Personal debt funds based mostly in Luxembourg grew their belongings beneath administration (AUM) by 21.5 per cent between June and December 2023, to achieve €510bn (£426.13bn).
In keeping with the annual KPMG Personal Debt Fund Survey 2024, commissioned by the Affiliation of the Luxembourg Fund Trade (ALFI), unregulated however industry-supervised fund autos have “considerably surpassed” regulated fund autos in Luxembourg this 12 months, having elevated their market share by 22 per cent since June 2023.
These unregulated fund autos embody the SCSp, which is utilized by 86 per cent of the funds coated within the survey.
Talking on the ALFI Personal Property Convention in Luxembourg, Julien Bieber, tax and different investments companion and co-head of personal debt at KPMG in Luxembourg, stated that the rising worth of those funds displays the maturity of the Luxembourg personal debt fund market.
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“Luxembourg is now recognised as one of the enticing domiciles for personal debt funds, mirrored within the spectacular development of belongings beneath administration,” stated Bieber.
“Sooner or later, the AIFMD II will provide a extra strong and aligned framework for mortgage origination, which is poised to harmonise laws throughout Europe.
“Moreover, a confluence of beneficial elements corresponding to excessive rates of interest, rising attraction amongst buyers, demand for tailor-made options by debtors, and a shift away from conventional financial institution lending has formed a dynamic panorama.
“We consider Luxembourg’s main place will likely be sustained by means of its strategic use of knowledge and know-how, entry to a extremely expert and various workforce, enlargement by means of retailisation, and a supportive regulatory framework.”
The bulk (62 per cent) of Luxembourg personal debt funds comply with direct lending methods – a two per cent lower on final 12 months.
Mezzanine funds changed distressed debt because the second hottest technique final 12 months, representing 16 per cent of Luxembourg personal debt funds, a year-on-year enhance of three per cent.
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The KPMG survey discovered that the demand for personal credit score stays excessive and the asset class is turning into extra widespread worldwide.
“The personal debt market has proven outstanding resilience and constant development amid a number of years of world market challenges,” stated Serge Weyland, chief govt at ALFI.
“This survey highlights the sustained urge for food for personal debt, with Luxembourg rising because the domicile of alternative, supported by its strong regulatory atmosphere, political stability, and extremely expert workforce. Wanting forward, we anticipate the rising momentum for retailisation to deliver additional sophistication and alternatives to the Luxembourg personal debt market.”
The typical rise of AUM is predicated on knowledge from 13 depository banks based mostly in Luxembourg.
Learn extra: Luxembourg’s personal debt funds grew AUM by 51pc this 12 months
