The European Parliament’s approval of the European Long-Term Investment Fund (ELTIF) framework has been welcomed by the industry and parliamentarians as the first step towards building the Capital Markets Union (CMU).
The ELTIF, meant as a conduit for patient capital, was first mooted in 2012 when the European Commission considered how it could better channel long-term capital into the economy.
Jonathan Hill, commissioner for financial stability, said the vehicle would help fund infrastructure projects “essential for a sustained recovery”.
Alain Lamassoure, the French MEP overseeing the framework’s passage, said it would boost both long-term investment and help bring about the launch of the CMU, one of Commission president Jean-Claude Juncker’s cornerstone policies.
“The investment gap and financial crisis present us with the challenge of solving the tricky equation of maximising economic growth, increasing financial stability, removing barriers to cross-border investment, ensuring consumer protection and enhancing competition all at the same time,” Lamassoure said.
For her part, Linklaters’ senior lawyer Silke Bernard flagged up the opportunities in responsible investing for the “exciting” vehicle.
She predicted there would be a lot of interest from investors for infrastructure projects considering social and responsible investment matters – such as schools and hospitals.
Monica Gogna, partner at Ropes & Gray, said the ELTIF’s approval by Parliament showed Europe was keen to remain “at the forefront of innovation” in the investment management sector.
“The development of this regulation and the implementing rules surrounding it will definitely be ‘one to watch’ as the industry starts to map out opportunities where this new structure may be used,” she said.
The ELTIF, aimed at both institutional and retail clients, was highlighted by Hill as the first step towards the CMU during the commissioner’s confirmation hearings.
Proponents of the ELTIF have long spoken out in favour of its long-term capital being deployed with socially responsible investment (SRI) in mind.
Natixis Asset Management previously told IPE it was in favour of enshrining SRI within the fund’s framework, requiring asset managers to comply with certain ESG principles or disclose that they had opted against such an approach.