Workshop: Private Equity

Transcription

1 London, 19 May 2011

2 London, 19 May 2011 Workshop: Private Equity Moderator: Laurent Schummer, Partner, Linklaters LLP Panelists: Yves Courtois, Partner, KPMG Lars Jonsson, Listening Triton to investors Christoph Lanz, Vice President, Banque Privée Edmond de Rothschild Europe Hans-Jürgen Schmitz, Managing Partner, Mangrove Capital Partners

3 Luxembourg a leading European private equity hub A leading European regulated private equity centre Over 300 regulated private equity structures Over US$ 40 billion of PE/VC fund assets administered in Luxembourg Growth of 850% over last 5 years Leading private equity service providers present in Luxembourg Leading global private equity houses operating in Luxembourg US$ 40 billion in assets Over 300 regulated funds

4 Luxembourg a leading European private equity hub Global private equity houses using Luxembourg as a center of excellence 3i American Capital Apax Partners Bain Capital BC Partners Carlyle Group Cinven Coller Capital CVC Fortress Goldman Sachs Investcorp JP Morgan KKR Kreditanstalt für Wiederaufbau (KfW) Lazard LGT Capital Partners Oaktree Capital PAI Partners Permira Unicapital TPG Warburg Pincus [.]

5 The Luxembourg PE tool box Regulated: the PE Fund family Standard Supervision UCI Part II Light Supervision SICAR SIF Unregulated: the PE Acquisition family SOPARFI > 30,000 Securitisation Undertakings > 500 (26 regulated) Source: CSSF 2011

6 Lightly regulated PE vehicles SIFs SICARs Feb 07 Dec 07 Dec 08 Dec 09 Dec 10 Jan Jan 11 Number of UCI Net assets of UCI in bn. Source: CSSF 2011

7 The Luxembourg PE fund environment FUND MANAGEMENT External Advisor Investment Committee INVESTORS Private Equity House (General Partner / Investment Manager) REGULATORY Insurance Co s Pension Funds Banks Business Angels HNWIs Corporate investor Fund of funds Family offices Sovereign wealth funds Fund raising / Commitments Capital calls Distribution Selection Monitoring Development Mgt + Perf. Fee Private Equity Fund Investments Divestment Light Supervision Custody Centr Admin Audit CSSF Depositary Bank Administrator Auditor DI DI DI PE Fund PORTFOLIO DI DI DI

8 Luxembourg Tax Neutrality INVESTORS Minimum tax leakage on capital gains and income End investor usually achieves same result as direct investment FUND STRUCTURE AIF No or optimally reduced WHT No/limited taxation at fund level SPV Optional: SPV EU Directives and DTT access No or optimally reduced WHT Certainty around tax exposure INVESTMENT MARKET Investments All PE/VC strategies

9 UK & international Master/Feeder Structures HNWI Institutional Professional Investment Manager XYZ UK & international Luxembourg CSSF Luxembourg Authority Auditor Legal Advisor SIF/ SICAR XYZ Set-up as a FEEDER Local Fund, the MASTER Target Investments : VC/PE, RE, HF, securities, cash Custodian Central Administration

10 SIF Umbrella structures UK & international HNWI Family Office, Family, Individual Etc. Institutional Bank, Insurance Cpy, Pension Fund, Re-ass. Cpy, FoF Professional Private Banker IFA Investment Manager 1 (ESP) Investment Manager 2 (US) Investment Manager 3 (UK) CSSF Luxembourg Authority SIF Umbrella Structure Initiator XYZ Custodian UK & international Luxembourg Auditor Legal Advisor Sub-fund 1 Long Only Strategy (plain vanilla UCITS-like fund) Sub-fund 2 Dedicated to 1 HNWI or its family or to 1 Institutional Investor Sub-fund 3 Socially Responsible Investments: Microfinance etc Target Investments Equities, bonds, target funds, MFI, cash, PE, RE, others Sub-fund 4 Pension pooling Central Administration Some TRENDS : -Private Equity -SRI Funds -Passion Funds (art, wine, football, ) -US Life Settlement Funds -Infrastructure -Real Estate -Timberland -Pension Pooling

