4.5 Indicative RFP content for external manager selection

TABLE 4.5 Indicative RFP content for external manager selection

RFP SECTION

Background Purpose of the RFP

DESCRIPTION

Background information on the rationale for the SIF’s launch and the sponsor. Brief description of the SIF the sponsor intends to launch, the sponsor’s role, and its capital commitment.

Features of the proposed SIF Summary description of the SIF’s intended strategy, funding, governance, ESG requirements, and other elements deemed relevant. Subheadings could include the following: • Target sectors • Target geographies • Eligible investee companies and capital instruments • Target fund size • Capital commitments already secured from sponsor and other investors • Capital commitment sought from external manager • Commitment and drawdown periods • Indicative fee arrangement • Governance and, in particular, role of the investment committee and the advisory committee representing fund investors • Ability to meet the ESG criteria adopted by the SIF • Any undertakings and representations required from applicants (for example, compliance with anti-money laundering and other legislation)

Selection process

Description of selection process and timetable, including the following: • Submission of proposals • Proposal evaluation • Interviews with shortlisted candidates • Due diligence on shortlisted candidates • Final selection and sponsor’s internal approval process Selection criteria The criteria deemed relevant for the selection of the manager, to be backed with written information by the applicants. Examples include the following: • Organizational structure of manager and suitability to proposed SIF • Description of the applicant’s envisaged approach to fulfill the SIF’s investment strategy, sourcing, and executing quality investments • Manager’s track record in relevant sector • Manager’s track record in relevant geography • Any competitive advantages of the manager (for example, deal sourcing capabilities, access to capital markets, and portfolio company support after the deal) • Description of the manager’s team and its experience, credibility, and cohesiveness • Decision-making, risk management, and other processes suitable to ensure the SIF’s achievement of its objectives • The manager’s experience in fulfilling its fiduciary duties, including reporting and administration requirements • The experience of the fund manager in capital raising (if the proposed SIF seeks capital other than from the sponsor) • The proposed terms and conditions of the fund Proposal submission Procedures for submission and any representations by the sponsor (for example, the right to reject proposal or request additional documentation, nonliability for submission costs).

Source: World Bank. Note: ESG = environmental, social, and governance; RFP = request for proposal; SIF = strategic investment fund.

diligence topics can be summarized as people, performance, pipeline, and process (the four Ps; see box 4.8).46 The support of advisers in this phase can be beneficial, together with the use of industry tools and guidelines. The Institutional Limited Partners Association, for instance, has published a detailed fund due diligence questionnaire template (ILPA 2018). In addition to verifying that the external manager meets the expertise and reputability criteria required to run the SIF, due diligence also allows for a preliminary understanding of fund terms and economics between public sponsor and manager.

The fourth and final phase consists of the public sponsor’s internal approval process for the selected fund manager. This process and its timing will vary