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capital 
V#2 The magazine of the Luxembourg Private Equity & Venture Capital Association 
Akuo Investment 
Management 
a holistic 
view on 
business
WILDGEN, PARTNERS IN LAW, 
HAS BEEN AT THE HEART OF LAW PRACTICE IN LUXEMBOURG. 
Needing expert legal advice on 
Private Equity and Venture Capital in Luxembourg? 
WILDGEN ASSISTS YOU. 
BANKING & FINANCE | COMMERCIAL & LITIGATION | CORPORATE 
INVESTMENT FUNDS | IP-TMT | LABOUR | PUBLIC | TAX 
69, bd. de la Pétrusse 
L-2320 Luxembourg 
T.: 352 40 49 601 
SINCE 1923 
www.wildgen.lu | lawyers@wildgen.lu 
“A FIRM YOU CAN RELY ON.”
Content 
5. Editorial 
Welcome to capitalV 
6. Regulatory 
AIFMD remuneration: Exceptions make the rule 
8. Personal Story 
A stable base for investing in a frantic world 
10. Cover story 
Akuo Investment Management [AIM], 
A holistic view on business 
14. Deal Story 
SecureIT: How Luxembourg got on the data centre map 
16. Interview 
EIF Social Impact Accelerator Fund 
18. Building Bright Futures Together 
Setting the stage for niche-based biomedicine 
20. Regulatory 
Bringing Substance to Luxembourg 
22. Life In Luxembourg 
The expat education conundrum 
24. Event Calendar 
What, When, Where 
#2 – capitalV – 3 
capitalV 
The magazine of LPEA 
Editorial: Stéphane Boudon, Uli Grabenwarter, 
Paul Junck, Julien Kinic, Vincent Lebrun, 
Patrizia Luchetta, Jean-Pascal Nepper, 
Hans-Jürgen Schmitz, Jérôme Wittamer, 
360Crossmedia 
Conception & coordination: 360Crossmedia 
Artistic Director: Tom Norest 
Cover photo: © Akuo 
Print run: 1000 copies 
Disclaimer : To the fullest extent permissible under applicable law, LPEA 
does not accept any responsibility or liability of any kind, 
with respect to the accuracy or completeness of the information and data 
from this documentation. The information and data provided in this 
documentation are for general information purposes. It is not investment 
advice nor can it take account of your own particular circumstances. If you 
require any advice, you should contact a financial or other professional 
adviser. No material 
in this documentation is an offer or solicitation to buy or sell any 
professional services, financial products or investments.
Private Equity professionals 
have exclusive banking needs 
which require speed, 
reliability and expertise. 
That’s why, at 
ING Luxembourg, 
we have a team of 
specialists dedicated 
to them… 
ING.LU 
Contact our Professional Intermediaries team 
at +352 44 99 27 30 
or at psf@ing.lu 
ING Luxembourg, Société Anonyme – 52, route d’Esch L-2965 Luxembourg – R.C.S. Luxembourg B.6041
#2 – capitalV – 5 
Dear Private 
Equity 
professionals, 
The second issue of Luxembourg 
Private Equity & Venture Capital 
Association’s (“LPEA”) proprietary 
publication, “Capital V” is a reality. 
Similarly to our inaugural edition, this one aims 
to provide you with a comprehensive overview 
of the Luxembourg private equity and venture 
capital market. It goes beyond the technical, 
tax, legal and regulatory overview to offer you 
a flavor of Luxembourg’s life and culture. 
It focuses on an industry niche, and it 
once again profiles recent local 
market developments. Our hope is 
that this magazine will pique your 
interest in the Luxembourg private 
equity and venture capital space, 
and urge you to consider it as a 
viable alternative for your future 
organizations’ developments. 
LPEA stands ready to welcome, 
guide and support you. 
Kindest regards 
Paul Junck, Managing Director 
Hans-Jürgen Schmitz, Chairman 
Luxembourg Private Equity 
& Venture Capital Association 
Editorial
Regulatory 
AIFMD remuneration: 
exceptions 
make the rule 
After making its way onto the private equity industry’s radar over the 
past year, the AIFM Directive has now become the latest hot topic for 
PE fund managers. While industry players will be grappling with many 
issues arising from the new regulation, it is remuneration that has 
taken centre stage as one of the most controversial - and perplexing 
- aspects of the directive. 
Taking in the big picture 
Remuneration rules will obviously have a significant impact 
on both an organisational and individual level. The Directive 
aims to avoid conflicts of interest as well as excessive risk-taking. 
So, in addition to identifying individuals affected, PE 
managers have to disclose remuneration in their funds’ 
annual accounts and conduct an annual review of policies, 
representing a sizeable shift in the way the industry operates. 
6 – capitalV – #2 
The structure and timing of pay are also affected by new 
rules. For structure, this means a balance between fixed and 
variable remuneration for certain PE managers and a mini-mum 
of 50% of remuneration paid in shares or units. For 
timing, the Directive foresees a deferral of between 40 and 
60% of variable remuneration by at least three years and 
preferably five, in addition to malus, clawback and other rela-ted 
provisions depending on the profile. 
Jean-Pascal Nepper, 
LPEA Member*
#2 – capitalV – 7 
Exceptions make the rule 
A certain number of PE houses, however, may in fact find 
that they do not need to adhere to all the above rules. 
Included in the Directive is a principle of proportionality, 
wherein fund managers who fulfil criteria based on size, 
internal organisation and scope of activities can disapply 
rules on deferral and variable remuneration among 
others. 
Some fund managers using carried interests might also, 
under certain conditions, disregard deferral and variable 
pay. On carried interest, the burning question for many is 
whether it is covered at all. The answer is affirmative and 
PE players will have to spend time considering how the 
Directive applies to their schemes to ensure they comply. 
In or out: which profiles are affected and how? 
A first step will be to assess which individuals are caught up 
in the new rules: the so-called identified staff. Remuneration 
rules apply to a wide range of roles and even to delegates in 
cases where the portfolio management function is outsour-ced. 
Executive and non-executive directors, senior manage-ment, 
risk takers and control functions are all impacted, as 
well as any other employees with pay equivalent to or above 
that of senior managers’ and who have a material impact on 
the AIF’s or AIFM’s risk profile. In small PE houses, this means 
that practically everyone is implicated, so the time is now ripe 
to begin the review and get a head start on remuneration. 
©KPMG 
“the time is now ripe 
to begin the review 
and get a head start 
on remuneration” 
Jean-Pascal Nepper 
* Partner, KPMG Luxembourg
Personal Story 
A stable base 
for investing in a frantic world 
Julien Kinic, managing director of IDI Emerging Markets, 
says Luxembourg’s appeal to private equity firms 
includes its quality of life, but also the authorities’ 
ability to keep one step ahead of the competition. 
Interview: 
Julien Kinic, IDI Emerging Markets 
8 – capitalV – #2 
the pricing as we already knew the portfolio and trusted each 
other. 
An example of direct investment comes from Sub-Saharan 
Africa and the trend for telecom operators to sell their mobile 
phone masts to specialist firms. We invested in IHS Telecom, 
a fast-growing portfolio company managing over 8,250 tow-ers 
in Nigeria, Cameroon and Côte d’Ivoire. 
Why did you set up your GP entity in 
Luxembourg? 
The business was launched in 2004 by IDI Group, a French 
private equity house, and has been moved to Luxembourg in 
June 2008 as an independent entity, to benefit from a trans-parent 
and efficient structure for investing in emerging coun-tries. 
Our key people live in the Grand Duchy – with all their families – 
providing an assurance of stability for our investors. Since we 
are traveling all the time, Luxembourg provides a welcome 
respite from the frantic world. I personally live close enough 
to cycle to the office, with the airport only 15 minutes away. 
