Investing

German judges handed down an important verdict this week: EU treaties are no obstacle to shared debt in the union. The ruling comes shortly after the European Commission called for new joint injections into the economy. “As an investor I would carefully reconsider my bond portfolio,” one critic warns.

On Tuesday, the German constitutional court in Karlsruhe ruled that “exceptional” EU loans to overcome problems caused by the Covid-19 pandemic do not violate European treaties.

Luxembourg has recently seen the launch of the Luxembourg Valuation Professionals Association, known as LVPA. Valuations are “extremely strategic for building trust with your investors,” said Hind El Gaidi, one of the LVPA’s co-founders. For this Luxembourg edition of the IO Talks podcast, El Gaidi spoke to Investment Officer together with three fellow co-founders: Christophe Vandendorpe, partner at EY; Rafaël Le Saux, director at PwC; and Antoine Boggini, co-founder at BHB & Partners, an independent advisory firm.

A total of 43 new Reserved Alternative Investment Funds, or Raifs, were registered in Luxembourg during November, indicating that the market for these alternative investments is not slowing down after all, according to data released by Luxembourg Business Register.

The most predicted recession ever is not coming at all. At least, not in Europe. According to DWS, the record-negative figures do not correspond to the actual state of the economy. “We expect growth, not contraction.”

Infrastructure investing has looked like a very good business in recent years. Initially, interest in infrastructure was due to its role as a long-term, inflation-resistant vehicle for institutional investors. But the crying need for building, repairing and upgrading the built world while most governments are short on funds has given it an almost socially-conscious image. 

Most such funds have realised they can easily more towards doing ESG-related investments. Often, it’s just about looking for the right investment option.

Typically, when a private equity fund approaches its contractual culmination point, it will seek to sell its assets, but this may not be possible or desirable at that moment. Establishing a continuation fund is an alternative, Laurent Capolaghi, partner and private equity leader at EY Luxembourg, explained in this Q&A. One third of the top 50 PE houses are considering this alternative option, he estimates.

The spread of web-based platforms has reached into the rarefied atmosphere of private equity, which has historically been paper-based and face-to-face in-person meeting with one’s investment adviser. This is taking place against an industry-wide drive to “democratise” the private assets world, in order to sate huge desire to invest, but also to address the equity issues raised in relation to significant barriers to access, Alfi’s Private Assets Conference made clear this week. 

When it comes to enhancing the economic value chain in terms of sustainability, net-zero and financing the energy transition, the private assets sector is well positioned as an actor that can help deliver the changes that are needed to keep growth sustainable, a Luxembourg panel on net-zero investments was told on Wednesday. 

Real Estate Investment Funds, or Reifs, in Luxembourg saw total assets climb by 26 percent in the year running up to the end of the third quarter, to 131 billion euro. The number of Reifs increased by 20 percent to 621 funds.

The latest edition of the Reif survey conducted by the Association of the Luxembourg Fund Industry, or Alfi, showed that multi-sector allocations remain the most popular strategy for Reif investors, with 49 percent.

The exact impact on private asset values of this year’s declines on global stock and bond markets has yet to be determined, but already some family offices are concerned about the shifts in their portfolios. “There are capital calls that have not been met,” a UBS banker told the Alfi conference on Tuesday.