The Alternative Credit Council (ACC) and the Alternative Investment Management Association (AIMA) have drafted a response to European Commission's proposal amending the European Long-Term Investment Fund (ELTIF). 

The ACC and AIMA support the ambition shown in the proposed reforms of the European Long-Term Investment Fund (ELTIF) Regulation. These changes have the potential to unlock ELTIFs’ value proposition and deliver for EU investors and businesses alike.

In addition to the significant improvements proposed by the European Commission, the ACC and AIMA position paper proposes supplementary reforms to optimise the role of the ELTIF as part of the CMU while remaining faithful to policymakers’ broader objectives and responsibilities. Key amendments include:

• Borrowing: Allow loan-focused ELTIFs to use borrowing in the same way as other ELTIFs;
• Evergreen ELTIFs: Allow the development of open-end or ‘evergreen’ ELTIFs by disapplying the requirement to be closed-end and fixed maturity where ELTIF managers can demonstrate that they have robust liquidity risk management measures in place;
• Optional liquidity window: Lower the minimum lock-in period to two years. Do not introduce Regulatory Technical Standards and instead rely on the requirements introduced in the level 1 rules;
• Fund-of-fund structures: Remove the proposed limits on the amount of capital a retail ELTIF can invest via a fund-of-fund structure;
• Allow ELTIFs to fully benefit from master-feeder structures: Remove the provisions that prohibit the investment of an ELTIF feeder into a master AIFs other than a master ELTIF;
• Expanding the range of eligible assets: ELTIFs should be permitted to invest in all securitisations rather than just STS Securitisations;
• Central public register: Remove the requirement for an ELTIF’s rules or instruments of incorporation of the ELTIF, the annual reports, the prospectus and, where available, the Key Information Document to be made available on the ESMA central public register; and
• Implementation: Introduce appropriate grandfathering conditions for ELTIFs established prior to the implementation of proposed legislative changes.

If you have questions or comments, please contact Yasmin Bou Hamze.