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Article By Adrian Aldinger, Partner at Arendt, Jérôme Mullmaier, Partner at Loyens & Loeff, and Maria Rodriguez, Senior Associate at Arendt, as published in Insight/Out magazine #36.
Introduction: Luxembourg’s leadership well-established
Luxembourg remains the jurisdiction of choice for Private Equity and more generally, alternative investment funds. Its strong regulatory framework, tax efficiency, and central location in Europe have made it a preferred base for global fund sponsors. The country offers a unique combination of stability and flexibility, which is highly valued by managers and investors alike. Over the past decade, Luxembourg has consistently adapted its legal and regulatory toolbox to meet the evolving needs of the market, reinforcing its reputation as a leading domicile for cross-border fund distribution.
But what explains this continued appeal, and what trends are shaping the future of private markets? The latest LPEA Structuring & Market Trends Paper, together with survey responses from 116 industry participants, provides useful insights into fundraising dynamics, investor behaviour, and structural developments. These findings are particularly relevant in today’s environment, where macroeconomic uncertainty and shifting investor priorities require sponsors to rethink traditional approaches. Inspired by similar surveys on the market, the survey aims at understanding how the Luxembourg market uniquely stands apart on these various trends.
Survey highlights: what the industry is saying
The survey was conducted in summer 2025 among LPEA members, including GPs, LPs, and service providers, and offers a snapshot of sentiment and expectations across the alternative investment sector. Respondents provided their views on liquidity, fundraising strategies, deal activity, and market opportunities. Below are the highlights from the seven key questions selected for this article.
Liquidity constraints drive structural innovation across private markets.
Instead of simply reporting that liquidity remains a concern, the responses point to a market where limited distributions and slower exits continue to shape decision-making. Managers are considering solutions to liquidity concerns, such as continuation funds, NAV-based facilities, and evergreen structures. These tools allow sponsors to provide liquidity options without forcing premature asset sales. This reinforces the growing role of GP-led secondaries and structured solutions, which have become tools for maintaining portfolio stability while addressing investor expectations.
High-net-worth investors gain access as sponsors diversify beyond institutional capital.
The survey confirms that sponsors are no longer relying solely on institutional capital: they are actively widening the investor base. Feeder structures and retail-friendly regimes are increasingly used to attract high-net-worth and semi-retail investors. This shift is driven by growing demand for private market exposure among individuals, supported by regulatory developments such as ELTIF 2.0. Private banks and wealth managers are playing a key role in this evolution, creating bespoke access products that mirror institutional strategies.
Cautious optimism prevails as 57% anticipate a moderate uptick in deal flow.
Rather than focusing on the figure alone, the responses illustrate a cautious but real optimism. Many participants link the expected uptick in activity to stabilising interest rates and an improving environment for exits. While large-cap buyouts may remain subdued, mid-market transactions and sector-specific opportunities, such as technology and healthcare, are expected to drive deal flow.
Sponsors pivot to secondaries and continuation vehicles as traditional exit routes remain constrained.
The survey highlights that the difficulty of securing attractive exits outweighs other concerns. Asset valuations and geopolitical factors are also cited, but exit conditions dominate. As a result, sponsors are extending holding periods and turning to alternative routes such as secondary sales and continuation vehicles, a trend that underlines the search for value preservation at a time when traditional IPO or trade-sale windows remain limited.
Western Europe leads in developed market appetite, whilst CEE and Asia capture emerging market interest.
The results confirm Western Europe’s position as the preferred developed market, reflecting its depth and predictability. Among emerging regions, respondents repeatedly point to Central and Eastern Europe and Asia, where growth potential and sector-specific themes, particularly infrastructure and private debt, offer compelling prospects. India and Southeast Asia also feature prominently due to favourable demographics and continued economic expansion.
Private debt and secondaries lead strategy preferences as investors prioritise income and liquidity.
The survey highlights that these strategies respond directly to current market needs. Private debt continues to attract investors seeking predictable cash flows and downside protection, while secondaries appeal because they provide accelerated liquidity and portfolio diversification. Both strategies align naturally with the wider emergence of evergreen structures and liquidity-focused solutions.
