Digital infrastructure ScSp SICAV RAIF Launch in Luxembourg: Fund Structure Optimization Guide

A Digital infrastructure ScSp SICAV RAIF is a Luxembourg alternative investment fund that combines a special limited partnership (SCSp) with a SICAV-RAIF umbrella, dedicated to professional investors in digital infrastructure assets.

1. Strategic overview: why choose a Digital infrastructure ScSp SICAV RAIF?

This structure is built for managers and investors who want long-term access to digital infrastructure with institutional governance and robust tax efficiency.

The ScSp SICAV RAIF format matches the illiquid, cash-yielding profile of digital infrastructure. It offers compartmentalisation of strategies within one umbrella. It also allows the general partner and AIFM to align carried interest and governance with a private equity or infrastructure style approach.

The core investor thesis is simple and disciplined:

• Digital infrastructure demand grows in line with data usage, cloud, and 5G penetration.
• Assets are often backed by long-term contracts with rated operators or blue-chip tenants.
• Revenues can be inflation-linked or volume-linked, supporting predictable cash flows.
• Luxembourg offers a tried and tested RAIF regime tailored to professional investors.

For sponsors, the ScSp layer creates a familiar limited partnership wrapper for carried interest. For LPs, the SICAV-RAIF umbrella adds legal ring-fencing and multi-compartment options under one fund brand.

2. Legal architecture: SCSp partnership inside a SICAV RAIF umbrella

This structure rests on three complementary Luxembourg building blocks.

First, the SCSp is a special limited partnership with no legal personality. It is driven by a general partner (GP) and one or more limited partners (LPs). The SCSp partnership agreement sets out economic terms, governance, and waterfall mechanics in detail.

Second, the SICAV is an investment company with variable capital. Each compartment of the SICAV can be dedicated to a specific digital infrastructure strategy. For example, one compartment may target core fibre networks while another focuses on edge data centres or regional tower portfolios.

Third, the RAIF regime is “reserved” to well-informed investors. It is not authorised on a compartment-by-compartment basis by the CSSF. Instead, it must be managed by an authorised external AIFM, which ensures indirect supervision under AIFMD rules.

In practice, managers typically use an SCSp SICAV RAIF to align three goals:

• Offer LPs a partnership-style economic deal.
• Host multiple strategies or vintages in separate compartments.
• Operate under the RAIF law with AIFMD passporting for EU marketing.

3. Eligibility and investor profile

The Digital infrastructure ScSp SICAV RAIF is aimed at professional and well-informed investors.

Typical investors include:

• Institutional investors such as insurers, pension funds, and sovereign entities.
• Family offices looking for long-duration income and partial inflation hedging.
• Specialised infrastructure funds seeking co-investment or sidecar structures.
• Corporate investors in the telecom and digital ecosystem.

Under RAIF rules, well-informed investors include professionals and any investor committing at least EUR 125,000 or certified by a credit institution, investment firm, or management company as having the required expertise.

The investor base is usually limited to a small number of LPs per compartment. Subscription lines, capital call schedules, and distribution waterfalls are set out in detail in the SCSp limited partnership agreement.

4. Target assets: what sits inside a Digital infrastructure ScSp SICAV RAIF?

A digital infrastructure fund in this format can focus on mission-critical connectivity and data assets.

Typical core and core-plus assets include:

• Fibre networks (backbone, metro, and last-mile FTTH or FTTx networks).
• Data centres (wholesale, colocation, edge, and specialised cloud on-ramps).
• Telecom towers, rooftops, and distributed antenna systems.
• Subsea and terrestrial cable systems linking key data routes.
• Edge computing sites serving latency-sensitive applications.
• Neutral-host infrastructure for 5G and small-cell deployment.

The portfolio strategy can range from brownfield, cash-generating assets to value-add build-out projects. Many investors seek a blend of contracted cash flows and growth exposure. For example, a core compartment could target stabilised data centres with high occupancy, while another focuses on network expansions in growth regions.

Debt financing is typically used at asset or compartment level to enhance equity returns while keeping prudent leverage ratios. Managers often target net IRRs in a high single-digit to low double-digit range, depending on risk, geography, and leverage.

5. Regulatory and tax framework of a Digital infrastructure ScSp SICAV RAIF

The RAIF regime combines regulatory robustness with lighter time-to-market.

The Digital infrastructure ScSp SICAV RAIF:

• Is formed under the Luxembourg RAIF law.
• Must appoint an authorised external AIFM subject to AIFMD supervision.
• Falls under the indirect supervision of the CSSF via the AIFM.
• Must appoint a Luxembourg depositary and central administrator.
• Is reserved to well-informed investors only.

From a tax perspective, a RAIF that does not opt into a risk-capital regime is generally exempt from corporate income tax and net wealth tax on its investment income and gains, but pays an annual subscription tax (usually 0.01% of net asset value, with possible reductions or exemptions depending on the asset mix). The SCSp itself is tax transparent for Luxembourg income tax purposes, so investors are taxed under their own tax regimes on allocated income and gains.

Double tax treaty access, withholding tax leakage, and local asset-level taxation must be analysed on a case-by-case basis. This is especially true where the fund invests in digital infrastructure operating companies or asset-owning SPVs in several jurisdictions.

6. Governance: roles and checks and balances

Governance is central to investor protection in a Digital infrastructure ScSp SICAV RAIF.

