Loan funds: Europe’s alternative source of business funding
An opportunity to drive growth in the EU economy
The financial crisis caused liquidity problems for banks globally, with a knock-on reduction in access to capital for businesses. To address this challenge, regulators in Europe are introducing alternative sources of financing, and in particular, are implementing measures to allow investment funds to issue loans to businesses.
At a European level, the ‘European Long-Term Investment Fund’ (ELTIF) is being established, while Ireland has recently launched its own ‘Loan Originating Qualified Investor Alternative Investment Fund’ (referred to below as Irish Loan Fund (ILF). Both measures offer a regulated fund that originates loans to business, and in this article we compare the key features of each.
Note that the ELTIF is not required to be a loan fund—it must invest at least 70% of its assets in eligible assets. These eligible assets can constitute several forms of long-term investment, including loans. In this article, we focus on the ELTIF structured as a loan fund.
Performance issue 16 - January 2015
Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.