A thriving asset class that has defied downward cycle forecasts and a slowed market momentum. Demand and performance is strong, though fund managers are facing more competition and higher risks, as part of ever growing transaction volume. Regulators too are closely watching developments. As assets in private credit strategies edge toward $2trn, the space continues to innovate via more diverse strategies and structures. Institutional investors, particularly pension funds, have been willing to assume greater credit and illiquidity risk in exchange for higher returns in private credit.
With the cost of acquisition debt rising and a more uncertain dealmaking environment, it seems private equity firms are searching further afield for leverage. NAV-based loan requests are on the rise, with many of the top tier PE firms investigating how they can use the structure to boost their liquidity.
The lack of transparency throughout the booming private credit market could breed risk which, has pushed jurisdictions to amend their regulation and vehicles. Luxembourg has not been immune to this, however, given the depth of expertise, Double Tax Treaty network and ease of accessing necessary services, it’s become a stable home for any structure and why, it’s become the ‘go-to’ jurisdiction for many private equity and credit funds who’ve recently established special-purpose vehicles (SPV) and offices in Luxembourg.
The United Kingdom is the largest center of asset management in Europe and an essential hub for investment activity. The UK is also providing many growth opportunities for managers looking to establish funds via a UK structure. Furthermore, the Qualifying Asset Holding Company (QAHC) offers investors in funds, a UK alternative with added tax benefits. as designed to make it easier for institutional investors and funds to use UK companies in asset-holding structures across a range of private market investment strategies.
Whether you are a small or large investment fund that wishes to outsource administration, compliance/ regulatory reporting, set up a back office for your fund in various jurisdictions or establish a special-purpose vehicle (SPV), talk to us.