The Commission said its goal is to have ELTIFs operational by mid-2015 as “useful vehicles” for investments in long-term projects and public or private/public investments in the rest of the economy.
The ELTIF regulation aims to direct investments into projects and companies in need of long-term financing that currently have difficulty raising funds on stock markets and securing loans from banks.
“Long term finance for infrastructure remains constrained: Many small medium enterprises still have limited access to finance and the free movement of capital across the EU remains a work in progress,” the Commission added.
Cross-border
Under the regulation, funds will be able to market ELTIFs across all EU member states, provided they have met a number of requirements.
Existing funds can only raise money in one member state as they are not accepted across national borders, which has so far limited their growth.
To qualify as an ELTIF, funds will have to invest 70% of their assets in unlisted companies needing long-term capital, real assets that need long-term capital to facilitate their development, European venture capital funds, and European social entrepreneurship funds.
Among other audiences, ELTIFs will be marketed at retail investors who can afford to have some of their money invested for a number of years in return for a steady income and lump sum at the end of term.
Peter De Proft, director general of the European Fund and Asset Management Association (EFAMA), said the organisation “welcomed” the agreement, viewing it as a “concrete step” towards meeting Europe’s pressing needs for financing growth and long-term development.
“The new ELTIFs framework has the potential to unlock capital and to encourage a shift towards investments in longer term projects,” he said. “We have long campaigned on the fact that asset managers have an important role to play in the changing landscape of a more capital market-based economy.”
“This shift is acknowledged as a tremendously important objective by institutions and regulators worldwide,” he added.
EFAMA said it was “looking forward” to assessing the agreement’s potential alignment of the needs of the EU economy with the needs and the interests of European investors.
In June, De Proft said the European finance sector felt “rushed” into implementing the Markets in Financial Instruments Directive (MiFID) II, which is aimed at increasing financial transparency.
He said that, while EFAMA supports the Markets in Financial Instruments Directive II, there is a general feeling that the industry should be given more time.
