Stone Mountain Capital Partners DDQ

STONE MOUNTAIN CAPITAL PARTNERS LLP
European Direct Lending Fund
Due Diligence Questionnaire
June 2019
Strictly Private & Confidential 1

Disclaimer
This questionnaire has been prepared by Stone Mountain Capital Partners LLP, the Arranger for the exclusive use of the party to whom
the Arranger delivers this questionnaire (the “Company”) using information provided by the Company and other, publicly available
information. The Arrangers have not independently verified the information contained herein, nor do they make any warranty, either
express or implied, as to the accuracy, completeness or reliability of the information contained in this questionnaire. This questionnaire
should not be regarded by the Company as a substitute for the exercise of its own judgment and the Company is expected to rely on its
own due diligence if it wishes to proceed further.
The valuation forecasts, estimates, opinions and projections contained herein involve elements of subjective judgment and analysis. Any
opinions expressed in this material are subject to change without notice and may differ or be contrary to opinions expressed by other
business areas or groups of the Arrangers as a result of using different assumptions and criteria. This questionnaire may contain forward-
looking statements. The Arrangers undertake no obligation to update these forward-looking statements for events or circumstances that
occur subsequent to such dates or to update or keep current any of the information contained herein. Any estimates or projections as to
events that may occur in the future (including projections of revenue, expense, net income and stock performance) are based upon the
best judgment of the Arrangers from the information provided by the Company and other publicly available information as of the date
of this questionnaire. Any statements, estimates or projections as to the Arranger’ fees or other pricing are accurate only as at the date
of this questionnaire. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from the
projections and such variations may be material.
Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. The Arranger, its affiliates,
directors, employees and/or agents expressly disclaim any and all liability relating or resulting from the use of all or any part of this
questionnaire or any of the information contained therein. Stone Mountain Capital is a limited company (LTD) registered in England &
Wales with registered number 8763463. The registered address is: 31 Compayne Gardens, London NW6 3DD, England, United
Kingdom. Stone Mountain Capital LTD is registered (FRN: 729609) as Appointed Representative with the Financial Conduct Authority
(‘FCA’) in the United Kingdom. The information on this questionnaire is only intended for "professional investors” and “market
counterparties” as defined by the FCA in the United Kingdom, including credit institutions, investment firms, authorised or regulated
financial institutions, insurance companies, collective investment schemes, pension funds, commodity dealers, government or local
authorities, or any other institutional investor. Within the European Economic Area, any investment or investment activity to which the
information in this questionnaire relates, is only available to qualified investors and will be engaged in only with qualified investors.
Specific information regarding distribution activities towards qualified investors in Switzerland as defined in the Federal Act on
Collective Investment Schemes (CISA):Stone Mountain Capital LTD is the Distributor of foreign collective investment schemes
distributed to qualified investors in Switzerland, including public entities, retirement benefits institutions and companies with
professional treasury operations, independent asset managers (subject to certain conditions), high net worth individuals (subject to certain
conditions) and investment structures such as family offices (subject to certain conditions). Certain of those foreign collective investment
schemes are represented in Switzerland by First Independent Fund Services LTD, which is authorised and regulated by the Swiss
Financial Market Supervisory Authority ('FINMA') as Swiss Representative of foreign collective investment schemes pursuant to Art
13 para 2 let. h CISA. Stone Mountain Capital LTD conducts securities related activities in the U.S. pursuant to a Securities and Exchange
Commission ('SEC') Rule 15a-6 Agreement with Crito Capital LLC, a U.S. SEC registered broker-dealer, and member of Financial
Industry Regulatory Authority ('FINRA'), Securities Investor Protection Corporation ('SIPC') and Municipal Securities Rulemaking
Board ('MRSB').
This questionnaire has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or
sell any securities or related financial instruments. The Company should not construe the contents of this questionnaire as legal, tax,
accounting or investment advice or a recommendation. The Company should consult its own counsel, tax and financial advisors as to
legal and related matters concerning any transaction described herein. This questionnaire does not purport to be all-inclusive or to contain
all of the information that the Company may require. No investment, divestment or other financial decisions or actions should be based
solely on the information in this questionnaire.
This questionnaire has been prepared on a confidential basis solely for the use and benefit of the Company provided that the Company;
and any of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided
to the Company relating to such tax treatment and tax structure. Distribution of this questionnaire to any person other than the Company
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whole or in part, without the prior written consent of the Arranger. This disclaimer should be read in connection with our company
disclaimer at: www.stonemountain-capital.com/disclaimer.

Table of Contents
Disclaimer Page 2
Table of Contents Page 3
Firm Overview Page 4
Fund Overview Page 4
Firm Ownership and General Information Page 5
Fund Information Page 6
Team Page 7
Firm Organizational Structure and Service Providers Page 9
Team Biographies Page 10
Investment Strategy and Process Page 12
Alignment of Interests Page 21
Fund Terms Page 22
Governance Page 24
Risk Management Page 25
ESG Page 28
Contact Page 30

Firm Overview
1. Legal Entity Name Stone Mountain Capital Partners LLP

2. Registered Number Not yet incorporated.
3. VAT Registration Not yet incorporated.
Stone Mountain Capital Partners LLP is to be incorporated as investment
4. Date of Incorporation manager and Limited Liability Partnership (LLP), trading name of Stone
Mountain Capital LTD.
5. Address 3, 31 Compayne Gardens
6. Postal Code NW6 3DD
7. City London
8. Country England, United Kingdom
9. Telephone Number +44 2037 228175
10. Fax +44 2037 228175
11. E-mail info@stonemountaincapitalpartners.com
Swiss Representative Office:
Etzelstrasse 49
12. Second Office CH-8808
Pfäffikon, Switzerland
Tel.: +41 79 9625818
13. Regulatory Body Not yet incorporated.
14. Main Contact Oliver Fochler - Managing Partner, CEO
15. Main Contact E-mail oliver.fochler@stonemountaincapitalpartners.com
16. Main Contact Telephone +44 7922 436360
17. Website www.stonemountain-capital.com/capital-partners
Fund Overview
1. Fund Legal Name European Direct Lending Fund (EDL)
2. Regulatory Body CSSF (Luxembourg)
3. Registration Number Not yet incorporated.
4. Structure Luxembourg AIF SCS Closed-ended
5. Fund Size Euro 500m (target)
6. Fund Term 5 years (1y +1y extensions)
7. Management Fees 1.5%
8. Carried Interest 15%
9. Carry Escrow n/a
10. Carry Catch-Up n/a
11. Hurdle Rate 6%
12. GP Commitment To be determined upon incorporation.
13. Placement Agent Stone Mountain Capital LTD
14. AIFM Carne Group Luxembourg AIFM
15. Auditor PriceWaterhouseCoopers (PWC)
16. Administrator & BNP Paribas
Custodian
17. Legal Counsel Allen & Overy Luxembourg
18. Swiss Representative First Independent Fund Services LTD
19. Target return 8%-10% net
20. Minimum Investment Euro 1,000,000

Firm Ownership and General Information
Stone Mountain Capital Partners LLP is a private limited liability partnership is to be incorporated in United
Kingdom and will be owned fully by its partners and employees. The company consists of 6 members, who have
been successfully and jointly working on credit opportunities and advisory mandates across multiple firms since
2008.
Stone Mountain Capital Partners LLP is to be incorporated as investment

manager and Limited Liability Partnership (LLP), trading name of Stone
Mountain Capital LTD. Stone Mountain Capital Partners LLP is the
1. Firm Introduction &
General Partner (GP) of European Direct Lending Fund, a closed-ended
Business Overview
Luxembourg vehicle that aims to provide private credit to lower
midmarket businesses in Northern and Western Europe in senior secured
and unitranche loans with 2-5 years’ maturity.
2. Ownership Status 100% by its partners and employees
3. Does the firm have a
succession plan in place?
Are any of the key No formal succession plan is in place. And there are no plans by any key
executives expected to executive to leave in the foreseeable future.
leave in the foreseeable
future?
4. What are the other
business activities
performed by the firm?
The Firm has no other current activities and is focussing only on EDL.
Provide list of investment
There are no prior funds to EDL.
vehicles managed by firm
including predecessors of
the fund.
5. Are there any material
changes being considered
Stone Mountain Capital LLP is not likely to be launching other strategies
(entering new business or
in the foreseeable future, and the team wants to focus on EDL.
exiting any operations,) in
the foreseeable future?
6. Provide commentary on
firm’s financials,
including liquidity and
capitalization. Are there The Firm is capitalized by its partners and there are no debt servicing
any debt servicing requirements or personal guarantees involved.
requirements? List any
Personal Guarantees
Involved.
7. Provide pro-forma budget
of the firm for the period
Available upon request.
covering the list of the
funds.
8. Is there any current
activity (e.g. a complaint
or a law suit) which could
n/a
have a financial or
reputational impact on the
firm?

