SFDR Disclosure

SFDR Disclosure for Maguar Capital GmbH & Co. KG
SFDR Disclosure for Maguar Capital II GmbH & Co. KG
SFDR Disclosure for Maguar Continuation Fund I GmbH & Co. KG

SFDR Disclosure for Maguar Capital GmbH & Co. KG

Introduction

Sustainability risk management is embedded in the way Maguar Capital GmbH & Co. KG seeks to originate investments and make investment decisions, as well as in ongoing portfolio and asset management activities. While Maguar Capital GmbH & Co. KG recognizes the importance of identifying, assessing, and managing material sustainability risks as part of its business operations, the fund does not promote environmental or social characteristics nor does it have sustainable investment as its objective, in line with Article 6 of the SFDR.

Maguar Capital GmbH & Co. KG is an internally managed fund and serves as its own Alternative Investment Fund Manager (AIFM). The management and decision-making authority of Maguar Capital GmbH & Co. KG is exercised by its managing limited partner or its general partner (together “Maguar Capital”). Consequently, certain policies and operations are implemented by Maguar Capital in accordance with the requirements and obligations of Maguar Capital GmbH & Co. KG.

How are Sustainability Risks Integrated into the Investment Process?

The Sustainability Risk Policy (also referred to as the “ESG Policy”) outlines how Maguar Capital GmbH & Co. KG integrates sustainability risks into its investment decision-making processes. The policy applies throughout the investment cycle, from deal sourcing to portfolio monitoring. The deal team considers sustainability risks alongside other financial and operational risks during preliminary and final investment evaluations. This includes assessments made during initial screening, due diligence, and investment risk analysis.

However, sustainability risks are not the primary focus or binding factors in investment decisions, and Maguar Capital GmbH & Co. KG retains discretion in pursuing investment opportunities, even in the presence of identified sustainability risks.

No Promotion of Environmental or Social Characteristics

Maguar Capital GmbH & Co. KG does not specifically promote environmental or social characteristics and does not set out to achieve sustainable investment objectives as defined under Article 8 or 9 of the SFDR. While certain ESG considerations may be taken into account during the investment decision-making process, they do not constitute a binding or primary criterion.

No Consideration of Principal Adverse Impacts (PAIs)

The SFDR requires Maguar Capital GmbH & Co. KG to make a “comply or explain” decision regarding whether to consider the principal adverse impacts (PAIs) of its investment decisions on sustainability factors, as set out in Article 4 of the SFDR. Maguar Capital GmbH & Co. KG has opted not to comply with this regime, both generally and in relation to the fund.

Maguar Capital GmbH & Co. KG will keep its decision not to comply with the PAI regime under regular review. The Fund supports the policy aims of the PAI regime to improve transparency around how financial market participants integrate the adverse impacts of investment decisions on sustainability factors. However, given the current lack of comprehensive and consistent data, Maguar Capital GmbH & Co. KG has decided that full compliance is not feasible at this time.

Integration of Sustainability Risks into Remuneration Policy

While Maguar Capital (along with its subsidiaries and controlled affiliates, “Maguar Capital”) integrates sustainability risks into its investment process, the remuneration policy does not specifically tie compensation to the achievement of environmental or social targets. Instead, the remuneration framework is aligned with the overall business strategy and aims to support sound risk management across all relevant risks, including sustainability risks.

Conclusion

Maguar Capital GmbH & Co. KG integrates sustainability risks as part of its overall investment and risk assessment process. However, the fund does not promote specific environmental or social characteristics, nor does it pursue sustainable investment objectives as defined under Article 8 or 9 of the SFDR. Disclosures align with Article 6 requirements of the SFDR to provide transparency in the consideration of sustainability risks without implying any binding ESG objectives or systematic monitoring of principal adverse impacts.

SFDR Disclosure for Maguar Capital II GmbH & Co. KG

Introduction

Sustainability risk management is embedded in the way Maguar Capital II GmbH & Co. KG seeks to originate investments and make investment decisions, as well as in ongoing portfolio and asset management activities. Maguar Capital II GmbH & Co. KG recognizes the importance of identifying, assessing, and managing material sustainability risks as an integral part of its business operations.

