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Moonfare, a leading private market manager, has decided to close its private equity European Long-Term Investment Fund (ELTIF) following a year in the market. The decision was primarily driven by insufficient investor demand for the ELTIF product.
Launched with the aim of providing European investors with long-term private equity exposure, the ELTIF struggled to attract and scale the anticipated investor commitments. Key reasons behind the shutdown include:
- Investor Preferences: Many investors showed a preference for more flexible or liquid investment vehicles over the long-term locked-in fund structure of the ELTIF.
- Regulatory and Product Complexity: ELTIFs are subject to stringent regulatory constraints, including investment and redemption rules that can deter some investors.
- Market Conditions: The period following the ELTIF’s launch saw macroeconomic uncertainty and market volatility, causing investors to be more cautious about committing capital to long-term illiquid private equity investments.
- Competitive Alternatives: Moonfare's core business involves private equity fund access and co-investment opportunities, which may have remained more attractive to their client base compared to the ELTIF offering.
In light of the ELTIF’s limited market traction, Moonfare has chosen to redirect its resources towards its core offerings and more popular investment products. Investors will receive their entire invested capital and a 12% interest payment.
Meanwhile, other asset managers in Europe are focusing on ELTIFs, with over 60 new funds launched in the first half of 2025 alone. However, maintaining an ELTIF comes with high costs, and for it to be profitable, it should be at least 100 million euros in size after one to two years.
Interestingly, Schroders Capital only managed to raise a modest 64 million euros with its first private equity ELTIF. The market for semi-liquid strategies, on the other hand, has gained significant momentum and continues to grow, as both Moonfare and Wealthtechs like Nao attempt to attract retail investors to these private markets through semi-liquid fund structures and low barriers to entry.
Moonfare is currently operating at a loss, as stated by founder Steffen Pauls. Despite this, the company is planning a second launch with a semi-liquid product, demonstrating their commitment to expanding their product offerings and catering to the evolving needs of their investors.
Traditionally, the private capital market was almost exclusively accessible to institutional investors, family offices, and wealthy individuals. However, with the growing interest in semi-liquid strategies and the efforts of asset managers like Moonfare and Schroders Capital, it seems that the landscape of private market investments is gradually becoming more inclusive.
In summary, Moonfare's decision to shut down its private equity ELTIF underscores the challenges faced by asset managers in navigating the complexities of regulatory requirements, investor preferences, and market conditions. As the private capital market continues to evolve, we can expect to see more innovative solutions designed to cater to a wider range of investors.
- Moonfare, originally aiming to offer European investors long-term private equity exposure, is redirecting its resources towards business areas with greater investor interest, such as private equity fund access and co-investment opportunities in the finance sector.
- Despite maturing into a loss-making entity, Moonfare has expressed their continued dedication to expanding their product offerings in the investment world, with plans for a second launch of a semi-liquid product, aiming to cater to the evolving needs of their clientele.
