Chapter 5: AIFMD II, NPPR & ELTIF 2.0: EU Fundraising Routes

Chapter 5

EU Fundraising Routes

AIFMD Landscape: Passport, NPPR, and April 2026 AIFMD II transposition
ELTIF 2.0: Semi-liquid evergreen structures enabling retail access (Oct 2024 RTS)

If you’re an emerging asset manager plotting your first or second close in Europe, you’re walking into a regulatory landscape that’s changing, just not in the sensational ways you may have heard. This guide translates the rules into operator language, corrects common misconceptions, and gives you concrete next steps and planning bands.

The EU Regulatory Timeline

AIFMD II is live, national transposition by April 16, 2026

The amending directive to the Alternative Investment Fund Managers Directive, AIFMD II (Directive (EU) 2024/927), was published in the Official Journal on March 26, 2024 and entered into force 20 days later. From a manager’s perspective, the date that really matters is April 16, 2026: by then, every Member State must have transposed AIFMD II into local law. Some of the enhanced supervisory reporting items may phase in during 2027, depending on each country’s rulemaking calendar. Practically, that gives you a 2025–H1 2026 window to run a gap-assessment and tune your policies so you’re already operating in an AIFMD II-compatible way before the deadline.

ELTIF 2.0’s RTS make semi-liquid retail designs operational (effective October 26, 2024).
ELTIF 2.0 broadened eligible assets and eased composition rules back in January 2024, but the regime became truly workable once the Regulatory Technical Standards (RTS) took effect on October 26, 2024. Those RTS do the heavy lifting for periodic redemptions and retail distribution: they set out exactly how your redemption policy must be framed, which liquidity-management tools (LMTs) you can deploy and when, how to match transfer requests, the criteria for asset disposals to fund redemptions, and what cost disclosures must look like. If you’re considering an ELTIF share class or vehicle to reach private-wealth channels, you should now design the product from the RTS backward, dealing frequency, notice/gates, liquidity sleeve sizing, and hedging policy all need to be nailed up front.

What AIFMD II actually changes

AIFMD II is a tightening, not a tear-down. Expect targeted updates in five areas:

Delegation oversight. More explicit expectations around who does what, how you supervise external delegates, and how you evidence that oversight. This is about documentation and reporting lines, not banning delegation.
Liquidity risk management. Clearer guidance on LMT governance and how leverage interacts with liquidity. Managers should refresh LRM policies, stress-testing cadence, and board/IC reporting.
Loan-originating AIFs (LO-AIFs). A harmonized framework for funds that originate loans, including portfolio composition limits, retention/skinning rules, and risk controls across origination, monitoring, and recovery.
Supervisory reporting. Expanded data granularity to NCAs/ESMA (think Annex IV plus additions). Build the data model early so you’re not scrambling in 2026-2027.
Depositary/custody touch-ups. Clarifications that align custody, safekeeping, and oversight responsibilities with the rest of the AIFMD II package.

The through-line is transparency and risk governance. If you map your current program to these themes now, delegation maps, LRM playbook, LO-AIF applicability, reporting schemas, you’ll glide through the national transposition wave rather than reacting to it.

Route 1: The AIFMD Passport (professional investors across the EU)

Scope

The passport is available to an EU AIFM marketing an EU AIF to professional investors (as defined under MiFID II). It is not available to non-EU AIFMs and does not cover retail access. Once the passport is granted, you can market in every notified Member State without reapplying locally, though you may still need to add local legends, meet language preferences, and respect host-country reporting quirks.

Registration & timeline

You submit an Article 32 notification to your home NCA (e.g., CSSF-Luxembourg, AMF-France, BaFin-Germany). A “complete” file typically includes:

The AIF rules/constitutional docs and PPM/IM
Details of the AIFM, AIF, and depositary
Article 23 disclosures (fees/expenses, valuation, liquidity, leverage, conflicts, etc.)
Target jurisdictions and a brief marketing plan (channels, investor type)
Confirmation you will comply with Annex IV reporting in host states

Once the home NCA confirms completeness, it has 20 working days to notify the host NCAs. Marketing can start after that transmission. In practice, plan on ~4 weeks once the clock starts, plus your document prep (2-6 weeks depending on how “data-room ready” you are).