Maguar Capital II GmbH & Co. KG is an internally managed fund and, as such, also serves as its own alternative investment fund manager (AIFM). The management and decision-making authority of Maguar Capital II GmbH & Co. KG is exercised by its managing limited partner, Maguar Capital Management GmbH, or general partner, Maguar Administration II GmbH (together “Maguar Capital”). Consequently, certain policies and operations are implemented by Maguar Capital in accordance with the requirements and obligations of Maguar Capital II GmbH & Co. KG.

Maguar Capital’s sustainability risk policy (also referred to as the “ESG Policy”) provides a comprehensive framework for integrating sustainability risk management into Maguar Capital II GmbH & Co. KG´s investment decision-making processes.

How does this Sustainability Risk Policy work?

The Sustainability Risk Policy sets out how sustainability risks are integrated into Maguar Capital’s investment decision-making processes. The policy applies throughout Maguar Capital’s entire investment cycle. The deal team uses this policy as a main point of consideration within the deal-flow process from sourcing to completion. Additionally, Maguar places high importance on the policy in the ongoing portfolio monitoring for existing investments. The investment committee considers sustainability risk factors when deciding on the exit of an investment.

Our policy considers the main sustainability risk factors related to Environmental, Social, and Governance. Within each category, we identify relevant sub-categories pertinent to our operations and targeted industries. The following non-exhaustive list of sustainability risks are considered: climate change resilience, pollution, biodiversity, carbon emissions, human rights in supply chains, health and safety, community relations, cultural heritage, labor and employment practices, and resource efficiency. The materiality of each risk will be determined for each investment.

Integration of Sustainability Risks into Investment Decision-Making Processes

Sustainability risks are considered at all stages of each product’s investment process, in respect of each individual investment opportunity.

Initial Screening:
o Determine if the potential investment aligns with the Sustainability Risk Policy during preliminary investment committee meetings.
Due Diligence:
o Conduct an in-depth assessment of sustainability risks during the due diligence process.
o Complete a summary ESG questionnaire as part of the investment committee paper. This questionnaire assesses initial sustainability risks and identifies areas requiring further investigation or due diligence.
Risk Assessment:
o Complete the sustainability risk matrix and due diligence questionnaires twice during the investment process: at Preliminary Investment Approval and at Final Investment Approval.
o Engage external specialists for complex industries or sensitive environments.
o Score and rate identified risks as Low, Medium, or High, with a narrative comment on each area.

Governance

Within Maguar Capital, the Compliance Officer is responsible for the oversight of sustainability and ESG risks and reports directly to the Management of Maguar Capital Management GmbH. All members of Maguar Capital are required to comply and operate under the ESG policy. As the firm grows in size in terms of employees and assets under management, further roles such as Sustainability Officer and ESG committee are planned to be implemented.

No Consideration of Adverse Impacts

The SFDR requires Maguar Capital II GmbH & Co. KG to make a “comply or explain” decision on whether to consider the principal adverse impacts (PAIs) of its investment decisions on sustainability factors. Maguar Capital II GmbH & Co. KG has opted not to comply with that regime.

Maguar Capital II GmbH & Co. KG will keep its decision not to comply with the PAI regime under regular review. Maguar Capital has carefully evaluated the requirements of the PAI regime in Article 4 of the SFDR, and in the draft Regulatory Technical Standards published in April 2020. Maguar Capital is supportive of the policy aims of the PAI regime but is concerned about the lack of readily available data to comply with many of the reporting requirements. Companies and market data providers are not yet ready to make available all necessary data for the PAI regime.

Notwithstanding Maguar Capital II GmbH & Co. KG´s decision not to comply with the PAI regime, Maguar Capital has implemented positive ESG-related initiatives and policies as part of its overall commitment to ESG matters. For the avoidance of doubt, none of the following information is intended to suggest that Maguar Capital II GmbH & Co. KG complies with the PAI regime.

