Structuring Club Deals in Luxembourg: Securitisation Company or Investment Fund?
When a sponsor brings together a group of investors for a defined project or a series of deals, Luxembourg offers three proven platforms: a securitisation company, a sub-threshold fund and a fully regulated fund. Each can work. The right choice depends on three questions: who takes the investment decisions, how investors will hold the investment, and how widely the opportunity will be marketed.
Three platforms, three different logics
A securitisation company finances a defined asset by issuing notes. An independent board takes the decisions, and the sponsor contributes through an advisory role. A sub-threshold fund is a partnership run by its general partner, whose manager stays below the EU size limits and registers with the CSSF instead of seeking a full licence. A fully regulated fund is run by a licensed alternative investment fund manager (AIFM) with a depositary bank, and it can be marketed to professional investors across the EU.
The platforms also differ in how investors hold the investment. Securitisation investors hold notes, which can carry an ISIN and sit in a securities account at a private bank. Sub-threshold fund investors hold partnership interests. Regulated fund investors hold fund shares or units.
1. The securitisation company
A regulated framework for an unregulated vehicle
A Luxembourg securitisation company acquires or finances an asset and pays investors from the cash flows that asset generates. The legal basis is the Securitisation Law of 22 March 2004, modernised in 2022. Eligible assets are broad: loans, receivables, bonds, shares, real-estate financing and fund interests. For private transactions no CSSF licence is needed. Authorisation is required only where the company issues to the public on a continuous basis.
The defining feature is the compartment. One company, with one board, can hold several projects, each in its own legally segregated compartment with its own asset, notes, investors and bank accounts. By law, a default in one compartment gives its creditors no recourse to the assets of another. A sponsor can therefore build a programme of projects on a single platform.
From set-up to redemption
A transaction follows five steps:
The board approves the compartment and its issue terms.
Investors complete KYC and subscribe.
The notes are issued and the proceeds acquire or finance the asset.
Cash flows are paid out in the agreed order of priority.
On exit, the asset is realised and the notes are redeemed.
Under current law, active management is permitted for debt portfolios that are not offered to the public. Bill No. 8761, filed in June 2026, would extend this to all asset classes in private transactions. The bill is still pending.
Notes shaped around the asset
The return profile of the notes can be designed around the underlying asset:
Fixed-rate notes pay a set coupon, like a conventional bond.
Floating-rate notes pay a reference rate plus a margin.
Profit-participating notes link the return to the asset's performance. They are the most common choice for club deals.
Senior and junior classes let a sponsor class absorb first losses and capture residual upside.
There is one watch-point. Tranching the credit risk of a pool of loans or receivables can bring a deal within the EU Securitisation Regulation, with its risk-retention and reporting rules. A single class of notes stays outside it.
Registered, cleared or tokenised
Notes can be held in four ways:
Registered in the issuer's own register, which works well for a closed group of known investors.
Certificated, with physical certificates. This is rarely used today.
With an ISIN and settled through Clearstream or Euroclear, so investors can book them at their private banks. This is often the decisive advantage for private clients.
Tokenised on a distributed ledger under Luxembourg's blockchain laws, with an ISIN "twin" where needed.
An optional listing on the Vienna MTF (Wiener Börse) or the Luxembourg Euro MTF provides a public price reference and supports bank acceptance. A listing does not by itself create a liquid market.
The board decides; the sponsor advises
In a securitisation company, every investment decision rests with the board, within the issue terms. A sponsor typically takes part through its own advisory company. That company can originate deals, carry out due diligence, make non-binding recommendations, and monitor and report on the asset. It should not take decisions, trade at its own discretion or direct the board. Keeping this line clear protects the vehicle's Luxembourg tax residence and its status outside the fund rules. The sponsor is paid through disclosed service fees, junior notes, or both.
2. The sub-threshold fund
Registration instead of a licence
A vehicle that pools capital from several investors under a defined investment policy is generally an alternative investment fund (AIF). If the manager's total assets under management stay below the EU thresholds, it only registers with the CSSF and reports on its funds; it does not need a full licence. The thresholds are:
EUR 100 million where the funds use leverage;
EUR 500 million where the funds are unleveraged and investors have no redemption rights for five years.
