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    Parallel Fund

    Luxembourg is considered as the largest European jurisdiction to setup parallel entities and one of the preferred location due to its reputation and the legal framework in place.

    Parallel funds are structures which co-invest and divest alongside the main fund, each structure is similar in many ways to the main fund in terms of strategy, investment policy, investment target, asset classes, risk management ect.

    The major distinction between the different funds would be the tax framework (capital gains, dividend, interest, etc …) or the will of the sponsor to differentiate each vehicle based on their investors group.

    This type of structure is therefore interesting for investors which have investment restriction to offshore structures.

    Another important aspect to be considered from an investor point of view is that all entities while being segregated are still part of the same asset pool.

    The Special Limited Partnership can be considered as the perfect structure to use in order to setup a parallel fund due to its flexibility and familiarity to the Anglo-Saxon model.

    Therefore, it is quite easy to replicate a Cayman or UK partnership as a SLP in Luxembourg and to have access to the European market. Furthermore, it also provides the possibility to access European passport for marketing purposes

    Key advantages of the SLP for Parallel Fund:

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

    • No minimum capital
    • Its short setup timeframe which enables manager to start their activities quickly. (1-2 Weeks)
    • Unlimited number of classes of shares
    • No limitation in the type of underlying fund
    • Unregulated up to 100 000 000 Eur (of 500 000 000 Eur for close ended fund and lock up 5 years)
    • Unlimited number of investors
    • Full tax transparency – no withholding tax up on distribution of the dividends or profit

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