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Investisseurs & Partenaires

PRI reporting framework 2019

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Overview

PE 01. Description of approach to RI

01.1. Provide a brief overview of your organisation’s approach to responsible investment in private equity.

ESG-related approach 

Due to the smaller magnitude of their operations, SMEs and MFIs IPAE invests in usually involve lower ESG risk than large companies and rarely have an effective internal ESG management. However, they involve significant social and environmental opportunities in terms of value creation and their fast growth requires a structured approach which needs to be implemented as early as possible. 

For each investment opportunity, we are consequently committed to pay attention to ESG matters (risks as well as opportunities) at all stages of the investment process, from initial screening until the final exit. Our methodology is adapted from the CDC toolkit, a reference tool for private equity funds investing in developing countries. We put a specific emphasis on seizing value creation opportunities, with a double bottom line approach (energy efficiency is an example of this win-win approach). Once invested in a company, our main role is to help companies draft, implement and monitor annual ESG action plans. 

On our portfolio as a whole, our ESG strategy is to pool resources around some objectives we consider as strategic for African SMEs, as described previously.  This results in shared actions at the portfolio level, with the aim to provide our investee companies with innovative and replicable ESG solutions

Impact measurement

As « impact investors», we believe that we can generate measurable impact on local development. But we definitely need to track, analyze and report on this impact performance. I&P has developed a specific impact assessment and monitoring system, including, among others, IRIS metrics (catalog of generally accepted performance metrics for impact investors). Quantitative and qualitative data are collected each year from our investee companies, in order to better understand their impact on their local environment (in terms of job creation, access to goods and services, local knock-on effects, contribution to the national added value, etc.). 

IPAE's investors are provided with a detailed impact and ESG reporting, on a yearly basis. 


PE 02. Investment guidelines and RI

02.1. Indicate whether your organisation’s investment activities are guided by a responsible investment policy / follow responsible investment guidelines.

02.2. Describe how your organisation outlines expectations on staff and portfolio companies’ approach towards ESG issues in investment activities.

For I&P, impact measurement is closely aligned to the investment management process. During the due diligence phase the investment team performs an in-depth screening of the ESG practices to assess if there is a match between I&P and the SME in terms of ESG values and whether I&P can help the investee company improve its ESG practices. When I&P needs to decide whether or not to invest in an SME, the potential social impact of the company on its stakeholders is a main selection criterion and an integral part of the rationale for investing.

The Fund’s final impact performance will be assessed against a set of key impact targets, which would be fully achieved in a best-case scenario. We consider that the Fund’s impact performance should be reflected in the Fund’s incentive structure. This structure is expected to reward the team to the extent to which impact targets are met (or not). If the financial hurdle rate is achieved (IRR > 5%), the proposal is to adjust the carried interest percentage for the investment manager.


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