This report shows public data only. Is this your organisation? If so, login here to view your full report.

Permira Advisers Group Holdings Limited

PRI reporting framework 2020

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.

Asset selection and origination

Screening of ESG risks and opportunities begins during deal origination and continues through the pre-investment process.

Due diligence and deal execution

During pre-investment, ESG forms part of the due diligence carried out by investment teams. This involves considering ESG risks and opportunities, for example relating to regulatory compliance, potential liabilities reputational risks and sustainability macro trends.

Investment teams assess ESG risk (assigning ratings of red, yellow or green) according to a company’s sector of activity, its current ESG status and management capability. Investment teams discuss risk ratings with the Head of ESG to ensure that risk criteria are assessed consistently. If an investment proceeds past the Preliminary Investment Review (PIR) stage, the investment team will undertake work to further understand ESG risks and opportunities, such as revenue upside or cost reduction potential.

Depending on the nature of the investment, external consultants may also be employed to assist in ESG due diligence and understanding of ESG risks and opportunities.

Permira also uses RepRisk, a business intelligence tool which tracks ESG and business conduct risks, to support pre-investment checks on prospective investments. RepRisk is also used during the life of the investment to support ongoing portfolio company monitoring.

Investment teams are required to include a summary of ESG issues in their investment recommendations presented to the IC, typically at Updated Investment Review (UIR) stage. Where appropriate, the IC is also attended by the Head of ESG. ESG considerations vary by sector (e.g. material issues relevant for the Industrials sector are likely to be different to those for the Technology sector), and therefore the level of documentation also varies between deals.

The IC makes recommendations to the General Partner of the fund. Christopher Crozier, the firm’s Chief Risk Officer, sits on the board of the General Partner/manager, thereby bringing specific risk and ESG expertise to the governance body of the fund.

Material findings from the pre-investment process are integrated into 100-day plans and the value creation planning process, as appropriate.

Permira’s ESG Framework and an ESG template for IC discussions guide the pre-investment process, but they are not prescriptive, allowing investment teams to focus on the relevant aspects of ESG for a given sector or target company.

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.

Permira's ESG Framework was developed in 2010 with reference to these sources of information and is updated on a regular basis to reflect changes in industry standards.  During the due diligence process, deal teams will consider all these sources of information, to the extent applicable and available, to assess the ESG profile (risks and opportunities) of the target company and identify potential areas for improvement. During the pre-investment process deal teams assess the ESG risk rating of the target in relation to the ESG risk rating for the industry/sector/region.

Investment teams are required to include discussion of ESG issues in their investment recommendations and, as such, their consideration of ESG issues is monitored by the Investment Committee at IC meetings, which, where appropriate, are also attended by the Head of ESG.

PE 07. Encouraging improvements in investees (Private)

PE 08. ESG issues impact in selection process (Private)