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CapMan Plc

PRI reporting framework 2020

Export Public Responses

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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.

Negative screening is done to rule out investments in certain industries. Otherwise, ESG aspects and risks are assessed after the investment opportunity has been identified and preliminary investment case has been formulated. The scope of due diligence is determined on a case by case basis. In the event of ESG criteria are not met, the opportunity will be discontinued.

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.

Relevant identified risks, opportunities and conclusions are included in the investment memorandum, on which the investment committee makes the decision.

PE 07. Encouraging improvements in investees

07.1. During deal structuring,what is the process for integrating ESG-related considerations into the deal documentation and/or the post-investment action plan?.

If yes

07.2. Describe the nature of these improvements and provide examples (if any) from the reporting year

ESG-related consideration are not typically included in deal closing documentation. Significant ESG enhancement opportunities identified in due diligence are considered in strategy work and business plan discussions and/or documentation that starts right after the deal closing.

As an example, in 2019 CapMan Growth Equity invested in Picosun, a small Finland-based company providing Atomic Layer Deposition (ALD) solutions globally. One of the key findings in due diligence was inadequate HR operations. Immediately after the completion of the transaction, HR Director was hired as a first step to spearhead the establishment of an acceptable HR function.

07.3. Additional information. [OPTIONAL]

PE 08. ESG issues impact in selection process

08.1. Indicate how ESG issues impacted your private equity investment selection processes during the reporting year.

08.2. Indicate how ESG issues impacted your private equity investment deals during the reporting year.

08.3. Additional information. [OPTIONAL]

During the reporting period, and in line with previous years, there are always few investment opportunities that are rejected due to ESG matters. These are rejected usually at early stage before venturing into full scope due diligence phase. No investment opportunities were rejected due to ESG matters when presented in the Investment Committee for the decision.

ESG issues identified in the completed investments during the reporting period did not impact to deal structuring but CapMan made sure the management takes the issues into account in order for company to operate with high ethics. Any identified ESG issue that creates a liability is considered in pricing and/or SPA clauses.