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Private equity at the heart of the economy

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.


The Luxembourg Private Equity community celebrated the New Year

The Luxembourg Private Equity community celebrated the New Year

Recent news strengthen the country’s position as leading European PE Hub.


The members of the Luxembourg Private Equity and Venture Capital Association (LPEA) gathered yesterday (30/01) evening in Luxembourg City to celebrate the New Year.

The party was the occasion to pass the previous year in review, make a few announcements, disclose the association’s objectives for 2017 and have some fun.

The spirits were high with the news circulated last week that Carlyle and Blackstone, two major private equity firms, were shifting more of their operations from London to Luxembourg, a sign that the country is well-positioned in the post-Brexit competition for this industry and is increasingly recognised as a leading PE hub.

This is precisely what LPEA aims to showcase with its landmark event “LPEA Insights: 360 GP View” to be held in Luxembourg on April 26th and announced during the evening. The local landscape continues to expand at an accelerated pace, forming a growing community of new players and operations which shift the market towards greater middle and front office activities.

Paul Junck, Managing Director of LPEA, summarised the activities and achievements of 2016 highlighting the growth of the association and its international promotional activities held in key markets such as the UK, the US, Germany, France and Switzerland.

With 139 members today, evenly split between investors/ general partners and service providers, LPEA continues to grow and to strengthen its position as an active voice in Luxembourg’s financial sector. A voice that will soon be better supported with a newly hired Public Affairs Manager.

Regulation will be on top of the agenda according to Jérôme Wittamer, President of LPEA, “in a context of mounting uncertainty and unexpected political events, we see opportunities for Luxembourg to further solidify its competitive edge while keeping an eye on the darker clouds on the horizon”.

Within the regulatory agenda, Luxembourg private equity is actively following a number of key subjects:

      • The AIFMD review, due to start later this year and for which LPEA will create an ad hoc working group of the Legal Technical Committee to address the issues that have been identified as critical for the industry.
      • As MLD IV is due to come into force in June 2017, it has become apparent that the implementation is very burdensome for certain firms. The Legal Technical Committee will therefore assess the significance of MLD for member firms.
      • As regards the EuVECA/EUSEF regulation, there have been negotiations from the Council and the European Parliament. LPEA has collaborated with ALFI to produce a common position paper to be sent to the EU Parliament.
      • The tax agenda is heavy with BEPS and European initiatives such as ATAD becoming more and more a reality.
      • Other national points such as the withholding tax, carried interest and VAT on directors’ fees.

Keeping an attitude of constructive dialogue, LPEA intends to further increase the number and quality of its conversations with all stakeholders, both locally and abroad.

As Wittamer puts it “LPEA will be busy again and with your support, make the Luxembourg ecosystem ever more competitive”.

Wishing all the Private Equity/ Venture Capital community a successful new year!

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For additional information about LPEA contact paul.junck@lpea.lu or call +352 28 68 19 – 602.

About LPEA

The Luxembourg Private Equity and Venture Capital Association (LPEA) is the representative body of private equity and venture capital professionals in Luxembourg.

With 139 members, LPEA plays a leading role in the discussion and development of the investment framework and actively promotes the industry beyond the country’s borders.

Luxembourg disposes of a stable tax regime and is today at the forefront of international PE regulation providing a flexible, secure, predictable and multi-lingual jurisdiction to operate in.

LPEA provides a dynamic and interactive platform for its members to discuss and exchange information and organises working meetings and networking opportunities on a regular basis.

If Luxembourg is your location of choice for private equity, LPEA is where you actually join the industry!


Jérôme Wittamer

President of LPEA

Expon Capital and the new Digital Tech Fund

Expon Capital and the new Digital Tech Fund

Capital V #8 | Building an onshore hub for Private Equity is a marathon, not a sprint




Jérôme Wittamer, Managing Partner of Expon Capital

Expon Capital was founded in June 2015, by Jérôme Wittamer, Alain Rodermann, Marc Gendebien and Rodrigo Sepúlveda Schulz. We spoke with Jérôme to learn more about this new venture.


