Board members or trustees: Ainda (as a secondary trustee) applies ESG analyses aligned to best practices (ILPA and UNPRI) to identify and manage investments.
Board members and the trustees in first place (pension funds) oversee and are accountable for the full investment process through the respective Corporate Governance bodies, including the Investment and Technical Committees and the Board of Directors. Investment and Technical Committees are called on an as-needed basis, but we have had at least three per year.
On the other hand, Ainda as GP has its own Board of Directors, as well as Audit and Compensation Committees that hold meetings every quarter. Proeza, as partner of Ainda, chairs the Board and both committees. According to our RI investment policy, ESG topics must be presented quarterly to the Audit Committee, and yearly performance reviews of the staff are reviewed and approved by the Compensation Committee, including ESG aspects
The investment process followed by Ainda consists of the following five stages. It is publicly available in our web page and in the placement prospectus:
1. Oppotunity generation
- Frequent contacts with companies in order to search for sources of capital
- Presence in forums relevant to the sectors, including all those related to ESG or RI.
- Approaches to different managing teams in each sector.
- Leveraging contacts of Committee members
- Generation and negotiation of new ideas, developing and entering strategic alliances that render strategic control and competitive advantages.
- Analysis and presence in governmental development plans.
- Development of a technical brief for a project, to find out whether it complies with basic eligibility criteria
- Analysis of business models to reflect them on a financial model.
- Market and geographic location analysis.
- Evaluation of investments and opportunities to create value.
- Risk identification and management.
- Environmental, social, and corporate governance considerations through third-party evaluations.
- Determination of assumptions and sensitivity analysis.
- Selection of base cases and upsides.
- Compilation and review of background from partners or shareholders of companies and projects. *This is very important when selecting the adequate partner in a project, as we have rejected projects in which the partner does not have a proper ESG risk management record.
- Possibility of exiting from an investment.
- Technical and business peer review by alliance members.
- Production and negotiation of investment contracts and shareholders agreements
- EPC structuring and contracts with optimal offtakers.
- Creation of solid work teams.
- Defining capital structures and ways to participate in trusts.
- Incentive schemes for partners, investors, and operators.
- Options for optimization of tax strategies
- Compilation of a closing information binder.
- Inclusion of planning in adequate monitoring.
- Active participation in governance bodies of the promoted companies.
- Following up the defined strategy to ensure operational and financial metrics.
- Monitoring by means of project management methodologies.
- Reviewing of annual budgets.
- Improvement of management processes and systems.
- Development of new businesses.
- Relation with regulatory authorities and local governments.
- Ensuring compliance with regulations, standards, conduct codes, and international standards.
- Reviewing of environmental, social, and corporate governance implications.
- Sale process with two parties or a limited number of participants.
- Conversion of debt into equity or the other way around.
- Mergers with companies
As mentioned before, the experience and knowledge of our board members (whose experience is described in question OO 1.2) bring to the Investment and Technical Committees is very important to make our Corporate Governance bodies and have them add value to Ainda´s investment decisions.
C-level staff oversee and are accountable for the full investment process on a day to day basis. They are also responsible of defining guidelines to implement ESG policies and to present results to the Investment and Technical Committees, as well as to the Audit and Compensation Committees, and to the Board of Directors.
Within Ainda, all the professional staff is responsible for the analysis, structuring, monitoring and exit in each of the projects. This staff includes its investment analysts, Portfolio Managers, Head of Engineering, Head of Compliance, and Head of Investor Relations. According to our investment process, RI must be considered in each of these stages so that everyone in the company has implementation responsibilities.
Accountability for all the staff is enforced through our compensation policy which establishes that annual bonuses and increase in salaries are in line with the annual performance evaluation which is based on each of the elements of the investment process (origination, analysis, structuring, monitoring and exit). It is also enforced through the commitment with an Ethics and Conduct code in which staff is committed to incorporate ESG risks and opportunities in the analysis.
Additionally, Ainda has an RI team who is responsible for elaborating RI execution plans and goals in Ainda. This team is also responsible for the oversight of RI implementation throughout the company. It is important to mention that this team is cross-sectional, including members of different functions within the company (i.e. finance, legal, compliance, engineering, etc.).
Besides, in line with transparency policies adopted from our partner Proeza, Ainda has an anonymous transparency line through which anyone can report any mismanagement taken in the investment process, including ESG topics.
Finally, Ainda also ensures compliance of ESG practices through 3rd parties, including for example:
Service providers. Ainda requires third party ESG assessment in the analysis and monitoring of investments.
Fiduciary Manager: In compliance with the regulation of CKDs in Mexico, Ainda hired a third-party fiduciary that manages through a trust the proceeds from the fund. The fiduciary attends the Technical Committee and isfully accountable in its duties.
Investor Representative: The fund was placed through the Mexican Stock Exchange and investors have to be represented by a third-party entity. The trust hired Evercore, one of the best brokerage houses in Mexico, whose duty is to look for investor´s interests. Therefore, Evercore (now CI Banco) oversees any relevant decisions taken in relation to the funds in the trust.