Agefi Luxembourg - janvier 2026

Janvier 2026 21 AGEFI Luxembourg Fonds d’investissement By Dr. Marcel BARTNIK, Partner –Avocat à la Cour, Dupont Partners J ust before the end of last year, the Luxembourg regulator CSSF fa- voured the investment funds in- dustry with a particular Christmas present by issuing a new circular (25/901) (1) that summarises its administrative practice for all those alternative invest- ment funds (AIF) that are under its direct supervision: specialised investment funds (SIF), investment companies in risk capital (SICAR) and retail funds subject to part II of the law dated 17 December 2010. So far, the rules for these productswere spread out over a number of different circulars, some of them going back as far as 1991 which appears almost prehistoric in our fast-changing times: The new circular abolishes most of them, such as the circu- lar concerning the SIF (07/309), the SICAR (06/241), part II-funds (02/80) and certain provisions of the ancient 91/75 circular. Instead andmuchmore effi- ciently, we now have a clearly laid-out com- pendium with the current regulatory practice applicable to all of them. Which types of investment funds are concerned? In principle, only those alternative investment funds mentioned hereabove, and which require an approval from the CSSF (including for anyma- terial changes), are covered. Not included in the scope of the new circular, at least in principle, are those AIFs that are not under any direct supervi- sion of the CSSF: reserved alternative investment funds (RAIF) and partnership structures (SCS/SCSp) that qualify as AIFs. They typically have set out their own rules, and if these include a reference to one of the old circulars, such ruleswill continue to be valid. Fromnowon, they could also choose to apply the rules of the new circular, but would not be obliged to do so. Also excluded are the European investment fund products such as ELTIF, EuVECA or EuSEF, as the CSSF has no competence in this regard. What are the main topics covered by the circular? Following the content of the abolished circulars, the main topics are how the principle of risk di- versification is interpreted (for SIFs and part II-funds) and how the regulator understands the concept of risk capital (for SICARs). In addition to this, there are also chap- ters relating to specific portfolio man- agement techniques such as securities lending or repur- chase agreements (previ- ously set out in circular 08/356 which from now on only applies to UCITS), borrowing limits and on the dis- closures the CSSF ex- pects to see, beyond what may be required by the rules of the AIFMDirective. Are there differences to the previous rules? Until now, the rule of thumb concerning risk spreading requirements was that part II-funds cannot invest more than 20% of their assets in a single target, while for SIFs this figure went up to 30% (with a number of exceptions). The first wel- come principle stated in the new circular is that, whatever the rules set out in it, the CSSF can grant exceptions to them with due justification. While that principle was always applied in practice, it is positive to see such flexibility stated explicitly. The risk diversification rules differentiate between the type of investors: They are understandably more strict if retail investors are targeted (i.e. byway of a part II-fund), and more generous for SIFs that can only accommodate well-informed investors who shouldbemore sophisticated. For the first cat- egory of retail investors, the limit is set at 25% per single target investment, a bit higher than before under the 02/80 circular. It is increased to a whop- ping 50% for infrastructure investments, a result of Luxembourg’s intention to enable investments in green energy projects also for non-professional in- vestors (and therefore indirectly helping ELTIFs which are frequently set up as part II-funds). For those products reserved to well-informed investors (SIFs essentially), the former 30%-limit (of circular 07/309) is increased to 50%and for infrastructure in- vestments even to 70%. The new circular also explicitly acknowledges a number of administrative practices that the CSSF has applied for a long time, but which were, for themost part, never put inwriting. That concerns, for example, the confirmation that in case of the use of special purpose vehicles (SPV) a look- through approach is applied for calculating any investment limits, or that the principle of risk spreading can be disapplied during a ramp-up (and winding-down) phase, which can have a length of up to four years. There are also some novelties and clarifications in the sectiondedicated to the SICAR.Among others, the conceptual duality that is required for a target to qualify as risk capital, i.e. having an aim to de- velop such target and an inherent, specific risk that goes beyond simple market risk, is set out inmore detail, and also refers to the exit strategy that is in- tended for a given SICAR’s assets. Another exam- ple is that the term risk “capital” does not exclude debt financing or even loan origination as a strat- egy for a SICAR. The CSSF understands the termmore literally for real estate investments, which can only be made through SPVs or target funds. It can also be noted – as is the objective of the circular in general – that it validates some changes in the regulator’s prac- tice, making it less restrictive: It is now acknowl- edged that a SICAR can invest into a single target, or into listed securities and commodities, use derivative instruments and hold cash if it is nec- essary for its operation and does not call into ques- tion the qualification of risk capital. In the section dedicated to borrowing, a limit of 70% of the assets or commitments of the relevant vehicle (or compartment) is set out in case of a marketing to retail investors. If onlywell-informed or professional investors are targeted, then – as for unregulated AIFs – no specific limit applies and any such limit can be determined by the vehicle itself.Another alignment with theAIFMDirective is also that temporary borrowing, if it is covered by the relevant vehicle’s capital commitment, is not taken into account. Practical impacts for existing SIFs, SICARs or part II-funds? While the new circular entered into force on 19 December 2025, it only applies to SIFs, SICARs or part II-funds authorised after such time (or com- partments thereof). It is explicitly stated that ex- isting vehicles can continue to apply their current rules, and existing and authorised closed-ended funds are entirely out of its scope. Considering that most of the provisions of the