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Responsible Investment Report 2019-20 B Bregal Investments Responsible Investment Report 2019-20
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
About Bregal Our commitment to responsible investing
Bregal Investments is the private equity platform that forms At Bregal, Environmental, Social and Governance (ESG) issues are a fundamental part of the COFRA group, a privately held group of companies headquartered in Switzerland. The COFRA group also part of our decision to invest in companies, as well as our proactive ownership. includes a global fashion retail business (C&A), a real estate business (Redevco) and an asset management platform We believe that a company’s approach to ESG is a solid indicator of its prospects (Anthos Fund & Asset Management). of long-term, sustainable value creation. During our ownership, we work with Bregal Investments was founded in 2002 and has grown extensively since then, with more than €15 billion invested each company to address the material ESG issues relevant to their strategy to date. The firm focuses on transforming and growing businesses for future success, with its funds focusing and our investment case. on longer-term value creation. Typically these businesses have an enterprise value of under €500 million. This is our third annual Responsible Investment Report, in which we aim to demonstrate progress made and share examples of how we are collaborating with our portfolio companies to improve their ESG performance. Contents
1 2019-20 highlights Fund case studies 36 Philanthropy Front cover 2 A letter from our Co-CEOs 16 1 Prioritise 38 Update on 2018-19 report With data centres throughout the US and Europe, 4 Bregal’s response to Covid-19 26 2 Invest Connectria is a leader in IBM and public cloud (AWS & Azure) managed & professional services. The company’s 20+ 6 ESG approach 32 3 Contribute years of IBM and private cloud experience, along with strong competencies supporting public cloud migration, position 8 Overview of funds it as one of the few true hybrid cloud managed solution providers in the world.
Signatory of: Sponsor of: Notes: All figures presented are as at December 2019 unless otherwise stated. The carbon footprint data disclosed on pages 10-15 relates to Bregal’s own organisation. It does not include data of each of the fund’s portfolio companies. B Bregal Investments Responsible Investment Report 2019-20 1
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
Bregal Sagemount Fund III 2019-20 $1.55bn raised, exceeding highlights its $1.35bn target
ESG reviews Bregal Sustainable Development Fund Bregal Social Impact Initiative >90% 4 Creating positive social Bregal Sagemount See p11 in-depth ESG reviews at more new loans to fund ESG impact in our local than 90% of our companies improvement projects communities Bregal Private Equity Partners Fund VI ESG portfolio company reviews The Bregal Sustainable Development Through Bregal’s Social Impact €1bn raised consistently adopted across all Fund provided four new loans to Initiative we have now supported Bregal funds, prioritising key ESG portfolio companies for projects five portfolio companies to create aspects and raising Board-level including the reduction of carbon positive social impact in their awareness. emissions, improved quality of care local communities. and renewable energy generation. 40% of the Fund has now been deployed.
Prioritise See p16 Invest See p26 Contribute See p32 BPEP See p15
Carbon neutrality Gender diversity Bregal Helps Initiative Carbon neutrality achieved Became a sponsor of In partnership with the COFRA Foundation, our senior Bregal across Bregal Investments Level20, an initiative employees established a €3 million fund to support Covid-19 relief platform for a third year that supports greater efforts. The Bregal Helps Initiative aims to alleviate human crisis through the support of a representation of reforestation project in women in the private close to our portfolio company ecosystem and to support wider Colombia equity industry healthcare efforts. Nine initiatives have been supported to date.
Our ESG approach See p6 Co-CEOs’ letter See p2-3 Our Covid-19 response See p4 B Bregal Investments Responsible Investment Report 2019-20 2
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
Over the past decade, the world has experienced a long Global pandemic period of relatively stable economic growth and low A letter from The economic impact of the Covid-19 crisis has been interest rates. During this time, our funds have realised larger than that of any previous crisis in generations. strong results and we have successfully expanded the our Co-CEOs It has had a significant, negative impact on our portfolio Bregal platform. We have also grown our business by companies, their employees, and other stakeholders. launching new funds, diversifying and growing our Quentin Van Doosselaere & Steven Black Along with our colleagues at Bregal, we are both working investor base and significantly increasing our number of very hard to try to mitigate these negative impacts and employees. At the end of 2019, we had direct investments support our portfolio companies to recover and prosper in 58 companies in North America and Europe, once more. However, the pandemic has also shone employing more than 28,500 people and generating a light on the role good businesses play in society approximately €6 billion of consolidated revenues. and the need for the recovery to be more inclusive Responsibility and sustainable. With this growth comes a heightened sense of Regardless of the industry, experience shows that responsibility to positively contribute to society and to strong ESG management is essential for companies to create long term sustainable value for all our weather the crisis, be it through more resilient business stakeholders. Although in financial terms the last operations, more robust and transparent supply chains, decade was fruitful for investors such as Bregal, the or higher employee morale and effective outreach sense of urgency regarding Environmental, Social and initiatives to local communities. This underscores the Governance issues has grown substantially. Our society importance of ESG integration, now more than ever before. today is in turbulent times and we face unprecedented Once the magnitude of the crisis became clear, our uncertainties, both from an environmental and social senior Bregal employees launched the Bregal Helps perspective. We are in the middle of the global Covid-19 Initiative together with the COFRA Foundation. pandemic and health crisis and at the same time, the The Initiative is a €3 million Covid-19 relief fund climate emergency and increasing loss of biodiversity created to help Bregal portfolio companies to alleviate urgently show the need for a ‘green’ recovery. Our human crisis and support their local communities. societies also grapple with social issues such as increased inequality, diversity and inclusion challenges, and racial injustice. B Bregal Investments Responsible Investment Report 2019-20 3
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
At the time of this report’s launch, we have supported Although the negative impact Although we have recently hired more women in our nine initiatives and are close to committing 50% of of the pandemic will be felt for a long investment teams, recruited and promoted colleagues the fund. Companies that have been helped include with an ethnic minority background to partner and Arkphire, which has enabled digital connectivity for time to come, we cannot reduce promoted our first female colleague to partner, we elderly care homes, palliative hospitals and community our focus on the climate emergency, recognise we still have a long way to go. services in the UK and Ireland; and Buyers Edge which continues to unfold. Recent tragic events in the US, which reverberated Platform, which has provided support to frontline Steven Black Co-CEO globally, have once again shown the need for social workers and helped vulnerable local communities by justice reform and racial equity. At Bregal, we are providing thousands of boxes of fresh produce in the US. We are committed to doing more committed to doing more and are united in trying to Climate change and are united in trying to be a socially be a socially responsible firm that promotes diversity and equal opportunity, with no tolerance for racial Although the negative impact of the pandemic will be responsible firm that promotes diversity injustice at any time or in any place. felt for a long time to come, we cannot reduce our focus and equal opportunity. on the climate emergency, which continues to unfold. Quentin Van Doosselaere Co-CEO As a firm, we want to reiterate our resolve to have a more At Bregal, we firmly believe that climate action remains diverse group of employees. We also want to renew our critical, particularly in the current decade, as the commitment to actively promote, and when necessary remaining ‘carbon budget’ to stay within 1.5°C warming investment in a 3.5MW solar project in Pennsylvania, fund, fair social practices in each of our portfolio is rapidly depleting. We are in the process of launching US, which instantly transforms the business of one of companies, knowing that we have the ability – and the a Bregal climate strategy and aim to announce our portfolio companies, IMG Energy Solutions. responsibility – to make tangible changes in the communities in which we operate. ambitious targets towards climate neutrality next year. Diversity and social justice We would like to thank our colleagues for their hard Furthermore, we aim to accelerate the deployment Like most firms, we employ people from diverse work and continuous commitment to ensuring we are of our €40 million Sustainable Development Fund, backgrounds across the organisation and we believe a responsible investor and owner, particularly in these dedicated to supporting ESG improvement initiatives we are a better firm because of it. In 2019, we became unprecedented times. Together, we are proud to present in our existing portfolio, particularly in relation to a sponsor of Level20, an initiative to improve gender in this Responsible Investment Report some of the climate action. diversity in our sector. Amongst other things, the initiatives we have developed to date. In 2019, we made four investments from the Fund, initiative will see our senior partners taking part in including the launch of a first-of-its-kind, carbon neutral mentoring programmes to support female professionals IBM Power Systems at Connectria in the US and an in our industry. B Bregal Investments Responsible Investment Report 2019-20 4
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
Bregal’s response B Bregal Helps Initiative Example grants
to Covid-19 From the start of the pandemic there has been a strong consensus and determination across The global Covid-19 pandemic Bregal to find a meaningful way to support the pandemic relief efforts. is an unprecedented human tragedy, e ie und which has impacted the personal Therefore, we launched the Bregal Helps Initiative. All senior Bregal employees in partnership with and professional lives of individuals, a ed ants t date the COFRA Foundation raised a €3 million relief fund families and communities across with the mission to assist Bregal portfolio company the globe. efforts to alleviate a human crisis and to support local ant a a s in cess communities with targeted charitable donations It has been our absolute priority to to those impacted by Covid-19. support our portfolio companies and the communities in which they operate, Proactive employee support to relief efforts whilst also ensuring the health and Alongside our external actively participated in Covid-19 commitments, many of our specific initiatives. For example, wellbeing of our own colleagues. employees took proactive action in partnership with the COFRA in supporting Covid-19 relief Foundation, a matching efforts and have already raised programme to support Doctors over €260,000. In addition to Without Borders (Médecins Sans our regular charitable matching Frontières) was established, programmes, employees also helping to raise over €80,000. B Bregal Investments Responsible Investment Report 2019-20 5
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
Engagement across the portfolio Connectivity Food for the Since the beginning of the crisis we have monitored for those in need homeless employment measures taken by our portfolio companies
Arkphire | Charities: Spread a Smile; Align General | Charity: Lucky Duck to minimise negative impacts and to ensure best safety Sunbeam House Services; St Francis Foundation Hospice; LauraLynn Children’s Hospice practices. Providing meals to homeless Delivering fully enabled IT individuals in San Diego. We assessed that in the peak of the Covid-19 solutions to enable digital The programme will start by lockdowns, approximately 3% of employees were connectivity for elderly care reaching 400 unsheltered homes, palliative hospitals homeless individuals per day. affected by redundancies. All short-term and furloughed and community services workers were compensated via government schemes, in the UK and Ireland. The initiative will help provide resulting in minimal wage losses. 100+ iPads and 20+ PCs. Where feasible our portfolio companies have also taken Amount: €67,557 Amount: $125,000 a proactive approach to supporting pandemic relief efforts, such as Onlineprinters starting production of non-medical physical protection headwear, and our Produce boxes for Access to healthcare provider, DPG, offering free apartments the disadvantaged education to clinics as quarantine stations in Aachen, Germany.
