“The Luxembourg voice of private capital: that’s how you describe yourself,” said finance minister (CSV) during the 15th anniversary celebration of the Luxembourg Private Equity & Venture Capital Association (LPEA), held at Cercle Cité on 6 February 2025. “Your voice has now been heard for 15 years, and I believe it is time to not only strengthen your voice, but to make the voice of private capital in general even stronger.”

When the LPEA was founded in 2010, the “Luxembourg private equity and venture capital ecosystem was still in its early days,” he said. Much has changed since then, at the Luxembourg, European and worldwide level. “Today, it is an essential pillar of our financial centre, growing year after year.” The LPEA itself has grown from some 25 members at its establishment to over 600 members, and “this speaks of the strengths, the dynamism and the growth of this industry here in Luxembourg.” Moments like the LPEA’s celebration demonstrate the “stability, evolution and patience of the private equity industry.”

Defining moments over the past years

“Over these past 15 years, the private equity market has been shaped by several defining moments,” continued Roth. “There was the aftermath of the 2008 global financial crisis and the European debt crisis in 2010. Both crises have tested the resilience of our financial systems, and I believe we have passed the test. We are well-positioned for the future, but these events also reinforced the need for well-structured alternative investments. Private equity emerged stronger and kept supporting businesses through restructuring and also innovation.”

Brexit, a “political and economic earthquake,” came in 2016. “But private equity firms being highly pragmatic firms--just as Luxembourg, by the way--saw the opportunity amidst the uncertainty. Many firms sought stability here in Luxembourg, recognising its role as a hub for cross-border finance.”

We want to embrace the positive impact of finance so that private equity in particular remains a force for innovation, sustainability and inclusive economic growth

Gilles Roth (CSV), finance minister

The covid-19 pandemic, he added, “disrupted markets, tested resilience and accelerated digital transformation.” Private equity helped by deploying dry powder into distressed assets and supporting companies. Russia’s full-scale war in Ukraine, inflation and the rise of interest rates have also affected financial markets.

But despite all of this, “private equity prevails,” said Roth. “Its ability to provide long-term and patient capital has become crucially important.” Private equity is a “key catalyst” for positive change, he argued, leading towards sustainable and technological advancements.

Future potential of private capital

“The private equity industry has had an impact on the real economy, on jobs, on households all over the world,” said Roth. But it also fosters economic development here in the grand duchy. “There are more and more PE-backed companies in Luxembourg, and venture capital funding for new companies is a cornerstone for our success in the future. The presence of PE and VC funds has a significant knock-on effect on our ecosystem. These funds invest into companies and are scaling new technologies. They are supporting the digital economy and they are reinforcing Luxembourg’s role as a hub for financial and technological expertise.”

Over the past 15 years, the private equity “industry has also strengthened Luxembourg’s service industry, from legal and advisory firms to fund administrators and technology providers. Such expertise has become unique, sought after and very competitive worldwide,” said Roth. The grand duchy has expanded its “fund toolbox,” going from specialised investment funds (Sifs) and société d’investissement à capital variable (Sicavs) to reserved alternative investment funds (Raifs) and limited partnerships.

Luxembourg is a “gateway” for global investors, he added, and “now hosts operations from 19 of the world’s top 20 private equity fund managers. Private asset funds in Luxembourg now have over €2trn in assets, and Luxembourg’s share of European private equity funds has grown from 7.4% in 2010 to over 50% today.” And through all these years, “the LPEA has been a crucial factor in federating, gathering and vouching for and with the industry.”

So what do the years ahead look like?

“My vision for the future of promising sector is clear. We want Luxembourg to remain a leading hub for private equity and venture capital in Europe. We want to ensure that Luxembourg continues to offer an efficient and business-friendly fund environment, and we want to embrace the positive impact of finance so that private equity in particular remains a force for innovation, sustainability and inclusive economic growth.”

“This is exactly how we can tackle European deficiencies, as outlined in the Draghi report [on European competitiveness],” Roth concluded. “Today, more than ever, I believe in the future potential of private equity and venture capital.”