The disclosures laid out in the remaining of the Sustainability-Related Disclosures pertain to SGT Capital Co-Invest I SCSp and SGT Capital Fund II SCSp (respectively “Co-Invest I” and “Fund II” and together referred to as the “Funds”). The Funds are managed by Intertrust Fund Management (Luxembourg) S.à r.l. (the “AIFM”), with SGT Capital Pte. Ltd. acting as the portfolio manager of the Funds. The Funds are classified as “Article 8” Funds under the Sustainable Finance Disclosure Regulation (“SFDR”).
Co-Invest I is a closed-ended single investment fund. Co-Invest I is fully invested and holds an indirect interest, alongside other funds advised or managed by SGT Capital Pte. Ltd., in a leading provider of high-security technologies for cybersecurity and compliance solutions, based in Germany and California. Co-Invest I is currently focused on value creation and its performance objective is to maximize returns over the holding period, targeting a net IRR of 25%.
Co-Invest I will not be making any other investments and will instead focus on value creation and monetisation of its current portfolio company.
Fund II is a closed-ended investment fund. The Fund II’s performance objective is to maximize returns over the holding period, targeting a net IRR of 25%
The Co-Invest I holds an indirect investment in a cyber security portfolio company.
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The Funds promote social characteristics, but does not have as its objective sustainable investment. They consider principle adverse impacts and expressly promote the following characteristics: social and employee, respect for human rights, anti-corruption and anti-bribery matters, and ensures that its portfolio company promotes these characteristics and follow good governance practices. The Funds use due diligence to assess whether the potential target meets its promoted social characteristics, and embeds its ESG commitments into the portfolio company and value creation plan, post acquisition. 100% of the Funds’ investments (direct or indirect) promote the Funds’ social characteristics.
Throughout the investment cycle, the Funds evaluate indicators in respect of its core social characteristics on an on-going basis, and work with the management to make improvements where required. The Funds have in place policies and procedures to ensure that the portfolio company meets its social characteristics objectives.
The Funds use data provided by the portfolio company and through regular meetings with the portfolio company management, and site visits by the investment team of the Funds, they gather financial and non-financial data on ESG matters and core social characteristics. The methodologies and data sources referred to in the sections above are subject to various limitations, however, these limitations do not affect how the social characteristics promoted by the Funds are met. ESG and sustainability matters and considerations are embedded throughout the Funds’ investment process and the social characteristics promoted by the Funds are a key part of the portfolio company governance post-acquisition. The Funds ensure that their portfolio company has robust anti-corruption and bribery, whistle-blower protection policies in place adheres to prevention of human trafficking, modern slavery and child labour.
The Funds promote social characteristics, but do not have as their objective sustainable investment.
The Funds consider principle adverse impacts and expressly promote the following characteristics: social and employee, respect for human rights, anti-corruption and anti-bribery matters, and ensure that their portfolio companies promote these characteristics and follow good governance practices.
Post investment, the social characteristics promoted by the Funds are embedded into the portfolio company’s strategy and value creation plans. The investment team regularly engages with the portfolio company, including through ESG reviews and site visits, and gathers financial and non-financial data to identify opportunities for improvement of the social characteristics promoted by the Funds.
Prior to selection of the investment target the Funds use the methodology and due diligence set out below to assess whether the potential target meets the core environmental or social characteristics promoted by the Funds.
Upon acquisition, the Funds’ ESG commitments are embedded into portfolio company strategy and value creation plans. The investment team engages with the portfolio company, and continuously monitors financial and non-financial data to assess management structures, employee relations, remuneration of staff and tax compliance.
100% of the Funds’ investments (direct or indirect) promote the Funds’ social characteristics set out herein.
The Funds ensure that the portfolio companies at all times maintain robust anti-discrimination and whistle-blower protection protocols, adhere to safe working practices, and ethical business principles, including prevention of modern-day slavery, human trafficking and child labour. The Funds also ensure that the portfolio companies at all times maintain robust anti-corruption and anti-bribery protocols across their operations and supply. The Funds promote strong business ethics and active and engaged governance, holding themselves and the portfolio companies’ management accountable for driving value with high integrity.
