This is an HTML version of an attachment to the Official Information request 'Selection of Te Ahumairangi Investment Management'.

 


 


 
 /DIRECTOR, NZ INSTITUTIONAL
Russell Investments
PWC Tower | Level 15 | 188 Quay Street | Auckland | 1010 | New Zealand
s 9(2)(a)
russellinvestments.com
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From: Darby, Julian <JDarbys 9(2)(a)
 
Sent: Tuesday, 10 September 2019 11:44 AM
To: Paul Dyer <Paul.Dyers 9(2)(a)
Cc: Arnold, Matthew <marnolds 9(2)(a)
Subject: RE: Review of Term Sheet
 
Hi Paul.
 
Not a problem. I have copied in Matt Arnold who you can address any requests you might have while
I am away.
 
Julian
 
Julian Darby
/SENIOR CONSULTANT
s 9(2)(a)
From: Paul Dyer <Paul.Dyers 9(2)(a)
 
Sent: Tuesday, 10 September 2019 10:52 AM
To: Darby, Julian <JDarbys 9(2)(a)
Subject: RE: Review of Term Sheet
 
Julian
 
One point I just thought of: If we do tweak up the fees could Russell re-issue this with the
updated figures?  Slightly awkward since it would probably be while you’re away.  Likely to be
just the base fees, so no need to rerun the Monte Carlo.  P.
 
 


 


 

 
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From: Darby, Julian <JDarbys 9(2)(a)
 
Sent: Monday, 26 August 2019 4:29 PM
To: Paul Dyer <Paul.Dyers 9(2)(a)
Subject: RE: Follow Up
 
Good afternoon Paul
 
Thank you for the providing the scope of the work you require.
 
We would be happy to assist by producing a brief paper addressing the issues you have
raised.
 
The scope indicates that we will need to draw on expertise from different parts of
Russell Investments. The following business units have indicated their ability and
willingness to contribute to this paper.
 
Operational due diligence team
 
Implementation team
 
Global equity team
 
Chief Investment Officer (Australasia)
 
Required
 
We recognise that time is crucial and that you have specific questions you would like us
to address. As such, we expect to be able to provide a 4-5 page paper addressing the
issues raised in points 3, 4 and 5 of your email. We aim to provide you our report by
Friday next week or earlier if possible.
 
Proposed cost: s 9(2)(ba)(i)
 
Please let me know if this is acceptable to you and the board.
 
Regards
Julian
 
 
Julian Darby
 /
SENIOR CONSULTANT
Russell Investments
PWC Tower | Level 15 | 188 Quay Street | Auckland | 1010 | New Zealand
s 9(2)(a)


 


 
 
I have begun speaking to them but as mentioned in our meeting it is a particularly difficult week to
progress this as I am preparing papers for client meetings and also attending a number of board
meetings.
 
However, I realise that timing is crucial for this piece of work and that Paul Miller will be expecting a
response from you (and us) soon.
 
I will give you a progress report by Monday, if that is ok?
 
Regards
Julian
 
 
Julian Darby
 /
SENIOR CONSULTANT
Russell Investments
PWC Tower | Level 15 | 188 Quay Street | Auckland | 1010 | New Zealand
s 9(2)(a)
russellinvestments.com
This e-mail may contain confidential or legally privileged information. If you are not the intended
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of the named sender identified above. If you do not wish to receive any email marketing material from
Russell Investments in future, please reply to this email with the word "unsubscribe" in the subject
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From: Paul Dyer <Paul.Dyers 9(2)(a)
 
Sent: Friday, 16 August 2019 1:28 PM
To: Darby, Julian <JDarbys 9(2)(a)
Subject: Follow Up
 
Julian
 
Good to talk today.  Couldn’t say much prior, but now I thought it might help to repeat
the scope what ACC is after.
 
As I see it:
  1.  The high level objective is to establish the mandate on commercial, arms length
terms. 
 
