory environment. This opens the
way for pension funds, insurance companies, private equity
investors, and others to take advantage of the high yields and safe
returns of debt.
Identify, specify, classify
We've even seen debt funds gaining layers of specialisation
in their post-2008 boom. Some get into debt funds by buying loan
books from a bank or other lender, while others coinvest with a
bank that's looking to reduce its exposure. Specialised
managers have furthermore emerged to create new types of lending
vehicles in response to the will of the market. Among these are
bridge loan financing, currently very popular in North America,
which involves helping borrowers to either roll over their loan at
favourable terms or borrow to purchase new property. Then there is
peer-to-peer lending now being established through securitisation
vehicles, which draws on a crowdsourcing model. New lenders are
also stepping in to assist cash-strapped governments worldwide in
their need to fund the refurbishment and construction of
infrastructure. And finally there are real estate specialists or
investment managers who are simply making loan investments instead
of buying the asset directly.
Raving about the RAIF in Luxembourg
Luxembourg has a history of finding new solutions for investors
with the help of its flexible and efficient legal/regulatory/tax
environment. In this case the history is barely history: earlier
this year a new investment vehicle dubbed the Reserved Alternative
Investment Fund vehicle, or RAIF, was launched. The RAIF is made to
be simple: it can be launched without prior approval from the CSSF
(Luxembourg's regulator), it offers a high level of investor
protection (with the AIFMD quality seal), it has access to a
marketing passport, and it possesses a high level of structuring
click here for even more advantages.
Depending on the investor's tax residency, a well-structured
RAIF could be a very efficient way to convert interest income into
capital gains—which are generally more favourably taxed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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As the banking industry continues to be shaped by technological and regulatory forces, we’ve gathered our European Central Bank (ECB) experts to hold a conference about this changing landscape. KPMG’s ECB desk from Frankfurt will join our Luxembourg banking partners to unpack the latest news from the ECB, including regulations that will affect the future of banking.
We would be very pleased if you could attend this event, which will be held at our Luxembourg headquarters in Kirchberg on 30 March. The talk will begin at 5:00pm and last until 6:00pm, at which point the evening will be turned over to a networking session with drinks.
Please let us know if you are able to attend by using the registration button above (by 27 March, if possible).
We look forward to seeing you there!
Here in Luxembourg, LPEA are holding an event which will offer new initiatives by bringing General Partners (GPs) and Limited Partners (LPs) together to examine and speak on the industry from the “360” perspective, leaving no stone unturned. We are a sponsor of the event, as well as having a speaker present. David Capocci, Partner and Head of Alternative Investments will be offering his own insight on the industry nowadays.
Over the last 40 years, the Cayman Islands has matured into one of the world's most sophisticated and successful international financial centres, providing a competitive, effective, transparent, cost-efficient and tax-neutral platform for international capital flows underpinned by an environment of legal, political and economic stability.
In the context of the Private Member's Motion, Cayman Finance strongly urges the movers of the motion and the other members of the House to remain focused on the need to protect the Cayman Islands Financial Services Industry, which is directly responsible for more than half of the Islands' economy, more than half of the government's revenue and employs more Caymanians than any other industry.
As the UCITS acronym suggests, its original focus was on investment in "transferable securities" although UCITS do offer far wider investment possibilities, as explained below.
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