The RAIF has similar features to the Luxembourg specialised investment funds (SIFs) and SICARs. However, unlike its counterparts, it does not need to be approved and is not supervised by Luxembourg’s financial regulator, the CSSF.
This new vehicle will extend the scope of the different options for structucting private equity, real estate or hedge funds and will reduce time to market significantly.
Speaking at Wednesday’s Association of the Luxembourg Fund Industry (ALFI) conference in London, Elvinger, a partner at law firm Elvinger Hoss & Prussen, confirmed that the new investment vehicle will be made available to ‘well-informed investors’ as early as next month, before Luxembourg’s parliament breaks for the summer.
“I would say we are on track. The council has given its opinion and we will have the RAIF before the summer holidays, either at the end of June or the beginning of July,” said Elvinger, chairman of ALFI’s regulatory board.
“The aim here is to complete the Luxembourg toolbox in terms of the structures that are available, we are not trying to replace the SIFs or the SICARs.”
Draft legislation
The move follows plans set out by the Luxembourg parliament in December 2015 when it published a draft legislation governing the structure and use of RAIFs, with a view to launching the product in the second quarter of 2016.
Elvinger said the new vehicle will make Luxembourg an “even more attractive place for investment”.
“The aim here is to complete the Luxembourg toolbox in terms of the structures that are available, we are not trying to replace the SIFs or the SICARs,” he added.
BNP Paribas Securities Services said RAIFs will be particularly attractive to “private equity, real estate and debt fund managers.”
A wholly-owned subsidiary of BNP Paribas, the asset-servicing unit predicts that once RAIFs come into effect some alternative fund managers will ‘re-domicile’ their offshore structures to access to the European market.
Some fund managers may also consider converting their existing investment structures into RAIFs to take advantage of the new regime, the firm added.
AIFM required
In order to ensure sufficient protection and regulation via its manager, a RAIF must be managed by an authorised external alternative investment fund manager (AIFM). The latter can be domiciled in Luxembourg or in any other EU member state.
If it is authorised and fully in line with the requirements of the AIFMD, the AIFM can make use of the marketing passport to market shares or units of RAIFs on a cross-border basis. As is the case for Luxembourg SIFs and SICARs, shares or units of RAIFs can only be sold to well-informed investors.
