CALL FOR COLLABORATION ( CFC ) PROVISION OF INSOLVENCY CREDIT COVER FOR AN AGGREGATED POOL OF FINANCIAL INSTITUTIONS UNDER LOAN INSURANCE SCHEME TRANCHE 5 (LIS 5) 1 BACKGROUND 1.1 The Loan Insurance Scheme ( LIS ) aims to help Singapore-based companies secure short-term working capital and trade financing loans. The scheme involves commercial credit underwriters providing insurance coverage on loans offered by Participating Financial Institutions ( PFIs ) to eligible companies, with SPRING Singapore and IE Singapore ( SPRING and IE ) supporting part of the insurance premium. 1.2 As the fourth tranche of LIS ( LIS 4 ) is expected to end on 31 March 2016, SPRING and IE are planning for a new tranche ( LIS 5 ) to continue incentivizing PFIs to avail short term working capital and trade financing facilities to Singapore-based companies. The targeted implementation of LIS 5 is 1 April 2016. 2 OBJECTIVE 2.1 SPRING and IE are calling for proposals from interested parties in the trade credit insurance industry ( Participant ) to formulate the LIS 5 programme framework which provides risk coverage for loans extended to Singapore-based companies by a panel of PFIs (as listed under Clause 5.1) under LIS 5. 2.2 Interested Participants are welcome to pull together expertise from different providers in the trade credit insurance industry to submit a proposal as a consortium. 3 TARGET BENEFICIARIES 3.1 The appointed Participant will be required to insure the PFIs against insolvency risks of the Target Beneficiaries for loans offered under LIS 5. 3.2 The Target Beneficiaries refer to Singapore-based companies seeking loan facilities for both domestic and overseas trade purposes. 3.3 Companies must meet the following criteria to qualify for Domestic Trade facilities: i) Local shareholding of at least 30%; and On a group basis, turnover shall not exceed $100 million or employment size shall not exceed 200 workers 3.4 Companies must meet the following criteria to qualify for Overseas Trade facilities: i) Singapore-based; and On a group basis, turnover shall not exceed $500 million for trading companies. Turnover shall not exceed $300 million for non-trading companies; and i Presence of at least 3 HQ functions in Singapore. HQ functions refer to activities such as banking & financial; marketing & business planning; procurement/logistics; training & personnel management; investment planning/coordination; R&D; technical support and manufacturing Specifications for Loan Insurance Scheme Tranche 5 (LIS 5) CFC Page 1
3.5 Companies must meet both sets of criteria (Clauses 3.3 and 3.4) to qualify for Domestic and Overseas Trade Facilities. SPRING and IE reserves the right to change the criteria at their sole discretion. 4 PRE-QUALIFICATION CRITERIA FOR INTERESTED PARTIES/CREDIT INSURERS 4.1 Each party and/or credit insurer interested in participating in the CFC shall be a legitimate entity registered in Singapore with the Accounting & Corporate Regulatory Authority (ACRA) and in healthy financial state. 4.2 The credit insurers engaged should have credit ratings that are acceptable to PFIs/potential FIs. 5 PROGRAMME FEATURES 5.1 The proposed framework should be flexible so as to adapt to market changes and capacity requirements. The framework is required to have the following features: Programme Period Coverage 5 years (Effective from 1 st April 2016 to 31 st March 2021) Insolvency of the Obligor Obligor As determined by criteria for Target Beneficiaries in Section 3 Capacity Insured 1 Up to S$6.2bil over the Programme Period Participating Financial Institutions (PFIs) to be covered are: Bibby Financial Services (Singapore) Pte Ltd CIMB Bank Berhad DBS Bank Ltd Hong Leong Finance Ltd Maybank Banking Berhad RHB Bank Berhad Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Ltd The Bank of East Asia Ltd Trade Facilities to be Covered The loan facilities to be covered would include the following: i. Inventory/Stock Financing ii. Structured Pre-Delivery Working Capital (including Revolving Working Capital) iii. Factoring (with Recourse) 1 SPRING and IE reserve the right to modify or expand the list of Insured. Addition of new financial institutions/banks (beyond the above list) will be subject to approval by SPRING and IE, and to be agreed upon by the insurer(s) Specifications for Loan Insurance Scheme Tranche 5 (LIS 5) CFC Page 2
