North West Business Financeltd (NWBF)

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North West Business FinanceLtd (NWBF)

The Maltings,

98 Wilderspool Causeway

Warrington
WA4 6PU

August 2013

North West Business Finance Ltd (NWBF) is pleased to invite tender responses for the delivery of a £3m Micro Fundas part of the £155m North West Fund managed by North West Business Finance Limited.

You are invited to submit a fully priced tender in accordance with the provisions of this tender document by noon on the7th Ocotober 2013. Any tender submitted later than this date and time will not be eligible for consideration.

Please ensure that your tender is submitted in line with the requirements set out in Volume 1 (Instructions to Bidders).

The Invitation To Tender (ITT) document is separated into four volumes. Please ensure that you take the time to read ALLvolumes.

Volume 1- Instructions to Tender

Volume 2- Selection documentation

Volume 3- Award documentation

Volume 4-Contract Documentation

Details of the tender clarificationprocess is set out in this volume (Instructions to Bidders). All clarifications and queries should be submitted by email to Clarification questions will be accepted up to and including the 25th September 2013. We will aim to respond to any questions within four working days. All questions and answers will be anonymised and posted on the tender page of the The North West Fund website ( that all bidders have access to the same information.

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Table of Contents – Volume 1

INVITATION TO TENDER DOCUMENTATION STRUCTURE

1GLOSSARY

2.INTRODUCTION

2.1Purpose of this Procurement

2.2Introduction and Overview

2.3North West Business Finance Ltd.

2.4 Micro Fund details

2.5 Contract Period

2.6General Contract Conditions

3INSTRUCTIONS TO BIDDERS

3.1Indicative Procurement Timetable

3.2General

3.3Tender Process

3.4Submission of Documents

3.5 Non Compliance

3.7Pricing Schedule

3.8Initial Appraisal

3.10Validation including Due Diligence

3.11Interviews

3.12Conditions of Contract

3.13 Debriefing

3.14Confidentiality

3.14Freedom of Information

3.16Guarantees/Security Bond

3.17 TUPE

4.EVALUATION METHODOLOGY

4.1Key Principles

APPENDIX A - SELECTION METHODOLOGY FOR VOLUME 2 (Selection Documentation)

APPENDIX B- AWARD METHODOLOGY FOR VOLUME 3

APPENDIX C –NWBF OVERVIEW AND MARKETING SUPPORT

APPENDIX D - FUND STRUCTURE ……………..……………..……………………………47

APPENDIX E – INVESTMENT OPERATING GUIDELINES ………………………….……53

APPENDIX F - CHECKLIST …………………………………………………………………..66

APPENDIX G – REPORT TEMPLATE………………………………………………………..71

APPENDIX H - SCREEN PRINT FROM CRM ………………………………………………90

INVITATION TO TENDER DOCUMENTATION STRUCTURE

VOLUME 1- INSTRUCTIONS TO BIDDERS
Section 1 / Glossary
Section 2 / Introduction
Section 3 / Instructions to Bidders
Section 4 / Evaluation Methodology
Appendix A / Selection Methodology for Volume 2
Appendix B / Award Methodology for Volume 3
Appendix C / NWBF Marketing Support
Appendix D / Fund Structure
Appendix E / Investment Operating Guidelines (IOGs)
Appendix F / Checklist
Appendix G / Report Template
Appendix H / Screen Print from CRM
VOLUME 2- SELECTION DOCUMENTATION
Stage One Selection
VOLUME 3- AWARD DOCUMENTATION
Section 1 / Service Delivery & Approach Questions
Section 2 / Pricing Schedule
Section 3 / Procurement Certificates
VOLUME 4 –CONTRACT DOCUMENTATION
Section 1 / Contents
Appendix 1 / LP Agreement
Appendix 2 / Fund Management Agreement
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1GLOSSARY

Unless the context otherwise requires, the following words and expressions used within this Invitation to Tender shall have the following meanings:

