The LFF 2 initiative is a EUR 200 million investment program between European Investment Fund (EIF) and Société Nationale de Crédit et d’Investissement (SNCI), which builds on the successful implementation of the LFF 1 initiative.
Under LFF 2, EIF and SNCI cooperate in order to stimulate the diversification and sustainable development of the Luxembourgish economy by making available financial resources to venture capital & private equity funds and early to later stage innovative businesses.
Investment proposals under LFF 2 will have to meet the Luxembourg Sustainable Economic Substance Criteria (LSESC) in order to be considered as an eligible investment proposal. See below what the so-called Luxembourg Sustainable Economic Substance Criteria (LSESC) entail:
LFF 2 investment operations shall exhibit at least two of the following projected Luxembourg Sustainable Economic Substance Criteria (LSESC):
- turnover/revenue/profit generation by companies and/or vehicles established in Luxembourg;
- direct cost reduction (efficiency gain) in Luxembourg;
- significant contribution to environmental sustainability in Luxembourg (impact on KPIs);
- creation of key skills (placing key people, knowledge, expertise etc.) in Luxembourg;
- significant employment creation in Luxembourg;
- diversification of Luxembourg’s funding landscape by offering new funding means to Luxembourg based companies.
Partners
Investment strategy
LFF 2 will be managed by EIF on behalf of SNCI and investment operations will conducted via primary fund commitments and/or via co-investments through Special Purpose Vehicles (SPV).
As per LFF 1, LFF 2 continues to follow a dual fold investment objective of achieving on the one hand a risk-adjusted financial returns whilst simultaneously stimulating the diversification & sustainable development of the Luxembourgish economy. This means, investments across a range of sectors and stages will be targeted including climate technologies, artificial intelligence, cybersecurity, energy resilience, life science & medical technologies, as well as investment in new space technologies.
The means through which the projected Luxembourg Sustainable Economic Substance Criteria (LSESC) shall be generated shall be one or more of the following:
- Incorporation of new business/research entities in Luxembourg or expansion of existing business/research entities in Luxembourg.
- Incorporation of new investment vehicles in Luxembourg or expansion of existing investment vehicles in Luxembourg (incl. expansion of associated employment positions).
- Creation and/or development of (new) fields of business activities in Luxembourg or expansion of existing fields of business activities in Luxembourg.
- Commencement of formal cooperation with key actors within the Luxembourg innovation system (universities, public research labs, clusters of [business] activities) or expansion of formal cooperation with aforementioned key actors.
The envisaged Luxembourg Sustainable Economic Substance Criteria (LSESC) should be generated and maintained over a medium-term perspective.
Are you a fund manager or a company interested in partnering with us under LFF 2?
Investments under LFF 2 will be in the form of Primary Fund Commitments and/or via Co-Investments through Special Purpose Vehicles (SPV). Investment proposals will need to be able to demonstrate the projected Luxembourg Sustainable Economic Substance Criteria (LSESC) at the time of investment consideration.
- LFF 2 Primary Fund Commitments: LFF 2 will aim to invest as a Limited Partner (LP) in venture capital and/or private equity funds (incl. hybrid debt-equity funds) that are either not yet established in Luxembourg or already established in Luxembourg and willing to expand Luxembourg based presence. Supported fund managers are expected to engage actively within the Luxembourg investment ecosystem.
- LFF 2 Co-Investments: LFF 2 co-investments will be made through Special Purpose Vehicles (SPV) managed by institutional type investment funds (incl. VC & PE funds, Family Offices etc.). Underlying final beneficiaries (companies) are typically innovative companies (across stages & sectors) that are looking to either establish their offices in Luxembourg or aiming to expand existing operations/presence in Luxembourg. Companies supported via LFF 2 co-investments are expected to engage actively within the Luxembourg business ecosystem.
Note: All LFF 2 investments by will be made on a commercial basis with risk-commensurate financial performance objectives. EIF, in its capacity as manager under LFF 2 will conduct commercial due diligence on the fund manager entity only.
If you would like to discuss your investment proposal further or would like to obtain further information regarding LFF 2 , please send an email to our LFF 2 investment team.
How to apply?
If you are a financial intermediary or a fund manager and you are interested in receiving an investment from EIF under DFF, please get in touch with your existing EIF relationship manager.