HENGISTBURY INVESTMENT PARTNERS

Hengistbury Investment Partners LLP (the “Firm”) is authorised and regulated by the Financial Conduct Authority (the “FCA”). The Firm is a UK domiciled discretionary investment manager to professional clients and unregulated collective investment schemes. As a Collective Portfolio Management Investment (CPMI) firm, Hengistbury is subject to the requirements of Chapter 11 of the FCA’s IPRU(INV) sourcebook with respect to the management of alternative investment funds (“AIFs”) where the Firm acts as alternative investment fund manager (“AIFM”) pursuant to the Alternative Investment Fund Managers Directive (“AIFMD”). Since the Firm has FCA permission to perform certain other activities aside from acting as AIFM to AIFs, it has also been categorized as a BIPRU Firm subject to certain sections of the FCA’s GENPRU and BIPRU sourcebooks that are derived from the Capital Requirements Directive (“CRD”). The respective regimes run in parallel; inter alia, each regime imposes separate and distinct minimum capital requirements on the Firm.

To note, from 1st January 2023 the BIPRU regime has been replaced by Investment Firms Prudential Regime (“IFPR”) and the implementation of the FCA’s MiFIDPRU sourcebook. As such the Firm is completing this last Pillar 3 disclosure for good order, in regard to the financial year commenced on 1st December 2021.

Under BIPRU and GENPRU the Firm has historically been required to implement three pillars of CRD:
Pillar 1 – Quantitative rules based capital adequacy calculations which sets out the minimum capital requirements for a firm based on its FCA categorisation. These are detailed in GENPRU. In addition, the Firm takes into account minimum capital requirements set out in IPRU (INV).
Pillar 2 – Qualitative risk based approach to assessment of capital adequacy which requires the preparation of an internal capital adequacy assessment that assesses a firm’s major risks and the controls in place to mitigate those risks.
To note the Firm is cognisant that quantitative and qualitative assessments are required under MIFIDPRU and these are documented in the Internal Capital Adequacy and Risk Assessment (”ICARA”).
Pillar 3 – Public disclosure of regulatory capital adequacy and regulatory KPIs contained in the internal capital adequacy assessment which will allow market participants to assess key pieces of information on a firm’s capital, risk exposures and risk assessment processes.

The Firm reports on a solo basis. The disclosure provides market participants with key pieces of information on the firm’s capital, risk exposures and risk assessment processes. 

Risk Management
The Firm's Executive Management Committee determines its business strategy and the level of risk acceptable to the Firm. In conjunction with the Chief Operating Officer, they have designed and implemented a risk management framework that recognises the risks that the business faces and how those risks may be monitored and mitigated on an ongoing basis. The Firm has in place controls and procedures necessary to manage those risks. 
The Firm considers the following as key risks to its business:
Business risk – This risk represents a fall in assets under management or the loss of key staff which may reduce the fee income earned by the Firm and hinder its ability to finance its operations and reimburse its expenses. Business risks are assessed and mitigated as part of the ICARA.
Market risk - The risk is the exposure to foreign exchange fluctuations due to investment management and performance fees being denominated in currencies other than sterling. The Firm operates currency bank accounts permitting it to receive/pay currency directly.
Operational risk – This risk covers a range of operational exposures from the risk of the loss of the key personnel to the risk of the provision of investment advice.  Legal and reputational risks are also included within the category of operational risk. Operational risks and how they can be mitigated are assessed as part of the ICARA.
Credit risk – This risk relates to the exposure to the Funds for non-payment of management and performance fees and counterparty exposure relating to the Firm’s bank balances and any other debtors. This is monitored by the Firm’s Chief Operating Officer.

Regulatory Capital
Since the Firm is a CPMI we have adopted the approach of calculating and comparing the own fund requirement under MiFID as well as the own fund requirement under AIFMD.  Since the Firm does not currently perform any MiFID activities (since it manages only AIFs) the own funds requirement calculated under MiFID is used for reference purposes only. 

