Apax Stewardship Code
The Stewardship Code
Background
The Stewardship Code (the
"Code") was published in July 2010 and is
maintained by the Financial Reporting Council (FRC). The Code sets
out best practice for institutional investors when investing in UK
listed companies and applies on a "comply or explain" basis. The
Code aims to enhance the quality of engagement between
institutional investors and companies thereby improving long term
returns to shareholders and ensure appropriate exercise of
governance responsibilities by investors.
Apax Partners ("Apax") supports the aims of the
Code and is committed to ensuring appropriate engagement with an
investee company ("Company") whether or not the
Company is quoted. The funds advised by Apax
("Apax Funds") are long term
investors with the aim of building robust and sustainable
businesses. Apax works with management to release the full
potential of such businesses through insight and patient long term
investment.
About Apax
Apax is an independent global private
equity firm. Apax Funds typically invest across five growth
sectors: Tech & Telecom, Retail & Consumer, Media,
Healthcare and Financial & Business Services. Apax Funds
predominantly invest in private Companies with a value of between
€1bn and €5bn. Investments in publicly traded Companies are
limited to circumstances such as: (1) Public to Privates (P2Ps), in
which the Company will be delisted, and (2) Private Investment in
Public Equity (PIPEs), usually to provide a publicly traded Company
with capital for acquisitions. Private Companies might go
public in IPOs, in which case Apax Funds typically maintain a stake
post-IPO for a certain amount of time.
The Apax Funds commit capital on behalf of
a diverse range of investors, which include public and private
pension funds, insurance firms, university endowments and other
financial institutions. The Apax Funds buy both majority and
minority stakes in large Companies that have strong, established
market positions and the potential to expand.
Principle 1
Institutional investors should publicly disclose their policy
on how they will discharge their stewardship responsibilities
Monitoring
Apax is an active investor and works to
create a long-term relationship with the Boards of Companies. All
Companies are monitored on an ongoing basis but the level of
monitoring depends on the size and nature of the investment. Apax
seeks representation on the Board of Companies, (e.g. through
non-executive roles) and has frequent interaction with the
Board.
Intervention
Apax works closely with the Board of a
Company to ensure that the appropriate management team is in place
in order to protect the value of an investment and to operate in
the best interests of the underlying investors in the Apax Funds.
Apax would intervene if it felt that the Board was not acting in
the long-term interests of the shareholders.
Internal arrangements
The principles of stewardship are embedded
in Apax's investment approach and implemented by the investment
professionals responsible for a Company. We consider that the
principles of stewardship and its aims are already well aligned
with the way in which Apax engages with its Companies.
UK Corporate Governance
Code
Apax strongly
supports the aims and principles of the UK Corporate Governance
Code and the governance of Companies is something that is reviewed
in detail during due diligence. A Company with a weak governance
structure or a governance structure that deviates significantly
from best practice would be very unlikely to be considered for the
Apax Funds.
Principle 2
Institutional investors should have a robust policy on managing
conflicts of interest in relation to stewardship and this policy
should be publicly disclosed
Apax operates a conflict of interest policy
as part of its Global Business Standards (GBS) and this policy
includes conflicts of interest relating to stewardship. The
conflict of interest policy is made available to investors in the
Apax Funds.
Principle 3
Institutional investors should monitor their investee
companies
Our monitoring involves holding regular
meetings with the Board. The extent of Apax's monitoring depends on
the size and nature of the investment. See also our response to
Principle 1.
Principle 4
Institutional Shareholders should establish clear guidelines on
when and how they will escalate their activities as a method of
protecting and enhancing shareholder value
See our response to Principle 1.
Principle 5
Institutional investors should be willing to act collectively
with other investors where appropriate
Apax works collectively with other
investors where this is relevant. As a large private equity firm,
Apax usually takes a majority stake in Companies and may be the
sole investor. Where Apax takes a minority stake we will usually
act collaboratively with other investors.
Principle 6
A clear policy on voting and disclosure of voting activity
Apax exercises its voting rights to enhance
the stewardship of a Company. Apax may use proxy voting if unable
to attend in person but does not generally appoint third party
proxies. Proxies are typically given to Apax representatives
with clear instructions on how to vote. Voting activity is
not usually disclosed as we do not believe that the benefits to our
investors warrant public disclosure.
Principle 7
Institutional investors should report periodically on their
stewardship and voting activities
This document sets out how Apax discharges
its stewardship responsibilities and is publicly available on our
website. Apax provides investors with the information that is
agreed with them at the time they make their investment and this
does not usually include specific information on voting for each
Company.
Apax does not obtain an independent audit opinion on its
engagement and voting processes with regard to the standards set
out in AAF 01/06 and SAS 70/SSAE-16.
Contact
For further information regarding the Code please contact
Benjamin Harding, Head of Communications at benjamin.harding@apax.com.
October 2012
(Updated to include the new Stewardship Code that came into
effect from 1 October 2012)