In 2020, and subsequently in 2023, PIP invested in Action, a leading European general merchandise discount retailer operating across 12 countries, which is backed by 3i Group plc, an international investment company focusing on private equity and infrastructure.
Action believes that sustainability should be accessible for all, by providing customers with good quality, sustainable products at the lowest price.
To achieve this, the company has set itself ambitious and measurable targets through the implementation of the Action Sustainability Programme. Initiatives delivered to date as part of this programme include:
- A commitment to reduce Scope 1 and 2 carbon emissions by at least 60% by the end of 2030, from a 2021 baseline. In the last two years, and while significantly growing the store and distribution network, the company has already achieved a 46% reduction as part of this target. This was delivered by procuring c.90% of electricity from renewable sources, disconnecting most stores from the gas supply, improving energy efficiency of stores, installing solar panels at seven out of 13 distribution centres, switching to biodiesel for 150 Action trucks, and piloting four new zero-emission e-trucks;
- Ambitions to reduce its emissions from the supply chain. The company has now established a full baseline for Scope 3, which represents 99% of its total carbon footprint (of which product raw materials, manufacturing and transportation represent 75% of the total);
- A focus on product circularity, working in partnership with Circle Economy, the Ellen MacArthur Foundation and Delft University of Technology. The company is working end-to-end from initial product design to disposal to improve material inflow, product lifespan and ease of recyclability.
- In 2023, Action delivered circularity improvements of +4.85% across all product categories and launched its first ever circular product in the form of plastic storage baskets. These baskets are a closed-loop product, made entirely from damaged items that have been returned by customers, thereby avoiding 5,000kg of waste. The company will look to expand its range of recycled, closed-loop products in the future; and
- Action has made significant progress in its goals to source more certified sustainable products. During 2023, Action sourced 100% sustainable cotton (private and white label products) and cocoa (private label products), and made significant progress towards its goal of achieving 100% sustainably sourced timber by 2024, with 95% of timber products certified as sustainable in 2023.
Action intends to build on its progress so far to ensure that it is able to meet the expectations of its cost- and eco-conscious customers.
About the company
Nutrition 101 is a food waste and recycling company and a go-to partner for food manufacturers seeking sustainable waste management solutions. The company cost-effectively converts food waste into affordable and nutritious livestock feed, compost and green energy products. As a result, food waste, landfill usage and greenhouse gas emissions are significantly reduced.
Investment rationale
- The company operates in a c.US$600bn dairy market that develops a variety of nutrient dense foods. The business is expected to benefit from the tailwinds supporting sustainable food production.
- There are significant barriers to entry due to the operational and technical know-how, physical assets and scale required.
- The company has visible revenue streams due to strong relationships and multi-year agreements with tenured blue-chip food manufacturers and customers requiring livestock feed.
Our relationship
Pantheon has a long-standing relationship with Altamont, having invested in several of their funds and it currently holds five advisory board seats with the manager. PIP has also previously co-invested alongside Altamont.
Active management and value creation
Altamont is a leading US mid-market buyout manager that focuses on companies with strong management that are undergoing a strategic or operational transition. It has identified several growth opportunities for Nutrition 101 to create value, which include the professionalisation of the company’s go-to-market strategy, optimising pricing and plant operations and geographic expansion across the USA.
About the company
Satlink is a global leader in the development of technological solutions for the maritime sector, focusing on sustainable fishing. Its products optimise decision-making by fishing vessels and help regulators audit ethical fishing methods.
Investment rationale
- Satlink offers several different products, services and technological solutions to its customers. The company has an international presence and holds a market-leading position in a highly concentrated sector.
- The private equity manager, Ergon Capital Partners (“Ergon”), regards Satlink’s core business as a strong growth platform as it operates in a market with high barriers to entry, has a strong financial profile and low customer churn.
- Further sources of growth include an increased service offering, the possibility of enhancing its subscription model and developing a more extensive oceanography product range.
Our relationship
- Pantheon is a primary investor with Ergon and an Advisory Board member. Ergon had been tracking Satlink over several years and was ultimately attracted to it as the theme of technological disruption in a traditional market is consistent with several of their previous investments.