Could you tell us your story? What triggered you to launch Expon Capital?

All of the four Founding Partners are digital natives: we first started playing with computers, calculators and games consoles in the late 70s and early 80s, then launched digital ventures in the 90s and 00s, and ended up investing in and supporting some of the most successful tech businesses built over the last 20 years (M-Systems invented the solid state memory you have in your phone/computer, LastMinute.com pioneered eCommerce in Europe, EVS powers slow motion replays for all sports broadcast on globally TV, Getaround democratised collaborative car-sharing…). At the same time, we also learned from investing in some less successful ventures (unclear business models, wrong market timing, harsh competition…). That’s why today, our experienced team shines through technology investing. What we are seeing now is a rapid, radical transformation of the world, through technology, and a trillion-euro opportunity in the process. Being so passionate about this, we couldn’t just sit there and watch. We want to be part of the change and help steer the future through our investment choices.

 

Other than digital transformation, do you identify more specific opportunities?

Of course. At the moment we are actively tracking specific innovations in Artificial Intelligence, Big Data, Blockchain, FinTech, Robotics, etc emerging from tech hubs in Europe, the US and Israel, but Expon Capital is much more than that.

Indeed, we believe that venture capital is also affected by this transformation and needs to evolve. You cannot just decide to focus on a specific opportunity as the whole economy is disrupted. We therefore launched our management company as a fully independent entity based on a new philosophy. Starting from a blank sheet of paper and armed with our lengthy experience, together with one of our strategic advisers, Salim Ismail (Global Ambassador at Singularity University and author of “Exponential Organizations”), we have developed a new approach to screening investment opportunities and boosting growth acceleration that we believe is more suited to capturing today’s market opportunities, based on our Exponential Framework. Any business that aims to impact a billion people will catch our attention!

You and your team were chosen to manage the Digital Tech Fund, a €20m seed fund investing in innovative digital start-ups based in Luxembourg. Can you tell us more about the Fund?

Firstly, the fund’s objective is to foster long-term innovation, and support the technology start-up ecosystem in Luxembourg. It also aims to facilitate the transfer of new digital technologies developed at the University of Luxembourg into successful spin-off companies. There is a financing gap in the market and while we won’t be able to fill it alone with this fund, we are confident that this will further raise the visibility and high quality of the opportunities we have in our country and improve the overall local financing landscape.

Secondly, the fund operates as any private venture fund, on the same exacting investment principles and market-driven governance with the aim of generating profit for the investors.

Is Expon Capital looking for specific things when you screen opportunities?

Expon Capital seeks and selects some of the most brilliant, ambitious entrepreneurs aiming to solve a tangible problem in a very large market. Specifically, for the Digital Tech Fund, these entrepreneurs must have also chosen to establish and grow their business from Luxembourg. Surprisingly, we meet people like this every week, coming from various backgrounds, very often originating from Europe. What we like businesses with a truly original service, with a very clear differentiation to the competition, such as with superior technology or user experience. We expect business acumen, sound unit economics, and great ambition from a team of visionaries.

What keeps you busy today?

Currently, we split our time between deal flow management (screening investment opportunities and meeting with entrepreneurs in Luxembourg and internationally) and fundraising for our Europe-focused Exponential Technologies Fund, Expon Capital Fund I. We also spend considerable time scrutinising technology developments and emerging trends.


Capital V #2

Capital V #2

The magazine of LPEA – 2H 2013


Summary



AIFMD Remuneration: Exceptions make the rule

Interview: Julien Kinic, IDI Emerging Markets

Akuo Investment Management

SecureIT: How Luxembourg got in the data centre map

European Investment Fund – Social Impact Accelerator Fund

Setting the stage for niche-based Biomedicine

Bringing substance to Luxembourg

The expat education conundrum


CONSULT


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