Under the previous BIPRU MiFID calculation methodology the Firm has adopted the following approach:

• Credit risk – the “Standardised Approach” (BIPRU 3.4) and “Simplified Method” (BIPRU 3.5)(per IPRU(INV) this is with respect to “designated investment business” only and as such excludes managing AIFs as an AIFM);
• Market risk – “Non Trading Book” only (BIPRU 7.4 and 7.5)(per IPRU(INV) this is with respect to “designated investment business” only and as such excludes managing AIFs as an AIFM); and
• Fixed Overhead Requirement (“FOR”) (GENPRU 2.1.53).

Pillar 1, also known as the Capital Resources Requirement (“CRR”) is the higher of Base Capital Requirement and Variable Capital Requirement (“VCR”).  The VCR is the higher of the sum total of (Credit Risk Capital Component + Market Risk Capital Requirement) and the FOR.
Under IFPR, the Firm is required to maintain capital in excess of its own funds threshold requirement, which is typically the higher of the Firm’s permanent requirement or FOR.
Since the Firm does not provide MIFID services to any segregated accounts currently, the MiFID calculation has been applied for reference purposes only.  The Firm’s capital requirement is governed only by the AIFMD’s Own Funds Requirement.

AIFMD calculation Methodology
A CPMI firm is also subject to a parallel minimum capital requirement as set out in IPRU(INV), also known as the “Own Funds Requirement” (“OFR”) which can be summarised as follows:

The higher of the Funds Under Management Requirement (@0.02% + base capital requirement) and the Own Funds Based on Fixed Overheads (FOR), plus either the Professional Negligence Capital Requirement or the PII Capital Requirement. 

Results of the ICARA
The ICARA covers the period from 1st December 2022 to 31st March 2023 and the data upon which it is based is drawn from the financial statements prepared for the Firm’s financial period ending 30th November 2022.

The Firm ensures that it maintains adequate capital for its size, nature and complexity of the business based on current total capital of £1,675,000 compared to a minimum capital requirement of £731,995 being the Own Fund’s Requirement under AIFMD.

As at 30th November 2022 the Firm’s regulatory capital position is:

Capital Item	£’000
Tier 1 capital	1,675
Total capital resources, net of deductions	1,675
Own Funds Requirement (Full Scope AIFM)	0.732

With a regulatory surplus of £943K at financial year end we consider this amount to be sufficient regulatory capital for now to support the business and have not identified any areas which give rise to a requirement to hold additional risk-based capital. The requirement for additional capital will be monitored continuously as the business develops.

The Firm must establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote effective risk management and do not encourage excessive risk taking.

The Firm ensures that the remuneration policy and its practical application are consistent with the Firm's business strategy, objectives and long-term interests.

Given the nature and small size of our business, remuneration for all personnel is set by the Executive Management Committee of the Firm. The Firm formally reviews the performance of all Partners and employees and based thereon determines for each the overall level of remuneration and the split of that between base salary, bonus according to the LLP Agreement and any discretionary additions in compliance with the FCA Rules on remuneration.

Any variable remuneration is intended to reflect contribution to the Firm's overall success. Staff are assessed throughout the year and rated based on company and individual performance, considering both financial and non-financial measures.

Given that the Firm has only one business area, investment management, all remuneration disclosed in our audited financial statements is from this business area.

The Firm has identified "Code Staff" as defined by the FCA being those who have a material impact on the risk profile of the Firm or AIFs managed by the Firm. Although the Firm is subject to the AIFMD Remuneration Code ("the Code"), it has applied proportionality and dis-applied various provisions of the Code where relevant.

There is a requirement for a remuneration statement to form part of the annual report of any Alternative Investment Fund ("AIF") to which the Firm acts as AIFM and which is either domiciled in the European Economic Area ("EEA") or marketed in the EEA. The Firm does not currently act for or market any AIFs domiciled within the EEA and is therefore not required to make such a disclosure.

