SFDR Article 10 disclosure

Disclosure relating to Ashmore Avenida LatAm Energy Efficient Affordable Housing Fund III

Sustainable investment objective of Ashmore Avenida LatAm Energy Efficient Affordable Housing Fund III, Special Limited Partnership (the “Fund”)

The Fund seeks to maximise its positive impacts in the environment and the communities where it invests and achieve superior returns through investments in real estate-related assets in Colombia, Peru or other countries. The Fund seeks to achieve attractive risk-adjusted returns from both cash flows and capital appreciation through the acquisition of equity, debt and quasi-equity interests including but not limited to shares, debt (secured and unsecured, including loans and loan participations), subordinated debt, convertible securities, participation units in trusts, fiduciary rights and depository receipts.

The Fund seeks to invest in the development of sustainable affordable housing and complementary social infrastructure assets in the health and education sector, in urban infill locations close to employment and educational hubs and transportation nexuses in main cities primarily in Colombia and Peru. The projects invested in by the Fund will in particular aim to target underserved, disadvantaged and vulnerable populations as final users, including female heads of household and construction workers. By focusing on investing in affordable, high quality and conveniently located housing solutions for low and low-middle income households, the Fund aims to contribute to the reversal of the poverty cycle and the sustainable redevelopment of urban centres. Subject to the Fund’s investment restrictions, a significant majority of commitments to the Fund will be invested in the development of low-income housing projects defined, in the case of Colombia, as VIP, VIS and urban renovation VIS or their equivalent in other markets. These are the affordable housing categories established in Colombia that based on law 1655/2019 are classified according to the housing unit price cap which is measured in monthly minimum wages. In the case of VIP units, the price cap is up to 90 monthly minimum wages, for VIS units is up to 150 monthly minimum wages and in the case of urban renovation VIS up to 175 monthly minimum wages. The remaining portion of the commitments to the Fund will be invested in complementary social infrastructure assets in the education and healthcare sectors.

Information on methodologies to assess, measure and monitor the Fund’s impact

In addition to the overarching Ashmore Group PLC’s ESG policy and related framework, the Fund also has three frameworks which it will use to assess and measure the impact of its investments. These are the: (i) Climate Change Integration Framework, which is based around the EDGE certification system as further described in the private placement memorandum of the Fund (the “PPM”) which aims to help reduce the CO2 emissions associated with construction sector activities and lead to use-phase savings in energy and water consumption; (ii) Residential Impact Strategy, which assesses and scores potential investments based on six factors (including commute times, accessible services, potential to run social improvement programs, proximity to traditional neighbourhoods, the local environment and house purchase price); and (iii) Developmental Impact Framework, which sets out the key considerations for the Fund’s investment strategy.

To evaluate the developmental impact of investments, the Fund has an impact management system based on nine of the Sustainable Development Goals and 34 of the underlying KPIs as further described in the PPM. This aligns with the ongoing monitoring of the sustainability performance of the investments, which will include the monthly tracking and quarterly reporting of data on water and energy, waste and recycling and workers and occupational health and safety. To the extent any irregularities are identified in the data, the Fund through its manager and the investment advisor appointed by the manager will engage with the development partner to understand the cause of the issue and where necessary will request supporting documents and evidence of any measures implemented to rectify the issue.

The Fund collates data in relation to its investments through a mixture of direct engagement with development partners and those involved in the construction of the underlying assets and publicly available information, including national databases.

Further product-related information is set out in the Impact Framework, Developmental Impact Framework, Residential Impact Strategy and Climate Change Integration Framework as described in the PPM, which are available on request by prospective investors.

Investment Strategy

The Fund’s manager believes that superior risk-adjusted returns can be achieved when return, risk, and impact are considered as part of investment decisions.

The Fund is looking to raise capital commitments to achieve primary controlling stakes in in real estate-related assets in Colombia and selectively in Peru or other countries, via one or more local investment vehicles.