Our offices in the heart of the city are relaxed and quiet, letting 
us focus completely on our work. 
Recently, we decided to launch our third investment vehicle 
as a Luxembourg SIF. We are here for the long-run, and always 
value the ability of officials to run the country as a well-man-aged 
company and stay one step ahead of the competition in 
the fund industry. 
How and where does IDI Emerging Markets 
invest? 
We are an investment firm that focuses on private equity in 
emerging countries, with 49 investments so far in China, India, 
Latin America, South-East Asia, Africa and the Middle-East 
through three different approaches. 
Our historical model – still accounting for 50% of our business 
– involves investing through local PE firms. We also acquire 
portfolios of emerging market investments through second-ary 
transactions, and make direct investments in companies. 
What kind of investments do you make? 
In all our investments, we target equity investments in fast-growing 
SMEs. An example of a primary fund investment is 
Peepul Capital in India. The firm is run by two charismatic part-ners 
from Chennai who are very passionate about the com-panies 
they invest in, and with whom we have been working 
since 2006. Through Peepul we invested for example in 
MedPlus, a Hyderabad-based pharmacy and pathology lab 
chain providing India’s middle-class professional medical 
advice in-store. We managed a return of close to four times 
the investment in this chain, which is growing at a rapid pace. 
As another illustration, we conducted a secondary transac-tion 
involving China Renaissance, a Chinese investment fund 
with which we have been in contact regularly since 2008. 
When one existing limited partner needed liquidity for its 
share in the fund, we were able to move quickly and optimize
© DR «We like 
people who 
fill a gap» 
Julien Kinic 
#2 – capitalV – 9
Cover Story 
10 – capitalV – #2
Akuo Investment 
Management [AIM], 
a holistic 
view on 
business 
#2 – capitalV – 11 
©Akuo AIM
Cover Story 
Stéphane Boudon, 
CEO 
Akuo Investment Management 
12 – capitalV – #2 
©360Crossmedia/C.O. 
nium and 100 kg of essential oil of citronella. Essential oils are 
sold to European cosmetic companies, as well as to Origin 
Biomed in Canada using it in drugs for diabetes. Close to 
Pierrefonds, at Le Syndicat with a power plant similar in size and 
technology, bio-melons and bio-watermelons are produced for 
local consumption. 
Farmers have access to a production environment enabling a bet-ter 
control of local conditions, namely controlling the conse-quences 
of heavy rains and exposure to cyclones, as well as using 
less or no pesticides. 
Similar experiments have gone through in Corsica, with an empha-sis 
on either sheep breeding, or beekeeping. It is known that all 
bee populations suffer from pesticides, and our installations free 
of them contribute to the production of honey in the best condi-tions. 
Asset Management & Product Structuring at 
AIM 
In short, AIM manages private equity funds and has chosen to be 
regulated by the Luxembourg market authority, the most 
advanced jurisdiction for alternative investments, and is building 
diversified portfolios of real assets. The team locates infrastruc-ture 
assets typically characterized by the low-risk, regular returns 
of debt securities and the attractive capital appreciation of pure 
equity investments. 
In addition, AIM structures dedicated financial products backed 
by long-term cash flows of renewable energy investments, ensur-ing 
stable distributions to investors with fixed annual coupons; 
and offers institutional clients, clean-tech companies and govern-ment 
agencies unmatched insight and opportunities in the renew-able 
energy sector. 
The recent economic collapse in some western countries and 
growing resentment towards shortsighted, business-as-usual 
practices on Wall Street has caused increased global disillusion-ment 
toward the financial industry and its investing culture which 
is focused on short-term profit. 
There has been since a movement in the last few years towards 
a model of investing that takes into account not only financial 
returns, but also environmental, social, and ethical considerations. 
Business schools where all starts think now about reviewing their 
curricula, infusing a holistic view of business, where maximizing 
shareholder value is not the only single objective anymore. 
Case studies 
AIM was established in Luxembourg in 2008 and it finances the 
development and construction of renewable energy infrastruc-ture 
projects worldwide. It invests to build photovoltaic solar 
farms, wind farms, biomass plants, and hydro-generated electric-ity 
power plants. The team has a proven track record in carrying 
through clean energy initiatives that generate stable, long-term 
returns for investors and real social value for local communities. 
AIM often states “we make money and we really like to make a real 
difference”. 
Its “agrinergie” program, for example, synergizes solar power pro-duction 
and the land’s original agricultural output by switching to 
higher-value crops that take advantage of greenhouses and the 
shadowing created by ground-mounted panels. The company 
helps farmers grow and at the same time produce electric energy 
in a sustainable way. 
As an example, in Pierrefonds at the Réunion Island located close 
to Madagascar, AIM installed a PV solar plant producing around 
3200 MWh of green electricity and 80 kg of essential oil of gera-
#2 – capitalV – 13 
“AKUO helps farmer 
grow and at the 
same time produces 
electric energy in a 
sustainable way” 
Stéphane Boudon 
©Akuo AIM ©Akuo AIM 
©Akuo AIM
Interview: 
Jérôme Wittamer, 
Genii Capital 
Jérôme Wittamer, Head of Investment 
Management at Genii Capital, recounts 
how the investment firm’s involvement 
with data centre firm SecureIT 
eventually turned a 51-fold profit – 
and how its history is intertwined with 
that of a small start-up called Skype. 
14 – capitalV – #2 
SecureIT 
How Luxembourg 
got on the data 
centre map 
Deal Story 
What is the origin of SecureIT? 
Wittamer: SecureIT was created in December 2003 by Eric Lux 
from a small data centre operation in a building acquired by the 
group’s real estate arm. Eric, Genii Capital’s founder and CEO, 
talked with various parties and finally agreed that Gary Kneip 
should run the business. Following the private equity precept of 
promoting entrepreneurship and profit-sharing, Kneip took a 
stake in SecureIT, which he developed in partnership with clients 
such as IBM and HP, and soon with a small Luxembourg-based 
start-up called Skype that then accounted for a minimal share 
of its business. 
How did the business expand? 
Wittamer: Over the years, SecureIT re-invested all of its cash 
flows (and more) into hi-tech equipment to evolve from Tier I to 
Tier II services, then secured additional space from state-owned 
LuxConnect to offer Tier III and IV services to customers such 
as Skype. Growth continued unabated (35-40% p.a.) during the 
whole 2004-2012 period, with turnover approching nearly 
€10m last year. In January 2012, Genii Capital began marketing 
the company to international data centre operators, resulting in 
the sale of the company (rebranded Data4 Luxembourg in June) 
and generating a 51x return on investment for Genii Capital. 
What were the most important challenges of 
SecureIT’s development? 
Wittamer: The first challenge was to establish a data centre 
solution that would meet and sometimes exceed its clients’ 
requirements at the best possible price. Bear in mind that in 
2004, connectivity and datacentre infrastructure in 
Luxembourg was limited – we had to foster co-operation 
between industry players, politicians and investors to make
«Secure IT has 
been a highly 
successful 
transaction for 
Genii Capital» 
Jérôme Wittamer 
#2 – capitalV – 15 
© 360Crossmedia 
things move and help put LuxConnect and LU-CIX on their feet. 
Today these efforts have paid out as Luxembourg’s datacentre 
infrastructure is second to none in Europe. The second chal-lenge 
was changing our business model following LuxConnect’s 
arrival. In selling the company, the main challenge was position-ing 
the business in light of the specific characteristics of the 
Luxembourg market. The biggest international players, who 
mostly operate their own infrastructures, are not yet in 
Luxembourg; the significant market presence of state-owned 
infrastructure providers thus made things a bit more compli-cated. 
