1. Overview

Freeport Financial Partners (“Freeport” or “Firm”) provides investment advisory services to certain funds and separately managed account vehicles (each a “Client” and collectively, the “Clients”). The Clients will primarily invest in floating-rate senior secured loans issued to lower middle-market borrowers (“Borrowers”) backed by private equity firms (“PE Partners”).

Freeport believes that the integration of environmental, social and governance (“ESG”) considerations into the investment process is in line with the Firm’s fiduciary responsibility and investment objectives. Freeport strives to manage material ESG risks and opportunities (collectively, “ESG Factors”) through the application of the Firm’s internal investment process and collaboratively with its PE Partners.

Freeport is a subsidiary of Moelis Asset Management (“MAM”), an asset management holding company that supports a broad array of asset managers across a variety of strategies. This ESG Policy is informed by the tenets outlined in MAM’s ESG philosophy.

  1. Purpose

For purposes of this policy, Freeport has adopted the Sustainability Accounting Standards Board’s definition of materiality, which includes “[ESG] issues that are reasonably likely to impact the financial condition, operating performance, or risk profile of a company.

This ESG Policy (“Policy”) outlines the Firm’s approach to integrating the evaluation of ESG Factors into the investment process. As a signatory of the United Nations-backed Principles for Responsible Investment (“PRI”), The Firm recognizes the importance of the PRI in shaping ESG practices and defining ESG principles for financial services participants. As such, this Policy has been drafted to align with the six principles and ensure the Firm’s approach to ESG integration is compliant with its status as a PRI signatory.

  1. Scope

This Policy is intended to apply across Freeport’s investment process, from initial screening through exit/maturation/loan satisfaction. Freeport will attempt to enact the provisions of this Policy where reasonable and practicable. However, the Firm may be limited by the non-controlling interests Freeport has in its Borrowers, the ongoing level of information provided by PE Partners and Borrowers, independence of the financing facility, and the level of engagement with Borrowers, among other factors.

Additionally, as a fiduciary, Freeport is legally bound to act in the best interest of its Clients. Therefore, in no case shall this Policy supersede or otherwise require action on the part of the Firm that is inconsistent with this duty or the contractual agreements between Freeport and its stakeholders, which include; (i) the Clients; (ii) investors in the Clients; (iii) PE Partners; (iv) Borrowers; or (v) other relevant parties.

  1. ESG Management

It is the responsibility of the Co-ESG Officers and Freeport’s investment committee (“Investment Committee”) to provide oversight of this Policy. Freeport’s investment team is generally responsible for the implementation of the ESG integration process, with support on various reporting and documentation items provided by the Firm’s compliance and investor relations teams.

The Firm’s Chief Compliance Officer (“CCO”) or the CCO’s delegate will ensure training on this ESG policy, and ESG matters more generally, is conducted on an annual basis. The CCO or the CCO’s delegate will also ensure that each new employee on the investment, investor relations, and compliance team is provided with a copy of this Policy upon hire and updated with any material update to the Policy thereafter.

  1. ESG Integration

Freeport seeks to integrate the evaluation of ESG Factors throughout the Firm’s investment process, subject to the limitations outlined in the Policy.

Pre-Investment Activities:

PE Partners:

As part of the diligence process, Freeport will request and review a PE Partner’s ESG Policy, or other relevant documents related to the partner’s ESG efforts. Freeport’s underwriting team and Investment Committee each review a PE Partner’s ESG practices, including identifying PE Partners that do not have a formalized approach.

When possible, Freeport will engage with PE Partners to ensure that adequate ESG governance and control mechanisms are in place at the general partner and portfolio company levels, or to discuss a PE Partner’s timeline for adopting ESG practices.

Deal Screening:

Freeport seeks investments with companies that operate in stable industries and are not generally expected to be susceptible to reputational and headline risk. During the deal screening phase, investment professionals review for the potential characteristics that may indicate reputational or headline risk. In the event such risk is identified, it will be reported to the Investment Committee to determine the investment approach.

Initial Due Diligence:

Freeport conducts initial due diligence on each potential investment to identify potential material risks. The investment team utilizes Freeport’s ESG questionnaire (“ESG Questionnaire”) during initial diligence to identify potential material ESG risks.

Freeport typically engages third parties to aid in the production and analysis of specific diligence items such as i) legal diligence, including litigation, contractual and corporate governance matters; ii) background checks; iii) market analysis; and, as necessary, iv) various other consultants for review of such items as regulatory and environmental compliance.

Investment Decisions:

Freeport’s Investment Committee reviews a detailed, internally drafted report of recommendations with respect to each of its potential investments. This report incorporates, among other items, recommendations related to any identified ESG Factors. The Investment Committee must achieve unanimous agreement among its members to proceed with an investment.

Documentation: Each completed ESG Questionnaire will be maintained by the relevant investment team member. Any ESG Factors identified during due diligence will be communicated to the Investment Committee as part of the investment recommendations for any prospective investment.

Investment Management:

Monitoring and Engagement:

Freeport does not typically hold a board seat at or have an ownership interest in a Borrower. Freeport does however typically meet with the management teams of its Borrowers several times a year. During these meetings, investment professionals may engage on various topics, including a Borrower’s ESG practices, ESG Factors identified during due diligence, or other ESG-related priorities.

Throughout the holding period, Freeport will request the completion of an annual ESG Questionnaire from each Borrower.

In the event an ESG Factor is identified through engagement with a Borrower, the ESG Questionnaire or any other means, Freeport’s Investment Committee will review the risk to determine the appropriate course of action. For example, Freeport may choose to escalate the frequency of its engagement with management, and in extreme cases, Freeport may deem a risk to be outsized relative to Freeport’s risk tolerance. In such instances, Freeport will seek to exit the investment at the earliest opportunity.

Documentation: Changes to, or newly identified ESG Factors related to a Borrower will be properly documented, including any action Freeport undertakes as part of the ESG Questionnaire, Investment Committee Memo, or other relevant documents.

Reporting

Freeport will respond to investors’ requests for ESG information on a case-by-case basis. At the Firm’s discretion, Freeport may include ESG-related information in periodic reports to limited partners.

In the event a material ESG incident arises at a Borrower, Freeport will disclose such incident as required by the Limited Partnership Agreement or other governing documents for the respective Client.

  1. Firm Alignment with ESG Practices

Freeport is committed to conducting itself in line with this ESG Policy. Each employee is guided by the Firm’s Employee Handbook, Code of Ethics and Compliance Manual, which, collectively, set forth the Firm’s required standards for behavior. Additionally, the MAM Code of Ethics applies to certain Freeport associated persons. These policies emphasize the Firm’s commitment to observing all applicable laws, outline basic standards of legal and ethical behavior, and provide a reporting mechanism for legal and ethical violations.

The Firm is especially mindful of climate-related risks and opportunities, and their effect on our investment process and Firm practices. Freeport is committed to an ongoing review of our approach to climate, and further formalizing our approach to addressing climate risk over the short and long term.

  1. Conclusion

Freeport’s Co-ESG Officers, Management Committee and/or delegate will conduct a review of the Firm’s ESG policy on at least an annual basis. This Policy may be supplemented or revised based on these