Agefi Luxembourg - novembre 2025

AGEFI Luxembourg 24 Novembre 2025 Fonds d’investissement ByKatia FETTES, PartnerAshurst F und finance transactions—ran- ging fromacquisition finan- cings, traditional subscription or capital call facilities to net asset value (NAV) facilities—are nowa mainstay of the Luxembourg market.A recurring structural question is the role of the al- ternative investment fundma- nager (AIFM) of the relevant alternative investment fund (AIF) in these financings. The answer turns on the legal mandate of theAIFMunder the Luxembourg lawof 12 July 2013 on alternative in- vestment fundmanagers, as amended (theAIFMLaw), the scope of any contractual delegations granted to theAIFM in the funddocumentation, and the nature of the financing and security package. TheAIFM’s legalmandate under theAIFMLaw Under theAIFMLaw, every LuxembourgAIFmust appoint an AIFM responsible for portfolio manage- ment andriskmanagement of theAIF. This statutory mandate is the starting point for delineating when AIFMinvolvement is required. Inpractice, theAIFM may be entrusted—by the fund’s constitutional doc- uments,limitedpartnershipagreement,offeringdoc- uments, or an alternative investment management agreement—with additional powers, including authoritytoissuedrawdownnotices,toincurindebt- edness, or to grant security and guarantees on behalf ofthefund.Becausethesedelegationsarehighlydoc- ument-specific, theAIFM’s rolewill vary fromtrans- action to transaction. Financing arrangementswhere theAIFM’s powers are limited Where the AIFM’s powers are confined to portfolio and risk management as defined in the AIFM Law, and no broader authorities have been dele- gated,market practice inLuxembourggen- erally permits the AIF to enter into stan- dard subscription or capital call facilities without involving the AIFM. The logic is straightforward: these facilities are typi- cally secured by theAIF’s uncalled cap- ital commitments and by the collection accounts into which investors fund their commitments. No security is granted over portfolio investments and no disposal of portfolio assets is contemplated at the time of entering into the facility. In that configuration, the financ- ing is viewedas anoperational liquidity tool to align the tim- ing of investments and capital calls, rather than an exercise of portfolio management. Some practitioners nonetheless argue that theAIFM shouldprovideaseparateconsentevenforthesefacil- ities, pointing to the facility’s potential implications for the fund’s investment strategy and risk profile. While such prudence is understandable, especially from a risk governance perspective, this view sits uneasilywiththelegislativeintentoftheAIFMframe- work where a classic subscription facility primarily streamlinesdrawdownsandcashmanagementwith- out altering the portfolio composition. Moreover, borrowing arrangements that are tempo- raryinnatureandfullycoveredbycontractualcapital commitments from investors are generally excluded fromthecalculationofleveragelimitsundertherules implementingtheAIFMD.Therefore,atypicalcapital call financing normally falls outside of the leverage reporting responsibilities of the AIFM. As a result, absent delegated powers that would be triggered by the facility,most lenders and sponsors proceedwith- outmaking theAIFMa party to the documentation. Contractual delegations in favour of theAIFM Where the AIFM has been expressly delegated the authority to issue drawdown notices, to incur bor- rowings on behalf of the fund, or to grant security or guaranteesinthefund’sname,theAIFMwillusually be expected to become a direct party to the finance documents. If theAIFM is operationally responsible for issuing drawdown notices to investors, lenders commonly require theAIFMto give representations andundertakingstoensureconformitywiththefacil- ity covenants and to acknowledge the security over uncalled commitments and pledged accounts. This approachaligns the financedocumentswith thedel- egationchainandreducesexecutionriskaroundper- formance of drawdown-related obligations. In some cases, an AIFM (often an external AIFM) has beengrantedbroaddelegations in the funddoc- umentation but does not, in practice, exercise those powers for the relevant fund. To avoidunnecessary complexityand tokeepunrelatedparties out of doc- ument negotiations, thepartiesmayadopt a stream- lined solution: theAIFMdelivers a short-form side letter rather than signing the full suite of finance documents. SuchasidelettertypicallyrecordstheAIFM’sconsent to the financingand includes negative covenants not to take actions thatwould cause theAIF to breach its obligations under the facility, while leaving day-to- daymechanics to the fund and its general partner or othermanagingbody. This approachwill usuallybe coupled with appropriate representations from the manager of the AIF in the finance documents con- firmingthatithasfullpowertomanagethefundand request payment of capital calls fromthe investors. NAV and asset-backed facilities: portfolio and riskmanagement implications Additional considerations arise where the facility is secured by, or otherwise impacts, theAIF’s portfolio assets—as is common in NAV facilities—or where theAIF issues equity commitment letters or guaran- teesbenefitingportfolioholdings.Inthesestructures, the analysis should not stop at the contractual dele- gation clauses. Instead, it must address whether the