Zurich Insurance to launch debut private debt ELTIF

(Update: This story has been updated to remove references to a Preqin report on regulation that was not directly relevant to the article.)

March 21, 2024 (Preqin News) – Zurich Insurance Group has launched its first European Long-Term Investment Fund (ELTIF), offering private debt to individuals and life insurance customers.

Luxembourg-domiciled Zurich Private Debt ELTIF will allow individuals to invest in a portfolio of direct loans to European mid-market companies. The portfolio will be managed by private credit-focused Pemberton Asset Management.

The ELTIF is a sub-fund of Zurich Global Private Asset Solutions SICAV, and will be marketed to eligible investors later this year. After an initial ramp-up period, it will offer monthly liquidity, subject to certain conditions.

The Zurich fund is one of the first to be launched under the revised ELTIF regime. The framework was first launched by the European Union in 2015 to source non-bank financing for investment in real economy projects.

After muted uptake, a revised framework was launched in January this year. However, a set of Regulatory Technical standards that will determine the details of the amended redemption framework and minimum holding periods are still pending finalization.

‘The launch of Zurich Private Debt ELTIF marks an important milestone. It reflects Zurich’s ambition to open our private market expertise to our customers,’ said Stephan van Vliet, Group Chief Investment Officer at Zurich Insurance Group, in a statement. The fund is intended to be the first in a series of private market offerings, the firm added.

Legislators hope the new ELTIF framework will help draw more investment from individuals and smaller investors. Six years on from its initial launch the aggregate size of net assets held in ELTIF vehicles was estimated at approximately €2.4bn ($2.6bn) in 2021.

The new regulations include removing minimum investment thresholds and introduce the possibility of selling ELTIF shares on the secondary market before the end of a fund’s life.

The changes also coincide with growing individual investor demand for private market assets, including private credit.

‘Private credit has continually grown over recent years. Attractive risk-adjusted returns, portfolio diversification, and lower volatility are some of the key benefits of the asset class, which is appealing to an ever-broader number of investors,’ said Symon Drake-Brockman, Managing Partner at Pemberton.

Several funds have announced new ELTIF products in recent months. Global private equity platform Moonfare announced in February that it was launching an ELTIF 2.0 strategy in ‘anticipation of strong demand following the introduction of new regulations’, it said in a statement. The fund will also offer investors a secondary liquidity mechanism.

‘Moonfare will take advantage of the ability under the ELTIF 2.0 regime to use fund-of-funds structures with their potential for a higher level of diversification,’ it said.