Term / Meaning
“Bidders” / Organisations responding to this Invitation To Tender.
“CfEL” / Capital for Enterprise Limited
“CIS” / Collective Investment Scheme
“Conditions of Tender” / Terms and Conditions set out in this Invitation To TenderDocumentation relating to the submission of a Tender.
“Contract” / The Fund Management Agreement entered into as a result of winning this tender process.
“Contract Management Team” / The team Bidders will put in place to manage the contract
“EIB” / European Investment Bank
“EIF” / European Investment Fund
“ERDF” / European Regional Development Fund
“Expansion Capital” / Financing providing for growth of an undertaking, which may not break even or trade profitably, for the purposes of increasing production capacity, market or product development or the provision of additional working capital
“FSMA” / Financial Services and Markets Act 2000
“FCA” / Financial Conduct Authority
“Fund Manager” / The manager appointed to provide the Services to the Limited Partnership.
“General Block Exemption Regulation (GBER)” / Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty
“GVA” / Gross Value Added (valuegenerated by a region or economy).
“Invitation To Tender Documentation” / This document and all related documents published by the NWBF and made available to Bidders
“IOGs” / Investment and Operational Guidelines
“JEREMIE” / Joint European Resources for Micro to Medium Enterprises Initiative
“Limited Partnership” or “LP” / A limited partnership established by a Limited Partnership Agreement
“Limited Partnership Agreement” or “LPA” / The agreement the successful bidder will be expected to enter into as set out in Volume 4.
“Most Economically Advantageous Tender (MEAT)” / The most economically advantageous tender in terms of costs, ability to deliver and quality.
“NWBF” / North West Business Finance Ltd. This is the Contracting Authority
“OJEU Notice” / Notice to tender published in the Official Journal of the European Union.
“Open Procedure” / One of four methods of procurement under EU regulations.
“Requirement” / The specified minimum requirements needed for the delivery of the service.
“Seed Capital” / Financing provided to study, assess and develop an initial concept, preceding the start up phase
“Service” / The fund management services to be provided via the Fund Management contract (substantially in the form set out in Volume 4 of this document) to the Limited Partnership formed via the Limited Partnership Agreement (substantially in the form set out in Volume 4 of this document)
“SME” / Small to medium sized enterprises defined as enterprises with less than 250 employees and either an annual turnover of less than €50m or a balance sheet total net worth of less than €43m as more particularly defined in Annex 1 of the GBER
“Stage 1 (Selection)” / The first stage of this procurement process, determining suitable suppliers deemed as having financial and technical capability, the investment track record and the capacity to deliver similar Services demonstrated from their past experience.
“Stage 2 (Award)” / The second stage of this procurement process, which will look at how bidder proposes to deliver the micro fund.
“Start up Capital” / Financing provided for the growth and expansion of an undertaking, which has not sold its products or services commercially and is not yet generating a profit for product development and initial marketing
“Submission” / The Bidders’ formal offer in response to this Invitation To Tender Documentation
“Volume” / There are four volumes to this Invitation To Tender Documentation;
Volume 1 - Instructions to Tender;
Volume 2 - Selection Documentation; Volume 3 - Award Documentation; and Volume 4 - Contract Documentation.

2.INTRODUCTION

2.1Purpose of this Procurement

The purpose of this procurement is to seek proposals from organisations for the delivery of a £3m micro fund to be invested across the North West of England by the end of 2015. This document provides guidance to Biddersin respect of the approach they should adopt in developing and submitting their responses.

This procurement follows the “OPEN” procedure as outlined in Regulation 15 of The Public Contracts Regulations 2006 (As ammended).

A summary of how the Submissions will be evaluated is as follows. Further details are in the following sections.

Selection Stage will be based on a desktop assessment process. Only those Bidders whose responses pass all of the ‘pass/fail’ criteria, demonstrate relevant financial strength and score 50% or more on the section covering technical capability, track record and capacity to deliver similar services in the past will proceed to Award Stage.

Award Stage will be evaluated based on a desktop assessment which will include due diligence. The top three scoring bidders will be invited to an interview to present their proposals for delivery of the fund.

The successful bidder will be invited to form the Limited Partnership and to be appointed to manage the Limited Partnership.

After 31st December 2015 there may be subsequent funding available for follow on investments for existing investments from legacy monies returned to NWBF. NWBF will decide how this funding will be allocated at a later date. Table 1 – NWBF Funds

Bidders will be invited to bid to operate and manage a Limited Partnership, which will be a CIS for the purposes of FSMA.

2.2Introduction and Overview

North West Business Finance is the holding fund operating The North West Fund. The North West Fund is a £155m evergreen investment fund established to provide debt and equity funding (currently from £50,000 to £2 million) to Small and Medium sized Enterprises (SMEs) based in, or relocating to, the North West of England. The North West Fund addresses an identified gap in the lending, venture capital and private equity markets. It is one of the largest public sector funds of its kind in Europe and the largest in the UK.

The North West Fund is financed by the European Regional Development Fund (ERDF) and the European Investment Bank (EIB) under the European Commission's Joint European Resources for Micro to Medium Enterprises Initiative – otherwise known as the JEREMIE programme.