financinganditssecuritypackageengagetheAIFM’s statutory remit over portfolio and riskmanagement. Granting security over portfolio assets generally constitutes an act of disposal (acte de disposition), because anenforcement couldresult inadivestment of those assets by the AIF. As such, the decision to encumber portfolio holdings is inherently part of portfolio management and, by extension, calls for the AIFM’s involvement. In practice, lenders will expect formal evidence—whether through a con- sent, approval certificate, or participation as a party—that the AIFM has assessed and approved the transaction from a portfolio and risk manage- ment standpoint, and that any conditions or limits in the fund documentation have been satisfied. For the lender, this should confirm the due authorisa- tion of the fund to enter into such transaction and therefore reduces its execution risk. In all cases, careful alignment between the finance documents and the fund’s internal governance is essential. The corporatedocuments shoulddemon- strate a clean chainof authority, reflectingwhomay bind theAIF in respect of borrowings and thegrant- ing of security, who may issue drawdowns, and whether theAIFMhas consentedwhere its statutory or delegated powers are engaged. The required approvals should be alignedwith the roles actually performed by the AIFM, avoiding overreachwhere theAIFM’s involvement is limited, and requiring appropriate undertakings where the AIFM is directly involved, be in respect of draw- down mechanics or the management of encum- bered assets. Where NAV or asset-backed facilities are concerned, the consent shouldaddress theport- folio and risk management functions of the AIFM and confirmconsistencywith the fund’s governing documents and policies. Conclusion TheAIFM’s role in fund finance transactions should be based on substance over form. If a facility does not touch portfolio assets and the AIFM holds no relevant delegations beyond its statutory mandate, the financings should proceedwithout theAIFMas a contracting party. By contrast, where the AIFM is delegated operational powers impacting financing arrangements, orwhere the security package impli- cates portfolio assets, direct AIFM involvement or, at aminimum, a formal consent shouldbeprovided. The AIFM’s role should be carefully assessed on the basis of the structure and documentation of each transaction to reduce execution risk, preserve regulatory integrity, andprovide lenderswith clear comfort that the fund’s governance has been prop- erly observed. What role should theAIFM have in fund finance transactions? By Elisabeth BEHETSWYDEMANS – Tax director at PwCLuxembourg I n today’s world, tax is no longer just about being compliant with statutory filings. In the alterna- tive investment industry espe- cially, large transactions, complex global structures, and rising re- gulatory scrutiny are forcing tax managers to fundamentally re- think how they work. Tax teams must shift from form- filling and reconciliations to strategic advice, complex structure management, and global reporting consistency. For alternative investment ma- nagers, this evolution isn’t only about compliance— it also affects regulatory risk, investor confidence, and the speed of closing deals. The foundation to turning these challenges into strategic advantage? Well-organised, high-quality data. Why tax is now in the spotlight Taxfunctionsworldwideareundergrowingpressure. Global initiatives such as Pillar II andDAC8 increase complexity, yet most tax teams must manage these demandswithconstrainedbudgets,leanerteams,and shorterdeadlines.Atthesametime,taxauthoritiesare modernising:traditionalauditsbasedonmanualdoc- ument checks aregivingway todata-drivensupervi- sion,includingsemi-automatedsubmissions,e-audits, real-time reporting, andmandatory e-invoicing. The OECD’s report Tax Administration Digitalisation and Digital Transformation Initiatives (2025) highlights that tax administrations are increasingly using AI acrosstheiroperatingmodel.Centraltothisisthecol- lection and analysis of large volumes of data, which enablesAIsystemstoidentifypatternsandassessrisk more effectively. For example, Luxembourg’s VAT authorities have introduced the OECD-recom- mended StandardAudit File for Tax (SAF-T), locally known as the FichierAudit InformatiséAED (FAIA), requiring structured, machine-readable data directly from accounting or ERP systems. These develop- ments reflect a broader trend: tax authorities are increasingly seeking access to live, trans- action-leveldata,makingoutdatedsystems, manualworkarounds, and siloed informa- tionflows unsustainable. Closing this dig- ital gap is not just about compliance, it is a keysteptowardtransformingthetaxfunc- tion into a proactive strategic partner. Frompressure to pain: a real-world example The following example, based on common industry situa- tions, features TechNova , a hy- pothetical private equity firm. During a year-end closing, the tax authorities requested de- tailed reconciliations for 10 fund entities within just 10 working days. The data needed was scattered across inconsistent spreadsheets and fragmented ERP systems. What followedwereweeks of late nights, urgent callswith service providers, and repeated back-and-forthwith deal teams simply to compile the numbers. By the timeTechNova submitted, the taxauthoritieshadal- ready flagged inconsistencies. The case was eventu- allyresolved,butonlyatthecostofstrainedregulator