11 Tax Neutrality - Luxembourg DDT Network 60 DTTs in force 16 DTTs pending Updated: July, 2010 Europe and Central Asia 1. Albania 9. Denmark 17. Iceland 25. Macedonia 33. Romania 41. Switzerland 2. Armenia 10. Estonia 18. Ireland 26. Malta 34. Russia 42. Turkey 3. Austria 11. Finland 19. Italy 27. Monaco 35. San Marino 43. Ukraine 4. Azerbaidjan 12. France 20. Kazakhstan 28.Moldova 36. Serbia 44. Un. Kingdom 5. Belgium 13. Georgia 21. Kyrgiztan 29. Netherlands 37. Slovakia 45. Uzbekistan 6. Bulgaria 14. Germany 22. Latvia 30. Norway 38. Slovenia 7. Cyprus 15. Greece 23. Liechtenstein 31. Poland 39. Spain 8. Czech Republic 16. Hungary 24. Lithuania 32. Portugal 40. Sweden America 46. Argentina 48. Brazil 50. Mexico 52. Trinidad &Tobago 47. Barbados 49. Canada 51. Panama 53. United States Africa and Middle East 54. Bahrain 57. Lebanon 60. Qatar 63. U.A.E. 55. Israel 58. Mauritius 61. Syria 64. South Africa 56. Kuwait 59. Morocco 62. Tunisia 65.China 68. Indonesia 71. Mongolia 74. South Korea South and East Asia 66. Hong-Kong 69.Japan 72. Pakistan 75. Thailand 67. India 70 Malaysia 73. Singapore 76. Vietnam

12 AIFMD How will Luxembourg adapt? Lux AIF (UCI/SIF/SICAR) Lux AIFM Prudential supervision Depositary requirement Transparency requirements Delegation Passporting capabilities Support services Highest compatibility standard Highest compatibility and «UCITS ManCo» track record Already standard Already standard Already standard Already standard Luxembourg sets global standard for distribution/placement AIFMD anticipation

13 Luxembourg a global PE centre MARKETPLACE LEGAL / TAX EXPERIENCE Central location, with highly qualified multi-lingual workforce Good connections to other European financial centres Stable government with strong political support for the financial services industry Leading investment fund/ financial centre in Europe and #2 globally Responsive, pragmatic and accessible regulator and tax administration Stable, flexible and predictable on-shore legal and tax regime for AIF through: Regulated AIF Specialised Investment Fund (SIF) Risk Capital Investment Company (SICAR) Unregulated AIF Financial holding company (SOPARFI) for Luxembourg or foreign funds Strong investor protection Over 20 years experience in structuring AIF Strong industry involvement through ALFI / LPEA, including dedicated training in all AIF assets classes Specialisation in custodian banks and central administrators Tailor-made AIF and SPV solutions for international managers / sponsors / initiators

14 Proven PE structures SICAR and SIF: the right products at the right time in the right place Key competitive features Ability for small and mid-sized promoters to access regulated PE regimes Brand image as a European regulated on-shore fund regime Enabler in fund raising Europe s most customised fund regimes for Private Equity choice of legal forms Tax neutrality Examples of specific attributes: Exemption from consolidation Light reporting rules No investment restrictions within the PE/VC sphere Pragmatic diversification requirements for SIF

15 Proven PE structures SOPARFI : a worldwide recognised vehicle for PE acquisition structuring Key competitive features Access to Double Taxation Treaties Low administration costs Legal and tax structuring certainty Efficient profit repatriation models Development of innovative hybrid instruments (e.g. PECs, CPECs)

16 Proven PE structures A large number of PE houses have their processing center for PE funds in Luxembourg Key competitive features Luxembourg is the unrivaled back-office of Europe s fund industry Numerous PE Houses have established offices with middle- and back-office operations in Luxembourg Third party service providers specialised on PE offer a large variety of services: Fund accounting and custody services Fund operations (investor and portfolio transactions) Cash handling Capital call facilities / Bridge financing

17 AC Market Challenges REGULATIONS MARKET C PE LBO M LBO R LBO I A S AIFMD DF A FAT S II B III F M A L G F HNWI I P PE M CS UK T T S VAT T K R D A I A S II B III E IPO C A S STRU CTURING PE FIRMS

18 Thank you Listening to investors 18

19 London, 19 May 2011