10 Leaves

This episode is also available as a blog post: https://10leaves.ae/publications/luxembourg/renting-a-sub-fund-in-luxembourg

Why rent a sub-fund in Lexembourg?

Luxembourg offers multiple fund structures with the flexibility of opting for supervision, lower requirements for diversification of assets and an option for passporting by appointing an AIFM.

Luxembourg also has a diverse ecosystem of existing funds and service providers, which makes it easier to rent a compartment or make a sub-fund of an existing umbrella fund. This is usually used by startup or first-time fund managers of smaller funds, due to the ease of setup and lower costs.

What are the advantages of renting a sub-fund in Luxembourg?

Renting a sub-fund has many advantages:

The first one being time-to-market.

1. Using an established provider helps launch the fund quickly. The fund manager does not have to go through a separate setup process, nor negotiate terms with service providers, since these platforms are pretty much plug and play options.

2. Costs also play a big part, especially for first-time fund managers. Plugging into an existing ecosystem has its advantages in costs, as opposed to setting up a fund outright.

3. The third is choice. Fund managers can choose the level of supervision they require, depending on the class of assets that the fund will invest in, and the kind of clients that the fund will market itself to. Accordingly, funds can be unsupervised (such as SLPs), supervised (such as SIFs) or attach themselves with a supervised AIFM (such as RAIFs).

4. A Luxembourg sub-structure offers comfort to investors, given the good reputation of the jurisdiction, the enhanced protections offered to investors and the existing network of globally-recognised service providers. Besides, this is a well-established practice, being tried and tested for many years.

5. Distribution options are also available. For instance, the sub-fund could be passported on the basis of the UCITS or AIFMD framework.

This episode is also available as a blog post: https://10leaves.ae/publications/luxembourg/real-estate-funds-in-luxembourg

Why setup a real estate fund in Luxembourg?

Luxembourg offers multiple fund structures with the flexibility of opting for supervision, lower requirements for diversification of assets and an option for passporting by appointing an AIFM.

Luxembourg has a diverse ecosystem of existing funds and service providers, which makes it easier to rent a compartment or make a sub-fund of an existing umbrella fund. This is usually used by startup or first-time fund managers of smaller funds, due to the ease of setup and lower costs.

Such factors have led to Luxembourg becoming the leading domicile globally, for real estate fund structures.

What are the advantages of setting up a real estate fund in Luxembourg?

There are many!!

1. The first big advantage is choice. Fund managers can choose the level of supervision they require, depending on the kind of clients that the fund will market itself to. Accordingly, funds can be unsupervised (such as SLPs), supervised (such as SIFs) or attach themselves with a supervised AIFM (such as RAIFs).

2. A Luxembourg structure also offers comfort to investors, given the good reputation of the jurisdiction, the enhanced protections offered to investors and the existing network of globally-recognised service providers.

3. Distribution options are the next major advantage. A Luxembourg real-estate fund could be passported on the basis of the AIFMD framework, once it appoints an AIFM.

Such funds also have a more advantageous tax treatment, with the choice of tax treatment according to the choice of investment fund. For instance, real estate funds can be fully taxable and have access to Luxembourg’s double tax treaties network. Alternatively, funds can be tax exempt, but with very limited access to double tax treaties. A third course being tax neutral, with either legal or no legal personality. In this case, the partners of the fund are subject to tax, and not the fund itself.

This episode is also available as a blog post: https://10leaves.wordpress.com/2021/03/14/launch-your-fund-with-10-leaves/

LAUNCH YOUR FUND WITH 10 LEAVES!

In today’s episode, we take you through what we can do for you, as service providers. Costs may differ based on the structures involved, but the underlying theme is – affordability, and turnkey solutions.

That’s it. It is that simple.

Let’s go to the solutions bit right away, since costs are subjective. However, we can assure you that our prices are unbeatable, of course, for the experience that we bring in. Our 50+ fund clients in the last year stand testimony to this fact!!

In terms of jurisdictions, we advise on DIFC funds, ADGM Funds and Luxembourg funds. That is quite a spread of literally any kind of fund that you can think of, including UCITS, Hedge funds, Islamic funds, PE and VC funds and the like.

Interestingly, 10 Leaves has managed to get the first two approvals for VC Fund managers under the new D I F C VC Fund regime, with many more in the pipeline.

By the way, we offer the fastest way to launch your Venture Capital Fund in the D I F C, and have everything sorted for you, in one seamless solution!!

This episode is also available as a blog post: https://10leaves.ae/publications/difc/new-difc-venture-capital-funds-regime

The DIFC has implemented a path-breaking VC Fund Manager Regime, that promises to add to the current startup ecosystem being built through the DIFC Fintech Hive and the DIFC Innovation Hub. The regime is a carve-out of the already fast-tracked Restricted Fund Manager regime, that is in place for entities that wish to only manage private funds

A VC fund would have to:

VC funds are usually closed-ended, for a fixed tenure and can be structured as Closed-ended Investment Companies or Partnerships.