Costs

There’s no single EU fee card. Budget €10k-€40k for legal/filings as a planning range; actuals depend on number of AIFs/sub-funds, whether you localize materials, speed requests, and any parallel work (e.g., updating Article 23 for AIFMD II). Some NCAs also charge modest notification/annual fees. Always validate with two quotes: counsel + administrator.

Advantages

Pan-EU reach to professional investors via one notification stream.
Single supervisory hub: your home NCA remains the primary interlocutor, simplifying oversight and correspondence.
Operational predictability: consistent Annex IV reporting framework across notified states.

Requirements

Organization & governance that meet AIFM standards.

A contracted depositary and documented valuation and liquidity-risk policies.
Conflicts and delegation frameworks.
Annex IV/regulatory reporting capability.

Under AIFMD II, these expectations tighten around delegation oversight, liquidity-management tools (LMTs) governance, loan-origination (if applicable), and expanded supervisory reporting, so build your passport pack to AIFMD II standards now rather than waiting for the 2026 transposition.

Operational checklist

Article 23 cross-walk: one page mapping your PPM/IM to Article 23 headings.
Host-state legend pack: pre-approved footers/legends and any language versions.
Annex IV readiness: dry-run a mock filing with your admin; assign SLA owners.
Distributor/placement agreements (if used): ensure scripts and factsheets match Article 23.
Change-control: a version log so any post-notification updates can be re-lodged cleanly.

Route 2: NPPR (National Private Placement Regimes)

Scope

NPPR is the mechanism most non-EU AIFMs (or EU AIFMs marketing non-EU AIFs) use to approach professional investors in specific EU Member States under AIFMD Article 42. It is not a pan-EU passport and generally does not permit retail marketing. Think of it as a country opt-in: each state decides whether and how you may market, and you must comply with both AIFMD transparency requirements and local add-ons.

Core conditions you should expect

While details vary by jurisdiction, most NPPR regimes require that you:

Provide Article 23 disclosures such as fees/expenses, valuation, liquidity, leverage, conflicts.
File annual reports (Article 22) and regulatory reports (Article 24 “Annex IV” style) to the host NCA on a quarterly/half-yearly/annual cadence, depending on AUM and leverage.
Confirm there’s a regulatory cooperation arrangement between the host NCA and your home supervisor, and that your fund/manager is not in an FATF “high-risk” third country.
Observe host-state marketing rules such as legends, language, record-keeping, facilities/local contact where required. Some countries also insist on a local legal representative or facilities agent.

Timeline & costs

In countries where NPPR is open, plan for ~2-4 weeks after a complete file to receive the green light. Costs are per country and typically include regulator fees plus local counsel: a planning band of €5k–€15k per jurisdiction is common, but complex structures such as parallel vehicles, feeders, leverage push costs up. Because fees and counsel time compound, NPPR is best for targeted coverage rather than broad EU reach.

What changes with AIFMD II?

AIFMD II does not abolish NPPR. Member States retain discretion to keep or adjust their regimes. Expect some process refinements, e.g., reporting content/timing that mirrors AIFMD II’s enhancements, but no automatic April 2026 “sunset.” Treat 2025 as your gap-assessment year and refresh your NPPR files as countries transpose.

When NPPR is the right tool

You’re testing demand in one or two Member States before committing to an EU AIFM + passport.

You’re a non-EU AIFM without an EU management footprint but with a clear pipeline of professional LPs in specific countries.

Your strategy doesn’t need retail/private-wealth access where ELTIF 2.0 would be the more natural route.

Operational guardrails

Reverse solicitation: don’t rely on it as a distribution strategy; many NCAs scrutinize claims of “investor-initiated” interest.

Pre-marketing: the harmonized EU pre-marketing rules were designed for EU AIFMs; for non-EU AIFMs the concept is not uniformly recognized, check local law before running teasers.

Legend pack: maintain country-specific marketing legends and translations; store them in your data room and hard-code them into factsheets.

