1. There has been much talk and excitement in the
Luxembourg market place in recent months with
the anticipated launch of the Reserved Alternative
Investment Fund (the “RAIF”), managed by
an authorised Alternative Investment Manager
(“AIFM”), moving quickly from idea to reality.
This culminated on 27 November 2015, with the
adoption of the RAIF Bill of Law by the Luxembourg
government, and the expected passing of the RAIF
law itself by Q2, 2016.
The excitement centres around what local
practitioners, and indeed the wider industry, see as
the ideal product to leverage the advantages of the
Alternative Investment Funds Managers Directive
(“AIFMD” or the “Directive”), bringing with it a level
of efficiency and speed to market not dreamed
of prior to implementation of the Directive. From
wishful thinking to concrete reality, the RAIF
is viewed by industry practitioners as a hugely
significant addition to the product armoury of the
Luxembourg market place, and a key differentiator
to its traditional competitors.
So what makes it so special? – essentially, the
legal framework of the Luxembourg RAIF has the
same characteristics and flexibility as a Specialised
Investment Fund (“SIF”) but with a long-awaited
major difference: the RAIF will not in itself be
subject to the supervision of the Luxembourg
Supervisory Authority (the “CSSF”).
Once the necessary legislative process has
been completed, Luxembourg will have further
strengthened its ties with the Private Equity,
Infrastructure, Real Estate and Private Debt
industries. Not being subject to the prudential
supervision of the CSSF means that the RAIF
requires neither prior authorisation for its creation
and launch nor the ongoing approvals to key
documents throughout its lifecycle. This will
undoubtedly attract the interest of many players,
already set-up as AIFMs, looking for the flexibility
and speed to market which the traditional regulated
fund structures are today unable to provide. The
flexibility of the AIFM not necessarily needing to
be located in Luxembourg will make it even more
attractive to many.
LUXEMBOURG THINK TANK
The RAIF hasn’t been designed by Luxembourg to
blindly add another string to its bow. During the
past year a think tank composed of well-regarded
industry players and members of the government
have regularly met to assess the current needs and
requirements of the market. Much research and
studies have been compiled by the Luxembourg-
based alternative industry, largely through its
industry bodies, to carefully interview local and
international PE & RE houses, gather and analyse
their input and formulate an appropriate action
plan. This new vehicle has therefore not been rashly
or hastily designed but has been well thought
through, carefully considered and very much
designed to meet the requirements of the most
demanding industry players.
WHAT WILL INVESTORS THINK?
Sceptics may have the view that the hype around
this investment vehicle might not last long. And
the question begs to be asked – “Why introduce an
investment vehicle without prudential supervision
from the local regulator? How could this be good
for the industry?” Indeed, unlike the SIF and SICAR,
the RAIF will not benefit from investor protection
afforded by the CSSF. In our view however, this
EXPERT VIEW
THE LUXEMBOURG RAIF -
TRULY A BRIGHT ALTERNATIVE
Alter Domus’ Chief Marketing Officer Alan Dundon and Fund Services Senior Manager, Gautier
Despret give their opinion on Luxembourg’s newest innovative investment vehicle

2. will not unduly concern investors, the RAIF being
an Alternative Investment Fund (“AIF”) managed
by an authorised AIFM – itself supervised by its EU
local regulator - whose responsibility is, amongst
others, to ensure that the AIF will comply with the
Directive requirements. The main idea behind the
RAIF is thus to avoid a double layer of supervision:
one at the manager level and one at the product
or AIF level. Additionally, in order to comply with
AIFMD, the RAIF will be subject to a Luxembourg-
based depositary and central administration
requirement, and will need to appoint an auditor, all
providing comfort to investors, as indeed envisaged
by the Directive.
WHAT DOES IT MEAN IN PRACTICE?
From a practical perspective, the RAIF, whilst
not directly regulated, is set-up in the form of an
investment fund. Unlike the traditional unregulated
product we refer to later in this article, the RAIF
will be serviced in the same manner as its regulated
counterparts, with regular NAV calculations,
transfer agency services and depositary serviced
by the Alter Domus systems and teams experienced
in the specifics of this product type. In particular,
reporting common to the regulated fund world,
including detailed investor reports, will be fully
available to RAIF managers and investors. We
therefore expect that ongoing administrative and
depositary running costs for a RAIF will be similar
to those of its regulated counterparts.
CAN THE RAIF MEET INDUSTRY
EXPECTATIONS?
