Main Capital Partners considers ESG (Environmental, Social and Governance) to be of great importance for their organization and the investment industry. With implementing ESG into our organization Main Capital Partners focusses on the future of its portfolio companies, investors as well as their own employees. We believe acting in a socially responsible manner (and according to the ESG guidelines) will improve our ability to meet commitments to beneficiaries as well as better align our investment activities with the broader interests of society.
The corporate values of Main Capital Partners are: partnership, quality, integrity, accountability, teamwork and respect. These values are key to the compliance and integrity of the organisation and the individuals working for Main Capital Partners. These key values enable Main Capital Partners to be successful, now and in the future, as the values legitimize the conduct and provide a balance between People, Planet and Profit.
Because sustainability is of great importance for Main Capital Partners and to guarantee sufficient knowledge in this area, we created an ESG-project group within Main Capital Partners and appointed an ESG Officer with a background in Sustainable Finance. The project group consists of (also taking into account mitigating potential conflict of interest risks): the Investment & Investor Relations Manager, the Investor Relations Associate & ESG Officer, the Compliance Officer and the CFRO. The ESG Officer ensures, among other things, the correct implementation of the ESG policy and that the sustainability information on the website is kept up-to-date. The Compliance Officer monitors the implementation of the ESG policy and reports on this to the board. The board is responsible for the integration of the sustainability risks in the processes within the organization.
PRI
To emphasize the importance of ESG, Main Capital Partners has committed itself to a membership to the Principles for Responsible Investment (PRI), instituted by the United Nations (www.unpri.org), since 2014. In accordance with the principles and beliefs of the Fund Manager (i.e. Main Capital Partners), investments in certain segments, geographical areas and activities are excluded. This entails that the Fund Manager will not invest in portfolio companies domiciled in corrupt countries, child labour sensitive industries or the weapon industry (see for the six principles and the full exclusion list: https://main.nl/value/). Due to our core investment focus of software companies in Northwestern-Europe most of these criteria are easily achieved.
Investment process
In the investment process the Fund Manager and the funds take into account the fact that both Main Capital Partners itself and many investors have committed themselves to certain socially responsible investment principles, such as the aforementioned PRI principles. Main Capital Partners has a professional and structured investment process with a clear governance structure. The Fund Manager always has an active and leading role in every stage of the process. The risk appetite regarding ESG issues, such as not being able to commit to the PRI principles, is ‘low’ for Main Capital Partners. Due to our core investment focus (nature of the business and geographical focus) this criterion is easily met. For example, climate-related risks are not integrated in the overall risk management, as these risks are hardly present. To avoid the risk of not being able to commit to the PRI principles, Main Capital Partners has taken risk management measures, such as using an ‘exclusion list’ and making ESG a mandatory part of the investment process. In the first phase an examination takes place whether the investment opportunity meets important investment criteria for an optimal risk-return profile within the limits of the fund (taking into account segments, regions and activities that Main Capital Partners excludes) and qualitative criteria, such as the business plan and business strategy (and sectors which we are interested in with the aim of making this sector more efficient, such as Healthcare software). After the first phase and second phase of business analyses and research, the third phase starts in which the Due Diligence researches take place. Main Capital Partners has designed their own Due Diligence-questionnaire of which ESG forms an important part. The answers of the Due Diligence-questionnaire are analyzed by the responsible deal team, included in the Investment Proposal, and presented and discussed in the Investment Committee meeting. After this the Investment Committee makes the final investment decision. After the investment and during the holding period, Main Capital Partners will annually update the Due Diligence/ESG-questionnaire for all portfolio companies. This makes the management team think about certain ESG-related issues that may be at play. The investors are kept informed through quarterly reporting of the Fund, Advisory Board meetings with some investors and Main Capital Partners cooperates with annual questionnaires of the investors.
No consideration of sustainability adverse impacts
At present, the Manager has not identified specific sustainability risks with a likely actual or a potential material negative impact on the returns of the Fund. The reason for this lies in the nature, scale and complexity of the organization and the nature and scope of the collective portfolio management activities that are undertaken. The Manager manages funds with a private equity strategy which may invest in software and IT portfolio companies in Northwest Europe, which is a transparent and regulated market. With the headquarter of Main Capital Partners in the Netherlands and affiliated companies in Germany and Sweden, Main Capital Partners has with local presence better contact with the portfolio companies, can provide correct and fast service and transfer the expertise and culture of Main Capital Partners. Any sustainability risks related to investments in these portfolio companies are presently not foreseen to have an actual or a potential material negative impact on the overall return of the Fund. However, no guarantee can be given that there will be no such actual or a potential material negative impact on the return of the Fund in the future. Therefore Main Capital Partners will annually review aforementioned viewpoint.
Remuneration Policy
Main Capital Partners believes in a competitive but balanced remuneration policy. Main Capital Partners has a remuneration policy which aims to ensure all personnel acts in accordance with the needs of its investors while also taking into account other stakeholders. In order to prevent perverse incentives, employee remuneration consists primarily of fixed-salary compensation. Variable compensation is capped at 20% of the fixed salary and is contingent on:
- The employee meeting or exceeding the annually determined personal financial and non-financial targets;
- A robust financial and liquidity position of the management company;
- The employee acting in accordance with our compliance policy and ethical guidelines, such as compliance with ESG requirements.