The servicing of private equity and property funds is becoming an increasingly important area of business for CACEIS, the investor services joint venture between the Crédit Agricole group and Natixis,
The servicing of private equity and property funds is becoming an increasingly important area of business for CACEIS, the investor services joint venture between the Crédit Agricole group and Natixis, the corporate and investment banking subsidiary of France’s Caisses d’Epargne group, thanks to a mix of external clients and business from within both Crédit Agricole and Natixis, which is heavily involved with real estate and infrastructure funds.
Historically CACEIS in Luxembourg has provided services to private equity funds such as Mangrove Capital Partners, best known for its early investment in Skype, but this area of activity has been relatively low-profile since many of its clients came from within the group. However, private equity work has become a more prominent area of business for CACEIS since its recent acquisition of Olympia Capital, an alternative fund administrator active in the US, Canada and Bermuda.
Today CACEIS has a team in Luxembourg focused on serving a private equity client base that is already substantial as well as an even bigger pipeline of prospective business. It helps that Luxembourg, with its introduction of the Sicar risk capital vehicle in 2004 and especially the Specialised Investment Fund regime last year, has put itself firmly on the map as a European centre for private equity structuring and servicing, with an attractive legislative and regulatory framework and a growing array of experienced and expert service providers.
Skills are an important factor in the development of the marketplace in general and for individual providers such as CACEIS. While private equity servicing has some similarities with traditional fund administration and this is an obvious area for recruitment, it is also necessary to bring in other skills, those provided by people with direct experience in the real estate and private equity world.
It also calls for experience in areas such as corporate accounting and reporting in IFRS, which is not widespread in the traditional funds environment, expertise in VAT treatment within the EU, and understanding of the special purpose vehicles used as holding companies within the Luxembourg structure – a range of skills often found in fiduciary services companies.
CACEIS in Luxembourg has around a dozen client relationships and services about 40 structures – for instance, Crédit Agricole Private Equity has three funds and four SPVs as holding companies in Luxembourg – but demand is growing constantly. This offers the opportunity to select projects that offer an attractive diversity in terms of the type of investments and the way they are structured – for example, direct or indirect investment, funds of funds or funds of SPVs, investments in partnerships or purely direct holdings.
One new area is microfinance. The Crédit Agricole group is launching a foundation in Luxembourg in partnership with Grameen Bank, which pioneered the microcredit concept in Bangladesh in the early 1980s, with a structure that will enable third-party investors to become involved. CACEIS is also dealing with clients making private equity investments in renewable energy, within the Kyoto Protocol’s framework for securitisation of carbon contracts.
Alongside innovations such as investment in wine stocks, which raises issues such as managing warehouses and inventories, CACEIS is active in servicing the growing sector of infrastructure-type investments, a category straddling the boundary between private equity and real estate, where clients buy or participate in the financing of highways in Poland, a harbour in Egypt or an airport in China.
Hervé Schunke is head of private equity and real estate servicing at CACEIS Bank Luxembourg