Leveraged or unleveraged? Leverage means any method that increases a fund's exposure beyond its own capital, such as borrowing cash or securities or using derivatives. An unleveraged fund invests only the capital its investors have committed. If either threshold is exceeded, the manager must apply for a licence within 30 days.
The trade-off is that a registered manager has no EU marketing passport. The fund is offered privately, and each target country's rules apply. It is also worth testing whether a club deal is an AIF at all: investors who keep day-to-day control can take it outside the definition.
The SCSp: the market standard
Most sub-threshold funds are set up as a special limited partnership (SCSp). An SCSp has no legal personality and is governed by a highly flexible partnership agreement. It is also tax-transparent: the partnership pays no Luxembourg income tax itself, and each partner is taxed on its share under its own tax rules, as if it held the investments directly.
The general partner, usually a Luxembourg S.à r.l., manages the fund, bears unlimited liability and typically acts as the registered manager. The limited partners commit capital, have limited liability and do not take part in management. The sponsor team usually receives carried interest through a dedicated carry vehicle. No depositary is required.
3. The fully regulated fund
A licensed manager, a depositary and the EU passport
Some strategies are discretionary, raise capital on an ongoing basis or target professional investors in several EU countries. For these, the fully regulated route is the natural home. An authorised AIFM manages the portfolio and its risk, and a depositary bank safeguards the assets and monitors cash. An administrator keeps the investor register and calculates the net asset value, and an auditor reports annually. The CSSF supervises the manager, the depositary and the administrator.
Luxembourg offers three products:
RAIF: needs no CSSF product approval, but must have an authorised AIFM. It is the fastest regulated route.
SIF: approved by the CSSF and subject to risk-diversification rules.
SICAR: approved by the CSSF and dedicated to private equity and venture capital.
All three are reserved for well-informed investors.
Where the sponsor fits
The authorised AIFM takes the investment and risk decisions. A sponsor can take part in three ways:
as investment adviser, which is the most common route for first-time sponsors;
as delegated portfolio manager, which requires the sponsor to hold its own asset-management authorisation;
through the general partner or board seats and carried interest, combined with either of the above.
4. Side by side
The comparison shows how the platforms differ:
Supervision and decisions: a securitisation company needs no CSSF licence for private deals and is run by its board. A sub-threshold fund's manager is registered, and the general partner decides. A regulated fund requires an authorised AIFM and a depositary.
Investor instrument: notes with an ISIN, partnership interests, or fund shares and units.
Several projects: compartments, separate partnerships, or sub-funds.
Tax: a securitisation company pays corporate tax only on a small margin, because payments to investors are deductible. An SCSp is tax-transparent. A RAIF or SIF pays a 0.01% annual subscription tax. None of the three levies Luxembourg withholding tax on payments to investors.
No platform wins on every criterion. Securitisation leads on speed for a single defined transaction, on legally segregated successive projects and on investors holding the investment at their private bank. The regulated fund leads on discretionary management, EU-wide marketing and regulatory comfort. The sub-threshold fund sits between them, offering fund-style economics without a full licence.
Which platform for which deal
In practice, four common scenarios point in different directions:
A single asset with known investors who want to hold the investment at their private banks: a compartment on an existing securitisation platform, which is the shortest route to launch.
A programme of projects with a distinct investor group for each, where the sponsor seeks fees and upside: a dedicated securitisation company with one compartment per project.
A small partnership that the sponsor manages on fund-style terms, placed privately in a few countries: a sub-threshold fund (SCSp).
A diversified, actively managed strategy raising capital continuously from professional investors across the EU: a RAIF with an authorised AIFM.
How Kuts & Co can help
Kuts & Co structures and coordinates club-deal platforms in Luxembourg. We work with sponsors on platform selection, the design of the advisory role and its remuneration, the note documentation, ISIN and settlement, private-bank acceptance and an optional listing. We do this together with independent licensed partner firms, which handle legal, tax, corporate services, paying agency and digital assets. Where a fund is the better answer, we say so and help set it up.
The full presentation also covers custody and crypto-funded subscriptions, sponsor economics and tax, and includes a glossary and the principal legal sources.
General information only, based on Luxembourg and EU law as at November 2026. This article does not constitute legal, tax, regulatory or investment advice; the right structure depends on the specific asset, investors and jurisdictions involved. Kuts & Co does not provide regulated investment advice or portfolio management.