Throughout the investment cycle, the Funds, in partnership with the management of the portfolio companies, evaluate, on an ongoing basis, factors such as: human resource policies, practices, staffing and organizational culture, employment practices, worker safety and accident prevention, pay practices and human rights, and work with the management to make improvements where required. The ongoing monitoring takes stock of these factors at acquisition, and then tracking those metrics over time, holding the Fund’s investment team and the portfolio companies management accountable for ongoing improvement.
The Funds are committed to driving real change by adding diverse board members at portfolio company level, and ensuring that C-level searches include diverse candidates. The Funds continue to work with the management to actively encourage diversity throughout the career development of portfolio company staff.
The Funds have in place policies and procedures to ensure that their portfolio companies meet social characteristics promoted by the Funds. At the asset selection and origination stage, the investment team of the Funds conduct ESG screening and analysis of portfolio investments and teams. The investment team reviews material ESG risks and upsides and excluded companies with broad-based ESG risks.
Throughout the investment cycle of the Funds, the investment team regularly engages with the portfolio companies, conducts site visits and gathers financial and non-financial data to identify opportunities for improvement in the implementation of the promoted social characteristics, where relevant.
In the selection process, the Funds use the data provided by the target company as well as external advisers as required. The portfolio company undergoes an internal ESG assessment every year and supplies the collected data to the Funds for assessment and monitoring. In addition, throughout the investment cycle of the Funds, the investment team holds regular meetings with the portfolio companies management, conducts site visits and gathers financial and non-financial data on ESG matters and core social characteristics.
The methodologies and data sources referred to in the sections above are subject to various limitations. Limitations for methodologies may include the dependency on understanding future best-standard adoptions of indicators and changes in the geopolitical climate. Limitations for data sources may include data availability and reliability of data provided by the portfolio companies.
However, these limitations do not affect how the social characteristics promoted by the Funds are met. The social characteristics promoted by the Funds are unlikely to be affected by future uncertainty and geopolitical changes. The Funds maintain regular engagement with the management of the portfolio company and the investment team conducts regular reviews of financial and non-financial data, allowing for early detection of variance or other indicators if data unreliability.
ESG and sustainability matters and considerations are embedded throughout the Funds’ investment process and the social characteristics promoted by the Funds are a key part of the portfolio company governance.
In the pre-screening stage, the Funds’ investment team reviews any “gating issues” to determine whether there are any critical ESG or reputational concerns in relation to target companies, operators, issuers, and, where relevant, sponsors. Companies with broad-based ESG risks are excluded from the process.
During the commercial and legal/compliance due diligence process, the investment team evaluates material ESG risks and opportunities applicable to the relevant industry, with regards to the issuer or target company, including environmental and climate change risks and other portfolio-wide considerations and opportunities where relevant. The key risks and opportunities are included in the Investment Committee discussions and memorandums as they relate to the issuer or target company. The relevant findings of the Investment Committee are documented and tracked, even when no additional actions are needed. ESG forms part of due diligence carried out by investment team, including compliance, liabilities, reputational issues, risk and opportunities. The Funds’ due diligence goals include the assessment of:
(i) business ethics, responsible conduct and compliance with applicable laws or regulations in each region of operation;
(ii) the strength of governance structures and routines, board oversight and track record;
(iii) management and leadership team’s diversity, equity and inclusion, including board and management team composition and diversity;
(iv) labor relations and treatment, human rights practices, employee health, wellness and safety;
(v) employee engagement and pay practices;
(vi) human resource policies, practices, staffing and organizational culture;
(vii) where relevant, community relations and impact on immediate and extended communities; and
(viii) where relevant, matters relating to sustainable growth and reducing climate impact.
Post investment, the Funds continue to drive meaningful progress across its core ESG commitments and to improve performance on material ESG factors and social characteristics specific to the business of the portfolio company. ESG risks and opportunities are be monitored and managed. Key ESG risks (if any) and opportunities are included in the portfolio company’s management team discussions. The management and monitoring team incorporates ESG consideration in the value creation plan. Efforts on relevant ESG issues or incidents are documented for ongoing tracking as relevant.
The Funds maintain robust anti-corruption and bribery and whistle-blower protection policies in place, and ensure that such policies are also maintained and adhered to at the portfolio company level. The Funds adhere to best-standard business ethics and exclude target investments that do not adhere to prevention of human trafficking, modern slavery and child labour. The portfolio companies also adhere to such prevention throughout their operations.
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Information published on: 30 December 2022
Last update on: 18 December 2023
SGT Capital
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