A glossary of structured finance.

A regulated manager authorised to manage alternative investment funds under the European AIFMD framework. The AIFM holds the regulatory responsibility for portfolio and risk management of a fund.

Describes an obligation or instrument whose repayment is supported by a defined pool of underlying assets, such as receivables, inventory, or property. The assets serve as the primary source of value behind the exposure.

A written undertaking by a bank to cover a defined obligation of its client if that client fails to perform. Lumen Capital does not monetise, lease, or advance funds against bank guarantees, and treats unverifiable or leased instruments as outside its scope.

An asset pledged by a borrower or counterparty to secure an obligation, which the secured party may claim if the obligation is not met. Collateral reduces credit risk and must be independently verified and properly held.

A contractual condition in a financing agreement that requires a party to do, or refrain from doing, specified things. Covenants protect lenders and investors by setting boundaries on conduct, leverage, or use of proceeds.

The design of financing, holding, or investment arrangements that span more than one jurisdiction. It addresses regulatory, tax, currency, and legal considerations so that a structure functions coherently across the relevant countries.

A regulated institution that holds and safeguards financial assets on behalf of their owner, keeping those assets separate from the custodian's own balance sheet. Custody arrangements support asset protection and clear ownership records.

The structured investigation of a counterparty, asset, or transaction before commitment. It verifies facts, confirms documentation, and assesses legal, financial, and reputational risk.

A document that sets out the scope, terms, responsibilities, and fees of a professional relationship. It defines what is, and is not, included in a given mandate.

A private organisation that manages the wealth, governance, and affairs of a single family or a small group of families. Family offices typically coordinate investments, succession planning, and administration over the long term.

A company formed to own equity stakes in other companies or assets rather than to carry on day-to-day operations itself. It is often used to consolidate ownership, organise governance, and manage cross-border investments.

The country or legal system whose laws govern an entity, contract, or transaction. The choice of jurisdiction affects regulation, taxation, enforcement, and the rights of the parties.

Know Your Customer (KYC) and Anti-Money Laundering (AML) are the procedures used to verify the identity of counterparties and to detect and prevent illicit funds. They are a standard condition of onboarding and of any regulated or professional engagement.

A layer of financing that sits between senior debt and equity in the capital structure. It typically carries higher risk and higher expected return than senior debt and is repaid after senior obligations.

A document that records the intentions and shared understanding of parties exploring a relationship. It is generally preliminary and may be wholly or partly non-binding, depending on its terms.

A debt instrument issued under a programme, typically with a maturity in the medium-term range. Lumen Capital does not monetise, lease, or advance funds against medium-term notes, and treats unverifiable or leased instruments as outside its scope.

An agreement under which parties agree not to bypass one another and to keep shared information confidential. It is used to protect introductions, relationships, and sensitive details during early discussions.

An institution appointed to handle payments of principal, interest, or distributions to holders of an instrument. The paying agent administers cash flows according to the terms of the issue.

Lending provided by non-bank investors directly to companies or projects, outside public bond markets. It is privately negotiated and typically held to maturity rather than traded.

Documentation that evidences a party's ability to meet a financial commitment, such as a bank statement or a confirmation from a financial institution. It is used to confirm capacity before a transaction proceeds.

An investor who meets defined thresholds of wealth, income, or professional experience and is therefore eligible for certain private or non-retail offerings. Qualification is confirmed during onboarding.

A Luxembourg fund vehicle that is not itself authorised by the regulator but must appoint an authorised AIFM. It offers structuring flexibility for funds aimed at qualified investors.

The legal and structural separation of certain assets, liabilities, or activities so that they are insulated from the risks of other parts of a structure. It is used to protect investors and to contain exposure within a defined perimeter.

The process of pooling financial assets and issuing securities backed by the cash flows of that pool. It allows the underlying exposures to be transferred to investors in tradable form.

Debt that ranks first for repayment and is backed by specific collateral. In the event of default, senior secured creditors are paid before unsecured and subordinated claims.

A Luxembourg holding and financing company used to own and manage participations in other entities. It is a common vehicle in cross-border investment and group structuring.

A separate legal entity created for a defined and limited purpose, such as holding an asset or isolating a transaction. It is used to ring-fence risk and to keep specific activities distinct from a sponsor's other operations.

A bank undertaking to pay a beneficiary if the applicant fails to perform a defined obligation, used as a backstop rather than a primary payment method. Lumen Capital does not monetise, lease, or advance funds against standby letters of credit, and treats unverifiable or leased instruments as outside its scope.

The financing and risk-mitigation tools that support the movement of goods between buyers and sellers, often across borders. It includes instruments and structures designed to bridge the gap between shipment and payment.

Legal arrangements used to hold and administer assets for defined beneficiaries or purposes, separate from the personal estate of the founder. They are commonly used in succession planning, asset protection, and philanthropy.