Private debt plays an important role in addressing the imbalance in liquidity supply and demand on the one hand and helping businesses raise capital and stimulating economic growth on the other hand. Private debt and banks are working together to finance the real economy by providing capital to SMEs and investments in infrastructure, real estate assets etc.
Regulated funds or Alternative Investment Funds (AIFs) managed by a regulated AIFM provide an ideal tool and framework for the market to provide non-banking financing solutions. They also allow regulators to monitor possible maturity mismatches and leverage.
Luxembourg private debt can originate and participate in syndicate loans and accommodate all types of debt strategies including investments in secondary, mezzanine or distressed loans. The Luxembourg regulator confirmed that AIFs may engage in loan origination, participation and acquisition. Open-ended, semi open-ended and closed-ended private debt may be structured, using a variety of Luxembourg legal forms and regulatory regimes.