UK Stewardship Code
Under Rule 2.2.3R of the FCA’s Conduct of Business Sourcebook, Hengistbury Investment Partners LLP is required to disclose the nature of its commitment to the UK Financial Reporting Council’s Stewardship Code (the “Code”) or, where it does not commit to the Code, its alternative investment strategy. The Code is a voluntary code and sets out a number of principles relating to engagement by investors with UK equity issuers. Firms which commit to the Code can either comply with it in full or choose not to comply with aspects of the Code, in which case they are required to explain their non-compliance.
The Code comprises twelve Principles that can be summarised as follows:

Purpose and governance	01. Purpose, strategy and governance 02. Governance, resources and incentives 03. Conflicts of interest 04. Promoting well-functioning markets 05. Review and assurance
Investment approach	06. Client and beneficiary needs 07. Stewardship, investment and ESG integration 08. Monitoring managers and service providers
Engagement	09. Engagement 10. Collaboration 11. Escalation
Righs and responsibilities	12. Exercising rights and responsibilities

The Firm pursues a fundamental investment strategy across global equity markets with a core focus on Europe, including UK equities. A consistent global approach is taken to engagement with issuers and their management in all of the jurisdictions in which the Firm invests and, consequently, the Firm does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction and feels that the Code is not appropriate to the Firm’s business model.

However, whilst the Firm has not made a formal commitment of compliance with the Code, its alternative investment strategy as set out above, is generally supportive of the spirit and aims of good stewardship as contained within the Code.  As such, in practice, the Firm takes into consideration the principles as set out in the Code.

This Statement is reviewed annually and updated where necessary to reflect changes in circumstances and actual practice.  Should the Firm’s position change we will review our commitment to the Code and make appropriate disclosure at that time.

The Shareholder Rights Directive II
The Second Shareholder Rights Directive which took effect in the UK on 10 June 2019, aims to improve shareholder engagement and increase transparency around stewardship. As the Firm invests in listed equities we are required to disclose and make publicly available our policies on how we engage with other shareholders and the companies that we invest in, and how our strategies create long-term value.

The Firm’s Approach
We are required to either:

• publicly disclose an Engagement Policy and a public statement on an annual basis on how the Engagement Policy has been implemented; or
• publicly disclose a clear and reasoned explanation of why the Firm has chosen not to make these disclosures.

This disclosure also serves as Hengistbury’s engagement policy for the purposes of Article 3g of the amended EU Shareholder Rights Directive (Directive 2007/36/EC).

Our Engagement Policy
This policy is published so that investors and investee companies are aware of the way in which Hengistbury integrates stewardship activities into the investment process.

a) How the firm integrates shareholder engagement in its investment strategy

Engagement with investee companies is the responsibility of the investment team at Hengistbury.  Hengistbury views access to management as an important part of its investment process and will generally meet with the management of core positions as often as is necessary to discuss issues such as governance, strategy and shareholder value. Hengistbury believes that its engagement with management on such issues is integral to the discharge of its stewardship responsibilities and the interests of its clients, and is unlikely to invest in companies where it appears that management is not acting in the best interests of shareholders.

b) How the firm monitors investee companies on relevant matters, including:

• Strategy
• Financial and non-financial performance and risk
• Capital structure
• Social and environmental impact and corporate governance

Hengistbury’s investment decisions are generated by fundamental research whereby analysts monitor investee companies through the review of annual reports, financial statements and other company announcements.  Analysts will meet with senior management of companies, attend company meetings and roadshows and use third party and broker research. This monitoring process is regularly reviewed by senior management.

Our investment team routinely monitors the activities of the companies in which the funds they manage have positions.  Third party research can be a helpful source of information and analysis, but we view carrying out our own research on such companies as being of significantly greater value.  Our team also enjoys regular engagement with executives and other members of the management of these companies.  During these meetings, the investment team extends its knowledge and understanding of the overall strategy that the companies are executing.

The team also familiarises itself with the governance structure through which the company is managed and controlled and assesses its effectiveness in addressing key issues. This engagement enables the team to form a view of the company’s ability to manage the various risk factors to which it is exposed. We fully recognise that a management team is appointed by a company’s shareholders to manage that company’s business.  Our activities in relation to governance and stewardship are consequently focused on the issues that we consider are the most significant to generating shareholder value – typically these could include corporate strategy, board issues (such as its leadership, composition and incentivisation), financing, corporate actions such as major acquisitions or disposals, management of risks and overall corporate performance.

