Growth in funds registered as Reserved Alternative Investment Funds, known as Raifs, in Luxembourg has increased considerably in the first half of this year, according to an analysis of data from the Luxembourg Business Registry by Investment Officer Luxembourg. With 18 new funds, asset services firm Waystone was the biggest issuer in the first half.
The data confirms that Raifs experience increasing popularity as a vehicle and that Luxembourg is recognised globally as an international hub for alternative investments. A total of 278 new Raifs were registered between January and June, the data shows. That is up 36 percent from the 205 new funds that were registered in the first half of last year.
A Raif can be created relatively quickly and does not involve direct interaction with financial supervisors. Its management companies nevertheless are subject to supervision by Luxembourg’s CSSF. A person familiar with alternative investments has said that Luxembourg’s Raif regime introduced in 2016 has created vehicles that “combine the tax and legal advantages of the regulated and unregulated world” while significantly shortening the time to market.
Waystone, Hauck and Carne lead
Asset services providers Waystone Management Company, Hauck & Aufhauser Fund Services and Carne Global were the most active issuers, the data analysis shows. Waystone issued a total of 18 new Raifs while Hauck & Aufhauser introduced 14 new alternative funds. Swiss-based Carne issued 11 Raifs.
The outcome was no surprise for Waystone, an international asset services firm and third-party ManCo created in March 2020 through the merger of DMS, MontLake and MDO.
“Our Luxembourg Raif structures have formed a key part of the growth of our platform offering enabling our clients to launch funds with certainty in cost and service delivery,” said Rachel Wheeler, CEO Global Management Company Solutions at Waystone, in a written comment.
“Over the past year, we have had strong client growth across the US, Asia, the UK and continental Europe,” Wheeler said. “Our ability to provide a full-service offering is enhanced by our multi-jurisdictional presence including Luxembourg where the Raif structure provides numerous benefits including speed to market, favourable tax treatment and flexibility in terms of investment strategies.”
The list of top 10 issuers also included the likes of Alter Domus Management Company, Rothschild & Co Investment Managers and Sanne LIS SA.
Most active Luxembourg Raif issuers in first half:
- Waystone Management Company: 18
- Hauck & Aufhauser Fund Services: 14
- Carne Global Fund Managers: 11
- Alter Domus Management Company: 8
- Rothschild & Co Investment Managers: 7
- Sanne LIS: 6
- Avega Capital Management: 5
- Ardian France: 4
- Universal-Investment: 4
- Fuchs Asset Management: 3
Last year was the biggest year ever for Raifs. A total of 417 such funds were created, up 39 percent from 364 a year earlier, according to analysis conducted by Investment Officer Luxembourg of filings.Luxembourg was home to a total of 1931 Raifs at the end of June.
Raif issuance dipped in April following the turmoil in global financial markets as a result of Russia’s invasion of Ukraine, but then increased again steadily to peak at 56 new Raifs in June. Issuance in July fell to 45 and stood clearly below the record of 65 new funds that were issued in July last year.
Global interest
The Raif vehicle is seen as particularly attractive for real estate or infrastructure investments by institutional investors, not only in Europe but by investors worldwide. Luxembourg this year has seen Raif activities by Queensland Investment Corporation, or QIC, in Australia, New York-based Stepstone and Singapore-based Silkroad, for example.
Among the Raifs reported in the first half of this year were at least 14 that were directly involved in infrastructure investments. At least 23 were created with the purpose of serving as a feeder fund to another investment fund. A feeder fund is a sub-fund that puts all of its investment capital into an overarching umbrella fund, known as a master fund, for which a single investment advisor handles all portfolio investments and trading.
Impact funds
As impact funds, Raifs also appear to be increasingly used for funding major sustainability projects. Ocorian Fund Management supported the creation of Systemiq Capital Fund II. Systemic sees itself as a systemic change company to help design and build that better economy. In July it confirmed the 70 million dollar first close of its second fund, targeting 200 million dollars to continue backing early-stage climate tech entrepreneurs. This will build on the success of Fund I, which launched in 2018 and has since deployed 30 million of capital and achieved three exits.
Also in July, Carne Global supported the launch of the Unigestion Climate Impact Fund. Unigestion is a Swiss alternative investment manager. Alter Domus in February helped launch the BlueEarth SF Global Impact Fund, run by Zug, Switzerland based Blue Earth Capital.
In May, Finexis supported the launch of the Nixdorf Impact Funds S.C.S., which follows a venture capital fund of fund strategy and has sustainable investments as its objective.