Sovereign Wealth Funds (SWF) are special purpose investment funds or arrangements that are owned by the general government, which resources are usually invested abroad. Differently from Central Banks that focus their investments in high liquid and low risk assets, most of SWFs present long term investment horizons which allow them to invest in different asset classes, with lower liquidity and higher risks.
According to the International Monetary Fund[1], (IMF) Sovereign Wealth Funds can be classified in five groups considering its purposes: (a) alternative international reserves investment, aiming at increasing its profitability; (b) social security purpose, investing government resources to meet future pension liabilities; (c) stabilization, to protect the budget and the economy from volatility in commodity prices; (d) savings, which allows to transfer to future generations revenues derived from the exploitation of nonrenewable natural resources; and (e) development, to fund projects or industrial policies.
Regarding their funding, stands out: revenues from commodities exports (oil, gas, copper etc); fiscal sources (fiscal surpluses, privatization etc.) and external sources (balance of payments surplus, international reserves resources etc).
The growing number of sovereign wealth funds and assets under SWFs management has led to an increased concern on the subject and the creation of a set of common evaluation criteria and reference for SWFs. Truman´s[2] Table, the Linaburg-Maduell[3] Transparency Index, developed by the Sovereign Wealth Fund Institute, and the Santiago Principles[4], defined by the International Working Group of Sovereign Wealth Funds, are the main attempts to define sovereign wealth funds’ best practices. Attempts to establish benchmarks were intensified in response to the growing importance of SWFs to international financial markets, especially during the recent financial crisis. Sovereign wealth funds, however, are a heterogeneous group in its objectives, funding sources and size, making it difficult to compare and establish a governance pattern to be adopted universally.
This contract which will be held under the Technical Cooperation Agreement – PREMEF, includes the elaboration of technical reports showing the best compliance and corporate governance practices of investment funds and sovereign wealth funds and is linked to PRODOC’s Result 9 of Product 9.12, signed on December 30, 2013.
This Terms of Reference aims to hire an individual consultant to elaborate empirical or theoretical studies presented through technical reports that must list the best practices in of the management of investment funds and sovereign wealth funds. A case study will also be requested, the scope of which will be defined by a Work Plan to be submitted by the selected consultant, subject to STN’s approval.
The conclusions of the technical reports should indicate investment funds and sovereign wealth funds governance state of the art literature. The reports should also include a case study that applies the best practices in an investment fund or sovereign wealth fund chosen by the contractor.
Areas InvolvedThe National Treasury Secretariat (STN) will be responsible for monitoring all project phases.
The place where activities related to the subject of this Terms of Reference will be performed shall be set by mutual agreement between STN and the consultant.
Preparatory meetings may be held in person or remotely, at STN discretion.
Throughout the project, the consultant will transfer knowledge to STN´s staff, in a way that enables them to maintain, develop, manage and improve, from both technical and business standpoint, each product related to this Terms of Reference.
It is estimated that it will take at least three presence meetings, each one consisting of up to 20 hours of work. The meetings will discuss the approach planned for the reports and the case study, including hypotheses, methodology, and relevant technical aspects of the work. They will also include workshops and training of STN´s staff on how to use the proposed methodology
Expenditures on airfare, daily rates, medical aid, food, local transportation, insurances, among other costs related to the services under these Terms of Reference will run exclusively at the expense of the consultant.
The preselected consultants must present a Work Plan and a detailed Financial Proposal, to be approved by the STN, containing delivery schedule and estimated additional trips to the specified above, if necessary, at the consultant’s expense.
Upon delivery, each product will be reviewed by the "Product Evaluation Committee", composed of at least 3 STN’s members. The consultant shall certify that the required expertise was transferred to STN’s staff, detailing the activities that were performed for this purpose and assessing the activities and byproducts delegated to STN’s technical and business teams. The technical opinion is a necessary requirement for the acceptance of products.
[1] Sovereign Wealth Funds – A Work Agenda. 2008, FMI.
[2] A Blueprint for Sovereign Wealth Fund Best Practices. 2008. Peterson Institute for International Economics.
[3] Available at http://www.swfinstitute.org/statistics-research/linaburg-maduell-transparency-index/.
[4] Sovereign Wealth Funds Generally Accepted Principles and Practices. “Santiago Principles”. 2008. International Working Group of Sovereign Wealth Funds.