It is expected that the RAIF will have the same
features as a SIF managed by an authorised AIFM
with no restrictions in terms of eligible assets,
structuring flexibility and rapidity combined with
noticeable investor protection. It will be open
for organisation as a company, partnership or
contractual form, subject to a 0.01% p.a. subscription
tax (waived under specific conditions), will have the
option of multiple compartments with multiclass
shares and investments kept at fair value unless
otherwise stated in its articles of association.
Although the RAIF is an attractive option for the
alternative investments industry, the risk of it
overtaking or substituting current Luxembourg
structures over time is unlikely. Certain promoters
will, for example, continue to favour establishing
regulated product, often to respond to investor
preferences. It does however represent an additional
component to an integrated offer, and indeed a
differentiating advantage over other jurisdictions
helping Luxembourg in its drive to offer a one stop
shop to the increasing and varying needs of the
alternative investment industry.
WHERE ARE WE TODAY?
After analysing this newcomer, it is useful for us to
look at what already exists, and will continue to be
used, in the industry. In the Luxembourg Alternative
Investments’ domain, two structuring options exist:
• UNREGULATED STRUCTURES
- SOPARFI
The SOPARFI (“Société de Participation
Financière”) is the most common European
alternative investment vehicle used for cross-
border investment. It can be organised in various
forms (SàRL, SA, SCA and SCS), with access to 75
double tax treaties currently in force in Luxembourg
(19 pending) and is not subject to the prudential
supervision of the CSSF.
- Limited partnerships
Modernised by the implementation of AIFMD,
Limited Partnerships remain an attractive structure
to investors, and indeed have grown significantly
in number over the past two years, with around
900 established to date. They are established
by contract (“LP Agreement”) for a limited or
an unlimited duration. Composed of at least one
General Partner (the “GP”) and one Limited Partner
(the “LP”), Luxembourg limited partnerships are tax
transparent. In Luxembourg, Limited Partnerships
may be incorporated as a Common Limited
Partnership (“CLP” – Société en Commandite
Simple) and partnership limited by shares (“PLS” –
Société en Commandite par Actions) both having
legal personality or Special Limited Partnership
without legal personality (“SLP” – Société en
Commandite Spéciale). The limited partnership is
not subject to the prudential supervision of the
CSSF by nature but can opt-in by applying the SIF/
SICAR regime.
• REGULATED STRUCTURES
- SIF
The SIF has become one of Europe’s most
recognisable alternative investment fund regime.
It can be organised as a company (i.e. SàRL, SA
and SCA), a partnership (CLP and SLP) or in a
contractual form (“Fonds Commun de Placement”
– “FCP”) as a mono or multi-compartment vehicle.
It is subject to the prior approval and ongoing

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Alter Domus is a leading European provider of Fund and Corporate Services, dedicated to international private equity
infrastructure houses, real estate firms, multinationals, private clients and private debt managers. Our vertically integrated
approach offers tailor-made administration solutions across the entire value chain of investment structures, from fund level
down to local Special Purpose Vehicles.
Founded in Luxembourg in 2003, Alter Domus has continually expanded its global service offer and today counts 30 offices
and desks across five continents. This international network enables clients to benefit globally from the expertise
of more than 850 experienced professionals active in fund administration, depositary services, corporate secretarial, accounting,
consolidation, tax and legal compliance and debt administration services.
We are proud to serve 9 of the 10 largest private equity houses, 7 of the 10 largest real estate firms and 3 of the 10 largest private
debt managers in the world.
—
www. alterDomus.com
GAUTIER DESPRET
Fund Services Senior Manager
Gautier.Despret@alterDomus.com
ALAN DUNDON
Chief Marketing Officer
Alan.Dundon@alterDomus.com
CONTACT US
supervision of the CSSF, its financial statements
must be approved by an independent auditor
(“réviseur d’entreprises agréé”) and its financial
fixed assets must be recorded at fair value unless
otherwise stated in its articles of association.
- SICAR
Launched in 2004, the SICAR is a dedicated
structure designed for the private equity and
venture capital industry. The SICAR is reserved for
qualified investors investing in risk capital only. The
SICAR can be organised under company (i.e. SàRL,
SA and SCA) or partnership forms (CLP and SLP) as
a mono or multi-compartment vehicle. It is subject
to the prior approval and ongoing supervision of
the CSSF, its financial statements must be approved
by an independent auditor (“réviseur d’entreprises
agréé”) and its financial fixed assets must be
recorded at fair value.
Undoubtedly the Luxembourg market place will
continue to fuel the global alternative investment
industry with attractive and innovative products.
The RAIF will certainly play its part in promoting
Luxembourg’s innovative character, and we expect
further innovation in the coming years, particularly
as AIFM market practices continue to develop.
We will keep you posted!