Universal-Investment

In a rapidly shifting economic landscape, leverage presents a distinct challenge. The private debt market emerges as a beacon of adaptability, with expertise and tailored solutions becoming crucial determinants of success, writes Yvonne Narin, senior manager risk controlling at Universal Investment Luxembourg.

The implementation of the AIFMD, the European directive for alternative investment funds managers, in 2011 can be seen as the starting point for the transition to a greater degree of specialisation. The requirements in this directive have increased the cost of obtaining an AIFM licence to a point such that a licence often no longer is viable for smaller fund boutiques. As a result, the use of ManCos has become even more popular for tangible assets such as real estate.

As Investment Officer knowledge partner, Universal-Investment’s Luxembourg country head Sofia Harrschar argues that reforming the EU regulation on social security would be in the interest of Luxembourg’s financial services sector and the many thousands that it employs. The industry meanwhile, needs to adapt quickly, look across the border and develop new ways of working.

The demand for ESG-compliant investments is growing, especially among professional investors. The urgency of climate change and the regulatory requirements are driving the development for responsible investing. 

Luxembourg last week was buzzing with speculation and market talk. A major deal was said to be in the making that could change the international leadership tables among Alternative Investment Fund Managers, AIFMs. “Is your firm going to be bought?” 

With the prominent focus on ESG, asset managers find themselves in a challenging position: On the one hand, they rely increasingly on ESG ratings, not only for meeting regulations but also for establishing trust and satisfying the growing customer demand for sustainable products. On the other hand, ratings based on the evaluation of past data can always only be retrospective. Real-time signals and their impact on a company’s sustainability cannot be considered.

Economic insecurities on a broad scale are increasingly impacting the decision making of institutional investors. With continuously high volatilities in equities and, as an effect of rising interest rates, even in the bond markets, they look at illiquid assets, or alternative investments that can offer solid cash flows and long-term returns.

Canada’s main pension fund, CPP Investments, has agreed to become a major shareholder in Universal Investment, a leading third-party Super ManCo in Luxembourg, by acquiring a significant stake in the firm from private equity and venture capital firm Montagu. The deal demonstrates that investors worldwide see further potential in Luxembourg’s growing asset services market.

Finland’s Mandatum Asset Management and fund services platform Universal Investment on Monday said they have launched a new open-ended Senior Secured Loan Fund for professional investors in Europe that will finance leveraged buyouts in Scandinavia and Europe. The fund is structured as a Luxembourg Raif and targets approximately one billion euro on the long term.

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.