iv. Bill/Invoice/Accounts Receivables Financing v. Overseas Working Capital Loans Support Facilities via Standby Letter of Credit or credit facilities made by the Lender through its Inter-branch Cover Letter. This only refers to facilities listed under (i) (iv). vi. Banker s Guarantee (BG) for Contractual Fulfilment Loan Period For Facility (i) to (v): Drawdown period of up to 12 months with maximum door-to-door period not exceeding 18 months For Facility (vi): Each BG tenor can be for a period of up to 24 months with a maximum 6 months run-off period Insured Percentage Government Involvement 75% SPRING and IE will support up to 50% of the insurance premium for Trade Facilities that are approved by the appointed LIS 5 insurers and accepted by the Obligor 6 PROGRAMME PERFORMANCE REQUIREMENTS 6.1 The appointed Participant shall target that all applications receive a definitive reply on the limit decision within 5 working days from the submission date by the PFIs. 6.2 The appointed Participant shall target that the overall approval rates on the submitted applications by the PFIs under LIS 5 are no lower than 85%. As trade facilities are essential in supporting the operations of a company, it is critical to ensure continued accessibility and certainty of trade facilities available to the Target Beneficiaries under LIS 5. 7 PROJECT DELIVERABLES 7.1 Upon selection, the appointed Participant has 3 months to develop, finalise and implement the LIS 5 programme, which include, but are not limited to, the following: i) Setting up the LIS 5 implementation infrastructure and bringing together commercial insurer(s) to support the PFIs in extending working capital and trade finance facilities to the Target Beneficiaries Ensuring counterparty risks of the participating commercial insurer(s) are acceptable to all PFIs under LIS 5, and assisting PFIs in clearing their counterparty lines to the insurer(s) i Finalising policy wordings and all legal agreements required for the prompt implementation of LIS 5 between all relevant parties, which are not limited to; PFIs, participating insurer(s), SPRING and IE iv) Ensure the prompt implementation of LIS 5 by 1 April 2016 Specifications for Loan Insurance Scheme Tranche 5 (LIS 5) CFC Page 3
7.2 In addition, the appointed Participant is expected to undertake the following responsibilities over the Programme Period: i) Management of the daily operational and administration work for LIS 5, which include, but are not limited to, the following: a) Facilitating the submission and approval process of LIS 5 applications from the Insureds to the participating insurer(s) b) Facilitating the claims submission process between the Insureds and the participating insurer(s) to ensure that all claims can be duly processed promptly c) Active management of the programme, and ensuring continued relevance of LIS to the needs of all stakeholders including; SPRING and IE, the Insureds, and the Target Beneficiaries i Ensuring prompt and accurate submission of weekly reports to SPRING and IE on details of all loans (such as loan quantum, loan type and number of loans) that have been approved by the participating insurer(s) under LIS 5 for the respective Insureds Ensuring prompt and accurate submission of monthly reports to SPRING and IE on the following: iv) a) Details (such as loan quantum and types of loans) of all LIS 5 loans that are approved and accepted by the Obligors as at the end of the previous calendar month. Additional details on the Obligor (such as turnover size, industry sector) would also be required b) Details (such as the Obligors, loan quantum and types of loans) of the outstanding amount of each LIS 5 loan as at the end of the previous calendar month c) Details of the Obligors with LIS 5 loans that have payment obligation to the Insureds which is more than two (2) months past its scheduled due date of payment, as at the end of the previous calendar month d) Details (such as the Obligors, sums recovered, legal and recovery fees and net claim payout) of all LIS 5 loans where a valid claim had been paid out. Monitoring and ensuring the processing of LIS 5 applications is prompt and within the abovementioned turnaround time. The appointed Participant is required to provide the LIS 5 processing time to SPRING and IE regularly v) Providing SPRING and IE with information on LIS 5 such as; insights on LIS 5 performance, sectoral data on the loan portfolio, ground insights, and challenges faced throughout the administration period of the programme when necessary vi) The appointed Participant is required to undertake the same responsibilities to support additional initiatives launched by SPRING and IE in complementing LIS5 to help the Target Beneficiaries access adequate trade facilities Specifications for Loan Insurance Scheme Tranche 5 (LIS 5) CFC Page 4