2.  No need to opine on the capabilities and likely quality of the manager – can
assume ACC has done appropriate DD and satisfied itself.  Likewise no input
needed on how this mandate sits within the broader portfolio, helps meet scheme
objectives etc.


 

 
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s 9(2)(ba)(i)

 
 
 
Thanks for all 
 
James
 
 
 
 
Sent from a mobile device, please excuse brevity, and grammar.
On 4/10/2019, at 11:37 AM, Gareth Worthington <gareth.worthingtons 9(2)(a)
wrote:
s 9(2)(h)
Gareth Worthington
Special Counsel
Russell McVeagh, 157 Lambton Quay, PO Box 10-214, Wellington 6143, New Zealand
s 9(2)(a)
gareth.worthingtons 9(2)(a)
www.russellmcveagh.com
 
 
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<3886887 ACC - TSA - v1.docx>
<3892204 New ACC IMA (draft 30 Sept 2019) - v8.docx>
<3908364 IMA differences comparison table (4 October 2019) - v2.docx>


 

 
Memorandum 
 
 
 
 
TO 
Chair of Board Investment Commit ee 
FROM 
Paul Dyer 
DATE 
19 September 2019 
SUBJECT 
Update on External Global Equities Mandate 
 
James 
 
I thought you could use an update on how this is progressing.  The process has been a little drawn out, 
not from any lack of goodwill, but rather because of a) the decision to seek external verification from 
Russell Investments (took 3 weeks) and b) Nicholas and Peter Scobie (our external contracts manager) 
being overseas until 7 October. 
 
Despite these delays I’m confident we wil  land the project satisfactorily.  Below is a summary of 
progress to date. 
 
1. 
The idea has been discussed with Nicholas, who is keen to proceed.  He produced an initial 
term sheet back in August.  This was sound in spirit, but had a range of detail that needed 
nailing down (this is usual with investment mandates).  s 9(2)(ba)(i)
 
  There is no doubt that both parties were serious 
and were negotiating in good faith. 
 
2. 
Because of the unusual circumstances, we decided to have the proposed terms externally 
reviewed.  This was undertaken by Russell Investments.  Our instructions to them were to look 
at all aspects of probity.  In particular we wanted assurance that the terms were normal and 
arms length, as well as general advice on dealing with a startup manager.  Their report 
(received 6 September) confirmed that the fee arrangement was attractive and competitive.  It 
stressed that the future relationship with ACC needed to be fully arm’s length, and that 
operational due diligence was critical for a new startup manager. 
 
3. 
We have engaged Russell McVeigh to turn the term sheet into an executable contract.  This has 
basically consisted of starting with ACC’s standard manager contract, inserting the parameters 
from the current internal mandate (largely a cut and paste from the Investment Guidelines), and 
adding the various features that are particular to this mandate.  The most important of these 
are: 
 
a)s 9(2)(ba)(i)
 
Accident Compensation Corporation 
Page 1 of 2 


 


 

 
 
Regards
Julian
 
Julian Darby
 /
SENIOR CONSULTANT
Russell Investments
PWC Tower | Level 15 | 188 Quay Street | Auckland | 1010 | New Zealand
s 9(2)(a)
russellinvestments.com

 
From:
Paul Dyer
To:
Darby, Julian
Subject:
Re: Follow Up
Date:
Monday, 26 August 2019 6:48:41 PM
Attachments:
image001.png
image13111c.PNG
Julian
Right on target. Please proceed.
Thanks, Paul.
Sent from my iPad
On 26/08/2019, at 4:29 PM, Darby, Julian <JDarbys 9(2)(a)
 wrote:
Good afternoon Paul
 
Thank you for the providing the scope of the work you require.
 
We would be happy to assist by producing a brief paper addressing the
issues you have raised.
 
The scope indicates that we will need to draw on expertise from different
parts of Russell Investments. The following business units have indicated
their ability and willingness to contribute to this paper.
 
