Agenda item

The Investments Manager presented the report. She reminded Members that the Infrastructure Policy Framework had been agreed at the December meeting of the full Committee. This report set out the tender and selection process in more detail. Section 7 specified the tender evaluation criteria. The tender process for Infrastructure resembled that for hedge funds, in that that the number and nature of the responses could not be predicted at this stage. It was planned that officers would work in close partnership with JLT in the due diligence process.

Mr Finch said that it was essential to know where and when the prospective managers would place investments. He was aware of some 116 infrastructure investment managers raising funds, of whom up to 80 might respond to the Fund’s tender. In order to keep fees down, the Fund was cooperating with two other local authorities in information gathering. The Chair suggested that the number of applicants might be reduced, if it was made clear to them that the Fund was not ready to begin investing immediately. Mr Finch, however, replied that the Fund should be looking for managers ready to invest, otherwise it could be paying fees on money not drawn down by the manager and on which no return was being earned. The benefit of diversification through this new asset class would also be lost. He said that it was important to find some means of comparing the prospective infrastructure managers’ fees on a common basis. It was not important whether they invested only locally or globally, but it was important to know how widely they had cast their net. A Member raised the possibility of the Fund investing in a manager who was not chosen to fund the project the infrastructure fund was hoping to invest in. Mr Finch said that managers’ track record in securing deals was a factor that should be taken into account in the selection process.

The Investments Manager asked Members for their views on how the selection process should be structured. She felt that a one-day selection based on one-hour presentations would be inadequate. The due diligence process would probably take one or two days, so that by the time the shortlist was prepared officers and JLT would know the applicants very well. These considerations might lead the Panel to prefer option 6.5(2), a selection panel comprising officers, JLT and those Panel Members wishing to attend, rather than option 6.5(1), a meeting of the full Panel.

The Chair felt that the complexity of the evaluation process required a wide range of expertise and that Members of the Panel had individual strengths they could contribute. He therefore felt that the selection should be done by the full Panel. He also felt that all applicants should be seen on the same day, so that comparisons could be made when all the details were still fresh in the mind. He suggested that the selection meeting should be preceded by a half-day briefing session. Other Members agreed with him. The Chair and Councillor Gilchrist pointed out that they would not be available on any of the suggested dates for the selection meeting. It was agreed that officers should propose new dates for the meetings.

RESOLVED

1. To agree the selection process and evaluation criteria for the Infrastructure tender process.

2. To agree that the selection meeting should be a meeting of the full Panel and should take place on dates in June/July to be arranged.