“It’s not a problem for us to find people to work for us,” noted Laurent Hengesch, a founding partner at Ilavska Vuillermoz Capital. He is a rare bird in Luxembourg: a fund manager making investment decisions in the grand duchy. Most funds based in Luxembourg have their portfolio managers in major global financial capitals, with the operations here tending to provide the infrastructure to make these funds function.
Many in the local industry are keen to work at the sharp end of this business. After all, assessing projects and taking decisions about which to support is the stuff of TV shows. Hengesch’s fund supports projects as varied as financial technology, anti-drone intrusion systems and a green holiday resort. “There are no more than five firms in Luxembourg taking investment decisions here,” he said.
It’s a business that requires a lot of travel, with Ilavska Vuillermoz having bases in Prague and Berlin. But being located in Luxembourg gives them greater access to private and institutional investors located here. “It gives investors more comfort to work with people they know.”
Making it happen
While the attraction of this front office work is clear, this is not to downplay the sense of achievement to be gained from working to find solutions to bring investment strategies to life. “It is important that people are made aware how varied and interesting this work is,” said Jeffrey Kolbet, a partner with the law firm Elvinger Hoss Prussen, who specialises in private equity funds.
When working with investment managers, “you get an exclusive view on the way they build and implement their investment strategies, and that is both very interesting, but also challenging,” he said. “You are there from the time of the fund’s formation through to completion, and this gives you a view of the full spectrum of activities.” He witnesses first-hand the fundraising process, as he works with investors to negotiate details. There is close cooperation with the fund manager, assisting them as they make their initial acquisitions, monitoring the projects as they mature, and being involved in the final liquidation phase.
Multidisciplinary problem solving
It is the multidisciplinary aspect of PE that Kolbet finds notably engaging, “particularly if you’re looking to challenge yourself, as it has a blend of finance, business and law,” he noted. It is also an environment that changes continually, such as how market and regulatory pressures have recently driven the sustainable investing agenda. The advent of legislation such as the EU’s Sustainable Finance Disclosure Regulation has required clients to reassess their portfolios and align them with new sustainability standards.
Laurent Hengesch. Photo: Ilavska Vuillermoz Capital
Kolbet said he finds it rewarding helping fund managers explore the different structuring options. “It is important that people are made aware of how varied and interesting this work is, as we need to attract people to enter this growing business area,” he said.
Asset management is a tip of the iceberg in terms of private equity fund employment in Luxembourg, with Hengesch noting that they only employ about ten people. Many more are needed in the wider ecosystem to bring these plans into action. “Compare it to Formula 1 racing,” he said. “Sure everyone would like to be the driver, but it’s also very interesting being part of the team making the car work and changing the tyres in record time.”