Atlantic Pacific Moves To Regain Its Footing –

No one can blame the GPs for passing over placment agent Atlantic Pacific Capital. A steady stream of high-profile departures have worn out the carpet under the exit sign at the Greenwich, Conn.-based firm, and few knew if the placement agency would even be around long enough to complete a year-long fundraising drive.

Michael Moreno left the firm to head up the investor relations at Black Diamond Capital Management; Michael Hewitt departed for a similar role at Terra Firma Capital; Basak Araz left to join Lehman Brothers’ fund marketing group; and Alma Poskovic absconded to Deloitte. Daniel Prendergast, meanwhile, left to launch his own placement agency, which led to a legal struggle between himself and his former firm.

However, it wasn’t until Edward Chestnut left to join Citigroup’s placement-agent group that Atlantic-Pacific Founder James Manley moved to stanch the flow of departures.

“It was a contentious period for sure,” one person close to the situation noted. “Anytime you lose that many senior people it’s going to be contentious.”

The solution was to give the remaining senior partners a stake in the firm, reducing Manley’s 100% ownership position, and create a management committee to redistribute control and establish a democratic governance at the firm. Joseph Herman was bumped up to president, while Partners Magnus Christensson, Michael Sotirhos, Tanguy Cotton and Chestnut (who was lured back once the restructuring was put in place) are among those that make up the management committee along with Manley and Herman.

The source characterized the changes as a capitulation on Manley’s part, saying, “Once [Chestnut] left it was pretty obvious that something had to be done. There certainly would’ve been others that followed him out the door.”

However, Atlantic Pacific was still able to raise some notable funds throughout the turmoil, marketing the successful closes of vehicles from MatlinPatterson and Platinum Equity in the second half of 2004, and winning the mandate to raise Legacy Partners in March of this year. And now, with the problems seemingly behind the firm, it is said to be close to winning three new fundraising mandates.

Moreover, the firm has begun hiring new professionals to help fill in some holes left by the departures, and most recently, Geoffrey Berger joined the firm as a principal in charge of direct placements.

Atlantic Pacific expects business to return now that its internal issues have been resolved. “When this was all up in the air, we couldn’t win business. It was a major barrier for us,” the source said. “Fundraising is a nine to 12 month process, and we couldn’t guarantee that certain partners were going to be around that long, so it was a risky bet for the GPs. Now, that shouldn’t be a problem.”