Remuneration Policy

Maguar Capital (along with its subsidiaries and controlled affiliates, “Maguar Capital”) has established a remuneration policy (the “Policy”) applicable to all Maguar Capital entities. The Policy is developed, approved, implemented, and monitored by a series of bodies within the Maguar Capital structure. The Policy applies to all employees of Maguar Capital, save for limited exceptions.

The Policy has been developed with the aim of supporting Maguar Capital’s business strategy, corporate values, and long-term interests, including by facilitating the identification, assessment, and management of sustainability risks when determining individual remuneration packages. The key principles of the Policy include fostering appropriate risk culture (including with respect to the management of actual and potential conflicts of interest) and compliance with applicable law and regulations.

The performance management and rewards framework envisioned by the Policy has been designed to promote effective risk management, including in particular by:

Ensuring that assessment of performance takes full account of adherence to risk management requirements, covering all relevant types of current and future risks, including sustainability risks.
Implementing deferral arrangements using co-investment and carried interest arrangements for senior personnel, facilitating alignment of interests between staff members and third-party investors. If the value of the relevant underlying investment portfolio should decrease (whether arising as a result of a sustainability risk or otherwise), the value of the employee’s holdings will be reduced accordingly.
Providing for the reduction of deferred variable remuneration awards to senior personnel in certain circumstances, such as in the event that the entity in which the relevant employee works suffers a significant failure of risk management or experiences a significant downturn in its financial performance (as determined in the sole discretion of Maguar Capital), including in connection with a sustainability risk concerning an investment.

Maguar Capital II GmbH & Co. KG – Sustainability-Related Disclosures

I. Summary

Maguar Capital II GmbH & Co. KG intends to promote environmental and social characteristics and consider the adverse impact of its investment decisions on certain sustainability factors across portfolio companies. Maguar Capital II GmbH & Co. KG will continue its focus by investing in B2B software and technology companies in the DACH region.

II. No Sustainable Investment Objectives

Maguar Capital II GmbH & Co. KG will promote E/S characteristics (Article 8 SFDR) but will not make any sustainable investments (Article 9 SFDR) as its objective.

III. Environmental or Social Characteristics of Maguar Capital II GmbH & Co. KG

Maguar Capital II GmbH & Co. KG promotes environmental and social characteristics through the incorporation of ESG considerations within its investment processes.

Environment: Climate change, pollution, waste management, resource management, footprint in the supply chain, usage of energy for the technological infrastructure.
Social: Employee well-being, health and safety, supply chain, and human rights, product integrity, safety, and quality, community impact, employee diversity, and data protection and cybersecurity.
Governance: Business ethics, code of conduct, board and management structure, internal controls, supply chain governance, stakeholder engagement, and reporting.

IV. Investment Strategy

Maguar will continue its successful strategy into the second generation (Maguar Capital II GmbH & Co. KG) which is centered around the business of identifying, negotiating, executing, monitoring, and realizing equity-related investments in businesses. Maguar Capital II GmbH & Co. KG strategy focuses on small and mid-size software, software-based services, and technology platform companies with a particular focus on the DACH Region.

Maguar Capital believes that sustainable business practices are well-matched with fund-level performance. ESG aspects are anchored in the investment process through the implementation of Maguar Capital’s ESG Policy, which is in line with the requirements and recommendations of established industry standards such as the United Nations Principles of Responsible Investment (UN PRI).

Maguar Capital II GmbH & Co. KG will not invest, guarantee, or otherwise provide financial or other support, directly or indirectly, to companies or other entities that generate meaningful sales out of the direct involvement in:

Tobacco, alcoholic products, weapons, ammunition, gambling, casinos, pornography, illegal activities, property holding, asset stripping, genetically modified organism (GMOs), or related sectors.

V. Proportion of Investments

Maguar Capital II GmbH & Co. KG does not commit to making sustainable investments with an environmental objective aligned with the EU Taxonomy, and will therefore not commit to a minimum extent to make sustainable investments.

VI. Monitoring of Environmental or Social Characteristics / Asset Allocation

Maguar Capital II GmbH & Co. KG portfolio is intended to have the potential to contribute positively to addressing climate change and/or to assist in the transition to a “net zero” economy. Investments may include sustainable investments within the meaning of the SFDR, however, there will be no minimum allocation of sustainable investments.

