Thomas Steiger and Serge Karp (VP Bank (Luxembourg) SA): Funds and infrastructure
Thomas Steiger and Serge Karp, CEO and Head of Fund Services respectively at VP Bank, anticipate sustained growth in the coming years, particularly in the 50-100 million euro funds segment. Interview.
How is VP Bank’s business evolving?
Thomas Steiger (TS): 2017 was very successful for investment funds, particularly for Private Equity (PE) and Real Estate (RE) assets. Our target of onboarding one fund per month was achieved. At times we are managing one fund request a week, so we need to be selective. We assess the size of the project, its quality, maturity and the experience of its founders. We act as a partner and sometimes adviser, helping to create the best conditions for success. Thanks to our experience, projects that are ready can be launched and others can be given the necessary time to mature. Fund initiators do not always understand everything that is involved, while the complexity of regulations generates costs that need to be anticipated.
“We act as a partner and adviser, helping to create the best conditions for success”
Do you provide any new solutions?
Serge Karp (SK): We launched a new high-growth asset class named “infrastructure” funds, which are similar to PE. PE invests in non-listed companies. Infrastructure funds, as the name indicates, invest in sectors such as solar energy, transport or hospitals, for example. This class generates regular income - for example electricity derivatives - and is often coupled with an environmental and social component. They are intended for pension funds, life assurance, Family Office and, at the end of the chain, private investors. Their appeal should increase even more in the future, particularly in Asia where emerging countries have significant modern infrastructure needs.
What are your firm's medium-term prospects?
SK: In the short-term, the future looks very positive. We get a lot of requests and growth should continue to be strong. Projects launched a few years ago are now maturing, and we are reaping the benefits.
TS: By recruiting experts we have been able to support and broaden this growth, establishing ourselves as a major player in the 50 to 100 million euro funds segment. Our clients are making their first steps in this segment and we are helping them grow. Several of them now passed the 200 million mark and the largest are now over 500 million. For example, nine years ago there was one fund which was on the borderline of viability - in 2017 it exceeded 100 million, and then 160 million only three months later! The 100 million bar is a trigger, offering increased visibility. Our positioning as a one-stop shop means our team can advise clients on everything they need to know about Luxembourg.
SK: The current regulation require costly resources, and PE/RE/Infrastructure funds cannot be standardised: investing in social housing in Germany is very different from roads in Malaysia. We provide all the necessary resources and skills for these diverse projects.