Most prospective buyers couldn’t understand the 
Luxembourg model. 
How can Luxembourg expand in the data cen-tre 
industry? 
Wittamer: Luxembourg will undoubtedly play an increasing role 
in the industry, but in the longer term, the role of the state and 
LuxConnect will need to be addressed. Nothing would have 
been possible without them, real estate prices and rare access 
to substantial electric grid connections are a strong impedi-ment 
for foreign investors, but soon the sector will need to 
attract international leaders to generate new dynamics and 
attract a new clientele. Publicly-owned infrastructure and the 
cost of land have and will continue to dissuade big players from 
setting up in Luxembourg; many of their international clients 
already choose other destinations b ecause their providers 
have no Luxembourg presence. If looking at the coverage map 
of industry leaders such as Interxion or Equinix is any indication, 
Luxembourg still needs to make progress in some areas. Losing 
the formidable opportunity the cloud has to offer would be a 
shame as Luxembourg understands the stakes and has a lot 
to offer.
Interview 
EIF Social Impact 
Accelerator Fund 
Uli Grabenwarter, who heads the European Investment Fund’s impact 
investment initiative, says the Social Impact Accelerator fund is 
designed to kick-start this new approach to investment, then let the 
private sector pick up the reins. 
What exactly is impact investing? 
An impact investment expressly incorporates a social and/or 
environmental purpose as an integral part of the investment 
decision. This approach is better known in the US, where 
people like Jeff Skoll and eBay founder Pierre Omidyar have 
raised its profile. 
Several studies, including JPMorgan’s, project that impact 
investing may account for a thousand billion dollars by the 
end of the decade, but that may be taking an overly broad 
view of what it consists of. Right now everyone wants to be 
16 – capitalV – #2 
associated with impact investing because it is sexy, but bear 
in mind that in 2004, the same thing was happening with 
«cleantech». As we know, that didn’t turn out the way people 
imagined. 
So you are wary when G8 summits discuss 
impact investing? 
It is great if impact investing attracts the attention as being 
one possible way to solving certain societal issues at scale, 
but there is a long way to go. The important thing is that we 
Uli Grabenwarter
«Our goal is eventually 
to make our own 
involvement 
redundant» 
Uli Grabenwarter 
#2 – capitalV – 17 
don’t lose sight of the substance of social impact that is pur-sued. 
Right now impact investing is simply a response to the 
desire of investors to place their money in socially and envi-ronmentally 
responsible products. They are seeking a double 
validation of their investment, a financial return and an envi-ronmental 
or social one. 
Visible success stories help attracting the spotlight, like an 
entrepreneur who bought a ski resort near Oslo and demo-cratised 
it by adapting prices to the social background of 
each customer. 
This turned out to be a strong marketing tool and led to the 
establishment of innovative social partnerships with leading 
brands. Turnover quadrupled, creating a business that is pro-fitable, 
sustainable and environmentally certified and 
demonstrates powerful impact in social inclusion and envi-ronmental 
education for disadvantaged communities. 
What role do you see for the Social Impact 
Accelerator fund? 
Our role is as a pioneer. Our goal is to nurture the emergence of 
an infrastructure of funds capable of demonstrating that social 
impact can become a new and successful asset class in its own 
right. In May, we launched the Social Impact Accelerator, a pan- 
European fund of funds structured as a public-private partner-ship. 
The European Investment Bank has taken the largest share 
of the €60m initial capital, but Deutsche Asset Management in 
London and French Crédit Coopératif are also investors, and 
other likely private sector participants are in the due diligence 
phase. Our aim is to have all the capital invested in around six 
impact investment funds within six to nine months. After that, 
we hope that European Commission will add momentum to what 
we have kick-started and endorse our approach of catalysing 
private sector activity for this nascent market segment. 
©360Crossmedia
Building Bright Futures Together 
SETTING THE STAGE FOR 
NICHE-BASED 
BIOMEDICINE 
Leveraging off current excellent life sciences 
research, the Luxembourg government is ramping 
up efforts to make the sector economically 
successful while burgeoning research and 
innovation. 
Patrizia Luchetta 
Director, 
Directorate New Technologies & Life Sciences 
Ministry of the Economy and Foreign Trade 
18 – capitalV – #2 
Luxembourg Personalised Medicine Consortium was born 
in 2010 to amalgamate key stakeholders to concentrate 
efforts into priority personalised medicine areas. 
International collaborations expanding into industry con-tinue 
to form and thrive under the same spirit. 
And the efforts are paying off. At Luxembourg’s recent 
Venture Lounge, an exclusive event – supported by LPEA 
- that brought together companies looking for strategic 
investments and investors, Luxembourg-based Theracule 
not only captured the attention of investors but also the 
2nd prize. 
What the future holds 
Making the effort more concrete, literally, is the set up of 
the House of BioHealth, a hosting facility, due to be opened 
in 2014, for companies to operate and grow from, in close 
proximity to local research centres, while being connected 
globally. 
A website is in the midst of creation due to be launched in 
autumn 2013. Meet us at the 2014 BIO International 
Conference in San Diego from June 23-26, where we will 
showcase what even a small country can achieve when big 
opportunities are explored. Let’s build bright futures 
together! 
Leveraging off existent capacity 
When the OECD highlighted Luxembourg’s potential in the 
biomedical sector in 2006, the country shifted gears, to 
speed up the exploration. With a thriving public research 
landscape and the set up of the University of Luxembourg, 
the stage was set to enrich industry-science relationships, 
a catalytic process needed to make the sector successful. 
Taking on a focused approach, three strategic partnerships 
were formed with US research centres to develop centres 
of expertise in molecular medicine locally. The Integrated 
Biobank of Luxembourg (IBBL), in partnership, today serves 
as the central point to transform research findings into tools 
for the prevention, diagnosis, and treatment of diseases. The 
creation of the Luxembourg Center for Systems Biomedicine 
(LCSB) has spearheaded recruitment of world-class 
researchers into the country while leading key projects into 
debilitating diseases. Public research centre, CRP-Santé 
took the lead on lung cancer research in the Partnership for 
Personalized Medicine which selects and validates biomark-ers 
in order to diagnose and manage diseases more effi-ciently. 
Reaping the benefits 
In the spirit of collaboration that has been propagated, the 
© Luc Deflorenne
Citeecar. #2 – capitalV – 19 
© Fotolia 
© DR
Regulatory 
Bringing 
Substance to 
Luxembourg 
Pwc Luxembourg Tax Partner and 
Private Equity Leader Vincent Lebrun 
talks to CapitalV about how the 
European tax landscape is shifting 
for private equity professionals and 
on the role that Luxembourg could 
play over the next few years. 
20 – capitalV – #2 
management, to achieve structural subordination of the different 
lenders, to provide security to banks (banks frequently prefer to 
take security over Luxembourg companies due to legal reasons), 
etc. “Being able to explain and justify the investment structuring 
strategy and choices will be key going forward.”, says Mr. Lebrun. 
The way forward 
The times in which using local premises and having annual board 
meetings in Luxembourg was an acceptable degree of substance 
are long gone. Ensuring that management decisions are effecti-vely 
made in Luxembourg by people with the correct set of skills 
will be key going forward. Over the last few years, many private 
equity houses have recognised this need and they have addressed 
it by mobilising more resources to Luxembourg, and by adapting 
their internal organisation. Private equity firms will have to conti-nue 
to work in that direction. And they should consider if more 
decision takers can be mobilised to Luxembourg to further sup-port 
their presence in Luxembourg. 
Of course, there are challenges and costs associated with that. 
