Luc Biren, head of fund services at Alter Domus in Luxembourg, explains why the Luxembourg-headquartered third-party administrator is attracting assets and people, which is good news for the Grand Duchy as much as it is for the firm.
Over the past two years, the alternative fund administration team at Alter Domus has expanded by 50%.
A driver of this recruitment has been the broad growth in alternative investments across Europe. Alter Domus is a third-party administrator that focuses purely on alternative investment vehicles, such as private equity, real estate,infrastructure and debt funds.
But the growth also comes at a time when Luxembourg – where Alter Domus is headquartered – has expanded its range of fund structures for alternative investment managers. Over the past years, the jurisdiction has introduced Limited Partnerships and Reserved Alternative Investment Funds, or RAIFs.
These type of funds represent the majority of new alternative investment funds newly launched in Luxembourg.
Luc Biren, head of fund services in Luxembourg at Alter Domus, says: “We can clearly see that the alternatives business is growing. This is the case in Luxembourg and in other areas of Europe, and certainly the bulk of our new business is split between these vehicles.”
But there is another reason why Alter Domus has attracted so many new people, says Biren, who joined the firm in March 2015. He believes people want to work there simply because of the business model – that is, the tight focus on alternative funds.
“Our business is specifically about alternative investment funds, such as private equity, real estate, infrastructure and debt funds. We do not do hedge funds and we don’t do UCITS funds.”
This specialism makes Alter Domus a “firm of experts working in a specialist field”, Biren says. This results in a deep look-through of fund activity, from the the investors’ level, through to special purpose vehicles, which is highly important for fund reporting in an age of increased regulatory scrutiny, and when clients are themselves under more pressure to report more transparently to underlying investors.
“Our business model means we are able to see below just the surface of the funds we service, right to the operating companies underneath the fund level. Our teams are vertically integrated which gives this depth of look-through and means clients can obtain what information they want from one point of contact.”
This is a differentiator for the firm, in contrast to bulge-bracket asset servicers, Biren says, where clients of these larger firms would have to deal with different departments for corporate secretary, accounts, tax and numerous other functions.
“The large asset servicers work at the fund level and probably do not have teams in house in Luxembourg to administrate at the level that we do. They are more focused on UCITS funds and that’s fine when they have to deal with a very high volume of transactions a day – they don’t need that level of depth. But the number of transactions in the alternatives universe is far lower and the sector has to be much more reactive.”
Biren expects that Luxembourg is and will continue to be a domicile of choice for alternative asset managers and investors in the years to come, thanks to its new fund structures.
“Luxembourg is still very much listening to the clients and their requirements. This is why we have new fund regimes here and there clearly is a trend of managers and promoters heading into these vehicles.”
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