The North West Fund is the umbrella name for the six funds that are available to businesses in the form of debt, equity and quasi-equity. These funds are managed by five fund managers under contract with North West Business Finance Limited (NWBF), Initially, £150m has been allocated to the fund managers, as outlined below, with a further £5m to be allocated in due course:

Fund manager / Name of fund / Fund committed
Enterprise Ventures Ltd / Mezzanine / £15m
FW Capital Ltd / Loans Plus / £45m
Enterprise Ventures Ltd / Venture Capital / £30m
Spark Impact Ltd / Biomedical / £25m
350 IP LLP / Energy & Environmental / £20m
AXM Venture Capital Ltd / Digital & Creative / £15m
TBA / Micro Fund / £3m
Funding to be allocated in due course / £2m
Total / £155m

Each fund manager has a mandate to invest its allocation into the specific product or sector it manages, before 31st December 2015.

NWBF is a private, not for profit, company, established to oversee the delivery of The North West Fund.

The fund was originally launched in December 2010. As at the end of July 2013, the fund had invested over £60m into 200 businesses across its sub-funds.

Due to the restructuring of the funds and to respond to market demand we would now like to launch a micro-fund which can make investments of between £25k-£50k with an initial value of £3m to invest funds up to the end of 2015.

2.3North West Business Finance Ltd.

NWBF has been set up to act as the umbrella for the operation of the JEREMIE programme in the Northwest. NWBF is a company limited by guarantee and is non-profit distributing - i.e. its constitutional documentation forbids the distribution of any profit/surplus to its members.

Figure 1: Governance and flow of funds is shown overleaf

Notes to diagram:

1.The Single Programme grant relates solely to the expenses of NWBF.

2.Each LP is to be established as an English Limited Partnership. The partners in each LP are the General Partner (which will be a company in the same group as the Fund Manager), NWBF (which will be a limited partner in the LP) and a carried interest partner (if proposed).The General Partner will be solely responsible for the management and operation of the LP. The General Partner may be a limited liability partnership or limited company and will be an entity in the same group as the Fund Manager.

3.If a Carried Interest Partner is proposed, its members will be the Fund Manager and executives of the Fund Manager and it will participate in the profits of LP as described below as an incentive for optimising the performance of the fund.

4. The successful Bidder(s)will contract to provide fund management services to the LP under the terms of the Management Agreement. The General Partner will execute the Management Agreement on behalf of the LP in its capacity as general partner of LP. The General Partner will be solely responsible for paying the fees of the Fund Manager for providing management services to the LP.

Figure 2: Returns on SME Investment and Funds Flow

2.4 Micro Fund details

Responding to demand in the region, we would like to appoint a fund manager to invest and managea micro fund with an initial value of £3m of investment into SMEs. The maximum initial investment to be made is set at £50k, with a maximum including follow on of £150k. The minimum investment should be no less than £25k but can be lower in exceptional cases.

Purpose of the Micro Fund:
To provide initial finance of between £25k-£50k to SMEs in the North West of England or businesses planning on moving to the North West of England within 12 months.
Tender Submission size:
£3m / Total allocations:
£3m - £6m
Should the full £3m be invested prior to the end of 2015 NWBF may look at allocating further funding to the successful bidder for investment.
Industry Sector Specialism:

• General, other than retails which is ineligible. Further details of the ineligible sectors are detailed in the IOGSs

Instruments and Agreements
The investments can be made by way of loan, equity of mezzanine but have to be made in compliance with the General Block Exemption Regulation where applicable.
In view of the anticipated size of each investment, the use of simplified standard documentation is to be encouraged in order to keep the transactions costs at a sensible level.

2.5 Contract Period

The contract period is nine years with the initial investment period running upto the end of 2015.

2.6General Contract Conditions

These are detailed in the IOGs in Appendix E of Volume 1 and in the LPA attached to Volume 4.

3INSTRUCTIONS TO BIDDERS

3.1Indicative Procurement Timetable

Key Actions / Dates 2013
Issue of OJEUnotice / 27thAugust
Last date for submission of requests for clarifications / 25thSeptember
Tender return date / 12 noon 7thOctober
Evaluation of Tenders / By 25th October
Validation/Due diligence at Bidders premises / By 1st November
Interviews and presentations / 4th November
Notification of award / 5th November
Standstill period / 6th November to 19th November
Stakeholder approvals / By 16th December
Fund management Agreement and LPA Signed / 16th December
New Micro Fund launched / January 2014

The procurement timetable sets out the indicative programme of activities.However,NWBF reserves the right to alter the timetable at any stage and will inform Bidders of any changes as they arise.

3.2General

Bidders should read these instructions carefully before completing theirInvitation To Tender response. These instructions are designed to ensure that all Bidders are given equal and fair consideration. It is important that Bidders provide all requested information in the format and order specified. Failure to comply with these requirements for completion and submission may result in the rejection of theirtender.