Buyers Edge Platform | Charity: Produce Embassy Kirchhofer | Charity: Stiftung Alliance Foundation Brändi Adapting internal ways of working Delivering fresh produce Supporting the expansion of boxes to the disadvantaged an existing school to provide Ensuring the health and wellbeing of our own employees community of Lake Worth, access to 30 disabled students at Bregal has been our top priority. All employees were Florida, and supporting the in Switzerland. Disabled children asked to work remotely, and we are making sure that agricultural industry. The have been severely affected by initiative will help support Covid-19 and this initiative helps our teams continue to work effectively and safely distribution of 3,000-4,000+ give them a fair chance in life by throughout this period. boxes of fresh produce. receiving high-quality education. Recognising the importance of mental health, all teams Amount: $125,000 Amount: CHF50,000 have been provided with access to relevant guidance and resources, including a health and wellbeing committee set up by employees. B Bregal Investments Responsible Investment Report 2019-20 6
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
Across the Bregal platform, our commitment emissions by 2030 to stay within a 1.5°C warming ESG approach to ESG integration is stronger than ever as we trajectory. At Bregal, we acknowledge the responsibility continue to deliver on our ESG approach we have as an investor and plan to announce a climate of ‘prioritise, invest and contribute’. strategy next year to help transition our portfolio towards carbon neutrality. Meanwhile, we are working with our We are proud that more than 90% of our companies management teams to develop carbon reduction plans Alvar de Wolff Head of ESG & Responsible Investing have completed annual ESG reviews. These companies for every company. The SD Fund also supports climate have committed to improvement initiatives and their action, with examples such as Connectria, IMG Energy progress is reviewed annually. For our most recent Solutions and Blue Harvest Fisheries. investments, ESG reviews are either planned or already Diversity, equity & inclusion in progress. We also continue to provide ESG funding to our portfolio companies. The €40 million Bregal Bregal is committed to being a socially responsible firm Sustainable Development Fund (SD Fund) issued four promoting diversity and equal opportunity. The troubling new loans in 2019 and is now 40% deployed. Through events in the US, and the subsequent rise of a global our philanthropy initiatives, another 14 companies racial justice and equity movement, have shown us have contributed to positive social impact in their local that we need to do more. This year, we will focus more communities. You can read more about progress and on racial equity and equal opportunities by upgrading future priorities for each of our funds in the Overview our hiring policies, raising awareness, providing training, of funds section (see p8-15). and supporting our portfolio companies to address these issues. We will also expand our charitable Our goals for next year are to accelerate our climate matching programme by supporting organisations action and to further our diversity, equity & inclusion addressing social injustice and racial inequity. efforts. Both climate change and social injustice are Climate action generational, long-term challenges, which as a society Recently, scientists have confirmed that the last decade we need to address collectively. We believe that by was the hottest on record, whilst 2019 was the second playing our part as investor, we can also help our hottest year, underscoring that climate change is portfolio companies to become more resilient and happening now. The world must roughly halve carbon responsible businesses. B Bregal Investments Responsible Investment Report 2019-20 7
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
We aim to consistently contribute to building great companies and creating Prioritise IMG Energy 1 Solutions long-term, sustainable value for our See p30 investors, whilst at the same time Identifying and prioritising material having a positive impact on society. ESG aspects and consistently aiming for improvement is a key element of our approach. We work to support our portfolio company management teams to formulate a vision for long-term sustainable growth. Invest See p16 2 Supporting companies as they transition towards greater environmental and/or social ATP Adhesive IMPACT Systems sustainability. See p18 See p26
SurePrep ePassi See p20 See p24 3 Contribute Supporting portfolio company initiatives that have the potential for transformative change Ruby Slipper See p34 within communities.
See p32 B Bregal Investments Responsible Investment Report 2019-20 8
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
Overview B BregalUnternehmerkapital B BregalSagemount B BregalPartners of funds Equity capital for mid-sized Private capital for growth Equity capital for mid-sized companies in the DACH region companies in North America companies in North America In 2019, the Bregal Investments private Bregal Unternehmerkapital specialises in Bregal Sagemount provides flexible capital Bregal Partners invests in industry-leading equity platform consisted of six direct majority and minority holdings, especially to market-leading technology companies middle market companies that generate investment teams and a fund-of-funds in mid-sized companies based in Germany, in high-growth sectors across a wide variety $5 million to $75 million or more of EBITDA. Switzerland and Austria – the ‘Mittelstand’. of transaction situations. Bregal Sagemount Bregal Partners seeks to invest between team active in Europe and the US. Bregal Unternehmerkapital is currently focuses on industries with strong secular $20 million and $90 million of equity in three investing a €1.2 billion fund. tailwinds and companies with recurring core verticals: consumer and multi-unit; or re-occurring revenue streams. food and beverage; and business services.
Portfolio companies 15 Portfolio companies 14 Portfolio companies 11 Employees 12,327 Employees 3,391 Employees 4,540 Assets under management €2.3bn Assets under management $2.8bn Assets under management $1.5bn Turnover €2.5bn Turnover $0.8bn Turnover $1.0bn
Note: All figures presented are as at December 2019 unless otherwise stated. All AUM data on pages 8-15 represents NAV plus unfunded commitments. Source: All data on pages 8-15 provided by Bregal Investments. B Bregal Investments Responsible Investment Report 2019-20 9
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
B B B B Bregal BregalMilestone BregalEnergy Private Equity Partners
Flexible growth capital Energy, power and renewables- UK and Benelux-focused middle Private equity funds, and strategic assistance focused middle market fund market private equity fund co-investments and secondaries for European companies Bregal Energy invests in diversified areas Bregal Freshstream invests in growing Bregal Private Equity Partners (BPEP) of environmental sustainability, as well as businesses based in Western Europe manages a diversified portfolio of private Bregal Milestone is a €495 million fund conventional verticals of the energy sector in dedicated to making investments in Europe. with a particular focus on the UK and Benelux equity fund investments, with fund North America and Europe. The team targets markets. Bregal Freshstream focuses on commitments that typically range from Bregal Milestone provides flexible growth private equity investments in the fast-growing capital and strategic assistance for fields of renewable infrastructure and businesses in which capital and support between €10 million and €40 million. European companies. resources, carbon-reducing technologies, enable management teams to grow through BPEP also makes co-investments of and the generation, transmission and strategic and operational change. approximately €5-15 million per company distribution of clean energy. and invests in secondary transactions.
