LGPS Central, one of the UK’s eight local government pension scheme (LGPS) asset poolers, has launched a tender process via IPE Quest, seeking to hire a new global equity manager for its LGPS Central Global Equity Active Multi-Manager Fund.
It is expected that the new manager will be funded in mid 2023 with a total value up to £750m (€845m) and the successful strategy will be added to the pool’s existing Authorised Contractual Scheme (ACS) sub-fund.
LGPS Central has been established to manage the pooled assets of eight Local Government Pension Scheme (LGPS) funds – Cheshire, Derbyshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, West Midlands, and Worcestershire, also called partner funds.
The pool currently has approximately £55bn of partner fund assets under management, including £28.5bn in the LGPS Central ACS.
The ACS sub-fund has responsible investment integrated status, so applicants will be expected to demonstrate that RI is fully integrated into the day-to-day management of their portfolios.
LGPS Central is looking for global equity managers that have a minimum of £500m of external client money invested at 31 December 2022 with a three-year track record (to the same date) in managing the global equity strategy submitted for this procurement.
The pool is looking for active managers that use a fundamental rather than quantitative approach, with evidence of strong performance in the quality style of investing, according to the tender notice.
Applicants for the bid process, are required to:
- be benchmarked against FTSE All World Index (GBP);
- be expected to return performance (net of all fees) above the benchmark of 1.5% per annum over rolling 5-year periods;
- predominantly invest in global equity or equity-style instruments across markets;
- have certain exposure limits – no single investment above 10% of the portfolio, 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 level;
- may use derivatives for hedging and efficient portfolio management;
- have a predominantly liquid portfolio; and
- have no specific exclusions on investments held within portfolios.
Successful bidders will need to be able to demonstrate a consistent, robust, repeatable, investment process, as well as low cost, full transparency, value for money. Additionally responsible investment integration and sustainability should be part of applicants’ investment processes and they should also demonstrate strong governance and oversight of their process and investments.
Tendering for this procurement is a three-stage process designed to be fair, transparent, and non-discriminatory. The procurements will be managed electronically by LGPS Central’s active-equity team via the company’s e-procurement platform system In-tend.
A selection questionnaire must be submitted via the In-tend portal before 12:pm GMT on 31 March 2023. 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.