Regulation 2015/760 (the “Regulation”) on European Long-Term Investment Funds (“ELTIF”) was published on May 19th 2015 in the official journal of the European Union.
Pursuant to its Article 38, the Regulation shall enter into force on December 9th 2015.
As further described in a previous article on ELTIF, the purpose of the Regulation is to establish a new brand for professional/institutional and retail investors wishing to invest in long-term infrastructure projects.
The ELTIF vehicle may only be managed by an authorised AIFM pursuant to Directive 2011/61/EU.
As stated by the Council of the European Union, the aim of the ELTIF brand is to “help tackle barriers to long-term investment in, for example, infrastructure projects, thereby stimulating employment and economic growth.”
"Originally designed as a vehicle suitable for professional and institutional investors, the ELTIF shall also be open to retail investors provided that a few safeguards are complied with."
These safeguards include, among others, the requirement for a fund manager or distributor to alert in writing retail investors about the closed-ended nature of the investment, if it is intended to last for more than ten years. In addition, the fund manager or distributor must ensure, through suitability tests, that a retail investor with a portfolio of up to EUR 500,000 doesn't invest an aggregate amount exceeding 10% of his/her portfolio in ELTIFs, provided that the initial amount invested in one or more ELTIFs is not less than EUR 10,000.
In summary, the Regulation offers to fund promoters a harmonised legal framework within the European Union and offers to potential investors the opportunity to invest in long term infrastructure projects through a regulated fund vehicle.