Potential problems and issues identified through fundamental analysis are, where appropriate, communicated to appropriate members of the investee company’s management or board.  However, in seeking to act in the best interests of its clients, Hengistbury may consider it better to reduce or eliminate an investment rather than engage in such dialogue.  Hengistbury does not normally wish to be made an insider and pre-communicates to investee companies that it does not wish to be exposed to price sensitive information which is not yet held in the public domain.  If Hengistbury becomes an insider, either intentionally or unintentionally, trading in the security will be restricted and a record of the circumstances maintained by Hengistbury’s compliance department.

c) How the firm conducts dialogue with investee companies

As noted above, analysts monitor investee companies through the review of publicly available information or third-party research as well as meeting senior management of companies.
As part of the research process, Hengistbury may look to hold meetings with management to express concerns it may have about the running of an investee company.  Hengistbury may consider, on a case by case basis, whether to intervene jointly with other institutions but will only do so where this is considered appropriate and in the best interest of its clients.  It may also be appropriate for us to raise concerns with a company’s advisers and/or corporate brokers. Hengistbury is unlikely to make public statements, submit resolutions or requisition an EGM.  If escalation is required then Hengistbury believes this is best achieved in a confidential manner.

d) How the firm exercises voting rights and other rights attached to shares

Hengistbury’s proxy voting procedures and record keeping are overseen by Hengistbury Operations who will refer, where appropriate, to the portfolio manager for voting decisions. 
Hengistbury’s proxy voting policies and procedures are designed to ensure that it votes proxies in the best interests of its clients.  It is not the Firm’s policy to automatically support the Board of investee companies particularly where having entered into dialogue with a company an issue has not been satisfactorily resolved and it is felt not to be in the best interests of its clients.  A record of all voting instructions is maintained whether in person or via proxy.  We do not publicly disclose voting records due to client confidentiality reasons.

e) How the firm cooperates with other shareholders, and communicates with relevant stakeholders of the investee companies

Hengistbury has no objection in principle to collective action by investors and will consider any specific action on a case by case basis.  However, in normal circumstances, Hengistbury will tend to act on its own when engaging with or expressing concerns to investee companies.
As a matter of policy, Hengistbury will not agree to vote in concert with another investor unless pre-approved by the Chief Compliance Officer.
Subject to underlying client confidentiality and investment strategy reasons, where requested (or as required by law), Hengistbury may disclose to a client or a client’s fiduciaries the manner in which voting was exercised on behalf of a client, however, it may not be appropriate to disclose voting actions at a detailed level.

f) How the firm manages actual and potential conflicts of interests in relation to the firm’s engagement

Hengistbury maintains a robust policy on managing conflicts of interest in relation to stewardship which is designed to ensure its decisions are taken wholly in the interest of its clients.  All personnel are requested to notify the Chief Compliance Officer (“CCO”) if they become aware of any material conflict of interest arising, including in relation to proxies on behalf of clients. Voting instructions will be subject to assessment and approval by the CCO in such circumstances.   A summary of Hengistbury’s Conflicts of Interest Policy is available to clients on request from the Chief Compliance Officer.

 

For further information on any of the above please contact:
Jonathan Sharp (jsharp@hengistburypartners.com).
Hengistbury Investment Partners LLP
May 2023

Hengistbury Investment Partners LLP

“Hengistbury”, “we”, “us” and “our” means Hengistbury Investment Partners LLP (the “Investment Manager”) and we are committed to respecting your privacy.
We are registered in the UK and our registered address is at First Floor, 34 Brook Street, London W1K 5DN and our Partnership Number is: OC365747.

About this privacy notice
For the purposes of data protection law, we are a data controller in respect of your personal data. Hengistbury is responsible for ensuring that it uses your personal data in compliance with data protection law.
This privacy notice applies to you if you are providing or have provided Hengistbury personnel with any personal data in support of an investment (or potential investment) in a Fund managed by us. The privacy notice sets out the basis on which any personal data about you that you provide to us, that we create, or that we obtain about you from other sources, will be processed by us. Please take the time to read and understand this privacy notice.

