European institutional investors are increasingly interested in emerging market managers and strategies. Pension funds and alternative asset allocators are widening their reach, creating opportunities for managers from Israel, the Middle East, India and other high-growth regions. Luxembourg stands out as a preferred route for accessing this capital, offering the credibility, flexibility and infrastructure that appeal to global investors.
Why Luxembourg is a strategic hub
Luxembourg combines a trusted regulatory environment with adaptable fund structuring options and a global reputation as a leading cross-border fund domicile. Its position in the EU gives managers access to a broad investor base, while its legislative framework, backed by European law, inspires confidence among institutional allocators.
Fund structuring flexibility allows managers to choose from a range of vehicles to match their investment strategy, investor profile and tax requirements. This adaptability supports everything from traditional private equity funds to more specialised alternative strategies. Coupled with an established reputation for quality and investor protection, Luxembourg remains a first-choice jurisdiction for serious capital raising.
Expert guidance for complex requirements
While Luxembourg offers opportunity, it also has technical requirements that can be difficult to manage without local insight. Regulatory expectations, tax implications and substance rules require precise handling. Experienced partners can help managers meet these obligations efficiently, reducing the risk of delays or non-compliance.
Our services in Luxembourg
We provide a complete range of fund solutions to help managers establish and operate successfully in Luxembourg:
- Fund administration: Comprehensive back and middle office services to support operations from launch onwards
- Banking services: Cash management, investor transactions and other banking needs
- Management companies (FundRock and FundRock LIS): Regulatory hosting and provision of substance within Luxembourg
- Distribution services: Access to European investor networks and market coverage
- Experience with emerging markets: A proven track record working with managers from Israel, the Middle East, India and other high-growth regions
Steps to set up a fund in Luxembourg
Establishing a fund involves a series of defined steps. These include assessing internal readiness, such as aligning governance structures and operational processes with European standards. Before launching, managers benefit from testing investor appetite through pre-marketing, which can help refine the fund proposition.
The choice of fund vehicle and regulatory regime is critical. Common options include GP/LP structures and investment companies in variable capital form, known as SICAVs, often under the Reserved Alternative Investment Fund (“RAIF”) law, each with different compliance, tax, and operational implications. Understanding carried interest treatment, VAT considerations, and cross-border tax exposure is vital at this stage.
“Luxembourg is often seen only as a high-cost jurisdiction, without considering the governance premium compared to offshore jurisdictions, which makes EU investors more comfortable with a setup.” – Dominik Becker, Strategic Head of Sales, Continental Europe
Finally, appointing experienced service providers ensures smooth execution and ongoing compliance, allowing managers to focus on investment activities rather than operational hurdles.
Raising capital – strategies that deliver results
A strong structure alone will not secure commitments. European investors expect evidence of local presence, ESG integration and operational transparency. KYC and AML requirements are non-negotiable. ESG alignment is particularly important, with investors increasingly screening opportunities against environmental, social and governance criteria.
“EU investors want ESG alignment and local substance, not just offshore structures.” - Dr. Bhaskar Dasgupta, Head of Strategic Development, MEA
Managers who succeed in raising capital often demonstrate consistent performance, present a clear value proposition, and maintain open communication with prospective investors. A track record of working with institutional partners can help build credibility.
Success stories from emerging markets
“Fund managers from Israel, the Middle East, and India have leveraged Luxembourg structures to attract European institutional capital.” – Shmuel Menahem, Head of Israel
In each case, their success was supported by:
- Selecting the most suitable fund vehicle for their strategy
- Building relationships with service providers who understand both their home market and European investor expectations
- Showing a genuine long-term commitment to the European market
- Integrating ESG principles into their investment approach
- These examples show that, with the right preparation and support, managers from high-growth regions can compete effectively for European allocations.
The bigger picture
Luxembourg offers more than just a place to domicile a fund. For managers willing to meet its standards, it provides access to a sophisticated investor base, long-term capital opportunities and a stronger international profile. Its blend of regulatory assurance, structuring flexibility and global reputation make it a strategic hub for those seeking to expand into Europe.
Watch the webinar on-demand
Complete the form to watch our on-demand webinar, Gateway to European capital through Luxembourg, and discover how Middle Eastern fund managers are securing European institutional investment through Luxembourg structures.
For practical guidance on establishing in Luxembourg and proven strategies for raising European capital, contact our teams in London, Luxembourg, Tel Aviv, Dubai, or Mumbai.
