Appointment of Fund Managers – London Pensions Fund Authority

Appointment of Fund Managers – London Pensions Fund Authority

The Committee of the Fund has agreed to consider an investment in a segregated alternative credit mandate, which will invest in illiquid and liquid higher yielding debt markets. The Committee is seeking to establish a framework agreement comprising a number of alternative credit managers.


United Kingdom-London: Pension fund management services

2014/S 167-297955

Contract notice

Services

Directive 2004/18/EC

Section I: Contracting authority

I.1)Name, addresses and contact point(s)

London Pensions Fund Authority
Dexter House, 2 Royal Mint Court
For the attention of: Jonathan Ord, Investment Principal
EC3N 4LP London
UNITED KINGDOM
Telephone: +44 2073696019
E-mail: jonathan.ord@lpfa.org.uk

Internet address(es):

General address of the contracting authority: www.lpfa.org.uk

Further information can be obtained from: Hymans Robertson LLP
20 Waterloo Street
G2 6DB Glasgow
UNITED KINGDOM
Telephone: +44 1415667848
E-mail: lpfacreditsearch@hymans.co.uk
Fax: +44 1415667788
Internet address: www.hymans.co.uk

Specifications and additional documents (including documents for competitive dialogue and a dynamic purchasing system) can be obtained from: Hymans Robertson LLP
20 Waterloo Street
G2 6DB Glasgow
UNITED KINGDOM
Telephone: +44 1415667848
E-mail: lpfacreditsearch@hymans.co.uk
Fax: +44 1415667788
Internet address: www.hymans.co.uk

Tenders or requests to participate must be sent to: Hymans Robertson LLP
20 Waterloo Street
G2 6DB Glasgow
UNITED KINGDOM
Telephone: +44 1415667848
E-mail: lpfacreditsearch@hymans.co.uk
Fax: +44 1415667788
Internet address: www.hymans.co.uk

I.2)Type of the contracting authority

Regional or local authority

I.3)Main activity

Economic and financial affairs

I.4)Contract award on behalf of other contracting authorities

The contracting authority is purchasing on behalf of other contracting authorities: yes

This framework is open to all other eligible Local Authorities
UNITED KINGDOM

 

Section II: Object of the contract

II.1)Description

II.1.1)Title attributed to the contract by the contracting authority:

Appointment of Fund Manager(s) — Segregated Alternative Credit Mandate.

II.1.2)Type of contract and location of works, place of delivery or of performance

Services
Service category No 6: Financial services a) Insurances services b) Banking and investment services

NUTS code UKI12

II.1.3)Information about a public contract, a framework agreement or a dynamic purchasing system (DPS)

The notice involves the establishment of a framework agreement

II.1.4)Information on framework agreement

Framework agreement with several operators
maximum number of participants to the framework agreement envisaged: 6

Duration of the framework agreement

Duration in years: 4

II.1.5)Short description of the contract or purchase(s)

The Committee of the Fund has agreed to consider an investment in a segregated alternative credit mandate, which will invest in illiquid and liquid higher yielding debt markets. The Committee is seeking to establish a framework agreement comprising a number of alternative credit managers. The framework will be open to other eligible Local Authorities and LGPS funds.
The key mandate parameters are flexible and will be agreed upon the appointment of a manager(s). However, the following provides a broad outline:
— The framework will be open to other Local Authorities;
— The mandate size is expected to be in the region of 100 000 000 GBP — 150 000 000 GBP. This could increase if the framework is used by further eligible participants;
— Managers must be able to provide a segregated solution for this mandate (pooled fund solution will not be considered);
— Managers and their investment strategy will need to be able to comply with LGPS regulations;
— The mandate should target an annual absolute return net of fees of between 10 %—15 %, with minimal/zero use of leverage, through investing in a number of higher yielding debt markets, including but not restricted to:
— Direct corporate lending,
— Mezzanine debt,
— Leveraged senior secured loans,
— High yield debt,
— Structured credit,
— Distressed/stressed debt,
— Real estate debt,
— Trade finance,
— The mandate will be able to invest in illiquid and liquid securities, however there is expected to be a portion of the overall mandate which can be liquidated within 0-3 months with further liquidity grading after that.;
— It is expected that income will be paid at some point in the near future, we would expect the current proposed portfolio to a have a 5 % running yield;
— Exposure to lower yielding investment grade credit markets will be a function of volatility management rather than for income generation;
— All currency exposure must be hedged back to Sterling. Limited derivate usage will also be allowed to provide some downside protection through hedging credit risk;
— Managers must have proven credentials and track record in investing in a number of the above markets, including experience in sourcing, origination and work-out experience;
— Managers must also exhibit superior default and recovery experience, relative to the more liquid public sub-investment grade credit markets;
— LPFA reserves the right to exclude funds on certain criteria e.g. significant use of leverage;
— LPFA reserves the right to alter the value of the funds awarded, both at outset and at an unspecified point in the future.

