Private equity & Venture capital
Under Luxembourg law, two regulated vehicles may be used to structure private equity investments.
The first is the investment company in risk capital (SICAR), a vehicle designed for private equity and venture capital investments. The second is the specialised investment fund (SIF), which provides an operationally flexible and fiscally efficient multipurpose fund regime that can be used for private equity. Both are regulated vehicles and reserved for investment by institutional and informed investors. Both can be listed on the Luxembourg stock exchange.
The SICAR is not subject to the principle of risk spreading and may concentrate its resources on a single target investment. However, it must invest exclusively in risk-bearing assets. The SICAR may invest in any shariah compliant type of asset that qualifies as risk-bearing.
A SIF is required to apply the principle of risk spreading, however there are no pre-set quantitative or qualitative restrictions. It may invest in any asset, including shariah compliant assets, provided that it does not invest more than 30% in any one asset.
Either vehicle may be set up in a number of different corporate structures. A SIF may also be set up as a common investment fund managed by a Luxembourg based regulated management company.
The brochure Luxembourg Vehicles for Islamic Finance Structures provides greater detail on the structuring of shariah compliant real estate investment vehicles.