An Attractive And Dynamic Market For Private Equity

With the possibility of a hard Brexit looming, Luxembourg remains a prominent and stable location for doing business in the European Union and beyond. Located in the centre of the European Union, the Grand-Duchy of Luxembourg is Europe's leading investment fund centre and the second largest fund centre worldwide after the US. 9 out of 10 of the largest private equity houses worldwide are doing business out of Luxembourg. The country also benefits from a stable political regime where traditional political parties and policy makers, regardless of their position on the political spectrum, have worked together to make Luxembourg a business-friendly political environment, conducive to welcoming decision-makers and entrepreneurs. The Luxembourg tax framework is also regarded as one of the most stable and rewarding in Europe for companies, their shareholders and their employees and corporate laws and regulations are highly flexible and competitive. This, in a nutshell, explains the country's propensity to attract private equity houses.

When it comes to setting up a structure, Luxembourg's efficiency within the civil law world is second to none. It is possible to incorporate companies within a few days and office space is readily available. A large number of leading, global service providers are already present in Luxembourg to service the ever growing accounting and day-to-day management needs of operating companies. Furthermore, Luxembourg is host to an increasingly large number of companies dedicated to servicing funds. With a growing population and a well-educated, multilingual workforce, Luxembourg has become increasingly attractive to non-EU private equity houses and asset managers as the hub for their European operations.

Range of Private Equity Investment Vehicles

The go-to structures for private equity houses in Luxembourg are investment funds typically structured as limited partnerships and holding companies owned by private equity funds.

Luxembourg company law offers a wide range of partnership and company formation options, each flexible in their own way, to allow the shareholders and limited partners to tailor the management and general organisation of such vehicles to their specific needs. Luxembourg company law recognises the validity of shareholder agreements and allows for complete contractual freedom, including choice of governing law, as long as fundamental civil law principles are respected. Luxembourg partnerships offer...