State of substance
For LPs, Luxembourg presents a well-trodden path with a legislative and regulatory framework that provides a safe and stable haven for their investments. Private equity firms based outside of the European Union additionally benefit from the pan-European marketing passport to facilitate their fundraising efforts across the bloc. For mid- and small-cap firms, alternatives are far and few in between.
However, upon domiciling their fund in Luxembourg, GPs are likely to feel the hair on the back of their neck raised by a pressure that is hard to articulate and harder to solidify: the requirements for substance that are tied to conducting business out of the country.
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