Mergers And Acquisitions 2018

I OVERVIEW OF M&A ACTIVITY

M&A activity remained relatively strong in Luxembourg in 2017 and 2018, despite a global slowdown due to the remaining uncertainties resulting from Britain's decision to leave the European Union and key global elections. Some of the reasons for this are Luxembourg's regulatory and legislative framework, its legal and political stability, and its domestic market, in particular its fund industry and financial sector.

Luxembourg remains the largest investment funds centre in Europe and the second-largest in the world behind the United States. At the close of March 2018, the net assets under management in Luxembourg amounted to €4.149 billion.2 Hence, the investment funds industry continues to play a major role in stabilising the Luxembourg market. Luxembourg continues to be ideally placed to implement tax-efficient M&A transactions, and hence to be a key platform for M&A and private equity activity. One reason for this is that the relevant legislation continues to be adapted and modernised in order to be as attractive and flexible as possible: this includes new forms of companies, namely the special limited partnership and the simplified stock company, which offer additional solutions for economic actors, including those of the private equity world. Funding instruments and methods created and used by practitioners over past decades, such as the use of tracking shares or the issuance of hybrid instruments, have recently been confirmed by the legislator and codified in the law of 10 August 2016 amending the law of 10 August 1915 on commercial companies (the 1915 Law), hence creating additional legal certainty.

Luxembourg remains one of the leading European hubs for vehicles investing directly or indirectly in European real estate. It is also worth noting that a lot of actions are being undertaken by the government to make Luxembourg a leading hub in the areas of information and communication technology, fintech and space technology.

Chinese banks continue to establish their European headquarters in Luxembourg. In general, Asian deal-makers and investors continue to set their sights on European targets in a bid to reduce reliance on their domestic market. North American investors on the other hand may feel more inclined to stay at home, as there may be new opportunities in a less regulated and lower tax US environment, as promised by the new US President.

With a number of promising drivers and deals in place, we...