Nikita Veremeev
17.02.2026 | 6 min read
Updated: 17.02.2026
I have been building COREDO since 2016 with a single goal: to help entrepreneurs and CFOs quickly and safely scale their businesses through international structures, licensing and high-quality compliance. In recent years the European market has given us a new tool that genuinely expands financing for long-term projects and opens private investors’ access to illiquid asset classes. This is about ELTIF 2.0: the updated European form of long-term investment funds with a distribution passport. Below: my perspective as the founder and a practitioner of the COREDO team, so that you can make an informed decision: to launch your own ELTIF, invest in one, or use it as part of your corporate strategy.
Why does business need ELTIF 2.0 today?
ELTIF 2.0 frees the hands of managers who want to finance infrastructure, real assets, private equity and SME lending, while also expanding capital-raising channels via retail investors. For entrepreneurs it means new money for construction and M&A, and for family offices and corporate investors — a diversification tool with a clear regulatory framework. The COREDO team has already implemented dozens of projects for fund registrations, licensing and distribution in the EU, Asia and the CIS; that experience shows where ELTIF works particularly effectively.
The second reason is alignment with European standards. EU ELTIF rules are integrated with the Alternative Investment Fund Managers Directive (AIFMD), MiFID II, PRIIPs and the ESG framework (SFDR and the EU taxonomy). This increases supervisory predictability, facilitates passporting of ELTIF 2.0 across the European Union and reduces legal fragmentation. In practice COREDO confirms: when you structure a fund in line with these rules from day one, time-to-market shortens and distributors connect more quickly.
ELTIF 2.0: EU rules and opportunities
ELTIF is a licensable alternative investment fund focused on long-term and often illiquid assets. Version 2.0 eased a number of the first edition’s restrictions: the criteria for eligible ELTIF assets have been broadened, working with co‑investments and SPV/holdco chains has been simplified, limits on ELTIF leverage have been clarified, and flexibility has been introduced regarding liquidity and redemptions. As a result, the product has moved closer to what the market has long needed: institutional discipline with the ability to attract retail capital.
ELTIF and infrastructure projects are a natural fit. Transport, energy, social infrastructure, digital networks, as well as renewable energy projects in ELTIFs receive financing on a 7–12 year horizon and beyond. On the debt side, infrastructure debt solutions are available; on the equity side – infrastructure equity and private equity/venture capital strategies within ELTIFs to support the growth of technology and industrial companies. In some cases COREDO helped combine such strategies into a multi‑asset structure where debt generates coupon cash flow and equity provides upside.
ELTIF for investors: access and protection
ELTIFs for private investors have become a reality. Retail investors’ access to ELTIFs has been expanded, while protective mechanisms remain in place: suitability and appropriateness tests for ELTIFs under MiFID II, target market assessment and product governance at distributors. KIDs and disclosure for ELTIFs under PRIIPs are mandatory, which standardizes the description of risks, costs and performance scenarios. COREDO’s practice confirms that correct configuration of the KID, scenario analysis and risk warnings increases sales conversion without compromising compliance quality.
The risks for retail investors in ELTIFs lie in illiquidity, long horizons and the volatility of valuations of non‑market assets. We address them through a transparent lock‑up period, clear maturity and redemption principles, as well as well‑designed redemption gates and suspension of redemptions in case of stress. It is important to explain liquidity mismatch and manage expectations for investors: this is not UCITS, and the secondary market for ELTIF units operates differently.
Minimum investments and fees
Minimum investment requirements for ELTIF 2.0 depend on the jurisdiction and the target market; for the retail segment regulators allow a threshold starting from several thousand euros subject to suitability tests and client portfolio exposure limits. In some countries a retail cap applies — a limit on the share of ELTIFs in an investor’s assets. I recommend building mechanisms into the term sheet to control these limits on the distributor side to avoid subsequent claims from NCAs.
The fee structure of an ELTIF includes management fees, performance fees, carried interest (if applicable), as well as ongoing charges. The practice of disclosing costs and fees in ELTIFs requires detail: the accrual basis, high‑water mark, hurdle rate and the method for calculating carried interest. We take into account the impact of exit fees and early redemption penalties on investor behavior and align this with the KID and marketing materials to provide a consistent picture of costs.
