The Drawdown quotes Edyta Brozyniak on setting up and structuring private credit funds
Edyta Brozyniak, Partner, advises general partners (GPs) on credit fund formation. She speaks to The Drawdown on the importance of choosing the domicile of your debt fund wisely.
“A fund vehicle should be tax transparent. GPs should ensure that credit funds can lend money without incurring withholding tax on the interest received from their investments. To this end, it is important to analyse which jurisdiction can offer exemptions from the payment of the withholding tax. Traditionally, Luxembourg has been a preferred jurisdiction for that reason.”
In the pipeline is an impending proposed update on AIFMD II, with any changes anticipated to come into effect from 2025.
“This proposal would affect credit fund managers as the current draft includes the requirement that loan-originating funds must be closed-ended when the fund manager is not able to show its home regulator that their fund has appropriate liquidity risk management policies and suitable liquidity risk management tools. There are also other proposals, for example the requirement to retain a percentage (5%) of the originated loan until its maturity. We have to wait and see what the final text will be.”
Read the full article in The Drawdown here.