Private equity at the heart of the economy

Featured in Duke 08, 22/03/2017

For 7 years, the LPEA has supported the development of a major industry within the Lxuembourg economy. Its President Jérôme Wittamer analyses its prospects to mark the first “LPEA Insights – 360 GP View” conference organised by the association.

The aim of the LPEA INSIGHTS – 360 GP VIEW conference is to demonstrate that the LPEA is a major player within the sector, by inviting family offices, wealth managers and private bankers to our event and to understand our investment strategies. Since the 2008 recession, Luxembourg’s private banking sector has evolved towards high-end asset management, in which private equity plays an increasingly significant role. It is important to make the link.

How would you assess the LPEA‘s performance since it was founded?

When it was founded in 2010, the LPEA had about 20 members. Since then, Luxembourg has become the European hub for private equity. This established the association’s international credibility. The expertise of our committees has enabled us to fulfil our threefold mission: to represent, promote and protect the activities of our 140 current members. Our strategy is focused on two levels:

1. At a national level, we show the Luxembourg political world the opportunities which this sector offers. We suggest tools and solutions to be implemented on the legislative side to ensure that Luxembourg is competitive and welcomes industry players. Our constructive proposals have made it possible to improve the existing legislative, regulatory and fiscal framework regarding the competitiveness of the financial market.

2. At an international level, we’ve promoted the Luxembourg industry in major financial cities including London, Zurich, Munich, Paris, Stockholm and New York. This has led to the creation of a number of reports on the subject. This intense promotion has paid off: private equity is currently the country’s most flourishing industry. Each year, a growing number of players open offices here. Moreover, it’s a very positive industry because it invests 100% in the economy. Lastly, we’ve also invested in training through our collaboration with the House of Training and the University.

What are the prospects for the “private equity – venture capital” sector in Luxembourg today?

They are excellent. Brexit has created unbearable uncertainty for players in the UK, a country in which a considerable part of the European private equity industry has been concentrated until recently. Luxembourg offers stability and favourable regulation. This allows industry professionals, who are making decisions for 10-year funds, to focus on developing their business.

A recent article in the Financial Times highlighted these different aspects. The article recognised our work and had a very positive impact as this newspaper has an influential effect in our industry, especially when it quotes references within the sector such as Carlyle and Blackstone. News about large private equity groups opening offices in the country and the development of existing groups are sure to follow. At the same time, our competitors aren’t resting on their laurels: we must continue to act.

You are organising the first LPEA Insight conference in April. Why?

Surprisingly, our industry is more visible abroad than in Luxembourg. The aim of the “LPEA INSIGHTS – 360 GP VIEW “conference is to demonstrate that the LPEA is a major player within the sector, by inviting family offices, wealth managers and private bankers to our event and to understand our investment strategies. Since the 2008 recession, Luxembourg’s private banking sector has evolved towards high-end asset management, in which private equity plays an increasingly significant role. It is important to make the link.

What are the expectations of members and individuals who contact the LPEA? 

Expectations differ, depending on the members’ profiles. “GPs” – General Partners – ask us to defend their interests at national and European levels. They express their concerns about regulatory, legal and tax issues and are actively involved in improving the sector. Meanwhile, service providers seek to participate in the development of the sector through specialist committees, to develop their network, to find out more information and to promote their company. They also want to be involved in the evolution of a growing industry in Luxembourg.

Private equity invests 100% in the economy.

Surprisingly, our industry is more visible abroad than in Luxembourg.