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    Debt Fund

    Luxembourg over the last 2 years has seen an increased of 40% of the private debt fund industry, the main reasons for such attraction can be summaries below:

    • Entry to European investor which facilitate the manager investment strategy.
    • Steady and reliable jurisdiction with a great reputation (part of EU Member State, AAA credit rating, benefits from government due to leading alternative investment center, wide network of institution fostering the AIF feature and stable environment).
    • Debt Fund Expertise  with staff having more than 30 years in debt servicing including administration, depositary, tax reporting, ect..).
    • Key debt players with more than 70% of the top 30 loans managers worldwide based in Luxembourg.
    • Investment Variety with the possibility to invest into any kind of debt instrument without any limitation.
    • Loan origination thanks to the Luxembourg fund framework enabling to stand on the loan origination side as well as on loan participation side as long as the fund meets the requirements in terms of risk management, asset management oversight and supervision. Any kind of debt strategies can be used in Luxembourg thanks to this framework, even loan origination in secondaries, mezzanine and distressed debt.
    • Innovative investment products including the SLP which can be open-ended, semi open-ended or closed-ended.
    • Legal Framework which is flexible and clear facilitating the setup of AIF for managers.
    • Transparency Tax environment thanks to the SLP being a tax neutral vehicle and enhance by a full access to EUR tax directive a full support from OECD and more.
    Debt strategies
    Liquid Funds:
    • Money Market Funds: the investment are made into liquid debt securities or money market instruments generally characterised with a low risk
    • Short-Term Funds: the investment are made into certificate of deposit, bonds and commercial paper with average maturity of 1 to 3 years.
    • Ultra Short-Term Funds:  the investment are made into ultra short-term securities with residual maturity of less than a year
    • Dynamic Bond Funds: the investment are made into all classes of debt instruments including corporate bonds, debentures and government securities with medium-high risk profile
    • Income Funds: the investment are made into money market instruments, corporate and government bonds with a long maturity period and a generally for high risk profile since it is largely exposed to changes in interest rates
    • Gilt Fund: the investment are made into securities issued by government s with medium and long term maturity periods. It is generally for high risk profile looking for capital appreciation.
    • Debt Hydrid Funds: the investment are made into a mix of equity (25%) and debt securities (75%) with 3 distinctive sub strategies (monthly income plans, asset allocation funds and capital protection-oriented funds)
    • Fixed Maturity Plans: the investment are made into debt instruments which have specific maturity dates that are equal to or less than the scheme’s maturity date.
    Illiquid Fund:
    • Direct Lending: This strategy revolves around the lending to established European medium and large companies, with a focus on the senior secured piece of the capital structure.
    • Litigation Finance: This strategy generally involves providing cash to litigants or attorneys to fund their cases in exchange for a portion of any awarded damages if the case is won.
    • Private Corporate Debt:  It implies the issuance of debt for private company in order to finance their activities
    • Mezzanine Finance: This strategy implies the fund raising for specific projects or to aide with an acquisition through a hybrid of debt and equity financing.
    • Art Lending: This strategy implies that a piece of art will serve as collateral backing a financial loan
    • Staking: Lending to crypto exchanges to supply liquidity in the crypto market
    • Debt Hydrid Funds: the investment are made into a mix of equity (25%) and debt securities (75%) with 3 distinctive sub strategies (monthly income plans, asset allocation funds and capital protection-oriented funds)
    • Fixed Maturity Plans: the investment are made into debt instruments which have specific maturity dates that are equal to or less than the scheme’s maturity date.
    Key advantages of the SLP for Debt Fund:

    The use of the Special Limited Partnership is particularly advantageous thanks to its flexible legal and tax environment, with key benefits for debt fund include:

    • No minimum capital
    • Unregulated up to 100 000 000 Eur for opened-ended and up to 500 000 000 Eur (for closed-ended fund assuming that there is no leverage)
    • Investors can subscribe by contribution in kind into the fund
    • Unlimited number of investors or capital account
    • External auditor is not mandatory
    • Vehicles can be listed on the Luxembourg Stock Exchange or on any overseas stock exchange
    • There is no specific debt/equity ratio
    • Carried interest and tracking shares available
    • Full tax transparency – no withholding tax up on distribution of the dividends or profit nor redemption of shares

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