Comvest Credit Advisors (Luxembourg), LLC

Purpose of the policy

This Policy is applicable to Comvest Credit Advisors (Luxembourg), LLC (“CCA Lux”) and the alternative investment funds for which it serves as investment manager, currently the entities comprising the Comvest Credit Partners VI and VII unlevered fund complexes (the “Funds”)^[1].

This Policy defines the principal requirements for our Exclusion Policy, and it forms part of our EU Sustainable Finance Disclosure Regulation Policy which can be found on our website.

Overall, this Policy provides more insight into the different exclusion categories considered by CCA Lux as well as the scope of implementation.

As described in more detail in Table 1 below, the Exclusion Policy excludes certain potential portfolio companies that are categorized as:

(i) Conventional Oil and Gas companies,

(ii) Unconventional Oil and Gas companies,

(iii) Coal Mining and Coal-Based Energy companies,

(iv) Tobacco companies,

(v) Controversial Weapons companies,

(vi) Soft Commodities companies, or

(vii) Palm Oil Production, Agricultural Land, Timberland and Forestry companies.

Exclusion approach

We apply our exclusions using a combination of approaches:

1. Norms-based approach – In addition to activity-based exclusions that are illustrated in Table 1, CCA Lux screens investments against minimum standards of business practice based on certain international norms.

1. Activity-based approach – CCA Lux applies a number of activity-based exclusions that are illustrated in Table 1.
2. Region-based approach – CCA Lux will follow applicable sanctions of the European Union or United States to which it is subject and will follow any mandatory (investment) restrictions deriving therefrom.

Implementation 

Adherence to the Exclusion Policy (as detailed in Table 1) is monitored by analysts and is ultimately the responsibility of CCA Lux’s investment committee.  Should there be a breach due to a failure in systems and processes that are otherwise meant to ensure that only qualifying deals are allocated to the Funds, the Funds would expect to sell the investment (which may be sold to other funds managed by affiliates of CCA Lux at fair value).  Portfolio companies whose proprietary scoring or criteria at underwriting deteriorates or changes over the life of the loan are expected to be held to maturity.

Transparency

CCA Lux is transparent regarding the companies and countries it excludes in accordance with the Exclusion Policy and the Exclusion Policy will be uploaded onto this page: https://comvest.com/SFDRexclusionpolicy/.

Practical guidelines are used when implementing the policy

CCA Lux’s first and main responsibility is to serve the economic interests of the Fund and any other clients as an investment adviser subject to the standards proscribed under the Investment Advisers Act of 1940, as amended, and the terms of its investment management agreements. Exclusion of companies from the Funds as a result of this Exclusion Policy are not expected to significantly alter the risk-return profile of the Funds.

Last Updated: September 2023

 

Exclusion categories

CCA Lux and the Funds intend to exclude investments in companies that fit any of the exclusionary criteria set out below.

Table 1

Activity	Exclusion criteria
1. Conventional Oil and Gas	Oil and gas companies Primarily Dealing with exploration and initial production stages of oil and gas (upstream); Oil and gas companies Primarily Dealing with the processing, storing, transportation of oil and gas (midstream);  Oil and gas companies Primarily Dealing with the conversion of oil and gas into a finished product (downstream).
2. Unconventional Oil and Gas	Oil sands producers with at least 20% of their “reserves” based on oil sands; Oil sands producers whose production represents at any time more than 5% of the worldwide production of oil sands; Oil and gas producers/operators (excluding Norwegian companies) (i) whose more than 10% of their production derives at any time from AMAP region or (ii) producing more than 5% of the worldwide oil sand volume of total AMAP region;  Oil and gas producers deriving more than 30% of their production from fracking / shale oil and gas; Companies that are Significantly Involved in oil sands transportation.
3. Coal Mining and Coal-Based Energy	Electric utilities with coal share of power production (energy mix) over 30%; Electric utilities with coal-based power “expansion plans” over 3 GigaWatts (GW); Mining companies with coal share of gross revenues over 30%; Mining companies with annual coal production over 20 Million Metric Tons
4. Tobacco	Companies classified as in the Tobacco Industry by the Global Industry Classification Standard.
5. Controversial Weapons	Companies involved in the development, production, use, maintenance, offering for sale, distribution, import or export, storage or transportation of Controversial Weapons and their key components; Companies owning 50% or more of an excluded company are also blacklisted.
6. Palm Oil Production, Agricultural Land, Timberland and Forestry	Palm oil production companies that have (a) not achieved Roundtable on Sustainable Palm Oil (or equivalent) certification, (b) unresolved land rights conflicts, (c) are unable to prove the legality of their operations and complied with all laws and standards, (d) have not undertaken social and environmental impact assessments, (e) have not consulted with stakeholders prior to commencing operations, or (f) have undertaken illegal logging; Companies that conduct logging operations (a) in Primary Tropical Moist Forest, (b) in High Conservation Value Forest (HCVF), unless the Precautionary Principle is applied and conservation based management plans which deliver preservation or enhancement of the high conservation values are implemented; (c) in Critical Natural Habitats; (d) that are in violation of local or national laws in respect of illegal logging; or (e) that include any species listed in Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES); Companies which are directly involved with (a) the purchase, trade or process timber from the above sources; (b) illegal logging and the uncontrolled and/or illegal use of fire in their forestry or plantation operations (including the preparation of land for planting); or (c) Conversion of Primary Tropical Moist Forest or HCVF to plantation / agricultural land use.
7. Soft commodities	Short-term instruments based on food (“soft”) commodities; Speculative transactions that may contribute to price inflation in basic agricultural or marine commodities (e.g., wheat, rice, meat, soy, sugar, dairy, fish, corn).

 

Definitions. 

For the purposes hereof, the term:

“Controversial Weapons” means any of the following:

1. anti-personnel mines (as defined in Article 2 of the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on their Destruction) and vehicles constructed to exclusively launch this type of weapon;
2. biological and toxin weapons (as defined in Article I of the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction);
3. chemical weapons (as defined in Article II of the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction);
4. cluster munitions (as defined in Article 2 of the Convention on Cluster Munitions); and,
5. nuclear weapons.

“Exclusion” meaning the exclusion from Comvest Credit Partners VI (Luxembourg) Master Fund, SCSp SICAV RAIF or portfolio of certain sectors, companies, countries or other issuers based on specified activities noted in the Exclusion Policy.

“Primarily Dealing” means a borrower whose gross revenue is greater than 50% attributed to the activity in question; and,

“Significantly Involved” means a borrower 20% of whose gross revenue is attributed to the activity in question.

 

[1] Each of the Funds consists of one or more feeder funds, and/or intermediate funds in addition to a master fund. Only the master funds invest in portfolio companies. The master funds are Comvest Credit Partners VI (Luxembourg) Master Fund, SCSp SICAV RAIF and Comvest Credit Partners VII Master SCSp SICAV RAIF. Each master fund is a closed-ended fund categorized as a product which has ESG characteristics (“Article 8”) according to the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”).