Portfolio companies 6 Portfolio companies 3 Portfolio companies 9 Assets under management €1.8bn Employees 1,784 Employees 77 Employees 5,295 Funds in current portfolio 100+ Assets under management €0.5bn Assets under management $0.2bn Assets under management €0.5bn GPs committed to 60+ Turnover €0.4bn Turnover $0.1bn Turnover €0.9bn Secondary transactions in current portfolio 4 Co-investments in current portfolio 9 % of GPs that are UN PRI signatories 30% B Bregal Investments Responsible Investment Report 2019-20 10
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
B BregalUnternehmerkapital
ESG remains a priority and is strongly implemented Equity capital for mid-sized Portfolio companies 15 in our portfolio management approach. In 2019, companies in the DACH region we completed detailed ESG reviews for all our portfolio Bregal Unternehmerkapital Employees 12,327 companies in order to identify key risks and value creation specialises in majority and minority holdings, especially Assets under management €2.3bn opportunities. For two of our portfolio companies this was in mid-sized companies based in Germany, Switzerland and Turnover a second annual review cycle and we were pleased to Austria – the ‘Mittelstand’. €2.5bn Bregal Unternehmerkapital see how active collaboration with the management teams Carbon footprint 1,086 tCO e is currently investing 2 had positively contributed to long-term value creation. a €1.2 billion fund. Offset by planting 5,650 trees We believe that strong ESG performance is critical for ATP See p18 driving value creation, even more so during such turbulent Investments by sector Investments by geography times. Therefore we are particularly proud to have already 1 A tomobiles nd strial oods supported Embassy Kirchhofer and Onlineprinters in their components services Covid-19 relief efforts. We continuously engage and 1 So tware ons mer services services support our portfolio companies not only to help manage 12 ommercial edia pro essional 2 o sehold ESG risks but also to help deliver on their corporate services personal prod cts 12 hemicals 2 ealthcare responsibility ambitions. ons mer e ipment d rables services apparel
Florian Schick Managing Partner Highlights Future focus • ESG reviews completed for all • Strong ESG progress across the • Identify suitable projects for companies, with two undergoing portfolio with ATP piloting combined Sustainable Development Fund a second review cycle1 heat and power installation and funding Kunststoff Schwanden AG obtaining • Sustainable Development Fund loan • Continuously review ESG progress ISO 45001 issued to DPG to fund research and complete 2020 review cycle to enhance quality of care • Won ‘Munich’s leading businesses’ for all companies in the SME category for our social • Provided relief grants for Embassy engagement with Dein München Kirchhofer and Onlineprinters as charity part of the Bregal Helps Initiative
1 All investments that had closed by September 2019. EA, iptor, Reline and GUS will be reviewed in 2020. B Bregal Investments Responsible Investment Report 2019-20 11
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
B BregalSagemount
At Bregal Sagemount, we consider our ESG Therefore, we have implemented a standard ESG review Gene Yoon approach an integral part of our investment process for all Sagemount companies. Last year, we Managing Partner ethos and our ability to generate the highest risk- also provided additional capital to support Connectria adjusted returns for our investors. ESG issues such to launch a carbon neutral cloud offering, which not as data privacy & security, diversity & inclusion and only makes the company more sustainable but further carbon footprint are ever more important issues for enhances our returns. the software and tech-enabled businesses we focus on.
Private capital for growth companies Portfolio companies 14 Highlights in North America • Provided ESG-focused capital via • Participated in the Bregal Helps Bregal Sagemount provides flexible Employees 3,391 the Sustainable Development Fund Initiative with companies including capital to market-leading technology to Connectria and Enprecis Buyers Edge Platform, Procurement companies in high-growth sectors Assets under management $2.8bn Advisors, Corcentric and Align across a wide variety of transaction • Implemented a standard ESG situations. Bregal Sagemount General receiving support for Turnover review process across all focuses on industries with strong $0.8bn their partnerships with local Sagemount funds secular tailwinds and companies philanthropies Carbon footprint 1,015 tCO e with recurring or re-occurring 2 revenue streams. Offset by planting 5,278 trees Connectria See p28
Investments by sector Investments by geography Future focus
6 oft are • Support our companies to • Continue to participate in the services implement best practices Bregal Helps Initiative and explore 2 Commercial identified in the ESG reviews additional ways Sagemount and professional services its team members can have a • Perform carbon footprint analyses 7 nsurance direct impact on our ESG goals, and aim for a carbon neutral including diversity & inclusion portfolio by the end of 2021 • Further explore ESG funding opportunities through the SurePrep See p20 Sustainable Development Fund B Bregal Investments Responsible Investment Report 2019-20 12
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
B BregalPartners
ESG considerations are foundational to the three Equity capital for mid-sized companies Portfolio companies 11 verticals in which we invest: consumer and in North America multi-unit, food & beverage, and business services. Bregal Partners invests in industry- Employees 4,540 leading middle market companies Sustainability issues are increasingly uppermost in that generate $5 million to $75 million Assets under management $1.5bn the minds of consumers and users of our companies’ or more of EBITDA. Bregal Partners seeks to invest between $20 million Turnover products and services, as they often express and $90 million of equity in three $1.0bn core verticals: consumer and a preference to support companies that share Carbon footprint 663 tCO e multi-unit; food and beverage; 2 their own values and beliefs. and business services. Offset by planting 3,447 trees Therefore, just as we do with other strategic value creation initiatives across our portfolio, our strong Investments by sector Investments by geography ESG focus also helps us build better businesses. 58 ood Our investments in Ruby Slipper, Total Vision Care beverage and American Seafoods are great examples 19 Consumer durables of that commitment. apparel 13 Energy e uipment services ealt care e uipment Charles Yoon services Managing Partner 4 Consumer services American Seafoods See p22
Highlights Future focus • Supported and funded social • Perform annual ESG reviews • Further explore ESG funding impact initiatives at Ruby Slipper, of all our portfolio companies opportunities through the Total Vision Care, JuJuBe Sustainable Development Fund • Increase focus on climate action and American Seafoods and perform annual carbon • Participated in the Bregal Helps footprints of portfolio companies Initiative, including grants for Ruby • Continue to participate in the Slipper and Embassy Management Bregal Helps Initiative • Performed ESG reviews of more than 90% of our portfolio companies B Bregal Investments Responsible Investment Report 2019-20 13
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
B BregalMilestone
Bregal Milestone maintained its strong meet rigorous, sustainable business standards in Jan Bruennler investment velocity in 2019 and H1 2020, line with our commitment to improving our overall Managing Partner growing its portfolio by 50% during the year with two ESG performance across our portfolio. Specifically, new investments and making further investments we have developed a tailored ESG methodology which into existing portfolio companies. Through this, we successfully piloted with ePassi. We are planning to we continued to focus on ensuring our investments roll out this approach across our portfolio in 2020/2021.
Flexible growth capital and strategic Portfolio companies 6 Highlights assistance for European companies • Invested in two new portfolio • Launched Milestone Performance • Participated in the creation and Bregal Milestone is a €495 million Employees 1,784 companies, ePassi and Partners (MPP), our portfolio value set-up of the Bregal Helps Initiative, fund dedicated to making investments Anywhere 365 enhancement capability including grants being awarded in Europe. Bregal Milestone provides Assets under management €0.5bn for Arkphire and ePassi flexible growth capital and strategic • Completed additional investments • Developed a comprehensive ESG assistance for European companies. Turnover €0.4bn in three portfolio companies review methodology and conducted • Partnered with Spread a Smile, to enable incremental growth the first review of ePassi with a London-based children’s charity
Carbon footprint 231 tCO2e through further acquisitions recommended actions to be monitored by the Board Offset by planting 1,202 trees
Investments by sector Investments by geography Future focus
100 oft are • Complete further investments • Further development of MPP services in European growth companies capability and offerings to provide out of our first fund and continue strategic support to grow Bregal Milestone • Further development of our ESG • Work with our portfolio companies review methodology and roll-out to drive and realise value across the wider portfolio in 2020/2021 • Continue to participate in the Bregal Helps Initiative ePassi See p24 B Bregal Investments Responsible Investment Report 2019-20 14
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
B BregalEnergy
Over the past year, the team has continued Whilst immediately contributing to improving Nathan Campbell to partner with our portfolio companies to Pennsylvania’s sustainability roll-out, the project will Partner improve our global footprint and has achieved some bring greater power resiliency and redundancy to a considerable milestones. Some examples of our critical regional infrastructure player, enhancing public achievements include a 25% reduction of carbon safety, and creating cost efficiencies. Recognising the emissions by Birchill, and IMG being selected as a unprecedented challenges ahead of us, we look forward key partner on the development of the Pittsburgh to building on the progress we present here. Airport microgrid project – the first of its kind in the US.
