Lux approves RAIF fund management vehicle

A new fund management structure known as the Reserved Alternative Investment Fund vehicle has been approved by Luxembourg lawmakers, and will come into force imminently, fund industry representatives  in the Grand Duchy have reported.

The new alternative fund structure, will enable authorised fund managers to bring new products to market more quickly than they previously would have been able to, according to the Association of the Luxembourg Fund Industry (ALFI), an industry association which promotes Luxembourg’s funds industry.

As is the case for such other Luxembourg fund products as SIFs and SICARs, shares or units of RAIFs will only be allowed to be sold to “well-informed investors”.

The new RAIF legislation will formally take effect three days after publication of the fact of its having been approved appears in Luxembourg’s Official Gazette Mémorial, ALFI said, in a statement on its website.

‘AIFM must manage’

Under the new legislation, RAIF entities must be managed by an authorised external alternative investment fund manager (AIFM), which may be domiciled in Luxembourg or in any other EU member state.

If it is authorised and fully in line with the requirements of the Alternative Investment Fund Managers Directive, (AIFMD), the AIFM “can make use of the marketing passport to market shares or units of RAIFs on a cross-border basis”, according to ALFI vice chairman Freddy Brausch.

This enables the RAIFs to avoid the need to be individually approved by the Luxembourg regulator, the CSSF, according to ALFI chairman Denise Voss, since their respective AIFM is the regulated entity. These AIFMs, though, are expected to submit regular reports to the CSSF.

The new RAIF structure, Voss added, “provides an additional – complementary – alternative investment fund” structure to others currently on offer in Luxembourg, such as the SIF regime.

“Luxembourg managers will therefore have a choice, depending on investor preference.

“They can set up their alternative investment funds as Part II UCIs, SIFs or SICARs, if they prefer direct supervision of the fund by the CSSF. Alternatively, they can set up their alternative investment fund as a RAIF, thereby reducing time-to-market.”

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