- As a result of the relationship between Pantheon and Ergon, PIP was offered the opportunity to co-invest alongside Ergon in this exciting company.
ESG approach
- Satlink’s products support sustainable fishing and contribute to the health of marine ecosystems:
- The company’s smart buoy products identify and distinguish schools of fish to make fishing more accurate by reducing the capture of non-target fish.
- Satlink’s technology helps preserve marine ecosystems by ensuring that only species with healthy stocks are fished, while the capture of vulnerable species is minimised.
- This results in better fuel efficiency in fishing vessels, and an overall reduction in their carbon footprint.
- Satlink is an important asset to the global ocean protection movement; it has strong links to non-governmental organisations such as charities that focus on the sustainability of fishing, and dedicates significant resources to increasing awareness of ocean sustainability. The company won a United Nations Global Compact award in February 2022 for its contribution to a more sustainable fishing industry and the preservation of marine life.
About the company
Star Health Insurance (“Star”) provides affordable medical insurance, accident insurance and travel insurance plans in India. Star is the largest private sector standalone health insurer in India, the largest in retail health insurance and the fifth largest health insurer overall. It operates with a network of c.11,000 hospitals across India. The company was a pioneer of in-house claims processing in India and employs a large team of in-house doctors to provide a seamless claims processing experience to its customers.
Investment rationale
- Health insurance is an underpenetrated and high-growth segment in India.
- Star has a c.55% market share amongst standalone health insurers in India and is a leader in the retail segment where it is harder to build scale compared with the corporate and government segments of the market.
- Star is one of the few general insurance players in this emerging industry in India and has been profitable since 2016.
Investment ESG credentials
- Star introduced a Coronavirus policy to cover Indian residents who test positive for COVID-19, offering a quick solution for people who have no health insurance cover but need protection against COVID-19.
- A dedicated employee COVID-19 helpline was set up offering COVID-19 advice to employees and for cases of hospitalisation or death from COVID-19.
- The company provided financial assistance for hospitalisation costs, funeral expenses, priority release of terminal benefits and hospital support.
- The company had a Corporate Social Responsibility budget of approximately $750k in FY 2021, which was spent on several activities such as maintaining public toilets, food distribution, a dialysis centre and support for sufferers of non-communicable diseases.
Active management and value creation
- Madison India Capital (“Madison”) was an existing investor in Star, and was part of the consortium to complete the buyout under the new lead shareholders.
- Madison worked with the management team and other shareholders to help Star navigate the COVID-19 crisis in India.
- Madison developed an ESG management system that integrates consideration of ESG risks into their investment processes. According to Madison’s annual ESG report, Star Health is one of the best-performing companies in their portfolio from an ESG perspective.
About the company
- Leading distributor of mobile and industrial filters for after-market applications.
- SF Filter’s modern filtration technology contributes to a cleaner environment by reducing energy consumption and the emission of pollutants.
Why invest
- Resilient business model operating in a favourable regulatory environment.
- Opportunity to accelerate organic growth through the reorganisation of its sales force, the introduction of CRM tools and by strengthening the management team.
- Potential to acquire industrial clients through complementary add-on acquisitions.
- Ambienta’s strong focus on operational improvement and internationalisation has resulted in the strengthening of the company’s organisation and systems, the optimisation of the balance sheet and the fuelling of online sales.
Our relationship
- Pantheon is a primary investor and holds Advisory Board seats in two Ambienta funds.
Manager ESG credentials
- Ambienta is a leading European manager that invests exclusively in companies whose products or services generate resource efficiency or control the impact of pollution.
- Ambienta has developed a proprietary scoring system to reflect their sustainability-driven private equity investment approach. In addition, Ambienta applies a range of standardised metrics to capture the full environmental impact of their portfolio companies.
- Ambienta achieved the Climate-Neutral label in 2020 and is committed to addressing incremental emissions that may arise from the expansion of the firm’s reach and operations.
- Ambienta’s diversity strategy continues to be implemented extensively and has been embraced at the highest levels of the organisation. In 2020, 44% of new hires were female.
