May, 19th 2011 Listening to investors Workshop Private Equity Moderator: Laurent Schummer, Linklaters LLP Panelists: Yves Courtois, KPMG Advisory Christoph Lanz, Banque Privée Edmond de Rothschild Europe Hans-Jürgen Schmitz, Mangrove Capital Partners Lars Jonsson, Triton Private Equity
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Workshop Private Equity Listening to investors - ALFI to investors Workshop Private Equity ... Lazard LGT Capital Partners ... including dedicated training
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SouthandEastAsia65.China68. Indonesia71. Mongolia74. South Korea
66. Hong-Kong69.Japan72. Pakistan75. Thailand
67. India70 Malaysia73. Singapore76. Vietnam
56. Kuwait59. Morocco62. Tunisia
Updated: July, 2010
60 DTTs in force
16 DTTs pending
AIFMD – How will Luxembourg adapt ?
Lux AIF (UCI/SIF/SICAR) Highest compatibility standard
Lux AIFM Highest compatibility and « UCITS ManCo » track record
Prudential supervision Already standard
Depositary requirement Already standard
Transparency requirements Already standard
Delegation Already standard
Passporting capabilities Luxembourg sets global standard for distribution/placement
Support services AIFMD anticipation
Luxembourg – a global PE centre
LEGAL / TAX
Stable, flexible and predictable on-shore legal and tax regime for AIF through:
Regulated AIFSpecialised Investment Fund (SIF)Risk Capital Investment Company (SICAR)Unregulated AIF
Financial holding company (SOPARFI) for Luxembourg or foreign funds
Strong investor protection
EXPERIENCE
Over 20 years experience in structuring AIF
Strong industry involvement through ALFI / LPEA, including dedicated training in all AIF assets classes
Specialisation in custodian banks and central administrators
Tailor-made AIF and SPV solutions for international managers / sponsors / initiators
MARKETPLACE
Central location, with highly qualified multi-lingual workforceGood connections to other European financial centresStable government with strong political support for the financial services industryLeading investment fund/ financial centre in Europe and #2 globallyResponsive, pragmatic and accessible regulator and tax administration
Proven PE structures
SICAR and SIF: the right products at the right time in the right place
Ability for small and mid-sized promoters to access regulated PE regimesBrand image as a European regulated on-shore fund regimeEnabler in fund raisingEurope’s most customised fund regimes for Private Equity – choice of legal formsTax neutralityExamples of specific attributes:
Exemption from consolidationLight reporting rulesNo investment restrictions within the PE/VC spherePragmatic diversification requirements for SIF
Key competitive features
Proven PE structures
SOPARFI :a worldwide recognised vehicle for PE acquisition structuring
Access to Double Taxation TreatiesLow administration costsLegal and tax structuring certainty Efficient profit repatriation modelsDevelopment of innovative hybrid instruments (e.g. PECs, CPECs)
Key competitive features
Proven PE structures
Luxembourg is the unrivaled back-office of Europe’s fund industryNumerous PE Houses have established offices with middle- and back-office operations in LuxembourgThird party service providers specialised on PE offer a large variety of services:
Fund accounting and custody servicesFund operations (investor and portfolio transactions)Cash handlingCapital call facilities / Bridge financing
Key competitive features
A large number of PE houses have their processing center for PE funds in Luxembourg
•Attractiveness of Luxembourg- Growing popularity among institutional investors, Family offices, HNWIs- Increased quality and competitive landscape for administrations and trusts- Political and industry drive to develop PE- Modernization of the SCS in the pipeline (to bring it more in line with the UK partnership)
• Tax- Transfer pricing international standards- Substance and VAT reviews- Taxation of carried interest & new circular on taxation of highly skilled workers
• Key challenges- Raising new funds- Deploying undrawn commitments- Achieve operational efficiencies- Increased compliance and risk management costs- Addressing investors needs (Solvency II, Basel III, transparency requirements)- Exiting through IPOs- Competition with strategic buyers- Access to debt markets- Salvaging distressed deals
• Challenging PE fund raising• LBO markets are functioning again• More LBOs will default on their debt• Refinancing of large LBOs will be problematic• Increasing consumer business deals in Asia and emerging markets• Strong secondary market
REG
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PE FIRM
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More risk management, compliance, restructuring, secondary transactions