To maximise its impact, the Fund will focus on four impact themes: (i) affordable housing with a focus on women heads of household; (ii) environmental sustainability; (iii) urban quality of life; and (iv) social mobility for workers. To track the Fund’s contribution to those four impact areas, the Fund will invest on the basis of a data-based methodology as disclosed in the PPM, refined after the experiences of the Fund’s predecessor funds. The Fund will also adopt key performance indicators in line with the Sustainable Development Goals as described in the PPM.

The Fund will focus in addition to the above, on main cities in Colombia and Peru (such as Bogota, Medellin, and Lima), while exploring opportunities in other countries. In these target cities there is typically a growing housing deficit, particularly in low and low-middle income segments. This is in part because these cities tend to have the strongest concentration of employment and financial centres in their respective countries, which makes land scarce and expensive and so affordable housing is commonly only developed on the periphery of such cities where the land is cheaper. This has the effect of increasing average commute times, which has an adverse impact on the environment and on the quality of life of people living in these areas.

In relation to environmental sustainability, the Fund will aim to certify 100% of its investments according to the Excellence in Design for Greater Efficiencies (“EDGE”) certification standard. EDGE, designed by the International Finance Corporation, is intended to achieve cost effective reductions in energy, water consumption and embodied energy in materials for different building types. The Fund will also endeavour where possible to certify its investments to the enhanced EDGE Advanced or EDGE Net Zero certifications.

In terms of urban quality of life, factors considered as part of the Fund’s investment process will include the quality of the overall environment to ensure that investments are located in areas with suitable living environments or that the projects will improve through their urbanism the surrounding environment. Investments should also provide common areas targeting the specific needs of the intended residents and provide leisure alternatives for the community, including free services such as gyms, playrooms for children and BBQ facilities.

As regards social mobility for workers, the Fund will look to invest in real estate-related assets where the common areas can be used as productive spaces and catalysers of economic activity for the community. This will be achieved by ensuring that relevant investments are designed such that the common areas of such investments allow residents to use them to obtain additional income, such as workshop trade spaces, meeting rooms for capacity building programs, and co-working areas. The Fund will also look to partner with third-party public, private and civil society organisations through its investments to create collaborative programs to reach disadvantaged populations and help them to access both government subsidies and financing from local banks to acquire an affordable home.

The Fund will also have representatives who are part of management committees as further described in the PPM to oversee projects during development and will have voting rights to influence decision-making. The development partner is also required to report to the Fund on the project’s finances and provide periodic management reports. In relation to each project there is also independent third-party oversight to hold parties to account, increase transparency and protect investors (the Fiduciaria Inmobiliaria) and the Fund has a party removal mechanism. There is also a conflict resolution mechanism established by the Investment Framework Agreement, which gives minority groups the ability to raise concerns and vote in decisions in relation to projects. Due diligence is performed on new development partners as part of pre-investment analysis and such analysis is renewed every five years.

Asset allocation and minimum share of sustainable investments

The Fund is expected to consist of investments ranging from US$5 million to US$15 million and produce co-investment opportunities for investors. A maximum of 15% of total commitments to the Fund can be made in any single investment (or up to 20% with LPAC consent).

The Fund intends to invest the following percentages of commitments in investments located in the following countries: (i) up to 100% in Colombia; (ii) up to 30% in Peru and other countries in the Latin America region (excluding Colombia); and (iii) up to 20% in countries outside Colombia and Peru. There are no strict geographic restrictions on where it may invest within each country although investments will be made in line with the Fund’s investment strategy set out above. The Fund also intends to invest up to 30% of total commitments in social infrastructure investments.

The Fund has sustainable investment as its objective within the meaning of Article 9 of EU Regulation (2019/2088).

The Fund expects that all of its investments will be sustainable investments within the meaning of EU Regulation (2019/2088). Given the nature of the Fund, it does not anticipate that it will need to make any investments for liquidity or hedging purposes.

No reference benchmark

The Fund is actively managed and accordingly does not have a designated reference benchmark within the meaning of EU Regulation (2019/2088).