Personal data that we collect about you
We will collect and process the following personal data about you:

• Information that you provide to us or one of our affiliates. This includes information about you that you give us by filling in forms or by communicating with us, whether face-to-face, by phone, e-mail or otherwise. This information may include: your name and address (including proofs of name and address), contact details, date of birth, gender, nationality, photograph, signature, occupational history, job title, income, assets, other financial information, bank details, investment history, tax residency and tax identification information.
• Information we collect or generate about you. This includes: Information relating to your (or an applicant’s) potential investment in the Fund, emails, call recordings and messages submitted through the Administrator’s website.   We may also record and retain  such information on a Client Relationship System (CRS)
• Information we obtain from other sources. This might include information obtained for the purpose of the Fund’s know-your-client procedures (which include anti-money laundering procedures, counter-terrorist financing procedures, politically-exposed-person checks, sanctions checks, among other things), information from public websites and other public sources and information received from the applicant’s advisers or from intermediaries.

Uses of your personal data
Your personal data may be stored and processed by usin the following ways and for the following purposes:

• Assessing your suitability and determining whether you would meet the FCA’s criteria that would enable us to accept and process your application for shares in the Fund and other share dealings, including performing know-your-client procedures, issuing and redeeming shares, receiving payments from and making payments to the applicant, calculating net asset value, and overseeing these processes.
• General business administration, including communicating with future, existing and former investors, communicating with service providers and counterparties, accountancy and audit services, risk monitoring, the administration of IT systems and monitoring and improving products.
• Compliance with legal and regulatory obligations and industry standards, including know-your-client procedures, the automatic exchange of tax information and legal judgments.
• In respect of information shared with Hengistbury and its affiliates, in their business activities relating to the Fund, such as investor relations, discussions with the Fund’s service providers and counterparties, decision-making in relation to the Fund, and business strategy, development and marketing.

We are entitled to use your personal data in these ways because:

• we have legal and regulatory obligations that we have to discharge;
• we may need to in order to establish, exercise or defend our legal rights or for the purpose of legal proceedings; or
• the use of your personal data as described is necessary for our legitimate business interests (or the legitimate interests of one or more of our affiliates), such as:

(i) carrying out the ordinary or reasonable business activities of the Fund, the Investment Manager, the Fund’s administrator or other persons, or other activities previously disclosed to the Fund’s investors or referred to in this privacy notice;
(ii) ensuring compliance with all legal and regulatory obligations and industry standards, and preventing fraud;
(iii) establishing, exercising or defending legal rights or for other purposes relating to legal proceedings; and
(iv) ensuring the security of information systems.

Disclosure of your information to third parties
We may from time to time, in accordance with the purposes described above, disclose your personal data to other parties, including (a) to a fund managed by us (b) professional advisers such as law firms, fund administrators, accountancy firms and their affiliates, (c) other service providers providing services to us or a fund managed by us, including technology service providers, (d) counterparties and (e) courts and regulatory, tax and governmental authorities. Some of these persons will process your personal data in accordance with our or a fund’s instructions and others will themselves be responsible for their use of your personal data. These persons may be permitted to further disclose the personal data to other parties.
We may also share your personal data outside of Hengistbury Investment Partners LLP and our affiliates:

• if we sell any of our business or assets, in which case we may disclose your personal data to the prospective buyer for due diligence purposes;
• if we are acquired by a third party, in which case personal data held by us about you will be disclosed to the third party buyer;
• to third party agents or contractors (for example, the providers of our electronic data storage services) for the purposes of providing services to us. These third parties will be subject to confidentiality requirements and they will only use your personal data as described in this privacy notice; and
• to the extent required by law, for example if we are under a duty to disclose your personal data in order to comply with any legal obligation, establish, exercise or defend our legal rights.

Transfers of personal data outside the European Economic Area
The personal data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may also be processed by staff operating outside of the EEA who work for our affiliates or for one of our suppliers.

