LFF 2 succeeds LFF 1 with additional firepower of up to € 200 million. LFF 2 will support investments to stimulate further the diversification & sustainable development of the Luxembourgish economy. It will have a broader scope including hybrid debt equity investments in addition to venture capital.
On Friday, 17 March 2023, the Ministry of Finance, Ministry of the Economy, Société nationale de crédit et d'investissement (SNCI) and the European Investment Fund (EIF) officially launched the Luxembourg Future Fund 2 (LFF 2).
LFF 2 is the successor initiative to the existing Luxembourg Future Fund (LFF 1), which reached the end of its active investment period.
The launch of LFF 2 highlights the successful cooperation between SNCI and EIF aiming to stimulate the diversification and sustainable development of the Luxembourgish economy via funding activities. With € 200 million in total financing commitments between SNCI (up to € 160 million) and EIF (up to € 40 million), LFF 2 provides additional firepower in support of innovative projects in Luxembourg.
With the launch of the LFF 2, we will pursue a unique partnership that is built on the EIF's deep expertise of managing public policy focused investment initiatives and the SNCI's as well as the knowledge of the Luxembourg economy of both the Ministry of Finance and the Ministry of the Economy. This complementarity helps focus investments in innovative technologies that will generate a sustainable and positive impact in key sectors like finance and climate technologies, thus contributing to the further diversification of our economy." Minister of Finance, Yuriko Backes
Like LFF 1, LFF 2 will target a risk-adjusted financial returns whilst simultaneously stimulating the diversification and sustainable development of the Luxembourgish economy with investments across a range of sectors including climate technologies, Fintech, cybersecurity, energy resilience, life science and medical technologies, as well as new space technologies.
From a public policy perspective, LFF 2 will provide an important tool in driving forward the diversification of the Luxembourg economy and the development of its strategic sectors by cooperating with the private sector in pursuit of sustainable innovation here in Luxembourg." Minister of the Economy, Franz Fayot
In line with the existing LFF 1 initiative, investments under LFF 2 will continue to take place in the form of fund commitments and/or co-investments. However, compared to LFF 1 the investment scope has been broadened and will now:
- Include investment funds and businesses already established in Luxembourg, thereby allowing these entities to expand local operations further.
- Target more mature innovative businesses by providing hybrid debt-equity investments. These less dilutive investment instruments may appeal to companies unwilling to give up further equity stakes. Thus, the addition of hybrid debt-equity investments will allow LFF 2 to invest into companies at different stages of development.
- As such, investments will also be considered for more mature companies, facing a complex and uncertain market environments, including businesses currently exposed to changes in digitalisation, supply chain disruptions or companies transitioning to a low-carbon business model.
Continue to develop the “sustainable and resilient Luxembourg economy of tomorrow”
SNCI President, Vincent Thurmes, stated: "By further valorising the 'ecosystem dynamics' initiated by LFF 1, LFF 2 will continue to develop together with all the stakeholders Luxembourg's sustainable and resilient economy of tomorrow."
"We're pleased to partner again with the SNCI and leverage on the EIF's experience for the second generation of the LFF initiative," said EIF Chief Executive, Marjut Falkstedt, "Broadening the scope to include hybrid debt equity investments in addition to venture capital will help address the financing needs of innovative companies that can bring value to Luxembourg and strategic sectors of the European economy."
Photo: Marjut Falkstedt, Chief Executive of EIF; Yuriko Backes, Luxembourg's Minister of Finance; Franz Fayot, Luxembourg's Minister of the Economy; Vincent Thurmes, Chairman of the Board of SNCI; Credit: MECO