disaster resilient sustainable Infra Technical Due Diligence

APKA Infrastructure Investor Responsible Investment Due Diligence Questionnaire DDQ has been developed to help project promoters understand and evaluate infrastructure investment investor's approaches to integrating material environmental, social and governance (ESG) factors into their investment practices,  and to understand where responsibility for doing so lies within the investment Project Management Office PMO of the borrower's organization. APKA additional aim is to encourage a globally consistent approach to due diligence and ESG disclosure by infrastructure managers. DDQ is divided into four sections, covering promoters’ project: 

1. General approach towards responsible investment; 
2. Responsible investment processes before investing;  
3. Post-investment responsible investment processes; 
4. Disclosure practices with regards to their responsible investment processes. 

All investors have different philosophies, drivers and liabilities  which shape their decision-making processes. Infrastructure  funds, sectors and assets also vary greatly. Convergence between infrastructure investors and promoters on ESG management and disclosure is therefore best achieved through  validation and verification of compliance parameters. APKA DDQ provides a baseline list of questions that investors can ask promoters in the investment due diligence or pre-commitment phase to suit their broader objectives and their  strategy, size, experience and resources. APKA DDQ streamlines industry practices and curbs the proliferation of abnormally diverse approaches which could ultimately become counterproductive for both investors and the investee. 

APKA DDQ is an important part of an investor’s due diligence when looking to allocate capital to a promoter's project enabling investors to make the most informed funding decision possible.

1. Consider what additional compliance elements and industry-specific resources are available to enhance their understanding  and analysis of the infrastructure project;
2. Engage with promoters to seek additional information and clarification, where necessary, and to lay the foundations for investing via both unlisted infrastructure equity and debt vehicles;
3. Evaluate Non Asset specific clauses;
4. Defining medium and long-term risk models.

1. Provision a policy that describes your approach to identifying and managing ESG factors within the investment and portfolio management processes
2. Plan to map, manage and mitigate ESG factors 
3. Commitment to international standards, industry (association) guidelines, reporting frameworks or initiatives that promote responsible investment  practices 
4. Formal commitments relating to ESG integration and ESG restrictions in fund formation  contracts, limited partnership agreements or in side letters when requested by investors. 

1.  Identify and manage material related risk and use ESG factors to create value
2. Define the materiality of ESG factors
3. Describe your process for identifying and understanding, and provide an example from your most recent experience of: (i) potentially material ESG risks, including long-term risks, (ii) ESG-related  opportunities, (iii) the time frame in which these  come to play during due diligence.
4. Once identified, how might the identification of: (i)  potentially material ESG risks, (ii) ESG-related  opportunities impact the investment decision, for  example by validating the decision, reducing the amount invested or declining the investment? Please give an example from your most recent investments. 
5. How are ESG risks and/or related opportunities  reported to, considered and documented by the  ultimate decision making body, such as the Investment Committee?  
6. Describe your approach to (and process for) understanding and managing ESG risks and  opportunities at the portfolio level (e.g. carbon footprint of the portfolio, exposure of assets to  extreme weather events due to climate change, etc.).
7. How do you leverage ESG-related insights and best  practices between assets within a portfolio?
8. During deal structuring, what is your approach to (and process for) integrating ESG-related considerations  into transaction documentation and/or the post-investment action plan?
9. Please describe how: (i) oversight responsibilities,(ii) implementation responsibilities for ESG integration  are structured within your organization. Please list the persons involved and describe their role, position  within the organization and how they are qualified for  this role. Please also describe any external resources you may use.
10. Do you provide training, assistance and/or external resources to your staff to help them understand and identify the relevance and importance of ESG factors in investment activities? If so, pls explain.