- Ambienta’s longstanding commitment to sustainability and ESG has been recognised by the industry.
About the company
Imperfect Foods was founded in 2015 with a mission to eliminate food waste and build a better food system for everyone. The company offers imperfect (yet delicious) produce, affordable pantry items, and quality eggs and dairy, delivering conveniently and safely to customers’ doorsteps. Imperfect Foods prides itself on offering affordable groceries, so customers can get the healthy, seasonal produce they want alongside the grocery staples they rely on, without having to compromise their budget or values.
Why invest in the company
The nearly one trillion dollar US grocery market is moving online rapidly, further accelerated by the COVID-19 pandemic that caused an immediate inflection point in adoption. The emerging “ugly produce” grocery category offers a differentiated and recession-resistant value proposition, marrying the brand ethos of sustainability with greater convenience and freshness at low prices. Insight Partners (“Insight”) identified Imperfect Foods as an early mover in this category, highly advantaged by its purpose-built value chain with high barriers to entry. Through Insight’s due diligence, the manager identified further potential opportunity to deepen the company’s defensibility and expand margins through continuous improvement across the value chain, including enhancements in automation, analytics, and customisation.
Our relationship
Pantheon’s relationship with Insight Partners dates back to 2005. Pantheon has invested in eight Insight funds and has completed five co-investments alongside the manager.
ESG approach
Imperfect Foods was founded to fight food waste by finding a home for the imperfect or “ugly” fruits and vegetables that farms could not sell to grocery stores. Imperfect Foods demonstrates a strong commitment to ESG causes both through its mission of environmental sustainability as well as through its commitment to its employees and the community more broadly:
- Imperfect Foods helps save food from waste, thereby avoiding emissions to produce food that is ultimately wasted, which currently account for 25% of the food system’s greenhouse gas emissions. In 2020, the company saved over 50 million pounds of food, avoiding over 20,000 tonnes of carbon dioxide emissions.
- Imperfect Foods’ last mile delivery network efficiently batches together customers and neighbourhoods, emitting approximately 12,800 tonnes less of carbon dioxide than if each customer went to the grocery store themselves, or the equivalent of taking 2,800 cars off the road for one year.
- Imperfect Foods’ Reduced Cost Box programme provides a discount on food orders to qualifying low-income customers. The programme more than tripled in size in 2020 due to increased need caused by the COVID-19 pandemic. The company fulfilled over 282,000 orders of Reduced Cost Boxes, serving nearly 13,000 customers.
- Imperfect Foods has made a number of commitments supporting diversity, equity, and inclusion (“DE&I”) within its workplace and more broadly. The company established three employee resource groups in 2020 – Black Imperfectionists Group, Imperfeminists, and Imperfectly Out. The company also launched an Anti-Racist Pledge to support black communities, improve internal practices, and promote racial justice. Progress in 2020 includes establishing a DE&I board, investing in DE&I software for recruiting to minimise implicit bias, and hiring a talent manager with a DE&I background.
Manager overview
- INCE Capital was founded in 2019 by JP Gan, the former Managing Partner and Head of Consumer Internet for Qiming Venture Partners.
- JP Gan is a renowned venture capitalist in China and has been featured in Forbes’ Midas List of top 100 global venture capitalists.
Pantheon ESG credentials
- Pantheon has a strong relationship with INCE Capital and was one of the first investors to commit to the manager’s first fund.
- Pantheon is a member of INCE Capital’s Limited Partner Advisory Committee.
- JP Gan established INCE with a small team with limited resources. Pantheon provided substantial knowledge transfer to INCE and, among other things, assisted in the institutionalisation of the manager’s ESG policies.
- With Pantheon’s assistance, INCE was able to adopt ESG best-practices within a short period after its formation.
- Pantheon assisted INCE in its development of a formal ESG policy.
- Pantheon provided climate change training to INCE, and recommended the incorporation of climate change considerations into its ESG policy.
- INCE formulated a Diversity & Inclusion statement with Pantheon’s support.
- Pantheon advised INCE on its anti-bribery & anti-corruption policy, business continuity plan, cybersecurity policy, and matters relating to fund liability insurance.