PE/VC, a generic expression that groups together investments in unlisted companies, has been on the rise over the past decade. Rajaa Mekouar-Schneider, who, in September 2019, became CEO of the LPEA after having been its chairwoman, vows to build on this positive momentum.
LUXEMBOURG AS AN INTERNATIONAL HUB
Above all, the CEO of the LPEA intends to make Luxembourg even better known among foreign investors.
The very varied nature of the industry, which implicates fund managers as well as family offices, private banks, pension funds or the wealthy themselves, means it must succeed in attracting the attention of as many stakeholders as possible.
That said, the Grand Duchy already appears to be an essential hub for all financial operators who wish to domicile an investment fund dedicated to private equity in Europe. “Our financial industry is one of the few that are by nature and design outward looking. “Obviously, the factors that explain the success of Luxembourg as a financial centre in general also apply to the success of the PE/VC sector: the country is stable from a macro-economic and a political point of view. To this list of advantages, I would add that the private and public spheres work hand in hand in Luxembourg.”
PE/VC consists in investing in the real economy, in businesses – from start-ups to large companies – that are supported with a long-term horizon and aligned interests amongst all stakeholders.
“In the PE sector, it always takes several years to reap the rewards of one’s work,” says Mekouar-Schneider. “When you invest in a PE/VC fund of this type, the overall investment horizon is 8-10 years, with your capital being returned over 5-6 years and profits being generated until the last investment is realised.”
MEETING THE SUSTAINABILITY CHALLENGE
Another element newer generations are far more sensitive is the sustainability of investments. “The impact of an investment on the natural or social environment is increasingly taken into account by new investors,” explains Mekouar- Schneider, who in addition to her position as CEO of the LPEA runs the PE/VC portfolio of a single family office. “Private equity is slowly getting up to speed with ESG criteria. One of our focus points is to describe how PE/VC contributes to long-term economic growth because it creates jobs and innovates constantly. It is about the real economy.”
By the same token, Mekouar- Schneider also wishes to support efforts to make the PE/VC more diverse. “It has been shown that the more diverse the teams, the more competent they are.” So, this is not just an ideological struggle, but an issue that ties in with business interests. To speed up this change the LPEA launched the ‘PE4W’ (private equity for women) initiative, which aims to make more women active in the sector.
All in all, the new LPEA slogan of ‘matching talent and money’ is very much coming to life as evidenced by the growing types of investors and practitioners who come to Luxembourg, with the end vision to boost Luxembourg’s role as a PE/VC hub within Europe and beyond.