For alternative investment and hedge fund managers, Luxembourg’s Special Limited Partnership, or SCSp, has quickly become a preferred structure. It blends the best of Anglo-American limited partnership flexibility with smooth access to the EU fund ecosystem. The benefits are straightforward: flexible governance, quick establishment, tax transparency when set up correctly, and appeal to global investors familiar with similar vehicles.
The SCSp is a contractual partnership, meaning it has no separate legal personality. It’s set up through a limited partnership agreement (LPA). Only a few mandatory rules apply, so the LPA can be tailored to replicate the well-known terms that investors and managers appreciate from Delaware or UK partnerships. This legal framework was introduced by Luxembourg in 2013, specifically to support alternative investment funds.
Managers use SCSp structures as core flagship funds or complementary satellites, such as feeder funds, co-investment vehicles, carried interest structures, or special-purpose entities for credit, tangible assets, and venture capital strategies. The LPA-first approach means consistent rules on things like transfer restrictions, profit waterfalls, and advisory committees, creating a predictable environment for investors.
For limited partners, the SCSp feels familiar. The combination of contractual flexibility, tax efficiency, and regulatory credibility is why the SCSp is fast becoming the go-to choice for managers and investors building private market platforms across Europe.