Other benefits:

In addition to the above, the DFSA:

1. Allows self-custody of fund property;

2. Makes the appointment of an investment committee optional;

3. Allows VC funds to invest more than 25% in a single undertaking;

4. Makes internal audit of the fund manager optional;

5. Removes the requirement for a Finance Officer;

6. Removes the requirement for appointment of a Compliance Officer until initial commitments of capital are required; and

7. Apply simpler capital requirements

This episode is also available as a blog post: https://10leaves.ae/publications/difc/difc-tech-startup-license

What is a DIFC Technology Startup License?

The DIFC started by attracting financial technology, or Fintech players into its DIFC Fintech Hive, which is an accelerator that just completed its third cohort, with over 30 fintech companies. It quickly extended the benefits of a startup license to all kinds of tech startups – fintech, edutech, regtech, and all technology-based startups that wish to cater to the region.

The DIFC tech startup license offers heavily discounted initial and ongoing fees, world-class co-working spaces at low costs, and an ecosystem of fellow technology firms, seed and angel investors, and access to the leading venture capital firms in the region.

This episode is also available as a blog post: https://10leaves.ae/publications/adgm/guide-to-the-adgm-category-4-investment-advisor-license

The ADGM is an upcoming international financial centre in the MENA region for business and fintech. The quality of ADGM’s independent regulator, the prevailing common law framework, excellent infrastructure and tax efficiencies make it the perfect base to take advantage of the rapidly growing demand for financial and business services in Abu Dhabi and the greater MENA region.

Why setup a financial services firm in the ADGM?

The ADGM is one of two international financial centres in the UAE. Established in 2015, it quickly rose through the rankings and is now counted as one of the top 25 financial centres in the world. ADGM’s innovative SPV regime, its initiatives in the fintech space and its issuance of the region’s first cryto-asset regulatory framework, have all contributed to its success.

Clients who wish to cater primarily to the Abu Dhabi market, sovereign wealth funds and Abu Dhabi family offices may consider setting up in the ADGM.

This episode is also available as a blog post: https://10leaves.ae/publications/luxembourg/luxembourg-securitisation-vehicles

Why setup a securitisation vehicle in Luxembourg?

In Luxembourg, securitisation of a wide range of assets, loans, bonds, incomes and risks is allowed. In addition to this, risks related to debt, movable or immovable property, tangible and intangible assets are also allowed to be securitised.

In general, anything that is a store of future income can be securitised in Luxembourg.

Issuers mainly use securitisation as an alternative to funding from banks and other formal lending institutions. Luxembourg offers many investment vehicles that can be used for securitisation transactions.

Luxembourg has an extensive Securitisation Law, that is innovative and designed for cross-border transactions, especially in the European Union. This has become very popular and there are currently more than 1500 securitisation vehicles, with over 7,000 compartments in Luxembourg, resulting in over 35% market share in all of Europe.

Other advantages include:

This episode is also available as a blog post: https://10leaves.ae/publications/luxembourg/luxembourg-specialised-investment-fund-sif

Advantages of setting up a SIF in Luxembourg

The following are the advantages of setting up a SIF in Luxembourg:

This episode is also available as a blog post: https://10leaves.ae/publications/luxembourg/setting-up-a-private-equity-structure-in-luxembourg

How do I establish a PE fund in Luxembourg?

Luxembourg offers multiple fund structures for private equity transactions.

Specialised Investment Fund, or SIF, is the most flexible investment fund structure, that can be used for multiple asset classes and investment strategies, including Private Equity deals.

The Luxembourg SIF is a supervised corporate vehicle and usually reserved for professional or qualified investors. It has low diversification requirements and can also be established as an umbrella fund with multiple sub-funds, thus allowing for multiple deals in the same structure. A Luxembourg Specialised Investment Fund can also qualify to obtain an AIFMD passport, given that it satisfies some mandatory conditions.

The Luxembourg Investment Company in Risk Capital, or SICAR, is also a supervised investment vehicle. The main purpose of the SICAR is to invest in risk-bearing assets, and is meant to be used as a vehicle for professional and qualified investors. SICARs are not obliged to follow risk-spreading obligations or diversification requirements. A Luxembourg SICAR can also qualify to obtain an AIFMD passport, given that it satisfies some mandatory conditions.

This episode is also available as a blog post: https://10leaves.ae/publications/luxembourg/reserved-alternate-investment-funds-raif-in-luxembourg

What is a Luxembourg RAIF?

The Reserved Alternative Investment Fund was created following the implementation of the AIFMD. Structurally, it is a combination of the Specialised Investment Fund (SIF) and the Investment Company in Risk Capital (SICAR).

However, unlike the SIF and SICAR, the RAIF is not ordinarily supervised by the Luxembourg CSSF. This allows the fund to be launched quickly, since double-supervision is avoided. However, a RAIF would have to appoint a CSSF-regulated Fund Manager (AIFM).

The Luxembourg RAIF is very popular in the EU, and there are around 650 RAIF established as of 2020.

Can a RAIF be sold to all investors?

A Luxembourg RAIF can only be sold to qualified investors, which include institutions and professional investors.

In some cases, prospective investors can declare that they a) can invest a minimum of Euro 125,000 or obtain a confirmation from a credit institution, an investment bank or a management company, certifying their expertise, experience and knowledge in sufficiently judging and understanding the implications of an investment made in the RAIF.