Operational due diligence team
 
Implementation team
 
Global equity team
 
Chief Investment Officer (Australasia)
 
Required
 
We recognise that time is crucial and that you have specific questions you
would like us to address. As such, we expect to be able to provide a 4-5
page paper addressing the issues raised in points 3, 4 and 5 of your email.
We aim to provide you our report by Friday next week or earlier if possible.
 
Proposed cost: s 9(2)(ba)(i)
 
Please let me know if this is acceptable to you and the board.
 
Regards
Julian
 
 
Julian Darby


 

 
Thank you for dropping by last week and for your follow-up email.
 
First, I wish to point out that we are willing to help out with this piece of work. Before
reverting to you with more details I need to speak to my colleagues offshore to ensure
that we can deliver exactly what you require.
 
I have begun speaking to them but as mentioned in our meeting it is a particularly
difficult week to progress this as I am preparing papers for client meetings and also
attending a number of board meetings.
 
However, I realise that timing is crucial for this piece of work and that Paul Miller will be
expecting a response from you (and us) soon.
 
I will give you a progress report by Monday, if that is ok?
 
Regards
Julian
 
 
Julian Darby
 /
SENIOR CONSULTANT
Russell Investments
PWC Tower | Level 15 | 188 Quay Street | Auckland | 1010 | New Zealand
s 9(2)(a)
russellinvestments.com
<image001.png>
This e-mail may contain confidential or legally privileged information. If you are not the
intended recipient, please notify me by return e-mail and delete your copy of the e-mail
immediately.  Please accept my apologies for any inconvenience caused.  Unsubscribe:
This email is sent by or on behalf of the named sender identified above. If you do not
wish to receive any email marketing material from Russell Investments in future, please
reply to this email with the word "unsubscribe" in the subject box. Thank you for your
co-operation. Please consider the environment before printing this e-mail.
From: Paul Dyer <Paul.Dyers 9(2)(a)
 
Sent: Friday, 16 August 2019 1:28 PM
To: Darby, Julian <JDarbys 9(2)(a)
Subject: Follow Up
 
Julian
 
Good to talk today.  Couldn’t say much prior, but now I thought it might help
to repeat the scope what ACC is after.
 
As I see it:
  1.  The high level objective is to establish the mandate on commercial,
arms length terms. 
 
2.  No need to opine on the capabilities and likely quality of the manager
– can assume ACC has done appropriate DD and satisfied itself. 


 

 
 
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contents to any other person."


 


 

 
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On 5/08/2019, at 10:53 AM, James Miller <james@s 9(2)(a)
 wrote:
Hi Nicholas
 
I haven’t had a chance to read in detail. At first glance there is nothing of concern.
 
If ok with you I need to get Paul to do a bit of probity work for me. And run a
spread sheet over your numbers. Nothing of concern just saves me doing it.
 
James
Sent from my iPad
 
https://www.celebratingourexchange.co.nz
 
On 5/08/2019, at 9:50 AM, Nicholas Bagnall <nicholasbagna s 9(2)(a)
wrote:
Hi James
 
Sorry I’ve taken so long to come back to you.
 
I attach two documents – Out of scope
, and the other contains a draft term sheet that I’d propose for
managing global equities for ACC.
 
I think you’ll find that the terms I’m proposing for managing global
equities for ACC are significantly better than the deal ACC gets from
any other external manager.  s 9(2)(ba)(i)
 
Out of scope

 
Out of scope
Regards
 
Nicholas
 
Sent from Mail for Windows 10
 
From: James Miller
Sent: Friday, 2 August 2019 9:17 AM
To: Nicholas Bagnall
Cc: Nicholas Bagnall
Subject: Re: Feedback on Governance review / term sheet for
externalmanagement
 
Hi Nicholas
 
Either way it lands, you will reflect on it as a major pivot point in your
career. So its important you take the time to get it right.
 
I was trying to get Paul’s workstream to a more concrete stage, so you
had something to base your decision upon. But I understand Paul has
briefed you, to the effect we are genuinely trying to land on a
workable outcome. 
 
