RESPONSIBLE INVESTMENT POLICY

About Vortex 

Vortex Capital Partners B.V. (“Vortex” or the “Manager”) is an alternative investment fund manager, and is registered with the financial supervisory authority (“AFM”) on the basis of the ‘light regime’ of Section 2:66a of the Dutch Financial Supervision Act (“FSA“).  

Vortex manages the private equity buyout fund, Vortex Capital Partners Fund IV (“Vortex Fund IV”, or the “Fund”).  Other funds managed by Vortex are not covered by this policy. Please refer to the SFDR disclosure provided for qualification of the other funds under the SFDR.

Objectives of the Fund 

Vortex’ investment strategy is to invest, and take majority positions, in technology companies that have the potential to grow organically and/or through acquisitions (in a so-called buy-and-build strategies). Key sectors for investment are software, business services, tech-enabled services, internet and online marketplaces. Target companies are typically headquartered in the Benelux. 

The main objective of the Fund is to realise medium-term and long-term capital appreciation for the investors of the Fund. Vortex Fund IV promotes certain environmental and social characteristics. Vortex Fund IV does not have a sustainable investment objective.  

Purpose of this policy 

The purpose of this policy is to describe the framework governing Vortex’ approach to responsible investing for Vortex Fund IV, and to provide guidance with respect to environmental, social and governance (“ESG”) matters as they relate to the Fund’s investment activities.  

Vortex recognises that a responsible approach to investing is a key element in better managing investment risks and generating medium- and long-term value for investors of the Fund. Therefore, Vortex will integrate ESG considerations into the investment decision-making process and into investment management activities for Vortex Fund IV as further set out in this policy. 

Furthermore, Vortex has adopted this policy in order to promote transparency and accountability.  

 

Ownership and accountability for responsible investment lies with each and every member of the Vortex team. Additional key responsibilities within the team are outlined below. 

Vortex has appointed a dedicated ‘Head of ESG’, who is responsible for ensuring day-to-day implementation of this policy, and for operationalising Vortex’ sustainability ambitions across the Fund.  

The Investment (sourcing and deal-making) Team ensures that the investment process, including decision-making, incorporates sustainability considerations. This includes consideration of sustainability risks.  

The Operations (investment management) Team ensures responsible engagement with portfolio companies. The Operations Team provides support to portfolio companies on sustainability targets, risks and opportunities, among other topics. The Operations team also initiates ESG-related projects with the management of the portfolio companies.  

The Managing Partners of Vortex are responsible for oversight of the Fund and for ensuring overall strategic alignment with this policy.  

Vortex may also use advisors on certain sustainability matters, as needed.  

 

Vortex makes sustainability disclosures in accordance with the EU Sustainable Finance Disclosure Regulation (“SFDR“).  

Article 8 “light-green” Fund 

Vortex Capital Partners Fund IV promotes environmental and/or social characteristics (“light-green”) within the meaning of Article 8 SFDR. The Fund does not have sustainable investment as its objective.  

Vortex Fund IV promotes environmental and/or social characteristics, provided that companies in which the investments are made follow good governance practices.  

Vortex Fund IV considers the principal adverse impacts of its investment decisions on sustainability factors. 

Product-level SFDR disclosures are available upon request.

 

The following environmental and social characteristics are likely to affect the financial condition or operating performance of the Fund’s tech-driven portfolio companies and are therefore relevant topics for stakeholders and investors.

Exclusion policy (screening process) 

A key element of Vortex’ responsible investment approach is to follow a screening process and to exclude certain sectors and activities from investment by the Fund. The following applies to initial platform investments as well as add-on acquisitions.  

Prior to investment (in the ‘Deal Generation’ phase), the Vortex Investment Team implements a risk-based screening of each proposed investee company, to identify potential ESG risks. Certain principal adverse impacts of the Fund’s investment decisions may be identified at this point, including, for example, exposure to controversial sectors. Results of the screening are documented by the Investment Team in an Investment Memorandum and presented to the Investment Committee.

Vortex also applies exclusion criteria as a minimum requirement for eligible investment by Fund IV. Vortex excludes companies that are directly involved in certain activities that are deemed to be non-ethical, harmful to society or the environment, or not in line with Vortex’ values. 

ESG Due Diligence 

Prior to investment (in the ‘Due Diligence’ phase), Vortex conducts due diligence on the proposed company, which includes a detailed review of environmental, social and governance factors.  

The ESG due diligence incorporates a top-down approach to screening of business activities, as well as a bottom-up approach to gathering information on relevant ESG topics. The proposed company is required to complete an ESG questionnaire and to provide supporting documentation on certain ESG topics.  

Results of the ESG due diligence are documented in an Investment Memorandum and presented to the Investment Committee. This way, the results of the ESG due diligence may influence the investment decision.

For the purpose of this policy, a sustainability risk (as defined by the SFDR) refers to an environmental, social or governance event or condition that, if it occurs, could cause a negative material impact on the value of the investment. 

Sustainability risks are considered as part of the Vortex’ investment selection and due diligence process. Pre-investment, Vortex seeks to identify any sustainability risks relevant to the proposed investee company, and – where possible – quantify the potential impact of sustainability risks on the investment.  

Identified sustainability risks are documented in an Investment Memorandum and discussed with the Vortex Investment Committee. Sustainability risks are considered, together with other financial and operational factors, in the decision-making process. The investment decision may be impacted by the outcome of Vortex’ assessment of sustainability risks as well as the Manager’s risk tolerance, among other factors.  

Vortex also considers sustainability risks as part of ongoing monitoring post-investment, and seeks to mitigate sustainability risks, where the risk may have a material impact on the value of the investment or returns of the Fund.  

The Fund undertakes to invest only in companies which follow good governance practices. Good governance practices will be assessed during the due diligence phase, and as part of ongoing monitoring and engagement with portfolio companies.  

Prior to investment and periodically thereafter, Vortex will collect and assess data from each portfolio company on certain governance topics.

Where significant gaps or weaknesses in a company’s governance practices are identified, Vortex will create, in consultation with the company management, a roadmap to bring the company to an acceptable level of good governance. 

Data collection process  

Vortex will periodically collect data on relevant sustainability indicators directly from each portfolio company (bottom-up approach). Portfolio companies will be expected to provide actual data on a ‘best effort’ basis. Where appropriate, the indicator may be estimated.   

Performance of each portfolio company with respect to attainment of environmental or social characteristics will be measured in relation to specific targets for each relevant sustainability indicator. Targets will be set only for indicators that are relevant to that company.  

Reporting 

The Manager shall comply with all applicable disclosure and reporting requirements under the SFDR. Vortex will publish a statement of Principal Adverse Impacts on sustainability factors (“PAI Statement”) on an annual basis.  

Vortex engages with the portfolio companies and exercise the Fund’s influence as an owner where the Manager believes it can support or improve a company’s sustainability performance. The Fund also intends to be represented on the boards of the portfolio companies.  

Through active ownership and engagement, Vortex aims to promote good governance practices, promote improvement on sustainability indicators, and support the sustainability ambitions of the portfolio companies.  

The Manager further intends to recommend that relevant sustainability topics are regularly reported on by portfolio companies’ management and discussed in companies’ board meetings.  

Vortex will actively support company management to ensure that each portfolio company meets its targets, realises its sustainability ambitions and effectively manages sustainability risks

Remuneration of the board members and the employees of the Manager are in line with market practice and contains fixed and variable components. Vortex’ approach to remuneration does not encourage excessive risk taking in relation to sustainability risks.