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Permira Holdings Limited

PRI reporting framework 2020

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » Implementation processes

Implementation processes

FI 01. Incorporation strategies applied

Indicate (1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and (2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.
Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%
Securitised
100 Screening alone
0 Thematic alone
0 Integration alone
0 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%

01.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

PDM operates across three core strategies in European credit: direct lending (investing predominantly in European mid-market companies), CLO management, and structured credit (investing in European CLO assets). 

Please see below for further details on the core strategies and approach to ESG incorporation.  

01.3. Additional information [Optional].

PDM operates across three core strategies in European credit: direct lending (investing in European mid-market companies), CLO management, and structured credit (investing in European CLO assets).

  • Direct lending: PDM's direct lending funds provide capital to strong and growing companies in the European mid-market, typically as the sole lender to the company. PDM believes that a focus on ESG is an important part of building lasting value in portfolio companies. PDM is committed to ensuring that potentially material ESG matters are integrated as part of the standard investment analysis for direct lending investments. PDM recognises that the considerations for a debt provider are different to a private equity investor acquiring a controlling stake in a company.
  • CLO management: PDM relaunched its CLO management business during 2017, and has since priced and closed three Providus CLOs. As part of the relaunch, PDM developed an ESG screening approach for the pre-investment process for its directly managed CLOs with ESG eligibility criteria included in the fund documentation. 
  • Structured credit: PDM is committed to increased engagement with CLO managers to understand what ESG policies and approaches are currently in place, and to promote the implementation of ESG policies and/or negative screening criteria in their investments.

PDM investment teams across all three strategies have access to the existing Permira ESG network and framework.

For the purposes of PRI reporting, PDM's three core strategies are reported under the following categories: direct lending (Fixed income - Corporate, non-financial), CLO management and structured credit (Fixed income – Securitised).  The CLO funds are securitised vehicles but invest in ‘corporate non-financial’ investments.


FI 02. ESG issues and issuer research (Private)


FI 03. Processes to ensure analysis is robust

03.1. Indicate how you ensure that your ESG research process is robust:

specify description

          PDM may rely on third party due diligence from reputable service providers and information disclosed by the portfolio company.
        

03.2. Describe how your ESG information or analysis is shared among your investment team.

          ESG issues are regularly discussed within deal screening meetings.
        

03.3. Additional information. [Optional]

FI 03.1 – RepRisk, used during pre-acquisition and for ongoing monitoring of companies, is a live database, updated frequently to reflect current ESG/reputational issues and ESG ratings for companies. Various other sources of information may be used during the pre-investment due diligence for direct lending investments. For example, PDM may gain reliance on independent environmental, health, safety and/or social due diligence undertaken for the sponsor as part of the due diligence process and review information disclosed by the portfolio company.

FI 03.2 - All PDM staff have access to a central internal database with ESG framework, guidelines and other related reference documents. ESG is regularly discussed within deal screening meetings, and has been particularly relevant in 2019 when PDM assessed transactions in the care home and fertility clinic sectors. Material ESG risks identified throughout the pre-investment due diligence are raised with the Investment Committee (IC) through the iterative IC process. For direct lending investments, at Final Investment Recommendation stage, overall ESG risks identified throughout the pre-investment process are distilled and presented in one summary slide to the Investment Committee, and discussed where relevant. 


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