PRIVATE EQUITY Dedicated to Private Equity A global approach - Luxembourg service offering
Why choose KPMG? A focus on what really matters You want people working with you who really understand the challenges and opportunities open to your firm. We focus on your issues rather than our service lines. Our Private Equity teams combine a wide range of skills and experience tailored to meet your individual requirements. A commitment to high levels of global service You expect a high degree of professionalism and consistency wherever you are in the world. We can offer you not only teams that are committed to Private Equity, but through our training and global accreditation scheme, we are also committed to delivering you quality, opinion-based service. Globally responsive We have the resource and commitment to pull together an experienced team wherever and whenever you need it across the globe. Across 42 countries, our network of specialists uses a consistently high methodology for our work. We are a truly global business with an unparalleled network giving you access to Private Equity and industry professionals wherever you need them. Real sector experience You need advisors who understand the industries you invest in. Across 19 global sectors, our sector specialists are on hand to help you identify and win the right deals, grow the companies you invest in, and prepare for - and execute - a successful realisation. Fully integrated teams Our Private Equity groups consist of professionals across our Audit, Tax, and Advisory practices. All our teams have a rich Private Equity experience and commitment, so you know you will be working with teams that understand you, your needs and the Private Equity market.
Why KPMG Luxembourg? Luxembourg has gained significant attractiveness in international markets for the structuring of unregulated and lightly regulated Private Equity solutions as a result of increased allocations to Private Equity by institutional investors. Significant availability of Private Equity expertise in the fields of tax, legal, structuring, and back office solutions also acts as a catalyst for the development of Private Equity funds in Luxembourg. KPMG Luxembourg has a coordinated group of experienced and well connected professionals in the fields of structuring, tax, corporate finance, valuation, transactions, accounting and audit, and has developed a strong track record in accompanying Private Equity firms with their various requirements. "At KPMG Luxembourg, we have an experienced corporate finance team to serve General Partners of Private Equity funds. Our expertise ranges from independent valuations of Private Equity portfolios, to technical assistance provided to development finance institutions. We have, for example, assisted in the launch of a mezzanine fund, comprised of a package of training to local teams, valuations, drafting of investment policies and structuring of the first deals." Yves Courtois, Head of Private Equity, KPMG Luxembourg
Giving you the specialists you need when you need them We believe Private Equity is more than just a transaction. Based around a relationship with you, your portfolio and your funds, we can work effectively with you throughout the Private Equity lifecycle. Fundraising Plan delivery Realisation Advice on fund-structuring options to help mitigate the fund s exposure to tax on its investments, Advice on the fund managers regulatory and compliance requirements, Act as a sounding board in the filing and approval of regulated Private Equity funds (Luxembourg SICARs and SIFs) with regulators. Investment Deal origination, Financial and business modelling, Perform pre-transaction evaluations and assess a deal s potential to create value, Detailed financial, tax, and other related due diligence, Understand the target s business, their market, and key operational challenges through use of the Group s industry-specific practitioners, Forensic background checks on new funds or investments. Valuation Provide objective and strategic advice at both the portfolio and investor company levels, Build and assess project plans encompassing the strategic, operational, or financial input required to improve performance, Advise on crucial buy, sell, or hold decisions for optimum returns, Help meet investors requirements for regular portfolio valuations and reporting disclosures, Undertake audits on portfolio companies, Restructuring and refinancing measures that focus on value enhancement and performance improvement. Provide deal completion and integration roll-up assistance, Advise on efficient forms of financing a target investment, Governance reviews - at portfolio or individual company level - including internal audit process, defining or redeveloping the finance function and reporting systems and pre-ipo review. Act as divestment advisor by utilizing KPMG s international network of practitioners, Help determine if a portfolio company has reached potential value and is ready to be sold, Help determine if a company is groomed effectively for disposal, Advise on an exit strategy that limits tax liabilities for divestitures, Help to ensure the reliability of the financial and commercial information that underpins a transaction, Plan realisation strategies at the pre-investment deal stage, Provide assistance with tax matters for investors, IPO support services, Buyer searches, running auction processes. Provide independent valuation of Private Equity portfolios to investors, Issue fairness opinions of the price and terms of a transaction as required by tax and regulatory authorities, Provide advice to Private Equity funds on the design of valuation policies and procedures. "In KPMG Tax, we assist funds to achieve the most profitable deal possible by structuring top-down and bottom-up the acquisitions of companies, their financing and refinancing and ultimately their disposal in the most tax efficient way." Jean-Marie Reiser, Tax Partner, KPMG Luxembourg
