A growing number of international investors demonstrate an appetite for venture capital strategies pursued under the EuVECA Regulation but prefer to gain exposure to EuVECA funds through feeder vehicles rather than directly. This preference is often driven by a desire to invest through an internationally recognised feeder structure and a structure that shields investors from tax (filing) exposure in the home jurisdiction of the EuVECA fund. Luxembourg is often considered the jurisdiction of choice for establishing such feeder vehicles driven by its recognition amongst international investors.

To accommodate the tax shielding preference, the feeder is usually organised as a Luxembourg partnership limited by shares (société en commandite par actions, or SCA) subject to the reserved alternative investment fund (RAIF) regime. An SCA combines traditional GP/LP-style governance with tax-opaque legal-personality status.

The introduction of a Luxembourg feeder raises an important distribution question: how can the SCA-RAIF feeder itself be marketed across the EU? An SCA-RAIF must appoint an authorised EU AIFM and would thus ordinarily be eligible for the AIFMD marketing passport. That said, where the SCA-RAIF is a feeder investing in a master fund managed by a registered, rather than authorised, EU AIFM, the AIFMD passport cannot be relied upon. As the master fund is a EuVECA fund managed by a registered EU AIFM, the feeder is not eligible for the AIFMD marketing passport.

The feeder is however eligible for the dedicated EuVECA marketing passport, as it qualifies, in its capacity of a feeder in a qualifying EuVECA fund. For registered managers of EuVECA funds seeking to broaden their investor base beyond their home market, this solution offers a practical means of accommodating international investors’ preferences while retaining access to EU-wide marketing under the EuVECA regime.

Although the establishment of an SCA-RAIF feeder requires the appointment of an AIFMD-authorised fund manager, resulting in an additional layer of cost, the structure may prove valuable where it enables access to a broader investor base that would otherwise be unable or unwilling to invest directly in the underlying EuVECA fund.

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