How to avoid liquidity mismatch
Liquidity and redemption in ELTIFs: a key design factor. ELTIF 2.0 allows limited redemption windows provided there are liquidity management mechanisms: staged redemptions, queueing, redemption gates and procedures for suspension agreed with the depositary. Restrictions on early redemptions in ELTIFs are explainable by the nature of the assets; the manager’s task is to record them transparently in the fund policy and the KID.
The secondary market for ELTIF units is developing. How does the ELTIF secondary market work in practice? Most often it involves organized platforms and partnerships with liquidity providers, as well as bilateral transactions observing transferability of units and transfer restrictions. At COREDO we implemented tokenization of units and digital registers where NCAs permit DLT solutions: this speeds up settlements and reduces operational risks without compromising AML/KYC controls.
Eligible assets and valuation models
What assets are permitted in ELTIF 2.0? The list is broader than before: equity and quasi-equity in non‑blue‑chip names, debt and SME issuances, infrastructure assets and projects, real estate and other real assets, as well as stakes in other funds subject to concentration limits. Asset concentration limits in ELTIF protect the investor from excessive risk to a single borrower or asset, and I recommend using internal limits that are stricter than the regulatory ones.
In infrastructure it is important to separate strategies: infrastructure debt vs infrastructure equity. Debt portfolios provide a predictable cash yield and lower standard deviation; equity approaches require a detailed growth model and active asset management. For VC within ELTIF we separately agree capital calls and drawdown mechanics to avoid capital being idle while retaining control over subscriptions.
Valuation of illiquid assets and NAV
Approaches to valuing illiquid assets in ELTIF must be transparent. We apply NAV valuation methodologies for illiquid assets based on discounted cash flows, comparable market multiples and independent valuation (third‑party valuation). For infrastructure a discount rate is used that reflects country risk, contract structure (PPAs, concessions) and inflation indexation.
Scenario analysis and stress testing of the portfolio are mandatory within risk management. We show investors the risk‑adjusted return via IRR, TVPI, DPI and ROI metrics, and for a large deal — a scenario ROI calculation taking into account sensitivity to monetary policy and inflation. ELTIF performance assessment for long‑term investors is built on project cohorts and the distribution schedule, not on short‑term NAV fluctuations.
How to manage risks and hedge?
The use of leverage in ELTIF and its limits are governed by ELTIF 2.0 and AIFMD: borrowing restrictions (leverage caps) are tied to strategy and asset liquidity. We use subordinated debt, subscription lines and the fund’s credit structure to smooth capital calls while maintaining cash flow transparency. Interest rate and currency risk hedging instruments — swaps, forwards, option structures — reduce IRR volatility without destroying upside.
Contingency planning and crisis scenario management include triggers to review redemptions, redistribution of capital calls and disclosure discipline. Internal control and the manager’s compliance procedures oversee conflicts of interest, side letters and deal prioritization, in order to protect retail and the institutional base equally.
How to launch ELTIF 2.0
The solution developed at COREDO is a phased roadmap: choice of jurisdiction, strategy design, document preparation, coordination with the NCA, setup of custody and the depositary, compliance and the start of distribution. We combine legal work with operational design: from the LP/GP model and partners’ legal agreements to sales due diligence and distributor integration. This approach saves months and removes misalignment between lawyers, the administrator and the sales team.
Regulatory obligations of ELTIF 2.0 managers are based on AIFMD: reporting to the NCA and ESMA, risk disclosure, leverage limits, liquidity management and depositary oversight. Prospectus exemptions and simplified documentation are available in places, but we always proceed from a standard of full transparency to withstand inspections by any EU regulator.
Choice of jurisdiction
Luxembourg and Ireland are the flagships. A rich ecosystem of depositaries, administrators, auditors and the NCA’s readiness to engage speed up passporting for collective investment products. For venture and infrastructure themes we often approach via Luxembourg with SPVs at the portfolio level in the EU and the UK. In certain strategies Cyprus and Estonia are appropriate for SPVs and holdco structures when local double tax treaties and operational simplicity are important.
Relocation of the manager and fund registration of an ELTIF in the EU are possible either through an in-house AIFM licence or by appointing an external manager (appointed AIFM). Our experience at COREDO has shown that for debut teams an external AIFM speeds up the start, and moving to an in-house licence should be considered as AUM grows. For deals with Asian and Middle Eastern components we connect Singaporean and Dubai platforms at the pipeline level while retaining ELTIF status in the EU.
