Eurizon has launched the first European Long Term Investment fund (ELTIF) in Italy dedicated to finance SMEs.
Eurizon Italian Fund - ELTIF is a closed-end fund that locks in the investment over a period of seven years. It uses a discretionary management approach, with fund rules easing long-term investment strategies.
The Fund envisages a minimum investment of 70% in long-term assets, with an exposure of over 50% to Italian equities and up to 25% in unlisted instruments.
“We believe that the ELTIF closed-end structure is the best way to finance medium/long-term projects, also for companies in low capitalisation segments."
The capital raised through the ELTIFs can be directed to finance medium- to long-term projects of companies in the low capitalisation segments such as the AIM, start-ups and businesses with high innovation potential.
Tommaso Corcos, CEO of Eurizon, said: "We believe that the ELTIF closed-end structure is the best way to finance medium/long-term projects, also for companies in low capitalisation segments. The past expertise gained by Eurizon in the selection of this type of entity has enabled us to rapidly create a dedicated closed-end fund, able to select innovative small- and medium-sized Italian companies that have the greatest growth prospects, with a strong focus on the quality of corporate governance."
"It requires specific advice, given the nature of the investment, the lack of liquidity of the underlying assets and the potential volatility. It is therefore aimed at sophisticated customers, with good financial knowledge and a high asset capacity that can use the ELTIF as an instrument for diversifying their investments," the firm added in a note.
The ELTIF joins the PIR funds launched in 2017, which created an alternative channel to bank financing for medium sized companies. In order to direct resources towards companies and projects that have low liquidity, or are even illiquid, the PIR compliant open-ended funds need to be accompanied by new closed-structure solutions, like the ELTIFs.
ELTIFs must invest at least 70% in eligible long-term investments (non-listed companies, direct holdings of real assets with a value of over €10m, units of other ELTIFs, European Venture Capital Funds and European Social Entrepreneurship Funds). The remaining assets are Ucits eligible assets.