capital v #1 invest industrial: turning ducati around

Invest IndustrIal:

Turning DucaTi

arounD

V#1

capitalThe magazine of the Luxembourg Private Equity & Venture Capital Association

#1 – capitalV – 3

Content

The magazine of the Luxembourg Private Equity & Venture capital associationeditorial: Paul Junck / Hans-Jürgen SchmitzConception & coordination: 360crossmediaartistic director: Frank WidlingCover photo: © DucatiPrint run: 2.000 copies

capitalV

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T.: 352 40 49 601

www.wildgen.lu | [email protected]

SINCE 1923

WILDGEN, PARTNERS IN LAW, HAS BEEN AT THE HEART OF LAW PRACTICE IN LUXEMBOURG.

Need expert legal advice on Private Equity and Venture Capital in Luxembourg?

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5. editorialWelcome to capitalV

6. Case studyMetrocab and citeecar: vehicles of change!

8. InnovationLuxembourg: open to partnership

10. InterviewPrivate Equity in Luxembourg: Three steps ahead

12. Cover storyinvest industrial: Turning Ducati around

16. regulatoryPlaying the aiFM music in the right tone: the role of professional associations

18. taxPrivate equity in Luxembourg: what about the current tax environment?

20. Profileadvent Venture Partners – Life Sciences’ venture: our core activity

23. FocusThe EuVEca Label new opportunities ahead for Venture capital and Luxembourg

24. GamingKabam: Paving the way for a digital future

27. CulturePhilharmonie Luxembourg: Sounds perfect!

28. social clubsnetworking in Luxembourg

30. lPea in BriefaBouT LPEa

Disclaimer : To the fullest extent permissible under applicable law, LPEA does not accept any responsibility or liability of any kind, with respect to the accuracy or completeness of the information and data from this documentation. The information and data provided in this documentation are for general information purposes. It is not investment advice nor can it take account of your own particular circumstances. If you require any advice, you should contact a financial or other professional adviser. No material in this documentation is an offer or solicitation to buy or sell any professional services, financial products or investments.


dear PrIvate equIty ProFessIonals,

The Superreturn conference in Berlin is a great opportunity to learn about the latest trends of our industry and meet

business partners.at this occasion, the Luxembourg Private Equity and Venture capital association is proud to present the first edition of «capitalV». We trust this magazine will help you acquire a better knowledge of Luxembourg’s expertise in private equity.

Kindest regards

Paul Junck, Managing DirectorHans-Jürgen schmitz, chairmanLuxembourg Private Equity & Venture capital association

editorial

THE PLacE carS TraDiTionaLLy HaVE in ToWnS iS BEing cHaLLEngED. WE LooK unDEr THE BonnET oF THiS PHEnoMEnon WiTH JEan-Marc gaLES, cEo oF THE cLEPa aSSociaTion oF EuroPEan auToMoTiVE SuPPLiErS.

#1 – capitalV – 76 – capitalV – #1

regulating, like on social networks. For example, the next user tells the network if the previous person didn’t put in any pet-rol. Mangrove capital Partners has launched this project in Berlin, which is soon set to be the first city “equipped” with 200 cars. The first 1,000 rentals have worked very well.

How does CIteeCar dIFFer From metroCaB?it’s completely different. 2 companies used to produce the famous London taxi cabs. Metrocab was bought out by Kamkorp in the early years of the last decade. This firm has developed a specific green concept whereby the taxis are fitted with a small petrol engine coupled with a generator which produces electricity. This means that co2 emissions are barely 50 g/km, whereas they are in excess of 200 g/km for a traditional taxi. Let’s not forget that we’re talking here about a 7-seater vehicle with room for a wheelchair. Mangrove capital Partners got involved in this project at the end of 2011. in excess of 300 Million sterling were invested by Kamkorp into a fully integrated, highly fuel efficient and optimized range extended electric drivetrain. The target market includes all of the world’s major cities.

www.citeecar.comwww.mangrove-vc.com

wHy do you tHInk ProJeCts wHICH are CHanGInG tHe PlaCe Cars tradItIonally Have In towns are FlourIsHInG?citeecar and Metrocab are a response to the current major trends we are seeing in the automobile industry. The first phenomenon is that more and more people are living in towns. in fact, 50% of the population live in towns today, with the figure set to rise to 60% within 10 years. a knock-on effect is the pressure this is putting on the environment. Mayors are struggling to limit pollution in their towns. There are 500 vehicles to every 1,000 inhabitants here in Europe, compared with 30 in china and 9 in india. The final point is the drain on our time. in Europe, the equivalent of €80 billion is wasted in traffic jams.

tHe CIteeCar ConCePt Has reCently Been launCHed In BerlIn. Can you exPlaIn wHat It’s all aBout?citeecar aims to reduce traffic jams by enabling people to rent a car. a “host” receives a car for free and provides a park-ing space. in return, they promise to lend the vehicle for a certain number of hours per day. For users, the subscription costs barely €5 per month, and the rental cost is €1 per hour plus €0.2 per kilometre. The car can be opened using a card, and is always returned to the same place. The system is self-

Case study

metroCaB and CIteeCar:

vEhIcLEs of chANgE!