Annex IV readiness: agree owner + calendar with your administrator; dry-run a host-state filing.

Renewals: diarize annual/periodic re-notifications and fee payments by country.

Documentation map: create a one-pager per country summarizing filings, status, next due date, and your local counsel contact.

Route 3: ELTIF 2.0

Scope

ELTIF 2.0 is a regulated wrapper that lets an EU-authorised AIFM distribute a single fund to retail and professional investors across the EU for long-term assets, private equity/credit, infrastructure, real assets, and certain securitisations. The 2024 regulatory technical standards (RTS) made the regime practical by spelling out how redemptions, liquidity-management tools (LMTs), transfer-matching, and cost disclosures must work. In plain terms: you can design a periodic-dealing fund that invests in illiquids, as long as your liquidity policy is engineered and disclosed with precision.

Why managers use it

First, it opens the private-wealth channel at scale: wealth managers, platforms, and banks can carry the product to advised retail clients, expanding your LP base beyond institutions. Second, you can offer periodic redemptions without daily-liquidity promises, provided you hard-wire notice periods, gates, and disposal criteria. Third, ELTIFs benefit from a passport for marketing, meaning once authorised you can distribute in multiple Member States with consistent rules and documents.

What it demands

Operationally, ELTIFs are heavier than classic closed-end VC. You need a depositary, administrator, and distributors who can run appropriateness/suitability checks, KID/PRIIPs delivery, and AML/KYC at retail scale. Your LMT toolkit must be codified such as gates, notice, redemption queues, anti-dilution levies/swing pricing, side-pockets for impaired assets. Derivatives are primarily for hedging, so return engineering via leverage is constrained. Reporting is richer: standard AIFMD reporting plus investor-facing cost breakdowns and liquidity reporting aligned to the RTS.

Designing the operating mode

Start with dealing frequency and a notice period such as 60–90 days. Size a liquidity sleeve as cash, near-cash,secondaries that can meet expected net redemptions under conservative scenarios. Define gates, for example 5–10% NAV per window, queuing rules, and matching of transfer requests to secondary buyers if redemptions exceed capacity. Write asset-disposal criteria ex-ante which are assets, order of sale, valuation protections, and build valuation governance around infrequent markets. Disclose all of the above, prominently, in the prospectus and investor materials then mirror it in your admin and distributor SOPs.

Documents and distribution

You’ll need an ELTIF prospectus, constitutional docs, cost disclosure annexes, target market and distribution agreements, plus a retail-grade onboarding flow as e-subs, KID delivery, risk acknowledgments. Prepare FAQ/illustratives for redemption calendars and LMT triggers. On the back end, ensure your portal can handle multi-jurisdiction legends, eligibility checks, and two-way messaging for windows, gates, and confirmations.

Timing and budgets

From mandate to first dealing day, expect 6-8 months to stand up: legal drafting, NCA authorisation, depositary/distributor onboarding, KID/PRIIPs, and portal build. Managers typically budget €50k–€100k to launch and €10k-€20k annually for ongoing ELTIF-specific obligations, then layer standard fund admin, audit, and custody cost.

When ELTIF 2.0 fits

Choose it if retail or private-wealth access is strategic and your strategy can sustain periodic liquidity without forcing sales at bad prices. For many, the pragmatic path is a dual-track: institutional AIF sleeve for pros, plus an ELTIF share class or vehicle engineered from the RTS back for wealth platforms.

Decision Tree: Which route for your fund?

Professional investors only, multi-country EU → AIFMD passport (and ensure AIFMD II alignment by April 16, 2026).
Professional investors in 1–2 countries or non-EU AIFM testing demand → NPPR with a country matrix and local legends.
Private-wealth / retail channel with periodic liquidity → ELTIF 2.0, designed from the RTS backward (redemptions + LMTs + cost disclosures).
UK focus → UK NPPR (no EU–UK passport).

