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IPE special report May 2018

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Luxembourg's first SEPCAV closes

LUXEMBOURG- Luxembourg’s first SEPCAV has closed after two years having failed to raise any funds. Launched at the end of 2000, Alliance Pension Fund (APF) was a partnership between the consultants Barnett Waddingham, Banque Generale du Luxembourg and Alliance, the Dubai-based insurance company.

Ikram Shakir was responsible for Barnet Waddingham’s input into the project until he left the firm last July. He stayed on as chairman of APF until it went into liquidation three months ago. Shakir says that the initial reception from the market was good but that potential clients blanched when they discovered the fund’s $10,000 start up fee.

Insurance contracts did not incur the same charges up front so Alliance went back to Barnett Waddingham and, according to Shakir, “said that they just could not market the product as it was.” It asked the consultant, who was providing the administration and structure of the fund, to spread the fee rather than have it up front.

Tony Leandro, a partner at Barnet Waddingham in London, says the fee structure in Luxembourg is driven largely by the regulatory authorities and that there was a problem with spreading it out. “For pure business reasons, Barnett Waddingham resigned in November and in February, Alliance decided to liquidate the fund.”

Alliance was the first company to take advantage of the Luxembourg legislation which was introduced in 1999. APF was created to offer cover for the millions of expatriates working in countries like Saudi Arabia, Kuwait, Qatar and the United Arab Emirates.

At the outset, it set a target of between $75m-$100m in assets within five years, two clients during the first year with one quarterly thereafter.


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