Out-Law / Your Daily Need-To-Know

Long term investment funds deal ‘paves way to boost EU infrastructure finance’

02 Dec 2014, 4:40 pm

Europe’s lawmakers say they have struck “a political deal” over European long term investment funds (ELTIFs) that should “boost non-bank financing for projects that deliver infrastructure, intellectual property or research results which benefit the real economy and society”.

Negotiating team leader Alain Lamassoure, a French MEP, said members of the parliament’s economic and monetary affairs committee (EMAC), the European Commission and representatives of EU countries, “have agreed on a structure to attract the savings of both individual and professional investors to finance long term investments in the European Union”.

EMAC chairman Roberto Gualtieri said the agreement “will provide the EU with a new tool to boost long-term investment in Europe”. Gualtieri said the agreement would complement plans unveiled by the European Commission to “mobilise at least €315 billion of additional investment over the next three years”.

However, the agreement still requires the formal endorsement of EMAC in addition to ratification by the whole parliament and the Council of Ministers.

EMAC said ELTIFs, which are designed to boost non-bank investment in the real economy across Europe, “will help pension funds, insurance companies, professional and retail investors, who are willing to invest at least €10,000 for the long term in one or more ELTIFs, to put money into projects in their own countries, elsewhere in the EU and outside it, provided that these benefit the EU economy and growth”.

“ELTIFs will channel funds only into long-term projects, which by their very nature are unlikely to return a quick profit,” EMAC said. “But they should drive long-run growth by delivering infrastructure, machinery and equipment, education and research results.”

“ELTIF investors will have to be ready and able to make a long term commitment, since they will not be able to withdraw their money easily,” EMAC said. However, to protect retail investors in particular, EMAC said negotiators agreed ‘redemption’ rules that would enable an ELTIF which has enough liquid assets to return an investor’s money on request.

“Parliament’s negotiators inserted provisions to ensure that long-term funds really do benefit the EU economy and growth, that they are not invested in speculative assets and that any retail investors in them are properly informed and protected,” EMAC said.