U.S. fund managers (USFMs) typically rely on a Luxembourg investor-facing special limited partnership (SCSp) when raising capital in Europe. The SCSp benefits from widespread investor recognition and can be efficiently marketed throughout the EU under a marketing passport, provided that it has appointed a (host) EU-authorised alternative investment fund manager (EU AIFM).

A plain vanilla SCSp cannot accommodate legally segregated series operating as distinct funds within the SCSp. In Luxembourg such series are referred to as compartments and the vehicle accommodating it as an umbrella. The most straightforward route for the SCSp to compartments is to subject itself to the reserved alternative investment fund (RAIF) law.

Although the RAIF law does not impose material additional costs or compliance burdens compared with a plain vanilla SCSp that has appointed an EU AIFM, USFMs do typically not opt for an SCSp RAIF. The majority of USFMs only launch an SCSp to accommodate a single strategy, usually as a parallel fund for their flagship strategy, and do thus not need compartments, except potentially to accommodate co-investments in the context of that strategy. However, as an SCSp-RAIF should normally adhere to a risk-diversification threshold, accommodating a single co-investment is usually not feasible.

USFMs that manage a range of SCSps, or USFM launching evergreen vintage funds may find the umbrella features of the RAIF regime appealing. However, also these USFM do not rely heavily on SCSp RAIFs. This is due to a combination of:

  1. challenges associated with compartment-based GP removal mechanics, particularly where substantially different investment strategies are pursued through separate compartments; and/or
  2. the fact that adopting the RAIF law is perceived as diverging the SCSp from the Delaware limited partnership model that USFMs generally seek to replicate in Luxembourg.

On 30 July 2026, the Luxembourg government introduced a bill that would allow an SCSp to establish legally segregated compartments without having to opt into the RAIF regime. The bill requires a compartmentalised SCSp to be managed by an EU AIFM. Hence, the bill effectively removes the diversification hurdle for co-investment compartments and concerns around the compartmentalised SCSp’s alignment with Delaware type features. It does not address concerns relating to GP removal mechanics, but these are inherent in a compartmentalized fund structure with a single GP.

As currently drafted, the bill would not extend the umbrella features to SCSps managed directly by USFMs, a structure which is certainly not uncommon in practice. We will closely monitor the bill as it progresses through the legislative process and keep you informed.

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