ELTIFs – the European Commission proposes Amendments

On 25 November 2021 the European Commission proposed a package of new measures regarding the Capital Markets Union which include, among other things, a revision of the regulation on ELTIFs.

The revised ELTIF regulation will provide greater flexibility for ELTIF managers and increase the attractiveness of the ELTIF label. As a result, European companies in the real economy will have increased access to stable, sustainable and diverse long-term financing, which will enhance their global competitiveness and create jobs.

In more detail, the proposal intends to:

• broaden the scope of the ELTIF’s eligible assets and investments;
• allow more flexible fund rules that include the facilitation of fund-of-fund strategies;
• reduce the unjustified barriers preventing retail investors from accessing ELTIFs;
• ease selected fund rules for ELTIFs distributed solely to professional investors; and
• introduce an optional liquidity window mechanism to provide extra liquidity to ELTIF investors and newly subscribing investors without requiring a drawdown from the capital of ELTIFs.

The barriers for retail investors will in particular be reduced by removing the initial minimum investment amount of 10,000 euros and the investment cap of 10% of such investor’s financial portfolio.

ELTIFs so far

As of October 2021, 57 ELTIFs were launched, with an aggregate of approximately EUR 2.4 billion in assets under management. These authorised ELTIFs are domiciled in only four Member States: Luxembourg (26 ELTIFs), France (16 ELTIFs), Italy (13 ELTIFs) and Spain (2 ELTIFs).

Our Luxembourg asset management & investment funds team has advised several major banking groups in the set-up of their ELTIFs with regard to legal, regulatory and tax aspects.

What's next?

The proposal by the European Commission will be discussed in the European Parliament and the EU Council before it is adopted.

Access the EU Commission’s legislative proposal for amendments to the ELTIF Regulation here.

For further information, please don’t hesitate to reach out to our asset management & investment funds team in Luxembourg.