8 EVALUATION PROCESS 8.1 Proposals will be evaluated based on the following: i) Comprehensiveness, clarity and completeness in addressing the Programme Features, Programme Performance Requirements, and Project Deliverables, listed in Sections 5, 6 and 7 i iv) Suitability, sustainability and feasibility of proposed programme framework to offer continued certainty and accessibility of adequate trade facilities to the Target Beneficiaries in a prompt manner Ease of implementation for usage by the PFIs which takes into account the extent of preconditions required to effect the implementation of the proposal Profile, track record and competence of the team to deliver the solution, adhere to Programme Performance Requirements in Section 6, and undertake the responsibilities listed in Section 7 9 TERMS AND CONDITIONS OF THE CFC 9.1 The final selection and appointment of Participant for LIS 5 reside solely with SPRING and IE. 9.2 SPRING and IE reserve the right to select a Participant to manage the programme in whole or in part. 9.3 SPRING and IE reserve the right to modify, refine and/or expand the scope of the proposal received. 9.4 SPRING and IE reserve the right not to enter into correspondence with any Participant regarding reasons for non-acceptance of a proposal. 9.5 By submitting a proposal under LIS 5, the Participant agrees that SPRING and IE has the right to request and use all relevant information regarding LIS 5 in the event of its appointment. Specifications for Loan Insurance Scheme Tranche 5 (LIS 5) CFC Page 5
10 PROPOSAL SUBMISSION REQUIREMENTS 10.1 Only completed proposals will be evaluated and considered. 10.2 Shortlisted applicants may be required to make a presentation of their proposals (at their own cost and expense) and answer questions pertaining to the proposal. All proposals shall follow the general format below. Non-compliance to this format shall render the proposal liable to rejection: Section I: Executive Summary / Introduction Section II: Programme Framework Outline of proposed LIS 5 framework, including key features (including those under Programme Features specified in Section 5 above), benefits/enhancements, and limitations (if any) Identification of critical conditions precedent for implementation, recommendations in managing these conditions precedent and the implementation steps Outline of how insurer(s) can continue to support LIS 5 in the event of an economic downturn Section III: Implementation Schedule Section IV: Roles, profiles and track record of the Participant, including the account-servicing team and the participating insurer(s) Section V: Any other Information 11 PROPOSAL SUBMISSION PROCESS 11.1 Proposals submitted shall be in accordance to the items found in Section 8 and shall provide as much details as possible. All assumptions used shall be clearly stated in the proposal. 11.2 Interested Participants are to submit both hard and soft copies of proposals and any other supplementary documents. All documents should reach SPRING Singapore by the submission deadline of 12 November 2015. Hard copies of proposals are to be submitted to: Attn to: Ms Liz Ng/Ms Nuraisha Nasir SPRING Singapore, Financing and Incentives Management Division 1 Fusionopolis Walk, #01-02 South Tower, Solaris Singapore 138628 Specifications for Loan Insurance Scheme Tranche 5 (LIS 5) CFC Page 6
Soft copies of proposals are to be submitted to: Attn to: Ms Nuraisha Nasir Subject: LIS 5 CFC Proposal Submission Email: Nuraisha_mohamad_nasir@spring.gov.sg; and Attn to: Ms Liz Ng Subject: LIS 5 CFC Proposal Submission Email: Liz_ng@spring.gov.sg 11.3 All proposals received after the submission deadline will not be considered. 11.4 Enquiries regarding this CFC should be addressed to: i. Ms Nuraisha Mohamad Nasir Senior Officer, Enterprise Finance, Financing & Incentives Management Email: Nuraisha_mohamad_nasir@spring.gov.sg ii. Ms Liz Ng 12 CFC BRIEFING Senior Manager, Enterprise Finance, Financing & Incentives Management Email: Liz_ng@spring.gov.sg 12.1 One (1) compulsory briefing session will be conducted for SPRING and IE to share on the requirements and conduct clarifications. Attendance is compulsory for proposals to be considered. 12.2 The briefing session details are as follows: Date: Time: 15 September 2015 (Tuesday) 2.30pm Venue: IE Singapore Bugis Junction Tower #10-00, 230 Victoria Street Singapore188024 12.3 Interested parties, please register your attendance by 14 th September 2015, 5pm for the briefing with either: i. Ms Nuraisha Mohamad Nasir Senior Officer, Enterprise Finance, Financing & Incentives Management Email: Nuraisha_mohamad_nasir@spring.gov.sg ii. Ms Liz Ng Senior Manager, Enterprise Finance, Financing & Incentives Management Email: Liz_ng@spring.gov.sg Specifications for Loan Insurance Scheme Tranche 5 (LIS 5) CFC Page 7