Fund: SPV/holding company, capital calls
SPV and holdco structures and target companies determine tax and operational efficiency. We design the custody chain and the role of the depositary so that all cash flows are traceable and depositary liability and the custodian’s duties are performed without disruptions. Capital calls and the drawdown mechanics are synchronized with subscriptions at distributors; subscription lines and the fund’s credit structure reduce cash drag and allow investors to enter with less idle cash.
Management of the manager’s conflicts of interest is recorded in policy, disclosed in the KID/prospectus, and also overseen by an independent director and the depositary. Share classes and unit classes are configured for different channels: institutional classes without trail fees and retail classes that account for platform costs.
Depositary and asset custody
ELTIF 2.0 requirements for the depositary and asset custody are fundamentally important. The depositary controls compliance with the investment policy, holds custody, tracks flows and verifies NAV calculations. COREDO’s practice confirms: early selection of the depositary and alignment of the LPA/prospectus save months in approvals with the NCA.
Compliance: AML/KYC for international investors, FATCA/CRS and investor tax reporting, documenting investor communications and product marketing — this is the baseline. Our AML team builds a risk-based approach: sources of funds, beneficial ownership structure, sanctions and PEP checks, ongoing transaction monitoring. For cross-border flows we use agreed W-8/W-9 forms, CRS self-certification and qualification procedures under double tax treaties.
Distribution and retail in the EU, Asia and the CIS
ELTIF distribution rules in the European Union require notifying the NCA in the home member state and using ELTIF 2.0 passporting to enter other EU markets. Next: local adaptation of marketing materials, a KID in the country’s language and channel settings taking MiFID II into account. For clients from Asia and the CIS it is important to plan the subscription currency, FX hedging and tax requirements for repatriation of payments in advance.
The role of distributors and retail investment platforms is growing. We integrate ELTIF with platforms that can perform suitability and appropriateness tests, conduct product governance and target market assessment, and provide transparent onboarding. Cross-border distribution in the EU and the CIS requires alignment of the legal and operational parts: a single data room with the KID, prospectus, SFDR disclosure and training materials for sales staff will be useful here.
Distribution and client tests
MiFID II requirements for the distribution of complex products determine the sales process. Suitability criteria for selling ELTIFs to retail clients take into account investment experience, objectives, horizon and risk tolerance. We structure product governance so that the distributor receives a clear picture: target segment, concentration limits, warnings about illiquidity, and scenario outcomes.
KID and PRIIPs: not just a formality. We configure the Key Information Document together with the prospectus and SFDR disclosure to avoid inconsistencies. We incorporate ESMA guidance and regulatory practices on ELTIF 2.0 into marketing templates, and include national competent authorities (NCAs) in checklists for each country.
Taxation and investor reporting
Taxation of investments in ELTIF depends on the status of the fund and the investor. Tax consequences for corporate investors in ELTIF include participation rules, withholding at source on coupons/dividends, and the application of double tax treaties. For investors from Asia and the CIS, local CFC rules, taxation of capital gains and reporting requirements are important.
FATCA/CRS and tax reporting of investors require the correct classification of the fund and the qualification of each LP. We ensure control of FFI status, prepare reports and exchanges in standard formats. For ESG strategies we separately show compatibility of ELTIF assets with the EU Taxonomy and SFDR requirements for ELTIF, which helps corporate investors collect their own non-financial reporting.
Liquidity of units on the secondary market
What does the ELTIF secondary market look like? Today it is a mix of OTC deals, specialized secondary platforms for trading units of illiquid funds and solutions from liquidity providers. Transferability of units and transfer restrictions are governed by the LPA and national law; COREDO pre-defines the procedure so that transactions proceed quickly and without risk of losing status-eligibility.
The market for secondaries and the role of liquidity providers are strengthening as the retail base grows. We test tokenization of units and digital registers where permitted: to speed up KYC and T+0/T+1 settlements. Exit mechanisms, early redemption penalties and exit fees must be synchronized with the liquidity policy and disclosure in the KID so as not to create false expectations.
COREDO cases: from idea to first closing
Recently the COREDO team implemented an ELTIF in renewable energy, registered in Luxembourg and distributed in Germany, Italy, the Czech Republic and Slovakia. We built the SPV chain, appointed an external AIFM, agreed the depositary and set up subscription lines. Anchor investors, seed capital and initial closings provided the critical mass of AUM, after which we connected retail channels with adapted share classes.
