Luxembourg’s Parliament passed a new law on July 14, 2016 introducing a Reserved Alternative Investment Funds (RAIF) structure. This law will come into force three days after publication in Luxembourg’s official gazette, Mémorial.
RAIF vehicles are similar to Luxembourg’s existing Specialized Investment Funds (SIF) and Société d’investissement en capital à risque (SICAR) regimes. However, they do not require authorization or oversight from Luxembourg’s regulator, the Commission de Surveillance du Secteur Financier (CSSF). This is provided that it complies with AIF requirements and is managed by a regulated Alternative Investment Fund Manager (AIFM), which must submit regular reports to the regulator.
The AIFM must be established in Luxembourg, another EU country or a third country according to the provision of the AIFMD and must notify the CSSF once it starts to manage a RAIF. The AIFM can also use the marketing passport to market RAIFs on a cross-border basis.
The new fund structure creates several benefits for managers, including a heavily reduced time to launch (less than one month as opposed to the current six months or greater timeline), planning certainty, and flexibility in legal and tax structuring. If investors prefer their alternative investment vehicle to be regulated and supervised directly by the CSSF, they can continue to set-up as UCIs, SIFs or SICARs.
How Duff & Phelps Can Help
As one of the first companies to obtain a third party AIFM license in Luxembourg, Duff & Phelps’ authorized Management Company (Super ManCo) is positioned to serve as your AIFM for your RAIFs. Our ManCo provides an umbrella solution for AIFs and UCITS companies across all asset classes and jurisdictions. This includes regulatory substance, hosting services, governance, risk and independent valuation services.