Sales, innovation & regulation 2018 Challenges for Swiss PE and VC Fund Managers. Zürich, 8 March 2018

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1 Sales, innovation & regulation 2018 Challenges for Swiss PE and VC Fund Managers Zürich, 8 March 2018

2 LPEA - Your organisation SPONSORS

3 LPEA IN BRIEF 165 members from 25 founders in active members on technical committees New PE/VC Young Leaders group! LPEA represents, promotes and protects the interests of the Luxembourg private equity and venture capital industry 74 PE Houses 91 Service Providers AFFILIATION TO Invest Europe * Rep. Group * Tax, Legal and Reg. Com. HCPF PROFIL LFF & close contacts with ALFI, LIMSA, LAFO, ILPA, EMPEA, LAVCA... 3

4 FULL MEMBERS Canna Luxembourg S.àr.l. Wert Investment Holdings S.àr.l.

5 PRIVATE EQUITY IN LUXEMBURG + 400b AuM international hub for Cross Border Investments EN-FR-DE... multilingual jurisdiction 19/20 biggest PE firms worldwide have operations in Luxembourg 90% of EU PE-funds are domiciled in Luxembourg 6000 PE / VC professionals +100% increase PE jobs postings state of the art Legal & Tax regulation

6 PRIVATE EQUITY IN LUXEMBURG - TRENDS Increase of substance Increase of «small» funds ( 400 à 500 millions) Over 10 «billion $» funds (> 1B): Ardian, Astorg, PAI, Castik, EQT, Goldman Sachs «private debt» funds increased 5 fold in last 3 years PE houses restrict their operations to fewer jurisdictions Managers US : «reverse solicitation» decrease

7 RECENT MARKET MOVERS

8 WORKSHOP AGENDA & PANELISTS 8:15 Introduction Paul Junck, Managing Director, LPEA 8:30 Panel Discussion Participants: Janin Söder, Vice President, SUSI Partners, Zürich Andreas Meier, Partner, Deloitte Luxembourg Harald Strelen, Partner, AIQU Tax, Luxembourg Anja Cavigilli, Managing Partner und Co-Founder, CH Advisors, Zürich Moderation: Anja Grenner, Director Funds, Intertrust, Luxembourg 10:30 Networking Coffee

9 PANELISTS Janin Söder Vice President SUSI Partners Anja Grenner Director, Head of Fund Services Intertrust Andreas Meier Partner Deloitte Anja Cavigilli Managing Partner and Co-Founder CH Advisors Harald Strelen Partner AIQU Tax

10 WORKSHOP AGENDA & PARTICIPANTS Contents Placements under AIFMD vs. Distribution under UCITS: History repeats itself? Sales in 2018: Strategy, Implementation, Regulation SUSI Partners innovation in fund marketing & sales Regulation: Data transfer, data protection and transparency and the impact on GPs Blockchain: examples of deployment in Asset Management and Fund Services Summary Q & A

11 Placements under AIFMD vs. Distribution under UCITS: History repeats itself? Is AIFM going to be as successful as UCITS? Will the distribution approach in UCITS and AIFMs converge? Is AIFMD leading to globalization of distribution? Is AIFMD going to undergo increased regulation? What are the effects? 11

12 Sales in 2018: Strategy, Implementation, Regulation Current AIFMD Marketing Landscape The AIFM Directive foresaw different timelines for making an EU distribution passport available, and for ending EU National Placement regimes ** Prior to 2018, marketing in the EU via either an EU passport or National Placement Regimes is, in principle, possible After 2018, only marketing through an EU passport should be possible* Deadline for Grandfathering ESMA decision on availability implementation of provisions re. delay to of the EU passport for non-eu ESMA decision on abolishment AIFMD in Member apply for AIFM AIFM and non-eu AIF of national placement regimes States licence 22 July EU AIFM & EU AIF EU Passport EU AIFM & Non-EU AIF National Placement ** EU Passport* Non-EU AIFM & EU AIF National Placement ** EU Passport* Non-EU AIFM & Non-EU AIF National Placement ** EU Passport* Second ESMA Opinion published 19 July 2016; awaiting news on potential passport introduction; no timeframe available hence no EU passport available yet ** Member States may decide at their own discretion to end National Placement regimes anytime prior to 2018 Source: Deloitte

Investor Protection Sales in 2018: Strategy,

2016 ESMA chose an additional six countries to review based

of non- EU funds and managers which currently operate

ESMA provided feedback for these countries focusing on four

Disruption 2 Market Disruption Obstacles to Competition 3

Monitoring of Systemic Risk JULY 2015 GO Jersey Guernsey

13 Investor Protection Sales in 2018: Strategy, Implementation, Regulation ESMA opinion and advice of July 2016 ESMA chose an additional six countries to review based on feedback received for its consultation and on the volume of non- EU funds and managers which currently operate within the EU. ESMA provided feedback for these countries focusing on four key areas: 1 Investor Investor Protection Protection Market Disruption 2 Market Disruption Obstacles to Competition 3 Obstacles to Competition Monitoring of Systemic Risk Monitoring of Systemic Risk JULY 2015 GO Jersey Guernsey Switzerland JULY 2016 GO Australia Canada Japan Hong Kong Singapore United States NO GO Bermuda Cayman Islds Isle of Man Source: Deloitte

