Raymond Frenken

Lawyers in Luxembourg expect that at least 20 new European long-term investment funds, known as Eltifs, will be registered in the grand duchy this year, even before the more liberal regulatory regime for these funds enters into force in 2024, researchers at Scope Fund Analysis said. 

Eltifs grew more than 50 percent last year into a 11.3 billion euro market, also buoyed by 4 billion euro in inflows. More than half of the 77 Eltifs available were registered in Luxembourg, according to the latest Eltif study by Scope Fund Analysis. 

The European Central Bank and the EU’s top insurance body have warned that businesses and households are not sufficiently insured against climate-related disasters, raising the risk of financial instability and economic crises. A discussion paper issued this week argued that catastrophe bonds should play a bigger role in bridging the overall climate insurance gap, while national and European authorities need to encourage uptake of policies to prevent such crises from occurring. 

The Luxembourg stock exchange has announced a new move to expand its cooperation with Macao, one of China’s Special Administrative Regions. The bourse said it will offer trading in securities listed on the Chongwa (Macao) Financial Asset Exchange Co. Ltd., commonly known as MOX, on its self-regulated Euro MTF market.

In a dawn raid on Friday, Luxembourg judicial authorities searched for documents of two holding companies controlled by US hedge fund Elliott Management in relation to last year’s 1.2 billion euro sale of Italian football club AC Milan. Although it has formally closed, the sale is still contested by a third Luxembourg holding company, Blue Skye Financial Partners, which owned a small minority stake in AC Milan and which claims it has fallen victim to fraud under Luxembourg law.

Bermuda-headquartered financial services firm Apex Group, one of the largest management companies in Luxembourg, has agreed to acquire MJ Hudson PLC, a troubled London-listed provider of management company services in Ireland and Luxembourg, for about 40 million pounds (45.2 million euro), less than half its value at the time of its 2019 IPO.

If there’s one thing clear from recent months, it’s that Luxembourg is placing a major bet on the future of Eltifs, or European Long Term Investment Funds. The EU’s adoption of a major upgrade of the Eltif regulation is opening the doors to private markets for high-net-worth investors and wealth management clients.

Rising interest rates and the demise of Silicon Valley Bank and Credit Suisse have led to a paradigm shift in private equity and venture capital. Reji Vettasseri, lead portfolio manager at Swiss private finance group Decalia, believes investors now need to to be innovative with emerging strategies, carefully selecting ‘small cap’ firms to invest in instead of fleeing to the safety of larger ventures.

Luxembourg’s financial supervisor CSSF this week presented its priorities in the area of sustainable finance. The regulator said it strives to “accompany the transition of the financial sector and its players in a proactive way”. It has defined separate priorities for banks, for asset managers and for investment firms.

Although there’s consensus on clouds hanging over private real estate markets while some investors here still face a rough ride, instability in the market for Real Estate Investment Funds, known as REIFs, - unlike the European Central Bank - is not seen as an immediate systemic threat to the real economy, according to real estate specialists in Luxembourg and London.

Downgraded green credentials for hundreds of investment funds and an increasingly polarised political US debate on ESG investments are shaping the current industry debate on sustainable finance. Joachim Nahem, sustainability expert and chief executive at Oslo-based Position Green, notes the emergence of a new concept that has taken over from greenwashing: green hushing.