Another project — converting an ELTIF to the retail segment from a purely institutional infrastructure debt strategy. The conversion to the retail segment required a complete rework of the KID, disclosure of costs and fee structure, as well as distributor training on product governance. As a result, the fund opened access for ticket sizes from €10–25 thousand, while preserving leverage discipline and strict project underwriting.
A separate case — an ELTIF for investors from Asia and the CIS. We prepared a cross-border distribution scheme taking into account local suitability rules, integrated AML/KYC procedures and structured tax optimization with regard to double tax treaties. The result: clear onboarding, correct FATCA/CRS reporting and a distributions plan with currency risk hedging.
Renewable energy infrastructure and long-term capital
In renewable energy infrastructure we modelled IRR, MOIC and TVPI for each project cohort, taking into account discounting at the risk-free rate and premiums for country and technology risk. ESG Due Diligence and impact measurement are built into the investment process: SFDR article, compliance with the EU taxonomy and transparent emissions KPIs. This discipline eased negotiations with NCAs and distributors and sped up the first closing.
Transitioning the fund to the retail segment
We conducted a governance audit: reviewed concentration limits, updated the liquidity policy, added retail investor protection mechanisms in ELTIF 2.0 and harmonized disclosure with the KID. Conflict-of-interest management and a transparent performance fee/carry structure increased client trust. In marketing we used a prospectus-driven approach without excessive promises.
Cross-border distribution and AML for investors from Asia and the CIS
COREDO established a sales due diligence procedure and issuer checks, and also segmented risks by jurisdiction. AML/KYC for international investors covered source-of-funds checks, corporate chain reviews and sanctions lists; adapting documents into local languages sped up verification. Result: a steady inflow of subscriptions, no flags from the depositary and predictable reporting to the NCA.
Entrepreneurs’ questions
How can a retail investor invest in ELTIF 2.0? Through a licensed distributor or platform, by passing suitability/appropriateness tests, signing the KID and the subscription documents. Minimum subscription requirements and the retail cap depend on the market; they should be clarified in advance.
The comparison between ELTIF and UCITS for retail clients comes down to liquidity and asset composition. UCITS: daily liquidity and liquid securities; ELTIF: illiquid long-term assets and limited redemptions, but potentially higher risk-adjusted returns. Liquidity management in ELTIF funds is based on planning redemptions and developing the secondary market.
What assets are permitted in ELTIF 2.0? Infrastructure, real estate, stakes in private companies, SME loans, participations in qualifying funds, subject to limits. Restrictions on borrowed financing in ELTIF control leverage and protect the investor.
How to assess returns? Evaluating ELTIF returns for long-term investors involves IRR by investment cohorts, TVPI/DPI at the fund level, sensitivity to interest rates and inflation, and scenario analysis. The use of leverage in ELTIF and the limits define the framework for return and risk; currency and interest-rate hedging smooth the profile.
How COREDO scales the product
Product scalability on international markets is about synchronizing legal, distribution and operational infrastructure. COREDO sets up the pipeline for working with anchor investors, seed capital and initial closings, then connects platforms, distributor banks and independent consultants. We create a unified data room, prepare training materials for sales teams, establish CRM processes and reporting to NCA/ESMA.
ESG integration increases demand among corporate and retail clients. We conduct ESG due diligence and impact measurement, check assets for compatibility with the EU taxonomy and set up SFDR disclosure. In parallel we carry out tax structuring, currency hedging and configure document flow for stable capital calls.
We keep operational costs of managing long-term assets under control through administrative automation and clear SLAs with providers. Sales due diligence, risk disclosure practices and consumer protection build trust; in crisis scenarios we activate contingency planning in advance to protect capital and reputation.
Conclusions
ELTIF 2.0 is a mature European instrument that gives businesses access to long-term capital and investors access to real assets within a transparent regulatory framework. At COREDO we combine legal precision, financial engineering and compliance so the product works in practice: with clear liquidity rules, understandable fees, carefully considered risks and effective distribution. If you need to launch or scale an ELTIF, the COREDO team is ready to go the whole way: from the idea and choice of jurisdiction to the first closing and sustainable subscription flows, with responsibility and attention to every detail.