Corporate responsibility

We interpret corporate responsibility (CR) as taking due regard of society’s expectations of the way we manage our business. By so doing we can avoid risk and identify opportunity, which ultimately will underpin our long-term access to markets, capital and resources.

At Candover we take care to comply with all relevant legislation and to ensure that we are a reasonable and fair employer. We maintain good relationships with our business partners, and Candover Partners Limited has developed an active charitable programme. However, our principal social impacts – and the consequent risks and opportunities – arise in our portfolio companies which operate in a diverse range of sectors and countries. We do not manage these businesses directly, regardless of the level of control that we have, but nevertheless we recognise the responsibilities that accompany our ownership and our strategic involvement through the companies’ boards.

This year we have commissioned a review of how best to manage our responsibilities which concluded:

  • CR is an important and valid concept for a private equity company like Candover, with the potential to affect the business in direct and indirect ways
  • Candover’s principal social and environmental impacts lie in the portfolio companies. We must therefore develop ways to understand and tackle these, commensurate with our position as investors in these businesses
  • The responsibilities of Candover itself relate principally to the investment decisions we make, our approach to transparency and disclosure, and also the firm’s ability to use its resources in support of a number of social causes.

Investee companies principles

Candover backs management teams to run the businesses we invest in. We do not intervene directly in their executive responsibilities, but we do expect them to consider the social and environmental impacts of how they operate.

We have adopted seven principles which we expect each management team to consider at least annually with us, and to use to stimulate ideas and action within their company.

1 Invest and build
Our aim is to create value, and creating value often requires investment. Our management teams will actively find ways to invest in the technology, facilities and people in their companies to make the businesses profitable and sustainable.

2 Respect the law
Management teams will ensure they understand the laws and regulations that relate to their companies, and that they are fully compliant.

3 Tackle waste
Our management teams will understand how their businesses use resources and ensure that consumption and waste are controlled. In companies that use significant amounts of energy, it will be measured and managed.

4 Focus on the market
Our businesses need healthy markets to grow, and healthy markets in turn need healthy societies. Our management teams will look in depth at trends and social concerns relevant to their market.

5 Focus on the positive
We believe in the power of business to solve problems, including social and environmental ones. Our management teams will be alert to opportunities to develop new products and services that benefit society and the environment.

6 Integrity
Our management teams will run their companies honestly and fairly, ensuring that they – and those who work for them – are free from damaging conflicts of interest, corruption or nepotism.

7 Appropriate reporting
Many of our businesses are relatively small, and most are business to business operations. In larger businesses, or those whose operations have a significant public face, our management teams will ensure that they report publicly on suitable non-financial topics following sector and industry norms.

Managing corporate responsibility

We have taken a number of steps as a result of the review to help us manage our corporate responsibilities effectively:

  • We have established the principles – set out above – for the management teams of investee companies
  • The Board will review Candover’s approach to CR, and its performance, on a regular basis
  • We have sharpened our focus on social and environmental risks (and opportunities) in our investment appraisal processes
  • Candover Partners Limited joined Business in the Community in 2007. We plan to strengthen relationships here and with the Private Equity Foundation. We will look for projects where our executives can contribute pro bono skills and experience
  • We will participate in sector and other forums to help develop the understanding of how CR applies to the private equity industry.

The Private Equity Foundation

The Private Equity Foundation (PEF) was established as a registered charity in 2006 to provide a focus for collective charitable activity for Europe’s private equity community. The Foundation’s mission is to empower young people to reach their full potential, which it does by investing both money and expertise from the private equity community to help strong charities achieve a step-change in their impact. The Foundation raised £5.0 million in its first year, and has so far invested in charities including IntoUniversity, Volunteer Reading Help, Community Links and The Place2Be. Candover Partners Limited is a founder member of PEF, and one of Candover Partners Limited’s Managing Directors is a trustee of PEF. Candover Partners Limited committed £125,000 to PEF during 2007.

The Walker Guidelines

During 2007 Sir David Walker published his Guidelines for Disclosure and Transparency in Private Equity, aimed at helping to improve the understanding of the role of private equity within the UK economy. The Guidelines oblige private equity firms to comply, or to explain clearly why they have not. Candover believes that it is fully compliant with the Guidelines in its 2007 reporting, the requirements of which – together with the location of the relevant disclosures – are shown in the accompanying table.

The Guidelines also stipulate that well-established valuation guidelines should be used by private equity firms to value their assets, and that firms should provide data to the BVCA in support of its role in data gathering and economic impact analysis. Candover is fully compliant in both these respects.

The Guidelines also place enhanced reporting requirements on portfolio companies meeting certain criteria (including having more than 50% of revenues generated in the UK, and more than 1,000 full-time equivalent UK employees). Two of our portfolio companies – Gala Coral and DX Group – meet these criteria. Gala Coral’s latest report already satisfies the required standard, DX Group will be fully compliant later this year. Gala Coral’s 2007 Report can be found at www.galacoral.co.uk.

Guideline requirement   To be found in
     
A description of Candover’s structure > About Candover
     
Investors in funds managed by
Candover Partners Limited categorised by geography and type		 > About Candover
     
Our history, investment approach and indicative holding periods >
 Our investment approach
> About Candover
  > Funds and investments at a glance
     
Our commitment to conform with the Guidelines on a comply or explain basis > In this section
     
The leadership of Candover in
the UK		 > Board of directors
     
A description of Candover’s UK portfolio companies > 20 largest investments