Jean-Marc Gales, CEO of the Clepa Association of European Automotive Suppliers

Metrocab.

Citeecar.

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DraFT BiLL 6471 noT onLy ProPoSES To iMPLEMEnT aiFMD inTo LuxEMBourg LaW, BuT aLSo To MoDErniSE iTS ParTnErSHiP LaW. LuxEMBourg THErEBy aDDS a FurTHEr TooL To iTS ProDucT oFFEring oF an aTTracTiVE FunD anD JoinT VEnTurE JuriSDicTion.

“Yes! LuxembouRg is open to paRtneRship”


luxemBourG:

oPen to PartnersHIP

wHat tHe reForm Is really aBoutThe Luxembourg partnership draft bill is less about innova-ting and much more about modernising the existing limited partnership legislation. The draft bill is further all about legal certainty.

tHe Common lImIted PartnersHIP (ClP)The draft bill reforms the existing Luxembourg limited par-tnership (société en commandite) regime. The basic principle is to confirm that this form of partnership benefits of a maxi-

Innovation

interests in a clp may be subdivided into units, but do not have to. classical partnership accounting permits to reflect the limited partners’ accrual of profits or losses from the limited partnership activity. The allocation of profits and losses is in accordance with what the limited partnership agreement provides (to allow, f.i., excused investors or default provisions to fully apply). Finally partnership interests may, pursuant to the draft bill, be more freely transferred than was the case so far if the limited partnership agreement so allows.

tHe sPeCIal lImIted PartnersHIP (slP)The draft bill then proposes what is probably the biggest innovation in the draft bill: a partnership without legal perso-nality. The reason to have such slp is that in a lot of jurisdic-tions partnerships do not have legal personality and certain regulatory, tax and/or legal conclusions are derived there

from. The draft bill proposes a much more flexible and confi-dential reporting of financial information for the clp than for the slp. all other rules briefly described for the clp equally apply to the slp.

tHe PartnersHIP lImIted By sHares (sCa) While the accent is clearly put on reforming the limited par-tnership legislation, the draft bill proposes for partnerships limited by shares to replicate the management structure for limited partnerships.

* Partner corporate Law, Mergers & acquisitions, arendt & Medernach

mum level of contractual freedom. only the voluntary or invo-luntary omission of rules on certain items will be regulated by default provisions. otherwise the partners’ joint intent prevails.other important features are: The liability of the limited par-tners remains limited to their contribution to the partnership, even if they do participate in the internal consultation or, even, decision making process through advisory committees or other. a clp may be managed by specially appointed mana-gers who are not necessarily general partners as well.

Laurent Schummer,LPEA Member*

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Interview

THE METaPHor “rEguLaTory TSunaMi” HaS oFTEn BEEn uSED WHEn coMMEnTing on THE arriVaL oF aiFMD anD oTHEr rEguLaTory iniTiaTiVES, BuT, unLiKE THE MaSSiVE WaVE, THESE rEguLaTionS HaVE no inTEnTion oF rEcEDing.


with the aiFMD Directive. Luxembourg has adopted a pro-active approach to implementation. The transposition law is on the table and is expected to be adopted in the coming three months. The cSSF (as the financial industry supervi-sory authority) has a long-standing experience in product supervision and has geared up to embrace the arrival of aiFMs seeking approval.Finally, Luxembourg has recognized the need to separate the uciTS world from Private Equity. as a case in point, servicing the needs of the Private Equity industry does not require a banking license. The status of a (specialized) professional service provider has been created and service firms are cur-rently implementing their offerings.

level PlayInG FIeldLuxembourg has developed tremendous expertise in Private Equity over the past decade. The presence of a large number of international players is only one of many indicators attes-ting to this.Luxembourg’s reputation of stability in terms of politics, law and tax, has contributed to this considerably. This being said there is little room for complacency. Promoters have alternatives as aiFMD is being implemented across Europe and other finan-cials centers are gearing up at similar speed. Leveraging its uciTS expertise, maintaining its attributes of stability and flexi-bility, combined with building the industry specific execution capabilities is a widely shared commitment in Luxembourg to establish a leading position as Europe’s onshore domicile of choice for Private Equity.

