Thank you for your suggestion @Alexandru !
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I can not try this fix because since then I have moved on and I use Ubuntu18.04 
for my L0 hypervisor, and I have also tried with Ubuntu18.04 on th L1 VMs.
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However very interesting. On my previous Ubuntu16.04 hosts, I believe I used 
"linux-image-4.4.0-XYZ-generic".

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https://bugs.launchpad.net/bugs/1797332

Title:
  qemu nested virtualization is not working with Ubuntu16.04 + Intel CPU

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