And there is much that Luxembourg has to do to support its ambi-tion 
of becoming a hub for cross-border alternative funds (e.g. a 
more attractive carried interest regime, a better housing & schoo-ling 
offer, etc). But there are headwinds ahead – and good oppor-tunities 
for the private equity industry and Luxembourg to further 
team up together. 
*Tax Partner, PwC Luxembourg 
A shifting landscape 
In an environment of economic recession and decreasing tax reve-nues, 
the tax authorities of many countries around the globe have 
become increasingly «aggressive». Private equity investment 
structures, and private equity fund structures are closely scruti-nised 
(and sometimes challenged) by tax authorities. The argu-ments 
that tax authorities bring forward with a view to challenge 
international investment structures have become more sophisti-cated 
e.g. ultimate beneficial ownership, effective management 
and control and, of course, lack of substance. 
Having low chances of success does not necessarily stop tax 
authorities when challenging structures – overwhelmed taxpayers 
are often keen to strike a deal to avoid the “pain” of litigating against 
the tax authorities. In Mr. Lebrun’s words: “This is a dangerous 
game. There are rules by which we must all abide, each taxpayers 
and tax authorities. Holding the ground when the tax collector is 
trying to push things too far has become more important today 
than ever before.” 
A strategic approach 
Sadly enough, the tax authorities of many countries seem to 
ignore the positive impact that private equity & venture capital has 
on their economies. Tax authorities are also failing to recognise 
that private equity investment structures are not necessarily 
driven by tax optimisation purposes. There are many other rea-sons 
why investment structures rely on intermediary holding com-panies 
e.g. legal reasons, to accommodate co-investors and/or 
Vincent Lebrun, 
LPEA Member*
#2 – capitalV – 21 
©360Crossmedia 
«Over the next few years, 
private equity investors 
will have to continue to 
adapt to a shifting tax 
landscape.» 
Vincent Lebrun
Life In Luxembourg 
The expat 
education 
conundrum 
Capacity at international 
schools has increased by nearly 
two-thirds since the mid-2000s, 
but demand still exceeds supply. 
22 – capitalV – #2 
2,200 in the coming years. However, English is most relevant 
for attracting international business talent. The government 
recognises the challenge, offering inducements such as 
80% subsidies for building work by independent schools. Yet 
with the private sector struggling to meet demand, some 
have called for the state to act more forcefully. 
No easy answers 
The Athénée de Luxembourg recently began offering a sec-ondary 
programme in English under the state system. 
Numbers are limited, with just one class of around 25 stu-dents 
in each year. The government fears expansion might 
endanger the fundamental principles of the wider state sys-tem. 
Although criticised by some for being excessively rigid, 
supporters say Luxembourg’s schools have a strong track 
record of producing well educated young adults able to speak 
many languages. Boosting English-focused schooling in the 
state sector would solve a short term problem, but could 
undermine the multilingualism which is one of the country’s 
main selling points. Schools are very good at integrating 
immigrants from different social and cultural backgrounds. 
Boom in international school places 
The Luxembourg state offers generous subsidies to private 
schools and expansion has been dramatic. For example, when 
the latest extension of the International School of 
Luxembourg is completed it will welcome 1,400 pupils of all 
ages, double the number seen 10 years ago. However, the 
school has indicated that there will be no further increases 
after this, despite the prospect of continued high demand. 
They cite a lack of space but they must also be concerned 
that quality could suffer with excessive growth. 
Demand greater than supply 
Expansion at St George’s International School has also been 
strong with 700 kids currently on their books. The Hamm 
campus could grow but management and parents will also 
want this to be controlled. 
The two European Schools offer teaching through all EU lan-guages, 
but European civil servants have priority. There are 
few free places in the English and French sections. 
The Lycée Vauban and the l’école primaire française teach 
under the French national system, with capacity due to reach
#2 – capitalV – 23 
©360Crossmedia 
© DR 
“Schools are very 
good at integrating 
immigrants from 
different social 
and cultural 
backgrounds”
Event Calendar 
LPEA | Roadshow to 
Paris 
LPEA | Board Meeting 
IFE Conference 
“Private Equity à 
Luxembourg” 
EVCA Venture Capital 
Forum 
ACG | EuroGrowth 
ALFI | European 
Alternative Investment 
Funds Conference 
ICBI | Super Investor 
24 – capitalV – #2 
September 24, 2013 
October 14, 2013 
October 24, 2013 
November 7-8, 2013 
November 12-13, 2013 
November 19-20, 2013 
November 19-22, 2013 
Cercle de L’Union 
Interalliée, Paris 
Luxembourg 
Novotel Kirchberg, 
Luxembourg 
Berlin 
London 
Luxembourg 
Paris 
www.lpea.lu 
www.lpea.lu 
www.ifebenelux.lu 
www.evca.eu 
www.acg.org/uk 
www.alfi.lu 
www.icbi-superinvestor.com 
EVENT 
CALENDAR 
WHAT WHEN WHERE REGISTER 
© DR
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CACEIS, your comprehensive asset servicing partner. 
... and climbing. 
Contact: 
Nicolas Palate 
E: nicolas.palate@caceis.com 
T: +352 4767 2356 
www.caceis.com 
www.munier-bbn.com
LPEA in Brief 
ABOUT LPEA 
T 
he Luxembourg Private Equity and Venture Capital Association (LPEA) 
is a member-based, non-profit trade association established in 2010. 
LPEA represents, promotes and protects the interests of the Luxembourg 
private equity and venture capital industry. 
LPEA’s role includes representing the interests of the industry to regulators and 
standard setters; developing professional standards; providing industry research; 
professional development and forums, facilitating interaction between its 
members and key industry participants including institutional investors, 
entrepreneurs, policymakers and academics. 
LPEA’s activities cover the whole range of private equity, from venture capital 
(seed, start-up and development capital), to buyouts and buyins. 
LPEA is a member of the European Private Equity and Venture Capital 
Association (EVCA). 
EXECUTIVE COMMITTEE 
Hans- 
Jürgen 
Schmitz 
Chairman 
TECHNICAL COMMITTEE LEADERS 
Legal & Regulatory Committee: Séverine Michel, Cintia Martins Costa 
Tax Committee: Patrick Mischo, Marianne Spanos 
AIMFD Committee: Hans-Jürgen Schmitz, Paul Junck 
Accounting & Valuation Committee: Benoît Cheron, Yves Courtois 
Market Intelligence & Training Committee: Fiona Monsen, Axelle Ferey 
Promotion Committee: Bertrand Manhe, Benjamin Lam 
26 – capitalV – #2 
Alain 
Kinsch 
Vice- 
Chairman 
Antoine 
Clauzel 
Member 
Patrick 
Mischo 
Member 
Emanuela 
Brero 
Vice- 
Chairman 
Paul Junck 
Managing 
Director 
Gilles 
Dusemon 
Member 
Jérôme 
Wittamer 
Member
Specialists in 
private equity 
Fund administration, registrar 
and corporate services to 
alternative asset classes. 
Tamara Williams 
Director 
tamara.williams@sannegroup.com 
Private equity 
Debt 
Infrastructure 
Venture capital 
Environmental 
For more information please contact: 
Nina Kleinbongartz 
Director 
nina.kleinbongartz@sannegroup.com 
+352 27 61 62 20 
www.sannegroup.com 
Members of 
Luxembourg | Channel Islands | London | Dubai | Dublin | Hong Kong | Shanghai 
Sanne Trust Company Limited is regulated by the Jersey Financial Services Commission (JFSC). Sanne Group (Guernsey) Limited is regulated by the Guernsey Financial 
Services Commission. Sanne Group (Luxembourg) S.A. is regulated by the Commission de Surveillance du Secteur Financier. Sanne Group Administration Services (UK) 
Limited, a company registered in England and Wales (registered number 08331425), is authorised and regulated by the Financial Conduct Authority. Sanne Corporate 
Services Limited is regulated by the Financial Supervision Commission. Sanne Corporate Services (Ireland) Limited is authorised by the Department of Justice and Law 
Reform. Sanne Group (Dubai) Limited is regulated by the Dubai Financial Services Authority. Sanne Group Asia Limited is licenced to conduct business in Hong Kong and 
is regulated by the JFSC. Sanne Group Shanghai Financial Management & Consulting Co Limited is licenced by the State Administration of Industry and Commerce.
