In a flurry of winter activity, Pacific Corporate Group (PCG) has added a chairman and vice president, lost a managing director and made plans to shift its business strategy.
On New Year’s Eve, the PCG board elected as chairman William Shiebler, president of Putnam Mutual Funds, who became acquainted with PCG in 1997 as a limited partner in one of the firm’s fund-of-funds.
Mr. Shiebler, who will retire from Putnam, plans to split his time between Boston and La Jolla, Calif., where the firm is based, said PCG Chief Executive Christopher Bower.
At the same time, Scott Stedman, a private placement professional who has worked for Chase Securities, U.S. Bank and Piper Jaffray, joined PCG in mid-January as a vice president. His responsibilities include analyzing, monitoring and sourcing private equity opportunities.
Director Leaves, Joins Former Partner
Meanwhile, Managing Director A. J. Matsuura, who handled PCG’s direct investments, left the firm in December to join former colleague Brian Kinsman at his new buyout firm. Mr. Kinsman, who had been a managing director at PCG, resigned in October to start Kinsman Capital (BUYOUTS Nov. 9, 1998, p. 8).
“It was really an opportunity for me to get back to working directly with middle-market companies in a principal role and focusing on the West Coast,” Mr. Matsuura said about his new post.
Mr. Matsuura’s departure does not trigger a key-man issue in PCG’s consulting contracts, as was the case with Mr. Kinsman, who was a key man in PCG’s consulting contract with the California Public Employees’ Retirement System (CalPERS) when he left in the fall, said Chief Operating Officer Kelly DePonte. Mr. Matsuura likely will not be replaced per se because the consulting firm has assigned responsibilities for direct and indirect investments to all its investment staff.
CalPERS had expressed concern about Mr. Kinsman’s departure, as well as about staff changes at the pension’s other private equity consultant, Hamilton Lane Advisors, but decided in December to maintain its contracts with both groups. CalPERS, however, has begun evaluating its use of consultants, especially in light of recent additions to the pension’s in-house private equity investment staff last year.
Regardless of CalPERS’ decision to continue using outside consultants, PCG’s long-term plan is to adjust its focus from being a pension consulting firm to a money management outfit. The firm no longer is responding to requests-for-proposals for non-discretionary consulting/gatekeeping roles, Mr. Bower said.
PCG also has existing non-discretionary advising relationships with the New York City employees, fire and police pensions, the Oregon Public Employees Retirement Fund and the Rhode Island State Investment Council.
As part of a more money management-oriented business model, PCG will launch its third broad-strategy private equity fund-of-funds this quarter. Pacific Corporate Group Private Equity Fund III, targeted at $125 million, will be raised from institutions and ultra-high-net-worth individuals. The vehicle’s predecessor has invested 75% of its capital in partnerships and is rapidly filling its 25% allotment to direct deals, Mr. Bower said. The new fund likely will place 70% of its capital in partnerships and 30% in directs deals and co-investments.
In the long-term, Mr. Bower would like to see PCG expose private equity to a larger investor base because he said only government employees and university professors generally have access to the asset class through their pensions. He hopes to draw on Mr. Shiebler’s expertise in the mutual fund business to create a model for more general-audience access to private equity. Meanwhile, however, the firm is in the market for one more senior professional to round out its staff.