Equity Overlay / Downside Risk Management

Northern LGPS is seeking to control equity risk on a medium-term basis and possibly on a longer-term strategic basis through the use of an equity overlay solution(s).

Northern LGPS is looking to renew its framework of approved equity overlay suppliers to offer overlay management services as required during the framework duration. It is anticipated that mandates will be awarded on an individual basis to suppliers within this framework as required by the underlying plans. Suppliers must be able to offer equity risk / drawdown control through a broad range of overlay solutions ranging from basic put / put-spread protection through to more complex strategies (as required by individual awards within the framework), and may also be required to offer mechanisms for funding (e.g. synthetic equity replication or other funding routes). The approved supplier framework will target a minimum of 3 manager appointments. Northern LGPS are seeking proposals from asset managers. Bank or other non-fiduciary solutions will be excluded. Suppliers must be able to implement solutions using their own trading relationships. Proposals requiring use of client ISDAs will be excluded. Suppliers must be regulated to offer services to UK institutional investors. It is estimated that the Northern LGPS will seek to deploy Equity Risk Overlay mandates on up to GBP 3bn initially. This figure represents the client's total equity exposure that might be referenced by overlay proposals. Individual mandates within the framework are expected to vary in sizes ranging from GBP 100m to GBP 2bn, with the framework expected to deploy multiple overlay solutions over time. There is also the potential for aggregate mandate size to grow through the incorporation of other asset classes over time.

Estimated contract value is £7,236,000 (exc VAT) and £8,640,000 (including VAT)

Procedure Type is Competitive Procedure with Negotiation

Additional information: The procedure for this tender will be based on a Competitive Process with Negotiation (CPN) process. bfinance, an independent investment consultant specialising in investment manager search and selection, has been appointed by the Northern LGPS to assist in the tendering process and will assist Northern LGPS in the evaluation of submissions.

Please contact bfinance for any queries regarding the mandate requirements or process issues. Where relevant, answers to individual questions will be anonymised and communicated to all applicants. No canvassing or other contact should be made directly to Northern LGPS or any of its officers or members regarding this tender process.

Subject to there being a sufficient number of responses meeting the selection criteria, Northern LGPS will select the 10 top scored qualified applicants to be invited to tender.

FOR ALL QUERIES, ACCESS TO DOCUMENTATION, EXPRESSIONS OF INTEREST, SUBMISSIONS PLEASE ACCESS VIA THE OPPORTUNITY ON THE CHEST PORTAL VIA http://www.the-chest.org.uk

Please note due to Christmas Shut down between 5pm Friday 23rd December 2022 and 9am Tuesday 4th January 2023 no questions will be answered during this period.