The European Fund and Asset Management Association (Efama), the European Private Equity and Venture Capital Association (EVCA) and the Federation of European Securities Exchanges (FESE) have welcomed the adoption by the European Parliament of its report on European Long-term Investment Funds (ELTIFs).
 
The groups were particularly encouraged by the implementation of a flexible regime that allows the design of ELTIFs to be based on the needs of investors and their investment strategy, the maintenance of the ‘retail passport’, the creation of separate professional and retail ELTIFs as well as the identification of the third category of semi-professional investors.
 
They also draw attention to the inclusion of listed small and medium-sized enterprises up to €1bn market capitalisation in the scope of eligible investments, observing that there are thousands of small and mid-cap companies listed on European regulated markets and multilateral trading facilities.
 
However, they are concerned that the European Parliament report does not create an efficient framework for the right of investors in retail ELTIFs to redeem their shares prior to the end of the fund’s lifetime, arguing that this should be left to the discretion of the ELTIF manager.
 
“We hope that discussions in the Council and the upcoming trilogues will ensure a more balanced and better designed structure of ELTIFs, with the aim of matching investors’ needs and facilitating long term investment in the EU,” said Peter De Proft, director general Efama.
 
Judith Hardt, director general FESE said: “Our members are delighted that the ELTIF proposal will help boost smaller companies’ liquidity by enabling more investors to invest in them. This will improve the conditions for future mid-cap IPOs and lower the cost of capital, while allowing European investors to benefit from long-term investments conducted by Europe’s most dynamic and rapidly growing companies.”