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Vinci Partners Investimentos Ltda.

PRI reporting framework 2020

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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.

Pre-Investment Phase: Upon the initial screening and approval of the investment committee, the investment is subject to two due diligence steps, which take into account the ESG factors in order to evaluate the potential ESG material topics. The potential material ESG topic are included in discussion with the Investment Committee to defined how they will be assessed during the following phased – i.e., it can be either conducted internally or by external advisors, as appropriate. When issues or gaps are identified during the ESG due diligence, related actions and deadlines are included in the Environmental and Social Action Plan (ESAP) section for evaluation. For each action, the following will be defined: the responsible party, priority, complexity and the deliverable or indicator of completion.

05.3. Additional information. [Optional]

In 2019 we increased our commitments towards improving our monitoring and reporting mechanisms of our ESAP, following conversations with IFC (our LP investor) to address their new policy requirements. The new reports will be issued in the first semester of 2020.


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.

This information, when relevant, is part of the investment memorandum and presented in our Investment Committee


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

We´ve applied our ESG-MS in all of the investments executed in the VCP III fund and identified improvement opportunities in the target companies, that became actions in our ESAP

1) Environment Aspects

Question: Does the company/project control and evaluate compliance with respect to environmental practices of its subcontractors from which it sources significant inputs?

Finding in the ESG DD: No. Currently the company / project does not control or assess  relevant sub-contractors. There are clear  conditions that could / have result in environmental impact. The company /project is not able to influence contractors to improve their environmental practices.

Action Required: Implement a more robust supplier audit process after Closing, together with the establishment of long term contracts with key suppliers that include protective clauses related to those issues.

2) Governance Aspects

Question::Does the company have a implemented code of conduct?

Finding in the ESG DD: The Target does not have a Code of Conduct in place

Action Required: Establish Code of Conduct/Ethics after conclusion of the transaction, including orientation to the following areas: corruption and bribery, discrimination, confidentiality  of information,  antitrust / anticompetitive practices, money laundering and or insider trading and dealing, environmental, health and safety, whistleblowing

07.3. Additional information. [OPTIONAL]

In 2019 we improved our monitoring and reporting mechanisms of our ESAP, following conversations with IFC (our LP investor) to address their new policy requirements. The first issue of the new report focused only on ESG themes will be available in the first semester of 2020


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]

 

  • ESG issues impacted the investment in terms of price offered and/or paid - we included the additional costs to adapt to our ESG standards in the cash flow projection of the target company
  • ESG issues were included in the post-investment action plan/100 day plan - the issues identified in the ESG due diligence became actions and part of our ESAP to be executed in the 100 day plan 
  • ESG issues impacted the terms in the shareholder/purchase agreements and/or lending covenants - we postponed the closing of one deal in more than 60 days because the target didn´t presented all environmental permits and licenses of one production plant, which was part of the purchase agreement
     

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