Corporate financing in Europe is currently undergoing a
significant transformation. Historically, it has been largely
dominated by banks, but with banks being in the process of
deleveraging and currently burdened by additional capital
requirements, debt funds have stepped in and increasingly provided
funding to small- to medium-sized enterprises, either through
direct lending or through loan acquisition/participation. Debt
funds have grown significantly in number and size in recent years
and are constantly winning market shares vis-à-vis banks. In
Luxembourg, for instance, the number of assets managed by debt
funds has increased by a factor of six over the past five
In order to keep pace with this market development from a
regulatory perspective, the European Securities and Markets
Authority (ESMA) published its opinion on 'Key principles for a
European framework on loan origination by funds' at the
European Commission's request. In doing so, the ESMA took stock
of the national practices towards loan origination by investment
funds and proposed the cornerstones around which a harmonised
European framework on loan origination could centre.
In response to this, the Commission de Surveillance du Secteur
Financier (CSSF) published an update of its AIFM Law FAQ in June
2016, where it officially confirmed that Luxembourg-based AIFs may
engage in loan origination, loan acquisition or loan participation
activities, subject to specific organisational and operational
Even though market participants could always obtain swift
feedback from the CSSF through its approval and supervisory
process, the update of the AIFM Law FAQ provided most welcome
clarification to the market players in Luxembourg, reflecting the
growing importance of debt fund activities here. After all,
Luxembourg is the largest fund distribution centre in Europe and
second largest in the world.
Our service offering
In order to support market participants in the various
challenges related to loan origination, loan acquisition and loan
participation activities by funds, we have designed a training
curriculum covering all relevant aspects of these activities from
audit, risk management, tax, and valuation perspectives.
These topics are set up as separate, stand-alone
'modules', and it is possible to select all of the modules
or only single ones for a training session. For each of the
modules, a dedicated team of experienced professionals will provide
you with an in-depth view on the relevant regulatory provisions,
methodologies, and market best practice.
Besides the aspects mentioned above we are delighted to talk to
you on any further aspects around debt funds. Please contact me for
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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25 Apr 2017, Business Breakfast, Luxembourg, Luxembourg
KPMG Luxembourg is pleased to invite you to a networking breakfast for Family Offices and Private Bankers. On this occasion, we will present the latest developments around hidden profit distributions to non-shareholders.
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.
The conference will centre on the new tax normal, full transparency, and specifically the role of private bankers in this new age. Originally perceived as a threat to existing business models, full tax transparency may actually hold new opportunities for private bankers.
With effect from 18 April Jersey is introducing a new regime in respect of private funds - simplifying the regulatory regime, and extending the benefits of flexibility and speed across Jersey's private funds space.
The Hedge Fund Law Report recently interviewed Woolverton in connection with his move to DMS, during which he discussed the role of robust fund governance in the context of private funds.
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