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Moonfare Discontinues Private Equity ELTIF, Shifts Focus to Semi-Liquid Products
In a significant move, Moonfare, a leading private equity investment platform, has decided to wind down its European Long-Term Investment Fund (ELTIF) offering, marking a setback for the platform. The decision comes after a year of limited market demand and commercial viability for the ELTIF product.
The ELTIF, designed to encourage long-term investments like private equity by offering a regulated and investor-friendly structure, has failed to garner the expected interest from investors. One of the key reasons for this is the complexity and distribution challenges associated with ELTIFs. The regulatory overhead and administrative complexity can lead to higher costs and operational burdens for both the provider and investors.
Moreover, the ELTIF's longer lock-up periods and regulatory rules that limit liquidity and ticket size for retail investors make it less attractive compared to Moonfare’s traditional feeder funds and other investment structures. In a competitive market, where agile products that align closely with investor preferences and offer flexibility tend to do better, Moonfare's ELTIF offering fell short.
Despite the challenges, Moonfare attempted to transfer institutional fund structures to the private investor market with its ELTIF offering. However, the private equity ELTIF product failed with private investors.
Despite this setback, Moonfare is not giving up on the private equity market. The platform is considering a second launch with a semi-liquid product, which is gaining significant momentum in the market. Wealthtechs like Nao are trying to attract small investors to private markets through semi-liquid fund structures and low minimum investments.
The market for ELTIFs, however, is expected to continue growing, with volumes reaching 65 to 70 billion euros by the end of 2027. In Europe, asset managers are increasingly focusing on ELTIFs as a means to grow their managed assets and collect fees.
As Moonfare moves forward, it will be interesting to see how the platform navigates the challenges of the private equity market and capitalizes on the opportunities presented by semi-liquid products. The platform, which was previously almost exclusively accessible to institutional investors, family offices, and wealthy private individuals, is now setting its sights on a broader investor base.
Meanwhile, Moonfare continues to operate at a loss, and the discontinuation of the ELTIF offering is part of the platform's efforts to streamline operations and focus on more successful products. Investors in the discontinued ELTIF product will receive their entire invested capital plus an interest payment of 12%.
Schroders Capital, another player in the private equity market, also faced difficulties with its first private equity ELTIF, collecting only 64 million euros. The challenges faced by Moonfare and Schroders Capital underscore the practical challenges ELTIFs face in gaining broad market adoption.
As the private equity market continues to evolve, Moonfare's decision to discontinue its ELTIF offering serves as a reminder of the importance of aligning products with investor preferences and market dynamics.
Moonfare, aiming to capitalize on the momentum of a semi-liquid product, is planning another launch in the private equity market, a shift from the traditional ELTIF structure. The growth of this emerging product category in the market, with platforms like Nao attracting small investors, presents an opportunity for Moonfare to expand its investor base beyond institutional investors and private individuals.
In the realm of finance and lifestyle, Moonfare's strategic focus on semi-liquid products illustrates the impact of technology-driven innovations on investing, as they cater to investor preferences for flexibility and lower barriers to entry.
