ING plans to begin offering one or more Eltif funds for its private banking and retail clients in the Netherlands and Belgium by the end of 2025, taking advantage of the revised Eltif 2.0 regime to significantly lower the entry threshold for private market investing.
Since October 2023, ING Private Banking has been offering funds that invest in private markets, including equities, loans and infrastructure. These are so-called evergreen funds from asset managers such as KKR and Blackstone. Between 10 and 20 percent of the assets are held in cash, providing participants with more liquidity than traditional closed-end funds.
ING has had considerable success with these funds over the past year and a half, said Johan Kloeze, director of private asset management at ING. “Our clients now have more than a billion euro invested in them,” he said.
That success is one reason why a few weeks ago the offering was expanded with a private equity fund from Carlyle Alpinvest and a fund from HarbourVest, which consists partly of co-investments and partly of so-called secondaries, portfolios acquired from one or more institutional investors. There are now nine private market funds in total. Investors can access these funds with a minimum investment of 125,000 euro.
Regulatory threshold removed
ING flagged that wants to lower the entry threshold for private markets. “That is why we now plan to offer Eltifs,” said Kloeze. “We are currently assessing the possibilities, but I expect we will be able to offer one or more of these funds in the final quarter of this year.”
ING has yet to determine its minimum investment threshold. The revised rules governing Eltifs (European Long Term Investment Funds) no longer set a mandatory lower limit.
“The guiding principle is that we want to make private markets accessible to an even broader group of private investors,” Kloeze said. The bank said it is “at the forefront of the democratisation of private markets.”
As far as is known, ING is the first private bank in the Netherlands planning to offer Eltifs. In an interview with Citywire last October, Rishma Moennasing, lead for investment funds and mandates at Rabobank, said the bank was looking into the option, but no announcement has followed since. Shortly after the interview, Rabobank did launch its first private market fund for private banking clients, but this was a regular evergreen fund: the Schroders Capital Semi Liquid Energy Transition Fund, with a minimum investment of €100,000.
Asked for an update, a Rabobank spokesperson said the bank “has the ambition” to expand its offering this year, and Eltifs are part of the options under consideration. The bank is still working out the details. “We remain critical, because a semi-liquid form does not mean that the underlying investments are liquid. They remain illiquid funds. That is why we must carefully assess which clients they are and are not suitable for.”
‘Classic’
The private market offerings of private banks Van Lanschot Kempen and ABN Amro MeesPierson have so far focused more on classic private equity. In October last year, ABN Amro MeesPierson said that evergreen funds would be introduced in 2025, but no further details have been made public.
The proprietary funds offered by Van Lanschot Kempen also generally have a minimum investment of 100,000 euro. A few weeks ago, the bank announced it had raised 388 million euro with its third European private equity strategy. For Dutch clients, this concerns the Kempen European Private Equity Fund III, a closed-end fund with a term of around ten years.
Asked for comment, Van Lanschot Kempen also said it is exploring whether Eltifs could be a meaningful addition to its offering. The combination with existing illiquid investment solutions could be particularly interesting. The bank also said it plans to launch its first open-end fund with a cooperative structure soon.
As Europe’s leading domicile for Eltifs, Luxembourg has seen a sharp increase in product launches under the updated Eltif 2.0 rules. While Dutch banks like ING are only now preparing their entry into the market, Luxembourg-domiciled Eltifs are already being distributed across the European Union. If ING follows market practice by selecting Luxembourg as a domicile, its new Eltifs would likely contribute to further growth of the local fund ecosystem.