Trustworthy, reliable 
and proactive 
That’s the kind of service you need for your business to thrive. To suit your particular goals, 
we work with the finest lawyers and financial experts to develop and deliver the most relevant 
solutions at the crossroads of finance, tax, law and accounting. With our roots in banking and a 
large international network, we have the global reach and local knowledge to help you succeed. 
That’s why we’re still a leading player in Trust and Corporate Services, after more than 60 years. 
Intertrust Group has completed the acquisiton of ATC Group, including ATC’s Capital Markets. As 
a combined group, Intertrust now operates from 33 offices in 24 countries and provides high 
quality trust and corporate services to multinational corporations, financial institutions, alternative 
investment funds and entrepreneurs from every corner of the world. 
You will benefit from our combined experience in regulated and unregulated 
Private Equity structures. 
www.intertrustgroup.com 
www.atcgroup.com 
Intertrust is a member of LPEA and ALFI in Luxembourg.

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Capital V #2 Akuo Investment Management a holistic view on business

  • 1. capital V#2 The magazine of the Luxembourg Private Equity & Venture Capital Association Akuo Investment Management a holistic view on business
  • 2. WILDGEN, PARTNERS IN LAW, HAS BEEN AT THE HEART OF LAW PRACTICE IN LUXEMBOURG. Needing expert legal advice on Private Equity and Venture Capital in Luxembourg? WILDGEN ASSISTS YOU. BANKING & FINANCE | COMMERCIAL & LITIGATION | CORPORATE INVESTMENT FUNDS | IP-TMT | LABOUR | PUBLIC | TAX 69, bd. de la Pétrusse L-2320 Luxembourg T.: 352 40 49 601 SINCE 1923 www.wildgen.lu | lawyers@wildgen.lu “A FIRM YOU CAN RELY ON.”
  • 3. Content 5. Editorial Welcome to capitalV 6. Regulatory AIFMD remuneration: Exceptions make the rule 8. Personal Story A stable base for investing in a frantic world 10. Cover story Akuo Investment Management [AIM], A holistic view on business 14. Deal Story SecureIT: How Luxembourg got on the data centre map 16. Interview EIF Social Impact Accelerator Fund 18. Building Bright Futures Together Setting the stage for niche-based biomedicine 20. Regulatory Bringing Substance to Luxembourg 22. Life In Luxembourg The expat education conundrum 24. Event Calendar What, When, Where #2 – capitalV – 3 capitalV The magazine of LPEA Editorial: Stéphane Boudon, Uli Grabenwarter, Paul Junck, Julien Kinic, Vincent Lebrun, Patrizia Luchetta, Jean-Pascal Nepper, Hans-Jürgen Schmitz, Jérôme Wittamer, 360Crossmedia Conception & coordination: 360Crossmedia Artistic Director: Tom Norest Cover photo: © Akuo Print run: 1000 copies Disclaimer : To the fullest extent permissible under applicable law, LPEA does not accept any responsibility or liability of any kind, with respect to the accuracy or completeness of the information and data from this documentation. The information and data provided in this documentation are for general information purposes. It is not investment advice nor can it take account of your own particular circumstances. If you require any advice, you should contact a financial or other professional adviser. No material in this documentation is an offer or solicitation to buy or sell any professional services, financial products or investments.
  • 4. Private Equity professionals have exclusive banking needs which require speed, reliability and expertise. That’s why, at ING Luxembourg, we have a team of specialists dedicated to them… ING.LU Contact our Professional Intermediaries team at +352 44 99 27 30 or at psf@ing.lu ING Luxembourg, Société Anonyme – 52, route d’Esch L-2965 Luxembourg – R.C.S. Luxembourg B.6041
  • 5. #2 – capitalV – 5 Dear Private Equity professionals, The second issue of Luxembourg Private Equity & Venture Capital Association’s (“LPEA”) proprietary publication, “Capital V” is a reality. Similarly to our inaugural edition, this one aims to provide you with a comprehensive overview of the Luxembourg private equity and venture capital market. It goes beyond the technical, tax, legal and regulatory overview to offer you a flavor of Luxembourg’s life and culture. It focuses on an industry niche, and it once again profiles recent local market developments. Our hope is that this magazine will pique your interest in the Luxembourg private equity and venture capital space, and urge you to consider it as a viable alternative for your future organizations’ developments. LPEA stands ready to welcome, guide and support you. Kindest regards Paul Junck, Managing Director Hans-Jürgen Schmitz, Chairman Luxembourg Private Equity & Venture Capital Association Editorial
  • 6. Regulatory AIFMD remuneration: exceptions make the rule After making its way onto the private equity industry’s radar over the past year, the AIFM Directive has now become the latest hot topic for PE fund managers. While industry players will be grappling with many issues arising from the new regulation, it is remuneration that has taken centre stage as one of the most controversial - and perplexing - aspects of the directive. Taking in the big picture Remuneration rules will obviously have a significant impact on both an organisational and individual level. The Directive aims to avoid conflicts of interest as well as excessive risk-taking. So, in addition to identifying individuals affected, PE managers have to disclose remuneration in their funds’ annual accounts and conduct an annual review of policies, representing a sizeable shift in the way the industry operates. 6 – capitalV – #2 The structure and timing of pay are also affected by new rules. For structure, this means a balance between fixed and variable remuneration for certain PE managers and a mini-mum of 50% of remuneration paid in shares or units. For timing, the Directive foresees a deferral of between 40 and 60% of variable remuneration by at least three years and preferably five, in addition to malus, clawback and other rela-ted provisions depending on the profile. Jean-Pascal Nepper, LPEA Member*
  • 7. #2 – capitalV – 7 Exceptions make the rule A certain number of PE houses, however, may in fact find that they do not need to adhere to all the above rules. Included in the Directive is a principle of proportionality, wherein fund managers who fulfil criteria based on size, internal organisation and scope of activities can disapply rules on deferral and variable remuneration among others. Some fund managers using carried interests might also, under certain conditions, disregard deferral and variable pay. On carried interest, the burning question for many is whether it is covered at all. The answer is affirmative and PE players will have to spend time considering how the Directive applies to their schemes to ensure they comply. In or out: which profiles are affected and how? A first step will be to assess which individuals are caught up in the new rules: the so-called identified staff. Remuneration rules apply to a wide range of roles and even to delegates in cases where the portfolio management function is outsour-ced. Executive and non-executive directors, senior manage-ment, risk takers and control functions are all impacted, as well as any other employees with pay equivalent to or above that of senior managers’ and who have a material impact on the AIF’s or AIFM’s risk profile. In small PE houses, this means that practically everyone is implicated, so the time is now ripe to begin the review and get a head start on remuneration. ©KPMG “the time is now ripe to begin the review and get a head start on remuneration” Jean-Pascal Nepper * Partner, KPMG Luxembourg
  • 8. Personal Story A stable base for investing in a frantic world Julien Kinic, managing director of IDI Emerging Markets, says Luxembourg’s appeal to private equity firms includes its quality of life, but also the authorities’ ability to keep one step ahead of the competition. Interview: Julien Kinic, IDI Emerging Markets 8 – capitalV – #2 the pricing as we already knew the portfolio and trusted each other. An example of direct investment comes from Sub-Saharan Africa and the trend for telecom operators to sell their mobile phone masts to specialist firms. We invested in IHS Telecom, a fast-growing portfolio company managing over 8,250 tow-ers in Nigeria, Cameroon and Côte d’Ivoire. Why did you set up your GP entity in Luxembourg? The business was launched in 2004 by IDI Group, a French private equity house, and has been moved to Luxembourg in June 2008 as an independent entity, to benefit from a trans-parent and efficient structure for investing in emerging coun-tries. Our key people live in the Grand Duchy – with all their families – providing an assurance of stability for our investors. Since we are traveling all the time, Luxembourg provides a welcome respite from the frantic world. I personally live close enough to cycle to the office, with the airport only 15 minutes away. Our offices in the heart of the city are relaxed and quiet, letting us focus completely on our work. Recently, we decided to launch our third investment vehicle as a Luxembourg SIF. We are here for the long-run, and always value the ability of officials to run the country as a