Sub threshold alternative investment fund as an SCSp
Dear friends,
I wanted to prepare a quick one pager on the setup of a sub threshold alternative investment fund in the form of a special limited partnership (SLP) with a private limited liability company acting as its general partner (GP) and de minimis registered alternative investment fund manager (if it (a) manages portfolios of AIFs whose assets under management, including with leverage do not exceed a threshold of EUR 100m; or (b)EUR 500m if they are unleveraged, without redemption rights exercisable during a period of five years following the initial investment).
These funds are mainly governed by the Lux company law and will also be subject to article 3(3) of Lux AIFM law requiring amongst other matters, the GP to (a) be registered with the CSSF;(b) the identification of the AIFs under management to the CSSF at the time of registration; (c) the provision of information on the investment strategies of the AIFs that they manage to the CSSF at the time of registration; (d) the regular provision of information on the main instruments in which they are trading and on the principal exposures and most important concentrations of the AIFs that they manage in order to enable the CSSF to monitor systemic risk effectively; and (e) inform the CSSF in the event that they meet and exceed the thresholds described above.
The salient legal features are as follows :
GP SLP
Legal personality No legal personality
Setup by notarial deed Setup by an LPA
EUR 12k as capital No minimum capital
Managed by a board Managed by its GP
Accounts published Not published
Tax opaque Transparent
Typically these funds could be interesting for an initial ticket of at least 20m-30m and suitable for a private debt, private equity, real estate strategy.Once the vehicles are setup, the bank account opening processes start and in parallel based on the sponsor, I prepare the amended and restated LPA and where required a PPM.An application is also made to the CSSF to register the managers of the GP, with an AML market entry form identifying the reportable features of the fund. The managers of the GP must have the requisite fitness to manage the fund (i.e. experience, no past criminal convictions, knowledge of Lux AML regulatory framework that can be evidenced by ad hoc trainings, appointment of the supervisory and compliance function - RC and RRs, etc.)
Benefits of the structure
• No statutory risk or diversification requirements
• Marketing under private placement regimes
• Light accounting requirements
• Efficient and quick to launch
• Can be converted to a regulated vehicle
• Inexpensive setup
The catch
GP must be registered before onboarding investors !
Happy to have a chat on your next midcaps project!!!
#Midcaps#luxembourg#funds#arvinezamani.com
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