YTD, the number of private equity (PE) funds in Luxembourg with more than €1 billion in assets has doubled since 2018. In addition, the size of the average PE-fund has also increased by 50% since last year, according to the The Alfi/Deloitte Private Equity and Venture Capital Investment Fund Survey 2019.
Another survey shows that the assets under management (AuM) in Luxembourg private debt funds amounts to a total of over €56 billion, representing an 40% increase over the last two years. Direct lending strategies almost doubled to 32% of the private loan market, up from 18%. High yield bond strategies remained stable at 22% whilst senior loans dropped from 35% in 2018 to 22% in 2019.
The private debt market was affected by implementation into Luxembourgish tax law of the EU Anti-Tax Avoidance Directive, Atad 1 & 2, which targets ‘aggressive’ tax planning. However, KPMG Luxembourg, expects the debt fund market’s growth to continue in coming years.
“Non bank intermediation, such as financing through private debt funds, is gaining further momentum. Private debt funds are a growth stimulator and important source of financing for the real economy. Alongside the banking industry, they can help businesses raise capital and address the imbalance of liquidity supply and demand…our survey shows that Luxembourg private debt funds are more sought after than ever.”, said Camille Thommes, director general of Alfi.