1. Market Studies & Contracts
2. Long Term Labor Costs
3. Long Term Power/Fuel Costs
4. Forward Cover
5. Available Indemnities
6. Lateral Support
7. Principal Economic Assumptions
8. Cash Flow and Annual Production recasts/Actual
9. Taxes, Royalties and Other Interests
10. Sensitivity Analysis
11. Value at Risk
12. Cash at Risk
13. Comparable Companies Multiple Method
14. Comparable Transaction Multiple Method
15. Porter's Five Forces Analytics

1. Submit Regulatory Corporate profile of the Firm
2. Required Regulatory Compliances
3. Detailed Utilization of Fund Statement
4. Favorable Funding Terms
5. Basis for Operating Cost Estimates.
6. Does the Firm have any existing business lines that are unrelated to the project?
7. Has the Firm or any affiliated entity ever failed to make payments under any secured or  unsecured indebtedness?
8. Has the Firm or any affiliated entity ever filed for bankruptcy?
9. Has any of the Firm’s current or former Team Members ever filed for bankruptcy?
10. Will the Firm or any of its Principals conduct outside business  or investment management activities during the investment period of the Fund?
11. Will the Firm or any of its Principals conduct outside activities (non-profit, academic, etc.) that are expected to take-up a significant (approx. ≥ 20%) amount of time during the  investment period of the Fund?
12. Is the Firm a publicly-held company?
13. Will the Firm allow co-investments from multiple investors?
14. Outside of the General Directors, will non-executive directors or partners affiliated with the Firm are prohibited from investing or holding an ownership interest in any other Firm?
15. Is the Firm prohibited from holding leverage on its balance sheet? 

