Key Takeaways
- • As of late 2024, net assets from US promoters domiciled in Luxembourg exceeded €176 billion, according to EY, a figure that excludes unregulated vehicles and therefore understates total US manager exposure.
- • Per the Alternative Credit Council's Financing the Economy 2024 (sponsored by EY Luxembourg), the global private credit market reached US$3 trillion in 2024 and is projected to reach US$3.5 trillion by 2028, with Europe at roughly 30% of the market.
- • Direct lending accounts for 64% of Luxembourg private debt funds, and open-ended structures doubled to 26% of the market in 2024.
- • Luxembourg hosts about 60% of existing ELTIFs, and Part II UCIs represent 73% of the ELTIF market, supporting retail and professional distribution across the EU/EEA.
- • Over 90% of the top 30 global debt fund managers already operate in Luxembourg, according to EY, which cites the jurisdiction's service provider ecosystem as a key advantage for US managers.
Summary
Luxembourg is positioning itself as a central hub for alternative investments, with private debt the main driver of growth and US managers using the jurisdiction as a gateway to global investors. According to EY, net assets from US promoters domiciled in Luxembourg exceeded €176 billion as of late 2024. EY notes this figure excludes unregulated vehicles, for which public information is limited, so it likely understates total US exposure.
EY, citing the Alternative Credit Council's Financing the Economy 2024 report, which EY Luxembourg sponsored, says the global private credit market reached US$3 trillion in 2024 and is projected to grow to US$3.5 trillion by 2028. Europe accounts for about 30% of this market, with assets approaching US$500 billion, and is growing nearly twice as fast as the US segment. North America remains the largest and most mature market, roughly twice the size of Europe. Within Luxembourg, 64% of private debt funds follow direct lending strategies, while mezzanine and distressed debt each account for 13%. Open-ended structures doubled to 26% of the market in 2024.
EY attributes Luxembourg's growth to regulatory clarity, including earlier FAQ guidance from the competent authority that confirmed loan origination is a permissible AIF activity, ahead of AIFMD II. The jurisdiction is also the domicile of almost 60% of existing ELTIFs, and the ELTIF marketing passport allows distribution to retail investors as well as professionals. Part II UCIs, which require no minimum investment, make up 73% of the ELTIF market. Other vehicles include unregulated SCSp funds, RAIFs (which can be set up in roughly 4 to 6 weeks), and CSSF-approved SIFs aimed mainly at institutional investors. EY also highlights tax exemptions for UCIs, SIFs and RAIFs, more than 80 double tax treaties, and an AIFMD marketing passport covering EU/EEA markets.
EY says more than 90% of the top 30 global debt fund managers already operate in Luxembourg, and that a dense network of third-party AIFMs, administrators, depositaries and auditors supports governance and scalability. EY advises that success for US managers depends on investor alignment, regulatory foresight regarding AIFMD II and ESG requirements, and operational excellence within Luxembourg's ecosystem.
EY, citing the Alternative Credit Council's Financing the Economy 2024 report, which EY Luxembourg sponsored, says the global private credit market reached US$3 trillion in 2024 and is projected to grow to US$3.5 trillion by 2028. Europe accounts for about 30% of this market, with assets approaching US$500 billion, and is growing nearly twice as fast as the US segment. North America remains the largest and most mature market, roughly twice the size of Europe. Within Luxembourg, 64% of private debt funds follow direct lending strategies, while mezzanine and distressed debt each account for 13%. Open-ended structures doubled to 26% of the market in 2024.
EY attributes Luxembourg's growth to regulatory clarity, including earlier FAQ guidance from the competent authority that confirmed loan origination is a permissible AIF activity, ahead of AIFMD II. The jurisdiction is also the domicile of almost 60% of existing ELTIFs, and the ELTIF marketing passport allows distribution to retail investors as well as professionals. Part II UCIs, which require no minimum investment, make up 73% of the ELTIF market. Other vehicles include unregulated SCSp funds, RAIFs (which can be set up in roughly 4 to 6 weeks), and CSSF-approved SIFs aimed mainly at institutional investors. EY also highlights tax exemptions for UCIs, SIFs and RAIFs, more than 80 double tax treaties, and an AIFMD marketing passport covering EU/EEA markets.
EY says more than 90% of the top 30 global debt fund managers already operate in Luxembourg, and that a dense network of third-party AIFMs, administrators, depositaries and auditors supports governance and scalability. EY advises that success for US managers depends on investor alignment, regulatory foresight regarding AIFMD II and ESG requirements, and operational excellence within Luxembourg's ecosystem.
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