5 Questions to: Henning Frölich

What are the fund services offered by beonti ?

beonti distinguishes itself as a premier boutique service provider in Luxembourg's financial landscape, with a specialized focus on the alternative investments sector. Our mission extends beyond conventional consulting, aiming to redefine industry standards through solutions tailored to our clients' unique challenges and opportunities.

This being said, we offer a comprehensive suite of services designed to elevate fund management and governance, inter alia taking over directorship mandates in funds / SPVs or supporting those holding these positions, shaping fund structures by aligning them with regulatory requirements or seeking to build an efficient setup of fund related parties around as well as supporting within reporting and/or audit processes. Generally, we intend to be a partner to our customers, empathetically knowing their needs and tailor our services accordingly.

What are your expectations for the Luxembourg Financial Sector for the next 5 to 10 years?

We continue to see numerous developments on the regulatory front. The key areas to highlight are ongoing - and justified - increases in ESG-related requirements, focusing not only on sustainability in the sector, but also on social responsibility and governance aspects. This trend is expected to continue in 2025 and beyond. Furthermore, the implementation of AIFMD 2 and updates to the UCITS Directive will require further regulatory adjustments for market participants and coming on top of continuously increasing AML/CFT requirements as well as the implementation of the Digital Operational Resilience Act (DORA).

In our specific business field, we anticipate a continuation of the consolidation trend among service providers, driven by the need for economies of scale and efficiency in an increasingly competitive and regulated environment. Concretely larger institutions will continue to acquire smaller market participants and thus an increasing price pressure in the market, especially on the remaining small and mid-sized players.

Generally, the financial market, along with other sectors, will face significant challenges due to technological structural changes, particularly the widespread introduction of artificial intelligence (AI) in business processes. This transformation is becoming increasingly necessary due to a substantial shortage of skilled workers across all industries, a situation further complicated by Luxembourg's dependence on foreign labor.

How does beonti position itself as a small service provider among these challenges?

It may sound somewhat paradoxical to what was said before, but we see this as an absolute opportunity for us and our approach as a service provider and consulting boutique.

Our initial approach when launching beonti in 2022 was to help small asset managers, who might even represent ticket sizes too small for established firms or who may have had negative experiences with them, to build the appropriate, cost-sensitive setup for their needs. This applies to newcomers in the Luxembourg market as well as to adjustments for already established players.

As an example of our services, let me explain our Fund-Setup-Analysis. In this process, we assess the complexity of a structure from the perspectives of an auditor, accountant, valuation, regulatory and governance experts. This allows us to provide valuable feedback to both the fund initiator and the Luxembourg service provider on the realistic demand for resources and appropriate pricing. As a result of these analyses, we create customized service provider setups for fund structures that align with individual client needs, ensuring long-term customer satisfaction. In our opinion, this approach is crucial for reducing the expectation gap about our Luxembourg as a fund hub. We see this by offering these tailored solutions, as our contribution to keep the promise of Luxembourg being the attractive fund domicile, particularly for small or highly specialized asset managers from Switzerland or the United States. Also, in light of the aforementioned consolidation, we anticipate an increased market demand in this area, particularly regarding quality and pricing.

Due to our highly experienced and multilingual team, we see another opportunity - especially for the German-speaking sector - in light of the mentioned shortage of skilled workers. Market participants must face the ever-increasing complexity of the regulatory environment and are therefore placing more specific demands on their service providers. As a small, agile boutique with very experienced profiles, we are better positioned to adapt to these individual needs.

How does beonti deal with the regulatory developments as spoken about in question 2?

beonti continuously analyzes the regulatory requirements that our clients have to meet. This enables us to assist them in implementing expanded requirements and entirely new implementations, through project steering or support. Specifically, and as said before already, beonti conducts highly detailed analyses of customer needs and decides on a case-by-case basis whether projects should be carried out independently or with one of our numerous specialized partners. This approach ensures that the highest standard of service quality is always achieved, as we promise our clients.

Concretely, I'd like to give two examples of the topic areas mentioned:

The subject of AML/CFT is on everyone's lips and - one doesn't need to be a prophet to know - will remain so for some time. In line with our promise of caring (“Kümmerer”), we want to support and somewhat relieve our clients in this area. To this end, we bring in our own resources as well as the extended expertise of a valuable partner to jointly model much more lean but anyway efficient processes for combating money laundering in our industry.

Regarding ESG, we see numerous service providers in the market who have focused primarily on regulatory implementations. However, in our 'favorite discipline', Real Estate, we go a step further. In addition to the environmental aspect, which has already gained significant momentum through official requirements in project development and energy generation, we also want to address the "S" in ESG. For instance, despite the tense situation on the Real Estate market, we contribute in our way to support promoters with attractive investment opportunities for affordable housing to enable clients to promote social aspects of our society.

How would you describe any unique or innovative strategies or approaches that you have used in servicing Luxembourg AIFs?

beonti stands out by maintaining a deep understanding of regulatory and sectorial changes and clients´ needs. Hence, we can offer tailored solutions that address the complex challenges faced by financial market participants and our flexible approach allows us to leverage our own expertise or bring in specialized partners where needed, ensuring that we consistently deliver high-quality services that meet our clients' specific requirements. The latter can be also service providers themselves, who we may support on an interim basis or contribute on the long term with expertise (“Servicer of the Servicers”).

This being said, our assets are the high seniority of our team, which has gathered many years of experience on both the service provider and market sides, as well as our close partnership and regular exchanges with our clients, allowing us to respond even more effectively to their individual needs. This together with our independence and broad network in and outside Luxembourg gives beonti the unique role as curator and ´Kümmerer´ for its clients.