However, despite reports that fund groups have been eagerly awaiting the arrival of the legislation for some time, there is little evidence that firms are rushing to get ELTIFs to market.
Economic growth
ELTIFs are a pan-European regime for alternative investment funds (AIFs), intended to channel capital into long-term investments in the real economy; boosting economic growth and jobs.
They target specific types of project that require long-term funding to develop successfully, such as infrastructure, but often struggle to get traditional financing.
Only managers who are authorised under the Alternative Investments Fund Managers Directive (AIFMD) can offer an ELTIF.
They are also required to invest at least 70% of their capital in ‘eligible investment assets’. These include unlisted companies, debt instruments for which a buyer cannot be easily identified, real assets that require significant initial investment, and SMEs with capitalisations of up to €500m (£361.5m, $543m) that have been admitted to trade on a regulated market.
Better mobilised capital markets
According to the European Parliament in April 2015, the financial crisis has shown that complementing bank financing bank financing with a wider variety of financing sources that better mobilise capital markets could help tackle financing gaps.
ELTIFs, therefore, can play a crucial role in this respect, and can also mobilise capital by attracting third-country investors, it added.
Possibly maybe
An industry source told International Adviser that there are some developments ongoing and that some projects could potentially launch in the first quarter of next year.
The Irish and Luxembourg regulatory authorities have both welcomed the signing of the new regulation.
As of yet, however, there has been little in the way of fanfare from fund providers for the new fund.