AIFMD II (April 2026) implications: what to gap-assess now

Delegation

AIFMD II does not ban delegation, but it raises the bar on substance and oversight. Build a one-page Delegation Map per function (portfolio management, risk, valuation, distribution) that names the delegate, the activities delegated, the responsible AIFM officer, and the supervisory routines such as MI packs, KPIs, exception thresholds, and escalation paths. Add evidence that you control the work:

Quarterly delegate attestation: policy adherence, conflicts, sub-delegation, key staff changes.
Periodic file reviews: sampled IC memos, trade logs, risk reports with minutes.
Onsite/virtual diligence cadence: with follow-up action items and deadlines.

If you delegate cross-border, document the regulatory cooperation arrangements and confirm no prohibitions apply. Keep a change-control register so NCA questions about “who does what” can be answered in minutes.

Liquidity risk management (LRM) and LMT governance

AIFMD II expects a clearer link between portfolio liquidity, dealing terms, and liquidity-management tools (LMTs). Refresh your LRM Policy to include:

A liquidity inventory: asset-level liquidation tiers, expected time-to-cash, valuation frequency.
Ex-ante LMT playbook which tools you may use as gates, notice extensions, redemption queues, anti-dilution levies/swing pricing, side-pockets, and who can trigger them under what metrics.
Stress tests showing redemption coverage under adverse scenarios and how leverage interacts with liquidity.
Board/IC reporting: standard dashboards with cash runway, pending subscriptions/redemptions, concentration of illiquids, LMT status and a 24-48h escalation protocol.

For semi-liquid/retail routes as ELTIF 2.0, make sure the dealing calendar, gates, notice, and disposal criteria in investor docs match your admin and depository SOPs.

Loan-originating AIFs (LO-AIF)

If your fund originates loans, AIFMD II introduces portfolio-level limits, risk retention/skin-in-the-game, credit underwriting standards, and monitoring/workout requirements. Actions now:

Write a Credit Lifecycle Policy (origination → monitoring → restructuring → enforcement) with role ownership, covenant templates, and impairment triggers.
Add portfolio concentration and borrower exposure limits to your risk appetite statement.
Build MI for credit (NPL ratio, Stage migration, PD/LGD assumptions, top exposures) and an early-warning regime.

Even “credit-light” strategies with convertible notes, venture debt top-ups should document why LO-AIF rules do or don’t apply, to avoid surprises during authorization or exams.

Loan-originating AIFs (LO-AIF)

If your fund originates loans, AIFMD II introduces portfolio-level limits, risk retention/skin-in-the-game, credit underwriting standards, and monitoring/workout requirements. Actions now:

Write a Credit Lifecycle Policy (origination → monitoring → restructuring → enforcement) with role ownership, covenant templates, and impairment triggers.
Add portfolio concentration and borrower exposure limits to your risk appetite statement.
Build MI for credit (NPL ratio, Stage migration, PD/LGD assumptions, top exposures) and an early-warning regime.

Even “credit-light” strategies with convertible notes, venture debt top-ups should document why LO-AIF rules do or don’t apply, to avoid surprises during authorization or exams.

Supervisory reporting

Expect more granular and frequent reporting to NCAs/ESMA. Treat 2025 as your data engineering year:

Produce a Data Dictionary listing every reportable field as instrument type, look-through, counterparties, derivatives, leverage, liquidity buckets, the system of record, and the owner.
Run a dry-run Annex IV with your administrator; reconcile to portfolio and NAV packs.
Implement a controls layer such as sign-offs, variance explanations, audit trail and a reporting calendar tied to dealing dates and audits.

Where Member States phase in new reporting by 2027, forward-date your templates and test submissions early so you’re not scrambling after transposition.

What to put in your data room

AIFMD II Readiness Memo: delegation map, LRM/LMT playbook, LO-AIF applicability decision, reporting plan.

Policy pack: updated Delegation, LRM, Valuation, Conflicts, Credit Lifecycle.

Reporting samples: mock Annex IV, liquidity dashboard, and board pack extracts.

Practical playbook for emerging managers (2025–2026)

Q1 2025: run a formal AIFMD II gap assessment

Map your delegation, LRM, conflicts, depositary/custody, and loan-origination controls to AIFMD II. Produce a short AIFMD II Readiness Memo with owners and deadlines so you can show LPs you’re on it.