Sales in 2018: Strategy, Implementation, Regulation Impact of ESMA advice/opinion and next steps European Commission (EC) agreed to follow ESMA s original advice of July 2015 to delay the decision on

14 Sales in 2018: Strategy, Implementation, Regulation Impact of ESMA advice/opinion and next steps European Commission (EC) agreed to follow ESMA s original advice of July 2015 to delay the decision on whether to extend the passport to third country AIFMs Currently awaiting EU Parliament, Council & Commission decision to deliberate on ESMA s advice of July 2016 no deadline set for response What is the impact of these publications ESMA published new advice on 19 July 2016 which continued assessment of HK, SG, US and included AU, CA, JP, KY, IM & BM NPR will continue to function as currently in force until subsequent issuance of Delegated Act on passport implementation Source: Deloitte

15 Sales in 2018: Strategy, Implementation, Regulation DISTRIBUTION Who & How? AIFM in accordance with the AIFMD Placement Agent in accordance with MiFID II Both need to comply amongst others with: Sponsor? NPPR? Reverse Solicitation? Source: AIQU Tax

Sales in 2018: Strategy, Implementation, Regulation January 2018 - What does a Placement Agent need?

16 Sales in 2018: Strategy, Implementation, Regulation January What does a Placement Agent need? COMMISSION DELEGATED DIRECTIVE (EU) 2017/593 of 7 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits DELEGATED DIRECTIVE (DD) Source: AIQU Tax

in accordance with the provisions of MiFID II PRIIP - GDPD

Regulation AIFM Transparency -Register RAIF SCS* Issuer

mandates & supervises AIFM GP/ Sponsor Lux Corporate

and publishes: Investor(s) or it s managers / board members

17 Sales in 2018: Strategy, Implementation, Regulation DISTRIBUTION Investors AIFMD GDP Regulation PA places shares in accordance with the provisions of MiFID II PRIIP - GDPD Placement Agent MiFID II AIFM mandates & supervises PA in accordance with the provisions of MiFID II PRIIP - GDPD PRIIP Regulation AIFM Transparency -Register RAIF SCS* Issuer /manufacturer within the meaning of MiFID II & PRIIP GP mandates & supervises AIFM GP/ Sponsor Lux Corporate RAIF/SIF* GP ensures compliance with Transparency register and publishes: Investor(s) or it s managers / board members or those of AIFM (?) Source: AIQU Tax

18 SUSI Partners innovation in fund marketing & sales Investing along the Energy Transition Value Chain How new Technologies enable Investment Opportunities for Institutional Investors

19 SUSI Partners innovation in fund marketing & sales SUSI Partners AG Management: Dr. Tobias Reichmuth, Marco van Daele Board of Directors: Björn Bajan (President), Kai-Uwe Ricke Prof. Dr. Uwe Krüger, Andrin Bachmann, Florian Seubert SUSI Team Renewable Energy Energy Efficiency Energy Storage SUSI Renewable Energy Fund I 200m; fully invested in solar/wind parks SUSI Renewable Energy Fund II Solar/wind parks in Europe ( 382m); in investment phase SUSI Energy Efficiency Fund I Financing energy efficiency measures through a contracting model ( 200m); investment phase SUSI Energy Efficiency Fund II Follow-on fund ( 250m); fundraising to start in Q SUSI Asia Energy Transition Fund Fundraising to start in Q SUSI Global Clean Infrastructure Fund Fundraising to start in Q SUSI Energy Storage Fund Financing decentralized Energy Storage ( 250m); fundraising/investing SUSI shows a strong track record (over 60 transactions completed) in sustainable energy infrastructure. Energy storage is the logical consequence for enabling tomorrow s energy transition.

SUSI Partners innovation in fund marketing & sales Renewable Energy Energy Efficiency Energy Storage and Grid Global investment in renewables (without hydro), at $265.

Approximately 1tn must be invested to reach this goal. 1 Energy efficiency retrofits allow for the highest emission savings per euro invested.

2 Globally, the investment need is greater than 1tn Energy Storage capacity is needed to make renewable energy available when demand is there.

