Will ELTIF 2.0 boost long-term investments in the EU economy?
Published on 22nd Feb 2023
European Parliament adopts the EU’s regulation for long-term investment funds
The European Parliament adopted the EU’s regulation for long-term investment funds (ELTIFs) otherwise known as "the ELTIF 2.0 regulation" on 15 February 2023.
The ELTIF regime was intended to boost investment funds' long-term investments in the European Union's real economy.
It allows for investments that, for example, promote the development of EU border regions, enhance commercial, financial and technological cooperation and/or finance environmental and sustainable energy projects.
The original ELTIF regulation did not, however, scale up as the European Parliament expected. Up until now only 84 ELTIFs have been registered with the European Securities and Markets Authority (ESMA).
New features of amended regulation
The European Parliament decided to amend the ELTIF regulation in a new attempt to boost long-term investments in the EU economy.
ELTIF 2.0 includes the following new features:
- It introduces a broader scope of eligible assets in which ELTIFs can invest. The new ELTIF regulation introduces a simplified definition of "real assets" and the minimum threshold value of €10 million per investment has been removed;
- It increases flexibility for ELTIF investments, including an increased pocket for liquid investments (45% instead of 30%), more possibilities for the use of leveraged investments and the possibility to invest in master-feeder structures; and
- It allows for a more flexible marketing regime in which the €10,000 minimum investment no longer applies.
ELTIF 2.0 will be published in the Official Journal of the EU in March 2023 and will enter into force in Q1 2024.