Energy, power and renewables-focused Portfolio companies 3 Highlights middle market fund • Birchill reduced its emissions by Bregal Energy invests in diversified Employees 77 25% by eliminating wellsite fugitive areas of environmental sustainability, gas leaks as well as conventional verticals of the Assets under management $0.2bn energy sector in North America and • IMG Energy Solutions was selected Europe. The team targets private equity Turnover to partner on the development of investments in the fast-growing fields of $0.1bn renewable infrastructure and resources, the Pittsburgh International Airport Carbon footprint 23 tCO e carbon-reducing technologies, and 2 microgrid project – the first of its the generation, transmission and kind in the US distribution of clean energy. Offset by planting 117 trees
Investments by sector Investments by geography Future focus
1 Oil gas • Build on progress made tilities • Address emerging need for reliable, innovative and sustainable energy solutions • Deliver competitive returns and measurable social and environmental good
IMG See p30 B Bregal Investments Responsible Investment Report 2019-20 15
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
B BregalPrivate Equity Partners
As fund investors, we can only achieve our ESG Private equity funds, co-investments Assets under management €1.8bn Investments by sector ambitions by aligning ourselves with partners and secondaries who share the same values and principles. For this reason, Bregal Private Equity Partners (BPEP) Funds in current portfolio 100+ 2 oft are manages a diversified portfolio of services the choice of GP is critical. ESG risk analysis continues private equity fund investments, 12 ndustrial GPs committed to 60+ goods to be increasingly integrated and prioritised within BPEP’s with fund commitments that typically services range from between €10 million Carbon footprint 226 tCO e Commercial investment processes. Historically, BPEP took ESG risks and €40 million. BPEP also makes 2 professional services co-investments of approximately into account through an exclusionary approach. In recent Offset by planting 1,175 trees 7 ealt care €5-15 million per company and e uipment years, we have moved away from negative screening, invests in secondary transactions. services further up the responsible investment spectrum, towards ealt care Consumer positive screening. services Highlights etailing Today, ESG features much more prominently during 3 inancial • ESG risk analysis increasingly • Raised the sixth BPEP fund, services 3 nsurance the investment process with the relevant GPs’ ‘ESG integrated in investment decision- a €1 billion fund to be invested 3 tilities making processes over the course of the next three Qualifications’ stated on the front page of our investment 2 Ot er years, and completed a secondary memos and in our quarterly reports. As a team, we are • Seven of our underlying GPs sale of the second BPEP portfolio improving our own understanding of ESG risks and have became UN PRI signatories in 2019 and 2020 been upgrading our methods for rating our current and prospective GPs, reflecting their current and future • Reviewed over 20 impact-focused growth equity/private equity funds commitments in their approach to managing ESG risks.
Future focus Jan Faber • BPEP will not engage with a GP that • Further develop our internal ESG Managing Partner does not have an ESG policy or does Rating System and engage with GPs not intend to develop one during the whose score indicates that there is course of the investment period. room for improvement In cases where a GP does not have • Continue to engage with GPs further a policy, BPEP aims to be helpful along the ‘impact spectrum’ by sharing best practices where possible B Bregal Investments Responsible Investment Report 2019-20 16
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
1 Prioritise An ESG review encompasses portfolio The main elements of the ESG plan are prioritisation company management’s long-term of ESG issues, an overview of short- and medium-term initiatives to improve ESG performance, and KPIs industry view on sustainability, to report and monitor progress. The purpose of this both environmentally and socially, ESG plan is to support management in embedding and prioritises initiatives to further material ESG aspects in their operations and strategy. improve ESG performance. The Board of Directors of each of our portfolio companies is Bregal’s primary platform for monitoring Post initial investment, Bregal deal teams work closely ESG performance and progress, and we encourage with portfolio company management to prepare them to discuss ESG priorities more extensively a 100-day or value creation plan to guide strategic at least once a year. direction and prioritise value creation initiatives. We aim to integrate material aspects of ESG in our value creation plans, so we drive progress in financial as well as ESG performance. B Bregal Investments Responsible Investment Report 2019-20 17
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
ESG review process ESG priorities Management KPIs and targets Improvement Investment ESG reviews are identified vision articulated defined initiatives agreed opportunities completed annually identified across the portfolio
Year 1 Year 2 Year 3 Low Med High
Material issues are Management vision Performance indicators Concrete ESG improvement Potential investment identified, which are of long-term growth and targets are defined initiatives for the current year opportunities in ESG specific for each of the company for the key ESG themes. (part of the budget) and in the projects, which are portfolio company. within the boundaries medium term (next 2-3 years). eligible for financing of sustainability. from the Sustainable Development Fund. B Bregal Investments Responsible Investment Report 2019-20 18
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
1 Prioritise BregalUnternehmerkapital
Our investment ATP Adhesive opportunity
Systems Unique and highly efficient customised product development ATP Adhesive Systems (ATP) is a leading capabilities
provider of speciality adhesive tapes. The Large and growing company specialises in the development and addressable market
manufacturing of pressure sensitive adhesive Strong and experienced tapes tailored specifically to the customer’s management team requirements for a broad range of applications. Focused on water-based adhesive tapes, ATP offers an environmentally friendly alternative to more traditional solvent-based adhesive tapes.
Employees 300 Sector Chemicals Head office Wollerau, Switzerland B Bregal Investments Responsible Investment Report 2019-20 19
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
1 Prioritise BregalUnternehmerkapital
A mental health risk assessment has recently been Material issues Highlights carried out. These measures help to ensure that lost
Occupational health and safety time days and absenteeism targets are consistently
Carbon footprint Optimised energy usage met and that employee turnover remains significantly below industry averages. Product design and quality As part of its long-term commitment to carbon neutrality Waste and hazardous material management by 2030, ATP has been exploring a number of energy As a leading manufacturer of industrial optimisation and carbon reduction solutions. In 2019, adhesive tapes, ATP consistently relies the company piloted combined heat and power (CHP) on the environmentally-friendly technology Key performance indicators systems, designed to reduce carbon emissions by up of water-based acrylates and produces sustainable to 30%. Two additional systems will be installed in 2020. products of the highest quality. Manufacturing under Electricity consumption in operations (kWh) the strictest adherence to all environmental and High-quality and environmentally friendly 1 occupational safety standards is beneficial for products 1 1 the health of all our employees and for society. Product quality is closely monitored, and ATP is Lost time (days) continuously investing in innovation to minimise the Daniel Heini CEO, ATP Adhesive Systems 1 1 impact of its products. ATP has a lower environmental 1 1 1 production footprint compared to common solvent- Priorities going forward
Material efficiency – ATP Alltape(m 2 waste/m2 produced) (%) based adhesive tape producers as their water-based adhesive tape production does not rely on evaporating Further roll-out of CHP systems and 1 solvents. The company continues to further develop continuous energy usage optimisations 1 sustainable carrier materials. Improve sustainable product design such as Waste volumes (tonnes) the development of biodegradable tape Healthy and safe workforce 1 1 Optimise manufacturing processes 1 1 To ensure mitigation of exposure to industrial hazards to minimise production waste such as dust, noise and harmful chemicals, ATP’s health and safety risk manager oversees a detailed monitoring system and provides employees with regular training. Source: ATP Adhesive Systems company data B Bregal Investments Responsible Investment Report 2019-20 20
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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1 Prioritise BregalSagemount
Employees Our investment (US) 121 SurePrep opportunity Employees (India) 631 Founded in 2002, SurePrep is a provider of Leading player Software & Sector services tax documentation automation software and in the market Irvine, CA, software-powered services and is the leader Currently unpenetrated Head office USA in 1040 tax automation for Certified Public market Accountancy firms. The company provides Insulated industry with compelling end-market innovative, comprehensive and productive dynamics
personal federal income tax automation Significant potential to solutions that include scanning, an optional accelerate sales optical character recognition verification service, outsourcing and a two-time award-winning mobile solution. B Bregal Investments Responsible Investment Report 2019-20 21
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
1 Prioritise BregalSagemount
SurePrep follows a documented process to ensure Exit interviews are conducted for all employees Material issues data security and conducts regular vulnerability testing. who leave voluntarily and in 2019 SurePrep hosted
Data privacy and security The company has achieved ISO 9001:2015 certification a wellness week in the US which was very well received
Good governance, ethics and compliance for process quality management. Relevant training by employees.
