SFDR Information Statement
Sustainability-related Disclosures
LR India Fund I S.à r.l., SICAV-RAIF
société à responsabilité limitée qualifying as asociété d’investissement à capital variable - fonds d’investissement alternatifréservé
Registered Office: 2, rue JeanMonnet
Luxembourg, L-2180,
Grand Duchy of Luxembourg
(the “Company”)
Article 9 statement (“Information Statement”) in respect of the Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector, as may be amended from time to time (“SFDR”), concerning the Company.
SFDR aims to provide more transparency to investors on Sustainability Risk integration, on the consideration of adverse sustainability impacts in the investment process and on the promotion of environmental, social and/or governance (“ESG”) factors or the sustainable investment objective. In particular, it requires fund managers and investment advisors to disclose specific ESG-related information to investors on their websites.
This Information Statement has been prepared for the purpose of meeting the disclosure requirements pursuant to Article 10(1) of SFDR, that is,specifically, the website disclosure requirements applicable to the Company on its sustainable investment objective.
All capitalized termscontained herein shall have the same meaning in this Information Statement asin the Offering Memorandum for the Company, unless otherwise indicated. Forfurther details on the definitions used herein, please refer to the Offering Memorandumfor the Company.
Disclaimer: The present working document may besubject to further regulatory changes.
I. Summary
No significant harm to thesustainable investment objective:
TheCompany, through the AIFM with the assistance of the Investment Advisor, willensure that all its Sustainable Investments do not significantly harm any of the objectives to which a Sustainable Investment may contribute by means of anintegrated, standardized and systematic approach to assessing, monitoring, and managing a wide range of ESG risks, events and conditions, including theirimpacts on Sustainability Factors. This includes the effort to incorporate the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles onBusiness and Human Rights in the assessment of the Company’s investments. Information and data on principal adverse impacts at portfolio company-level iscollected and considered pre- and post-investment, consequent to a preliminaryassessment on risk, as part of the regular investment due diligence, monitoringand/or review process.
Sustainable investment objective ofthe financial product:
The Company has sustainableinvestment objectives in accordance with Article 9 of SFDR as its objective andseeks to provide investors with capital appreciation from a diversifiedportfolio of companies which aim to have long-term positive social and/orenvironmental impact. In particular, the Company intends to pursue “SustainableDevelopment Goals” developed by the United Nations (the “SDGs”).
Investment strategy:
Primarily investments (directlyor indirectly) in equity and/or quasi equity in minority Growth Investmentsacross diverse sectors in the Target Jurisdictions with the objectives ofproviding investors with attractive capital appreciation from a diversifiedportfolio of companies which provide market-oriented returns and attain the Company’ssustainable investment objectives, i.e., long-term positive social and/orenvironmental impact and that follow good governance practices.
Proportion of investments:
AllPortfolio Investments are intended to be Sustainable Investments and to contributeto the Company´s sustainable investment objective. The current share ofSustainable Investments in the Company is 80% and non- Sustainable Investmentsis 20%, with a minimum share of 60% targeting social objectives and a minimumshare of 20% targeting environmental objectives. The minimum share ofTaxonomy-aligned investments in the Company is 0%.
Monitoring of sustainable investmentobjective:
Throughoutthe lifecycle of the Company, the monitoring of the sustainable investmentobjective will be performed through standardized assessments of impact and ESGperformance including tracking of sustainability indicators and principaladverse impacts on Sustainability Factors and monitoring the implementation ofimpact and ESG activities and initiatives of respective Portfolio Companies.
Methodologies:
TheInvestment Advisor applies a systematic integrated approach to ensure that thesustainable investment objectives and their attainment are appropriatelydefined, measured, and reported in alignment with industry standards. All Portfolio Investments are assessed and measuredregarding their ability to contribute to the SDGs and deliver positive socialand/or environmental impact based on the Investment Advisor’s strategic impactframework for the Company and its proprietary impact assessment.