new circular were already an integral part of the CSSF’s administrative (but unwritten) practice for some time, it is likely that some of the flexibility that ap- pears in it has already found its way into quite a fewexisting fund rules. If that is not the case, such flexibility could be introduced by changing the rel- evant documentation. Sometimes such documen- tation may also be sufficiently flexible to allow to introduce some new flexibility in a new compart- ment only. Anything else? Apparently thinking that one present is not enough for last Christmas, the CSSF also issued a sort of glossary of terms and concepts that are used by alternative investment funds, with the in- tention of reflecting the regulator’s understanding and expectation related to them (2) . It covers what the CSSF expects to see as the de- scription of the investment policy; how it cate- gorises the different asset classes (from index replicating funds, private equity or infrastructure to virtual assets); concepts relating to specific in- vestment methods such as primary or secondary transactions; and a summary of different subscrip- tion and redemption models such as commit- ment-based or fully-funded funds, including details about the regulator’s viewon closed-ended and open-ended structures. It is not a circular and therefore does not have – at least in theory – any binding element to it. It is also conceived as an evolving document, which is in- tended to be updated as necessary over time. Be- yond its scope which is limited to the directly supervised entities, it can also be expected that this compilation colours the regulator’s interaction with AIFMs that are under its supervision, and therefore indirectly also impacts RAIFs or unreg- ulated partnerships in some way. Final words While its rather long gestation period is regret- table, the new circular’s publication is certainly welcome. Having a single document with an up- to-date view of the regulator is helpful, and the clear commitment to more flexibility in terms of fund structuring and operation should increase the attractiveness of the directly supervised invest- ment vehicles. Although these are, from a statisti- cal perspective, in decline since the vast majority of the AIFs of the last few years are structured as RAIFs or partnerships, there is still a significant number of legacy structures that can benefit. Added to that the more recent trend of establish- ing investment funds for retail investors to invest into private assets (such as but not only by way of an ELTIF), the circular is timely indeed. The “glos- sary” published at the same time also goes some way to mitigating an opacity in terms of regula- tory supervision that was a trademark of the CSSF for a long time, not always to the benefit of fund sponsors. 1 )https://www.cssf.lu/wp-content/uploads/cssf25_901eng.pdf 2 )https://www.cssf.lu/wp-content/uploads/cssf25_901_recueil_eng.pdf Evolution, not Revolution: the new CSSFCircular 25/901 T he Luxembourg Private Equity & Venture Capital Association (LPEA) an- nounces the release of its Struc- turing & Market Trends Paper*, developed by the Private Funds Committee and published last month. Led by the Committee’s co-chairs Jérôme Mullmaier (Loyens & Loeff), Maria Rodri- guez (Arendt), and Adrian Al- dinger (Arendt) (pictures), the paper delivers a market-driven analysis of how private funds are structured today—and why Luxembourg continues to play a central role in global fund platforms. Drawing on a dedicated 2025 market survey, Preqin data and practitioner insight, the publication examines structuring choices against a backdrop of slower fundraising, higher investor scrutiny and growing distribution complexity. It highlights the continued dominance of vehicles such as the SCSp and RAIF for institutional strategies, the rele- vance of regulated structures for pri- vate wealth access, and the accelerating growth of evergreen and hybrid models. Despite geopolitical uncertainty and elevated interest rates, the paper identifies resilience across key segments, notably secondaries, and points to early signs of an improv- ing fundraising cycle—one Luxem- bourg is well positioned to capture. Three key takeaways fromthe paper Jurisdiction choice remains a corner- stone of fundraising strategy The choice of fund domicile continues to dominate GP–LP discussions from the earliest stages of a fundraising. Regulatory access, tax treatment and investor familiarity all weigh heavily in this decision, as the selected juris- diction can materially impact investor outcomes. Sponsors increasingly deploy multi- jurisdictional platforms—typically combining Delaware or Cayman vehi- cles for US investors with Luxem- bourg or Irish sleeves for European LPs. Luxembourg stands out as a trusted, well-trodden jurisdiction for European investors, reducing due diligence friction, facilitating regula- tory compliance and supporting smoother fund launches and ongoing operations. Luxembourg leads European Private Equity fundraising Data confirms Luxembourg’s leading position as the preferred European domicile for Private Equity funds. In 2023, 58% of capital raised in Europe was structured through Luxembourg vehicles, a share that rebounded above 60% in 2025. This dominance reflects Luxembourg’s robust regulatory framework, effective use of the AIFMD passport and deep bench of third-party and sponsor- ownedAIFMs. Even as fundraising cy- cles fluctuate, Luxembourg continues to attract sponsors targeting European capital and investments. A clear standout for Private Debt and complex strategies Luxembourg’s leadership is most evi- dent in Private Debt, representing 86% of European Private Debt capital raised in 2024. In credit strategies, where the tax treatment of interest income and distributions is critical, Luxembourg of- fers the certainty and efficiency in- vestors require. Its appeal extends well beyond Private Debt, with a highly flexible framework that supports parallel funds, managed accounts and hybrid structures tailored to increasingly specific investor needs. Strong momentum This positioning is reinforced by the upcoming revised carried interest tax regime, which introduces a clear, per- manent and competitive framework. By broadening the current regime— and offering effective tax rates of up to 12% or full exemption in certain cases—the regime strengthens Luxem- bourg’s role not only as a premier struc- turing jurisdiction, but also as a long-term base for fund managers and investment talent. * https://lpea.lu/lpea-market-trends-survey-2025/ One in every two European Private Equity funds are launched in Luxembourg