B U S I N E S S
P R I VAT E E Q U I T Y
The best possible framework Text Annick Weber — Illustration Gina Mueller
With a stable regulatory and fiscal environment, a highly qualified workforce and a geographical position at the heart of the EU, Luxembourg is home to EUROPE ’S
PREMIER INVESTMENT
FUND CENTRE . We spoke to Serge Krancenblum of IQ-EQ about 120
Luxembourg’s leading role in private equity.
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erge Krancenblum is group executive chairman at IQ-EQ, the fourth largest investor services provider in the world which until March 2019 was known as SGG Group. From its Luxembourg headquarters, IQ-EQ offers highly personalised investor services, helping global clients focus on investing and preserving capital in a sustainable and compliant manner. The firm has a presence in 23 countries and a total of 2,500 employees around the world, but its operations are firmly rooted in Luxembourg. Krancenblum is also chairman of the Investment Facilitation Forum (IFF), a platform for enterprises and organisations involved in investment facilitation at a global level, and the Luxembourg International Management Services Association (Limsa), the representative body for first-rate trust companies in the Grand Duchy. “Luxembourg is the number one European hub for international fund distribution and an important industry player in the world,” says Krancenblum. “It offers the stable and innovative legal framework you need to successfully set up international investment projects.” STABILITY AS A MAIN ASSET Private equity activities in the Grand Duchy go back to as far as
120-122_business3.indd 120
more than 30 years ago. Over the course of the past three decades, the Luxembourgish ecosystem has developed into a highly favourable environment for investment funds, backed by the country’s central location in the heart of Europe. It has become a trusted gateway to the EU and the rest of the world for multiple reasons. “The key thing that investors find in Luxembourg is stability,” explains Krancenblum. “Luxembourg is a global investment hub relying on a very strong ecosystem of professionals. Investors also come here because they benefit from the most stable fiscal regime within the EU.” A main strategic asset is the availability of a strong network of double tax treaties: Luxembourg has bilateral tax treaties with all EU member states (with the exception of Cyprus) and almost all OECD member states among other countries. Furthermore, it boasts effective tax rates for companies, their shareholders and employees, and a significant range of tax exemptions. “Thanks to investment hubs like Luxembourg, there is more foreign direct investment in emerging countries,” says Krancenblum of the stability the Grand Duchy offers. “There are many emerging countries that you couldn’t invest in directly because of issues like stability of the tax and legal system or
corruption. If investors have the option to do so via Luxembourg’s secure framework, more money goes to those countries, which helps boost their economies.” Krancenblum sees Luxembourg as a centre of excellence in terms of compliance, as investor services providers act as gatekeepers to make sure that funds meet regulatory and compliance obligations. Especially when tapping into emerging economies, complying with the latest anti-money laundering (AML) regulations can
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