Why LPA GAAP is just fine your SCSp

You know which city this is.

Green Isle – sunny and nice beaches

And if you follow the recent developments in the fund industry, you also know why everyone is starting to get excited about partnerships in that country again (I´m not talking about the [unfortunately very difficult] exercise of meeting your soulmate, but about partnerships as a commercial agreement between a general and a limited partner).

Aaaaand I have no clue about accounting and reporting requirements under Irish statute and regulation, would be great to get some insights (PM me on LinkedIN).

Landlocked – frequently hit by storms

But what I do know is: whichever accounting principles (“GAAP”) you are comfortable with, if your business activity is conducted through a Luxembourg special limited partnership commonly referred to as SCSp, any GAAP is good enough. Yes, just go with whatever you think is appropriate.

Luckily this view is shared by many market participants, and that has – amongst many other benefits – fueled the rise of the SCSp’s as an investment vehicle since its creation in 2013.

And even though the entire investment community including the biggest asset managers and their investors (and excluding the auditors) embrace and value that flexibility, SCSp’s that are subject to a very specific regulatory nuance are surrounded by a little article in a big law that needed some interpretation.

A very recent announcement has now been made by the regulatory body in Luxembourg (actually, just a small revision in an existing Q&A) that basically takes that flexibility of the accounting of Luxembourg SCSp’s that everybody appreciates and throws it into a stream of depression – as if we are not already shocked enough by bad news every day already.

Oh sorry, I thought you’re talking about something important

If you don’t give a dang about accounting and fair value and stuff, this is all you need to know and you can stop reading.

If you want to know why that recent revision is potentially an incorrect application of law, stay tuned and follow me on LinkedIn as I’ll share more thoughts about the topic.

[full disclosure: I have worked in Luxembourg all my life and it’s the greatest country when it comes to investment structures, but I need to admit that it’s impossible not to love Ireland]