European Long-Term Investment Funds

Following on from the proposals for European VenCap and Social Entrepreneurship funds (EuVECA & EuSEF – see Regulatory Roundups 47 & 48), Europe is proposing a further type of collective label, a European Long-term Investment Fund (ELTIF).

They are designed to be long term investments (as in investors will be locked in for whatever the fixed term is) to provide monies for long term projects, such as infrastructure, so investment is largely (at least 70%, although this level of investment can be phased in over a period of up to five years) restricted to unlisted companies and real assets plus EuVECA and EuSEF. It will be available to retail investors as well as the usual institutions etc. The balance of up to 30% can be invested in assets that would be eligible for a UCITS fund and which will act as a buffer, affording the fund a degree of flexibility regarding when to sell assets or replace them with new ones.

The fund will be an AIF and subject to the AIFMD so ELTIF managers will need to be authorised as an AIFM. An ELTIF will be classified as an authorised closed-ended fund (so will be subject to prospectus requirements) and an ELTIF marketing passport will be available.