* co-Founder and Managing Partner, Mangrove capital Partners

While, as a practitioner, i still grapple with the tangible benefits that aiFMD seeks to achieve, its implementation is a manageable task and the structural and financial impact, while not negligible, is not going to be unsur-

mountable. a more pervasive threat to the industry at large, however, could be regulatory initiatives that potentially curtail the availability of capital from, and the deployment of capital within Europe for start-up and growth investments. not something that i believe Europe can afford in times of economic contraction and financial turmoil that still lay ahead of us.

HIstorIC assetsMore stringent regulations are set to change the private equity environment worldwide, and Luxembourg has all the right assets to take advantage of this situation. Journalists often ask whether Luxembourg will repeat the same success with the aiFMD that it had with uciTS iV. in fact, there is one major difference between the two. uciTS iV primarily protects the investor from himself, whe-reas the aiFMD is aimed at professionals. Private Equity is an asset class with limited liquidity and is more complex than uciTS, which automatically rules out any form of ‘industrialization’. That being said, Luxembourg has extensive experience in a regulated context. Since the advent of the risk capital investment company (Sicar) in 2004, the country has been building up know-how in Private Equity. For a long time, it was the only country requiring the use of a custodian. The complete infrastructure is already in place.

towards a PrIvate equIty FsPWith the implementation deadline of July 2013 approaching fast, investors should soon demand that aiFMs fully comply

Hans-Jürgen Schmitz,LPEA Chairman*

“skYpe is a pRime exampLe of the

success of pRivate equitY in

LuxembouRg”

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PrIvate equIty In luxemBourG:ThREE sTEPs AhEAD


Cover story

Invest IndustrIal:

turnInG duCatI

around

© D

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Cover story

WHEn inVEST inDuSTriaL inVESTED in DucaTi, iT WaS on THE VErgE oF BanKruPTcy. Six yEarS LaTEr, THE FirM WaS SoLD To auDi WiTH MorE THan DouBLE THE MarKET SHarE anD roaring ProFiTS. inVEST inDuSTriaL’S carL naucKHoFF ExPLainS HoW THE iconic MoTorcycLE MarquE WaS TranSForMED.


tional capital and industrial solutions to enable the company to really do what it ought be doing – developing fantastic premium motorbikes through a powerful r&D department. Most of the time our industrial approach delivers real progress. it is very rare that we have to cut costs or jobs. The final step involved speeding up the internationalisation of the company. When we invested, there was only one man-ufacturing facility, in Bologna. now there is a second plant in Thailand and a third in Brazil. We also expanded the dealer network in asia. wHat Is duCatI’s sItuatIon today?The company produced around 42,000 motorbikes in 2011, of which 80 per cent were sold overseas. asia in particular is a highly promising market where sales are growing at a fast pace. During our ownership, EBiTDa quadrupled to 19.7% of turnover in 2011. We are always trying to acquire business that happen to be located in italy or Spain but have a global potential. gucci, Prada and Versace are great brands as well as ambassadors for italy! But investors like us need the right project: a mature company with a proven brand and identifiable problems such as management fail-ures, weak r&D or ineffective retail marketing. and Ducati is now back on the right track.

wHen dId Invest IndustrIal Get Involved wItH duCatI?We invested in two steps. in 2006, we acquired 30 per cent less one share, in order to get into the company with a large enough stake to control its future strategy. at that time, the company was publicly listed and was in a weak financial state. Two years later, after confirming our key assumptions, we took the company private. Looking back, it was the right moment, given how markets were doing at that time. you sold duCatI to audI In 2012 For €860m. How dId Invest IndustrIal turn duCatI around?We did what we always do – adopt an industrially-driven approach. First we strengthened the management by appointing a new cEo and executive team, which is very important if you want the company to be able to grow. More experienced people are capable not only of taking the right decisions but of implementing them. We happen to have a deep bench of managers we have worked with over the past 20 years. For example, they teamed up with Porsche consulting, because we thought their experience in the SuV market had parallels with the cruiser market Ducati was trying to develop. in a second step, we provided addi-

