Key requirements - 30th Jul 2011

LUXEMBOURG is one of the largest funds jurisdictions worldwide and offers an attractive legislative environment for all types of investment vehicles. As the second largest fund centre in the world behind the United States the overall Luxembourg market has €2.2 trillion of assets under management.
The success of Luxembourg as an investment fund jurisdiction can be attributed to the country’s business orientated regulation, combined with a favourable tax environment and an expert professional services and fund administration industry.
The development of the fund administration sector in Luxembourg over the past decade has been a key component in the growth of Luxembourg as a premier fund centre. While the asset servicing sector is not the most high profile part of the investment management value chain, high quality administration and reporting capabilities are key requirements for running a viable fund.
As regulatory demands increase across regions it is important to focus on the key attributes required when selecting the right administrator and the important role such administrators can have in assisting a successful fund.
Primary factors that should be taken into consideration when choosing an administrator are customer service, responsiveness and cultural alignment. It is key for fund managers selecting an administrator to understand the requirements of their investors, which will include, although are not limited to: independence, service expectations, asset-class specialism, fund structure experience, systems and operational controls.
The size and fit of the administrator is also important. If the administrator is very large in relation to the fund and its manager then the manager may not be treated as an important relationship. If it is too small, the administrator may have limited ability to provide a full service range such as jurisdictional coverage, best practice knowledge and asset specialism. A fund manager will also look to their administrator to demonstrate local understanding as well as the ability to provide strong governance.
With a wide range of current regulatory challenges, notably AIFMD, the Dodd-Frank Act, FACTA and Basel III, understanding and adapting to such developments across multiple jurisdictions requires that administrators devote appropriate resources to their regulatory compliance functions. Fund managers are facing increased regulatory obligations themselves and administrators such as Sanne are able to assist them through training, briefing papers and ensuring they obtain the best third-party advice available.
Looking ahead, the new regulatory environment represents an opportunity for Luxembourg as it can build on its extensive expertise in UCITS in particular to strengthen its leading position as a fund domicile. Luxembourg has established itself as a key private equity, real estate and ‘regulated’ hedge funds hub with asset managers appreciating the country’s readiness to deal with new regulation, and those planning new launches in the coming year will naturally look to Luxembourg for clarity.
It is important that administrators can proactively adapt to these regulatory changes. This environment of change has provided opportunities for quality administrators who can demonstrate strong compliance monitoring capabilities and experienced staff capable of implementing robust governance and regulatory frameworks.
Sanne Group’s fund administration business is a leading provider of independent administration services to global asset managers.
With assets under administration in excess of $15bn, the business employs more than 40 staff in its primary service centres in the Channel Islands, Luxembourg, Dubai, Hong Kong and Shanghai with specialist teams focused on private equity, venture capital, listed funds, debt, real estate and alternative asset classes (including life science and oil and gas, carbon credits, art and infrastructure and technology).
Services include fund structuring, regulatory compliance, investor acceptance, corporate governance and management and control, financial and investor reporting as well as general administration services such as cash and transaction management.
Our Luxembourg office offers an experienced and multi-lingual management and operations team with extensive experience administering a range of fund structures including SICARs, SIFs and UCIs.
Sanne’s MENA based team has an excellent understanding of the service requirements of the diverse and professional customer base within the region and has strong working relationships with legal providers, accountancy firms, banks and custodians within the local market.

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