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AGM: Venture Capital plays a key role in the future of the Luxembourg economy

AGM: Venture Capital plays a key role in the future of the Luxembourg economy

PRESS RELEASE

9/05/2016

 

AGM: Release of the preliminary results of the GP Survey 2016 and election of new Board of Directors

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The private equity community met today in Banque de Luxembourg for the annual general meeting (AGM) of the Luxembourg Private Equity & Venture Capital Association (LPEA). The external speaker invited for this year was Nicolas Buck, Entrepreneur and Chairman of Fedil who highlighted the role of private equity players in Luxembourg’s growth and especially that of local venture capitalists which can find fertile ground in areas such as ICT, Industry 4.0, Eco Tech, Circular Economy or Social Impact.

The event was also the occasion to release the preliminary results of the GP Survey conducted by LPEA. The survey, a project conducted by the Market Intelligence Committee, collected the opinion of 40 general partners and limited partners operating in Luxembourg and provided an update to the previous survey conducted in 2014. The survey reports that Luxembourg remains a very attractive place for the PE business, even though stability and the tax environment attractiveness have decreased. The main risk to the participant’s business in Luxembourg is the changing tax environment (BEPS) and the reputation of Luxembourg as a financial centre, although the majority of respondents believe Luxembourg being well positioned to deal with regulatory developments.

Jérôme Wittamer (President) and Paul Junck (Managing Director) presented the association’s activities held in 2015 and emphasised the association’s annual growth with an increase of membership from 119 to 132. A summary of the activities held and an updated profile of the association are available in the Annual Report 2015 which is available here.

The AGM elected the 31 Board members that will represent the association in the next two years and which constitute a balanced representation of the two constituencies: PE and VC managers (full members) and service providers (associate members).

For additional information please contact LPEA’s Managing Director Paul Junck on
lpea-office@lpea.lu / +352 28 68 19 – 601.

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LPEA Annual Report 2015

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!

Activity Report 2014

LPEA Annual Report 2014

Year in Review


Summary



Luxembourg has set an ambitious agenda to attract Private Equity houses to provide more middle-office related services from Luxembourg, in particular with regard to increasing substance requirements and AIFMD-related
regulatory standards.

Out of the 10 largest Private Equity houses worldwide, 9 are doing business out of Luxembourg. Most have started by leveraging the advantages that Luxembourg holding companies provide when structuring Private Equity acquisitions. But business interests have since driven more substance to Luxembourg. This originally discrete business with little local presence in Luxembourg has fundamentally changed as Private Equity houses have been enhancing their presence in Luxembourg by establishing or ramping up operations and other capabilities.

A clear trend toward enhanced transparency and regulation drove Luxembourg to respond by introducing the regulated private equity and venture capital vehicle SICAR in 2004 and the SIF in 2007 which, in retrospect,
anticipated many of the legal requirements that were introduced in the Alternative Investment Fund Managers Directive (“AIFMD”) in July 2013.

Combining flexibility in legal and tax structuring, a reputable and stable financial environment and efficient infrastructure has brought hundreds of Private Equity participants, both established and emerging, to set up some or all of their Private Equity structures in Luxembourg.


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