Invest IndustrIal:turnInG duCatI around

“peRfoRmance is uLtimateLY about haRD woRk!”caRL nauckhoff

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THE EuroPEan coMMiSSion caME uP THiS yEar WiTH a SPEciaL cHriSTMaS giFT: THE So Long aWaiTED LEVEL 2 iMPLEMEnTing MEaSurES For THE aiFM DirEcTiVE; aS a cHErry on THE caKE, THE ESMa rELEaSED THaT VEry SaME Day TWo conSuLTaTion PaPErS on THE TyPES oF aiFMS anD on THE KEy concEPTS uSED in THE DirEcTiVE.


tHe roleof PRofEssIoNAL AssocIATIoNs

l2 released wItH ImPortant ClarIFICatIons For Pe wHat tHe reForm Is really aBoutThe L2 implementing measures brings clarifications on the following important topics for PE: how to calculate assets under management to benefit from the de minimis exemp-tion threshold; how to treat exposure that exists at the level of any financial or legal structures involving third parties controlled by the aiF and how to deal with temporary bor-rowing arrangements (such as bridge financing); operating conditions and in particular due diligence requirements when investing in target companies, risk management, or

regulatory

avoid assessing the ‘substance’ of the delegated activities as compared to those retained by the aiFM on a quantita-tive basis only.

wHICH remInds us oF tHe key role oF ProFessIonal assoCIatIonsThe engagement of a professional association such as LPEa is key to represent our industry and advocate for a pragmatic interpretation. Let’s be clear, the idea is by no way to circumvent the aiFM Directive and in particular its sub-stance-strengthening approach. The idea is to help regula-tors to come up with a workable interpretation, meaning an

approach creating value and growth. in doing so, Private Equity professional associations, first of course the EVca but also national associations such as LPEa are fully sup-porting the Eu commission’s agenda to create growth into Europe.

* alain Kinsch is country Managing Partner at Ernst & young Luxembourg and EMEia Private Equity Fund Leader at Ernst & young

axelle Ferey is Director, Private Equity at Ernst & young, Luxembourg

transparency (with a reporting to regulator required only annually for PE under conditions).

However, a real marGIn For InterPretatIon remaIns on key toPICsHowever, on other topics, such as delegation, the text leaves significant room for interpretation. as it stands now, the article 82 on the Letter Box entity does not fully clarify to what extent an aiFM may delegate portfolio and/or risk management without being deemed a letter box. art 82 mainly contributes to the debate a set of qualitative criteria which regulators are required to take into account so as to

PlayInG tHe aIFmmusIC In tHe rIGHt tone:

Alain Kinsch LPEA Vice-Chairman

and Axelle Ferey, LPEA Member*

“pRivate equitY pRofessionaL

associations aRe fuLLY suppoRting the eu

commission’s agenDa to cReate gRowth

into euRope.”

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tax

LuxEMBourg HaS BEEn WELL KnoWn, For Many yEarS noW, aS onE oF THE LEaDing LocaTionS For STrucTuring PriVaTE EquiTy inVESTMEnTS in THE EuroPEan union. onE oF THE Main FacTorS conTriBuTing To THiS SuccESS iS cErTainLy THE BuSinESS FriEnDLy anD FLExiBLE LuxEMBourg Tax EnVironMEnT.


PrIvate equIty In luxemBourG:whAT AbouT ThE cuRRENT TAx ENvIRoNmENT?

Eur 1,500 applicable to financial companies (i.e., companies whose net assets consist of more than 90% of financial assets, transferable securities and cash at bank) has been increased to Eur 3,000 but is capped at Eur 20,000 for tax consolidated groups. Furthermore, a new minimum tax appli-cable to all other Luxembourg companies, ranging from Eur 500 to Eur 20,000 (depending on the total balance sheet of each company at the end of the fiscal year), applies from January 2013. This minimum tax can however be deducted from the corporate income tax liability of the coming years and should not be applicable in a double tax treaty context (provided that the right to tax is not granted to Luxembourg). given the relatively low amount of this tax and the fact that treaty protection will be available in many situations (in parti-cular with respect to private equity real estate investments structured through Luxembourg property companies), one can expect that the changes brought by the finance law should have limited adverse tax consequences in most cases.

a PosItIve outlook: tHe luxemBourG lImIted PartnersHIPHaving said that, Luxembourg is also in the course of adopting new tax measures which will be of significant importance for the private equity industry. Luxembourg is indeed in the pro-cess of implementing the alternative investment fund mana-gers directive (aiFMD) into Luxembourg domestic law. The bill which is currently under review for adoption by the Luxembourg parliament, contains specific tax provisions applicable to limi-ted partnerships and to carried interest which should create a favourable tax framework for structuring private equity