well-man-aged company and stay one step ahead of the competition in the fund industry. How and where does IDI Emerging Markets invest? We are an investment firm that focuses on private equity in emerging countries, with 49 investments so far in China, India, Latin America, South-East Asia, Africa and the Middle-East through three different approaches. Our historical model – still accounting for 50% of our business – involves investing through local PE firms. We also acquire portfolios of emerging market investments through second-ary transactions, and make direct investments in companies. What kind of investments do you make? In all our investments, we target equity investments in fast-growing SMEs. An example of a primary fund investment is Peepul Capital in India. The firm is run by two charismatic part-ners from Chennai who are very passionate about the com-panies they invest in, and with whom we have been working since 2006. Through Peepul we invested for example in MedPlus, a Hyderabad-based pharmacy and pathology lab chain providing India’s middle-class professional medical advice in-store. We managed a return of close to four times the investment in this chain, which is growing at a rapid pace. As another illustration, we conducted a secondary transac-tion involving China Renaissance, a Chinese investment fund with which we have been in contact regularly since 2008. When one existing limited partner needed liquidity for its share in the fund, we were able to move quickly and optimize
  • 9. © DR «We like people who fill a gap» Julien Kinic #2 – capitalV – 9
  • 10. Cover Story 10 – capitalV – #2
  • 11. Akuo Investment Management [AIM], a holistic view on business #2 – capitalV – 11 ©Akuo AIM
  • 12. Cover Story Stéphane Boudon, CEO Akuo Investment Management 12 – capitalV – #2 ©360Crossmedia/C.O. nium and 100 kg of essential oil of citronella. Essential oils are sold to European cosmetic companies, as well as to Origin Biomed in Canada using it in drugs for diabetes. Close to Pierrefonds, at Le Syndicat with a power plant similar in size and technology, bio-melons and bio-watermelons are produced for local consumption. Farmers have access to a production environment enabling a bet-ter control of local conditions, namely controlling the conse-quences of heavy rains and exposure to cyclones, as well as using less or no pesticides. Similar experiments have gone through in Corsica, with an empha-sis on either sheep breeding, or beekeeping. It is known that all bee populations suffer from pesticides, and our installations free of them contribute to the production of honey in the best condi-tions. Asset Management & Product Structuring at AIM In short, AIM manages private equity funds and has chosen to be regulated by the Luxembourg market authority, the most advanced jurisdiction for alternative investments, and is building diversified portfolios of real assets. The team locates infrastruc-ture assets typically characterized by the low-risk, regular returns of debt securities and the attractive capital appreciation of pure equity investments. In addition, AIM structures dedicated financial products backed by long-term cash flows of renewable energy investments, ensur-ing stable distributions to investors with fixed annual coupons; and offers institutional clients, clean-tech companies and govern-ment agencies unmatched insight and opportunities in the renew-able energy sector. The recent economic collapse in some western countries and growing resentment towards shortsighted, business-as-usual practices on Wall Street has caused increased global disillusion-ment toward the financial industry and its investing culture which is focused on short-term profit. There has been since a movement in the last few years towards a model of investing that takes into account not only financial returns, but also environmental, social, and ethical considerations. Business schools where all starts think now about reviewing their curricula, infusing a holistic view of business, where maximizing shareholder value is not the only single objective anymore. Case studies AIM was established in Luxembourg in 2008 and it finances the development and construction of renewable energy infrastruc-ture projects worldwide. It invests to build photovoltaic solar farms, wind farms, biomass plants, and hydro-generated electric-ity power plants. The team has a proven track record in carrying through clean energy initiatives that generate stable, long-term returns for investors and real social value for local communities. AIM often states “we make money and we really like to make a real difference”. Its “agrinergie” program, for example, synergizes solar power pro-duction and the land’s original agricultural output by switching to higher-value crops that take advantage of greenhouses and the shadowing created by ground-mounted panels. The company helps farmers grow and at the same time produce electric energy in a sustainable way. As an example, in Pierrefonds at the Réunion Island located close to Madagascar, AIM installed a PV solar plant producing around 3200 MWh of green electricity and 80 kg of essential oil of gera-
  • 13. #2 – capitalV – 13 “AKUO helps farmer grow and at the same time produces electric energy in a sustainable way” Stéphane Boudon ©Akuo AIM ©Akuo AIM ©Akuo AIM
  • 14. Interview: Jérôme Wittamer, Genii Capital Jérôme Wittamer, Head of Investment Management at Genii Capital, recounts how the investment firm’s involvement with data centre firm SecureIT eventually turned a 51-fold profit – and how its history is intertwined with that of a small start-up called Skype. 14 – capitalV – #2 SecureIT How Luxembourg got on the data centre map Deal Story What is the origin of SecureIT? Wittamer: SecureIT was created in December 2003 by Eric Lux from a small data centre operation in a building acquired by the group’s real estate arm. Eric, Genii Capital’s founder and CEO, talked with various parties and finally agreed that Gary Kneip should run the business. Following the private equity precept of promoting entrepreneurship and profit-sharing, Kneip took a stake in SecureIT, which he developed in partnership with clients such as IBM and HP, and soon with a small Luxembourg-based start-up called Skype that then accounted for a minimal share of its business. How did the business expand? Wittamer: Over the years, SecureIT re-invested all of its cash flows (and more) into hi-tech equipment to evolve from Tier I to Tier II services, then secured additional space from state-owned LuxConnect to offer Tier III and IV services to customers such as Skype. Growth continued unabated (35-40% p.a.) during the whole 2004-2012 period, with turnover approching nearly €10m last year. In January 2012, Genii Capital began marketing the company to international data centre operators, resulting in the sale of the company (rebranded Data4 Luxembourg in June) and generating a 51x return on investment for Genii Capital. What were the most important challenges of SecureIT’s development? Wittamer: The first challenge was to establish a data centre solution that would meet and sometimes exceed its clients’ requirements at the best possible price. Bear in mind that in 2004, connectivity and datacentre infrastructure in Luxembourg was limited – we had to foster co-operation between industry players, politicians and investors to make
  • 15. «Secure IT has been a highly successful transaction for Genii Capital» Jérôme Wittamer #2 – capitalV – 15 © 360Crossmedia things move and help put LuxConnect and LU-CIX on their feet. Today these efforts have paid out as Luxembourg’s datacentre infrastructure is second to none in Europe. The second chal-lenge was changing our business model following LuxConnect’s arrival. In selling the company, the main challenge was position-ing the business in light of the specific characteristics of the Luxembourg market. The biggest international players, who mostly operate their own infrastructures, are not yet in Luxembourg; the significant market presence of state-owned infrastructure providers thus made things a bit more compli-cated. Most prospective buyers couldn’t understand the Luxembourg model. How can Luxembourg expand in the data cen-tre industry? Wittamer: Luxembourg will undoubtedly play an increasing role in the industry, but in the longer term, the role of the state and LuxConnect will need to be addressed. Nothing would have been possible without them, real estate prices and rare access to substantial electric grid connections are a strong impedi-ment for foreign investors, but soon the sector will need to attract international leaders to generate new dynamics and attract a new clientele. Publicly-owned infrastructure and the cost of land have and will continue to dissuade big players from setting up in Luxembourg; many of their international clients already choose other destinations b ecause their providers have no Luxembourg presence. If looking at the coverage map of industry leaders such as Interxion or Equinix is any indication, Luxembourg still needs to make progress in some areas. Losing the formidable opportunity the cloud has to offer would be a shame as Luxembourg understands the stakes and has a lot to offer.
