“Eighteen of the 20 largest international private equity firms are based in Luxembourg.” Local organisations, led by Luxembourg for Finance, are happy to use this promotional argument. These large companies include the world leader in private equity, the American firm Blackstone, as well as names such as Partners Group, KKR, CVC Capital Partners, Ardian and Apollo Investment Management.

While these companies tend to use Luxembourg as a base for structuring and distributing their funds across Europe, their decision-making centres--with the exception of CVC--are located in other countries. Some see their exposure as misleading marketing. Others, such as EY, see it as proof that Luxembourg vehicles are virtually indispensable to the major players in PE. “Our legal framework and the experience of our professionals in the field give us a clear advantage in Europe,” says , private equity leader at EY Luxembourg.

One thing is certain: unlike the American and London financial centres, Luxembourg is not a place where managers congregate. It is a place where funds are domiciled. In this respect, it is number two in the world (behind the United States) and number one in Europe. “Luxembourg is THE place to come to create and structure your range of funds,” says , CEO of the Luxembourg Private Equity & Venture Capital Association (LPEA).

Heavyweights and pioneers

According to CSSF statistics, Luxembourg had 2,104 PE funds out of 9,019 alternative funds at the end of 2023. Who are these players?

In the international heavyweight category, in addition to the aforementioned names, we can also mention the Swedish investment company EQT, which, like Blackstone, is active in traditional multi-strategy PE. Another key player is Blackrock. Coming from the liquid world, this American giant has made a name for itself in alternative investments.

Then there are what we’ll call the ‘pioneer,’ the local venture capitalists who ‘created’ the ecosystem because they were the first to succeed: Mangrove Capital Partners and Expon Capital, co-founded by (who later chaired the LPEA). Middlegame Ventures also came later.

Then there are those who were not necessarily expected in this field, but who have to their credit the creation of a front office in Luxembourg. Luxempart, considered to be Foyer’s ‘alternative armed wing,’ is one of these. Other names that crop up are Wendel, a major industrial group with a strong presence in its various circles, and Sofina, a listed Belgian company recognised in Luxembourg for the skills it has developed in PE.

Smaller and more discreet

The smaller players include specialists such as Cube Infrastructure Managers (infrastructure) and Oraxys (environment). These are ‘pure players’ who employ less than 50 people in Luxembourg, and do everything themselves.

Then there are those who communicate little or not at all, because they are subject to local restrictions (sometimes linked to their stock market listing) or have opted for discretion. This is the case with the listed company Brederode, which has Belgian roots and has its head office and team in Luxembourg. Sometimes dubbed ‘the Belgian Warren Buffet,’ its founder, Pierre van der Mersch, is also regarded as a pioneer of private equity. He handed over the chairmanship of Brederode to the economist Bruno Colmant in 2023.

A specialist in fund structuring, Luxembourg is also a rising platform for new PE transactions. Find out more this Friday.

This article was originally published in .