20 SUSI Partners innovation in fund marketing & sales Renewable Energy Energy Efficiency Energy Storage and Grid Global investment in renewables (without hydro), at $265.8 billion, was more than double dollar allocations to new fossil fuel power, 27% of total energy consumption must originate from renewable energy sources by Approximately 1tn must be invested to reach this goal. 1 Energy efficiency retrofits allow for the highest emission savings per euro invested. To reach EU-2030 targets annual investments of roughly 100bn in energy efficiency retrofits are necessary. 2 Globally, the investment need is greater than 1tn Energy Storage capacity is needed to make renewable energy available when demand is there. In 2015, some 250 MW of electricity storage* were installed worldwide, up from 160 MW in Global investment need until 2024 is roughly bn. 3 *not including pumped hydro and lead-acid batteries The need for investments in sustainable Infrastructure is growing steadily and creates attractive investment opportunities for institutional investors with calculable risk and attractive returns. 1 European Climate Foundation (2014), Power Perspectives 2030; 2 European Commission (2014); 3 CITI Group (2015), Investment Themes in 2015: Dealing with Divergence

SUSI Partners innovation in fund marketing & sales Electric Mobility & Charging Smart Metering and Grid Decentralized Energy Systems Mass-rollout of Electric

g. renewable energy) leads to increasing need for real time grid information Digitalization trends Ongoing decentralisation of energy supply Growing investments in

in Europe, of which Germany will make up for roughly 6-8bn 2 Combined investment need for new infrastructure and replacement of existing infrastructure within

21 SUSI Partners innovation in fund marketing & sales Electric Mobility & Charging Smart Metering and Grid Decentralized Energy Systems Mass-rollout of Electric Vehicles Ubiquitous EV charging infrastructure is crucial High regulatory support, i.e. tax incentives Strong political will EU Directive for Smart Grids and Meters Mass-deployment of decentralized energy sources (e.g. renewable energy) leads to increasing need for real time grid information Digitalization trends Ongoing decentralisation of energy supply Growing investments in energy efficiency Strong need for higher flexibility Estimated global investment need of 7-11bn by 2020 and 40-50bn by Estimated investment need of 10-12bn in Europe, of which Germany will make up for roughly 6-8bn 2 Combined investment need for new infrastructure and replacement of existing infrastructure within Europe of at least 20bn by International Energy Agency (2017), SUSI Analytics (2017); 2,3 SUSI Analytics (2017)

22 SUSI Partners innovation in fund marketing & sales Decentralized Energy Systems on the Blockchain Smart Meter & Smart Grid Rollout 7 6 Energy Efficiency 3 Energy Storage 4 5 Electric Mobility & Charging Infrastructure 2 Offshore Renewable 1 Energy Onshore Renewable Energy

23 SUSI Partners innovation in fund marketing & sales SUSI Partners AG Bellerivestrasse 36 CH-8008 Zürich Tel: Fax:

24 Regulation: Data transfer, data protection and transparency and the impact on GPs GDPR (General Data Protection Regulation) Adoption in April 2016 enforcement date 25 May 2018 provisions that require businesses to protect the personal data and privacy of EU citizens for transactions that occur within EU member states The GDPR also regulates the exportation of personal data outside the EU Concerned: oursourcers handling YOUR client data, client contracts, data flows GDPR leaves much to interpretation at this stage. 24

25 Cybersecurity issues for placement agents / distributors Cybersecurity a US/EU practical case Agent needs to have a privacy policy regarding the collection, use and disclosure of personal information Agent need to show that it has adopted and implemented technical and organizational measures to protect Confidential Information against ANY unlawful activities Ensure hardware, network, transmission and control of confidential information, personnel security and training, security agent software, storage, Agreements on the above to be put in place AND regularly reviewed Questionnaires to be filled in by placement agents re the above points.

26 Summary and Q&A Regulation Costs New technologies will revolutionize certain aspects in the AM space AIFMs fully captured Regulators do not put on the brakes but need to ensure investor protection

27 Alternative Investment Fund Manager (AIFM) Das Luxemburger operative Modell General Partner (GP) Limited Partners (LPs) Portfolio Management Risiko Management Compliance* Bewertung* Limited Partnership (LP) SCA / SCSp / SCS Investments Vertrieb* Delegation Dienstleister Aquisitionsvehikel (SPV) Zentraladministration Depositary Interne Prüfung Wirtschaftsprüfer Anwälte Ziel-Ug. (indirekt gehalten) Ziel-Ug. (direkt gehalten) Anlageberater

28 Thank You!

29 Luxembourg Your Private Equity Hub

WELCOME ADDRESS. HE Gérard Philips, Ambassador of the Grand Duchy of Luxembourg

WELCOME ADDRESS. HE Gérard Philips, Ambassador of the Grand Duchy of Luxembourg WELCOME ADDRESS HE Gérard Philips, Ambassador of the Grand Duchy of Luxembourg With the support of CHOPPY WATERS AHEAD? THE FUTURE OF FINANCIAL SERVICES IN EUROPE HE Pierre Gramegna, Minister of Finance,