Luxembourg indeed offers a large number of diffe-rent types of vehicles, either regulated or not, which, combined to a large double tax treaty network and the favourable Luxembourg participation exemp-tion regime and/or other specific tax regimes,

contributes to creating a competitive tax framework suitable to the needs of most of the private equity players.

a CHallenGInG envIronment: InternatIonal Pressure and PuBlIC deFICIts In luxemBourGHowever, like many countries, Luxembourg is now facing many challenges, among them an ongoing financial turmoil as well as increasing pressure from the international scene promo-ting a global tax harmonisation and challenging more and more tax planning strategies. any such tax planning should thus reflect the commercial substance of a group’s operations and be in line with the arm’s length principle. Having an ade-quate level of substance and carrying out genuine economic activities in Luxembourg are thus key factors in the success of any tax planning strategy. These issues relating to tax plan-ning are unlikely to go away while countries have their own tax systems. in this context, the Luxembourg government had to adopt a finance law for 2013 that accommodates the needs for an increase in tax revenues and a reduction of the public deficit. one of the main measures that affects all corporations, inclu-ding those active in the private equity sector, are the changes brought to the minimum taxation levied on all Luxembourg companies as from 2013. in a nutshell, the minimum tax of

Patrick Mischo, LPEA Member*

Long version

investments via Luxembourg.From a legal point of view, the bill will result in the improvement of the existing Luxembourg limited partnership regime (i.e., the «ScS» having legal personality) and in the setting-up of a new type of limited partnership, the so-called special limited par-tnership (i.e. the «ScSp» not having legal personality). From a direct tax perspective, Luxembourg limited partnerships are in principle tax transparent from a tax perspective, but they may still be subject to Luxembourg municipal business tax in certain cases, should they perform or be deemed to perform a commercial activity in Luxembourg. This taxation was clearly proving to be an obstacle to the attractiveness of this type of vehicle for international investors. The bill undertakes to modify the conditions according to which an (unregulated) limited partnership can be subject to Luxembourg municipal business tax (on a deemed commercial activity basis). as a consequence, it will be possible under the new tax framework to structure private equity funds organised as a limited par-tnership in total tax neutrality. From a foreign tax perspective, the availability of a limited partnership without legal persona-lity should allow full tax transparency, which is often highly relevant for investors into private equity funds. This reform should thus put Luxembourg on an equal footing with anglo-Saxon limited partnerships, which is most welcome as the main international model for private equity funds is traditio-nally a limited partnership.

a sPeCIal tax reGIme For CarrIed InterestThe bill also introduces some specific provisions relating to

the tax treatment of the carried interest paid to the managers of an aiF. it is indeed foreseen that the carried interest paid to individuals who are employed by managers (or by manage-ment companies) of aiFs, may be subject to tax at a reduced rate (equal to a quarter of the global rate, i.e. approximately 10%). This favourable tax regime is however only available if a certain number of conditions are met and notably under the condition that the individual (i) was not previously tax resident (or subject to tax) in Luxembourg during the five years pre-ceding the entry into force of the law and (ii) becomes a Luxembourg tax resident during the year of entry into force of the law or during the next five years. although the various conditions provided for under the bill are too strict in terms of limitation in time and not always fully compatible with the pri-vate equity operating model, the introduction of a specific carried interest tax regime as such is a positive signal for the private equity industry as it demonstrates the willingness of the Luxembourg tax authorities to create a favourable and competitive tax framework in order to attract private equity market players to Luxembourg. LPEa will certainly continue its lobbying efforts with the aim of obtaining relevant adjust-ments of the conditions provided for by the bill to ensure that the contemplated tax regime will become attractive to the private equity sector.all put together, this shows that, despite a challenging envi-ronment, Luxembourg continues to improve its tax framework to remain attractive to the private equity industry.

* Partner, allen & overy Luxembourg

Profile

20 – capitalV – #1

aDVEnT VEnTurE ParTnErS iS onE oF EuroPE’S BEST ESTaBLiSHED groWTH anD VEnTurE caPiTaL FirMS WiTH a Long ExPEriEncE in LiFE SciEncES. THE aDVEnT LiFE SciEncES FunD i (aLSF i) iS THE 5TH FunD ESTaBLiSHED By aDVEnT VEnTurE ParTnErS anD ExcLuSiVELy DEDicaTED To LiFE SciEncES.

advent venture Partners – lIFe sCIenCes’ venture:ouR coRE AcTIvITy

acquired by amgen and algeta (oSE: aLgETa), an oncology company developing treatments for bone metastases and disseminated tumours.

wHat Is your Investment Plan For tHe Future, also on tHe luxemBurGIsH’s market?aLSF i is a £101m fund which started to invest in February 2011. up to date, 9 investments have been made. The fund targets around 15 investments, 70% of the investments taking place in Europe. in line with the Luxembourg government’s initiative to promote the health technologies sector, Société nationale de crédit et d’investissement (Snci) decided to invest into aLSF i in order to strengthen the overall health technologies action plan established and presented by the government in 2007.aLSF i will investigate potential investments opportunities in Luxembourg, as well as it will leverage on the network and the experience of its partners to support the development of the Life Sciences ecosystem locally.

