The ELTIF: concrete help to support the EU capital markets union
ELTIFs (European Long-Term Investment Funds) are closed-end mutual funds that provide repayment of capital at maturity. They were introduced by EU Regulation 2015/760 to incentivise long-term investment in infrastructure projects, unlisted companies and in small and medium-sized enterprises that need stable financing.
They have the characteristic, on the one hand, of being investment instruments that are difficult to liquidate before maturity, as they have a low level of liquidity, and on the other hand they are able to offer an important flow of income and a capital appreciation at maturity.
ELTIFs must primarily allocate at least 70% of their assets to long-term investment risk capital, i.e. in shares or in debt, including bonds issued by European companies, with certain parameters on diversification, such as concentration in a single company or in single real activities can be no greater than 10%.
The ELTIF proposal, in addition to being of interest to institutional investors, is also aimed at both professional and retail private investors.
Despite the potential advantages of these vehicles, only a limited number of ELTIFs have been launched in Europe. To date, the ELTIF regulatory framework has not managed to bring added value to investors and even less to companies that were to supposed be the main recipients of these instruments.
Therefore, the European Commission recently launched a consultation on the revision of the ELTIF Regulation...