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Investment Strategy

Investment Strategy

Lion Capital’s investment strategy targets the maximizing of portfolio performance, thus increasing the value of the managed assets and the investment income.

Lion Capital’s objective is the efficient management of a diversified portfolio comprised of high-quality assets, capable of providing a steady flow of revenues, preservation and medium-term capital growth, in order to increase the value for shareholders and obtain as high yields for the capital invested.

The strategic allocations by asset classes and within each class are based on assessments of the individual attractiveness of investment opportunities, under the existing conditions on the macroeconomic and market environment.

Investments are performed over a specified period of time, complying to the regulated prudential terms, under appropriate risk monitoring and control, to ensure a steady balance of risk and expected return. The investment decision-making process is formalized through internal procedures and the levels of competence approved by the company’s Board of Directors.

Lion Capital has under management a complex portfolio, consisting of the following main categories of financial instruments: shares, bonds and fund units. The company applies an exit strategy tailored to the specificity of each investment, defined on the basis of:
• the applied strategy;
• investment objectives;
• the conditions (that trigger) of the exit transaction.

The differentiated approach addressed by the Company for each of its shareholding aims at capitalizing on an aggregate return, generated by dividend gain and capital gain.

The execution of the various exit strategies is adapted and correlated with a series of internal and external factors, such as:
– general economic prospects;
– bull or bear evolution of the Bucharest Stock Exchange;
– the liquidity of the listed securities and the daily trading volumes;
– the regionality of small businesses;
– access (interest) barriers, depending on the ownership structure;
– Lion Capital’s need of liquidity.

Lines of action in portfolio management

• creating a varied portfolio comprised of assets capable of achieving the targeted returns at the level of risk assumed;

• increasing the quality of the portfolio, as a basis for its value growth and its capacity of constant income generation;

• management and development of the portfolio so as to adapt to the overall risk profile;

• developing the specific areas of expertise that form the basis of our operations;

• improving corporate governance practices.

The principle of sustainability risk management in the investment decision-making process

In the investment decision-making process, Lion Capital analyses the sustainability risk of issuers regarding the criteria applied to determine whether an economic activity qualifies as sustainable and contributes substantially to one or more of the sustainability objectives.

The integration of assessment and management of sustainability risk is part of both the pre-investment verification process and the investment monitoring process and is in constant connection with the Fund’s investment strategy and objectives in terms of portfolio allocation.

The manifestation or materialization of a sustainability risk factor in a way that is not anticipated may have a negative impact on the value of an investment and therefore on the total value of the asset under management with a negative impact on the market price of LION shares traded on BVB.

Lion Capital’s remuneration policy promotes effective and sound risk management, without the remuneration structure encouraging excessive risk-taking in relation to sustainability risks, being correlated with risk-adjusted performance.