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Tender for management of US small/mid cap equities

General
This document gives a description of the procurement process and some general information on the mandate(s). To download the official CONTRACT NOTICE published in “Publication of Supplement to the Official Journal of the European Communities” please see below at the end of this document.

Applications
The application should be in the form of a letter describing how the manager fulfils the conditions for participation as set out in the official contract notice under item 12.

The applications should be sent both by e-mail to US.smid@ap3.seon or before the 01/11/2002 and followed immediately by one identical hard copy by mail/messenger with the envelope marked ”US small & mid cap AP3 2002/79” to the following addresses:

For mail: Tredje AP-fonden, Att. Lena Djurberg, P.O. Box 1176, SE-111 91 Stockholm, Sweden

For messenger: Tredje AP-fonden, Att. Lena Djurberg, Vasagatan 11, 8th floor, Stockholm, Sweden.

Questions of general nature and AP3’s answers will be posted on AP3’s website (www.ap3.se).

Information about the procurement

The process

AP3 plan to form closer relationships with a small universe of managers, most likely in the range of 5 to 10, with whom Investment Management Agreements will be signed. Out of this universe a selected number of managers will be funded.

Since AP3 is a government authority we need to go through a formal public procurement process when hiring external managers. The process is divided into three steps.

In the first step all interested managers are welcome to answer the questions in the official contract notice, which is published in TED and also can be found on AP3’s website (www.ap3.se). It is important that the answers are substantiated with relevant information.

The second step will be that, based on the answers received, the managers who fulfil the requirements in the official contract notice and are among the 25 managers with the highest information ratio, given the minimum tracking error level (see Item 6 in the official contract notice) will receive a questionnaire (RFP).

As the third step, based on the RFP’s, a limited number of managers will be selected for on-site visits to give a presentation of their capabilities in the relevant area. Following the on-site visits a small number of managers will be invited to contract negotiations.

As the third step, based on the RFP’s, a limited number of managers will be selected for on-site visits to give a presentation of their capabilities in the relevant area. Following the on-site visits a small number of managers will be invited to contract negotiations.

Provisional timetable (this may be subject to changes)
September 24 – Announcement to be placed with TED
November 1 – Deadline for applications
November 18 – Questionnaires (RFPs) to be distributed to managers
December 13 – Deadline for receipt of questionnaires (RFPs)

After this the evaluation phase begins. This will include on-site visits and potentially presentations by the managers at AP3. All which are planned to take place in the early part of year 2003.

Information about the mandate(s)
Below please find some general information that is eligible for this active US small/mid cap equity mandate(s).

  • The portfolio allocated is expected to be in the range of USD 200 – 400 million. This will be divided between one or more managers.
  • Most likely the Russell 2500 Index will be used.
  • The base currency for the mandate(s) will be USD.
  • The mandate(s) should preferably be managed on a segregated basis.
  • The performance and tracking error objectives will be set in consultation with the successful candidate(s). The tracking error limit is, however expected to be at least 4%.
  • Given the tracking error constraint managers are requested to put forward what they consider to be their highest net information ratio product with an information ratio not lower than 0,25.
  • AP3 has appointed The Northern Trust Company as its global custodian. The global custodian will handle all custody matters, including stock lending.
  • AP3 will require weekly reporting of daily net asset values as well as regular monthly and quarterly reporting.
  • AP3 will require the Investment Management Agreement to be governed by and construed in accordance with English law. A standard agreement will be distributed together with the RFP.

Download the official CONTRACT NOTICE here >>