‘#1 Aligned with E/S characteristics’ includes the investments of the financial product used to attain the environmental or social characteristics promoted by the financial product. Category #1 Aligned with E/S characteristics covers the sub-category #1B Other E/S characteristics, covering investments aligned with the environmental or social characteristics that do not qualify as sustainable investments.

VII. Methodologies for Environmental or Social Characteristics

Any investment Maguar Capital II GmbH & Co. KG will undergo an ESG due diligence guided by Maguar’s ESG policy, particularly by its ESG due diligence checklist.

The following areas will be assessed:

Available internal policies and measures of awareness for ESG topics.
Implemented reporting/monitoring processes.
Recent ESG incidents and reactions to them.
Supplier selection, interactions, and continuous assessment.
Data protection guidelines, processes, incidents.
Cybersecurity status quo, monitoring procedures.
Guidelines for using open-source software, monitoring processes.

VIII. Data Sources and Processing

Maguar Capital II GmbH & Co. KG relies on a variety of data sources to assess and monitor the sustainability performance of its investments. These sources include:

Internal Data: Information provided by portfolio companies, such as ESG reports, completed ESG Questionnaires, and compliance documentation.
External Data Providers: Data from third-party ESG rating agencies and sustainability data providers to ensure comprehensive and accurate assessments.
Publicly Available Data: Information from public disclosures, regulatory filings, and industry reports.

To ensure the quality and reliability of the data, Maguar Capital employs rigorous data processing methodologies. This involves cross-verifying information from multiple sources, using advanced data analytics tools, and conducting regular audits of the data management processes. The proportion of estimated data is minimized and clearly identified when used.

IX. Limitations to Methodologies and Data

The EU Taxonomy sets out a “do no significant harm” principle by which Taxonomy-aligned investments should not significantly harm EU Taxonomy objectives and is accompanied by specific EU criteria. The “do no significant harm” principle applies to those investments underlying the Fund and which take into account the EU criteria for environmentally sustainable economic activities.

Maguar Capital II GmbH & Co. KG´s investment strategy focuses predominantly on majority buyout investments; however, the Fund participating as a minority stakeholder for some portfolio companies could occur. As a minority stakeholder, the legal limitations would not allow Maguar Capital II GmbH & Co. KG to guarantee full compliance with all requirements outlined by the SFDR and the EU Taxonomy for sustainable investments with an environmental objective aligned with the EU Taxonomy.

X. Due Diligence

Sustainability is anchored in Maguar Capital II GmbH & Co. KG through Maguar’s ESG policy. ESG aspects are considered throughout the entire investment lifecycle, including the due diligence phase for all new acquisitions. Maguar Capital requires its deal teams to include ESG screening analysis in investment memoranda when seeking final Investment Committee approval. In addition to due diligence screening, ongoing ESG monitoring, and regular communication between the Maguar Capital and the portfolio companies, Maguar Capital does not conduct further research or investigations regularly, at least as long as the data reported by the portfolio companies do not give rise to any reasonable doubts.

XI. Engagement Policy

Maguar Capital’s engagement policy is an integral part of its ecological and social investment strategy. This policy includes:

Active Engagement: Engaging with portfolio companies to promote the adoption and improvement of sustainable practices.
Management Procedures: Implementing management procedures to address sustainability-related controversies in companies invested in.
Monitoring and Reporting: Regularly monitoring and reporting on the progress and effectiveness of engagement activities.

The engagement policy aims to ensure that portfolio companies adhere to high standards of business ethics, environmental responsibility, and social governance, aligning with the overall sustainability objectives of Maguar Capital II GmbH & Co. KG.

XI. Designated reference benchmark

Maguar Capital II GmbH & Co. KG does not use benchmarks when making investment decisions. Instead, we work with absolute values to assess the sustainability performance of our investments. This approach allows us to focus on the actual impact and improvements made by each portfolio company rather than comparing them to an external standard that may not fully capture the unique aspects of our investments.