1.  Summarize the Firms fund seek strategy and types of transactions the Fund will pursue. Include details on  anticipated transaction sizes (including minimum/maximum), investment pace, holding periods, geographic focus, industry/sector focus, investment stage and other relevant characteristics).
2. Discuss the Firm’s ability to invest as promoter's equity.
3. Provide detail on the Firm's diversification strategy in terms of number of projects, geographical concentration and sector allocations.
4. Describe the background and evolution of the Firm’s funds allocation, including strategies that do not apply to the project.
5. Provide a timeline of this evolution, including when any additional strategic platforms were added to  the Firm’s offerings.
6. Provide examples of investments that demonstrate this evolution.
7. Discuss how the Firm’s investment requirements compares to the previously executed project.
8. Is the Firm’s fund seek strategy expected to change  in the future?
9. Describe the Firm’s competitive advantages and discuss how the Firm attempts to produce replicable returns.
10. Describe the Firm’s expected investment structures. What will be the typical equity structures used by the Firm?
11. Discuss the use of leverage at the portfolio company level and state the targeted leverage levels (%) of a typical project allocation.
12. Discuss the effectiveness of the Fund’s expected strategy if leverage is not applied. How has the  Firm’s use of leverage evolved between the Fund and prior funds? Provide examples of investments that  demonstrate this evolution.
13. Describe the Firm’s preference for being a control, minority, joint or sole project owner. Detail this preference  historically. What controls and rights does the Firm offer when executing investments? If predominately a control project owner, under what scenarios would the Firm consider a non-control position (and vice-versa)? 
14. Provide examples of investments that were in violation of their debt covenants during the course of the Firm’s  operational lifetime. Provide a brief description of the covenant breach, the lessons learned from the situation and examples of steps taken in subsequent investments to prevent the same situation from repeating itself.
15. Are there any factors that would automatically end a  potential a deal? If so, explain.
16. Discuss the risk factors of the Firm's fund seek strategy (e.g. political risk, economic, financial, technology,  business cycle, etc.) and the steps taken to mitigate these risks.
17. Discuss the Firm’s approach to working with existing or new management teams at portfolio companies. Describe (citing examples) the strategies that are used to incentivize portfolio company management teams.
18. Discuss the typical methods used by the Firm to create value for its portfolio companies (restructuring, strategic re-positioning, leveraging, operational improvements, etc.).
19. Discuss how the Firm’s strengths in creating value for  investments impact its sourcing capabilities. Provide case studies to illustrate the Firm’s value creation  capabilities.
20. What is the return-profile threshold (gross IRR, money multiples, etc.) for targeted investments? What is the  expected holding period?
21. Describe the Firm’s project implementation capabilities and the process used to identify attractive investment opportunities.
22. How is the project sourcing process staffed, conducted and documented? What criteria are used to assess an investment’s attractiveness?
23. Describe the robustness and sustainability of the Firm’s proprietary network of  contacts used to identify opportunities.
24. Discuss any organizations that the Firm will not typically source deals  from.
25. Describe the Firm’s screening and due diligence processes. How is each process staffed, conducted and  documented? How long is the due diligence process?
26. Will the deal team be in charge of the investment until retirement, or will other professionals be assigned post-funding? Include details on any due diligence checklists, internal  reports, financial models and investment committee documents prepared.
27. Describe any functions performed by third parties in the sourcing, screening and due diligence processes. Describe the Firm’s decision-making process for determining if a third party is used/not used.
28. Discuss the Firm's screening, due diligence and risk management processes prior to acquiring an investment, to protect against fraud, corruption or more general risks of a fund not gaining clear legal ownership of assets that  the fund proposes to acquire.
29. Describe how the Firm checks and determines the chain of title for all real assets,  real estate or tangible personal property-collectible assets and secures adequate information to support  management assertions under controlling accounting rules that the project has clear legal ownership of the acquired assets.
30. If applicable, provide examples of fraud, corruption or other potential asset ownership risks that the Firm previously identified in a potential project investment and explain how the Firm identified and managed those risks.
31. Provide details on the Firm’s internal decision-making and approval process, including details on the role, composition and function of the Firm’s Investment Committee. Provide examples of provisions that the Firm incorporates in contracts to protect investor's exposure.
32. Discuss the Firm’s approach to the valuation of investment opportunities and pricing discipline.
33. Discuss the Firm’s portfolio investment monitoring policy, including details about contact events (weekly,  quarterly, board meetings, etc.). What information is required to be reported by the portfolio investments? Discuss the Firm’s approach to board representation at its portfolio companies.
34. How many active portfolio companies is each management professional responsible for? In addition to active projects, how many deals in the pipeline is each management professional responsible for?
35. How were these number determined and how have they evolved over the Firm’s history? What is the Firm’s process for handling  bandwidth during periods of peak activity? 
36. Describe the Firm’s criteria for evaluating follow-on projects investments. Include a description of the Fund’s provisions  for capital recycling and follow-on reserves.
37. Discuss the Firm’s strategy/criteria/plan for retiring the investments. Include an analysis of past participations (IPO, trade sale,  financial buyer, write-offs, etc.). Provide examples that illustrate the Firm’s decision-making for choosing the type of exposure retirements.
38. Describe the Firm’s policy on IPOs. If applicable, include information about any dedicated group that monitors the  public markets in anticipation of an IPO.
39. Describe the Firm’s processes for protecting against fraud and corruption, post-investment. If applicable, discuss  any fraud and/or corruption that were detected in prior investments.
40.  Describe the Firm’s processes, if any, to monitor and verify the supply chains of the portfolio companies. If  applicable, are portfolio companies typically members of organizations such as the Fair Labor Association?
41. If applicable, provide examples of leveraging the management and/or capabilities of one investment to help  another investment.
42. Describe the hedging policy that will be employed by the Firm. Will the Firm employ an active, passive or spot policy?
43. Describe any other fund (active or liquidated) secured by the Firm that uses/used a different policy and explain the rationale for the differences.  

1. Assess adequate finance and ESG related competence at the asset or project company level?
2. Ensure that the management team for each asset devotes sufficient resources to  managing performance and ESG factors that have been identified.
3. Define data capture pivots and data projection models to monitoring performance processes 
4. If proposed to be funded via equity vehicles: Give two or three examples of how you plan to manage ESG factors and stewardship for  assets in your portfolio. 
5. If proposed to be funded via debt and/or equity vehicles: Specify initiative(s) to achieve a positive ESG outcome. Alternatively, can you provide examples of  initiatives the asset or project company was already undertaking that you identified as existing good  practice?
6. Do you measure whether your approach to ESG  factors has affected the financial and/or ESG  performance of your investments? If so, please  describe how you are able to determine these  outcomes. 
7. If proposed to be funded via equity vehicles: How do you use  your interaction with the board to influence the  management of ESG factors in each of your portfolio  assets?
8. What is your approach to incorporating ESG considerations into preparations for exposure retirement and post retirement phase? 