Engaged and diverse workforce is provided annually to all employees. Data privacy and security of our systems Carbon footprint Fair labour conditions and engaged is critically important to our CPA clients in workforce across operations delivering their services and maintaining SurePrep has operations both in the US and India, reputation. It is therefore our key priority to meet Key performance indicators and HR functions are managed separately to address constantly evolving information security requirements. We are proud to have served our clients for the last 18 Number of critical or high risks identified country-specific employee needs. Robust policies are in annual penetration test Zero in place, ensuring a consistent approach and coverage years without a single known incident of data breach. of country-specific issues. For example, in India, the David Wyle CEO, SurePrep 62.5% male Diversity rate company has an Internal Complaints Committee to 37.5% female handle any harassment complaints and offers sexual Priorities going forward harassment awareness workshops and confidential Source: SurePrep company data counselling sessions. Finalise review of the Code of Ethics and
Highlights Management-level diversity training is provided to foster hire new Compliance Officer an inclusive workplace culture. In recognising the Conduct a full employee engagement survey importance of diversity, SurePrep is also assessing Data privacy and security recruitment initiatives, such as hosting ‘women in Consider renewable energy usage and To ensure best-in-class data management and technology’ days to engage local university students. carbon offsetting options protection, SurePrep has established rigorous In addition to onboarding training, SurePrep provides information security policies and processes. new employees with weekly check-ins for the first month Specific data security roles and responsibilities are and offers to pay for further training needs. assigned to individuals, including the Chief Innovation Officer, Director of IT and Information Security and a full-time Information Security team based in India. B Bregal Investments Responsible Investment Report 2019-20 22
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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1 Prioritise BregalPartners
Our investment Employees 840 American Seafoods opportunity Sector Fishery
Founded in 1987, American Seafoods is the Access to abundant Seattle, WA, Head office USA largest harvester of fish for human consumption and well-managed, sustainable natural in the US and one of the largest catcher- resources processors of sustainably harvested fish in Market-leading company the world. The company serves 1 billion people in attractive segment around the globe with consistently high-quality of pollock fishery seafood products. Catches are harvested and Favourable global trend processed on board and include Alaska pollock, of increasing demand for healthy protein Pacific whiting, yellowfin sole and Pacific cod in the waters off Alaska, and Pacific hake off the coasts of Oregon and Washington. B Bregal Investments Responsible Investment Report 2019-20 23
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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1 Prioritise BregalPartners
In the face of the Covid-19 pandemic, the company has Material issues Highlights undertaken rigorous testing and quarantine procedures
Sustainability of the fisheries to preserve operations and ensure employee safety.
Labour standards and occupational safety Leader in sustainable fisheries Energy usage and carbon footprint Energy usage and carbon/water footprint American Seafoods hold certifications for both the Employer of choice Marine Stewardship Council and the Alaska Seafood The company has taken significant steps to reduce its Marketing Institute Responsible Fisheries Management carbon footprint. In 2019, it used 19.3 million gallons Program. of fuel, equating to roughly 0.5kg of total carbon emitted Key performance indicators for every kilogramme of fish that reaches consumers. The company’s strong communications infrastructure, This is lower than all other traditional sources of which permits members of harvest cooperatives to Finished products (kWh/lb) protein including nuts, tofu, poultry, pork and beef. share catch information in real time via satellite, enables 1 1 it to minimise any bycatch. American Seafoods’ catches Our promise to the world is to feed 1 1 of wild Alaska pollock in the Bering Sea have the highest 1 1 people better food sourced from a better retention rates for targeted species, at 99.5%, setting it place. We are committed to helping our Accidents and illnesses (per 1 million hours) apart from its major peers. crews at sea, communities where we fish, and hungry 1 1 people around the world. 1 11 Ensuring occupational safety on board Mikel Durham CEO, American Seafoods 1 American Seafoods aims to be best-in-class for health and safety performance in the industry. Therefore, in Priorities going forward Marine Stewardship Council (MSC) certification scores 2019, the company launched its Corporate Safety Committee to drive best practice and a ‘fit for duty’ Ensure safety and security of crews during Pacific hake 96.8 (#1) health protocol. the pandemic Bering Sea and Aleutian Islands (BSAI) pollock 96.3 (#2) The company has also strengthened its partnership with Become an industry employer of choice the Dutch Harbor clinic, offering consolidated medical by 2021 BSAI Pacific cod providers and records to allow for better care, as well 92.3 (#10) Optimise processes and efficiency of as pneumonia vaccines. This has led to an annual vessels to reduce environmental footprint Source: American Seafoods company data reduction of illnesses per trip of 41%, and a decline in average injuries per trip of 3%. B Bregal Investments Responsible Investment Report 2019-20 24
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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1 Prioritise BregalMilestone
Our investment ePassi opportunity
Founded in 2007, ePassi is a provider of High-growth Nordic employee benefit solutions, offering sports, fintech culture, wellness, public transport and lunch Leading mobile payment benefits, primarily in Finland and Sweden. player in the market Predictable revenue ePassi is a pioneer in mobile payment systems, model with high barriers and has become one of Europe’s fastest-growing to entry companies, on which more than 1 million Licensed Payment Service Provider with employees rely for employee benefits. significant potential for further disruption
Employees 88 Sector Fintech/employee benefits Head office Helsinki, Finland B Bregal Investments Responsible Investment Report 2019-20 25
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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1 Prioritise BregalMilestone
as part of onboarding for new employees and in annual The team is ensuring the necessary controls and checks Material issues employee training. ePassi has taken the important are in place, with clear thresholds and requirements
Data privacy step of hiring a Compliance Officer who will build on for spend decisions and commercial proposals.
Good governance the current practices to further set up a robust and Whilst at ePassi we have always held Employee engagement and performance management mature programme. our employees and work to the highest Employee engagement and performance standards, it has been important to formalise management our policies into a top-notch system, reflective of our Key performance indicators ePassi has two HR managers who provide operational values. ESG is critically important to ePassi and we An in-depth ESG assessment has been conducted HR support across Finland, Sweden and Poland. are proud to be working alongside Bregal to ensure and detailed actions have been identified in areas The team has been working hard to standardise and these processes continue to adapt as we scale. of employee engagement, data privacy and security, formalise people management practices across all Pekka Rantala CEO, ePassi and good governance. Management has committed three countries, covering the full employee scope with to tracking numerous KPIs, including compliance a focus on the employee value proposition, engagement Priorities going forward training completion rate, employee NPS score and of the workforce and management of performance diversity & inclusion rate. and talent. Formalised engagement measure tools Enhance GDPR documentation and and KPI tracking is underway with the aim to further respective policies improve employee motivation and satisfaction. Highlights Finalise new Compliance Officer onboarding Good governance Create a standardised employee Data privacy ePassi’s management team has taken significant steps engagement, incentivisation and A strong culture of compliance and business ethics are to establish a regular and structured set of leadership management policy handbook important to Bregal, and ePassi’s management team is meetings with documented agendas and minutes. making good progress in further formalising procedures. The team has been diligent in establishing clear The company’s main focus has been to enhance decision-making authority per role and function across GDPR-related documentation, with ongoing work to ePassi, enabling decisions to be made more effectively incorporate compliance and risk-related aspects into and without direction from the top of the organisation. the business values, including embedding these policies B Bregal Investments Responsible Investment Report 2019-20 26
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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2 Invest We are funding and supporting Bregal The purpose of the SD Fund is to support portfolio portfolio companies’ ESG ambitions companies in transitioning their business models towards greater environmental and/or social by providing loans at attractive terms sustainability by providing funds to invest in to finance improvement initiatives improvement projects which meet strict ESG criteria. aligned with the UN Sustainable Achieving any substantial ESG improvements often Development Goals. requires funding. However, the payback period for ESG-related improvement projects may be too long Launched in 2018, the Bregal Sustainable for portfolio company management and Boards Development Fund (SD Fund) is a €40 million fund to decide to deploy scarce equity or operating intended for investments in improvement projects cash to these projects. By launching the SD Fund, that contribute to the sustainability performance we encourage our portfolio companies to realise of Bregal portfolio companies. tangible ESG improvements. To date, 40% of the SD Fund has been deployed to fund seven projects, including the reduction of carbon emissions, water management, improved quality of care and renewable energy generation. B Bregal Investments Responsible Investment Report 2019-20 27
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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Eligible projects Renewable energy Energy efficiency Projects eligible to receive funding Investments related to new and ongoing renewable Investments in production processes, green from the Sustainable Development energy projects, such as solar panels, wind, biomass buildings or product efficiency improvements projects or associated energy storage solutions. of at least 20% vs the incumbent technology Fund improve the sustainability or existing asset base. performance of the company on ESG aspects relevant to the business.
