Registrations of new Reserved Alternative Investment Funds, a highly popular private market vehicle in Luxembourg known as Raifs, slowed during April, continuing a downward trend from the peak observed last December. The numbers reflect the impact of higher interest rates and a market shift towards incorporating sub-funds under the umbrella of existing structures.
Registrations of new Raif structures, not including sub-funds, have settled into a slower pace since a recent peak last December. April saw the registration of 26 new Raifs, down from 34 in March. There has been so far this year a bimonthly pattern of one stronger month, then one weaker, but the market is down from its earlier highs.
The Raif registration numbers for stem from Investment Officer’s analysis of the mid-May 2024 dataset of the Luxembourg Business Registers (LBR). LBR has a government mandate to register these funds. The dataset lists some 2,300 Raif structures registered since 2016.
Industry participants said that Raif is still in a very strong position as a Luxembourg fund vehicle, even considered separately from Raif sub-fund activity.
‘Almost exclusive’
“Raifs are the most important and almost exclusive investment vehicle of institutional investors who choose Luxembourg as a fund domicile to invest in alternative investments,” said Markus Bannwart, head of department for capital markets fund structuring at Universal Investments. “Not only are nearly all new funds set up as Raifs, but on top of it, quite a few existing SIFs (Specialised Investment Funds, ed.) have been transformed into Raifs as well. Not the other way around.”
As Investment Officer reported earlier, there has been a trend towards using the ability of a Raif structure to incorporate sub-funds, with sub-fund registrations exceeding Raif structure registrations.
The strong December finish of 42 Raif registrations followed a big slow-down in October 2023, where new registrations fell to 10.
Major investment houses
The new Raifs registered in April came from a range of investment houses, including Carne Global, Waystone, Blackstone, Rothschild & Co, Sanne LIS and UBS.
The two firms with the most new Raifs registered in April were both Irish-registered Super Mancos. Dublin-headquartered Carne Global had a total of 16 Luxembourg Raifs and Waystone Management Company, also headquartered in Luxembourg, came in second with 15. Both of these firms are considered “third-party mancos”. Rounding up the top 3 was the Swiss-based Partners Group, with 14. Partners is an in-house ManCo, which only manages its funds.
Most of the firms listing Raifs tend to be third-party mancos.
Few large players
Lemanik Asset Management came in fourth with 12, followed by the 9 listed by ONE Fund Management, the 8 listed by Blackstone Europe Fund Management and the 7 from Hauck & Aufhäuser Fund Services. After that, the number of Raif registrations drops off to about 5/firm for the month.
The data since the 2016 inception of the Luxembourg Raif laws shows that new Raif structure registrations peaked in July 2021, where some 60 were added. Activity since then has been lower, with the level of 40 registrations only reached twice since 2023.
It’s clear that despite the move by many firms to leverage their existing Raifs for listing sub-funds, there is ongoing demand for new Raif structures, at lower levels since the 2022 peak.
Higher rates harm market
Raif registration levels vary with the financial market situation. “The general market was down over the last months based on raised interest rates,” said Pascal Pech, head of business development and real assets Luxembourg for Hauck Aufhaüser Lampe Private Bank’s Luxembourg branch.
The shift to using Raif sub-funds instead of launching new Raifs, according to Bannwart of Universal Investment, “is most likely because most institutional investors have established Raif platforms since 2015 and are now using these existing umbrella structures to add more sub-funds.”
“The formerly high number of real estate and real estate debt funds came down to nearly zero in 2023,” he added. “Now the market seems to be in recovery and even some distressed asset strategies are set up as a Raif to take advantage of the market situation.”
Optimism remains
Optimism about the future of Raifs is strong. “Raifs had an extraordinary year back in 2022, followed by a natural evolution through 2023 which we also see continuing in 2024,” said Alexandra Serban Liebsch, head of business operations – continental Europe at Waystone.
Waystone reports it has seen a 150 percent increase in the number of Raifs launched between the first quarters of 2023 and 2024, “with more clients currently onboarding,” said Serban-Liebsch, who confirmed her clients are seeking efficiency of their business models by focusing more on platform solutions and “compartmentalisation of their existing Raif structures.”
New Raif structures registered in April 2024:
| Atlas Global Macro RAIF | UBS Fund Management (Luxembourg) S.A. |
| BCV REAL ESTATE FUND | Gerifonds (Luxembourg) S.A. |
| Arcano Secondary Fund V, S.C.A. SICAV-RAIF | Arcano Capital SGIIC, S.A.U. |
| Carmignac Private S.A. SICAV-RAIF | Carmignac Getion S.A. |
| ALTERALIA CREDIT OPPORTUNITIES S.C.A., SICAV-RAIF | Alantra Multi Asset SGIIC, S.A.U. |
| BCF 14 Private Investors Offshore SICAV-RAIF S.C.Sp. | Waystone Management Company (Lux) S.A. |
| BXD-T (Lux) SCA SICAV-RAIF | Blackstone Europe Fund Management S.à r.l. |
| BXD (LUX) SCA SICAV-RAIF | Blackstone Europe Fund Management S.à r.l. |
| Blackstone Multi-Asset Credit S.C.A. SICAV-RAIF | Blackstone Europe Fund Management S.à r.l. |
| Uncorrelated Hedge Fund Strategies S.A.SICAV-RAIF S.A. | Carne Global Fund Managers (Luxembourg) |
| Arrow Lending Opportunities I A SCSp, SICAV-RAIF | ONE Fund Management S.A. |
| Arrow Lending Opportunities I B SCSp, SICAV-RAIF | ONE Fund Management S.A. |
| Northern Horizon Aged Care Social Infrastructure SCSp SICAV-RAIF | Northern Horizon Capital AIFM Oy |
| BREDS V SCA SICAV-RAIF | Blackstone Europe Fund Management S.à r.l. |
| Trident Investments Luxembourg SCA SICAV-RAIF | TMF Fund Management S.A. |
| MPEP Fund V FCP-RAIF | MPEP Luxembourg Management S.à.r.l |
| Nomads II Lux SCA SICAV-RAIF | Hummingbird Ventures Management NV |
| BlueShore S.A. SICAV-RAIF S.A. | Carne Global Fund Managers (Luxembourg) |
| AXA IM InMotion RCF Fund III SCA SICAV-RAIF | AXA Investment Managers Paris |
| ACIF Infrastructure III SCSp-RAIF | Access Capital Partners S.A. |
| Partners Group European Direct Lending Co-investment Fund (EUR) L.P. S.C.S.Sp., SICAV-RAIF | Partners Group (Luxembourg) S.A. |
| MV Credit Subordinated SCA SICAV-RAIF | MV Credit S.à r.l. |
| Mircap Opportunities II SCA SICAV-FIAR | Mircap Partners |
| Federated Hermes European Direct Lending Fund III Master SCA, SICAV-RAIF | Hermes Fund Managers Ireland Limited |
| Atempo Growth II | Alter Domus Management Company S.A. |
| HL Servisa SCSp SICAV-RAIF | FundRock LIS S.A. |