Key actors and responsibilities typically include:

• General Partner (GP) – represents the SCSp, manages the partnership, and is usually controlled by the sponsor.
• AIFM – authorised manager responsible for portfolio and risk management, as well as reporting under AIFMD.
• Board of the SICAV RAIF – supervises the fund and approves major decisions at umbrella and compartment level.
• Depositary – safe-keeping of assets, cash flow monitoring, oversight of subscriptions and redemptions.
• Central Administration Agent – NAV calculation, registrar, transfer agent, and reporting functions.
• Auditor – annual audit of the fund’s financial statements.

Advisory committees or investor committees can be set up for conflict review, related-party transactions, or key investment decisions. Voting rights, consent thresholds, and conflict-of-interest rules are defined in the fund documentation.

7. Cash flows, distributions, and investor economics

Digital infrastructure assets typically generate resilient cash flows from long-term contracts.

In a Digital infrastructure ScSp SICAV RAIF, revenue can come from:

• Recurring lease or service contracts with telecom operators or enterprise tenants.
• Usage-based charges linked to data volume, bandwidth, or capacity.
• Development gains from building and stabilising new assets.
• Capital gains on asset rotations or exits.

Distributions follow the waterfall defined in the SCSp limited partnership agreement. A classic setup includes return of capital, preferred return, catch-up, and carried interest. Some compartments may be structured as income-focused, distributing a high share of net cash, while others reinvest more aggressively for growth.

Managers often target quarterly or semi-annual distributions when asset cash flows allow. Liquidity is usually limited to secondary transfers of partnership interests, subject to GP consent and transfer restrictions.

8. ESG and sustainability in a Digital infrastructure ScSp SICAV RAIF

ESG is increasingly central to the digital infrastructure investment case.

For a Digital infrastructure ScSp SICAV RAIF, ESG considerations can include:

• Energy efficiency of data centres and network equipment.
• Renewable energy sourcing and power purchase agreements.
• Climate resilience of sites and critical routes.
• Data security, resilience, and uptime commitments.
• Community impact, including digital inclusion and access.

Many managers classify their RAIF compartments under the EU SFDR framework (for example as Article 6, 8, or 9 products). Data collection and reporting frameworks must align with SFDR and investors’ own ESG reporting obligations.

9. How to launch a Digital infrastructure ScSp SICAV RAIF

This process requires coordination between sponsors, advisers, and Luxembourg service providers.

1. Define the investment thesis, including target geographies, asset classes, and risk profile for each compartment.
2. Select the legal architecture, confirm use of an SCSp as the partnership layer, and align carried interest mechanics.
3. Appoint an authorised AIFM and agree on portfolio management and risk management delegation.
4. Choose a depositary, central administration agent, and auditor with infrastructure experience.
5. Draft the limited partnership agreement, issuing document, and internal policies (valuation, conflicts, ESG, risk).
6. Model the tax structure across jurisdictions, including SPVs and holding companies.
7. Establish the SICAV RAIF and register it with the Luxembourg Trade and Companies Register.
8. Set up bank accounts, capital call procedures, and payment workflows.
9. Prepare AIFMD and marketing documentation for target investor jurisdictions.
10. Launch fundraising, execute first closing, and start deploying capital into seed assets.

10. Key features and benefits at a glance

This section highlights the practical advantages of a Digital infrastructure ScSp SICAV RAIF for sponsors and investors.

• Luxembourg credibility – recognised hub for cross-border alternative funds with stable regulation.
• Partnership economics – SCSp allows familiar PE-style carry and governance.
• Umbrella flexibility – SICAV compartments can host multiple digital infrastructure strategies.
• Investor targeting – RAIF is reserved to professional and well-informed investors, easing marketing within a defined universe.
• Time-to-market – indirect supervision through an AIFM reduces lead times compared with fully authorised products.
• Scalability – new compartments can be added to capture new themes or vintages without re-building the fund ecosystem.
• Portfolio construction – dedicated digital infrastructure focus enhances diversification versus traditional PE or real estate funds.
• Cash-flow visibility – long-term contracts and inflation-linked revenues can support predictable distributions.

11. Positioning within an institutional portfolio

A Digital infrastructure ScSp SICAV RAIF often sits between core real estate and traditional infrastructure.

It can complement allocations to direct real estate, listed infrastructure, and private equity buyout funds. For many LPs, digital infrastructure provides:

• Defensive characteristics due to essential services and long-term contracts.
• Growth potential linked to data usage, cloud adoption, and digitalisation trends.
• Inflation mitigation where contracts include indexation clauses.

Correlation with traditional equity and fixed income can be moderate. This supports long-term diversification and stable yield in institutional portfolios, subject to appropriate risk management and leverage levels.

For sponsors, the Digital infrastructure ScSp SICAV RAIF can also serve as a long-term platform. New compartments can be raised across multiple vintages, with the same AIFM, GP, and operational ecosystem.

Digital infrastructure ScSp SICAV RAIF – FAQ

This section answers common questions from sponsors and professional investors about the Digital infrastructure ScSp SICAV RAIF.

Glossary: Digital infrastructure ScSp SICAV RAIF sector and asset types

This glossary explains key terms used in the context of a Digital infrastructure ScSp SICAV RAIF and digital infrastructure investing.

Damalion supports entrepreneurs, investors, and family offices with the design and implementation of compliant Luxembourg fund structures, including Digital infrastructure ScSp SICAV RAIF solutions, as well as banking coordination and legal and tax alignment. Please contact your Damalion experts now.