LPEA Annual Report 2015

Index

Introduction

Private Equity & Venture Capital in Luxembourg

About LPEA

2015 – A Year in Review

Priorities for the Future

Membership

Financials

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pic_Jerome-Wittamer

by Jérôme Wittamer, President of LPEA

From dropping oil prices to negative interest rates, socially impacting migrant crises to the perpetuation of the sovereign debt crisis and inflation of buyout prices, nothing seems to have remained unchanged in 2015. The new year promises ever new changes. Where will all the dry powder deploy? Will it continue to propel Enterprise Values in coming months? Who will connect the wall of money with opportunities in the SME sector? While the ECB policy might offer short-term answers, the EU Commission’s Capital Markets Union (CMU) might hold some longer term clues.

With the right measures in place, capital mobility stands to increase within the region, fostering competition and fuelling growth and jobs. In summary, Europe is likely to improve from a cross-border capital markets perspective. The opportunity to inspire change is in our hands.

It is our role at LPEA to embrace these opportunities and collaborate with fellow associations and Invest Europe to make sure the right policies are implemented. We must continue to outline the critical role played by Private Equity investors and the substantial amounts of positive energy our industry has continued to deploy since 2015, contributing to making our companies more successful, and ultimately making this world a better place.

As banks deleverage, they provide fewer loans to companies, especially to SMEs. The role of Private Equity/Debt funds is therefore critical in that respect as our industry acts as a vital source of financing for SMEs. Private Equity collaborates significantly with commercial companies and businesses supporting innovation, building competitive industry leaders, creating hundreds of thousands of jobs across the world and cooperating with management teams to create value for all stakeholders. Our industry is therefore a real force of economic progress, a force that must be reckoned with.

In addition, ours is an interconnected world in which borders are disappearing. Opportunities are no longer limited by location, and investors increasingly go wherever they must in order to seize them. This operational and economic reality contrasts with the political views of countries vying to capture value locally through antiquated systems.

The fact that Private Equity fund managers from all over the world manage money on behalf of pension funds, insurance companies, sovereign wealth funds and large corporates must not be forgotten, because the majority of these investors are institutional investors who manage our populations’ savings and pension money. We owe it to these investors to maximise value.

In this context, the role of LPEA is to maintain a continuous dialogue with all relevant authorities, remind stakeholders of our industry’s role and positive impact, and ensure that Luxembourg maintains a global perspective on the activities of Private Equity operating from Luxembourg and continues to defend tax neutrality of both funds and intermediary companies. On the basis of our conversations, LPEA is confident in our government’s determination to establish an image that is more in sync with the new reality, thus helping Luxembourg to remain among the most competitive nations.

Paul-Junck by Paul Junck, Managing Director of LPEA

Today, Private Equity continues to grow as an asset class and represents a diverse industry comprising activities ranging from buyout to direct lending. For that reason, Prequin, a market leader in the collection of private equity-related data, has for the first time introduced the concept of “Private Capital”, which aims at better representing the wide spectrum of the closed -end funds industry.

Luxembourg is no different, and among our members we find an increasing diversity of strategies and interests. Such variety reflects different needs and that is why we have also seen new regimes and structures picking up international interest.

In a financial centre driven by cross-border activities, LPEA is conscious of its role in promoting the sector abroad. As stated in the LuxFin 2020 strategy document endorsed by the Minister of Finance Pierre Gramegna, our objective is to become the prime onshore centre for Private Equity; an ambitious move but one consistent with our efforts and those of our members who regularly join us as speakers, sponsors or attendees in our roadshows abroad.

I am truly confident that what we have achieved over the past five years is just a glimpse of what is still to come. After building the founding blocks of our credibility with a representative membership base, 2015 saw our international presence becoming more visible and regular as we returned to key markets and deployed a set of new communication tools.

Having just moved to the House of Finance, the centre of the financial industry’s associations, we expect to continue following the right path. This will start by expanding our team with a new resource in 2016 focused on legal and regulatory matters, and by making the conditions for our technical committees even more efficient.

I take this opportunity to thank our technical committee members for all their dedication and to emphasise that these structures remain open for any member willing to embrace a more active role within the association.

I look forward to celebrating another five years in this exciting community!