* MD Venture Partner

wHat are your maIn areas oF aCtIvIty?advent Life Sciences invests predominantly in early-stage and growth equity life sciences companies in the uK, Europe and the uS. it will back companies that have a first- or best-in-class approach in a range of sectors within the life sciences sector, including new drug discovery, enabling technologies, med-tech and diagnostics.

Can you tell more aBout tHe kInd oF Invest-ments you are dealInG wItH?advent Life Sciences is a leader in European life sciences venture capital. its investments include: PowderMed, a therapeutic Dna vaccine company sold to Pfizer; Thiakis, an obesity treatment company acquired by Wyeth Pharmaceuticals; respivert, a drug discovery company focused on respiratory diseases that was acquired by Johnson & Johnson; EuSa Pharma, a transatlantic special-ity pharmaceutical company acquired by Jazz Pharmaceuticals; avila Therapeutics, a biotechnology com-pany developing targeted covalent drugs acquired by celgene corporation, Micromet, a biotechnology company

AUDIT - TAX - ADVISORY

Turning Complexity into Opportunity

kpmg.lu

Watch KPMG TV on www.kpmg.lu/tv

© 2013 KPMG Luxembourg S.à r.l., a Luxembourg private limited company, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Alain Huriez*

Focus

THE counciL oF THE EuroPEan union PuBLiSHED an aMEnDED ProPoSaL For a rEguLaTion on EuroPEan VEnTurE caPiTaL FunDS (“VcF”) on 7 DEcEMBEr 2012 (THE “rEguLaTion”).

tHe euveCa laBelNEw oPPoRTuNITIEs AhEAD foR vENTuRE cAPITAL AND LuxEmbouRg

development of its fast- growing venture capital industry. investment companies in risk capital (“Sicar”) and special-ised investment funds (“SiF”) will be put in a competitive position to raise monies within an investor base composed of professional clients and other investors who commit to invest a minimum of Eur 100,000. The new Luxembourg Special Limited Partnership (“SLP”, société en commandite spéciale) introduced in the Luxembourg bill of law transpos-ing the aiFMD will also constitute a flexible alternative to the above regulated structures.

The regulation appears as a solid opportunity (i) to promote venture capital across the European union and (ii) for Luxembourg to establish its fast- growing venture capital industry as one of the best jurisdictions to take advantage of its different legal structures and its long and well-recog-nised experience in dealing with cross-border distribution.

1. under certain specific conditions, including tax reporting policies of

the third country.

* counsel, Elvinger Hoss & Prussen

1. PurPose oF tHe reGulatIonThe purpose of the regulation is to facilitate the access of small and medium-sized enterprises (“SMEs”) to financing, in order to stimulate their growth and sustainable develop-ment. it is addressed to Eu venture capital fund managers (“VcFM”), which are subject to the registration procedure under the aiFMD and whose assets under management do not exceed Eur 500 million in total. VcFM willing to use and distribute non-leveraged European VcF across the European union will be conducting their activities by using the designation “EuVEca”.

2. requIrements IntroduCed By tHe reGulatIonThe regulation also introduces requirements at the level of the VcF such as the composition of its investment portfolio, investment techniques and eligible undertakings. The use by a VcFM of the designation EuVEca shall be limited to the management of European VcF that invest at least 70% of their capital contributions and uncalled committed capi-tal in equity and/or quasi-equity issued by one or several European and third country1 non-listed undertakings whose annual turnover or balance sheet does not exceed Eur 50 million or Eur 43 million, respectively.