Data sources and processing:
The Investment Advisor relies primarily on the Company’s portfolioinvestments for provision of requisite information and data, in addition toexternal sources such as specialised third-party providers on a case-by-casebasis in an effort to actively manage data quality and integration.
Limitations to methodologies and data:
Limitations to methodologies and data may include a lack of dataavailability, or imprecise or incorrect data provided by Portfolio Companies orthird-party providers, limiting the Investment Advisor’s ability to conductcertain analyses or impact the quality of such analyses. However, theselimitations are not expected to affect the attainment of the Company’s sustainableinvestment objective as such.
Due diligence:
The Investment Advisor has adopted policies and procedures seeking tointegrate ESG events and conditions, potentially constituting a SustainabilityRisk to the extent they actually materialise, into the investment proposal forfurther decision-making by the AIFM as well as the evaluation and monitoring ofPortfolio Investments. Impact and ESG due diligence are undertaken on allproposed investments.
Engagementpolicies:
TheCompany, through the Investment Advisor, seeks to support and further enhancethe impact and ESG practices of Portfolio Companies through active and formalengagement.
Attainmentof the sustainable investment objective:
The Company has not designated an indexas reference benchmark for the attainment of its sustainable investmentobjectives.
II. No Significant Harm to the sustainable investment objective
The Companywill ensure that all its Sustainable Investments do not significantly harm anyof the objectives to which a Sustainable Investment may contribute. For thispurpose, a standardized and systematic approach to assessing, monitoring, andmanaging a wide range of ESG risks, events, and conditions, including theirimpacts on Sustainability Factors, is applied and integrated throughout theinvestment process.
Inits investment decisions, the AIFM relies on the analysis and advice of theInvestment Advisor to consider principal adverse impacts on SustainabilityFactors. The InvestmentAdvisor considers whether Portfolio Investmentsare showing adverse impacts on Sustainability Factors as part of its impact andESG due diligence and/or monitoring, and hence in its investment advice.
Informationand data on principal adverse impacts at portfolio company-level is collectedand considered pre- and post-investment, consequent to a preliminary assessmenton risk, as part of the regular investment due diligence, monitoring and/orreview process. Based on the evaluation of this information, acceptabletolerances against specific indicators for adverse impacts will be set todemonstrate that the Sustainable Investments of the Company do notsignificantly harm any of its Sustainable investment objectives. The assessmenttakes into account at the minimum the set of mandatory indicators for adverseimpacts as set out in Table 1 of Annex I, plus two voluntary indicators fromTable 2 and 3 of Annex I of the Delegated Regulation 2022/1288 (“SFDR RTS”).
The Companyseeks to assess implications of any such adverse impacts or risks on thereturns of the respective suggested investment. If material impacts orSustainability Risks are identified that are not appropriately managed by thecompany and/or a company is not in full compliance with its ESG objectives andpolicies, the Company works with the company to develop action plans in a formmutually agreed that seek to mitigate and manage these impacts or risks toachieve compliance. To ensure commitment from the management of the respectivecompany to comply with the Company’s ESG policies and applicable standards, itstrives to integrate appropriate ESG terms and warranties into the legalinvestment documentation to the extent possible.
The Companyseeks to align every Portfolio Investment with the OECD Guidelines forMultinational Enterprises and the UN Guiding Principles on Business and HumanRights, including the principles and rights set out in the eight fundamentalconventions identified in the Declaration of the International LabourOrganisation on Fundamental Principles and Rights at Work and the InternationalBill of Human Rights (the "Guidelines and Principles”).
Forassessing the alignment of Sustainable Investments with the Guidelines andPrinciples, a systematic integrated approach is applied to strive for therelated Portfolio Companies having respective policies and procedures in placethat are commensurate with their size, scale and scope of operations, and thespecific related risk potential. The Guidelines and Principles have beenconsidered in the design and implementation of the Investment Advisor’s ESGmanagement system as outlined in its ESG Policies, hence are embedded in itsstandardized investment process and advice to the Company.