Global Private Equity service proposition provides for a multidisciplinary approach on the marketplace Fundraising Realisation Deal Origination Private Equity Lifecycle Exit Grooming Evaluation and investment Plan Delivery We have a keen awareness of our responsibilities to our clients, who are likely to rely on our accounting advisory services as the basis for many of their decisions. Over the years, we have developed a top-down approach to accounting services planning, which means that we have been gaining a deep understanding of our clients needs. The combined use of specialist skills, including IFRS - which means that our feedback is based on the work of professionals who really understand the complex issues involved - creates a professional environment that clearly differentiates KPMG Accounting. Eric Wilhelm, Accounting Director, KPMG Luxembourg
Luxembourg A prime jurisdiction for Private Equity On account of the local tax and legal environment, the ease of structuring Private Equity funds and Private Equity deals has made Luxembourg a prime jurisdiction for the Private Equity industry. The most commonly used investment vehicle dedicated to Private Equity and venture capital is the Société d Investissement en Capital à Risque ( SICAR ). Its flexibility and simplicity to set-up demonstrate Luxembourg s commitment to attract the industry. Other lightly regulated fund structures such as Specialised Investment Fund ( SIF ) and unregulated Société de Participation Financière ( SOPARFI ) represent interesting alternatives. Strong fundamentals The local legal scheme has proved attractive, as Luxembourg has become a prime location for lightly regulated Private Equity funds. At the beginning of 2009, approximately 800 SIF and 200 SICAR funds had been incorporated in Luxembourg. An attractive economic environment to buyout firms Luxembourg has also attracted a buyout market for direct Private Equity investments in the Luxembourg economy. In 2007, Luxembourg had received close to 800 million of direct investment from Private Equity firms. Luxembourg is also a natural gateway for investment in the Greater region (Luxembourg, Wallonia, Saarland, and North-Eastern France). Comprehensive Regulation The Luxembourg legislation offers a large choice of alternatives for the set up of investment vehicles. High regulation Light regulation No regulation UCITS SICAR SIF Securitisation SOPARFI Securitisation "We have an extensive track record of serving non regulated Private Equity firms in Luxembourg. Over the years, our dedicated teams have developed an efficient and coordinated approach to our audit of international groups applying either US GAAP, IFRS or Luxembourg GAAP. Our ability to assist our clients addressing accounting issues linked to their complex structure or financing provides our clients with a trusted counterparty." Philippe Meyer, Audit Partner, KPMG Luxembourg
Legal environment SICAR SICAR is dedicated exclusively to investments in risk capital and fits the needs of Private Equity investments. The SICAR is a very flexible lightly regulated Private Equity vehicle. It can include multiple ring-fenced investment compartments, each with their own specific investment policy, or be dedicated to holding only one asset. Dividend payments by a SICAR are in principle free from withholding tax. Fees for management services rendered to a SICAR are VAT exempt. SICARs are exempt from any asset based or subscription tax. Hereafter are some key aspects of the SICAR legal and regulatory requirements : Invest in assets representing risk capital, Have a registered office and a central administration based in Luxembourg, The assets of the SICAR must be valued at fair value in the financial statements, The minimum subscribed share capital of a SICAR amounts to 1 million which may include share premium. SIF SIF may invest in all types of assets, the main requirement being that the principle of risk spreading is observed. The fund can be set-up under the following forms : Contractual fund, Fonds Commun de Placement ( FCP ), Corporate fund, Société d Investissement à Capital Variable ( SICAV ), Umbrella fund structure. A SIF must have a minimum 1,250,000 capital by the twelfth month following authorisation. SIFs are subject to an annual subscription tax of 0.01% on net assets. Dividend payments by a SIF are in principle free from withholding tax. SOPARFI SOPARFI is a Luxembourg resident fully taxable company limited by shares and benefits from the double tax treaties. The aim of a SOPARFI consists in general in taking financial participations in resident or foreign companies, as well as in the management of these participations. The SOPARFI benefits from a favorable participation exemption regime on dividends, capital gains and liquidation proceeds. Dividends received from a qualifying participation and capital gains realised on the sale of a qualifying participation are tax exempt under certain conditions. Dividends paid to a parent company by a SOPARFI may be exempt from withholding tax through application of double tax treaties and Luxembourg participation exemption regime. As a complement to the services presented in this brochure, we have also built a full range of advisory services that will facilitate the life of Private Equity groups willing to establish some administrative functions in Luxembourg. Those services include advice in ideal organisation, business processes, selection of cash management, accounting & reporting IT systems, human resources & compensation. Alain Picquet, Head of Advisory, KPMG Luxembourg
kpmg.lu Your contacts in Luxembourg Corporate Finance and Valuation Yves Courtois, Head of Private Equity Tel : +352 22 51 51 75 03 yves.courtois@kpmg.lu John Li Tel : +352 22 51 51 62 00 john.li@kpmg.lu Tax Jean-Marie Reiser Tel : +352 22 51 51 55 90 jean-marie.reiser@kpmg.lu Accounting Eric Wilhelm Tel : +352 22 51 51 62 63 eric.wilhelm@kpmg.lu Audit Philippe Meyer Tel : +352 22 51 51 63 19 philippe.meyer@kpmg.lu Jane Wilkinson Tel : +352 22 51 51 63 25 jane.wilkinson@kpmg.lu Advisory Alain Picquet Tel : +352 22 51 51 79 10 alain.picquet@kpmg.lu The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. 2009 KPMG, the Luxembourg member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Luxembourg. Corporate Finance services, including Financing, Debt Advisory and Valuation Services, are not performed by all KPMG member firms and are not offered by member firms in certain jurisdictions due to legal or regulatory constraints.