Fund Information
1. What is the structure of

The fund is a Luxembourg AIF SCS closed-ended Luxembourg using a
the fund? Describe any
tax transparent Luxembourg version of traditional limited partnership.
distinctive features.
2. What is the tax structure
of the fund? Describe any Being a limited partnership, the structure is tax transparent.
distinctive features.
We have engaged Stone Mountain Capital, the firm of Oliver Fochler, as
placement agent for the fund. The fund has just launched, and we are
3. Provide a brief on
currently fundraising with target 1st close being end of 4Q18/beginning
fundraising. Timeline and
1Q19. We have secured and accepted subscription line term sheets and
closing dates
received warehousing lines offers for the fund during the summer break
2018.
4. Expected investment date
and expected date when Transactions might be completed before the closing date and part of those
fund will start applying investments might be warehoused and then rolled into the fund.
management fee.
We provide co-investment opportunities for existing LPs in our fund or
in case we have established a segregated managed account (SMA) for the
LPs. We do not allow co-investment without LP interest or an SMA. In
5. Can the fund co-invest
case co-investment is available to us due to an equity sponsored
with other funds or
transaction, we notify existing LPs of the opportunity. Currently we have
partners (whether general
2 sponsored transactions out of 27 in our pipeline and both would be co-
or limited)? If yes, please
investment eligible for our LPs. In sponsor less transactions, we do only
provide description and
act as senior secured lender or via an unitranche 1st lien lending
examples of how such co-
agreement and would notify existing LPs in case we do not cover the
investment opportunities
entire debt requirement of the borrower. Our typical range for loans is 5-
be allocated.
15m EUR and larger transactions qualify for co-investments. In our
current pipeline of 25 sponsor less transactions, 4 transactions would
qualify for co-investment.
We will typically refer the borrower under NDA to one of our LPs with
6. What are the co-
an interest in co-investment. We would charge an arrangement fee of 1-
investment commercial
2% upfront for the co-investment and no management fees for the co-
terms?
investment.
7. Explain how much in total
AUM and in annual Our target fund size is 250-500m EUR. Our current deal pipeline is ca.
deployment you believe 320m EUR in 27 transactions and we anticipate being able to deploy
your firm can comfortably 100m EUR p.a. first and then increase this to 150m EUR in the second
manage in the next 3-5 and following years. More information is available upon request.
years.
8. Detail the unit pricing
policy of the proposed To be defined upon completion of PPM.
fund
9. a) Detail the taxation
structure of the proposed
fund and the tax
To be defined upon completion of PPM.
treatment of:
• capital gains
• income
• any other applicable
taxes
b) Outline how you

achieve optimum tax
efficiency for UK investors
on non-UK assets.
10. Detail any dilution levies
applicable with the To be defined upon completion of PPM.
proposed fund.
11. Detail the dealing
cycle/process for the
proposed fund:
• how you propose
managing capital calls,
including; - Capital Calls: once the investment committee approves a transaction or
- notice procedures and shortly before, capital calls will be issued by the AIFM. The investors
timings will have around 2-3 weeks to transfer the funds. Form and execution
- form of instruction for procedures will be finalized during the fund set-up.
trades
- execution procedures - Unit / share price: this should be at the same time as the Capital Call.
and timings
• when the unit / share
price applied to the trade
will be made available to
the LP or its agent
12. Reporting Currency Euro.
Team
1. Are there any known No.

conditions (health, financial,
litigation, personal, etc.) of
any of the Firm's Principals
that might influence their
ability to execute their duties
to the Fund or Firm.
There are four key persons involved with the management of the fund:
Oliver Fochler, Alexander Rothlin, John Haam and Gregor Gruber. If at any
2. What are the firm’s time fewer than two key persons are devoting substantially all their business
provisions and policies to time to Stone Mountain Capital Partners, the General Partner must notify
manage any “Key-Person” the investors that the key person threshold has been breached. The General
event? Partner will nominate one or more replacement key persons. If it doesn’t do
so within 60 days of the notice given, its ability to make new investments
on behalf of the fund will be suspended.
3. Describe any significant staff None.
departures that are expected
to occur between now and
the end of the Fund’s
investment period.

4. Is the Firm aware of any No.
significant staff departures
(as defined above) that are
expected to occur between
now and the end of the
Fund’s investment period?
EDL’s management team combines over 75 years’ experience in European
credit markets with specialization in credit analysis, financial structuring
and portfolio management. The experience of the team extends to risk
management, distressed workouts and financial responsibilities. Oliver
Fochler as the founder and CEO of Stone Mountain Capital has client
relationship with John Haam since Pamplona and with Gregor Gruber since
his time at Allianz and joint lending transactions have been done in Oaktree.
With Alexander Rothlin, the client relationship goes back to Aurelius
Capital and covered Mainfirst Bank and Alexander joining the Stone
5. Provide an overview of the Mountain Capital team as structurer. John Haam and Gregor had a client
Firm’s Team Members, relationship via their prior banking roles. Ashvin Chotai and Alexandros
including the shared work Kyparissis, our analysts, will be focusing on deal sourcing and credit
history of the Firm’s analysis. Alexander Rothlin will be responsible for risk monitoring and
Principals. Also, provide a finance.
description of each job title,
detailing the responsibilities
held by junior, midlevel and
senior staff.
6. How does the team We communicate via e-mails, phone and communication platforms. Our
communicate internally? office is London and Switzerland based and the staff is travelling on a
Discuss the co-operation and biweekly basis to London. Gregor Gruber lives in Munich, Germany and is
communication between the travelling between Germany and UK.
Firm’s various offices. How
often do the different offices
meet in person? How often
do the different offices meet
electronically/telephonically?
7. Describe the Firm’s We are thinking of hiring potentially one more credit analyst to support the
recruitment plans and analysis of underlying credits, sourcing and monitoring. Hiring process
procedures for hiring staff. requires obtaining references from agencies and previous firms.
To what extent are
background checks involved
and how are objective
references obtained?
8. Discuss the Firm’s approach A competitive training and compensation plan.
to staff retention and
training. Discuss the Firm’s

historical experience in this
area.
We are looking to attract talent with experience in private credit markets
9. Please state what steps the
regardless gender, ethnicity and background. Currently, all of our team
firm takes to achieve
members come from different countries of origin backgrounds: United
diversity in terms of gender,
Kingdom/Germany, Germany, Korean/United States, Switzerland, Greece,
ethnicity and background.
United Kingdom/India.
10. Has there been any change No.
in the structure/ownership of
the Management team or
company in the past 5 years?
Are there expected to be any
changes to the structure
moving forward?
Firm Organizational Structure and Service Providers

Team Biographies
Gregor Gruber – co-CIO

Gregor is the Managing Partner and the Co-CIO of the European Direct Lending Fund with base in London and
Germany. With over 25 years’ experience in fixed income markets, Gregor will be focusing on direct lending in
private markets and deal sourcing and structuring. He will be also responsible for credit analysis and EDL’s
portfolio construction. As Oaktree Capital Management’s most senior London-based investment professional in
Strategic Credit, he has most recently helped in growing their European private debt business. Since joining the
alternatives manager in early 2013 and developing a variety of alternative asset management franchises for the
firm, including CLOs and other forms of asset-backed finance, Gregor structured a number of credit investments
in European corporates. These have included cash-flow based, but also real-estate-backed loans to SMEs.
Previously, as member of the board for Allianz Investment Management, he spent six years building the Allianz
Group’s alternative investment business, both in terms of the allocations made and the execution of the individual
strategies. His focus on fixed income credit included the responsibility for making loans to corporates and
infrastructure projects. Prior to that, Gregor spent seventeen years in credit analysis, debt capital markets
origination, product development and management roles, primarily at Goldman Sachs and Morgan Stanley. His
most recent role in banking was as a member of the management committee for BNP Paribas in Frankfurt,
responsible for all financial institutions business. Subsequent to his undergraduate degree from Harvard College
and work as a strategy consultant for the Boston Consulting Group, Gregor graduated with an MBA in finance
and operations from Stanford University. Gregor is also non-executive chairman of the fintech start-up LifeScale
Ltd and a member of the board at Prime Collateralised Securities absl, a not-for-profit industry group dedicated
to reviving the European securitization market after the financial crisis, including as a means of providing
additional funding sources for SMEs.
John Haam – co-CIO

John is the Managing Partner and the Co-CIO of the European Direct Lending Fund. Prior to this, he was a Senior
Advisor to Belgrave Capital Management, a member of the investment committee of Bridge Asset Management
and Chief Investment Officer and a founding partner of Pamplona Capital Management LLP with $3.5 billion
under management. John has held a number of senior roles in the asset management and banking industry,
including Chief Investment Officer of Spyre Asset Management, a $500 million Fund of Hedge Funds Group,
Head of Alternative Investments and Financing within Abbey National Treasury Services and Principal Fund
Manager and Managing Director of Gottex Asset Management.
Oliver Fochler – CEO

Oliver is Managing Partner and CEO of Stone Mountain Capital Partners, the general partner of the European
Direct Lending Fund. He is managing partner and CEO of Stone Mountain Capital, a London and Switzerland
based alternative investment advisor, providing alternative investment research, structuring and placement
solutions to hedge funds, private debt, private equity and corporate finance with Alternative Assets under
Advisory (AuA) of $51bn. He has over 20 years of experience. Prior, Oliver was a Partner and Member of the
Executive Committee of Prytania Investment Advisors, a credit asset manager in London with $1.2 billion AuM
seeded and majority owned by JP Morgan. As Head of Origination & Client Management he marketed the credit
fund range to institutional investors globally and developed investment and risk advisory for legacy asset holders
in bad banks, governmental agencies, central banks and insurers. Prior, he was Head of Global Business Solutions
at Moody's Analytics in London. Here he developed client solutions around risk analytics and advisory services
in the area of valuation and risk assessment of structured finance and derivatives, credit portfolio management,
liquidity risk and Solvency II. He initially covered Moody's KMV's global accounts in banking, insurance and
asset management in relation to credit portfolio and risk management solutions. Prior, he was responsible for
business development of strategic solutions encompassing Basel II credit risk, structured products, ALM, and
derivatives in Reuters Trade & Risk Management in Zurich. Oliver is a regular speaker at international finance
conferences and seminars and publishes articles around the topics alternative investments, credit, modelling,
regulation and quantitative risk management. Oliver is a certified Financial Risk Manager (FRM) of GARP. He
holds a BBA from the University of Augsburg in Germany and an MBA and Licentiate in finance and computer

science with honours magna cum laude from the University of Zurich in Switzerland, where he did his PhD studies
(ABD) in quantitative finance.
Alexander Rothlin – CFO

Alexander is CFO of the European Direct Lending Fund and Senior Advisor for Financial Structuring in Stone
Mountain Capital since 2014 with special focus on credit products and alternative investments. He was Director
for European sustainable infrastructure investments in the Energy Efficiency team at SUSI Partners in Zürich,
structuring tailor-made financing solutions for its technology partners which included debt and equity structures.
Prior, he was head of asset-based financing at MainFirst Bank in Frankfurt and Zurich. He has more than 20 years
of experience in structuring and originating structured products. Prior to MainFirst, Alex was Partner and
Managing Director at Aurelius Capital Management, an asset manager focused on structured credit based in
Vienna. Alex was in charge of client solutions and portfolio management with over EUR 2 billion assets under
management. Between 1994 and 2006, Alexander was with Bear Stearns in New York and London and HSBC in
London, working on various securitization transactions in Latin America, Europe and Japan. During his time in
London, Alex was a board member at Titulización de Activos (TdA) Sociedad Gestora de Fondos de Titulización
SA, a joint venture between various Spanish savings banks and Bear Stearns International. Alex holds a Master
of Arts in Business Administration from the University of St Gallen, Switzerland.
Ashvin Chotai – Senior Credit Analyst

Ashvin is a Senior Credit Researcher for European Direct Lending Fund and focusses on company research from
a corporate credit perspective of specific industries and make credit recommendations to management. Ashvin is
Senior Advisor for Research in Stone Mountain Capital since 2013. He has been involved in the analysis of the
international automotive industry since 1989 and is Managing Director of Intelligence Automotive Asia, which
provides research, analysis and advisory services on developments in the global automotive industry, with specific
focus on Asia and Asian companies. Main areas of current research activities include the analysis of provincial
and city level demand and competitive dynamics in China’s auto industry, luxury car market dynamics in China,
opportunities and challenges in China’s Electric Vehicle (EV) market, India’s auto industry developments
including comparisons with China, global opportunities and challenges for Japanese and Korean brands and
evolution of vehicle markets in ASEAN region. Between 1992 and 2007, he advised at Global Insight (today IHS
Global Insight), initially in the European auto-consulting practice and then specialized in Asia. Between 1996 and
2007, he was the Head of Asian Automotive Research and played an instrumental role in the development of
Global Insight’s Asian and emerging market automotive research and analytical capabilities. He is frequently
invited to make presentations at conferences and at major corporations in North America, Europe, and Asia. He
has presented at Investor Forum in Las Vegas, Shanghai, Hong Kong, Tokyo, San Francisco and New Delhi and
conducted meetings with investors and automotive companies across the globe. He is also widely quoted in media
on global and Asian automotive issues. Ashvin's career started in the oil exploration industry with Schlumberger,
where he worked for nine years, mainly in Asia. He held a number of positions, including Field Engineer,
Operational Management, Country Manager and Business Development in several European and Asian countries,
including assignments in Indonesia, India, Taiwan, Philippines, China, Norway and the UK. Ashvin holds a
Bachelor of Science in Electronic and Electrical Engineering from Bristol University, UK and has an MBA from
London Business School.
Alexandros Kyparissis - Credit Analyst

Alexandros is a Credit Analyst in the European Direct Lending Fund with focus on assessing and performing due
diligence of transactions for the fund and credit research. Alexandros is Analyst in Stone Mountain Capital since
2015 and focuses on quantitative alternative investment analysis and product development. He worked as a
performance analyst in Elen and has published academic papers around real estate, life expectancy in insurance,
the equity premium puzzle in behavioural finance, portfolio theory and the efficient frontier, a comparison of fund
of hedge funds against single manager hedge funds and other alternative investment and corporate finance related
topics. Alexandros holds a Bachelor of Science in Accounting and Finance from Athens University of Economics
and Business and a Master of Science in Corporate Finance from ICMA Centre of the University in Reading, UK.

Investment Strategy and Process
The objective of EDL is to generate consistently superior risk-adjusted

returns with low correlation to traditional and other alternative
1. Please describe your investments. The strategy is designed to capitalise on the funding gap
investment objective. resulting from increased regulatory restrictions on banks and provide
investors with exposure to a market that requires specialized knowledge
and is otherwise difficult to access.
The European Direct Lending Fund (EDL) provides private credit to
2. Please describe your lower midmarket businesses in Northern and Western Europe. The fund
investment strategy. provides senior secured and unitranche loans to small and medium sized
enterprises (SMEs) with 2-5 years’ maturity.
3. Please describe the type of EDL is focussing on senior and unitranche corporate lending of €5-15m
transactions, transaction loan size with 18 months call protection and maximum loan term of 5
sizes, anticipated holding years. Geographically, EDL focusses on the DACH region, UK &
period, geographic focus, Ireland, Benelux and Nordics. EDL is likely to be investing in the
industry/sector focus and following sectors: industrial, consumer, business services, healthcare,
other characteristics energy, TMT and real estate.
4. Please describe your
investible universe
including:
a) equivalent credit ratings
b) capital structure
Our investable universe consists of lower-middle market
seniority
corporates/SMEs.
c) optionality/pre-payment
conditionality/convertibility
a) Private SMEs are not rated but credit equivalent would be single B.
d) borrower sizes/turnover,
b) Senior Secured.
geographies,
c) Call protection of 18 months and opportunistic equity participation,
industries/sectors, growth
converts, warrants
stage, ownership/sponsor
d) Target companies would have EBITDA of €2-25m, western and
type
Northern Europe (UK, Ireland, DACH, Benelux and Nordics),
e) loan tenors, expected
majority of pipeline deals are sponsor less.
average life
e) Loan size range 2-20 million, typical maturity 3-5 years.
f) Fixed versus floating rate
f) We prefer fixed rates. In case a borrower insists on a floating rate
credits
we would swap it to fixed.
g) securitization/derivatives
g) n/a
h) number and type of
h) n/a
counterparties in
i) n/a
syndications
i) project or asset types (for
infrastructure, real estate
or otherwise asset backed
credits)

Our investment philosophy is to focus on the segment of the European
market that represents a good risk-reward balance but is currently
underserved by many private debt funds. As alluded to elsewhere in this
document, our specific targets are therefore unrated, but strong high-
yield equivalent corporates (i.e. BB and B) in Northern and Western
Europe without sponsors but with EBITDAs typically below €25m.
Despite the reasons we believe these firms to be sound borrowers, they
will tend to be unrated, primarily because they have never tapped the
capital markets but also because they are effectively too small to do so.
In our view, this is currently the “sweet spot” in European credit. We
expect our fixed-rate loans with 3-5 years maturities to range in size
from €2-20m. With call protection for at least 18 months, the duration
is relatively short, particularly for those exceptions that are floating rate.
5. Describe your investment As rates are more likely to rise than fall over the next few years, we
philosophy and process believe this position is currently appropriate. Particularly as the credit
completely and succinctly. cycle may also turn as rates rise (not to mention the current threat of
Your answer should cover trade wars and other political instability), we are keen to avoid cyclical
how the following (where market sectors or industries and remain at the stronger end of the capital
relevant) are incorporated, structure, hence our predilection for senior secured. In some cases, we
and why: would be prepared to stretch that lending to higher EBITDA multiples,
a) credit risk positioning or even to what is referred to as a “unitranche” structure. However, with
b) duration positioning very few exceptions (<10%) other than for revolvers, we would not
c) capital structure accept any debt above us in the capital structure. Revolving bank credit
positioning facilities of reasonable proportion are generally exempt from this
d) market segment prohibition, as we are generally able to provide such facilities given the
positioning closed-end nature of our fund—some corporates will not be able to
e) valuation/relative value manage without them, though they may be able to secure them on a pari
framework passu basis. Valuations of our target companies are not always directly
f) macro and geographic relevant, as our lending is generally not asset-backed (i.e. based on
position LTVs), but rather on cash flows (i.e. the ability to service and repay).
g) currency positioning, In the unusual event that we should be buying loans in the secondary
where relevant market, we will clearly do so based on a relative value assessment.
h) deal selection Should we be of the opinion the companies are distressed, we would
i) portfolio clearly expect to buy any loans at a discount; however, this will not be
construction/diversification our primary focus and will therefore not exceed 20% of the fund. Our
j) allocation to sustainable geographic preference for Northern and Western Europe reflects 1) our
assets (e.g. renewable more positive macro view on these economies, 2) our experience that
energy). the legal systems in these countries are more reliable and lender
k) sell discipline, where friendly, and 3) our better sourcing network in these countries. Relative
relevant value or risk-reward balance are more difficult to assess, as the banks
in these countries are generally prepared to lend at much lower rates.
Hence, we will focus on opportunities where the banks’ reluctance is
more driven by their inflexibility than by underlying credit quality. As
exceptions to our North-West preference, our experience with the legal
system in France has been less favourable, so it will probably not be as
much of a focus for us; conversely, the legal systems in Spain and Italy
have been reformed and may in future offer better relative value, once
they have been tested. As already noted elsewhere, currency arbitrage
will not be a value driver for this fund as we prefer to match the
currency invested by our LPs and hedge any open exposure for the term
of our respective loans. Similarly, we have indicated our policies
regarding risk management in the relevant section below, which also
covers diversification and concentration limits. Besides relative value,

the latter two considerations will be the main drivers for deal selection.
There will be no fixed allocation to renewables or other forms of
sustainable investments. Whilst we believe this could be inherently
attractive, our perception of their relative value leads us to consider the
returns on traditional investments in this area as inadequate. Again, as
addressed below under liquidity issues, we do not intend to trade the
loans in our portfolio and will only consider this if we are presented
with an unusually attractive opportunity to sell (and lock in profits
early), or in case we believe the particular loan to be impaired.
However, in the latter eventuality, most of the damage is usually
reflected in the level of any bids, so even then, sales are not that likely
to present an attractive alternative.
6. What is your track record
in and policy for managing
default or stress scenarios Whilst there have (by definition) been no distressed assets in the
in individual credits? portfolio, the two co-CIOs have extensive (re-)structuring experience
Please use any relevant and have worked out many individual loans, as regards both financial
examples of workout risk and operational management/restructuring.
situations or asset
disposals.
a) Most firms target larger companies in the mid-market spectrum
leaving lower mid-market companies underfinanced and making upper
mid-market space competitive. Demand is really high and smaller
7. What is your firm’s
companies are willing to pay higher to finance themselves. EDL’s
sustainable competitive
management team combines over 75 years of experience in European
advantage? Please
credit markets with specialization in credit analysis, financial
describe:
structuring and portfolio management. The experience of the team
a) What is the asset or
extends to risk management, distressed workouts and financial
capability that your firm
responsibilities. We have local presence to our core lending market, we
has that enables it to
have done transactions in these countries in the past and each team
deliver better performance
member is multilingual.
than the competition?
b) Why is this not
b) To replicate what we do requires the combination of a complex
replicable by other firms?
idiosyncratic skillset that our team possesses. As explained in the
question above, we combine experience, expertise, local presence and
knowledge of law and a robust network.
8. Please provide your

internal portfolio
Industry Concentration Limits: 20% Geographic Concentration Limits:
constraints (as a percentage
30%
of total portfolio) and/or
policy weights as relevant.
9. Please describe if, how and

why you allocate between
direct/bilateral credits, club
deals, syndications and n/a
securitisations/derivatives
(i.e. CLOs, CMBS, CDSs
etc).

We implement qualitative and quantitative due diligence with focus on
10. Outline your approach to
the legal aspect and laws of every jurisdiction. We do extensive
due diligence and ongoing
research on the market and the company and we have partnered with
asset management,
rating agencies for data, analysis processes and scoring methods.
including engagement with
Essential to the process are background check, referrals and
management at borrowing
interviewing management team and board representation. Stone
entities, site visits,
Mountain Capital is a global placement agent that is mandated from
engagement with equity
equity sponsors and is receiving deal flow from those. We are often
sponsors, influence on
invited for sponsored transactions and co-investment (lending)
operations.
opportunities. The partners have backgrounds from leading sponsors.
We use in-house analysis complemented by external risk models. We
collaborate with Rapid Ratings who provide their financial health rating
model and we map it into probability of default. Given that most/all of
11. Please describe your credit the borrowers will not be rated, we will analyse their quarterly and
rating methodology. annual financial statements using a credit scoring mechanism. That
credit score will then be mapped to a credit rating scale of a rating
agency, given an indication of a potential rating. Such indication will
not be confirmed by a rating agency.
For straight senior secured we were lending at multiples of 3-4x
12. Please elaborate on the
EBITDA in 2016; for deals with additional financing, the maximum
current asset level leverage
total debt would have been around 5 or 5.5x EBITDA. Under
debt multiples you are
competitive pressure, these multiples have crept up more regularly to
seeing in your pipeline and
4x (or even 4.5x) for senior and 5.5x for total debt. At least as far as our
how that compares to two
own pipeline is concerned, we are avoiding going above 4x for senior
years ago. What is the
and 5.5x for total debt (i.e. unitranche, as we generally don't lend on a
expected averaged debt
mezzanine basis). However, this also depends on company specific
multiple for the deals in the
idiosyncrasies (e.g. EBITDA margin, the company's position/strength
proposed strategy (both
in the supply chain, barriers to entry or other factors contributing to
gross & net Debt /
sustainability of margin (e.g. IP) and more broadly the sector in which
EBITDA, include both
the company operates). The above are multiples that we might consider
senior and total debt
for non-cyclical businesses. Cyclicals would have do make do with at
multiples).
least one less turn of leverage.
13. Describe if any leverage

will be used at the fund We are using a subscription line and intend to use a warehousing line
level, this includes any in the ramp-up phase of the portfolio in order to deploy our pipeline
working capital facilities portfolio. On portfolio level, we intend to use no leverage.
and revolvers.
We expect to be the sole lender at our level of seniority for most of our
borrowers, though there may be exceptions for revolvers, which we
generally wouldn't provide (given the closed end nature of our fund).
As regards our percentage allocation of our fund to any particular
14. Expected % hold size in
borrower, we would ultimately strive for something around the 3%
deals (as part of investment
mark, though this will vary over time, depending on a) ramp up period,
capital by the
b) speed of deployment and c) the size of our fund. Thus, we are likely
fund/mandate, but also the
initially to have 100% in one deal but would expect this to drop to
% exposure of the loan
around 20% within the first year of investing. 5-10% is probably more
controlled by the manager
realistic for our second year, depending on how the fund size evolves
through other vehicles).
relative to our speed of deployment. By the end of that year, the range
would ideally be between 7% (€150m) and 2% (€500m). As our
investment team is focused exclusively on this strategy, the percentages
by manager would be the same as by fund/mandate.

15. What is the expected
average term of the loans
and average expected
holding period? What level Expected average term of the loans are between 2 and 5 years and we
of investment turnover is are expected to hold the loans to their maturity. We are expecting 1.5-2
expected for the Target times turn-over on our investment portfolio. We are intending to recycle
Portfolio? Do you intend to capital within the investment period. Average holding period would be
recycle capital within the same as expected average term of our loans which is between 2 and 5
investment period? Outline years with average term being 3.5 years.
the average holding period
and pre-payment
provisions / penalties.
16. Please describe the
valuation policy for the
We intend to hold loans to maturity and therefore do not expect to see
fund – MTM or held to
any mark-to-market volatility except in the case of impairments—
maturity. Please elaborate
whether as a result of interest rate or credit spread volatility.
on historical volatility of
the portfolio.
Since the fund’s investors will be predominantly investing in Euros and
17. Please provide Target the majority of our investments will also be denominated in Euros, there
Portfolio currency and if will fundamentally be a natural match. However, we expect to make
non-Target Portfolio [10-20%] of our loans in Sterling and another [10-20%] in other
currency denominated currencies (e.g. CHF or SEK), so our investors may prefer that we
assets are expected to be hedge this exposure back into Euros. We have also considered having
hedged and if so how such a sleeve of our fund in US Dollars, but not initially. Thus, we would
hedging will be expect a limited proportion (10-30%) of cross-currency risk that we
implemented. plan to hedge via derivatives. Given the relatively short-dated tenor of
our loans, this should be eminently feasible at reasonable cost.
Stone Mountain Capital acts as global placement Agent and corporate
finance advisor for sponsor-less corporates for 6 years and has
proprietary deal flow from lower middle market corporates. The
18. Please describe your firm’s partners and fund manager have worked for the largest private equity
relative advantage in sponsors and leading investment banks and investment management
sourcing deals. firms in the past, which provide origination channels as an advantage
compared to competitors. In our core markets UK, Germany,
Switzerland, we have people on the ground as source of further
proprietary deal flow which differentiates us from competitors.
19. Please describe how you a) We have very good relationships with equity sponsors and anticipate
originate deals: including ca. 10-20% sponsored transactions and the remaining 80-90%
a) Do you originate through to be sponsor less transactions, which we originated directly. In our
equity sponsor current deal pipeline of 27 transactions, there are 2 sponsored
relationships and if so how transactions and 25 sponsorless transactions.
much of such origination
would be utilised in the b) All partners have worked at large private equity and private debt
proposed fund (as a sponsors in the past, that enables us to source deals from our equity
percentage of the fund’s sponsor network efficiently. Stone Mountain Capital acts as global
expected steady state placement agent and corporate finance boutique since 2012 and has deal
allocation)? flow from the leading equity sponsors due to its placement agent
b) How do you access and activity, by utilizing them as LP and partially acting for them as GP.
maintain relationships with
equity sponsors for c) Our headquarter is in London, UK. We have a subsidiary in
origination? Switzerland, which Alexander Rothlin leads and Alexander lives in

c) What is your regional Pfaeffikon, Switzerland. Gregor Gruber lives in London, but has
footprint for this sort of worked extensively on the Continent, especially Germany. John Haam
origination? lives in London, UK and has a residence in Switzerland. Oliver Fochler
d) Do you originate lives in London, UK and has a residence in Switzerland. We originate
through banks and if so in UK, Ireland, Germany, Austria, Switzerland as our core countries
how much of such and cover from London, Switzerland and Germany and for Benelux,
origination will be utilised Nordics as opportunistic regions, we originate on an opportunity and
in the proposed fund (as a fly in basis.
percentage of the funds’
expected steady state d) We have very good relationships to the leading investment and
allocation)? commercial banks across Europe and the partners had management
e) What is your positions in the leading institutions. Stone Mountain Capital acts as
relationship to the banks global placement Agent and corporate finance advisor and thus the
and how do you maintain banks are a funding source for our clients. We use some of the
this relationship and this institutions as a source of deal flow on individual deal basis, not on
element of your deal flow? portfolio deal basis, e.g. when there are lending restrictions for a bank
f) Describe any other on the level of a country restriction like e.g. only Switzerland, or when
means of deal origination a loan is not large enough for an investment bank to get involved, e.g.
and how they may feature our focus is on lower middle market companies and the investment
in the proposed fund. banks would only work with middle market and large corporate clients.
We would not consider restructuring or any distressed opportunities,
nor do we consider portfolio or NPL transactions from banks. We
anticipate the bank loan origination to be max. 5% of the fund.
e) We have very good relationships to the leading investment and

commercial banks across Europe and the partners had management
positions in the leading institutions. Stone Mountain Capital acts as
global placement agent and corporate finance advisor and thus the
banks are a funding source for our clients. We are in constant exchange
with the leading banks and commercial banks on behalf of our clients
for funding their mandates. We use some of the institutions as a source
of deal flow on individual deal basis, not on portfolio deal basis, e.g.
when there are lending restrictions for a bank on the level of a country
restriction like e.g. only Switzerland, or when a loan is not large enough
for an investment bank to get involved, e.g. our focus is on lower middle
market companies and the investment banks would only work with
middle market and large corporate clients. We would not consider
restructuring or any distressed opportunities, nor do we consider
portfolio or NPL transactions from banks.
f) We source our debt funding opportunities through our origination

partners including corporate finance advisors, solicitors and
accountants, as well as arrangers, brokers, introducers and the
specialised finance community. Stone Mountain Capital acts as global
placement Agent and corporate finance advisor and thus has proprietary
deal flow from sponsor less corporate borrowers.
Yes, we store every opportunity on a secure, cloud-based software and

only members of the firm can access the opportunity set. After the initial
20. Does the Private Debt team
screening of the investment committee, opportunities enter into a deal
‘track’ deal opportunities?
pipeline, which is constantly updated until execution and then the
opportunity is converted into a loan from our direct lending fund.

21. Describe the Firm’s
screening and due diligence
processes. How is each
process staffed, conducted
and documented? How Deal screening consists of the following steps: as noted above, initially
long is the due diligence a Corporate Overview, Evaluation of Management Team, Relative
process? Will the deal team Value Analysis and Illiquidity Premium test; once these are passed,
be in charge of the screening continues with Advanced Cash flow analysis, Asset
investment until Valuation, Financial Modelling, Comparable Credit Analysis, Legal
exit/maturity, or will other and Jurisdictional Analysis, Stress Test Downside Equity Cushion,
professionals be assigned Equity Upside Yield Analysis. The length of due diligence will depend
post-investment? Include on the level of comfort we get with each corporate and the speed of
details on any due diligence document provision. The same team is in charge until exit/maturity.
checklists, internal reports,
financial models and
investment committee
documents prepared.
22. Describe any functions
performed by third parties No third party is permanently retained for due diligence or sourcing.
in the sourcing, screening However, occasionally, we may pay a finder’s fee to outside parties,
and due diligence who are not already acting on behalf of a potential borrower (see
processes. Describe the sourcing network above). As necessary on a case-by-case basis, we also
Firm’s decision-making retain outside counsel, e.g. for legal or tax due diligence. In such a case,
process for determining if a the decision would be made based on a partners’ vote after analysing
third party is used/not the offers received.
used.
The Firm’s Investment Committee meets regularly, but if required also
on an ad hoc basis, and consists of the three partners (the CEO and the
two CIOs). Other senior investment professionals join on a nonvoting,
case-by-case basis, particularly if their investment proposals are being
considered. Moreover, others team members with relevant experience
(e.g. by sector or jurisdiction) will also join on a nonvoting basis. Once
23. Provide details on the an investment idea has passed initial screening, it is briefly presented to
Firm’s internal decision- the Investment Committee to obtain a License to Hunt. Outstanding
making and approval Licenses to Hunt are reviewed at each regular Investment Committee
process, including details meeting. Once terms of a potential deal have broadly been finalized, the
on the role, composition investment is formally presented for approval, where the outcome can
and function of the Firm’s be 1) approval; 2) rejection; or 3) request for re-submission pending
Investment Committee. specified modifications. Once a deal has been approved in principle, it
moves into documentation and due diligence before closing.
Immediately prior to closing, the deal is then submitted once again to
the Investment Committee for confirmation of satisfactory due
diligence, execution and any conditions precedent. Deals are then
reviewed by the Investment Committee on a quarterly basis, based on
monitoring reports.
All lending agreements are conducted on senior secured basis only with
a preference to be the lender on record without a bank being senior. The
24. Provide examples of unitranche lending agreement is structured as 1st lien and as well senior
provisions that the Firm secured with higher lending multiples to EBITDA / LTV compared than
incorporates in contracts to the senior lending agreement. Depending on the sector a corporate
protect its investments. borrower operates in we use inventory as security. We typically require
additional security of the corporate owner in form of a property or
securities account portfolio. We typically require a guarantee of the
corporate owner. We require equity participation in form of a warrant
on the firms private shares and define e.g. EBITDA triggers. Typical
covenants in agreements are lending limits on EBITDA multiples /
Loan-to-Value (LTV), limits on Debt Service Coverage Ratio (DSCR).
We typically have 18 months call protection in the unitranche
agreement and we include floating rates in the loan agreement like 3M
Euribor plus x% in order neutralize interest rate increases.
25. Discuss the Firm’s portfolio
investment monitoring The monitoring consists of the following steps: Track actual
policy, including details performance vs. projections • Filings (if public), business update and
about contact events press releases • Monitoring payments, ratio compliance and collateral •
(weekly, quarterly, board Maintain fundamental valuations • Harmonious relationship with
meetings, etc.). What service provider • Purchase or sale in open market or private
information is required to transactions based on market inefficiencies. Board representation will
be reported by the portfolio give us up-to-date information and company knowledge but is not
investments? Discuss the typical for lending relationships. Should we be the primary lender and
Firm’s approach to board the company subject to [unusual] stress, there may be situations in
representation at its which non-voting board attendance may be mutually agreed.
portfolio companies.
26. How many active
investments is each
investment professional The team has two co-CIOs who are responsible for managing the
responsible for? In addition investments. As a new fund, we currently have no active investments.
to active investments, how At the moment, we have over 25 deals on our watchlist within the
many deals in the pipeline pipeline, which are equally split between the CIOs at the moment. We
is each investment expect that each CIO will average 2-4 active transactions at any given
professional responsible time, i.e. negotiation, structuring documentation and/or due diligence.
for? How were these Once deals have closed, we expect each senior professional to be
number determined and responsible for approx. five outstanding transactions. The team has also
how have they evolved over two analysts at the moment that will assist in analysing and monitoring.
the Firm’s history? What is As regards allocation to specific professionals, source of origination
the Firm’s process for and experience in an industry or firm will be important.
handling bandwidth during
periods of peak activity?
27. What type of covenant
protections does the The main covenants will seek are:
Investment Company - Negative Pledge against the raising of senior or pari passu debt
intend to seek in relation to instruments
investments that the Fund - Debt Service Coverage Ratios appropriate to the respective company
will make?
28. Describe any investments

We will not consider deals that are not ESG compliant or where the
that will not be considered.
management team/company may reputational issues, which includes
Are there any factors that
potential money laundering or other forms of fraud. We will not
would automatically end a
consider deals that fail to pass our initial screening or later based on our
potential a deal? If so,
due diligence process.
explain.

We aim to hold the loans to maturity. However, in some cases (e.g.
29. Describe the proposed exit restructuring or other liquidity events), we may consider selling an
strategies of the Fund. investment, either to profit from any unusual upside or to reduce risk in
the overall portfolio.
As the portfolio will be held to maturity at historical cost (except in the

case of any impairments), there will be no mark-to-market in response
30. How is the portfolio’s to interest rate movements. However, in some cases interest rate swaps
interest rate risk managed? may be used to ensure that the cash flows from individual investments
contribute as expected to the fund’s overall performance (i.e. on a fixed-
rate basis).
31. Describe the Fund’s
expected investment
structures. Discuss the use
of leverage at the Fund
Whilst we will examine the respective deals as unlevered investments
level and state the targeted
opportunities, we plan to employ leverage at the fund level in two
leverage levels (%) of a
respects: advance drawing against LP commitments (subscription line)
typical investment. How
and bank financing available against the (increasingly) diversified pool
has the Firm’s use of
of loans (warehousing line), which will serve to mitigate idiosyncratic
leverage evolved between
credit risk via cross-collateralization of the various investments.
the Fund and prior funds?
Provide examples of
investments that
demonstrate this evolution.
As mentioned under hedging strategies (4.12 above), despite our
32. Discuss the risk factors of relevant expertise, we do not propose to provide macro hedges within
the Fund’s investment the fund itself. As such, LPs should invest if they are comfortable with
strategy (e.g. political risk, the current political and economic risks in the target market. As regards
economic, financial, financial, technological and business cycle risks, these will be evaluated
technology, business cycle, at the level of the individual investments and we will furthermore seek
etc.) and the steps taken to to diversify these across the portfolio (see sector and geographic
mitigate these risks. diversification in 6.6. above). Avoiding investments in cyclical
industries should also help.
33. What is the return-profile
threshold (gross IRR, Target net IRR 8-10%. Gross IRRs are expected to be in the low teens
money multiples, etc.) for and may include some equity upside (e.g. warrants in conjunction with
targeted investments? lending). Expected holding period of 2-5 years. Money multiples do not
What is the expected generally apply to private credit.
holding period?
34. Does the firm have any

strategy on IPOs? Is there
any dedicated group n/a
monitoring public markets
in anticipation of an IPO?

35. Does the fund have a
process to protect against
fraud and corruption There has been no historical instance.
related risk events? Were
there any historical
instances?
Alignment of Interests
Partners and staff are compensated through a blend of base salary or

1. What is the compensation drawings; a profit (not revenue) related component on revenues that
structure of the firm? they have responsibility for; a discretionary bonus; and, for partners, a
share of the profits of the group.
2. How is the carried interest To be determined.
vested for those parties that
participate? How is the
unvested carry of former
Team Members treated?
3. Is the General Partner’s The partners contribute to the GP equity and will be financed by equity
contribution for investment holdings.
financed? If yes, how?
4. Will any Principal or To be defined.
affiliate of the General
Partner invest in the Fund
(outside of the General
Partner’s commitment)? If
yes, provide commentary.
5. Describe any clawback n/a
situation that occurred in a
prior fund.
6. Detail any conflicts of Stone Mountain Capital follows the following principles:
interest (potential, current - every employee has to be trained (and updated regularly)
and historic, if applicable) - investment team/CEO want to deploy money
within the firm and - Mitigation: risk management needs to approve a potential transaction
proposed fund and explain - stock trading through insider information and stocks/participation in
how these are and have companies which might receive funding from EDL are not allowed
been managed and - other business activities (such as M&A, IPO, etc.) with EDL clients
disclosed. not related to the company are not allowed
7. Detail whether the The proposed fund is the exclusive vehicle for investing in this strategy
proposed fund is the by our organisation or our affiliates.
exclusive vehicle for
investing in this strategy by
your organisation or your
affiliates. If not, detail how
conflicts of interest between
different fund products are
identified, avoided and/or
managed. Provide a copy of
the allocation policy for
conflicting mandates /
funds.
Fund Terms
1. Provide a summary of n/a

