A $100 million investment mandate has been released to grow South Australia’s funds management industry
Treasurer Rob Lucas has released money from the sale of the Motor Accident Commission to help grow the financial services sector.
THE State Government has put a $100 million funds-management mandate into the market, as part of its commitment to boost the local financial services sector.
A tender has been called by the Department of Treasury and Finance to manage the money, with the contract running until at least December 2023.
“The portfolio is expected to be initially funded to $100 million,’’ the tender documents state.
“The investment-management model for the portfolio must be structured with a target of delivering at least $113 million (after fees) to meet an external cash-payment obligation in December 2023.
“The Government has a low-risk appetite and will work with the selected fund manager to ensure a management model that achieves the requirement for a targeted return and high liquidity.
“The SA Government is committed to developing the funds/investment-management industry in South Australia, and contributing to that objective is a core deliverable of this procurement.
“It is anticipated that the contract for funds-management services will be up to a maximum of 4½ years, subject to performance against agreed industry benchmarks.’’
The bidders would be assessed against the State Government’s Industry Participation Policy requirements and the tender “will require completion of an Economic Contribution Test or Industry Participation Plan at the next stage of the procurement and an acceptable response will be required prior to contract award’’.
The Government had been intending to shift the management of public sector superannuation and other assets managed by Funds SA into local hands, or require more local participation. However, Treasurer Rob Lucas said that approach was unworkable due to reasons such as long investment mandates and other issues.
Mr Lucas said the new tender was a “Plan B” which meant the money, which had come from the sale of the Motor Accident Commission, could be used to foster growth in funds management locally.
Lanyon Asset Management has an investment team based in Adelaide. Managing director David Prescott said the contract was a good step towards underpinning a healthier local funds management industry.
“Our state’s capital pool, which is predominantly comprised of our communities retirement savings, is growing and is of a globally enviable size,’’ he said.
“This capital is almost entirely invested by fund managers located in Martin place or Collins street or offshore.
“We have long bemoaned that our local funds management industry is virtually non-existent and mostly inadequate.
“We are pleased and wholly supportive of this government initiative which we feel will strongly assist in developing an ecosystem of strong organisations and also attracting and retaining talent.’’
The Government is receiving proposals until August 9.