Improvements might be within the Ecosystem impact Emissions and waste company’s own operations as well Investments in impact reduction of company Projects to reduce emissions from the company’s as upstream in the supply chain or operations or its supply chain on terrestrial own operations or supply chain. Investments related and aquatic biodiversity. Projects to protect to projects that enhance recycling, material recovery, downstream at a consumer level. and conserve nature. reuse and landfill waste diversion. Eligible projects include, but are not limited to, those presented opposite. Water management and conservation Eco-efficient product development Investments in water efficiency projects Development and introduction of more environmentally such as upgrades to water efficiency fixtures friendly products, potentially with eco-label or or investments in water filtration. environmental certification, sustainable packaging and distribution.
Supply chain improvements Miscellaneous Investments in enhancing operating standards Any initiatives with a material positive impact on the of suppliers through improvements in health & safety company’s social or environmental performance, standards, chemical usage, liveable wages and relevant for the business but not covered by the supply chain transparency. other categories. B Bregal Investments Responsible Investment Report 2019-20 28
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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2 Invest BregalSagemount
Our investment Connectria opportunity
Founded in 1996, Connectria is a global Differentiated model leader in cloud hosting, cloud managed in an increasingly commoditised managed services and cloud security, as well hosting sector
as cloud management software. Meaningful opportunity to enhance Connectria’s The company was the first HIPAA-compliant organic growth managed hosting company and is the largest Well positioned to take IBM i (AS/400) cloud provider in the world. advantage of the growing Connectria operates out of five data centres need for hybrid cloud and serves more than 1,000 customers worldwide.
Employees 220 Sector Managed IT hosting and services Head office St Louis, MO, USA B Bregal Investments Responsible Investment Report 2019-20 29
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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2 Invest BregalSagemount
First ever carbon neutral ‘green cloud’ Data centres account for about 3% of all Highlights in North America and the EU energy consumption worldwide and growing, Minimising environmental impacts and we want to be good stewards of our SD Fund loan 2019 $5m planet. By creating carbon neutral IBM i and VMware As a market leader in cloud solution services, it is clouds, Connectria is doing its part to take care Connectria’s priority to help minimise the industry’s of our planet, and not be jerks. Project eligibility increasing environmental impact whilst providing Rich Waidmann Founder, President and CEO, Connectria customers with the highest-quality service. Renewable energy Emissions and waste Energy is a central component for data centres across Investment in each new IBM flash storage has helped Energy efficiency the globe and the industry already consumes 3% of all replace 40 older and larger devices, resulting in energy electricity production and is predicted to account for reduction of 95%. 14% of total worldwide carbon emissions by 2040, Connectria’s advanced data centres also contribute Key performance indicators around the same proportion as the US does today. to a carbon neutral footprint across its IBM i and In 2019, enabled by a Bregal Sustainable Development VMware clouds. For instance, its newest data centre Annual energy savings when in Amsterdam is one of the most energy efficient in the operating at full capacity 1,360 MWh Fund loan, Connectria created the first ever carbon- neutral IBM Power Systems ‘green cloud’, which allows world. The facility is LEED Gold, ISO 14001 and 50001 Annual carbon emissions reduction certified and uses a mix of biomass and hydropower when operating at full capacity 1,579 CO2e Mt companies in North America and the EU who are running IBM i and VMware systems to significantly reduce their to achieve 100% renewable energy consumption. Energy savings to date: energy consumption. Connectria’s ‘green cloud’ has already received • North America 87,000 kWh For any residual energy consumption, Connectria significant traction with new and existing customers who • EU 8,000 kWh purchases high-quality carbon offsets or renewable are looking for high-quality, yet environmentally friendly energy credits, which makes the cloud completely solutions. To date, over 87,000 kWh of energy savings carbon neutral. have been achieved by customers in North America and over 8,000 kWh in the EU. Based on customer demand Creating a carbon neutral footprint and commitment, a further 245,000 kWh of savings are The energy savings are made possible by a unique expected in 2020. systems architecture developed and implemented Source: Connectria company data by Connectria. B Bregal Investments Responsible Investment Report 2019-20 30
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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2 Invest BregalEnergy
Our investment IMG Energy opportunity
Solutions Growth in decentralised and flexible generation capacity IMG Energy Solutions (IMG) offers a wide Strategic access to range of development, construction and asset abundant, low-cost gas management services for gas and solar power Roll-out opportunity with generation. The company owns and operates diversification benefits quick start, small-scale, natural gas-fired power plants, and solar PV projects in the PJM network – the US’s most prominent regional transmission organisation providing power to over 65 million people in the Mid-Atlantic and Midwest regions.
Employees 28 Sector Energy Head office Pittsburgh, PA, USA B Bregal Investments Responsible Investment Report 2019-20 31
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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2 Invest BregalEnergy
Solar power opportunity at Pittsburgh IMG is excited to be part of this unique Highlights International Airport and smart power project that represents Powering the future at Pittsburgh International Airport the real value and viability of integrating SD Fund loan 2019 $6.36m clean natural gas power with renewable energy In 2019, starting with the Pittsburgh Airport project, IMG sources whilst de-risking critical power infrastructure has expanded its offering towards developing efficient and achieving significant savings on electricity costs. Project eligibility and environmentally friendly on-site power generation Mike Brady CEO, IMG facilities for critical infrastructure in the community. Renewable energy Emissions and waste The Pittsburgh International Airport will soon become Sustainable energy production across Pennsylvania Energy efficiency the first major US airport entirely powered by solar Financed by a $6.36 million loan from Bregal’s energy and onsite existing natural gas, making it one Sustainable Development Fund, the solar plant of the most resilient airports in the world and a global will immediately contribute to Pennsylvania’s Key performance indicators leader in aviation innovation. sustainability roll-out plan. This is being made possible through a combination Solar power production per annum on Despite being the third highest power generator average over the project’s useful life 4.2 MWh of IMG’s natural gas generation expertise and IMG’s across all US states, Pennsylvania ranked only 42nd development, ownership and operation of a 3.5MW Equivalent households powered in renewable generation in 2019. The project will not by clean energy >378 solar power system. only immediately contribute to improving Pennsylvania’s Savings per annum over the project’s Scheduled to be operational in 2021, the project sustainability roll-out, but will also bring greater power useful life (64,000 tCO e in total) 1,600 tCO2e 2 will bring power resiliency and safety to the airport, resiliency and redundancy to a critical regional its tenants, and nine million annual passengers, infrastructure player, enhancing public safety and whilst also creating cost efficiencies estimated to creating cost efficiencies. be worth more than $500,000 in the first year alone. As high-profile airport power outages multiply across the Power from the solar plant will be sold to the airport country, the microgrid is unique. In addition to providing under a long-term power purchase agreement. power to both terminals, the airfield, the Hyatt hotel IMG will also provide operations, maintenance and a Sunoco gas station, it will be fuelled by regionally and asset management services to the natural produced natural gas as well as by the airport’s on-site natural gas wells and nearly 9,800 solar panels across Source: IMG Energy Solutions company data gas plant through long-term service contracts. eight acres of an otherwise low utility former landfill. B Bregal Investments Responsible Investment Report 2019-20 32
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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3 Contribute We actively support Bregal portfolio Consumers and employees, particularly from younger companies to engage with their local generations, increasingly express a desire to be associated with businesses and brands that share communities and address social causes their values and sense of purpose. and business-relevant impact. Our Social Impact Initiative aims to support In 2018, supported by the COFRA Foundation, portfolio companies to create positive social impact. Bregal launched the Social Impact Initiative to further We believe that this is most fruitful in areas relevant align our charitable giving with the ESG-related to the long-term prospects of the business. To date, opportunities we have in our portfolio. the Initiative has provided five grants. We aim to support our portfolio companies to engage In early 2020, together with the COFRA Foundation, with their local communities and to create positive our senior Bregal employees also established a social and environmental impact. We believe such €3 million Bregal Helps Initiative to help our portfolio positive impact is relevant for the long-term prospect companies support their local communities affected of any business. by Covid-19. Nine initiatives have been supported to date. You can read more about the Bregal Helps Initiative on page 4. B Bregal Investments Responsible Investment Report 2019-20 33
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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Approach to supporting initiatives When considering an initiative, we assess the opportunity from -term, transformative cha Do we create Long nge different angles, with positive social long-term, impact always being our key priority. transformative change?
