Brussels, 26/06/2013 (Agence Europe) - On Wednesday 26 June, the European Commission unveiled a draft regulation to set up a long-term European investment fund.
EU Internal Market Commissioner Michel Barnier said the fund would help small and medium-sized companies complete projects requiring investment over a very long period of time.
The idea is to harmonise a highly fragmented market, where some countries have long-term investment funds, but others have nothing of the sort. Barnier said the fund would target insurance companies, pensions funds and private investors investing in non-liquid assets, which would be given clear information in advance about the length of time for which their money would be tied up, possibly for ten years or longer. Investors would get regular income from the assets in which they invest and also, possibly, an “illiquidity” premium.
The funds would be accessible to any type of investor in the European Union as long as certain EU rules are met on categories of assets and long-term projects in which the fund can invest, such as infrastructure, transport and sustainable energy. Portfolio diversification is envisaged to avoid excess concentration of capital in a single asset. The fund would need to constantly call on depositors to keep their money in the fund, and would not be allowed to use derivatives apart from managing risks inherent in their portfolio (and not for speculation). The fund's borrowing capacity would be capped. (EL/transl.fl)