Deal on Retail Investment Strategy: improvements for sophisticated investors in private equity

A much bolder strategy could have been promoted and negotiated, but from a private equity perspective, the newly approved legislation nonetheless holds important changes, particularly to the distinction between professional and retail investors. These changes will make it easier for high-net-worth individuals and private equity managers to qualify as professional investors. In particular:

• Employees of AIFMs will now be automatically classified as professional clients when making co-investments

• The criteria for becoming a professional-upon-request have been eased:

  • Minimum transaction frequency thresholds have been lowered for investors in unlisted companies

  • Minimum wealth thresholds have been reduced by half

  • Experience requirements have been broadened to include relevant education and training, making it easier for entrepreneurs to invest in venture capital funds within sectors they know well.

Invest Europe also welcomes the fact that, compared with the European Commission’s original proposal, the final agreement avoids overly restrictive rules on inducements and requirements to comply with harmonised and - for our industry - irrelevant public value-for-money benchmarks. 

Invest Europe will now engage with EU- and national authorities to ensure that the ambitions of today’s political agreement do not evaporate in the forthcoming technical work, and that the specific characteristics of private equity and venture capital are properly taken into account.