Access to international capital markets is essential to fleet renewal and expansion driven by market and regulatory demand
Luxembourg has established itself as the premier financial center in Europe through its pragmatic, business-friendly transposition of relevant European and international regulations.
A modern regulatory framework promotes the design, development, administration and distribution of innovative investment products and strategies with strong investor protections adaptable to ship finance.
Ranked as the second largest global fund center, Luxembourg is a preferred jurisdiction for institutional and private investors, including hedge funds and private equity investors which play an increasingly prominent role in ship finance. Hedge fund assets under management in Luxembourg currently exceed EUR 150 billion.
Luxembourg is at the forefront in the development of a European investment fund regime, particularly in regards to Undertakings for Collective Investment in Transferable Security (UCITS) through which pooled capital can be collectively invested in a portfolio of financial instruments (i.e. stocks, bonds and other securities). It was the first Member State to adopt the EU UCITS Directive’s uniform rules on investment fund liquidity, diversification, use of leverage, organisation, management and oversight, opening the door to cross-border marketing of EU-regulated investment funds (“EU passport”).
Reduced costs and time to market has allowed Luxembourg to become a globally-recognized leader in cross-border distribution of investment funds accounting for over 70% of internationally-distributed UCITS funds. Luxembourg’s prompt implementation of both the UCITS III and UCITS IV Directives has facilitated investments in additional financial instruments (ex. derivatives, money markets) with robust investor protections.
Alternative Investment Funds
Luxembourg’s timely implementation of the AIFM Directive has also enabled it to assume a leading position in alternative investment fund activities.
Specialized Luxembourg investment vehicle structures facilitate private equity acquisitions, including Special Investment Funds (SIFs) and Investment Company in Risk Capital (SICAR). Luxembourg is also a leading domicile for Environmental, Social and Governance (ESG) funds and Sharia-compliant funds.