cial impac How much positive So t social impact are we creating?
Are employees and other stakeholders holder engage engaged in the Stake ment initiative?
Is the cause siness relevan relevant for Bu ce the business? B Bregal Investments Responsible Investment Report 2019-20 34
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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3 Contribute BregalPartners
Our investment Ruby Slipper opportunity
The Ruby Slipper Restaurant Group is an award- Unique restaurant winning restaurant concept, known for adding concept New Orleans flair to Southern breakfast, brunch Roll-out potential and lunch classics. Founded in 2008, after Opportunity to build Hurricane Katrina devastated the New Orleans growth platform area, Erich and Jennifer Weishaupt created Breakfast/brunch arguably one of the a place where locals could enjoy unique New more attractive Orleans-inspired dishes in an authentic and segments within the vibrant atmosphere. The concept now operates restaurant industry 18 restaurants across Louisiana, Alabama, Florida, Tennessee and North Carolina.
Employees 400 Sector Food retail Head office New Orleans, LA, USA B Bregal Investments Responsible Investment Report 2019-20 35
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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3 Contribute BregalPartners
Supporting local federal employees affected by the Ongoing support during the pandemic government shutdown The fight against Covid-19 has resulted in significant Contribution $15,000 unemployment across the country and in particular in New Orleans, where Ruby Slipper is based. Faced again with a unique and challenging situation, Ruby Slipper Key performance indicators continued to stay true to its roots and found a way to give back, in spite of the economic challenges Number of people helped >7,000 faced as a restaurant during the Covid-19 pandemic. Ruby Slipper’s free meals The Ruby Slipper meal donations Amount donated (in free meals) c.$55,000 From the onset of the ‘stay at home’ orders issued by initiative was greatly programme provided more than local government, Ruby Slipper committed to ensuring appreciated by all who benefited 1,300 meals for frontline their Krewe members and families would have a warm workers Highlights meal to eat by offering all Krewe throughout their Since the inception of our brand, Providing free meals to those in need restaurant group’s locations up to four meals (per family) daily for eight weeks. we have set out to be the first to raise our In 2019, due to the longest US government shutdown hand to help serve our team, our guests Ruby Slipper also launched a programme partnering in history, approximately 800,000 federal workers were and our community, to leave them better than how with loyal guests and community to donate meals for furloughed. In line with one of Ruby Slipper’s core values we found them. of supporting and giving back to local communities, the Covid-19 frontline response workers, which helped Peter Gaudreau President and COO, Ruby Slipper company was committed to finding a way to positively serve thousands of meals. In addition, the company’s impact those directly affected by the shutdown. founders launched the Lagniappe Krewe Emergency Relief Fund to help support hospitality workers and their In response, Ruby Slipper launched a unique initiative, families who have been impacted by situations beyond offering free meals to furloughed federal employees their control, particularly as a result of the pandemic. and their families. With the support of the Social Impact With the support of the Bregal Helps Initiative’s grant Initiative, they were able to feed more than 7,000 people of $100,000, the fund is expected to provide vital and donated approximately $55,000 in free meals. support for over 400 people. The programme was a great success and garnered overwhelmingly positive responses from all who benefited, in addition to the community at large. B Bregal Investments Responsible Investment Report 2019-20 36
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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Philanthropy Selected foundations that received a donation Our Philanthropy Programme is designed to encourage our employees to become more active in charitable organisations. The COFRA Foundation grants address themes such as climate change and inequality, South Bronx United Justice & Care and at Bregal we are especially focused on education Leveraging soccer The Victim Navigator and training, services for ‘at risk’ youth and families, for social change Programme as well as climate change. South Bronx United provides soccer and after-school programmes The Victim Navigator Programme sees specialist workers COFRA Foundation Grants to more than 1,300 children in the low-income and black/ deployed in police forces across the UK, offering specialist immigrant community of the South Bronx, NY. The charity also knowledge in slavery investigations and support to victims to The COFRA Foundation funds employee philanthropy provides other services such as academic tutoring, college prep, rebuild their lives. In 2019, it trained almost 1,000 officers, health and wellness programmes, and immigration/legal services. providing advice in 210 cases and support to 56 survivors. activities across COFRA businesses, in the spirit of engagement and commitment to the communities 2019 donation: €35,000 2019 donation: €50,000 they live in and work with. Through its programme, the COFRA Foundation wants to connect and inspire colleagues across the globe to contribute to causes close to their hearts. ReachOut Spread a Smile €764,026 €3,022,689 Mentoring charity for Providing smiles to seriously Total committed in 2019 Total committed since disadvantaged youth or terminally ill children inception in 2011
ReachOut is a charity working with volunteer mentors to provide This charity visits London hospitals and provides joy where it’s Grants by sector disadvantaged children with support to raise aspirations and help needed most to children who are seriously or terminally ill by 28 them grow in character and attainment. In the 2017/18 school distracting them with magicians, fairies, singers, face painters organisations supported 3 year, 980 young people were referred to the charity and received and therapy dogs. Spread a Smile also takes families to special in 2019 10,224 hours of mentoring from 863 volunteers. events such as concerts and theatre shows. 2019 donation: €22,351 2019 donation: €50,000
Note: All donations mentioned in this section are funded by the COFRA Foundation. B Bregal Investments Responsible Investment Report 2019-20 37
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
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Matching grant programme Selected foundations that received a donation We are a socially conscientious firm which supports, through the COFRA Foundation, charitable causes throughout the world. By supporting the truly charitable initiatives which are important to the people who work for Bregal, we hope to strengthen the spirit of employee Educational First Steps Achilles International Improving education for Building confidence volunteerism and engagement that is core to our values. disadvantaged children through participation in Through this programme, the COFRA Foundation will mainstream athletics
match any charitable contribution by a sponsoring Educational First Steps improves the quality and availability Achilles International operates in over 65 locations in the US employee from €100 up to €5,000 made during any of early childhood education for disadvantaged children by with a mission to enable people with all types of disabilities to current calendar year. transforming existing daycare centres in the most vulnerable participate in mainstream athletics in order to promote personal neighbourhoods in North Texas into nationally accredited achievement, enhance self-esteem and lower barriers to living preschools. a fulfilling life.
€105,861 €456,868 2019 donation: €3,274 2019 donation: €437 Total committed in 2019 Total committed since inception in 2011 86 organisations supported Mary Bendet Foundation Mind in 2019 Helping deprived children Providing support to from difficult backgrounds people with mental health problems
The Mary Bendet Foundation strives to make underprivileged For more than 60 years Mind has worked to improve the lives of children’s lives better by improving their living conditions in people experiencing mental health problems. Through public daycare centres, dormitories and playgrounds, as well as campaigns, government lobbying and more than 1,000 services supporting talents by sponsoring scholarships. delivered in communities across England and Wales, the charity has touched millions of lives.
