Committed to Sustainability

The funds managed by Vortex Capital Partners are designated as follows:

• Vortex Capital Partners II Coöperatief U.A.: SFDR Article 6
• Vortex Capital Partners Fund III Coöperatief U.A.: SFDR Article 6
• Vortex Capital Partners Continuation Fund I Coöperatief U.A.: SFDR Article 6
• Vortex High Growth Fund B.V.: SFDR Article 6

For the above funds, the Manager complies with the disclosure requirements under the Articles 3, 4 and 5 of the SFDR, as further laid down below.

• Vortex Capital Partners Fund IV Coöperatief U.A.: SFDR Article 8

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

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

For VCP Fund IV, the Manager complies with the additional disclosure requirements under Article 10 of the SFDR.

The investments underlying these financial products do not take into account the EU criteria for environmentally sustainable economic activities.

The Manager acknowledges that environmental, social or governance-related events or conditions could, if they occur, cause an actual or a potential material negative impact on the value of the investments in the Funds. The Manager views ESG as a standard topic in the pre-investment due diligence process of Portfolio Companies. Sustainability risks are therefore part of the Manager’s selection and due diligence procedures and its risk management policy.

Vortex considers the Principal Adverse Impacts (PAIs) of its investment decisions on sustainability factors only for funds designated as ‘Article 8’ funds. Principal adverse impacts relate to those impacts of investment decisions that result in negative effects on sustainability factors.

Vortex considers the principal adverse impacts of its investment decisions on sustainability factors as part of its due diligence processes and procedures.

Vortex publishes a PAI Statement annually following each reference/reporting period.

Remuneration of the board members and the staff of the Manager are in line with market practice and its fixed and variable components do not encourage excessive risk taking related to sustainability risks.

The disclosures contained in this section relate only to VCP Fund IV.

SUMMARY
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.

NO SUSTAINABLE INVESTMENT OBJECTIVE
VCP Fund IV intends to promote environmental and/or social characteristics. VCP Fund IV does not have a sustainable investment objective.

ENVIRONMENTAL OR SOCIAL CHARACTERISTICS OF THE FINANCIAL PRODUCT
The Fund aims to promote environmental and/or social characteristics relevant to the tech and tech-enabled companies in which it invests.

The environmental and/or social characteristics promoted by VCP Fund IV are determined by Vortex at the time of each new investment, by assessing which environmental and/or social factors are most relevant for the industry or sector in which the portfolio company operates (a ‘materiality assessment’). Vortex does not expect all characteristics to be relevant to all portfolio companies, rather the Fund will promote only the environmental and/or characteristics which are relevant to each portfolio company. Sustainability indicators used to measure the attainment of each of the environmental and/or social characteristics promoted by the Fund will therefore also be defined per each portfolio company.

INVESTMENT STRATEGY
General Fund strategy:
The Fund’s investment strategy is to invest, and take majority positions, in technology companies that have the potential to grow fast organically and 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 headquartered mainly in the Benelux, as well as the Nordics and Germany. The main objective of the Fund is to realise medium-term and long-term capital appreciation for the investors of the Fund.

ESG integration strategy:
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 integrates ESG considerations into the investment decision-making process and into investment management activities for the Fund. The Manager’s approach includes, but is not limited to, consideration of sustainability risks. Sustainability risk means ‘an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material impact on the value of an investment’.

As part of the investment selection and due diligence process, Vortex will identify relevant ESG risks and subsequently determine whether the identified risks are material in relation to the company and the Fund’s investment strategy. Due diligence of companies prior to investment incorporates a top-down approach to screening against an exclusion list, as well as a bottom-up approach with respect to collection and assessment of data on material ESG factors. Environmental and social characteristics, as well as the investee company’s governance practices, may influence the investment decision. ESG integration is guided by the Manager’s Responsible Investment Policy.

PROPORTION OF INVESTMENTS
Vortex expects that at least 50% of the Fund’s investments will contribute to attaining the environmental or social characteristics promoted by the Fund. However, all investments will be subject to the binding elements of the Fund’s investment strategy, being screening against exclusion criteria.

MONITORING OF ENVIRONMENTAL OR SOCIAL CHARACTERISTICS
Methodology to measure and monitor E/S characteristics:
While Vortex expects that all new investments will contribute to attaining environmental and/or social benefits, performance of each portfolio company will be measured in relation to specific environmental and/or social targets relevant for that company.

Data sources and processing:
Vortex will collect data on relevant sustainability indicators, including principal adverse sustainability indicators, directly from each portfolio company. Portfolio companies are expected to provide actual data on a ‘best effort’ basis, and where appropriate, may estimate data points. As such, the Manager may observe limitations to the data provided.

METHODOLOGIES
Screening criteria:
As a minimum requirement for eligible investment in VCP Fund IV, Vortex implements a screening process for all new investments. Initial screening prior to investment involves a high-level assessment of sustainability risks and screening against exclusion criteria.

Vortex will exclude 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. Exclusions are further detailed in Vortex’ Exclusion Policy.

Due diligence process:
Vortex’ due diligence on proposed companies includes consideration of sustainability risks and opportunities, as well as the company’s governance practices. Proposed companies are required to complete an ESG questionnaire and to provide supporting documentation on certain ESG topics. Results of the ESG due diligence may influence the investment decision.

Integration of ESG considerations into Vortex’ investment decision-making process is guided by the Vortex Responsible Investment Policy.

ENGAGEMENT POLICIES
Vortex engages with portfolio companies to promote good governance practices, promote improvement on sustainability indicators, and support the sustainability ambitions of the portfolio companies.

Vortex aims to collaborate with each portfolio company or create an action plan where the Manager expects to be able to improve the company’s performance against certain indicators.

DESIGNATED REFERENCE BENCHMARK
Vortex does not apply a designated benchmark for the promotion or attainment of the environment and/or social characteristics.

REPORTING
The Manager shall comply with all applicable disclosure and reporting requirements under the SFDR. Pre-contractual disclosures and periodic reports are made available upon request.

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“).

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.

The environmental and social characteristics promoted by the Fund 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.

ESG INTEGRATION PRE-INVESTMENT
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.