1. Describe the Firm's internal accounting process.
2. What accounting principles does the fund operate under?
3. Has the Firm established an internal audit function? If so, how often are internal control audits performed?
4. Has there been any  major control weaknesses identified from the audits? If so, what is the Firm doing to resolve the identified weaknesses?
5. How can investor/s monitor and, where necessary, ensure that the deployed project fund is operating consistently with agreed upon terms and conditions including the ESG related policies and practices, including disclosure of ESG related incidents?
6. Which channels do you use to communicate escalations information to investors?
7. Provide samples of ESG-related disclosures from an earlier project? If not, please indicate whether you would consider introducing ESG-related disclosures.
8. Is the management of ESG factors included on the  agenda of the Project Management Office  Advisory Committee,  annual general meeting, and/or investor annual/quarterly updates?
9. Describe your approach to disclosing and following up on material ESG incidents to your investors. 

1. Describe any past criminal or administrative proceedings or investigations against the Firm, its affiliated entities  and/or its current and former Team Members.
2. Describe any past investigations by an industry regulatory body of the Firm, its affiliated entities and/or its current  or former Team Members.
3. Describe any pending or ongoing litigation/investigation against the Firm, its affiliated entities and/or its current or  former Team Members. 
4. Describe any accusation and/or conviction of fraud or misrepresentation against any of the Firm’s current or  former Team Members. 
5. Describe the activities of the Firm’s support functions (Finance and Project Management, Human Resources, Compliance/Legal, etc.).
6. Detail the processes and procedures for internal capital movements (capital calls, transfers of cash, investment  acquisitions and distributions).
7. Provide an overview of the third-parties providing services to the Firm or Project (e.g. law firms, custodians, project administrators, prime brokers, consultants, banks, etc.).
8. How does the Firm manage counterparty risk related to  these third-party arrangements?
9. What types of insurance coverage does the Firm maintain (e.g. fidelity bond insurance, errors and omission insurance, directors and officers insurance, other)?
10. Provide a summary of any material claims made against these  policies in the last five years.
11. List and describe any software that the Firm uses for business functions like portfolio management, trade order management, administration and risk.

1.  Since the closing of the Firm’s most recent prior project, please describe the development/implementation of and/or  any significant changes to the Firm’s Diversity and Inclusion policy, Code of Conduct, and Family Leave policy.
2. Describe the development/implementation of and/or any significant changes to the Firm’s Diversity and Inclusion policy, Code of Conduct, and Family Leave policy that are expected in the next year. 
3. Describe the Firm’s process for recruiting new employees to the project team? Operations team? Administrative team? 
4. If applicable, describe the Firm’s formal mentorship program. 
5. What percentage of the Firm’s female employees were promoted in the last year? What percentage of the Firm’s minority employees were promoted in the last year?
6. What percentage of the Firm’s female employees departed in the last year? What percentage of the Firm’s  minority employees departed in the last year?
7. For investments made by the Firm during the last five years, what is the average percentage of female board members per company? Average percentage of minorities? Data should be as-of the earlier of the most recent  quarter-end or the date the investment was exited. Only include projects in which the Firm held a majority interest (either directly or through “club deals”). 
8. If any claims of sexual or general harassment, misconduct, or discrimination have been made against any of the  current and/or former Firm employees (while employed by the Firm) within the last 5 years, please provide details  for each claim, including the charges, investigative process, and outcome, including disciplinary action. Note:  Individual names should not be provided and are not being solicited for this clause of APKA DDQ.