UK Stewardship Code Disclosure
Under COBS 2.2 of the FCA Handbook, we are required to make a public disclosure in relation to the nature of our commitment to the above Code, which was published by the Financial Reporting Council (''FRC'') in July 2010.
The Code aims to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities. It sets out good practice on engagement with investee companies and is to be applied by firms on a "comply or explain" basis. The FRC recognizes that not all parts of the Code will be relevant to all institutional investors and that smaller institutions may judge some of the principles and guidance to be disproportionate. It is of course legitimate for some asset managers not to engage with companies, depending on their investment strategy, and in such cases firms are required to explain why it is not appropriate to comply with a particular principle.
The seven principles of the Code are that institutional investors should:
- Publicly disclose their policy on how they will discharge their stewardship responsibilities;
- Have and publicly disclose a robust policy on managing conflicts of interest in relation to stewardship;
- Monitor their investee companies;
- Establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value;
- Be willing to act collectively with other investors where appropriate;
- Have a clear policy on voting and disclosure of voting activity; and
- Report periodically on their stewardship and voting activities.
Prisma Capital Management International LLP does not currently comply with the Code for the following reasons:
- Prisma Capital Partners LP ('KKR Prisma'), our US affiliate, manages all client investments through a sub-advisory agreement;
- KKR Prisma is a hedge fund-of-funds manager that makes and monitors investments in hedge fund managers. KKR Prisma does not make direct investments in companies listed in the UK; and
- As the managing of investments is carried out by KKR Prisma as sub-advisor, we therefore do not engage in stewardship practices. KKR Prisma is or may be responsible for such activities.
KKR Credit Advisors (UK) LLP (“KCA UK”) does not currently comply with the Code for the following reasons:
- KCA UK invests directly in fixed income securities and fixed income derivatives which do not typically have equity interests or voting rights attached; and
- KCA UK has outsourced all proxy voting activity to ISS Governance Services (“ISS”); the voting agent for all KKR Credit client investments globally and
- KCA UK monitors the activities of ISS as required, therefore we do not engage in any stewardship practices.
Should any of the above factors change, we will review our commitment to the Code at that time and make appropriate disclosure.
For further details on any of the above information, please contact Mark Howard (+ 44 20 7839 9800).
Prisma Capital Management International LLP
KKR Credit Advisors (UK) LLP
5 November 2015