By Robert van Kerkhoff, Managing Director, BNP Paribas S.A., Luxembourg Branch
Private Equity plays a key role in the Luxembourg investment ecosystem. This asset class has grown exponentially in the last years due to the search of yield and diversification element in investment portfolios. Luxembourg has positioned itself as an attractive place to launch vehicles for international players, mainly due to the efficient interaction between all relevant stakeholders – regulator, market players, associations, administrators and banks. New pure niche players have entered the market as well as traditional asset managers that have taken the decision to launch alternative vehicles to diversify their product range for their investor base. We leveraged our historical UCITS experience in Luxembourg and launched at the same time and at a swift pace, the required transformation to grow our alternative market service offering. Now Luxembourg needs to make sure to keep on addressing the right themes in order to keep up with the momentum of the fast-evolving alternative segment.
Service providers to master complexity
To truly leverage the fast growth of the Private Equity segment, fund managers (GPs) are looking for operating models that can handle complexity at scale via automation and industrialise reporting capabilities – allowing for quick expansion into new markets – without impacting resources at front office level. The ultimate objective is for them to benefit from an integrated banking solution.
Indeed the administration activity is at the forefront of the transition. Leading private capital investors require assistance with the management of their unlisted assets with a track record for holistically supporting them including a day-to-day management of cash flows, capital calls, fund distributions, the monitoring of investment portfolios and performance calculations. GPs expect an integrated end-to-end offering, coupled with a best-of-breed approach to technology and systems to maximise efficiency, enabling them to focus on their core business activities.
Business dynamism and scalable talents
As there is no “one-size-fits-all solution” to address the dynamics and challenges of the industry, the selection of the right partner, technology and staff is key to ensure a constant sustainable growth with a healthy business model. The search for talent is becoming every day more challenging in the Luxembourg market. In order to cope with these circumstances, universities, schools and associations are important players contributing to market education as well as generating and sharing knowledge.
Associations such as the LPEA provide a dynamic platform allowing members to network, to exchange their vision, to share their know-how via events, conferences, workshops and training. Universities on the other hand bring in new talents in the market and we constantly see more specialised courses focusing on the fund industry as for example the recent launch of the master degree in investment fund law at the University of Luxembourg. Our ecosystem relies on actors who are able to attract business whilst educating talents by leveraging the evolving infrastructure in Luxembourg.
Photo Copyright: Maison Moderne