3. luxemBourG’s PersPeCtIvesThe regulation will permit Luxembourg to continue the

Xavier Le Sourne,LPEA Member*

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member of EVCa, LpEa, aLFI


Gaming

kaBam: PAvINg ThE wAy foR A DIgITAL fuTuRE

the required audience but also to indicate their passion for providing the ultimate free-to-play gaming experience. Kabam have launched extensive research into the whos and whys of social networks, highlighting the outmoded stere-otype of the social platform game player and focused on the rise of a rapidly growing segment – the hardcore social gamer.

soCIal networks key to GloBal PresenCeit’s an industry wide fact that gamers are migrating their playing time, and the currency they spend, to social games at the expense of traditional gaming platforms. Today, as a leading developer of free-to-play online games that combine deep, immersive gameplay with the connectivity and inter-action benefits of social networks, Kabam is leading the charge of a new wave of games. With this in mind, Kabam are serious when they say they are offering a very real chal-lenge to the xbox 360® system, PlayStation® 3 and nintendo Wii™. First Europe, then the world!

dIGItal means For CommunICatIon metHodsKabam, founded in 2006 developed social network applica-tions, and spotting a gap in the market, shifted direction, becoming one of the first developers on Facebook, creating sports and entertainment communities. The results saw app installations top 60 million. What better in-built audience is there than those already logged onto social networking plat-forms? Kabam aim to maximize Massively Multiplayer online (MMo) games and create a unique experience for ‘hardcore’ gamers - those who know what they want and how they want it. Tailoring challenges for this niche group is no mean feat and adaptation is key to survival. Kabam has offices in San Francisco and redwood city, california, Beijing, china, and now Luxembourg. With seven games on the market, and a growing team (400 and counting), the only way is up.

GaInInG tHe aCCess to maxImIze tHe ramKabam’s soundbite is ‘We play, for real’. The double meaning speaks volumes for both the ability to identify and target

arguaBLy onE oF THE MoST LucraTiVE inDuSTriES in EnTErTainMEnT, THE gaMES inDuSTry iS a TougH nuT To cracK. KaBaM noW HaVE an Hq in LuxEMBourg, anD arE PoiSED To cLiMB To THE VEry SuMMiT oF THiS DigiTaL DoMain. HoW? By cornEring THE SociaL nETWorK’S gaMES MarKET.


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Create value in private equity.

Private equity is not immune to micro-economic uncertainties that cloud the horizon, but has demonstrated to withstand shocks, while bringing private equity investors with more entrepreneurial mindset to working with their portfolio companies.

For more than 20 years, Luxembourg has established itself as a major hub in the private equity industry, while attracting private equity houses from all over the world, to structure private equity transactions or regulated private equity funds.

Find out how Ernst & Young Luxembourg comprising of more than 100 professionals fully dedicated to Private Equity can help you add value in your business at ey.com/luxembourg.

Alain Kinsch EMEIA Private Equity Fund leaderErnst & [email protected]

Olivier Coekelbergs Luxembourg Private Equity LeaderErnst & [email protected]

PHIlHarmonIe luxemBourG: souNDs PERfEcT!

concert room. it doesn’t stop there, however: the concert hall is truly open to all types of music. There is also space for lively, demanding jazz, world music and contemporary music. Such a blend of tradition and modernity is not surprising, not in Luxembourg.

at tHe Crossroads oF a PromIsInG Future To justify its status as a European capital, Luxembourg needed a concert hall to match its reputation. However, as the project was part of a long-term policy, an important place has been given to the most demanding of audiences – children. Teaching children to love music is a major educational undertaking. Everyone is capable of appreciating a symphony, but to under-stand it, appropriate it and really feel it requires a finer, more nuanced approach. your ears need to be educated, in the same that you educate your tastebuds. From “1-2-3 music” for the very youngest to “iPhil” for 13-17 year olds, there is a complete range of concerts in French, german or Luxembourgish to introduce children to the wonders of the most beautiful melo-dies in music and make them part of their lives – and their MP3 players.

make tHe sPaCe vIBrateThe Philharmonie Luxembourg, also known as the grande-Duchesse Joséphine-charlotte concert hall, is located in the heart of a lively district and is a musical temple vibrating with a myriad of notes, magnificent melodies and surprising rhythms. Designed by the French architect christian de Portzamparc, who has built a number of prestigious concert halls, the Philharmonie’s design represents a natural filter into the world of music. Lines of columns, like tight strings, separate the exte-riors of the various halls with their finely worked acoustics, which can be adjusted to suit the artists performing there. a total of nearly 193,000 square metres of art, finesse and pas-sion, which will amaze concertgoers at every performance.

oPen to tHe world The Philharmonie programme can be accurately summed up in one word: eclectic. With over 400 concerts per year, more than one a day, it hosts the most prestigious orchestras in the world, from London, Saint-Petersburg or Vienna, along with the no less prestigious Luxembourg Philharmonic orchestra, and wel-comes the biggest names in chamber music to a dedicated

SiTuaTED in THE cEnTrE oF THE KircHBErg BuiLDingS, THE PHiLHarMoniE LuxEMBourg iS a SuBLiME concErT HaLL WHErE you can HEar THE MoST BEauTiFuL MuSic in THE WorLD.