SFDR Disclosure for Maguar Continuation Fund I GmbH & Co. KG

Introduction

Sustainability risk management is embedded in the way Maguar Continuation Fund I GmbH & Co. KG seeks to originate investments and make investment decisions, as well as in ongoing portfolio and asset management activities. Maguar Continuation Fund I GmbH & Co. KG recognizes the importance of identifying, assessing, and managing material sustainability risks as an integral part of its business operations.

Maguar Continuation Fund I GmbH & Co. KG is an internally managed fund and, as such, also serves as its own alternative investment fund manager (AIFM). The management and decision-making authority of Maguar Continuation Fund I GmbH & Co. KG is exercised by its managing limited partner, Maguar Capital Management GmbH, or general partner, Maguar Continuation Fund I Administration GmbH (together “Maguar Capital”). Consequently, certain policies and operations are implemented by Maguar Capital in accordance with the requirements and obligations of Maguar Continuation Fund I GmbH & Co. KG.

Maguar Capital’s sustainability risk policy (also referred to as the “ESG Policy”) provides a comprehensive framework for integrating sustainability risk management into Maguar Continuation Fund I GmbH & Co. KG´s investment decision-making processes.

How does this Sustainability Risk Policy work?

Integration of Sustainability Risks into Investment Decision-Making Processes

Sustainability risks are considered at all stages of each product’s investment process, in respect of each individual investment opportunity.

Initial Screening:
o Determine if the potential investment aligns with the Sustainability Risk Policy during preliminary investment committee meetings.
Due Diligence:
o Conduct an in-depth assessment of sustainability risks during the due diligence process.
o Complete a summary ESG questionnaire as part of the investment committee paper. This questionnaire assesses initial sustainability risks and identifies areas requiring further investigation or due diligence.
Risk Assessment:
o Complete the sustainability risk matrix and due diligence questionnaires twice during the investment process: at Preliminary Investment Approval and at Final Investment Approval.
o Engage external specialists for complex industries or sensitive environments.
o Score and rate identified risks as Low, Medium, or High, with a narrative comment on each area.

Governance

Within Maguar Capital, the ESG Officer is responsible for the oversight of sustainability and ESG risks and reports directly to the Management of Maguar Capital Management GmbH. All members of Maguar Capital are required to comply and operate under the ESG policy. As the firm grows in size in terms of employees and assets under management, further roles such as Sustainability Officer and ESG committee are planned to be implemented.

No Consideration of Adverse Impacts

The SFDR requires Maguar Continuation Fund I GmbH & Co. KG to make a “comply or explain” decision on whether to consider the principal adverse impacts (PAIs) of its investment decisions on sustainability factors. Maguar Continuation Fund I GmbH & Co. KG has opted not to comply with that regime.

Maguar Continuation Fund I GmbH & Co. KG will keep its decision not to comply with the PAI regime under regular review. Maguar Capital has carefully evaluated the requirements of the PAI regime in Article 4 of the SFDR, and in the draft Regulatory Technical Standards published in April 2020. Maguar Capital is supportive of the policy aims of the PAI regime but is concerned about the lack of readily available data to comply with many of the reporting requirements. Companies and market data providers are not yet ready to make available all necessary data for the PAI regime.

Notwithstanding Maguar Continuation Fund I GmbH & Co. KG´s decision not to comply with the PAI regime, Maguar Capital has implemented positive ESG-related initiatives and policies as part of its overall commitment to ESG matters. For the avoidance of doubt, none of the following information is intended to suggest that Maguar Continuation Fund I GmbH & Co. KG complies with the PAI regime.

Remuneration Policy

The performance management and rewards framework envisioned by the Policy has been designed to promote effective risk management, including in particular by:

Ensuring that assessment of performance takes full account of adherence to risk management requirements, covering all relevant types of current and future risks, including sustainability risks.
Implementing deferral arrangements using co-investment and carried interest arrangements for senior personnel, facilitating alignment of interests between staff members and third-party investors. If the value of the relevant underlying investment portfolio should decrease (whether arising as a result of a sustainability risk or otherwise), the value of the employee’s holdings will be reduced accordingly.
Providing for the reduction of deferred variable remuneration awards to senior personnel in certain circumstances, such as in the event that the entity in which the relevant employee works suffers a significant failure of risk management or experiences a significant downturn in its financial performance (as determined in the sole discretion of Maguar Capital), including in connection with a sustainability risk concerning an investment.

