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Antares believes that ESG assessment is central to making sound credit decisions. As ESG considerations have evolved, so have we — ensuring we are more deliberate in how we define it, how we track it, and how we ensure that a strong understanding of ESG and its importance is ingrained in our culture.Timothy G. Lyne
In-depth, fundamental analysis is at the heart of our investment philosophy. And ESG factors are integrated into the framework of our investment process.
We not only maintain high ethical standards for ourselves and sponsors, but also for the middle market companies we invest in. Which is why our research for each potential borrower is guided by the Antares ESG Scorecard, designed to elicit the issuer’s strengths and weaknesses with respect to ESG considerations.
Climate change, air quality, GHG emissions, waste management, resource conservation and energy efficiency
Human rights and community relations, privacy, health and safety, labor practices, supply chain continuity, product safety, innovation, and diversity, equity and inclusion
Transparency of management, cyber security and internal controls, and business ethics
In this previously exclusive, Antares borrowers-only webinar excerpt, Shannon Fritz, Senior Managing Director of Credit at Antares Capital, and Angela Jhanji, Director of ESG and Sustainability Services at Grant Thornton, discuss the ESG spectrum and the steps companies can take to advance their ESG journey.
Working with Purpose
At Antares, we work with purpose—championing middle market growth so our people, partners and communities achieve their full potential. This purpose is at the core of our continuous focus on building a more diverse workforce and creating a culture of belonging that positively impacts our business and our communities.
Antares has a robust screening process that includes initial negative screening – i.e. declining to invest in companies or industries that are not aligned with our purpose, mission and values. In the case of a provider of behavioral treatments in clinic and home settings, we discovered a history of prior child abuse incidents through an adverse media check. Additionally, there was a prior known government investigation which stemmed from complaints from former employees related to improper billing practices. Despite the fact that the Company had shown evidence of certain improvements in business practices and the dismissal of some bad actors involved in the prior incidents, it was determined that business practices were still behind industry standards of care. As such, we chose not to invest in the deal.
Antares engages in thorough due diligence across a host of ESG factors leveraging SASB materiality guidance and deal team expertise given the specifics of the borrower. As an example, during due diligence for a potential investment, we uncovered prior cybersecurity breaches that had compromised material intellectual property (“IP”) and ultimately led to a bankruptcy.READ MORE
Antares engages in thorough due diligence across a host of ESG factors leveraging SASB materiality guidance and deal team expertise given the specifics of the borrower. As an example, during due diligence for a potential investment, we uncovered prior cybersecurity breaches that had compromised material intellectual property (“IP”) and ultimately led to a bankruptcy. Though this incident occurred several years prior to Antares’ involvement, we identified it early in our screening process and the deal team focused on mitigating future threats. We reviewed multiple third-party reports related to IT, IP and legal due diligence and had conversations with the Sponsor and management team to understand their response to the situation and their strategy to prevent cybersecurity issues. The deal team was able to get comfortable that the current levels of governance, controls, and IP patent protection, along with significant investment made by the business in these areas post incident would help protect against future threats. The team plans to engage with the Company and the Sponsor through annual discussions on a post-investment basis, as well.
An existing portfolio company in the market intelligence and data collection industry was acquiring a target that would diversify its product offering. When presenting the opportunity to the lending group, the Sponsor disclosed an embezzlement issue related to a previous employee of the target who had been terminated one year prior to the acquisition and related pending litigation against the employee.READ MORE
An existing portfolio company in the market intelligence and data collection industry was acquiring a target that would diversify its product offering. When presenting the opportunity to the lending group, the Sponsor disclosed an embezzlement issue related to a previous employee of the target who had been terminated one year prior to the acquisition and related pending litigation against the employee. Although the historical incident highlighted a weakness in internal controls, Antares’ deal team discussed the matter at length with Antares’ investment committee and ultimately became comfortable with the transaction after 1) review of two independent third-party financial audits, 2) a third-party internal controls report covering the prior and current controls in place, 3) review of a plan for additional controls the Sponsor planned to put in place post-acquisition and 4) discussions with legal counsel in relation to the structural protections in place to limit future liability to the borrower.
Antares does not consider the adverse impacts of its investment decisions on sustainability factors within the meaning of Article 4(1)(a) of the Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088) (as amended, the “SFDR”) at this time. The SFDR defines sustainability factors as environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery. Antares fully supports the SFDR’s policy objective of providing greater transparency to investors and the market in relation to the adverse impacts investment decisions may have on sustainability factors. However, Antares currently does not consider adverse impacts because, among other reasons, the legislation setting out the principal adverse impacts and disclosure templates has not yet been finalized and investment-level data is not readily available in a consistent format. As a result, it is not possible for Antares to make a meaningful assessment of the principal adverse impacts (if any) of its investment decisions on sustainability factors. This approach will be reviewed at least annually.
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