2019 donation: €5,000 2019 donation: €1,274 B Bregal Investments Responsible Investment Report 2019-20 38
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
Onlineprinters Steele Compliance of large enterprises in the US and Update on abroad, helping them mitigate bribery Optimised production to minimise waste Pushing positive and financial crime risks, through ESG impact anti-money laundering and media 2018-19 monitoring tools. Steele also began to sell a new suite of compliance Steele’s core products have continued tools focused on conflicts of interest to push positive ESG impact for tracking, and whistleblower/hotline report its customers. The company has services to better serve their continued to grow its customer base compliance needs. The companies presented in our previous Responsible Blue Harvest Fisheries Investment Reports have made further progress this Expanding MSC quotas year in incorporating ESG Blue Harvest Fisheries has aspects into their business. continued to expand its portfolio of Marine Stewardship Council Highlights are presented (MSC) certified resources with the on the following pages. acquisition of additional groundfish quota in early 2020. Onlineprinters and its subsidiaries be fully eliminated from production, retained their focus on process Onlineprinters has established optimisation, supply traceability and numerous recycling initiatives, such reduction of waste. A workgroup was as waste separation training, efficient 90% of harvested seafood is projected initiated by Onlineprinters in Germany prepress processing, and package to be from MSC certified fisheries to further strengthen engagement sizing. In 2019, a recycling rate of in 2020 (up from 84% in 2018). with suppliers on sustainable fibres, ~95% was achieved across all certification and chemical waste subsidiaries. With regards to additive treatment. The company continuously waste, all subsidiaries have achieved 94.7% 93.3% promotes the usage of Forest full compliance with state and US Atlantic US Atlantic Stewardship Council and Programme European regulations. The company groundfish – sea scallop – for the Endorsement of Forest also implemented projects to further MSC certification MSC certification Certification-certified papers by its reduce the amount of chemicals score score customers, with subsidiary LaserTryk required by investing in the most producing only eco-labelled paper. efficient machinery and investigating Where paper waste cannot currently the use of mineral oil-free ink. B Bregal Investments Responsible Investment Report 2019-20 39
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
Total Vision Care IMG Energy Solutions Arkphire
Access to eye care Sustainable, local energy Commitment to ESG
In 2019, Arkphire took important steps towards consolidating the sustainable governance of the business. The addition of Paul Nannetti as Chairman to lead with a strong commitment to ESG was pivotal. This was followed by the expansion of the Board of Directors, which demonstrated Arkphire’s focus on promoting diversity across the Group and resulted in three out of the seven Board Directors being women. Additionally, Arkphire was proud to announce for the third consecutive Total Vision established a corporate- Since then, Total Vision has continued IMG is working with local universities sustainable power to the local food year that it had been named as one level programme to provide access to partner with organisations to help to create custom solutions for supply chain, thus reducing the overall of Ireland’s Best Managed Companies to eye care for disadvantaged young provide eye care and glasses to sustainable power sourced locally. production carbon footprint, as well by Deloitte Ireland. people in the local communities in young people in need. This includes as providing long-term local jobs. New partnerships between IMG and which Total Vision operates. partnerships with the Stand Down innovative farms aim to provide San Diego programme and Urban In February 2019, Total Vision Street Angels organisation. participated in its first pilot community project, partnering with VSP Eyes of Through these two partnerships, Total Enprecis Aqua Terra Remaining carbon neutral Hope to provide vision care to at-risk Vision has donated over 350 pairs of students identified by the San Diego glasses and eye exams. Total Vision County Offices of Education (117 eye has also partnered with the San Diego In 2019, four water recycling systems A calculation error was discovered in exams, 100 pairs of glasses). Lion’s Club and Laguna Niguel Lion’s were installed at Aqua Terra’s largest Bregal’s 2018 carbon emission data. 87% saltwater disposal facilities in the The correct number is 3,276 tonnes Club to donate nearly 700 pairs By the fourth quarter of 2020, Permian Basin, supported by a loan of CO e (previously reported as 2,405 of glasses. management forecasts that 87% 2 from the Sustainable Development tonnes). of revenue will be from customers on Fund. 33.6 million barrels of water have the new, more energy-efficient cloud We addressed this by obtaining the been processed since then, equivalent platform, built with investment from respective credits, maintaining our to 44% of the company’s total Permian 1,000+ 350 the Sustainable Development Fund. carbon neutrality. disposal volume over that timeframe. pairs of glasses donated eye exams (Second quarter: 20%) B Bregal Investments Responsible Investment Report 2019-20 40
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
There can be no assurance that any Bregal IMPORTANT INFORMATION FOR RECIPIENTS IN THE FOLLOWING JURISDICTIONS Investments vehicle will be able implement Disclaimer its ESG strategy or achieve its ESG objectives. United States of America United Kingdom In considering any performance information Any future offering of interests will not be This Presentation is being communicated in the contained herein, recipients should bear in mind registered under the U.S. Securities Act of 1933, UK by Bregal Investments LLP, which is authorised that past, targeted or projected performance as amended (the “Securities Act”), or any state or and regulated by the FCA, only to persons who (i) This Presentation is not intended to be relied is not necessarily indicative of future results, other securities laws or the laws of any non-U.S. fall within Article 14 (“Investment Professionals”) upon as the basis for an investment decision, and there can be no assurance that comparable jurisdiction. Any future offering of interests will of the UK Financial Services and Markets Act 2000 and is not, and should not be assumed to be, results or that target returns, if any, will be met. be offered and sold only to US investors that are (Promotion of Collective Investment Schemes) complete. This Presentation does not constitute “accredited investors” as defined in Regulation D (Exemptions) Order 2001 (as amended) (the “CIS or form part of, and should not be construed as, This Presentation includes forward-looking promulgated under the Securities Act and Order”), (ii) fall within Article 22 (“High net worth an offer, solicitation or invitation to subscribe for, statements, which includes all statements other “qualified purchasers” as defined under the U.S. companies, unincorporated associations etc.”) underwrite or otherwise acquire, any securities than statements of historical facts, including Investment Company Act of 1940 (the “Investment of the CIS Order, (iii) fall within one or more of the of the Fund or any product advised or managed any statements preceded by, followed by or Company Act”) Any future interests offered will be categories of persons referred to in COBS 4.12 of by the Firm, or any member of the Firm’s or its that include forward-looking terminology such sold for investment only and will be subject to the FCA’s Handbook of rules and guidance, or (iv) parent company’s group. as the words “targets”, “believes”, “estimates”, restrictions on transferability and resale and may are persons to whom this communication may “expects”, “aims”, “intends”, “can”, “may”, not be transferred or resold except as provided in otherwise be lawfully communicated (the persons This Presentation discusses general market “anticipates”, “would”, “should”, “could” or the subscription documents relating to any such referred to in (i) – (iv) being referred to collectively activity, industry or sector trends, or other similar expressions or the negative thereof. offering, and as permitted under the Securities as “Relevant Persons”). This Presentation must broad-based economic, market or political Any forward-looking statements contained Act. Accordingly, investors should be aware that not be acted on or relied on by persons who are not conditions and should not be construed as in this Presentation are subject to known and they will be required to bear the financial risks of Relevant Persons. Any shares or interest to which research or investment advice. Any investment unknown risks and uncertainties and other any investment in such interests for an indefinite this relates are available only to Relevant Persons. is subject to various risks, none of which are important factors beyond Bregal Investments’ period of time. None of the limited partnerships to outlined herein. All such risks should be carefully control that may cause actual results to be which any future offering relates will be registered considered by prospective investors before they materially different from those contemplated as an investment company under the Investment make any investment decision. The contents by such statements. These forward-looking Company Act, as amended. Investors will not herein are not to be construed as legal, business, statements speak only as at the date of this be afforded the protections of the Investment or tax advice, and each prospective investor Presentation. In particular, details included in Company Act of the U.S. Investment Advisers Act should consult its own attorney, business this Presentation are subject to updating, revision, of 1940, as amended. advisor, and tax advisor as to legal, business, further verification and amendment, although and tax advice. there is no obligation to do so, and refer to events The case studies referenced in the Presentation as having occurred which have not occurred at the are for informational purposes only to illustrate date of this Presentation but which are expected how Bregal Investments seeks to incorporate to happen in the future. No representation environmental, social and governance (“ESG”) or warranty is made as to future performance initiatives within its portfolio companies. or such forward-looking statements. B Bregal Investments Responsible Investment Report 2019-20 41
Introduction Co-CEOs’ letter Covid-19 ESG approach Overview of funds 1 Prioritise 2 Invest 3 Contribute Philanthropy Update on 2018-19 report
Fund case studies
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