SICAR And Private Equity In Luxembourg: Is It A Secure Investment

What is a SICAR in Luxembourg and what does private equity mean?

In this article we will talk about SICAR in Luxembourg, however, first of all, it is important to understand what private equity means, because the two entities are strictly connected.

The term "private equity" means the institutional investment activity in risk capital of non-listed companies but with high potential for development.

Private equity funds are becoming more and more important within the national and international economic scene because of their intervention function to support companies of any size in order to develop their business.

Therefore, they are alternative investments, which are currently considered as relevant for the stabilisation and diversification of the portfolio, especially in the presence of low interest rates and poor returns on conventional financial markets.

The importance of this activity may be found in giving the opportunity to small and medium size companies, which are not listed on the stock exchange, to secure capital.

In accordance with what described above, private equity may basically be considered a type of medium-long term investment, which is mainly undertaken by institutional investors with the aim to obtain a substantial income on account capital deriving from the acquired shareholdings or stock market flotation.

SICAR and private equity in Luxembourg: the place to be for Private Equity in Europe

The country which has acquired much more prestige in the matter of SICAR and private equity interests certainly is Luxembourg.

Talking in numbers, nine out of ten of the largest SICAR and private equity establishments of the world appear to be operating in the Grand Duchy of Luxembourg.

Moreover, there are at least 25.000 holdings domiciled in the territory.

In view of the above described phenomenon and in order to improve transparency in the field, Luxembourg has set up two main vehicles of private equity and capital venture, namely SICAR and the more recent SIF.

Private equity funds in Luxembourg are structured in the form of regulated funds subject to CSSF monitoring, or in the form of non-regulated funds, namely SOPARFI, and thus not subject to CSSF monitoring.

SICAR and private equity in Luxembourg: their advantages

SICAR or private equity funds in Luxembourg provide different advantages, as you may see below.

A SICAR is a private equity fund, designed for investment in risk capital, recommended for start up companies, or...

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