Culture

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social clubs


networkInG IN LuxEmbouRg

soCIal CluBsCercle Munster: www.munster.luGolf Club Grand Ducal: www.gcgd.lu

servICe CluBsRotary: www.rotary-interclub.luLions Club: www.lions.luRound Table: www.trl.luJCI: www.jci.luKiwanis: www.kiwanis.lu

sPortsPolo Club: www.poloclub.luTennis clubs: www.scheiss.lu, www.tennisspora.luGolf Clubs: www.golfdeluxembourg.lu,www.kikuoka.lu, www.golfclervaux.lu, www.golfgaichel.com, www.golfclubchristnach.luFitness: www.justmove.lu, www.coque.luYacht Club: www.mycl.luPool: www.q42.lu

CHamBers oF CommerCeChamber of Commerce of Luxembourg: www.cc.luAmerican Chamber of Commerce: www.amcham.luItalian Chamber of Commerce: www.ccil.luFrench Chamber of Commerce: www.cfci.lu

British Chamber of Commerce: www.bcc.luIndian Chamber of Commerce: www.ibcl.luNordic countries: www.nobelux.se

ProFessIonal assoCIatIonsBanks: www.abbl.luInvestment Funds: www.alfi.luPrivate Equity: www.lpea.luIndustry and Trade: www.fedil.lu

otHer BusIness lInksEntrepreneurs Task Force: www.etfl.luLuxinnovation: www.luxinnovation.luIncubator: www.technoport.luRegulator: www.cssf.luResearch: www.tudor.luGovernment: www.gouvernement.lu

otHer weBsItesFormalities: www.guichet.luSchools: www.euroschool.lu, www.islux.lu,www.st-georges.lu, www.vauban.lu, www.empf.luFoundations: fdlux.luTourism: www.visitluxembourg.comAutomobile Club: www.acl.lu

© 2013 PricewaterhouseCoopers, Société coopérative. All rights reserved.

www.pwc.lu/private-equity

Luxembourg in the race for implementing AIFMD and becoming a leading Private Equity and Alternative Funds centre

Your contacts

John Parkhouse, European Asset Management Leader+352 49 48 48 [email protected] Prime, Luxembourg Asset Management Leader+352 49 48 48 [email protected] Lebrun, Private Equity Industry Leader +352 49 48 48 [email protected] Malcourant, Hedge Funds Industry Leader +352 49 48 48 [email protected] Evrard, Real Estate Industry Leader +352 49 48 48 [email protected] Roussel, Luxembourg AIFMD Leader +352 49 48 48 [email protected]

Increasing demand for transparency and trust

Evolving tax environment

More stringent regulations and higher standards

Risk management & operational failures

To help navigating through these challenges, PwC Luxembourg Alternative Group serves 70 of the top 100 asset managers around the world and is a trusted business adviser to investment managers, distributors and other sponsors of alternative investment products.

Join our Alternative Investments community and do not miss our next event:

• Private Equity Forum 27 June 2013

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lPea in Brief


aBout lPea

exeCutIve CommIttee

teCHnICal CommIttee leaders

T he Luxembourg Private Equity and Venture capital association (LPEa) is a member-based, non-profit trade association established in 2010. LPEa represents, promotes and protects the interests of the Luxembourg private equity and venture capital industry.

LPEa’s role includes representing the interests of the industry to regulators and standard setters; developing professional standards; providing industry research; professional development and forums, facilitating interaction between its members and key industry participants including institutional investors, entrepreneurs, policymakers and academics. LPEa’s activities cover the whole range of private equity, from venture capital (seed, start-up and development capital), to buyouts and buyins.

LPEa is a member of the European Private Equity and Venture capital association (EVca).

Hans-Jürgen Schmitzchairman

Legal & Regulatory committee: Séverine Michel, Cintia Martins CostaTax committee: Patrick MischoAImfD committee: Hans-Jürgen Schmitz, Paul JunckAccounting & valuation committee: Benoît Cheron, Yves Courtoismarket Intelligence & Training committee: Fiona Monsen, Axelle FereyPromotion committee: Bertrand Manhe, Benjamin Lam

Alain Kinschvice-chairman

Antoine Clauzelmember

Patrick Mischomember

Emanuela Brerovice-chairman

Paul Junckmanaging Director

Gilles Dusemonmember

Jérôme Wittamermember

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