Luxembourg

WHY MEZZANINE RBF FINANCING FROM LUXEMBOURG ?

Luxembourg is the largest European fund domicile and the second largest fund centre in the world after the US.

With its track record in investment funds, its flexible and efficient legal, regulatory and tax environment, Luxembourg is an attractive and strategic location for a debt platform.Shadow banking accounts for 40% of total investment in Europe, although it declined slightly in 2018. According to ECB figures, Luxembourg is by far the largest player in Europe, with € 14 trillion in assets managed in the country. In its July 2019 report on shadow banking, the European Central Bank estimates its weight at 41.900 billion euros for the whole of the European Union. For the euro area, the total is 33,600 billion euros. The term “shadow banking” – finance from the shadows – includes all financing activities of the economy outside the banking sector. Investment funds are therefore a big part of it. Note that the term has a negative connotation, while the activities are completely legal, the ECB has chosen to replace it with the term “non-bank financial intermediation”

WHY AN ALTERNATIVE FINANCING SPV IN LUXEMBOURG?

A Luxembourg SPV as funding vehicle for financing or projects has many benefits, such as:
  • SPV attract international Insitutional investors focusing in private debt because of the low yields available from government bonds.
  • An SPV allows the ownership of a single asset often by multiple parties and allows for ease of transfer between parties
  • There are definite tax benefits of SPVs where assets are exempt from certain direct taxes
  • By structuring the SPV appropriately, the sponsor may limit legal liability in the event that the underlying project fails.
  • By Meeting regulatory requirements
  • By transferring assets off-balance sheet to an SPV, banks are able to meet regulatory requirements by freeing up their balance sheets
  • By being ‘bankruptcy remote in the event of bankruptcy or a default

LUXEMBOURG BENEFITS

  • DIVERSIFIED WITH GLOBAL REACH
  • The Luxembourg financial centre offers a diverse range of financial services connecting investors and markets around the world.
  • The financial centre’s unique cross-border expertise attracts financial service providers from around the globe, while Luxembourg’s capital markets infrastructure makes it the ideal place for companies of all sizes to finance their European and global activities.
  • SMART AND FORWARD-LOOKING
  • From building Europe’s number one international fund distribution platform, to the listing of the world’s first Green Bond, Luxembourg has been a pioneer for many decades
  • With its large pool of multilingual talent, the Grand Duchy’s financial centre is a perfect launch pad for new products and services requiring cross-border appeal
  • STABLE AND SOLID
  • Luxembourg is politically stable, it has very low public debt, and an economy with proven staying power, consistently outperforming the EU average.
  • The global financial community has recognised Luxembourg’s sustained competitive edge with AAAcredit ratings.