Maguar Continuation Fund I GmbH & Co. KG – Sustainability-Related Disclosures

I. Summary

Maguar Continuation Fund I GmbH & Co. KG (“Maguar Continuation Fund I”) promotes environmental and social characteristics within its investment processes, particularly in relation to its single-asset investment in HR WORKS. However, it does not set sustainable investment as its primary objective. While the fund operates under Article 8 of the SFDR, it is not fully compliant with all Article 8 requirements.

II. No Sustainable Investment Objectives

Maguar Continuation Fund I promotes environmental and social characteristics but does not make sustainable investments (Article 9 SFDR) as its objective.

III. Environmental or Social Characteristics of Maguar Continuation Fund I

The fund integrates ESG considerations as part of its investment in HR WORKS, focusing on promoting responsible business practices, including governance structures, social responsibility, and environmental risk management. The ESG characteristics promoted by Maguar Continuation Fund I are, however, not binding and do not constitute the primary objective of the fund.

IV. Investment Strategy

Maguar Continuation Fund I is a single-asset continuation fund, solely focused on its investment in HR WORKS, a provider of HR software and technology solutions, headquartered in Freiburg, Germany. While ESG factors are considered and encouraged in the business practices of HR WORKS, the primary focus remains on financial performance and strategic growth. The fund employs an ownership approach to enhance value creation in
HR WORKS, applying ESG best practices where appropriate, without binding sustainability targets.

V. Proportion of Investments

The fund is solely invested in HR WORKS, and all considerations of environmental and social characteristics are directly related to this single asset. The fund does not commit to making sustainable investments with an environmental objective aligned with the EU Taxonomy.

VI. Monitoring of Environmental or Social Characteristics / Asset Allocation

Maguar Continuation Fund I regularly engages with HR WORKS to assess and promote responsible business conduct and monitor ESG-related risks and performance. Monitoring activities are centered on the business model and industry practices relevant to HR WORKS. There are no external monitoring mechanisms in place, and the fund does not adhere to specific asset allocations aligned with sustainable investments.

VII. Methodologies for Environmental or Social Characteristics

The methodologies used by Maguar Continuation Fund I for assessing environmental or social characteristics are tailored to the operations and strategy of HR WORKS. The fund conducts qualitative assessments during the investment process and ongoing engagement to ensure ESG considerations are part of the business conduct and risk management of HR WORKS.

VIII. Data Sources and Processing

The fund primarily relies on data obtained directly from HR WORKS to assess and monitor sustainability-related performance. This includes internal reporting, ESG-related documentation, and company disclosures. Publicly available data may also be used to supplement the internal information. The data is verified as necessary to ensure accuracy and relevance to the fund’s investment objectives.

IX. Limitations to Methodologies and Data

Given that Maguar Continuation Fund I is a single-asset fund, there are limitations in the scope and diversity of ESG data available. The fund relies on the direct engagement and transparency of HR WORKS to obtain relevant information. While best efforts are made to verify data accuracy, some limitations may exist in terms of data completeness and consistency.

X. Due Diligence

Maguar Continuation Fund I conducts due diligence in line with its Sustainability Risk Policy, with a focus on understanding the environmental, social, and governance practices of HR WORKS. This assessment is part of the overall investment process and continues throughout the holding period to ensure ongoing alignment with ESG considerations.

XI. Engagement Policy

The fund actively engages with HR WORKS to promote responsible business practices and address any sustainability-related controversies. Regular monitoring and dialogue with HR WORKS aim to align the company’s operations with the environmental and social characteristics promoted by Maguar Continuation Fund I, while ensuring that financial performance remains the primary objective.

XII. Designated Reference Benchmark

Maguar Continuation Fund I does not use a benchmark for assessing the sustainability performance of its investment. Instead, the fund relies on qualitative assessments and ongoing engagement with HR WORKS to track the progress and implementation of ESG considerations.