III. Sustainable investment objective of the financial product
The Company has sustainable investment objectives inaccordance with Article 9 of SFDR as its objective and seeks to provideinvestors with capital appreciation from a diversified portfolio of companieswhich aim to have long-term positive social and/or environmental impact. Inparticular, the Company intends to pursue “Sustainable Development Goals”developed by the United Nations (the “SDGs”).
Theportfolio of the Company can be structured alongside the three overarchingthemes of People, Planet and Productivity, which can again be segmented intospecific investment sectors or sub-themes including healthcare, education,renewables transformation,sustainable food & agriculture, smart mobility & transportation,transforming finance and digital business infrastructure. All SustainableInvestments of the Company are expected to and are assessed against making asubstantial contribution to clearly defined SDG-aligned environmental or socialimpact objectives within these thematic sectors or sub-themes by providingscalable and technology driven business solutions to specific challenges.
In respectof the Taxonomy Regulation, i.e. Regulation (EU) 2020/852 of 18 June 2020 onthe establishment of a framework to facilitate sustainable investment, andamending the Disclosure Regulation (the “Taxonomy Regulation” or the “Taxonomy”),the Sustainable Investments with environmental objectives underlying theCompany may contribute to:
(a) climatechange mitigation;
(b) climatechange adaptation; and
(c) thesustainable use and protection of water and marine resources (with primaryfocus on food and agriculture.
The information on the overallsustainability-related impact of the Company by means of relevantsustainability indicators as referred to in paragraph 1.(b)(i) of Article 11 ofSFDR will be disclosed in the annual reports of the Company.
IV. Investment strategy
The Company willpredominantly invest in the Target Jurisdictions, directly or indirectly,across diverse sectors with the intention to have a positive social and/orenvironmental impact. The Company invests primarily, directly, or indirectly,in minority Growth Investments.
The Company mayinvest, directly or indirectly in buyout and/or late-stage funds and/or hold,directly or indirectly, buyout and/or late-stage Portfolio Companies, it beingspecified that this will not constitute the main strategy of the Company.
The Company mayinvest in the following Target Jurisdictions:
· India;
· Singapore;and
· the UnitedStates.
Subject toprevailing market conditions, the Company will seek to maintain exposurefocused on India, with minority exposure in Singapore and the United States.The Company may invest in equity and/or quasi equity.
The AIFM, asadvised by the Investment Advisor ensures implementation of the Company’sstrategy through a standardized and clearly defined investment process,including formal ESG and Sustainable Investment criteria, policies,assessments, and procedures.
The Company will invest in companies thatfollow good governance practices. For the assessment, areas such as soundgovernance policies, board and management structures, business integrity andethical leadership, employee relations, reporting and transparency,remuneration of staff and general compliance with applicable legal andregulatory obligations including tax and audit compliance are taken intoaccount.
V. Proportion of Investments
The Company pursues sustainable investmentobjectives with all investments intended to be Sustainable Investments andcontributing to its sustainable investment objectives. The minimum share ofSustainable Investments in the Company is 80%.
The Company seeks to invest in a diversifiedportfolio of companies across diverse sectors with the intention to have apositive social and/or environmental impact in line with the SDGs. The minimumshare of Sustainable Investments with an environmental objective in the Companyis 20%, whereas the minimum share of Sustainable Investments with a socialobjective in the Company is 60%. 20% of the Company’s investments areconsidered non-Sustainable Investments.
The Company does not entail a commitment to makeTaxonomy-aligned investments, hence the minimum share of Taxonomy-alignedinvestments in the Company is 0%. The proportion of Sustainable Investments andthe extent to which these are aligned with the EU Taxonomy will be reported onin the annual report of the Company.
In terms of assetallocation, the Company will primarily, directly or indirectly, invest inequity and quasi equity in Growth Investments predominantly in the TargetJurisdictions.