Technical Report that reviews the investment funds and sovereign wealth funds compliance and governance best practices with a case study with an investment fund or SWF to be chosen by the contractor. Among other topics, the report should include at least:
Literature review;
Review of international experience related to the subject, analyzing at least 5 SWF cases;
Case Study detailing a proposal of governance structure, such as:
Analysis of the adequacy of the governance structure in relation to the SWF investment mandate;
Analysis of the advantages and disadvantages of using external managers in comparison to internal management;
Analysis of the decision making process;
Levels of jurisdictions; Division of roles and responsibilities among the different bodies;
Creation of a supervision and compliance system considering an adequate checks and balances system; and
Process improvements, and operational rules consistent with the investment fund or SWF objectives and with the agility required in the markets in which it operates.
Development and execution of a workshop to present the case study in the light of technical reports prepared in order to standardize between servers and authorities in the areas involved the understanding of its contents.
Initial diagnosis of governance in investment funds and in sovereign wealth funds in the scope of the project.Days: 60 days after contract signing.Technical report with the literature review and the best governance practices in the management of investment funds and sovereign wealth fundsDays: 90 days after contract signing.Technical report on the case study and a workshop, internal to the STN, to present the results.Days: 180 days after contract signing.
Value: 50%
General Criteria: The hired consultant must maintain strict secrecy on all accessed information during the project, as well as the products, and may only disclose results, partially or totally, and any other content, with the express permission of STN.The deadlines established under “Key Outputs” must comply with the submitted Work Plan and may be changed if properly justified by the Consultant and approved by STN;All expenses relating to the development, formatting and delivery of products, object of this Terms of Reference, as well as travel, food and transportation shall be borne by the consultant, being included in the final price of services
Delivery of all components of each product;Clarity and objectivity of received documents’ content;Transparency during the development of products, byproducts and activities;Fulfillment of all conditions on the execution of the products and byproducts;All documents and files relating to the products must be sent electronically in a format agreed with the STN; Acceptance of each product by the “Products Evaluation Committee”; andThe non-acceptance of any product shall be duly justified by the “Products Evaluation Committee”, pointing out all improvements needed for acceptance, in up to 30 days.Qualifications and Evaluation Criteria
Mandatory Criteria:
Professional with an undergraduate degree and at least 3 (three) years of experience in governance, management and analysis of investment funds or sovereign wealth funds, management of international reserves, pension funds, public finance or related field.
Applicants will be ranked according to the criteria listed below, upon: (i) curriculum analysis, consisting of curriculum vitae, and all certificates, expertise statements in relevant projects, national and international publications sent by the candidate attesting their technical and professionals skills; and (ii) technical interview that can be held remotely through telephone contact, instruments and software for videoconferencing or teleconferencing.
The Evaluation Committee will be composed of at least three people and will be responsible for the analysis and selection of candidates.
The Evaluation Committee will pre-select up to five candidates to be interviewed, based on its CVs. The pre-selected candidates which will be required to present a Work Plan and a detailed Financial Proposal to be discussed on the interview.
During the technical interview the following requirements will be assessed, which will be scored up to 15 points per interviewer:
Experience related to SWFs management activities.
1 point per year, additionally to the mandatory period.
Up to 5 points
Experience in consulting projects related to SWFs.1 point per Project
Up to 5 points
Papers or working papers (WP) on SWFs.Up to 5 points
1 point per year
Up to 5 points
Experience in governance related consulting projects.1 point per project
Up to 5 points
Papers or working papers on governance.Up to 10 points
Professional experience in multilateral organizations.1 point per year
Up to 5 points
Up to 5 points
10 points
Up to 10 points
Up to 15 points per interviewer (total of three)
Up to 45 points
The Project must be completed in 180 days, counted from the moment of the contract signing. This deadline can be renegotiated with the hired consultant at the discretion of STN.
All material (development, activities, presentations, drafts, proposals, emails, briefs, intermediate products, byproducts and final products delivered) must be presented in English or Portuguese. Technical meetings must be held in English or Portuguese. All support material provided by the STN (legislation, regulations, statistics, reports, etc.) will be available only in Portuguese.
Payment will be subject to product delivery as described in this Terms of Reference and under “Products Evaluation Committee approval”. Product delivery may be anticipated, based on Work Plan schedule, if quality requirements are fulfilled and observing the precedence between products established in the Work Plan.
Questions about the project may be resolved by demand and must be requested through the email ucp.codin.df.stn@fazenda.gov.br.
Those interested in attending the selection process should send curriculum vitae and additional information to ucp.codin.df.stn@fazenda.gov.br until 04/14/2014.
Only pre-selected candidates will be contacted.
Supervisor: Líscio de Brasil Camargo Supervisor Role: National Project DirectorUNDP is committed to achieving workforce diversity in terms of gender, nationality and culture. Individuals from minority groups, indigenous groups and persons with disabilities are equally encouraged to apply. All applications will be treated with the strictest confidence.
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