The NOK547bn (e68bn) Norwegian Government Petroleum Fund has issued one of the world’s largest ever fixed-income RFPs, seeking 14 mandates for between $5 bn–8bn of assets, with the initial tender process being run through the IPE-Quest electronic manager selection system.
Niclas Hiller, head of external fixed income products within the fixed income department at Norges Bank Investment Management (NBIM), which runs the assets on behalf of the Petroleum Fund says the size of the fixed income tender is in line with the strategic benchmark of the huge fund, which sits at 40% global equities and 60% global bonds.
“Fixed income was 100% internally managed by us to begin with then we added a couple of global mandates and now we announce these new mandates to get access to other external mangers with specialised skills and thus create a more even balance between managers and internal and external management.
“This is a huge announcement – it is fourteen different mandates, five in index, five in enhanced and four in active. We would like to find and fund as many interesting managers as possible.
“This is a very fluid and flexible process. In our RFP we are not telling managers explicitly what we would like. It is up to the manager to tell us what they are good at and their niches. We will work around that and see what there is room for,” says Hiller.
He explains the reasons behind the selection of the briefs: “Firstly we would like to have regional specialisation. Managers will not be considered for a global mandate if they don’t pitch for one of the same in a regional category, because we are seeking specialisation here.”
Another reason for the shift, he says, is the scheduled move at the beginning of next year from a customised Salomon World Government Bond Index benchmark to a customised Lehman Global Aggregate benchmark.
Hiller says NBIM used the IPE-Quest system to streamline a very labour-intensive process: “The benefit of having an electronic tendering process reduces the admin burden and enhances your ability to be better in your database work when you receive what can be a vast amount of data.
“You also try to do these things in a standardised way where people can go in have a look and save their searches and they will come in the same format.
“IPE-Quest is a great way of marketing these things to the investment community because we would like as many managers as possible to compete in this tender.”
The closing date for initial responses to the RFP is 15 January this year.
**Full information on the RFP can be found at http://nbim.ipe-quest.com