The Bidder shall ensure that each and every sub-contractor, consortium member and advisor abides by the terms of these instructions and of all sections, appendices and schedules comprising the Invitation to TenderDocumentation.

Tenders shall remain open and valid for acceptance for a period of 6 months from the tender return date.

The Bidder shall not make contact with any employee, agent or consultant of the NWBF who is in any way connected with this procurement exercise, unless instructed otherwise by NWBF. Bidders should note that any representations made or discussions held with any employee, agent or consultant of NWBF prior to the issuing of this Invitation To Tender Documentation cannot be relied on or warranted in the preparation of Bidders’ submissions.

While reasonable care has been taken in preparing this Invitation to Tender Documentation, the information within it does not purport to be exhaustive or to have been independently verified. NWBF does not accept liability or responsibility for the adequacy, accuracy or completeness of any information or opinions stated in this document. No representation or warranty, expressed or implied, is or will be given by NWBF or any of their representatives, employees, agents or advisers with respect to the Invitation To Tender Documentationor the information on which it is based.

Each Bidder shall be deemed to have satisfied itself before submitting a proposal as to the accuracy and sufficiency of the price stated in its proposal, which shall (unless otherwise provided) cover all obligations under the Micro Fund.

NWBF shall have no liability for any cost or expense Bidders may incur as a direct or indirect consequence of tendering for the provision of the Services.

NWBF reserves the right to amend, add to or withdraw all or any part of this Invitation To Tender Documentation at any time during the procurement process.

No unauthorised alteration or addition shall be made to the Invitation To Tender Documentation. In addition submissions must not be qualified, whether by reference to assumptions, conditions or otherwise, but must be submitted strictly in accordance with the Invitation To Tender Documentationand these instructions.

NWBF does not bind itself to accept the lowest price or any tender and reserves the right to award on the basis of only part of a Tender. Tenders will be assessed on the basis of MEAT.

3.3TenderProcess

Selection Stage- documentation is contained in Volume 2 (Selection) of this Invitation To Tender Documentation.

Award Stage-is contained in Volume 3 (Award Documentation) of this Invitation To Tender Documentation.

3.4Submission of Documents

The tender must be submitted in full accordance with the Form of Tender instructions contained in Section 3 of Volume 3 (Award Documentation) and the key submission requirements set out below. Failure to do so may render the tender non-compliant and result in the tender being rejected.

Bidders should submit all documents fully completed and in the format set out in the table below. All documents shall be clearly referenced, separately appended and cross referenced to the relevant question number.

Instruction to Tender – Volume 1 / Documents to be returned
Instructions to Tender / Not required to be returned. Please read and understand, declaring your agreement with key objectives and outputs in question 11 of Stage 1 (Selection). The specification forms part of the Terms of Contract.
Appendix F: Checklist for return / Electronic copy and two hard copies
Selection Documents – Volume 2 / Documents to be returned
Selection Stage / Threehard copies and
One copy on CD Rom or memory stick
Award Stage Documents – Volume 3 / Documents to be returned
1.Service Delivery & Approach
2.Pricing Schedule / Three hard copies, one copy on CD-Rom or memory stick.
3.Procurement Certificates / Twosigned hard copies of each certificate
One scanned signed copy on CD Rom or memory stick
Contract Documents – Volume 4 / Documents to be returned
1.LP Agreement (LPA) / Not required to be returned. However, please include a declaration stating your agreement, subject to contract, with all terms and conditions set out in the LPA, in your response documentation.
2.Fund Management Agreement / Not required to be returned. Please include a declaration stating your agreement, subject to contract, with all terms and conditions, in your response documentation

• Bidders are responsible for ensuring that they have completed and returned in their envelopeall the required and completed copies of agreements and procurement certificates.
• Bidders shall not substitute their own type of documents for the required questionnaire(s) contained in Volume 2 (Selection Documentation)and Volume 3 (Award Documentation) of the Invitation to Tender Documentation.
• Bidders shall notinclude in their submissions any promotional material and other documents not requested in Invitation to Tender Documentation.
• Bidders should adhere to the word or page limits which have been set.
• Bidders are to complete the documentation in 12 Arial font.
• All submissions must be written in English.
• Please ensure that you reply to each point as instructed.
• Where responses are not offered or further information (e.g. an attachment) is missing, an evaluation rating of zero or failmaybe recorded.
• Submission envelopes shall be plain and shall not show any reference to the Bidders identity. Bidders shall note that this requirement also applies to any tenders submitted by courier.
• CD-Roms/memory sticks should be clearly marked with the Bidders organisationname.
• All documents saved to a CD Rom/memory stick should be readable as a PDF document or in Microsoft Office 2010 programme.

Submissionsshould be CLEARLY labelled as follows: