LGPS Central, one of the UK’s eight local government pension scheme (LGPS) asset poolers, has launched a tender process seeking to hire a new emerging market (EM) equity manager for its Emerging Markets Equity Active Multi-Manager Fund.
It is expected that the new manager will be funded in early 2023 with a total value expected to be more than £100m (€114m), the pool announced.
LGPS Central, which currently has approximately £55bn of partner fund assets under management, is looking for an active EM equity manager that already has a minimum of £250m of external client money invested as of 30 September 2022, with a three-year track record (to the same date) in managing the EM equity strategy submitted for this procurement.
The pool is looking for active managers that use a fundamental rather than quantitative approach, with evidence of robust performance in this style of investing, it said.
Tender documentation, which was originally submitted via IPE Quest, noted that the following requirements should be considered for this bid process. Managers would be expected to:
- take a fundamental approach to investing in EM with a value approach or demonstrate flexibility and a proven track record in incorporating this style of investment;
- be benchmarked against FTSE Emerging Index (GBP) (or equivalent);
- generate return performance (net of all fees) above the benchmark of 2.0% per annum;
- predominantly invest in global EM or equity style instruments across markets;
- have certain exposure limits – for example, no single investment above 10% of the sub-fund, no single investment to be more than 5% of the company’s shares in issue;
- be a high conviction portfolio with a reasonable level of diversification;
- have no leverage taken at the portfolio/fund level;
- if necessary, use derivatives for hedging and efficient portfolio management;
- have a predominantly liquid portfolio; and
- have no specific exclusions on investments held within portfolios.
Additionally, successful bidders will need to be able to demonstrate:
- a consistent, robust, repeatable investment process;
- low cost, full transparency, value for money;
- responsible investment integration and sustainability as part of their investment process;
- a strong governance and oversight of their process and investments;
- an actively managed portfolio; and
- full transparency (look through) with the authorised contractual scheme (ACS) custodian.
Tendering for this procurement is a three-stage process that will be fair, transparent, and non-discriminatory, the pool stated. The procurements will be managed electronically by LGPS Central’s active equity team via the company’s e-procurement platform system, In-tend.
Participating asset managers have until midday on 6 January 2023 to submit bids. Late submissions will not be accepted.
Successful applicants will then be invited to complete a request for proposal (RFP) before a competitive dialogue and due diligence stage, which will include final interviews prior to selection.
LGPS Central looks after the pension assets of administering authorities across the Midlands (Cheshire, Derbyshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, West Midlands, and Worcestershire).