II.1.6)Common procurement vocabulary (CPV)

66141000

II.1.7)Information about Government Procurement Agreement (GPA)

The contract is covered by the Government Procurement Agreement (GPA): no

II.1.8)Lots

This contract is divided into lots: no

II.1.9)Information about variants

Variants will be accepted: no
II.2)Quantity or scope of the contract

II.2.1)Total quantity or scope:

The Committee of the Fund has agreed to consider an investment in a segregated alternative credit mandate, which will invest in illiquid and liquid higher yielding debt markets. The Committee is seeking to establish a framework agreement comprising a number of alternative credit managers. The framework will be open to other eligible Local Authorities and LGPS funds.
The key mandate parameters are flexible and will be agreed upon the appointment of a manager(s). However, the following provides a broad outline:
— The framework will be open to other Local Authorities;
— The mandate size is expected to be in the region of 100 000 000 GBP — 150 000 000 GBP. This could increase if the framework is used by further eligible participants;
— Managers must be able to provide a segregated solution for this mandate (pooled fund solution will not be considered);
— Managers and their investment strategy will need to be able to comply with LGPS regulations;
— The mandate should target an annual absolute return net of fees of between 10 % – 15 %, with minimal/zero use of leverage, through investing in a number of higher yielding debt markets, including but not restricted to:
— Direct corporate lending,
— Mezzanine debt,
— Leveraged senior secured loans,
— High yield debt,
— Structured credit,
— Distressed/stressed debt,
— Real estate debt,
— Trade finance,
— The mandate will be able to invest in illiquid and liquid securities, however there is expected to be a portion of the overall mandate which can be liquidated within 0-3 months with further liquidity grading after that.;
— It is expected that income will be paid at some point in the near future, we would expect the current proposed portfolio to a have a 5 % running yield;
— Exposure to lower yielding investment grade credit markets will be a function of volatility management rather than for income generation;
— All currency exposure must be hedged back to GBP. Limited derivate usage will also be allowed to provide some downside protection through hedging credit risk;
— Managers must have proven credentials and track record in investing in a number of the above markets, including experience in sourcing, origination and work-out experience;
— Managers must also exhibit superior default and recovery experience, relative to the more liquid public sub-investment grade credit markets;
— LPFA reserves the right to exclude funds on certain criteria e.g. significant use of leverage;
— LPFA reserves the right to alter the value of the funds awarded, both at outset and at an unspecified point in the future.

II.2.2)Information about options

Options: no

II.2.3)Information about renewals

This contract is subject to renewal: no
II.3)Duration of the contract or time limit for completion

Section III: Legal, economic, financial and technical information

III.1)Conditions relating to the contract
III.1.1)Deposits and guarantees required:
III.1.2)Main financing conditions and payment arrangements and/or reference to the relevant provisions governing them:
III.1.3)Legal form to be taken by the group of economic operators to whom the contract is to be awarded:
III.1.4)Other particular conditions
III.2)Conditions for participation

III.2.1)Personal situation of economic operators, including requirements relating to enrolment on professional or trade registers

Information and formalities necessary for evaluating if the requirements are met: Providers must be registered in terms of the UK Financial Services and Markets Act 2000, or equivalent law of the European Economic Area (EEA) member state to manage the assets of occupational pension schemes. Proof of registration must be provided.
III.2.2)Economic and financial ability

III.2.3)Technical capacity

Information and formalities necessary for evaluating if the requirements are met:
Providers should complete a Request for Proposal (‘RfP’). Please contact Hymans Robertson LLP for a copy of the RfP. Contact details can be found in Annex A.
Minimum level(s) of standards possibly required:
Providers must be registered in terms of the UK Financial Services and Markets Act 2000, or equivalent law of the European Economic Area (EEA) member state to manage the assets of occupational pension schemes. Proof of registration must be provided. Providers must be able to comply with appropriate LGPS regulations.
III.2.4)Information about reserved contracts
III.3)Conditions specific to services contracts

III.3.1)Information about a particular profession

Execution of the service is reserved to a particular profession: yes
Reference to the relevant law, regulation or administrative provision: Providers must be registered in terms of the UK Financial Services and Markets Act 2000, or equivalent law of the European Economic Area (EEA) member state to manage the assets of occupational pension schemes. Proof of registration must be provided.

III.3.2)Staff responsible for the execution of the service

Legal persons should indicate the names and professional qualifications of the staff responsible for the execution of the service: yes

Section IV: Procedure

IV.1)Type of procedure

IV.1.1)Type of procedure

Open
IV.1.2)Limitations on the number of operators who will be invited to tender or to participate
IV.1.3)Reduction of the number of operators during the negotiation or dialogue
IV.2)Award criteria

IV.2.1)Award criteria

The most economically advantageous tender in terms of the criteria stated in the specifications, in the invitation to tender or to negotiate or in the descriptive document

IV.2.2)Information about electronic auction

An electronic auction will be used: no
IV.3)Administrative information
IV.3.1)File reference number attributed by the contracting authority:

IV.3.2)Previous publication(s) concerning the same contract

no

IV.3.3)Conditions for obtaining specifications and additional documents or descriptive document

Time limit for receipt of requests for documents or for accessing documents: 16.10.2014 – 10:00
Payable documents: no

IV.3.4)Time limit for receipt of tenders or requests to participate

16.10.2014 – 12:00
IV.3.5)Date of dispatch of invitations to tender or to participate to selected candidates

IV.3.6)Language(s) in which tenders or requests to participate may be drawn up

English.
IV.3.7)Minimum time frame during which the tenderer must maintain the tender
IV.3.8)Conditions for opening of tenders

Section VI: Complementary information

VI.1)Information about recurrence

This is a recurrent procurement: no

VI.2)Information about European Union funds

The contract is related to a project and/or programme financed by European Union funds: no
VI.3)Additional information
VI.4)Procedures for appeal
VI.4.1)Body responsible for appeal procedures

VI.4.2)Lodging of appeals

Precise information on deadline(s) for lodging appeals: As per the Public Contracts Regulations 2006.
VI.4.3)Service from which information about the lodging of appeals may be obtained

VI.5)Date of dispatch of this notice:

1.9.2014