Setting up a securitisation vehicle in
Luxembourg for a major investment management
company
The Issue
A European investment fund company was looking
to set up a securitisation structure in Luxembourg
under the legal framework of the Luxembourg
securitisation law of March 22, 2004. The targeted
investors are institutional investors as well
as private investors.
The client was looking for information and
support regarding legal, regulatory and accounting
issues. One major target was the avoidance of
consolidation of the securitisation vehicle
within the financial statements of the company.
Our Approach
In a first step we provided general information
about the Luxembourg securitisation market and
the main advantages of the Luxembourg securitisation
law. We explained in detail a securitisation
structure using several compartments in only
one legal entity, so that both targeted investors
group could be served independently. After analysing
the general structure of the planned transactions,
we discussed the main criteria to avoid a consolidation
under IFRS regulations.
In addition our specialists supported the client
regarding several accounting issues, like valuation
of the assets and the disclosure of financial
statements. We worked very closely with the
client, their legal advisers and other involved
parties to set up the securitisation vehicle.
We provided several comments to necessary legal
documents and discussed also the pro forma financial
statements and the notes.
The Outcome
At the end the client has set up a successful,
flexible securitisation structure under the
Luxembourg securitisation law using a securitisation
vehicle with many compartments. The structure
is now used for institutional and private investors
and for different transactions. We as auditors
of the vehicle continue to support the accounting
and regulatory issues of new compartments.
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