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Nexus Point Management Limited

PRI reporting framework 2019

You are in Direct – Private Equity » Pre-investment (selection)

Pre-investment (selection)

PE 05. Incorporating ESG issues when selecting investments

05.1. During due-diligence indicate if your organisation typically incorporates ESG issues when selecting private equity investments.

05.2. Describe your organisation's approach to incorporating ESG issues in private equity investment selection.

I. Statement on Responsible Investing
Nexus Point believes that incorporating Environmental, Social and Governance (“ESG”) considerations into our investment decisions will have a long term positive impact on the performance of our portfolio and represents an important obligation we have to the communities where we operate and invest. Nexus Point evaluates ESG issues with respect to each prospective investment as part of the investment decision process and will continually monitor how our portfolio companies are adhering to and improving on ESG related matters.
II. Risk Analysis
Where Nexus Point cannot fully explore a potential ESG issue ourselves or where more detailed analysis is required, the firm should appoint external advisors with the requisite skillset and expertise to more fully identify and analyze the issue. The firm believes that fully understanding ESG issues are a critical part of the investment decision process.
III. Investment Committee Focus
Our standard investment memorandum for investment committee discussion purposes must have an ESG assessment section when appropriate. The team should analyze ESG risks and identify potential mitigants in the memorandum. The Investment Committee may require additional analysis and discussion on ESG issues prior to making an investment decision.
IV. Target Companies
Nexus Points will not consider investments in target companies that have a history of violating applicable local laws and regulations, engages in unfair or exploitative labor practices, engages in businesses of ill repute or moral turpitude, produces illegal products; poses an imminent threat to the environment or manufactures or distributes weapons of war. Nexus Point may engage third party advisors and service providers as well as conduct database searches to ensure compliance with our ESG policy.
V. Ensuring ESG Remediation and Adherence to Policies
The Firm is committed to ensuring that there is appropriate follow-through on ESG matters identified at the Investment Committee or by deal teams monitoring portfolio companies. To ensure that new or existing ESG policies are strictly adhered to, the deal team should integrate remediation plans into the first-year business plan for the portfolio company. The internal audit departments at our portfolio companies should be instructed to actively monitor ESG implementation plans and adhere to local law and regulation as well as global best practice standards.
VI. Performance Standards
When reviewing a potential investment in a portfolio company with heightened ESG exposure, the firm may consider as a guide the International Finance Corporation (IFC) 2012 Performance Standards on Environmental and Social Sustainability (Performance Standards) as they apply to our business in our determination, as well as any additional ESG guidelines that we consider to be applicable. The firm’s ESG policy does not, however, strictly adopt any external policy or set of standards beyond what is defined in Section IV of our ESG policy.

05.3. Additional information. [Optional]


PE 06. Types of ESG information considered in investment selection

06.1. Indicate what type of ESG information your organisation typically considers during your private equity investment selection process.

06.2. Describe how this information is reported to, considered and documented by the Investment Committee or similar.

The Investment Memorandum includes a ESG assessment section. We analyze all the potential ESG risks and develop a redemption plan. Investment committee's approval on this ESG section is required before making an investment decision.


PE 07. Encouraging improvements in investees (Not Completed)


PE 08. ESG issues impact in selection process (Not Completed)


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