Thursday July 14 2016

News Source: Fund Regulation

Focus: Other

Type: General

Country: European Union




The European Commission has today proposed amendments to the European Venture Capital Funds (EuVECA) and the European Social Entrepreneurship Funds (EuSEF) regulations.

The proposals aim to boost investment into venture capital and social projects and make it easier for investors to invest in small and medium-sized innovative companies. In particular, the Commission is proposing to open up the EuVECA and EuSEF fund labels to fund managers of all sizes, and to expand the range of companies that can be invested in. The Commission also aims to make the cross border marketing of EuVECA and EuSEF funds cheaper and easier by explicitly prohibiting fees levied by Member States and simplifying registration processes.

The European Commission launched a consultation on 30 September 2015 to ask whether targeted changes to the Regulations could boost the take-up of these investment funds. The review identified a number of factors holding back the development of these funds.

The Commission proposes to:

  • extend the range of managers eligible to market and manage EuVECA and EuSEF funds to include larger fund managers, i.e. those with assets under management of more than €500 million. Large managers can provide economies of scale and trusted brands, offering benefits for investors who in turn can invest more for the ultimate benefit of venture capital and social enterprises;
  • expand EuVECA eligible assets, to allow investment in small mid-caps, and SMEs listed on SME growth markets. This is expected to allow more companies to benefit from EuVECA investments and make investments more attractive through greater diversification of risk;
  • decrease the costs explicitly prohibiting fees imposed by competent authorities of host Member States, simplifying registration processes and determining the minimum capital to become manager.

As part of the wider Capital Markets Union package to stimulate venture capital investments in the EU, a pan-European venture capital fund of funds will combine EU financial sources with greater volumes of private capital. This pan-European fund of funds is intended to help to overcome market fragmentation and attract private investors to the EU venture capital asset class.

The proposals have been submitted to the European Parliament and the Council for adoption under the co-decision procedure.

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