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New rules in Italy to allow direct lending by EU Alternative Investment Funds

New rules in Italy to allow direct lending by EU Alternative Investment Funds

  • United Kingdom
  • Italy
  • Financial institutions - Asset managers and funds


On 14 February 2016 the Italian Government approved the Law Decree no. 18/ 2016 (the Decree), which introduces interesting provisions for asset management industry players in Italy.
One of the most important changes introduced by the Decree is that EU Alternative Investment Funds (EU AIFs) will be able to carry out direct lending vis-à-vis Italian companies.


Lending activity in Italy had been traditionally reserved to banks and to specific financial institutions enrolled with an ad hoc register held by the Bank of Italy and subject to Italian banking law.
Following the implementation in Italy of the AIFMD, in early 2015, a significant innovation has been introduced in the lending market by authorising Italian AIFs to invest in receivables by directly granting loans to non-consumer third parties out of the AIFs’ assets.  However, it was unclear whether the same provisions applied to EU AIFs.

The Law Decree no. 18/2016

The Decree gives continuity to this opening-up process, which is aimed at increasing the availability of non-bank financing to Italian companies, and expressly provides that EU AIFs are allowed to invest in receivables by directly granting loans in Italy, subject to certain conditions which are laid down by the Italian Financial Act.

Therefore, EU AIFs have now been granted direct lending capability in Italy, in addition to the ability to purchase receivables and they can also benefit from the relevant tax provisions.

In the performance of lending activity, an EU AIF:

  • shall be authorised to lend by the home member competent authority;
  • shall be a closed-ended fund whose operating rules are comparable to those applicable to Italian AIFs; and
  • shall be subject to the provisions of the Italian Banking Act concerning transparency of terms and conditions, relationship with clients and administrative sanctions which apply to Italian AIFs.

As a result of the introduction of the new rules, as well as the contraction in bank lending because of recent stringent reforms of the banking legal framework, the Italian lending market is becoming increasingly attractive for non-banking players, such as insurance companies and investment funds.

The Decree entered into force on 16 February 2016 and will be converted into law within the following 60 days.

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