Investment managers have seen their regulatory and compliance burden inch upwards for years. The use of management companies in jurisdictions like Luxembourg has sought to ease this load. Investment managers are welcoming the additional support provided by a third-party ManCo, allowing them to concentrate on their core capabilities of managing money.
Investment managers have seen their regulatory and compliance burden inch upwards for years. The use of management companies (ManCos) in jurisdictions like Luxembourg has sought to ease this load. Investment managers are welcoming the additional support provided by a third-party ManCo, allowing them to concentrate on their core capabilities of managing money.
Luxembourg regulation dictates that all regulated investment vehicles must appoint a ManCo or be self-managed. Even Reserved Alternative Investment Funds (RAIFs) need to appoint an external Alternative Investment Fund Management company.
The 2022 Management Companies Observatory Barometer by PWC revealed that, despite the industry challenges, ManCos “demonstrated an incredible ability to adapt by developing their business models and transforming regulatory evolution into business opportunities. 2021 ended again with a series of records”.
According to the report, these entities in Luxembourg managing €5.3 billion, which represents an increase of 22% year on year. Further, both traditional Ucits and alternative assets reported double digit increases, 16% for UCITS but even more impressive for AIFs with
41% YOY.
Luxembourg has a strong track record for delivering quality in this space, offering a broad ecosystem, which operators can benefit from when selecting a firm to represent them. The growth in the ManCo arena is proof that the Grand Duchy has continued finding ways of delivering value-add to fund managers seeking professionals to support the expansion of their business.
Bertrand Jaboulay, Partner, Management Company Leader, PwC Luxembourg says: “The increase of alternative assets has been mainly driven by the continuous success of unregulated assets since 2016 with the modernisation of the products offering by creating an unregulated AIF regime – the RAIF – in 2016 and creating the Limited Partnership regime in 2017. Those structures are by far the most successful products used by AIFMs. The dynamism of alternative investments has been characterised by a wide range of investment strategies deployed in 2021, mainly Private Equity, Real Estate, Fund of Funds and Private Debt.”
