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Serge Krancenblum and Diana Senanayake (IQ-EQ): How Tiny Luxembourg Has Become a Giant Investment Hub 

As financial markets evolve, Luxembourg is positioning itself to make the most of its unique advantages. We sat down with Serge Krancenblum, Chairman of IQ-EQ, and Diana Senanayake, IQ-EQ’s Regional CEO for Continental Europe, to learn more.


A Hub for European Funds

According to Krancenblum and Senanayake, Luxembourg is well established as the EU’s premier financial centre. Expertise in the management, administration and cross-border distribution of both regulated and unregulated funds has built up the country’s reputation. “But what has made the real difference,” Krancenblum explains, “is that Luxembourg has taken a pragmatic, business-friendly approach to incorporating European and international regulations in its local law.”  These carefully crafted laws let asset managers raise money internationally with a single fund structure, rather than having to manage multiple investment vehicles for a multitude of jurisdictions.

“Luxembourg’s fund centre operates internationally, beyond Europe, and its flexible fund structures are recognised as market leading globally,” Senanayake adds. “Luxembourg for Finance reports that there are over 330 management companies, 600 registered AIFMs and 260 authorised AIFMs present in the jurisdiction. As IQ-EQ’s regional head for Continental Europe, I see first-hand the strategic importance of Luxembourg as a hub for this wider region and beyond. Indeed, Luxembourg is home to IQ-EQ’s global headquarters and we’re proud to be celebrating our 70thanniversary in the jurisdiction this year. Luxembourg has been a hugely supportive force in our growth over the years.”

Emerging Financial Trends

As a leading centre for investment funds, Luxembourg is moving quickly to respond to recent trends and regulatory changes. As the fundraising market has tightened, Luxembourg has proposed more sophisticated services and clarified rules on cross-border activities, allowing initiators to test the market before launching a fund.

But this isn’t the only trend that Krancenblum and Senanayake have their eye on. “Rising inflation and official interest rates have helped to bring private debt into the mainstream of investment classes,” Krancenblum says, “as investors seek to avoid the turbulence of public markets.” This asset class has grown steadily since 2018 and is expected to reach an all-time high of $2.3 trillion in 2027.

Hybrid funds, too, are becoming more common, providing greater flexibility and returns. “Managers need administrators to provide knowledgeable and thorough guidance when setting up a fund,” Senanayake says. “And with the rise of private debt and hybrid funds, structures are becoming more complicated and clients are expecting much more from their administrators, in terms of both expertise and technology.”

ELTIF 2.0 was also flagged as a game changer in the private markets, providing access to private wealth investors searching for yield through a regulated vehicle tailor-made for long-term, illiquid and real assets. “ELTIFs can represent a safer pathway for investors interested in private equity investments but present a lower risk profile than pure private equity funds. Platforms such as Moonfare and iCapital are playing a fundamental role in the democratisation of the private markets,” comments Senanayake.

“Luxembourg is a stable, safe pair of hands when it comes to economic management.”

Serge Krancenblum, IQ-EQ

A Hub for Family Funds

Alongside these changes, Luxembourg is becoming a hub for family offices. “Luxembourg has a unique regulated environment tailored towards multi-family offices,” Senanayake explains, “thanks to a 2012 law that ushered in comprehensive rules to ensure a high level of service and investor protection.” IQ-EQ is making use of the opportunity. “We decided to create our ‘Asset Owners’ service segment, which includes both private and institutional asset owners,” Krancenblum says. “In making this evolution, we’re bringing together two main types of wealth holder, recognising that family offices and institutional asset owners are more aligned than ever before.” As the financial market shifts and opportunities open up with both European and family funds, it seems like there’s never been a better time to run investments through Luxembourg.

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