Regards 
 
James
Sent from my iPad
 
https://www.celebratingourexchange.co.nz
 
On 2/08/2019, at 9:05 AM, Nicholas Bagnall
<nicholasbagnal s 9(2)(a)
 wrote:
Hi James
 
Sorry I’ve taken so long to get back to you on this – this
was partly because I was feeling guilty about abandoning
everyone else in the team, and was holding off while I
waited for Phil’s decision.

 
 
I said to Paul Dyer that I’d aim to get back to you before
the end of this week, but I would like to spend a bit more
time on it, so rather than send you my current draft now,
I intend to review it again tonight, and send it through to
you either tonight or tomorrow morning.
 
Thanks for your patience!
 
Regards
 
Nicholas
 
Sent from Mail for Windows 10
 
 
<term sheet.docx>
<feedback on PWC draft report.docx>
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If you believe you have received this email in error, please advise us immediately by return
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attachments or disclose the contents to any other person."


 

 
 
From: James Miller <jamess 9(2)(a)
 
Sent: Thursday, 8 August 2019 11:17 AM
To: Paul Dyer <Paul.Dyers 9(2)(a)
Subject: Re: term sheet.docx
 
Can you recommend an external fund manager consultant expert to provide us
benchmarking service for probity purposes. (Obviously someone respected but
trusted).
 
Ps below looks good.
Sent from my iPad
On 7/08/2019, at 9:54 AM, Paul Dyer <Paul.Dyer@s 9(2)(a) wrote:
James
 
I think what you’re after here is assurance that the proposed terms
are broadly right and acceptable.  The short answer is yes, they are
very reasonable.  First my detailed thoughts in the order the paper is
written, then overall impressions.
  s 9(2)(ba)(i)

 
s 9(2)(ba)(i)


 

 
 
"This message and any attachments may contain confidential and
privileged information. If you believe you have received this
email in error, please advise us immediately by return email or
telephone and then delete this email together with all attachments.
If you are not the intended recipient, you are not authorised to use
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Disclaimer:
"This message and any attachments may contain confidential and privileged
information. If you believe you have received this email in error, please advise
us immediately by return email or telephone and then delete this email
together with all attachments. If you are not the intended recipient, you are not
authorised to use or copy this message or any attachments or disclose the
contents to any other person."


 

 
Cc: Nicholas Bagnall <Nicholas.Bagnalls 9(2)(a)
Subject: RE: Feedback on Governance review / term sheet for
externalmanagement
Hi James
 
Sorry I’ve taken so long to come back to you.
 
I attach two documents – one contains my criticisms of the PWC
slides, and the other contains a draft term sheet that I’d propose for
managing global equities for ACC.
 
s 9(2)(ba)(i)
 
Out of scope
 
Regards
 
Nicholas
 
Sent from Mail for Windows 10
 

 
From: James Miller
Sent: Friday, 2 August 2019 9:17 AM
To: Nicholas Bagnall
Cc: Nicholas Bagnall
Subject: Re: Feedback on Governance review / term sheet for
externalmanagement
 
Hi Nicholas
 
Either way it lands, you will reflect on it as a major pivot point in your
career. So its important you take the time to get it right.
 
I was trying to get Paul’s workstream to a more concrete stage, so you
had something to base your decision upon. But I understand Paul has
briefed you, to the effect we are genuinely trying to land on a
workable outcome. 
 
Regards 
 
James
Sent from my iPad
 
https://www.celebratingourexchange.co.nz
 
On 2/08/2019, at 9:05 AM, Nicholas Bagnall
<nicholasbagnalls 9(2)(a)
 wrote:
Hi James
 
Sorry I’ve taken so long to get back to you on this – Out 
of 
sco
pe
 
I said to Paul Dyer that I’d aim to get back to you before
the end of this week, but I would like to spend a bit more
time on it, so rather than send you my current draft now,
I intend to review it again tonight, and send it through to
you either tonight or tomorrow morning.
 
Thanks for your patience!
 
Regards
 
Nicholas
 
Sent from Mail for Windows 10

 
 
 
<term sheet.docx>
<feedback on PWC draft report.docx>