Q2-Q3 2025 - prepare your passport file

Build your Article 32 notification pack: AIF rules, depositary appointment, Article 23 disclosures, and marketing legends. Target the 20-working-day clock by ensuring your file is complete when submitted.

Interim to April 2026

Where you’re not passporting, use Article 42 NPPR. Maintain a country matrix with filings, timelines, fees, legends and diarize renewals or updates.

Post-April 2026 - operate under AIFMD II

Adopt the transposed rules as each Member State completes its lawmaking and calendar any 2027 reporting go-lives.

Optional in parallel

Start from the RTS: redemption frequency, gates/notice, matching of transfer requests, liquidity sleeves, and cost disclosure. Bring your distributor and depositary into the design early to avoid re-drafts.

Cost & timeline summary

AIFMD Passport: €20k-€40k setup plus €5k-€10k annual; once the notification is complete, ~20 working days is a common processing timeline at the NCA level (jurisdictional variance expected).
NPPR: €5k-€15k per country plus counsel; 2-4 weeks per registration after a complete file.
ELTIF 2.0: €50k-€100k setup; €10k-€20k ongoing annually; 6–8 months to stand-up and approve with counterparties (market practice, verify locally)

Caution on numbers: regulators don’t publish a standard fee card covering all work. Treat the figures above as scoping bands for your budget and RFPs; confirm with your counsel, administrator, and depository.

Private-wealth growth in the EU

ELTIF 2.0 is the cleanest way to tap Europe’s private-wealth market with long-term, illiquid strategies. Unlike classic closed-end VC funds restricted to professionals, an ELTIF can be offered to retail and professional investors when an EU-authorised AIFM runs it and the fund follows the new rulebook. The 2024 RTS turned the regime from “possible” to operational by forcing clarity on four things wealth platforms care about: a redemption policy tied to the portfolio’s actual liquidity, a playbook of liquidity-management tools such as notice periods, gates, queues and anti-dilution, transfer-matching so excess redemption demand can be routed to secondary buyers, and transparent cost disclosures that slot neatly into KID/PRIIPs and platform workflows.

That scaffolding matters commercially. Private banks, RIAs and fund supermarkets need products that are standardised, well-disclosed and operable at scale. With ELTIF 2.0, you can design periodic-dealing access to private equity/credit or infrastructure while avoiding the false promise of daily liquidity. Distributors can run appropriateness/suitability checks, deliver KIDs, and onboard investors through existing portals, making ELTIFs a natural SKU alongside UCITS and other packaged products.

For managers, the prize is a broader LP base and stickier capital: advised retail, family offices, and private-bank clients who want long-term exposure but still value occasional liquidity. The trade-offs are operational: you’ll need a depositary, an admin comfortable with ELTIF reporting, distributor agreements aligned to MiFID product-governance, and a liquidity sleeve sized to conservative redemption assumptions. Your prospectus must spell out dealing calendars, notice windows, gates, disposal criteria and hedging limits, and your systems must execute exactly that.

A pragmatic pattern is dual-track distribution. Keep your institutional AIF for professional investors, then add a sister ELTIF vehicle or share class engineered “from the RTS back”: quarterly dealing, 60-90 day notice, calibrated gates, and explicit cost/fee tables. You reach the private-wealth channel without diluting the institutional sleeve’s terms or pacing, and you future-proof your fundraising mix as wealth platforms continue to expand ELTIF shelves.

Table of Contents

EU Fundraising Routes

← Previous chapter Next chapter →

How to Fundraise Your First Fund in 2025

Defining Your Investment Thesis

LP Targeting: Family Offices to Fund-of-Funds

Building Your Sourcing Edge

Running Your Fundraising Process

Fund Structure: 506(b), AIFMD & ELTIF

First Close: Funnel & Metrics

US Marketing Rules & SEC Compliance

The Final Close Checklist

EU Fundraising Routes

LP Reporting & Communication

Building Your LP Data Room & DDQ

Secondaries & Continuation Funds