RAIF: a new vehicle in the Luxembourg investment toolbox
Luxembourg Parliament has today approved the law on the reserved alternative investment fund, or RAIF. The new law enriches the already impressive toolbox of investment vehicles Luxembourg can boast by adding another highly efficient tool geared towards international asset managers and investors.
Leveraging the opportunities of the alternative fund managers directive (AIFMD), notably by regulating the fund manager rather than the fund itself, the RAIF offers the best of both worlds: a flexible fund vehicle that can be set up quickly and without regulatory approval and supervision by the Luxembourg regulator, yet providing an added layer of security and legal certainty for international investors thanks to the requirement to be managed by an EU regulated alternative investment fund manager (AIFM). Indeed, the AIFM regulation will be fully applicable with all the related investor protection measures. The RAIF will thus also benefit from the marketing passport granted to the alternative investment manager.
Modeled on the highly successful Luxembourg specialized investment fund regime (SIF), the RAIF can be set up within a matter of a few days and provides all the asset allocation and structuring flexibility global alternative asset managers expect.
One of the core ambitions of the financial centre over the next 5 years is to further strengthen Luxembourg’s role as a centre of excellence in cross-border finance, which includes constantly adapting and improving the regulatory framework and, where necessary, expand the toolbox available to international investors. The introduction of the RAIF is testimony of the government’s commitment to achieve these ambitions and to further diversify the Luxembourg financial centre.
With 9 out of 10 of the world’s leading PE houses already present in Luxembourg, this new vehicle makes the Grand Duchy even more attractive for alternative investment players and widens the scope of options available for private equity, hedge fund and real estate investments.