Maitland’s carefully designed ecosystem for alternative assets has proven its power with an optimal solution found for an Asian manager launching a private debt fund in Europe.
There has been continued growth in private debt fund activity in key markets, confirming that the ability to offer an alternative financing method to companies (including SMEs and equity investors) has become increasingly important.
According to the eVestment Alternative Fund Administration Survey 2019, which reports retrospectively on the 2018 year, institutional investors have increasingly turned to alternatives with a view to diversification and improving portfolio performance.
Private equity and debt contributed most to incremental growth, with total assets under private equity and debt assets administration totalling $3.07 trillion at the end of 2018. Private debt growth is happening across a variety of types of financing, including senior debt, unitranche financing as well as mezzanine and other subordinated debt.
The authorities are also facilitating in ways that promote and ease access to this type of financing. As part of its Capital Markets Union (CMU) programme, the European Commission has made progress in streamlining regulatory issues facing funds operating across Europe and achieving further integration of the funds and capital markets.
Luxembourg is the largest European fund domicile and is increasingly becoming an attractive and strategic location for debt funds.
According to the Association of the Luxembourg Fund Industry (ALFI) over 70% of the top 30 debt fund managers worldwide are present in Luxembourg.
The Luxembourg regulator, the CSSF, has confirmed that alternative investment funds (AIFs) may engage in loan origination, participation and acquisition. Open-ended, semi open-ended and closed-ended debt funds may be structured, using a variety of Luxembourg legal forms and regulatory regimes.
Operational in Luxembourg for 43 years, Maitland was among the early movers in establishing an Alternative Investment Fund Manager (AIFM). It is also a leader in utilising the Reserved Alternative Investment Fund (RAIF) structuring and has enabled a number of solutions for clients across a wide range of PERE needs.
Maitland has continued to expand its offering in the alternative assets space to find a powerful solution for a major Asia-focused private debt fund. The structure for the client in supply chain finance involves a fund and underlying SPV enabled seamlessly through Maitland’s multi-jurisdictional offering.
Kavitha Ramachandran, Senior Manager – Business Development & Client Management at Maitland in Luxembourg, says that the solution is unique in that Maitland’s role in this client solution is threefold – it acts as AIFM and fund administrator, as well as corporate services provider while working with a depositary independent of Maitland and its auditor.
The Asia-focused private debt fund client says, “Maitland has provided a comprehensive end-to-end offering covering AIFM, fund administration and provides oversight, administration and accounting services for underlying SPVs. In addition to this, they bring in their experience in the form of investment committee professionals. The combined value add to the product and process is valuable from an investor and governance perspective, in addition to their solutions-oriented approach.”
1 – ‘Association of the Luxembourg Fund Industry (ALFI), Debt Funds – An Alternative Source of Financing for the European Economy’, June 2015
2 – https://www.alfi.lu/en-GB/Pages/Setting-up-in-Luxembourg/Alternative-investment-funds-asset-classes/Debt
Kavitha Ramachandran is Senior Manager, Business Development & Client Management, at global advisory, administration and family office firm Maitland
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The information and opinions herein are for information purposes only. They are not intended to constitute legal, financial or other professional advice, and should not be relied upon as such or treated as a substitute for specific advice relevant to particular circumstances. Maitland as a group or any of its member firms or affiliated entities accepts no responsibility for any errors, omissions or misleading statements in this publication, or for any loss which might arise from reliance on the material. No mention of any organisation, company or individual, whether on these pages or not, shall imply any approval or warranty as to the standing and capability of any such organisations, companies or individuals on the part of Maitland. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser.
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