relationships,additionalprofessionalfees,andanex- haustedtaxteam.Thisexampleshowshowcrucialit is to have structured and reliable data. Without a proper database, even skilled tax teamswill struggle to provide an appropriate response to regulatory re- quests in due time. The data is there, but often out of reach Every transactionabusinessmakes cancarry tax im- plications. Yet many tax professionals still spend a large part of their time gathering, cleaning, and re- shapingdata tomake it usable. Recurring challenges include: - Dispersed data sources : ERP platforms, spread- sheets, and local databases rarely provide ready-to- use formats; -Manualintervention :Humaneffortincreaseserror risk and slows processes; - Regulatory pressure : Authorities expect granular, real-time, transparent data; and - Limited visibility : Tax often lacks real-time access to operational data. AtTechNova,tax-relateddatawasspreadacrossmul- tiple systems, so even simple reconciliations required constantback-and-forth.Thissloweddownprocesses and increased risk. Why data strategy is key to tax transformation PwC’s 2025 Asset Management Compliance Insights Survey found that firms are shifting from many small tools to integrated platforms. Yet many still struggle to achieve results because the underlying data is fragmented or poorly governed. This re- flects the industry’s broader push toward digital transformation andhighlightswhy structureddata is critical. It’s important to remember that technol- ogy alone cannot achieve this. Digital tools deliver value only when supported by clean, structured, and well-governed data. We have seen several players in the alternative in- vestment industry invest heavily in advancedplat- forms and technologies to be disappointed by the results. The reason? Poor data. Technology alone cannot solve tax challenges if the underlying data is fragmented, inconsistent, or poorly governed. For example, firms deploying workflow tools, ro- botic process automation, or evenAI without first addressing data quality often find themselves spending evenmore time reconcilingmismatched inputs and correcting errors. Without a clear strat- egy for how data is captured, structured, and maintained across the organisation, new tools cre- ate complexity rather than clarity. The lesson is clear: digital investments onlydeliver valuewhen built on a solid data foundation. For TechNova, listingall requireddatapoints across regions and output filings was the first step. They arenowstreamliningprocesses, leveraging technol- ogyandAI to increase automation, and focusingon higher-value tasks. The result? Reconciliations that once tookweeks can nowbe completed in days. Building a foundationwith structured data The future of tax compliance is moving toward seamless integration and real-time exchange of in- formation. Increasingly, clients are looking to con- nect their data environments (cloud-based warehouses or internal systems) directlywith their tax service providers. To achieve this, tax teams need to start today by structuring and standardis- ing their data, systematically organising and clas- sifying it from the start, defining clear categories, applying consistent naming conventions, andusing standardised formats. When tax data is clean, centralised, and connected, teams can reduce compliance risk through auto- mated controls, enhance decision-making with real-time access to transaction-level details, free up time by automating routine data work, and re- spond quickly to regulatory changes. Structured, connecteddata alsomakes it easier to establishgov- ernance, define ownership, and implement auto- mated checks for accuracy, consistency, and compliance, laying the foundation for a resilient, fu- ture-ready tax function. Three priorities for taxmanagers? To conclude, having exploredwhy data is essential, today’s challenges, and what tax needs to achieve, we suggest three key areas that tax managers may considerprioritisingtobuildafuture-readyfunction: 1. Get involved early in digital initiatives – Don’t wait for technology to be rolled out. Join projects from the start to influence how systems are de- signed,ensuredataisstructuredcorrectly,andmake reportingandcompliance easier. Early involvement saves time, reduces errors, and ensures technology actuallymeets tax needs; 2. Build diversified tax teams – Focus on develop- ing a teamwith the right mix of skills. PwC’s 2025 Asset Management Compliance Insights Survey high- lights that leadingfirms are complementing techni- cal tax expertisewith strong datamanagement and digital skills. For tax teams, thismeans being able to structure and analyse the detailed data behind transactions tomeet newrequirements suchasPillar II andDAC8. Taxmanagerswhobuilddigitallyflu- ent teams will not only reduce compliance risk but also position the tax function as a strategic business partner; and 3. Partnerwithstrategic advisors –Choose advisors who go beyond filing tax returns. Look for those who understand your business, your data flows, and can help design processes, ensure governance, and anticipate regulatory changes. The right advi- sors become truepartners, not just serviceproviders. By acting on these priorities, taxmanagers not only strengthen compliance but also reduce regulatory risk and create the confidence to move faster on strategic transactions. The future of tax inAlternatives starts with data