The Regulation (2015/760) on European Long Term Investment Funds (ELTIFs) has now been published in the Official Journal – see Regulatory Roundup 64.
They are designed to provide long term finance (an ELTIF is not required to offer redemption rights before the end of its life) for areas such as infrastructure, the roll-out of new technologies and SMEs so it is a requirement that at least 70% is invested in ‘eligible investment assets’. The latter are undertakings – financial undertakings as defined in the Regulation do not qualify – that are either not admitted to trading on a regulated market or MTF or, where they are so admitted to trading, their market capitalisation is no more that €500m. EuVECAs and EuSEFs also qualify as eligible investment assets. The balance of up to 30% can be invested in assets that would be eligible for a UCITS e.g. transferable securities dealt on a regulated market etc. In turn a UCITS will be able to invest in an ELTIF to the extent that it is eligible under the UCITS Directive.
An ELTIF will be an EU AIF and so an ELTIF manager will need to be authorised as an (EU) AIFM. Furthermore an ELTIF will need to be authorised in accordance with the ELTIF Regulation (which will be valid in all Member States). As such, not only will the ELTIF need to comply with the Regulation but also the ELTIF and its manager will need to comply with AIFMD. Although an AIF, it will be possible to market an ELTIF to retail investors, subject to certain requirements including a ‘suitability test’ and potential limits on investment (see Articles 26 – 31).
The Regulation applies from 9 December 2015 (Article 38).