Daniel Siepmann (Credit Suisse Fund Services (Luxembourg): Investing in PE/RE as a driver of growth
Growth in private equity and real estate funds remains vigorous as clients continue to benefit from the strategy to make Luxembourg our EU fund services hub. We are fully committed to further scale up our PE/RE team, states Credit Suisse Fund Services (Luxembourg) CEO Daniel Siepmann.
What factors have driven the growth of your business over the past few years?
Seven years ago, we decided to make Luxembourg our European hub. Thanks to this choice, our clients fully benefit from our multi-domicile and multi-asset-class strategy with a unique one-stop-shop approach, this includes our management company, administration and depositary services which are available in Luxembourg, Ireland, and Switzerland. In terms of operations, our clients profit from the proximity of our services, i.e. availability of local expertise, which differentiates us in service delivery and quality vis-à-vis our competition. Over the past few years, we have attracted a significant number of third-party clients, which now account for the majority of funds we service. Our Luxembourg operation is also a hub for other fund domiciles within the group, enabling us to benefit from the increased scalability of our operations.
"We’ve been growing faster than the market for the past three years."
How do you assess the outlook for this year?
We have been growing faster than the market for the past three years, especially in third-party business across all asset classes. Growth in private equity and real estate business had been particularly strong over the past 18 months and will soon exceed 20% of our total assets under administration. As an example, we have just insourced a portfolio of Private Equity Funds from another market player with an expected volume above 2 bn CHF (including commitments). We also have a strong track record in other alternative asset classes, such as microfinance, senior loans and other private debt. Currently, more than a third of our fund portfolio is regulated under the AIFMD. We are very optimistic about our future growth, given our confirmed onboarding pipeline. The group has invested heavily in its private equity and real estate business over the past two years, recruiting key experienced people and implementing new business tools, and we have decided to offer portfolio management capabilities for real estate funds out of our Third-Party Management Company, Multiconcept Fund Management. These investments are already paying off and put us in a prime position for further growth in the future. We are fully committed to further scale up our Private Equity and Real Estate team and respective supervision and control functions.
What market developments do you forecast?
It will be interesting to see the impact of Brexit and interest rate hikes on our industry. UK-based asset managers are looking at a choice between three jurisdictions for post-Brexit activities in the EU, Luxembourg, Dublin and Frankfurt. We can offer two of the three options. We are already serving Irish clients through passporting services from our Luxembourg management company while we support fund administration there. Higher interest rates could lead to shifts between asset classes, but our broad capabilities enable us to implement a wide range of strategies that clients may choose to follow, involving either illiquid or liquid assets. By leveraging our capabilities throughout the group, including our strong real estate expertise in Switzerland, we should continue enjoy solid momentum in PE/RE business. Despite the complexity stemming from the new rules, the Luxembourg regulator has proven its pragmatism, enabling us to adopt a highly proactive and dynamic approach.