notable deviations from
the terms of the previous
fund.
2. What the Fund’s carried EDL’s carried interest is set in a market conform manner in line with LP
interest charge by the GP requirements. EDL charges 15% on whole fund, not deal by deal.
and its basis (e.g. whole
fund or deal-by-deal).
Yes, the fund is an SCSp (AIF) under AIFMD and we are regulated by
3. Is the Fund regulated?
Commission de Surveillance du Secteur Financier (CSSF) via our Manco
Please provide details
Carne Global Fund Managers Luxembourg S.A., which will be our
(AIFMD compliant?)
AIFM (BO148258) and delegates investment management to us.
4. State the Fund’s 1.5% management fee, 15% performance fee.
management fees and
other amounts payable to
the GP, including the
frequency and the
formulas used to
determine such fees.
5. Describe the allocation of The fund EDL carries transaction related fees and the GP carries the fees
fees (e.g. transaction fees, of operation and salaries.
investment banking fees,
monitoring fees, director’s
fees, etc.) between the GP
and the Fund. How has
this allocation evolved
from prior funds? What
are the Fund’s policies on
placement agent and
finders’ fees? Who is
accountable for their
payment?
6. State the Fund’s To be defined.
provisions regarding the
transferability of
partnership interests.
7. State the standards of To be defined.
indemnification that apply
to the GP and related
parties.
8. Describe any different We include a founder’s share class for the partners in the fund and the
compensation options (e.g. initial LPs with reduced management and performance fees. After the
(a) 2% management fee / first closing fees will shift to the regular fees as per question 4.
20% carry or (b) 2.5%
management fee / 15%
carry) that are offered to
each Limited Partner.

9. Describe any circumstance In the founder’s share class as described under question 8.
in which one Limited
Partner is not investing
under the same terms as
other Limited Partners
10. Describe the Fund’s policy To be defined.
for making cash or in
specie distributions.
Provide details on the
prior history of in specie
distributions. Describe the
distribution policy of the
Fund.
11. Describe the Fund’s policy To be defined.
on allowing Limited
Partners to opt-out of an
investment. What are the
circumstances for
allowing an opt-out?
Fund Management Fees 1.5%* Est.
Total Expense Ratio 1.75%* Est.
This includes 0.25%* Est. Fund operation expenses consisting of

auditors’ fee, ongoing legal costs, Manco/AIFM in Luxembourg,
12. Detail the fees proposed
Administration Fee and loan servicing fee and other ongoing operational
for the proposed fund. For
charges.
your response, complete
the fee matrix on below
Research costs 0%* Est.
setting out:
• Fund Management Fees
At this time, we do not anticipate charging research costs to the clients.
• Total Expense Ratio
• Research costs
Total cost 1.75%* Est.
We have a founder’s share class that provides a rebate for early investors
up to the first closing and the partners. Normally, our fund incurs a 15%
performance fee, which we have not included in this RFP.
13. If leverage is included in The strategy is unlevered.
the fund structure, please
explain on how the costs
are shared (i.e. are the
costs of leverage deducted
from the overall returns
or applied as a
management fee, to what
part of the capital are
these charges made
including the equity
and/or the levered capital
as well)
14. Will administration and The set up and admin costs will be charged as costs of ca. 0.25% and will
setup costs be included in not be included in the management fee.
the management fee? If
not, please outline
estimated costs for
administration, custody
and setup costs (if any) for
the client.
15. Please discuss any To be defined.
additional fees
(transaction fees,
origination fees, financing
fees, etc.) received by the
investment manager in
relation to managing the
fund that are passed onto
the fund or offset against
the management fees.
Please detail
circumstances where
additional fees would not
be passed onto the fund.
16. Please provide details of To be defined.
fund marketing expense
policies and identify any
caps on the amount of
such expenses that can be
charged to the fund.
17. Please describe how We typically charge 1-2% up-front fees and include an OID in
origination fees are split negotiation with the borrower depending on the lending rate in order to
between up-front fees and achieve our target risk-adjusted price.
OID.
18. Outline the equalisation To be defined.
charges (if any) if the
client invests in the fund,
post first close.
Governance
1. What is the role of the The internal advisory consists of Oliver Fochler, Gregor Gruber and John
Firm’s internal advisory Haam.
board(s).
2. Are there any matters n/a
which are referred to the
advisory board but
unresolved?
3. How the Firm’s policies To be defined.
(Compliance Manual,
Code of Ethics, etc.) are
supervised, monitored and
enforced.
4. What is the Firm’s policy There is no specific policy as to date this has not arisen and is not
of personal investments by expected to arise.
any employees or affiliates
in deals reviewed by the
General Partner (both
accepted and rejected)? If
applicable, provide a list
of all previous investments
of this nature.
5. Describe the Firm’s We have a fulsome confidentiality policy which employees sign up to as
policies on the handling part of their employment contract.
and safeguarding of any
material, non-public
information? How are
these policies
communicated to
employees?
6. Does the Firm have an Not at the moment.
Environmental, Social and
Corporate Governance
(ESG) policy (or
equivalent CSR/SRI
policy)?
7. Is the Firm a signatory to Not at the moment.
the United Nations
Principles for Responsible
Investing (UNPRI)?
Risk Management
Alexander Rothlin is responsible for the Firm’s Internal Risk Control

1. Provide details on Firm’s Systems, reporting to the CEO, Oliver Fochler. The goals are to i)
Internal Control Systems manage the financial reporting, ii) control the operations such that they
(Risk Management, are efficient and effective (internally and with third party service
Compliance, Internal providers) and iii) make sure that all activities are compliant with
Audit) applicable laws and regulations. Operational/error manuals will be
created accordingly.
We identify and analyse risks associated with achieving our objectives
such as:
- market risk with sub-categories regulations, inflation, taxes,
competition, macroeconomics;
- credit risks with sub-categories default of investor/fund
2. Discuss the Firm’s risk
client/AIFM/EDL;
management. What types
- operational risks with sub-categories conflict of interest at company,
of risks are monitored and
pricing model errors, fraud by business partners, errors with mapping
how are they measured?
fund client ratings, target return, concentration requirements, non-
Are there dedicated
compliance with regulations or fund requirements, etc;
employees assigned to the
- liquidity risk, ie investors will not provide liquidity after cap call).
risk monitoring function?
We detail those risks in a risk mapping process, whereby a probability
(low, mid, high) and potential damage (low, mid, high) is assigned to
each subcategory. Part of the process will also be to define mitigation
strategies related to each risk.

