LUXEMBOURG MICROFINANCE INVESTMENT VEHICLES

 WHY LUXEMBOURGLuxembourg-Microfinance-Investment-Vehicles_reference

Luxembourg is a leading financial center for funds

  • 2 208.198 billion euros: net assets under management in Luxembourg investment funds at the close of February 2011.
  • Proactive and investor friendly attitude of Luxembourg authorities
  • Reputable supervisor (CSSF) implementing pragmatic regulation
  • Attractive tax regime for vehicles and investors
  • Flexible laws and stable legal and economic environment
  • Highly qualified fund professionals

Attractiveness of Luxembourg for microfinance investment vehicles (MIVs)

  • Appropriate laws for the various types of MIVs: SIF, SICAR, Part II Fund, Securisation vehicle
  • Increasing number of double tax treaties with investment countries of MIVs
  • Domicile of choice for major investors in MIVs such as DFIs: KfW, EIB, IFC, BIO, FMO, …
  • Fund professionals accustomed to MIVs specificities

QUALIFIED LUXEMBOURG PROFESSIONALS ACTIVE IN MICROFINANCE

Luxembourg favors the presence of diverse actors involved in the provision of technical expertise, structuring and establishment, funding and refinancing, advisory practice, training and legal advises for microfinance.
MIVS IN LUXEMBOURG AND THEIR LINKS TO MFIS AND MICRO ENTREPRENEURS

Microfinance institutions, which offer banking services to micro-entrepreneurs in poor and developing countries, are increasingly turning to the capital markets to raise money to increase their reach into the poor urban and rural areas which they serve. Microfinance investment vehicles (MIV) have been created to meet this demand for capital, at the same time producing some return for socially aware investors.
As of December 2008:

  • 33 MIVs
  • $ 3.1 bn of total assets (TA)
  • 40% of estimated TA of all MIVs ($ 6.5 bn)
  • 1st MIV domicile
  • $ 2.3 bn of Microfinance portfolio (MFPF)
  • Mainly SICAV/FCP-Part II and SIF
  • 1st MIV created in Luxembourg: Dexia Microcredit Fund (1998)

In this way, Innpact S.àr.l. offers specialised consulting services in the establishment of MIVs:

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A comprehensive list of Microfinance Investment Vehicules established in Luxembourg is available on www.syminvest.com on.

TRENDS IN MIVS

Luxembourg also promotes the raising of private capital for microfinance through the creation of the Luxembourg Fund Labelling Agency asbl (LuxFLAG). The purpose of this non-profit making association is to award a specific label to microfinance investment vehicles based on defined and publicly available criteria. The criteria are designed to ensure that the fund is really invested in microfinance.
To find out more about the labelled MIV’s :

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As the domicile of choice for MIVs and thanks to the flexibility of its regulator and the involvement of its fund professionals, Luxembourg has a great role to play in the development of the investment in microfinance and more generally in development and social finance.