LUXEMBOURG Law and Practice Contributed by: Johan Terblanche, Baptiste Aubry and Michelle Barry, Maples Group
1. Transaction Activity 1.1 Private Equity Transactions and M&A Deals in General As of 2025, Luxembourg continues to solidify its posi - tion as a hub for private equity and M&A activities. The jurisdiction’s appeal is largely due to its political and economic stability, favourable tax environment and sophisticated legal framework, which collectively provide an attractive landscape for international inves - tors and companies. In the current year, a continued interest in private equi - ty investment funds has been observed, with unregu - lated funds being the most utilised format. There is a particular emphasis on special limited partnerships (SCSps), which offer significant legal flexibility as well as tax transparency, and are the go-to form of Euro - pean fund for a global audience of managers and investors. M&A activity has been particularly resilient in sec - tors such as fintech, renewable energy, infrastruc - ture and healthcare, with Luxembourg often used as the jurisdiction of the holding vehicle, even though the underlying assets or targets are located abroad. Asset-holding and acquisition structures involving Luxembourg entities continue to be widely used by global sponsors due to the jurisdiction’s operational and legal efficiencies.. Moreover, funds that focus on structured debt and credit continue to attract investors, benefitting from the sophisticated financial infrastructure and the high quality (and often bespoke) fund service capabilities that Luxembourg offers. Despite a broader interest in diverse investment opportunities, most private equity sponsors in Lux - embourg maintain a disciplined approach, adhering to their core investment strategies. There is, however, a noticeable trend towards sector-agnostic invest - ments, as some firms seek to capitalise on special situations and unique opportunities that promise high returns, irrespective of industry.
1.2 Market Activity and Impact of Macro- Economic Factors The Luxembourg private equity market, while demon - strating resilience, has not been immune to ongoing macroeconomic challenges. In 2024 and into 2025, elevated interest rates, persistent inflationary pres - sures and continued geopolitical tensions, particu - larly the ongoing consequences of conflicts in East - ern Europe and instability in global trade routes, have contributed to a moderate slowdown in deal flow and have extended deal timelines. Investor caution has increased, leading to enhanced due diligence and a strong focus on cash flow sus - tainability and resilient business models. Funds that focus on distressed, credit or special situations have seen growing interest, with some sponsors reposition - ing their strategies to capture value in volatile market conditions. Despite these challenges, sectors such as infrastruc - ture, sustainable energy, technology and private credit remain highly active. Luxembourg continues to benefit from its robust fund services ecosystem and investor- friendly environment. The jurisdiction’s ability to adapt to changing economic conditions and its commitment to providing a supportive ecosystem for private equity transactions continue to underpin its status as a lead - ing destination for investment in Europe. 2. Private Equity Developments 2.1 Impact of Legal Developments on Funds and Transactions Over a number of years, Luxembourg has taken steps to position itself as Europe’s leading location for both private equity fund vehicles and asset-holding vehi - cles. Luxembourg partnerships – in particular the SCSp and (albeit to a lesser extent) the simple limited partnership – have become the go-to form of entity for private equity-pooling vehicles, while private lim - ited liability companies (SARLs) remain the preferred asset-holding vehicles for private equity funds glob - ally. The introduction of the Alternative Investment Fund Managers Directive (AIFMD)-compliant Reserved
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