  • 16. Interview EIF Social Impact Accelerator Fund Uli Grabenwarter, who heads the European Investment Fund’s impact investment initiative, says the Social Impact Accelerator fund is designed to kick-start this new approach to investment, then let the private sector pick up the reins. What exactly is impact investing? An impact investment expressly incorporates a social and/or environmental purpose as an integral part of the investment decision. This approach is better known in the US, where people like Jeff Skoll and eBay founder Pierre Omidyar have raised its profile. Several studies, including JPMorgan’s, project that impact investing may account for a thousand billion dollars by the end of the decade, but that may be taking an overly broad view of what it consists of. Right now everyone wants to be 16 – capitalV – #2 associated with impact investing because it is sexy, but bear in mind that in 2004, the same thing was happening with «cleantech». As we know, that didn’t turn out the way people imagined. So you are wary when G8 summits discuss impact investing? It is great if impact investing attracts the attention as being one possible way to solving certain societal issues at scale, but there is a long way to go. The important thing is that we Uli Grabenwarter
  • 17. «Our goal is eventually to make our own involvement redundant» Uli Grabenwarter #2 – capitalV – 17 don’t lose sight of the substance of social impact that is pur-sued. Right now impact investing is simply a response to the desire of investors to place their money in socially and envi-ronmentally responsible products. They are seeking a double validation of their investment, a financial return and an envi-ronmental or social one. Visible success stories help attracting the spotlight, like an entrepreneur who bought a ski resort near Oslo and demo-cratised it by adapting prices to the social background of each customer. This turned out to be a strong marketing tool and led to the establishment of innovative social partnerships with leading brands. Turnover quadrupled, creating a business that is pro-fitable, sustainable and environmentally certified and demonstrates powerful impact in social inclusion and envi-ronmental education for disadvantaged communities. What role do you see for the Social Impact Accelerator fund? Our role is as a pioneer. Our goal is to nurture the emergence of an infrastructure of funds capable of demonstrating that social impact can become a new and successful asset class in its own right. In May, we launched the Social Impact Accelerator, a pan- European fund of funds structured as a public-private partner-ship. The European Investment Bank has taken the largest share of the €60m initial capital, but Deutsche Asset Management in London and French Crédit Coopératif are also investors, and other likely private sector participants are in the due diligence phase. Our aim is to have all the capital invested in around six impact investment funds within six to nine months. After that, we hope that European Commission will add momentum to what we have kick-started and endorse our approach of catalysing private sector activity for this nascent market segment. ©360Crossmedia
  • 18. Building Bright Futures Together SETTING THE STAGE FOR NICHE-BASED BIOMEDICINE Leveraging off current excellent life sciences research, the Luxembourg government is ramping up efforts to make the sector economically successful while burgeoning research and innovation. Patrizia Luchetta Director, Directorate New Technologies & Life Sciences Ministry of the Economy and Foreign Trade 18 – capitalV – #2 Luxembourg Personalised Medicine Consortium was born in 2010 to amalgamate key stakeholders to concentrate efforts into priority personalised medicine areas. International collaborations expanding into industry con-tinue to form and thrive under the same spirit. And the efforts are paying off. At Luxembourg’s recent Venture Lounge, an exclusive event – supported by LPEA - that brought together companies looking for strategic investments and investors, Luxembourg-based Theracule not only captured the attention of investors but also the 2nd prize. What the future holds Making the effort more concrete, literally, is the set up of the House of BioHealth, a hosting facility, due to be opened in 2014, for companies to operate and grow from, in close proximity to local research centres, while being connected globally. A website is in the midst of creation due to be launched in autumn 2013. Meet us at the 2014 BIO International Conference in San Diego from June 23-26, where we will showcase what even a small country can achieve when big opportunities are explored. Let’s build bright futures together! Leveraging off existent capacity When the OECD highlighted Luxembourg’s potential in the biomedical sector in 2006, the country shifted gears, to speed up the exploration. With a thriving public research landscape and the set up of the University of Luxembourg, the stage was set to enrich industry-science relationships, a catalytic process needed to make the sector successful. Taking on a focused approach, three strategic partnerships were formed with US research centres to develop centres of expertise in molecular medicine locally. The Integrated Biobank of Luxembourg (IBBL), in partnership, today serves as the central point to transform research findings into tools for the prevention, diagnosis, and treatment of diseases. The creation of the Luxembourg Center for Systems Biomedicine (LCSB) has spearheaded recruitment of world-class researchers into the country while leading key projects into debilitating diseases. Public research centre, CRP-Santé took the lead on lung cancer research in the Partnership for Personalized Medicine which selects and validates biomark-ers in order to diagnose and manage diseases more effi-ciently. Reaping the benefits In the spirit of collaboration that has been propagated, the © Luc Deflorenne
  • 19. Citeecar. #2 – capitalV – 19 © Fotolia © DR
  • 20. Regulatory Bringing Substance to Luxembourg Pwc Luxembourg Tax Partner and Private Equity Leader Vincent Lebrun talks to CapitalV about how the European tax landscape is shifting for private equity professionals and on the role that Luxembourg could play over the next few years. 20 – capitalV – #2 management, to achieve structural subordination of the different lenders, to provide security to banks (banks frequently prefer to take security over Luxembourg companies due to legal reasons), etc. “Being able to explain and justify the investment structuring strategy and choices will be key going forward.”, says Mr. Lebrun. The way forward The times in which using local premises and having annual board meetings in Luxembourg was an acceptable degree of substance are long gone. Ensuring that management decisions are effecti-vely made in Luxembourg by people with the correct set of skills will be key going forward. Over the last few years, many private equity houses have recognised this need and they have addressed it by mobilising more resources to Luxembourg, and by adapting their internal organisation. Private equity firms will have to conti-nue to work in that direction. And they should consider if more decision takers can be mobilised to Luxembourg to further sup-port their presence in Luxembourg. Of course, there are challenges and costs associated with that. And there is much that Luxembourg has to do to support its ambi-tion of becoming a hub for cross-border alternative funds (e.g. a more attractive carried interest regime, a better housing & schoo-ling offer, etc). But there are headwinds ahead – and good oppor-tunities for the private equity industry and Luxembourg to further team up together. *Tax Partner, PwC Luxembourg A shifting landscape In an environment of economic recession and decreasing tax reve-nues, the tax authorities of many countries around the globe have become increasingly «aggressive». Private equity investment structures, and private equity fund structures are closely scruti-nised (and sometimes challenged) by tax authorities. The argu-ments that tax authorities bring forward with a view to challenge international investment structures have become more sophisti-cated e.g. ultimate beneficial ownership, effective management and control and, of course, lack of substance. Having low chances of success does not necessarily stop tax authorities when challenging structures – overwhelmed taxpayers are often keen to strike a deal to avoid the “pain” of litigating against the tax authorities. In Mr. Lebrun’s words: “This is a dangerous game. There are rules by which we must all abide, each taxpayers and tax authorities. Holding the ground when the tax collector is trying to push things too far has become more important today than ever before.” A strategic approach Sadly enough, the tax authorities of many countries seem to ignore the positive impact that private equity & venture capital has on their economies. Tax authorities are also failing to recognise that private equity investment structures are not necessarily driven by tax optimisation purposes. There are many other rea-sons why investment structures rely on intermediary holding com-panies e.g. legal reasons, to accommodate co-investors and/or Vincent Lebrun, LPEA Member*