VI. Monitoring of sustainable investment objective
Throughout the lifecycle of the Company, themonitoring of the sustainable investment objective will be performed throughstandardized periodic assessments of impact and ESG performance includingtracking of sustainability indicators and principal adverse impacts onSustainability Factors and monitoring the implementation of impact and ESGactivities and initiatives of respective Portfolio Companies.
During theholding period, the Investment Advisor periodically monitors progress andongoing compliance with the Company’s sustainable investment objectives andrelated impact and ESG requirements. For each investment, the InvestmentAdvisor aims to carry out regular standardized assessments and performancemeasurement with respect to the attainment of sustainability objectives.
VII. Methodologies
For assessing the attainment of sustainableinvestment objectives, the Investment Advisor applies a systematic integratedapproach, as further described in the Company’s disclosures pursuant to Annex 3to the SFDR RTS, to ensure that the objectives and their attainment areappropriately defined, measured, and reported in alignment with industrystandards.
AllPortfolio Investments are assessed and measured regarding their ability tocontribute to one or multiple SDGs. This assessment is conducted at a PortfolioInvestment level using the Investment Advisor’s strategic impact framework forthe Company and its proprietary impact assessment. Potential investments arescreened for their strategic fit with such strategic impact framework whichdefines the priority investment sectors and themes to allow a decision as tolikely compatibility with the sustainable investment objectives early on.Investments will then be assessed thoroughly based on the Investment Advisor’sproprietary pre-investment impact assessment tailored to the Company’ssustainable investment objectives, with the assistance where appropriate ofindependent expert consultants, towards incrementally building a deep andcomprehensive understanding of a prospective investment´s risk-adjustedpotential to contribute positively to one or multiple SDGs.
A specific set of sustainability indicators isdefined for each investment at the time of investment, as may also be revisedas necessary, to meaningfully monitor and ultimately measure the attainment ofsustainable investment objectives at the Company level. The set usuallyconsists of a combination of standardized, industry-aligned sustainabilityindicators and customized, more company-specific sustainability indicators.Examples of sustainability indicators used by the Company include the number oflives touched, the number of patients provided access to affordable healthcare,the number of students helped to achieve better educational outcomes, tons ofCO2e emissions avoided, the MW of renewable energy installed, the number ofSMEs supported, the volume of loans disbursed to SMEs, or the number of smallmerchants with improved payment solutions.
The list ofindicators used to measure the attainment of the sustainable investmentobjective of the Company will be reported in the annual report of the Company.
VIII. Data sources and processing
· Datasources used to attain the sustainable investment objectives:
The Investment Advisor relies on a combination ofinternal and external sources of information and data, including from itsstandardized impact and due diligence process, its proprietary pre-investmentassessment such as the net impact potential score.
The Investment Advisor uses and collects data onimpact and ESG performance directly from Portfolio Companies and may also relyon data from third-party service providers that conduct impact and/or ESG duediligence, assessments or reviews on Portfolio Investments.
· Measurestaken to ensure data quality:
Data quality is maintained through directengagement by the Investment Advisor with Portfolio Companies and formalpartnerships with potential third-party providers, as necessary. Data qualityand integrity of all received data is further ensured by checks and controls ofresponsible teams.
· How data isprocessed:
The Investment Advisor is processing and managingall of the data used in its analyses. The Investment Advisor may choose to relyon estimated data to corroborate primary data received from the portfoliocompany.
· Proportionof data that are estimated:
The proportion of data that are estimated isexpected to be larger than 50%, contingent on the data received from eachrespective Portfolio Company. The actual proportion of estimated data will bedisclosed in the annual reports of the Company.
IX. Limitations to methodologies and data
TheInvestment Advisor relies on data directly provided by the Portfolio Companies.In some cases, Portfolio Companies may not be able to provide all requesteddata due to a lack of data availability or underlying collection methods orspecific data points not being relevant for the specific company, which maylimit the Investment Advisor’s ability to perform certain analyses or impactthe quality of such analyses.
