Case Study—The Marguerite Fund: An Infrastructure Fund Sponsored by Development Banks
precondition for attracting qualified professionals. Fee levels are confidential, but Marguerite’s management confirmed that they reflect the typical private equity combination of management fees (at the lower end of the typical range for infrastructure funds) and share of carried interest.
ECONOMIC IMPACT AND ESG REPORTING Marguerite applies the ESG criteria of the EIB and other public sponsors, and also endorses international ESG principles such as the UNPRI and the Equator Principles. ESG factors are fully integrated in every phase of investment analysis and decision-making, as detailed in table 11.4. Some sponsors require disclosure of ESG and impact metrics, such as renewable generation capacity installed and carbon dioxide savings. EIB requires that all its investee funds measure the economic rates of return of their investments and comply with minimum return thresholds. Marguerite I guidelines therefore were based on EIB guidelines and requirements from the other sponsors.6
FINANCIAL DISCLOSURE As is typical for private equity funds, Marguerite’s financial disclosure is limited to the funds’ investors, not the broader public. Such disclosure includes quarterly and annual portfolio performance reports, with portfolio valuation conducted internally. Marguerite funds are audited by Deloitte according to the International Financial Reporting Standards. Public disclosure is limited to a list and description of fund investments and press releases published on Marguerite’s website and updated as new transactions are announced.
TABLE 11.4
Marguerite’s ESG assessment throughout the investment process
DEAL PHASE
ESG IMPLEMENTATION
Project screening
• P otential investments are screened according to their social and environmental risks and have to meet minimum thresholds of economic return (in addition to financial returns).
Due diligence
• M arguerite estimates an economic rate of return and only proceeds with investments delivering a positive result in this respect. • Obligations to comply with environmental laws and regulations and to prohibit corruption are captured in project contracts (concession agreements, permits, construction contracts, operations contracts, and so on). • ESG considerations are included in the detailed investment proposal submitted to the Investment Committee.
Asset management
• A n environmental and social officer was appointed to ensure ongoing compliance. • There is active ownership at the portfolio company level through board participation. • ESG risks identified during due diligence are carefully monitored throughout the holding period. • Environmental and social action plans reflecting the outcome of due diligence are implemented by the management teams of portfolio projects and companies.
Source: Marguerite 2018. Note: ESG = environmental, social, and governance.
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