EU Publishes Final Text Of ELTIF Regime – Fund Management/ REITs

The EU has published its final text for the proposed revision of the
European Long-Term Investment Fund (“ELTIF”) regime by
means of the European Long-Term Investment Funds Regulation.

The ELTIF regime was originally introduced in 2015 to create a
product allowing retail access to alternative investment classes
including private credit, private equity and infrastructure but has
seen only a modest number of launches as a result of several
restrictive features of the regime (such as prohibitions on
co-investments that did not allow asset managers to include ELTIFs
in their private market product lines). It is hoped that the
updating of the ELTIF framework will lead to a significant increase
of investment into the EU economy at a time when traditional
sources of financing are becoming more challenging for businesses
to access.

The agreement will significantly upgrade the ELTIF product
by:

• Splitting up retail and professional ELTIFs to cater to these
  investor bases that have different regulatory requirements and
  allow institutional-only products.




• Simplifying access to ELTIFs by retail investors while
  maintaining strong diversification suitability and disclosure
  protections.




• Introducing greater flexibility regarding eligible assets for
  the ELTIF by expanding the universe to an increased range of
  corporate and real estate investments.




• Introducing a framework for master-feeder ELTIFs and
  fund-of-funds structures.




• Allowing ELTIFs to use prudent levels of borrowing to expand
  their investment potential.




• Allowing ELTIFs to co-invest with other funds and/or accounts
  managed by the same investment manager.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.