With only a few European long-term investment funds (ELTIFs) launched since regulations on them were implemented in 2015, it was clear that the existing framework wasn’t working. Now, the Council of the EU has taken up a liberalised version of the regulatory framework in hopes of piquing interest in these investments.
Designed to focus on companies participating in the real economy of the EU, ELTIFs are seen as a tool for increasing the amount of non-bank financing available for transport, energy, and social infrastructure projects in member states. Yet, due to restrictions on the distribution process (which affected demand) and eligible assets (which affected supply), ELTIFs never took off among investors.
The Council’s announcement of its adoption of the revised framework is the final step in the regulatory review for ELTIFs. It follows a provisional agreement that was reached on 19 October last year after negotiations with the European Parliament.
Some key changes on the supply side include a broadened range of eligible assets and the removal of the requirement for real assets to be valued at €10 million or more. On the demand side, the requirement for a minimum investment of €10,000 has been abolished. In addition, retail investors with portfolios of less than €500,000 no longer must ensure that ELTIFs do not exceed 10 percent of their portfolio.
Read the full version of the amendments here.