  • 21. #2 – capitalV – 21 ©360Crossmedia «Over the next few years, private equity investors will have to continue to adapt to a shifting tax landscape.» Vincent Lebrun
  • 22. Life In Luxembourg The expat education conundrum Capacity at international schools has increased by nearly two-thirds since the mid-2000s, but demand still exceeds supply. 22 – capitalV – #2 2,200 in the coming years. However, English is most relevant for attracting international business talent. The government recognises the challenge, offering inducements such as 80% subsidies for building work by independent schools. Yet with the private sector struggling to meet demand, some have called for the state to act more forcefully. No easy answers The Athénée de Luxembourg recently began offering a sec-ondary programme in English under the state system. Numbers are limited, with just one class of around 25 stu-dents in each year. The government fears expansion might endanger the fundamental principles of the wider state sys-tem. Although criticised by some for being excessively rigid, supporters say Luxembourg’s schools have a strong track record of producing well educated young adults able to speak many languages. Boosting English-focused schooling in the state sector would solve a short term problem, but could undermine the multilingualism which is one of the country’s main selling points. Schools are very good at integrating immigrants from different social and cultural backgrounds. Boom in international school places The Luxembourg state offers generous subsidies to private schools and expansion has been dramatic. For example, when the latest extension of the International School of Luxembourg is completed it will welcome 1,400 pupils of all ages, double the number seen 10 years ago. However, the school has indicated that there will be no further increases after this, despite the prospect of continued high demand. They cite a lack of space but they must also be concerned that quality could suffer with excessive growth. Demand greater than supply Expansion at St George’s International School has also been strong with 700 kids currently on their books. The Hamm campus could grow but management and parents will also want this to be controlled. The two European Schools offer teaching through all EU lan-guages, but European civil servants have priority. There are few free places in the English and French sections. The Lycée Vauban and the l’école primaire française teach under the French national system, with capacity due to reach
  • 23. #2 – capitalV – 23 ©360Crossmedia © DR “Schools are very good at integrating immigrants from different social and cultural backgrounds”
  • 24. Event Calendar LPEA | Roadshow to Paris LPEA | Board Meeting IFE Conference “Private Equity à Luxembourg” EVCA Venture Capital Forum ACG | EuroGrowth ALFI | European Alternative Investment Funds Conference ICBI | Super Investor 24 – capitalV – #2 September 24, 2013 October 14, 2013 October 24, 2013 November 7-8, 2013 November 12-13, 2013 November 19-20, 2013 November 19-22, 2013 Cercle de L’Union Interalliée, Paris Luxembourg Novotel Kirchberg, Luxembourg Berlin London Luxembourg Paris www.lpea.lu www.lpea.lu www.ifebenelux.lu www.evca.eu www.acg.org/uk www.alfi.lu www.icbi-superinvestor.com EVENT CALENDAR WHAT WHEN WHERE REGISTER © DR
  • 25. A global player in asset servicing... Offering leading value in investor services demands constant evolution. At CACEIS, our strategy of sustained growth is helping customers meet competitive challenges on a global scale. Find out how our highly adapted investor services can keep you a leap ahead. CACEIS, your comprehensive asset servicing partner. ... and climbing. Contact: Nicolas Palate E: nicolas.palate@caceis.com T: +352 4767 2356 www.caceis.com www.munier-bbn.com
  • 26. LPEA in Brief ABOUT LPEA T he Luxembourg Private Equity and Venture Capital Association (LPEA) is a member-based, non-profit trade association established in 2010. LPEA represents, promotes and protects the interests of the Luxembourg private equity and venture capital industry. LPEA’s role includes representing the interests of the industry to regulators and standard setters; developing professional standards; providing industry research; professional development and forums, facilitating interaction between its members and key industry participants including institutional investors, entrepreneurs, policymakers and academics. LPEA’s activities cover the whole range of private equity, from venture capital (seed, start-up and development capital), to buyouts and buyins. LPEA is a member of the European Private Equity and Venture Capital Association (EVCA). EXECUTIVE COMMITTEE Hans- Jürgen Schmitz Chairman TECHNICAL COMMITTEE LEADERS Legal & Regulatory Committee: Séverine Michel, Cintia Martins Costa Tax Committee: Patrick Mischo, Marianne Spanos AIMFD Committee: Hans-Jürgen Schmitz, Paul Junck Accounting & Valuation Committee: Benoît Cheron, Yves Courtois Market Intelligence & Training Committee: Fiona Monsen, Axelle Ferey Promotion Committee: Bertrand Manhe, Benjamin Lam 26 – capitalV – #2 Alain Kinsch Vice- Chairman Antoine Clauzel Member Patrick Mischo Member Emanuela Brero Vice- Chairman Paul Junck Managing Director Gilles Dusemon Member Jérôme Wittamer Member
  • 27. Specialists in private equity Fund administration, registrar and corporate services to alternative asset classes. Tamara Williams Director tamara.williams@sannegroup.com Private equity Debt Infrastructure Venture capital Environmental For more information please contact: Nina Kleinbongartz Director nina.kleinbongartz@sannegroup.com +352 27 61 62 20 www.sannegroup.com Members of Luxembourg | Channel Islands | London | Dubai | Dublin | Hong Kong | Shanghai Sanne Trust Company Limited is regulated by the Jersey Financial Services Commission (JFSC). Sanne Group (Guernsey) Limited is regulated by the Guernsey Financial Services Commission. Sanne Group (Luxembourg) S.A. is regulated by the Commission de Surveillance du Secteur Financier. Sanne Group Administration Services (UK) Limited, a company registered in England and Wales (registered number 08331425), is authorised and regulated by the Financial Conduct Authority. Sanne Corporate Services Limited is regulated by the Financial Supervision Commission. Sanne Corporate Services (Ireland) Limited is authorised by the Department of Justice and Law Reform. Sanne Group (Dubai) Limited is regulated by the Dubai Financial Services Authority. Sanne Group Asia Limited is licenced to conduct business in Hong Kong and is regulated by the JFSC. Sanne Group Shanghai Financial Management & Consulting Co Limited is licenced by the State Administration of Industry and Commerce.
  • 28. Trustworthy, reliable and proactive That’s the kind of service you need for your business to thrive. To suit your particular goals, we work with the finest lawyers and financial experts to develop and deliver the most relevant solutions at the crossroads of finance, tax, law and accounting. With our roots in banking and a large international network, we have the global reach and local knowledge to help you succeed. That’s why we’re still a leading player in Trust and Corporate Services, after more than 60 years. Intertrust Group has completed the acquisiton of ATC Group, including ATC’s Capital Markets. As a combined group, Intertrust now operates from 33 offices in 24 countries and provides high quality trust and corporate services to multinational corporations, financial institutions, alternative investment funds and entrepreneurs from every corner of the world. You will benefit from our combined experience in regulated and unregulated Private Equity structures. www.intertrustgroup.com www.atcgroup.com Intertrust is a member of LPEA and ALFI in Luxembourg.