SFDR Disclosures

Summary

The Fund is subject to Article 8 of the European Union’s (EU) 2019/2088 Sustainable Finance Disclosure Regulation (“SFDR”) and thus promotes environmental or social characteristics but does not have a sustainable investment objective.

The consideration of environmental and/or social characteristics is carried out both before and after an investment. In line with the SFDR criteria for sustainable investments, Maven has developed an approach to identifying sustainable investments, the methodology of which is detailed below.

No sustainable investment objective

The Fund promotes environmental or social characteristics but does not have a sustainable investment objective.

Environmental or social characteristics of the financial product

The Fund has chosen to promote a social characteristic by aiming to invest in companies that support economic empowerment across the UK.

This characteristic resonates with Maven’s goals of investing in accountable, fair and transparent companies with strong governance processes. Establishing and working towards these goals should increase the social impact of the underlying investments of the Fund.

No reference benchmark has been designated for the purpose of attaining the characteristics promoted by the Fund.

Investment strategy

The Fund will employ a private equity strategy and will invest in market-leading or market-influencing small to mid-sized businesses headquartered across the regions of the UK and which have a strong track record of profitable growth and a capable management team. The Fund will focus on the Technology, Healthcare, Financial Services and other IP-led sectors.

The Fund will adopt the Manager’s exclusion policy to enhance the impact of the Fund’s strategy. The exclusion policy means that the Fund will avoid investing in portfolio companies which provide services or products which have the potential to materially affect climate, health and/or social characteristics. As such, the Fund will not, to the Manager’s knowledge, invest in businesses which:

(a)    do not meet UK/EU Human Rights laws;
(b)    employ animal research which does not adhere to the 3Rs: Replacement, Reduction & Refinement. All research must be governed by the Animals (Scientific Procedures) Act 1986 Amended Regulations 2012 (A(SP)A);
(c)    produce tobacco or derive >10% revenue directly from the management or ownership of gambling facilities, the production of weapons and ammunitions, the production of pornographic materials, or any illegal activities under any applicable laws; or
(d)    have substantively poor environmental practices which could not be remedied during the Fund’s period of investment, such as environmental damage.

The following elements are binding, as part of the Investment Manager's strategy for this Fund:
•    The Manager’s exclusions policy 
•    Providing the ESG assessment at pre-investment and annually thereafter
•    Working with each portfolio company to promote the Fund’s chosen social characteristic.

To promote these characteristics, the following steps are incorporated into the Fund's investment and portfolio companies monitoring processes:

Pre investment: each prospective investee must complete Maven’s bespoke ESG assessment to assess the adequacy of the company’s ESG processes and how these are implemented into its operations. If an opportunity proceeds to Investment Committee, this information is then incorporated into the relevant investment paper and discussed. 

Post completion: an analysis of the ESG responses will be carried out to understand the baseline position and to identify areas of focus with ESG being included in the Value Creation Plan.

During investment lifetime: ESG will be monitored on an ongoing basis, with KPIs being gathered.

Pre exit: ESG is considered by all potential acquirers, and we will ensure that we have robust data available as part of the suite of diligence for a buyer of a portfolio company.

Good governance - minimum safeguards and good practice:

Robust governance, and risk management, are central to Maven’s support and management of investee companies. Post investment, and core to operational improvement, is Maven’s work with each management team to establish or enhance governance and risk management structures ensuring these are relevant, robust and fit for purpose for the businesses’ future growth. Maven’s regional presence, investment experience and formal approach to ESG facilitate this hands-on and active approach to good governance.

Proportion of investments

100% of the Fund’s assets are aligned with the social characteristic selected.

Monitoring of environmental or social characteristics

The Investment team are primarily responsible for implementing the investment strategy and working closely with each portfolio company to ensure that they are working towards promoting the social characteristic of the Fund.

The Investment Committee are responsible for ensuring that ESG risks have been formally considered during the investment process.

Maven’s Compliance team will support the team to ensure that the Fund is in regulatory compliance with SFDR. Compliance will also review the periodic disclosure to ensure that such disclosures are in line with all relevant regulatory requirements.

The Maven Risk Committee will review and approve the regulatory disclosures and will receive regular information on the Fund’s compliance with SFDR.

Methodologies for environmental or social characteristics’

The Fund’s social characteristic is to promote economic empowerment. At a high level, the Fund will track the percentage of companies demonstrating material alignment to one or more themes of the social characteristic.

However, the Fund also has defined social indicators to monitor the performance of the companies with respect to the promoted characteristic above.  These indicators include:

-    Gender Diversity: Gender ratio by Senior Management. 
-    Job creation: Number of new roles created post-investment.
-    Financial Inclusivity: Percentage of staff earning above the real living wage. 

All indicators will be tracked annually, and investee companies will receive support in monitoring the progress of these through active engagement with the Fund representative(s).

Data sources and processing

In order to attain each of the social indicators promoted by the Fund, an ESG assessment is completed by all portfolio companies during due diligence ahead of investment. The data collected is then assessed for quality and integrated into the investment decision-making process. 

During the investment period, the companies will complete the overall ESG assessment annually and provide six monthly updates on the specific indicator progress. This will be reviewed and monitored internally with input from the Buyout Fund Team and our colleagues in ESG and Compliance.

Our ESG assessment provides guidance on how to measure each indicator so the methodology should be consistent across the portfolio. Regular check-ins will be set up with companies to ensure ESG developments are being progressed and to also aid in the measurement of the alignment to the social characteristic.

Limitations to methodologies and data

The information collected from the portfolio companies as part of due diligence and monitoring processes by the Fund is provided by the portfolio company and given some companies may have less robust internal ESG reporting capabilities. 

It cannot be ruled out completely that false information may remain undetected in certain cases. As the Fund’s investments are made with the intention of being held for several years, the Fund considers it a priority to establish and maintain a trustful working relationship with its portfolio companies in order to ensure compliance with the social characteristics promoted by the Fund.

Due Diligence for each asset held is detailed in the Fund’s Private Placement Memorandum, which will be provided to all potential investors.

Engagement with companies:

• Board seat
• ESG must be a formal Board agenda item
• Independent Remuneration Committee must be established
• Positive and Negative Covenants in Investment Agreement
• Enforcement of policies such as HR, Bribery Act etc. which must be in place
• Quarterly Board meetings with company

All of these serve to drive and support strong governance at investee businesses, and our engagement with them, and will be part of our 100 Day and Value Creation plans.

Engagement with Investors:

• Six-monthly Reports
• AGM

The fund has not defined a benchmark with regards of attaining the sustainability 
Characteristics.