Luxembourg private capital growth demands your attention

June 21, 2023

The private capital landscape is expanding and evolving at an extraordinary rate. Is your service provider flexible enough to keep up?

Global private capital is in an era of exponential growth, and Luxembourg has become Europe’s domicile of choice for many of these funds. According to a recent Private Equity News article: “Luxembourg accounts for 23% of AIFs in the European Economic Area.”

Alongside this growth, we’re also seeing an emerging trend in Luxembourg to make private assets more accessible to larger groups of investors – creating a variety of challenges in terms of product design.

In this article, we’ll explore how private capital markets in Luxembourg are expanding and evolving, and why – more than ever – you need an experienced partner with a flexible support model to help you succeed.

Massive growth in Luxembourg private capital

Investment firms are drawn to Luxembourg because of the strength of its government, industry and reputation; and the country’s private capital markets are where many of them are finding the most promising growth opportunities. Luxembourg also has a mature and tested ecosystem to support private capital.

Over the past 5-7 years, Luxembourg’s private equity and private debt asset classes have proven especially robust.

  • Luxembourg private equity growth: “The past few years have seen massive sums pour into private equity in Luxembourg, where the assets under management of all private equity and venture capital funds has grown by an average of around 20% annually to €285bn,” according to Private Equity News.
  • Luxembourg private debt growth: According to the annual ALFI-sponsored KMPG private debt fund survey in 2022: “It’s been another year of growth for the private debt market, proving itself once again as a strong asset class. With €267.8 billion in AuM now, there was an impressive 45.4% average growth of AuM this past year.”

While this growth is certainly attractive, it also reflects a changing, more modernized approach to the types of products being offered.

Here at U.S. Bank, private capital is 90% of our client book in Luxembourg. It’s what we do day in and day out.

David Kubilus, U.S. Bank Global Fund Services Chief Commercial Officer

The shift toward more flexible products

Private capital funds have traditionally been closed-end, long-term investments for institutional investors. But a recent shift to open up markets to other qualified investors is blurring the lines between private assets and more traditional asset classes.

“Basically, we’re seeing an increase in open-ended products where people can buy in and get out with more flexibility than they had in the past,” says Didier Delvaux, country head of Luxembourg for U.S. Bank. “And many of these funds are targeting a different type of investor – qualified high-net-worth individuals, for example – whereas before it was almost exclusively large institutional investors who were investing in closed-end funds.”

This shift creates numerous challenges for fund managers – but mainly, how to find the right product design to manage the liquidity of these funds.

“Managers are faced with trying to build liquidity, or the ability to exit a fund, into an asset class that’s traditionally very illiquid,” says Didier. “And there’s a lot of discussion around how to do that – how to find the right balance and the right structure.”

The advantages of the right partner

As managers work to build more flexible funds, it’s important they find a Luxembourg-based service provider with infrastructure and service model flexibility to match. At U.S. Bank, our operating model was designed to be adaptable and to accommodate nearly any type of fund structure or strategy.

“We’re able to service just about any private capital fund regardless of how it’s structured,” says Didier. “We don’t have functionalization or offshore servicing centers. When clients introduce new products with different features, our in-domicile service teams control the whole value chain for successful implementation.”

Unlike many other providers, we also use the same accounting system for open-end and closed-end funds.

“For clients that have closed-end funds and want to wrap those same strategies in open-end funds, we can give them a very similar reporting and client experience,” Didier says.

What should you look for in a service provider?

When you think of Luxembourg from a financial standpoint, strength and stability immediately come to mind. By pairing these qualities with those of a strong, stable service provider, you put yourself and your investors in the prime position to help secure long-term success.

A financially strong administrator provides several fundamental advantages:

  • Well-developed infrastructure
  • Risk mitigation
  • High credit rating

Beyond this, private capital managers also want a partner who delivers the following:

  • High-quality, white-glove service levels
  • Flexibility around their reporting needs
  • A deep understanding of their asset classes – particularly private equity, private debt and infrastructure

“We understand the needs of private capital managers – and the demands that generally come with having a large number of very sensitive investors,” says David Kubilus, U.S. Bank Global Fund Services Chief Commercial Officer. “That’s why we provide customized solutions and flexible reporting specifically tailored to your type of structure and investor base.”

While many firms outsource functions to lower-cost countries, our model at U.S. Bank is to control quality by using teams that are located in-domicile. Clients benefit from having a single point of contact located in Luxembourg, so they know exactly where to go to get the information they need.

