In a fund market that is becoming increasingly fragmented between European requirements, rising regulatory pressure, and the growth of private markets, large offshore firms can no longer ignore Luxembourg. For Mourant, historically established in Jersey, Guernsey and the Cayman Islands, opening an office in the Grand Duchy two years ago was not merely a geographic expansion. It was a strategic repositioning.
“Luxembourg was the missing piece of the puzzle,” said Saniyé Tipirdamaz, partner in finance. The group was already active in the main financial centers where international wealth structures are established. To support clients combining European vehicles with entities outside the EU, the absence of a base within the EU became difficult to maintain. “Luxembourg is seen as the gateway to European investors,” said Lara Forte, partner specializing in investment funds.
For an international asset manager, a Luxembourg vehicle facilitates access to European capital, particularly institutional capital. But the dynamic goes beyond Europe alone.
Investors from Asia and the Middle East also see Luxembourg structures as safe and well-regulated vehicles. “Investors know that when they invest through a Luxembourg vehicle, a minimum standard of protection exists,” Forte said. The European regulatory framework, which is stricter than that of some offshore centers, is therefore not only a constraint. It also constitutes a commercial argument.
In practice, hybrid structures are common. A Cayman fund may exist alongside a Luxembourg vehicle within the same strategy. For Mourant, the added value lies precisely in the ability to operate across multiple jurisdictions simultaneously within a single structuring or financing transaction.
CRD6: uncertainty and credit reshuffling
The EU’s CRD6 reform, which strengthens the framework for third-country banks, is raising questions in the financing market. “Today, no one has a completely clear answer,” said Saniyé Tipirdamaz. The directive sets out principles but leaves room for interpretation by member states. In Luxembourg, a draft law has been published, but final implementation is still pending.
In theory, some non-European banks could come under pressure if they do not have a presence within the Union. Exceptions exist, particularly those related to “reverse solicitation,” but their practical application remains unclear. How do you demonstrate who initiated the relationship? How do you frame commercial practices that are often informal?
Yet the partner does not expect an abrupt break. Market participants will adapt. A structural trend nevertheless appears more clearly visible. CRD6 targets banks, not investment funds. “We will probably see a slight shift toward a greater role for private capital in financing,” she said. The disintermediation of banks, already underway for several years, could therefore accelerate further. For institutional investors, private credit now fits into a structural rather than cyclical logic.
AIFMD II: the value of predictability
The entry into force of AIFMD II - most of its provisions become applicable next month - represents another major milestone for European private markets. Luxembourg has quickly transposed the directive into national legislation, giving managers clarity. “In the financial sector it is essential that a manager knows exactly within which framework they will operate,” said Lara Forte. That predictability is all the more important because the reform more clearly regulates the activity of direct lending by funds.
Luxembourg’s decision not to further tighten the European text reinforces this legal certainty. For managers launching new credit funds, the absence of national surprises and the clarity of the framework are decisive factors.
Tokenization and regulatory balance
Tokenization of fund shares and the digitalization of processes around settlement and reporting are, according to the firm, important themes for the coming years. Although a harmonized European framework for tokenized funds has yet to emerge, Luxembourg is trying to maintain its position as an innovative financial hub.
But the competitiveness of the financial center depends on a broader balance. “Regulation must help, but it should not become a problem in itself,” said Lara Forte. An environment that is too costly or too complex would risk creating a situation where only large groups can participate, to the detriment of mid-sized players.
Saniyé Tipirdamaz also observes a gradual evolution in the local landscape. Whereas decision-making centers were historically often located in London or elsewhere, she notes “a slight shift” with more decision-makers physically present in Luxembourg. It is still a gradual change, but one that points to growing anchoring.
The Luxembourg proposition thus appears as a hybrid architecture: political stability, accumulated expertise, a harmonized European framework, and the ability to coexist alongside offshore vehicles. In a regulatory environment that is being reshaped once again, this very ability to connect multiple jurisdictions may prove to be one of the Grand Duchy’s most important strengths.