Launching your Master‑Feeder Fund Structure in Luxembourg

Launching a master‑feeder structure in Luxembourg remains a highly efficient way for fund sponsors to build proof of concept and attract international investors. For vehicles with total assets under management up to €100 million, sponsors can benefit from the flexibility and expedited rollout of either:

• a RAIF SICAV‑SLP; or

• a special limited partnership (SLP/SCSp, société en commandite spéciale) with a registered management company (e.g. small manager or Luxembourg SARL acting as AIFM).

1. Legal Framework: RAIF and AIFMD

The Reserved Alternative Investment Fund (RAIF) is established under the Law of 23 July 2016, as amended most recently in July 2023. RAIFs are not subject to prior CSSF authorisation but must be managed by an authorised external AIFM, which may be located in Luxembourg or another EU Member State. This enables indirect supervision through the AIFM under the AIFMD framework.

Eligible investors are limited to “well-informed investors”—institutional, professional, or sophisticated individuals who have explicitly confirmed their status in writing and meet either the €100 000 subscription threshold or are certified for expertise by a financial institution.

A RAIF may be structured as a SICAV (variable capital company) or as a common contractual fund (FCP), both of which can be implemented in a master‑feeder arrangement, including within a single umbrella RAIF with multiple compartments.

2. Legal Forms: SICAV‑SLP or SLP with Management Company

SICAV‑SLP structure:
- A feeder vehicle (typically a SICAV‑RAIF) invests into a master vehicle structured as a SCSp (special limited partnership).
- The feeder may take a corporate form (SICAV), offering familiar investor interfaces, while the master is the SCSp, offering contractual flexibility and tax transparency.

SLP with registered management company:
- A Luxembourg SCSp is set up as the investment vehicle, with a registered management company (e.g. SARL) serving as General Partner or AIFM.
- This allows a simpler, quicker structure without CSSF-led authorisation—suitable for smaller private-equity or venture‑style vehicles under €100 M.

The SCSp is attractive because:
- It has no legal personality of its own, offering contractual flexibility via the LPA;
- Liability is limited for LPs, and the management and governance can be delegated to the AIFM or a management company.

3. Luxembourg master‑Feeder Mechanics & Advantages

In a Luxembourg master‑feeder structure, one or more feeder vehicles (e.g. SICAV‑RAIFs or SCSp feeders targeting different investor groups or geographies) invest into a single master SCSp that executes the investment strategy. The structure may support:

• Parallel feeders with different fee profiles, investor types, NAVs, or terms;

• Legal ring-fencing of assets per feeder or compartment;

• Potential for co‑investment vehicles alongside the master pool.

Benefits include:

• Economies of scale at portfolio management and execution level;

• Faster setup for feeder vehicles (e.g. RAIF feeders don’t require prior CSSF approval);

• Tailored access: for example, a feeder targeting EEA professional investors, another for non‑EEA high‑net‑worth individuals or family offices.

4. Sub‑€100 M Threshold & Lightweight Option

Liquidity needs and regulatory overhead mean that vehicles under €100 million are particularly suited to the lightweight RAIF or SCSp + management company model:

• RAIFs avoid CSSF authorisation, enabling a launch in a few months;

• SCSp + SARL AIFM structures are unregulated but still compliant with AIFMD where investor thresholds are respected; suitable as proof‑of‑concept vehicles when sponsor capital is limited and marketing budgets lean.

Both options allow sponsors to build track record and commence capital raising while demonstrating progress to international investors.

5. Key Practical Steps

Selection of legal form: Decide whether a feeder is best as a RAIF SICAV, or the entire fund as SCSp with registered management.

Engage a licensed AIFM or set up a Luxembourg SARL AIFM (for SCSp structure).

Draft feeder and master constitutional documents:

• • Feeder: articles (SICAV) or regulations (FCP) or LPA;

  • Master SCSp: limited partnership agreement.

Notarial incorporation:

• • RAIF feeders require notarial certificate and publication in Mémorial;

  • SLP formation via private deed is sufficient.

Prepare offering documents indicating that the vehicle is not subject to CSSF supervision (mandatory disclosure for RAIF).

Establish co‑investment and parallel vehicle agreements, if multiple feeders or sides are involved.

Subscribe capital: RAIF minimum €1.25 M must be reached within 24 months; similar thresholds apply to SIF/SCSp leveraged alternatives.

6. Attracting International Investors & Validating the Concept

Launching a feeder structure enables sponsors to:

• Raise initial capital under controlled risk: initial feeders may be closed or limited;

• Show early investment execution within the master SCSp;

• Demonstrate governance, NAV reporting, fee alignment, liquidity mechanics to prospective institutional or offshore LPs;

• Launch additional feeder vehicles tailored by jurisdiction, investor profile, and offering terms (e.g. different currencies or share‑classes).

The RAIF‑structure’s EU marketing passport supports cross‑border marketing to well‑informed EU investors once the AIFM is authorised, and potentially further expanded under ELTIF regimes when investor criteria align.

7. Tax & Regulatory Considerations

• RAIFs and SCSp‑based vehicles benefit from low subscription tax (0.01%), exemption from corporate income and net wealth tax where structured under the regulated environment.

• SCSp partnerships remain tax-transparent, ensuring pass‑through status for LPs.

• Investors should consider double tax treaties, withholding implications and VAT/status of management company in Luxembourg.

For fund sponsors contemplating a master‑feeder launch in Luxembourg with up to €100 million in assets, two viable and efficient legal structures are available:

• A SICAV‑RAIF feeder investing into a master SCSp, leveraging RAIF’s non‑CSSF‑approval model; or

• A standalone SCSp structured with a Luxembourg registered management company/AIFM, offering speed and flexibility.

These structures offer cost‑effective proof of concept, early track record building, and enable marketing to international investors via the AIFMD passport regime. With well‑crafted legal documentation, compliant governance, and transparent investor communication, sponsors can validate their model and scale toward larger vehicles in Luxembourg’s fund ecosystem.

Please contact your Damalion expert now to setup your master feeder fund in Luxembourg.