Regulation (EU) 2023/606 of the European Parliament and of the Council of 15 March 2023 amending Regulation (EU) 2015/760 as regards the requirements pertaining to the investment policies and operating conditions of European long-term investment funds and the scope of eligible investment assets, the portfolio composition and diversification requirements and the borrowing of cash and other fund rules (Text with EEA relevance)

New Regulation (EU) 2023/606 as regards the regulatory framework for the operation of European Long-term Investment Funds (ELTIFs) was published in the Official Journal (OJ) of the EU. The regulation makes long awaited changes to the European Long-Term Investment Funds Regulation (ELTIF Regulation – Regulation (EU) 2015/760) to improve the investment opportunities of ELTIFs and to make them more attractive to investors. The key provisions of the new 2023 ELTIF regulation are briefly outlined below:
(1) it broadens the scope of eligible investments to include, among others, investments in securitizations, FinTechs, green bonds and in real assets that are located in third countries;
(2) it redefines „real asset“ to mean any asset „that has an intrinsic value due to its substance and properties“ which is a more liberal definition and allows for investments in infrastructure projects of various kinds (e.g. retirement homes, health facilities, educational facilities) and in other assets such as „intellectual property, vessels, equipment, machinery“;
(3) it lowers the minimum threshold for eligible assets and investments from 70% to 55%. Please note that in the proposed regulation, the regulators only sought to reduce this threshold to 60%;
(4) it permits minority co-investments rather than majority-based subsidiaries or direct investments only;
(5) it entirely removes the minimum investment value requirement of real assets (previously EUR 10.000.000). Please note that in the proposed regulation, the regulators only sought to reduce the minimum investment value limit to EUR 1.000.000;
(6) it removes the retail investor „entrance“ barrier of EUR 10.000 altogether;
(7) it permits a fund-in-funds investment strategy applicable to „similar“ funds (look-through-approach); and
(8) it sets out an entirely new, relaxed set of rules for ELTIFs that are marketed only to professional investors with respect to concentration limits, portfolio composition, or diversification requirements (see revised Article 13, 15, and 16).
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As there are numerous other changes, please review the original legal text for more detailed, comprehensive information.
Also please note: Existing ELTIFs that were launched under the current regime will still be considered compliant up to January 11, 2029. ELTIFs that were authorized under the current regime can choose to switch to the new regime by notifying their national competent authority.