LUGANO FUND FORUM, NOVEMBER 2013 SETTING UP A FUND IN LUXEMBOURG GIUSEPPE RIZZO We go the extra mile
Agenda Luxembourg investment fund center Legal framework AIFMD impact Amicorp Luxembourg 1
Luxembourg: leading European on-shore domicile Largest investment fund center in Europe and the second largest in the world in terms of net assets Sweden 2.0% Italy 2.2% Switzerland 3.7% Others 10.3% Luxembourg 26.9% Net assets under management: 2.5 trillion Euro United Kingdom 10.9% Ireland 13.8% France 16.0% Germany 14.3% Source: European Fund and Asset Management Association, June 2013. Percentages on net assets under management. 2
AUMs steady growth despite market conditions During the last ten years, net assets under management have increased by +150% 2.1 2.2 2.1 2.4 2.5 SIFs net assets have more than doubled in the last 6 years 1.8 1.6 SIFs Part II UCI UCITS 2007 2008 2009 2010 2011 2012 Q2 2013 Data in trillion euros. Source: ALFI/CSSF, June 2013. 3
Promoters come from all over the world 80% of the top 30 asset managers use Luxembourg as their primary European platform for distribution BE 121 bn 5% LU 53 bn 2% NL 52 bn 2% Others 199 bn 8% US 574 bn 23% The largest global distribution center for investment funds (70) FR 176 bn 7% IT 194 bn 8% GER 382 bn 15% CH 366 bn 15% UK 370 bn 15% Source: CSSF/EFAMA, June 2013. 4
Success factors 1 Economic Fundamentals Political stability Financial stability Skilled & multilingual workforce 2 Industry Standing Business friendly environment Pragmatic regulatory regime Tax efficient solutions 3 Products / Location Highly diversified offerings for retail & institutional investors Experience UCITS/ Non UCITS products AIFM ready Favorable location for cross-border distribution 5
Agenda Luxembourg investment fund center Legal framework AIFMD impact Amicorp Luxembourg 6
Luxembourg investment funds regime Highly diversified offerings for retail & institutional investors 1.2 1.1 Level of regulation 1 0.9 0.8 0.7 UCITS Restricted asset classes Public distribution with EU passport High level of regulation UCI Part II All asset classes Public distribution without EU passport Private equity only Restricted to qualified investors Low level of regulation SICAR All asset classes Restricted to qualified investors Low level of regulation SIF 0.6 Medium level of regulation 0.5 0.5 1 1.5 2 2.5 3 Structuring flexibility Source: CSSF/LPEA, Dec. 2012 7
UCITS (Part I) and UCI (Part II 2010 Law) What is UCITS Undertakings for collective investments in transferable securities (UCITS IV compliant) UCI Part II Undertakings for collective investments in securities other than those authorized by the UCITS IV Directive Distribution Benefit from EU passport and eligible for distribution in numerous non-eu countries Can be distributed to the public but do not benefit from EU passport Risk spreading Specific rules on eligible investments and diversification to ensure high investor protection Less stringent as regards eligible investments, diversification, and liquidity requirements Liquidity requirements Investors must be able to redeem their shares at least twice a month Can be structured as open-ended or closedended Common features Savings invested on a collective basis Savings collected from the public Investments in accordance with the principle of risk spreading The CSSF approval also encompassed the approval of the fund promoter 8
SICAR (2004 Law) and SIF (2007 Law) SICAR SIF What is Investment company in risk capital Specialised Investment Fund Eligible assets Private equity, venture capital, PE real estate Any kind of assets, no investment policy restrictions Risk spreading No requirements max. 30% of NAV in one investment Common features Restricted to well informed investors Light supervision by CSSF which does not encompass promoter approval Light administrative requirements Light publication and reporting duties Umbrella structure 9
Tax efficient solutions for managers & investors 1 No income or withholding tax Investment funds are not subject to Luxembourg income tax Dividends and capital gains are generally not subject to withholding tax 2 Minimum subscription tax Annual subscription tax of 0.01% for SIFs, 0.05% for UCITS/ UCI Part II 3 No capital duty Abolished in Luxembourg from 1 January 2009 4 VAT exemptions Management services rendered to Luxembourg funds under CSSF supervision 5 Double treaty benefits Double tax treaty benefits for SICARs/SIFs applicable with several countries 6 Benefits for investors Investors are not subject to capital gains or income tax in Luxembourg¹ ¹Except for those residing or having a permanent establishment/representatives in Luxembourg 10