In certaincases, the Investment Advisor may rely on third-party consultants to conductthe due diligence or assessments on Portfolio Investments. Such analysis, dataor research may be imprecise, incorrect or unavailable and the resultinganalysis or use of such information by the Investment Advisor may be impacted.
TheInvestment Advisor is in the process of implementing mechanisms and proceduresto continuously increase the quality, accuracy, precision and reliability ofmethodologies and data used.
While thedescribed limitations to methodologies and data may impact the accuracy ofrelated assessments and monitoring processes, they are not expected to affectthe attainment of the Company’s sustainable investment objective as such.
X. Due Diligence
In its investment decisions,the AIFM relies on the analysis and advice of the Investment Advisor toconsider Sustainability Risks and ESG elements.
The Investment Advisor hasadopted policies and procedures seeking to integrate ESG events and conditions,which the Investment Advisor becomes aware of and which in the InvestmentAdvisor’s determination, could constitute a Sustainability Risk to the extentthey actually materialise, into the investment proposal for furtherdecision-making by the AIFM as well as the evaluation and monitoring ofPortfolio Investments. For this purpose, a customized ESG management system isin place that is fully integrated into the investment process. The managementsystem is based on industry best practices and founded on the InvestmentAdvisor’s detailed “ESG Policies and Business Principles” that outline itsefforts, commitment, and expectations towards addressing Sustainability Risksand opportunities at its operations and that of Portfolio Investments.
The Investment Advisorundertakes a preliminary impact and ESG diligence on all its suggestedinvestments, assessing a company’s level of practice, ability and commitment tomanage Sustainability Risks and opportunities in accordance with its policiesand principles. The Investment Advisor may rely on third-party impact and/orESG consultants to conduct the due diligence on potential investments, asnecessary. Insights gained from the due diligence and related assessments arefed into the investment memoranda at each stage of the pre-investment processto inform decision-making.
In line with the Company’sinvestment strategy, investment focus on future-oriented key sectors and itsinvestment policy, the Investment Advisor proposes investments in companiesthat by nature of their business models usually only face low and few materialSustainability Risks. Based upon the information available, the InvestmentAdvisor considers in its investment advice the principal adverse impacts onsustainability factors and seeks to assess implications of any such adverseimpacts or risks on the returns of the respective Portfolio Investment. Ifmaterial impacts or Sustainability Risks are identified that are notappropriately managed by the company and/or a company is not in full compliancewith its ESG objectives and policies, the Investment Advisor works with thecompany to develop action plans that seek to mitigate and manage these impactsor risks to achieve compliance. To ensure commitment from the management of therespective company to comply with the Investment Advisor’s ESG policies andapplicable standards, it strives to integrate appropriate ESG terms andwarranties into the legal investment documentation to the extent possible.
XI. Engagement Policies
The Company, through the Investment Advisor,seeks to support and further enhance the impact and ESG practices of PortfolioCompanies through active and formal engagement. Engagement with PortfolioCompanies, including on ESG topics, is key for properly identifying investmentopportunities, managing investment and Sustainability Risks, monitoring PortfolioCompanies and ensuring long-term sustainability. Portfolio Company engagementcan involve regular meetings or ad-hoc dialogues on compliance with andprogress on sustainable investment objectives, implementation of impact and ESGaction plans, best practices and/or market trends and reporting on impact andESG progress and performance of the respective Portfolio Company.
XII. Attainment of the sustainable investment objective
The Company has not designated an index asreference benchmark for the attainment of its sustainable investment objective.
Information referred to in Article 9of SFDR may be found in the Offering Memorandum of the Company, as amended fromtime to time.
Information referred to in Article 11of SFDR will be available in the Company’s annual reports.
This Information Statement is accurate as of 31 December 2022.
