Private equity is a growing industry in New York City, with a total of $84.6 billion invested in 2020, according to the Private Equity Growth Capital Council. With increasing interest in European investment opportunities, many New York private equity (PE) firms are turning to Luxembourg investment funds to make their ventures easier and more efficient.
New York Private Equity Industry
In 2020, the private equity industry in New York City saw a total of $84.6 billion invested, with an average deal size of $75 million. The majority of these investments were made in the technology and healthcare sectors. Additionally, the city saw an increase in cross-border deals, with 45% of investments made in European companies.
Luxembourg Investment Funds
Luxembourg has a long-standing reputation as a hub for investment funds and offers a range of investment vehicles for private equity firms. These funds come in two types: regulated and unregulated.
Luxembourg Regulated Funds
- UCITS (Undertakings for Collective Investment in Transferable Securities) are funds that are available to retail investors and must comply with strict regulations to ensure investor protection.
- SIF (Specialized Investment Funds) are similar to UCITS, but are geared towards professional investors and offer a wider range of investment options.
- SICAR (Société d’investissement en capital à risque) is a fund designed for venture capital investments and is subject to limited regulations.
Luxembourg unregulated Funds
- RAIF (Reserved Alternative Investment Fund) is an unregulated fund that offers a flexible investment structure with no restrictions on investment types or amounts. The SICAV-RAIF (Société d’investissement à capital variable – Reserved Alternative Investment Fund) is similar to the RAIF, but is structured as a closed-end investment company.
- SLP (Special limited partnership) is a limited partnership that is used for private equity and venture capital investments.
- SOPARFI (Société de participations financières) is a holding company that is used for passive investments.
Advantages for New York PE Firms
Investing in Europe through Luxembourg investment vehicles offers several advantages for New York private equity firms, including:
- Access to a wider pool of investment opportunities in Europe
- Lower tax rates in Luxembourg compared to other European countries
- A favorable regulatory environment for private equity and venture capital investments
- Access to a highly skilled and knowledgeable financial services sector in Luxembourg
Luxembourg investment funds offer New York private equity firms an efficient and effective way to invest in European companies. With a range of regulated and unregulated funds to choose from, PE firms have access to a diverse pool of investment opportunities, along with favorable tax and regulatory conditions. The city’s thriving financial services sector provides additional support, making Luxembourg a key destination for cross-border investment in Europe.
Damalion helps New York private equity firms to setup their investment funds in Luxembourg to facilitate their investments in Europe. Contact your Damalion expert now.
