Across Europe and beyond, investor appetite for private assets — private equity, private debt, real estate, infrastructure — remains strong. Yet, between the idea of a first vehicle and its actual launch, many sponsors face the same obstacle: the regulatory, operational, and financial burden of full AIFM authorisation.
The good news is that there is a proven, fast, and significantly less costly alternative: the sub-threshold AIF, structured around a General Partner and a registered AIFM.
The “sub-threshold” regime in brief
The AIFM Directive distinguishes between two categories of alternative investment fund managers: the authorised AIFM and the registered AIFM.
As long as assets under management remain below the thresholds set by the Directive, the manager falls within the so-called de minimis regime and only needs to register with the regulator, the CSSF in Luxembourg, without undergoing the full authorisation procedure. The thresholds are as follows:
- EUR 100 million of assets under management where the portfolio uses leverage;
- EUR 500 million where the AIFs are unleveraged and do not grant any redemption rights during the five years following the initial investment.
Below these thresholds, obligations are considerably lighter: registration, identification of the AIFs managed, communication of investment strategies, and periodic reporting to the regulator.
This is a far cry from the substance, governance, and costs required of a fully authorised AIFM.
A proven structure: the SCSp with a General Partner
The reference structure combines this registered AIFM with a Luxembourg special limited partnership, or SCSp — the continental equivalent of the Anglo-Saxon limited partnership and a structure well known to institutional investors.
The mechanism is simple:
- the General Partner, generally an S.à r.l., assumes responsibility for the management and direction of the vehicle;
- the Limited Partners contribute capital and are liable only up to the amount of their commitment;
- the SCSp qualifies as an AIF and is managed by the registered AIFM.
Key point: this SCSp is not subject to CSSF product authorisation. There is no fund file to be approved and no authorisation period.
The contractual freedom of the Limited Partnership Agreement makes it possible to tailor the investment policy, capital call mechanics, distribution waterfall, and governance arrangements.
The advantages, in concrete terms
Simplicity and speed of implementation.
Without AIFM authorisation to obtain and without a product to have approved, the period between the decision and closing is measured in weeks, not quarters.
Cost optimisation.
The savings are real and arise on three levels: no authorisation costs, lighter regulatory substance, and proportionate reporting. For a first fund, a club deal, or a single-theme strategy, the budget difference compared with a fully authorised structure is significant.
Flexibility.
The contractual framework of the SCSp offers rare flexibility to adjust the structure to the expectations of a defined circle of investors.
A springboard, not a dead end.
The sub-threshold structure is designed to support growth. When assets under management exceed the threshold, or when the European marketing passport becomes necessary, the transition to authorised AIFM status can be prepared without starting from scratch.
At that stage, regulated vehicles such as the RAIF — Reserved Alternative Investment Fund — become accessible, it being specified that a RAIF must appoint an authorised AIFM. This is not the purpose of the sub-threshold structure, but it is the logical next step in a successful trajectory. SableRock can then take charge of the substance, governance, and coordination required for its implementation.
A note in full transparency.
A registered AIFM does not benefit from the European marketing passport. The distribution strategy must therefore be considered in advance and comply with the applicable rules.
Depending on the relevant jurisdictions, distribution may rely on national private placement regimes, or NPPRs, on a country-by-country basis, or on reverse solicitation, the conditions of which must be strictly framed to avoid any reclassification as active marketing.
Properly calibrated, this framework is ideal for a defined circle of professional or institutional investors: precisely the case of a first fund, club deal, or dedicated investment vehicle.
SableRock: a single provider to
handle everything
This is where apparent complexity can become simple again.
Setting up a sub-threshold AIF requires assembling several building blocks: the General Partner entity and its directors or managers, the registered AIFM function, administration, domiciliation, the AML/CFT framework, supervision of the directors or managers, and regulatory monitoring.
Multiplying service providers means multiplying interfaces, costs, and friction points.
SableRock offers a one-stop shop. As a Luxembourg boutique specialising in governance, compliance, and managed services, SableRock coordinates and operates the entire chain:
- incorporation and administration of the General Partner entity;
- establishment and operation of the registered AIFM function with the CSSF;
- governance and management of the vehicle, with experienced directors and managers providing the expected substance and credibility;
- administration, registrar, and domiciliation;
- AML/CFT framework and the function of the person responsible for the control of compliance with professional obligations;
- continuous regulatory monitoring.
And when the project grows — whether through the transition to authorised AIFM status or the establishment of a RAIF — SableRock ensures the scale-up, including the appointment of the required approved Conducting Officers and the strengthening of substance then required by the CSSF.
A single point of contact, a project coordinated from end to end, and clear, controlled pricing.
Founded by a professional with more than twenty years’ experience in the Luxembourg financial centre, SableRock speaks both the language of investment sponsors and that of the regulator.
From idea to closing
If you are considering launching an alternative investment vehicle in Luxembourg and wish to do so simply, quickly, and with a controlled budget, the sub-threshold AIF deserves a conversation.
We would be delighted to review your project and present you with a tailor-made structure.