Agenda Luxembourg investment fund center Legal framework AIFMD impact Amicorp Luxembourg 11
Alternative Investment Fund Managers Directive No impact on UCITS Convergence between traditional and alternative investment universes, in terms of transparency, liquidity and management fees Regulates all AIF managers Where: i) the manager is EU based, and/or ii) the AIF is EU based, and/or iii) the AIF is marketed in the EU Broad scope All collective investment undertakings with a defined investment policy that raise capital from a number of investors Impacts mainly managers Authorization, capital, organizational and operational requirements similar to UCITS management companies But in part also AIFs Depositary rules, disclosure in prospectus and annual report, valuation Benefits? European passport for AIFMs who wish to access the entire EU market Super license for UCITS 12
AIFMD in Luxembourg (Law of 12 July 2013) Luxembourg has been one of the first EU countries to implement the AIFMD Lux AIFMs Registration Authorization Thresholds: 100 million (including leverage) 500 million (no leverage and no redemption during 5 years) Requirements: Internal procedures, risk management, conflicts of interests, remuneration, etc. Initial capital and own funds¹ ¹ Euro 300,000 or 150,000 if AIF internally or externally managed, plus 0.02% on AUMs for funds exceeding Euro 250 million and cap at Euro 10 million 13
New opportunities for Luxembourg Migration offshore/on-shore More stringent regulations on AIFs will bring benefits to Luxembourg due to its tradition of leading on-shore domiciliation and business-friendly jurisdiction Increasingly competitive Leverage on experience in regulated fund structures now that AIFMs and AIFs based in less regulated jurisdictions also have to comply with new regulations Super licenses Leverage on existing UCITS management companies who can easily extend their authorization to become authorized AIFM New LP regime Luxembourg introduces a new regime (SCSp, société en commandite spéciale) which follows the tracks of the Anglo-Saxon Limited Partnerships New depository regime New category of professional depositary for AIFs with no redemption rights during 5 years investing in tangible assets 14
Agenda Luxembourg investment fund center Legal framework AIFMD impact Amicorp Luxembourg 15
Why Clients Choose Amicorp Fund Services (AFS) Underpinned by strong core values Strong and independent Comprehensive service offering Quality of services Global footprint with local knowledge Experience with diverse customer base Deliver excellence that brings peace of mind to clients while saving them time and money Founded more than 20 years ago, global team of 870 professionals in 40+ offices AFS allows its clients to focus on their core competencies of investment and fundraising Pursuing the highest level of accuracy and a punctual delivery of products and services AFS provides its clients with the best solutions in almost every jurisdiction Hedge Funds, Private Equity/Real Estate, Fund of Funds, UCITS, Managed Accounts 16
Amicorp Luxembourg S.A. Deep roots in Luxembourg Incorporated in 1995 Fully licensed Domiciliation Agent, Fund Administrator, Paying & Transfer Agent Wide scope of activities Fund services Corporate services Strong team 25 people plus centralized back-office support (200+ people) Stable client base ~200 clients (Institutional & HNWIs) 17
Key Service Lines 1 2 3 4 Fund Structuring Fund Administration Registrar & Transfer Agency Corporate Management Selection of jurisdiction, vehicle, third-party providers (turnkey package) Third party providers coordination and interface with supervisory authorities Incorporation Offering Memorandum & Agreements NAV calculation & communication Expense posting, payment of invoices Fee calculation Luxembourg regulatory reporting Financial statements and ancillary reports Audit Support Maintenance of investors register Processing of subscriptions, redemptions, capital calls, distributions Compliance and due diligence over investors (KYC, AML) Dealing with investor queries Conservation of documents Management company / GP incorporation Registered office provision Provision of managers/ directors to the management company / fund Corporate secretarial activities Monitoring fund activities & proper corporate governance 18
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