Where we transfer your personal data outside the EEA, we will ensure that it is protected in a manner that is consistent with how your personal data will be protected by us in the EEA. This can be done in a number of ways, for instance:

• the country that we send the data to might be approved by the European Commission;
• the recipient might have signed up to a contract based on “model contractual clauses” approved by the European Commission, obliging them to protect your personal data; or
• where the recipient is located in the US, it might be a certified member of the EU-US Privacy Shield scheme.

In other circumstances the law may permit us to otherwise transfer your personal data outside the EEA. In all cases, however, we will ensure that any transfer of your personal data is compliant with data protection law.
You can obtain more details of the protection given to your personal data when it is transferred outside the EEA (including a copy of the standard data protection clauses which we have entered into with recipients of your personal data) by contacting us in accordance with the “Contacting us” section below.

Retention of personal data
How long we hold your personal data for will vary. The retention period will be determined by various criteria including:

• the purpose for which we are using it – we will need to keep the data for as long as is necessary for that purpose; and
• legal obligations – laws or regulation may set a minimum period for which we have to keep your personal data.

Your rights
You have a number of legal rights in relation to the personal data that we hold about you. These rights include:

• the right to obtain information regarding the processing of your personal data and access to the personal data which we hold about you;
• the right to withdraw your consent to our processing of your personal data at any time. Please note, however, that we may still be entitled to process your personal data if we have another legitimate reason (other than consent) for doing so;
• in some circumstances, the right to receive some personal data in a structured, commonly used and machine-readable format and/or request that we transmit those data to a third party where this is technically feasible. Please note that this right only applies to personal data which you have provided to us;
• the right to request that we rectify your personal data if it is inaccurate or incomplete;
• the right to request that we erase your personal data in certain circumstances. Please note that there may be circumstances where you ask us to erase your personal data but we are legally entitled to retain it;
• the right to object to, and the right to request that we restrict our processing of your personal data in certain circumstances. Again, there may be circumstances where you object to, or ask us to restrict, our processing of your personal data but we are legally entitled to continue processing your personal data and / or to refuse that request; and
• the right to lodge a complaint with the data protection regulator (details of which are provided below) if you think that any of your rights have been infringed by us.

You can exercise your rights by contacting us using the details set out in the “Contacting us” section below. You can find out more information about your rights by contacting the Information Commissioner’s Office, or by searching their website at https://ico.org.uk/ .

Contacting us
If you would like further information on the collection, use, disclosure, transfer or processing of your personal data or the exercise of any of the rights listed above, please address questions, comments and requests to Tyne Cameron (tcameron@hengistburypartners.com).

May 2023

The Modern Slavery Act 2015 came into force on 29 October 2015 and requires businesses in scope to produce an annual statement setting out the steps they have taken to ensure that there is no modern slavery in their own business or in any of their supply chains. Modern slavery includes slavery, servitude and forced or compulsory labour and human trafficking.

Hengistbury Investment Partners LLP (“Hengistbury”) is a UK-based limited liability partnership whose sole business activity is investment management.

Hengistbury has given careful consideration to Section 54 (Transparency in Supply Chains) of the Modern Slavery Act 2015. Hengistbury sources its services almost entirely from the UK and other low-risk countries such as Ireland and the United States of America where modern slavery is not prevalent.   Its review has concluded that the services it provides are very unlikely to be affected by slavery, as are the supply chains of those it uses for the purchase of services.  Accordingly, it has been deemed unnecessary for Hengistbury to take any further action in respect of this legislation at this time.

Hengistbury does not condone any activity which constitutes a criminal and/or civil offence.

The effectiveness of the steps taken by Hengistbury to ensure that slavery and human trafficking is not taking place in its business or supply chain will be kept under periodic review.

This statement is also in respect of managing member, Hengistbury Service Company Limited.

The partners of Hengistbury Investment Partners LLP approved this statement on 21st December 2022 in respect of financial year end 30th November 2022.

Jonathan Sharp
Designated Member, Hengistbury Investment Partners LLP