3. Describe the Firm’s Monitoring of investments consists not only of the procedures detailed
processes for protecting in 4.7 above, but also of audits performed by independent accountants,
against fraud and including spot checks of bank accounts for consistency with declared
corruption, post- financials. Our firm and fund fully comply with the UK Bribery Act
investment. If applicable, 2010.
discuss any fraud and/or
corruption that were
detected in prior
investments
4. Discuss the Firm’s The monitoring consists of the following steps: Track actual
portfolio investment performance vs. projections • Filings (if public), business update and
monitoring policy, press releases • Monitoring payments, ratio compliance and collateral •
including details about Maintain fundamental valuations • Purchase or sale in open market or
contact events (weekly, private transactions based on market inefficiencies. Board representation
quarterly, board meetings, will give us up-to-date information and company knowledge but is not
etc.). What information is typical for lending relationships. Should we be the primary lender and
required to be reported by the company subject to [unusual] stress, there may be situations in which
the portfolio investments? non-voting board attendance may be mutually agreed.
Discuss the Firm’s
approach to board
representation at its
portfolio companies.
5. Describe any functions No third party is permanently retained for due diligence or sourcing.
performed by third However, occasionally, we may pay a finder’s fee to outside parties, who
parties in the sourcing, are not already acting on behalf of a potential borrower (see sourcing
screening and due network above). As necessary on a case-by-case basis, we also retain
diligence processes. outside counsel, e.g. for legal or tax due diligence. In such a case, the
Describe the Firm’s decision would be made based on a partners’ vote after analysing the
decision-making process offers received.
for determining if a third
party is used/not used.
6. Please explain (if - revenue sharing arrangements: to be determined
applicable) your policy - counterparty management and lending limits: each investment is
(and on-going monitoring) reviewed regularly based on public information and data that will need
with regard to the lending to be provided by the borrowers
of any securities held in - once an investment is done, asset management will monitor the
the portfolio and investments going forward. If there are any deviations with regards to
approach to collateral credit risk and cash flows, risk management will be informed. Risk and
management. Your asset management will then assess the situation and depending
response should include:
• revenue sharing
arrangements
• counterparty
management and lending
limits
• risk management
7. Risk targets and a) Interest rate risk will be inherent in our fund since we propose to invest
constraints for the on a fixed-rate basis and pass through returns to our LPs on a fixed-rate
proposed funds Please basis. Only floating-rate coupons will be swapped. With an average
provide (quantitative or maturity of four years, we would expect the duration to be around the
qualitative) risk targets / two-year mark.
constraints for the
proposed fund (including b) Credit spread will also be an inherent risk in our fund, yet we will not
target allocation among only seek to make sure that it is adequate to the respective risk of the
different mandates if underlying investments, but also to limit it via diversification. We do not
applicable) and cover intend to hedge credit risk via default swaps or other derivatives.
following risk Moreover, as we intend to hold the loans to maturity, we do not expect
factors/categories: to see any mark-to-market volatility except in the case of impairments—
a) Interest rate (duration) whether as a result of interest rate or credit spread volatility.
b) Credit spread
c) Default and c) Default and prepayment will also be inherent risks of the portfolio, yet
prepayment they will be mitigated not only by a conservative investment process with
d) Currency commensurate due diligence (including against fraud), but also by an
e) Liquidity active workout process, which we will initiate before (or at the latest at
f) Derivative structure the time of) any impairments. Prepayment risk will be mitigated (if not
related risks avoided altogether) by prepayment penalties that will serve to make the
g) Key risk metrics fund whole in such a case (whether partial or full).
monitored at portfolio
level d) Currencies risks will be largely avoided on the basis of natural
h) Any other risk hedging, but our €-denominated fund is expected to include a limited
constraints, including proportion of Sterling (10-20%) and other (Northern) European currency
position on single issuer, risks (altogether another 10-20%). Thus, we would expect a limited
sectors, region, risk proportion (10-30%) of cross-currency risk that we plan to hedge via
bucket etc. derivatives. Given the relatively short-dated tenor of our loans, this
should be eminently feasible at reasonable cost.
e) Liquidity risk can have two potential sources: 1)

redemptions/withdrawals, and 2) investments made in advance of LP
funding. The former do occur with closed end funds and we manage the
latter by means of a subscription line, under which a lender has agreed
to provide us with funding based on LP commitments.
f) Derivatives can be employed at the fund level to reduce risks (as

described above), or they can be inherent in the underlying investments
in so far as they are themselves structured derivatives. However, our
investment thesis focuses on corporate credit risk and avoids structured
risk, such as derivatives on other values or instruments.
g) Key risk metrics monitored at the portfolio level include overall

interest rate mismatches (before and after hedges), diversification and
concentration limits.
h) We have imposed a number of risk mitigating investment parameters,

such as Industry Concentration Limits: 20% Geographic Concentration
Limits: 30% Generic Diversification: number of investments expected to
be over 30 At this stage in the credit cycle, the industry concentration
limits are complemented by an aversion to cyclical industries.
Weighted Average WA Credit Score of the Portfolio shall not be below

for example B-. If yes, that WA should be based on an original credit
scores per transaction.
8. Risk management a) We use in-house analysis complemented by external risk models. We
platform and other collaborate with Rapid Ratings who provide their financial health rating
resources Describe any model and we map it into probability of default.
tools, including external

risk providers, you use to b) n/a
conduct the above risk
management, including: c) Alexander Rothlin will be our dedicated risk manager for the fund.
a) Proprietary or external
risk models (and/or data
source) used, if applicable
b) Other quantitative or
qualitative framework
used for risk monitoring
c) Internal or external
talents /human resource
dedicated to private credit
risk management
9. Risk management team a) The risk management function is separated from the investment team
and governance structure and reports directly to the CEO
a) Please describe which b) Once the investment team identifies an investment opportunity, risk
team(s) is responsible for will approve it, before the risk manager of the fund, the AIFM, will give
risk management and that its approval to proceed with the final due diligence process. After the due
team’s reporting line (if diligence process, the AIFM will provide its final decision (approval or
that team is independent decline) of the investment.
of the fund management
team).
b) If applicable, please
specify the whole risk
governance structure for
the proposed fund.
ESG
1. Does the Firm have an No.

Environmental, Social and
Corporate Governance
(ESG) policy (or
equivalent CSR/SRI
policy)?
We are not yet a signatory to UNPRI, but we do not intend to engage
2. Is the Firm a signatory to
with any non-ESG compliant corporates and we will not engage with
the United Nations
companies manufacturing cluster munitions, landmines, and chemical
Principles for Responsible
and biological weapons. We are considering becoming a signatory to
Investing (UNPRI)?
UNPRI.
We take ESG into account when we analyse an investment and we focus
on the following risks:
3. How, if at all, are ESG
Environmental: Chemical safety, emissions, pollution, contamination,
risks taken into account
management of environmental risks, raw material sourcing and supply
within the investment
chain management
process?
Social: Community relations, customer satisfaction, employee and union
relations, human health impacts and safety practices
Governance: Board structure, capital allocation, company bylaws &
articles, management incentive structures, shareholder and bondholder
rights.
4. Please describe the Our analysts screen and analyse potential ESG risks based on the factors
resources available to the above. We use publicly available information and external data providers
team managing the fund to augment our analysis. This analysis is integrated into the initial
for identifying and screening of deals or during management due diligence.
managing ESG risks,
including;
- External data providers
- In-house responsible
investment teams, systems
and databases.
Describe how those

resources are utilised and
integrated into the team’s
processes and the
investment strategy.

Contact
Stone Mountain Capital Partners team is always happy to answer to queries about its strategy. For more
information contact us at:
Stone Mountain Capital Partners LLP

31 Compayne Gardens
London NW6 3DD
United Kingdom
Swiss Representative Office:

Etzelstrasse 49
CH-8808 Pfäffikon
Switzerland
Email: info@stonemountaincapitalpartners.com
www.stonemountaincapitalpartners.com
www.stonemountain-capital.com
Please provide the name and title of the officer at your company who prepared and reviewed this
questionnaire.
Signature
Name Oliver Stefan Fochler

Position Managing Partner, CEO
Date 11 June 2019

Stone Mountain Capital Partners DDQ

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STONE MOUNTAIN CAPITAL PARTNERS LLP

European Direct Lending Fund

Due Diligence Questionnaire

Strictly Private & Confidential 1

Strictly Private & Confidential 2

Table of Contents Page 3

Firm Overview Page 4

Fund Overview Page 4

Firm Ownership and General Information Page 5

Fund Information Page 6

Firm Organizational Structure and Service Providers Page 9

Team Biographies Page 10

Investment Strategy and Process Page 12

Alignment of Interests Page 21

Fund Terms Page 22

Risk Management Page 25

Strictly Private & Confidential 3

1. Legal Entity Name Stone Mountain Capital Partners LLP

Strictly Private & Confidential 4

Stone Mountain Capital Partners LLP is to be incorporated as investment

Strictly Private & Confidential 5

1. What is the structure of

b) Outline how you

1. Are there any known No.

Strictly Private & Confidential 7

Strictly Private & Confidential 8

Firm Organizational Structure and Service Providers

Strictly Private & Confidential 9

Gregor Gruber – co-CIO

John Haam – co-CIO

Oliver Fochler – CEO

Strictly Private & Confidential 10

Alexander Rothlin – CFO

Ashvin Chotai – Senior Credit Analyst

Alexandros Kyparissis - Credit Analyst

Strictly Private & Confidential 11

The objective of EDL is to generate consistently superior risk-adjusted

Strictly Private & Confidential 12

Strictly Private & Confidential 13

8. Please provide your

9. Please describe if, how and

Strictly Private & Confidential 14

13. Describe if any leverage

Strictly Private & Confidential 15

Strictly Private & Confidential 16

e) We have very good relationships to the leading investment and

f) We source our debt funding opportunities through our origination

Yes, we store every opportunity on a secure, cloud-based software and

Strictly Private & Confidential 17

28. Describe any investments

Strictly Private & Confidential 19

As the portfolio will be held to maturity at historical cost (except in the

34. Does the firm have any

Strictly Private & Confidential 20

Partners and staff are compensated through a blend of base salary or

1. Provide a summary of n/a

Strictly Private & Confidential 22

This includes 0.25%* Est. Fund operation expenses consisting of