The Alternative Investment Management Association (AIMA), the global representative for the alternative investment industry, and its private credit affiliate, the Alternative Credit Council (ACC), welcome the political agreement on the European Long-Term Investment Funds (ELTIF) Regulation confirmed last night.

The much-needed modernisation of the ELTIF framework will lead to a significant increase of investment into the EU economy at a time when traditional sources of financing are becoming more challenging for businesses to access.

The new rules will make it easier for asset managers to launch products that cater to both institutional and retail clientele with additional flexibility for the former and important protections for the latter, ensuring that regulatory requirements are properly calibrated.

AIMA and the ACC have assisted EU policymakers by providing technical solutions to the key areas in need of change with ELTIF, such as improving the supply side of financing, while retaining the original policy goals.

Introduced in 2015, the ELTIF framework has seen a modest level of take up because of several restrictive features such as prohibitions on co-investments that did not allow asset managers to include ELTIFs in their private market product lines.

The agreement will significantly upgrade the ELTIF product by:

• Splitting up retail and professional ELTIFs to cater to these investor bases that have different regulatory requirements

• Simplifying access to ELTIFs by retail investors while maintaining strong diversification suitability and disclosure protections

• Introducing greater flexibility regarding eligible assets for the ELTIF by expanding the universe to corporate and real estate investments

• Introducing a framework for master-feeder ELTIFs and fund-of-funds structures

• Allowing ELTIFs to use prudent levels of borrowing to expand their investment potential

• Allowing ELTIFs to co-invest with other funds and/or accounts managed by the same investment manager

Jiří Król, Global Head of the Alternative Credit Council, says: “I would like to congratulate the European Commission for introducing an excellent proposal and the co-legislators for improving it even further. We are convinced the new ELTIF product will become a global success and a key achievement of the Capital Markets Union policy."

“There are large pools of capital that are not being deployed today in the EU because of significant barriers to their cross-border flows. These reforms to the ELTIF will change that by creating an attractive and flexible vehicle focused on the direct financing of EU businesses and infrastructure. We estimate this could result in an additional €100 billion of funding over the next five years.”¹

¹ https://acc.aima.org/research/financing-the-economy-2021.html

Contact Details:

Tom Kehoe, Global Head of Research and Communications, AIMA

Tel: +44 207 822 8388

Email: [email protected]

About AIMA:

The Alternative Investment Management Association (AIMA) is the global representative of the alternative investment industry, with around 2,100 corporate members in over 60 countries. AIMA’s fund manager members collectively manage more than US$2.5 trillion in hedge fund and private credit assets.

AIMA draws upon the expertise and diversity of its membership to provide leadership in industry initiatives such as advocacy, policy and regulatory engagement, educational programmes and sound practice guides. AIMA works to raise media and public awareness of the value of the industry.

AIMA set up the Alternative Credit Council (ACC) to help firms focused in the private credit and direct lending space. The ACC currently represents over 250 members that manage US$600 billion of private credit assets globally.  

AIMA is committed to developing skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the first and only specialised educational standard for alternative investment specialists. AIMA is governed by its Council (Board of Directors).

About the ACC:

The Alternative Credit Council (ACC) is a global body that represents asset management firms in the private credit and direct lending space. It currently represents 250 members that manage over US$600bn of private credit assets.

The ACC is an affiliate of AIMA and is governed by its own board which ultimately reports to the AIMA Council.

ACC members provide an important source of funding to the economy. They provide finance to mid-market corporates, SMEs, commercial and residential real estate developments, infrastructure as well the trade and receivables business.

The ACC’s core objectives are to provide guidance on policy and regulatory matters, support wider advocacy and educational efforts and generate industry research with the view to strengthening the sector's sustainability and wider economic and financial benefits.