“Many of our competitors are more focused on UCITS or other retail-type investments,” David continues. “Here at U.S. Bank, private capital is 90% of our client book in Luxembourg. It’s what we do day in and day out, so we have deep expertise working with these types of assets and a clear track record of providing exceptional quality and client service.”

If you’re looking for promising investment opportunities, Luxembourg private capital markets have a lot to offer. Find an in-domicile administrator with the deep expertise, experience and resources, and rely on their guidance to help you harness the potential of these thriving asset classes.


For more information about how we can customize our services to help achieve your business goals, please visit our website or contact us.

Related content

Maximizing your infrastructure finance project with a full suite trustee and agent

How digital platforms streamline client onboarding for investment funds

Alternative fund servicing: bank or boutique?

Mutual fund to ETF conversions: challenges and considerations

Direct lending trends in Europe

High-yield bond issuance: 5 traits lawyers should look for in a service provider

High-yield bond issuance: how to avoid 5 common pain points

4 reasons your Luxembourg fund needs an in-market administrator

Luxembourg's thriving private debt market

The unsung heroes of exchange-traded funds

Top 3 considerations when selecting an IPA partner

The benefits of bundling services for Luxembourg regulated funds

The benefits of a full-service warehouse custodian

Ask an expert Q&A: 3 US ETF trends and their impact in Europe

Rethinking European ETFs: Strategy wrappers and a means to an end

An investor’s guide to marketplace lending

Combined strength: Luxembourg and your fund administrator

3 questions to ask your equity, quant and CTA fund administrator

Easier onboarding: What to look for in an administrator

Easing complex transactions: Project finance case studies

ESG-focused investing: A closer look at the disclosure regulation

European loan agency: finding the right balance of agility and stability

Luxembourg funds: 5 indicators of efficient onboarding

Luxembourg private capital growth demands your attention

Programme debt clients want reliable service – no matter where they’re based

Programme debt Q&A: U.S. issuers entering the European market

Service provider due diligence and selection best practices

3 tips to maintain flexibility in supply chain management

Inherent flexibility and other benefits of collective investment trusts

The reciprocal benefits of a custodial partnership: A case study

The secret to successful service provider integration

Depositary services: A brief overview

3 innovative approaches to ESG investing in Europe

European outlook: Trustee experience more important than ever

Liquidity management: A renewed focus for European funds

Emerging trends in Europe: An outlook from multiple perspectives

Hybridization driving demand

The role of a custodian

The benefit of a multi-jurisdictional European trustee

Bank vs. brokerage custody

5 questions you should ask your custodian about outsourcing

Preparing for your custodian conversion

4 benefits of independent loan agents

What goes into private equity fund calculation?

Investment management platforms: Easily enter the Irish funds market

Ask an expert Q&A: automation and artificial intelligence trends in Luxembourg

At your service: outsourcing loan agency work

Refining your search for an insurance custodian

Ask an expert Q&A: European CLO market outlook

Middle-market direct lending: Obstacles and opportunities

Managing complex transactions: what your corporate trustee should be doing

4 questions you should ask about your custodian

Rule 18f-4: The limited use exception

3 European market trends to watch

Cryptocurrency custody 6 frequently asked questions

Depositary bank and collateral agent

Accommodating the growing complexity of private equity funds

Ask an expert Q&A: 3 US ETF trends and their impact in Europe

Start of disclosure content


Investment products and services are:
Not a deposit • Not FDIC insured • May lose value • Not bank guaranteed • Not insured by any federal government agency

U.S. Bank Global Fund Services is a wholly owned subsidiary of U.S. Bank, N. A. 

U.S. Bank Global Fund Services (Ireland) Limited is registered in Ireland, Company Number 413707. Registered Office at 24 - 26 City Quay, Dublin 2, Ireland. Directors: Eimear Cowhey, Ken Somerville, Hosni Shadid (USA). U.S. Bank Global Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland.

U.S. Bank Global Fund Services (Guernsey) Limited is licensed under the Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended, by the Guernsey Financial Services Commission to conduct controlled investment business in the Bailiwick of Guernsey.

U.S. Bank Global Fund Services (Luxembourg) S.a.r.l. is registered in Luxembourg with RCS number B238278 and Registered Office: Floor 3, K2 Ballade, 4, rue Albert Borschette, L-1246 Luxembourg. U.S. Bank Global Fund Services (Luxembourg) S.a.r.l. is authorised and regulated by the Commission de Surveillance du Secteur Financier.

U.S. Bank does not guarantee products, services or performance of its affiliates and third-party providers.