Art. 10 SFDR – Sustainability-related information about financial products that promote environmental or social characteristics
heal.capital Management GmbH (“heal.capital”) is the alternative investment fund manager of heal.capital II GmbH & Co. KG (“heal.capital II”) within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) and as such publishes the following information in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosure requirements in the financial services sector (the “SFDR”).
This financial product advertises environmental or social characteristics and will make 30% sustainable investments as defined in Art. 2 No. 17 SFDR. The sustainable investments of the financial product are aimed at a sustainable and future-proof healthcare system. Contributions to this can be made, among other things, by improving non-discriminatory access to and affordability of medical services as well as innovative approaches for a healthy life and well-being of all people. Accordingly, they pursue a social goal. The advertised characteristics are a social investment focus and exclusion criteria. 100% of the investments are made in accordance with the investment strategy and investment restrictions.
No reference benchmark has been designated to attain the environmental or social characteristics promoted by the financial product.
Dieses Finanzprodukt bewirbt ökologische oder soziale Merkmale und wird 30 % nachhaltige Investitionen im Sinne der Definition des Art. 2 Nr. 17 SFDR tätigen. Die nachhaltigen Investitionen des Finanzprodukts zielen auf ein nachhaltiges und zukunftsfestes Gesundheitswesen ab. Beiträge hierzu können geleistet werden u.a. durch Verbesserung des diskriminierungsfreien Zugangs zu und Finanzierbarkeit von medizinischen Leistungen sowie innovativen Ansätzen für ein gesundes Leben und Wohlbefinden aller Menschen. Sie verfolgen demnach ein soziales Ziel. Bei den beworbenen Merkmalen handelt es sich um einen sozialen Investitionsfokus und Ausschlusskriterien. 100 % der Investitionen werden im Einklang mit der Anlagestrategie und den Anlagebeschränkungen getätigt.
Es wurde kein Referenzwert benannt, um die mit dem Finanzprodukt beworbenen ökologischen oder sozialen Merkmale zu erreichen.
No sustainable investment objective
This financial product promotes environmental or social characteristics and will make 30% sustainable investment with a social objective.
No significant harm to the sustainable investment objective
heal.capital considers the principal adverse impacts of investment decisions on sustainability factors for all sustainable investments within the meaning of Art. 2 No. 17 SFDR to ensure that the sustainable investment does not significantly harm any of the sustainable investment objectives. ‘sustainability factors’ mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.
heal.capital has developed strategies for identifying and prioritizing adverse sustainability impacts. heal.capital ‘s methods for doing so take into account the fundamental characteristics of investing in young companies and growth companies whose business operations are focused on growth. This may result in increased adverse sustainability impacts in certain areas, with limited implementation of the strategy to avoid adverse sustainability impacts.
The strategy for addressing significant adverse sustainability impacts considers each case individually, in particular the extent and nature of the adverse sustainability impacts and approaches to reduce or avoid the adverse sustainability impacts. The adverse sustainability impacts are assessed in the pre-acquisition review and the portfolio companies are required to regularly measure and report on any adverse sustainability impacts. This enables heal.capital to track and evaluate the adverse sustainability impacts.
heal.capital continuously reviews the sustainable investments of the financial product against the background of the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights and intends to support the Portfolio Companies in complying with these standards. However, as the investments made in the portfolio companies are minority interests, the influence that heal.capital can exercise over the portfolio companies is limited. Should it become apparent that the above standards are not being met by a portfolio company and no measures are taken on the part of the portfolio companies to counteract this, heal.capital will consider terminating the investment early or no longer treating it as a sustainable investment with regard to the minimum share, weighing up the matter in accordance with the principles of proportionality.
Environmental or social characteristics of the financial product
All investments are made with the overarching goal of sustainable and future-proof healthcare. In doing so, heal.capital II supports non-discriminatory access to and affordability of medical services. Investments are made exclusively in companies that pursue the goal of ensuring healthy lives and promoting the well-being of all people at all ages, thereby supporting UN SDG 3. In addition to the focus on UN SDG 3, heal.capital II’s investments are intended to promote UN SDGs 5, 9, 10 and 11.
The Fund does not invest in industries excluded under the LPA. These include, for example Production and distribution of arms, pornography, manufacture and distribution of tobacco products, extraction of critical raw materials („CRM“), production of agricultural products and livestock; production and distribution of genetically modified organisms, gambling, production of nuclear energy.
The investment objective of heal.capital II is to establish, hold and manage (including divest) equity and quasi-equity investments in various early and growth stage companies in the Digital Health sector. All investments will be made in compliance with the heal.capital’s ESG Policy. In addition, The Fund will focus its investments exclusively on companies that promote, in particular, UN SDG 3 as well as UN SDGs 5, 9, 10 and 11.
No investments are made in the sector exclusions. As part of due diligence and ongoing investment management, the heal.capital II’s investment team will continuously monitor whether investment objectives are being pursued and investment restrictions are being met, and whether the investment is consistent with the investment strategy.
Policy to assess good governance practices of the investee companies
Good governance practices include sound management structures, employee relations, remuneration of staff and tax compliance. As part of the due diligence and ongoing investment management, the investment team will review whether a potential investee company has good governance practices in place.
Proportion of investments
heal.capital II will invest fully in line with its investment strategy and investment restrictions. heal.capital II will not invest a portion of its capital in any other asset class.
Monitoring of environmental or social characteristics
The investment team for heal.capital II will initially and continuously monitor whether the investments contribute to the above-mentioned UN SDGs and whether the investment restrictions are abided by and whether the investment falls within the investment policies.
The reports on the adverse sustainability impacts of sustainable investments are provided together with the annual report of the financial product.
Methodologies for environmental or social characteristics
For documenting the achievement of the social objective of a sustainable investment or the promoted characteristics are determined individually for each company at the time of investment, taking into account the focus of the portfolio company. The exclusion list is used to measure how the social or environmental characteristics promoted by the financial product are met.
Data sources and processing
heal.capital II receives data provided by the portfolio companies as part of the due diligence process and at regular intervals after the investment. Where necessary or beneficial, heal.capital II also makes use of publicly available data. Data processing is exclusively internal and DSGVO compliant. Estimates of data are not made.
Limitations to methodologies and data
heal.capital is partly reliant on the information provided by portfolio companies during the due diligence process. Moreover, in the post-investment phase, heal.capital is reliant on the company’s reported data. In both cases, complete data may not always be available due to the nature of the investments. The information is verified only if and to the extent misrepresentations are suspected.
Since heal.capital II’s investments are made for a multi-year investment period, heal.capital II places a high priority on establishing a trusting working relationship with the portfolio companies to ensure that data is submitted reliably and completely and that the above restrictions are met.
heal.capital considers the promoted ESG aspects when sourcing new portfolio companies for heal.capital II and during the due diligence on targeted portfolio companies. The due diligence is performed by obtaining all information relevant to heal.capital II using a due diligence questionnaire, which is then reviewed internally. If necessary, further specific information is also obtained from the potential portfolio companies, should this still be necessary after the detailed questioning. The due diligence process is not externally monitored.
heal.capital II invests in the portfolio companies for a period of several years. Therefore, heal.capital makes it a priority to establish and maintain a trusting working relationship with the portfolio companies in order to continuously comply with the investment restrictions. heal.capital thus also intends to establish or strengthen the consideration of sustainability risks at the portfolio level. heal.capital is in constant dialogue with the portfolio companies, but as a venture capitalist without majority ownership, the influence heal.capital can exert on the portfolio companies is limited.
Last Version: 07/09/2023