Pacific Corporate Group has received a vote of confidence in its restructuring efforts, as it will continue to maintain the advisory business of 15-year client Oregon State Treasury.
The state pension fund sent out a request for proposal for a private equity advisor last fall, after a number of executive departures from La Jolla, Calif.-based PCG, including Tara Blackburn, who had been the chief liaison between PCG and Oregon, and who now is at Hamilton Lane. About 10 advisor shops vied to win the RFP, including Hamilton Lane. PCG won the contract, in part because of its low fees, and the high returns PCG has generated for Oregon and other clients, said David Fann, head of PCG Asset Management, a newly established division that was setup after the loss of of personnel.
The loss of Blackburn and turnover of PCG staff has led to at least two PCG clients to explore replacing it. The Illinois Teachers Retirement System has also put PCG’s advisory contracts out to bid, and a decision is expected shortly. Another PCG client includes the California Public Employees’ Retirement System, which recently awarded PCG Asset Management a $400 million clean technology mandate
Though Oregon will stay with PCG, the state pension fund likely won’t have much more money to commit this year, according to Senior Equity Investment Advisor Jay Fewel. “We’re essentially out of money for 2007,” he said, given the amount buyout firms coming back to market this year, which the pension fund expected to come back next year. Fewel added that the money hasn’t been officially committed yet, and Oregon is still open to meeting with general partners.
The $62.1 billion state pension fund, which favors buyout funds over venture investments, will likely commit about $2.5 billion to about 20 funds this year, including investment vehicles managed by Apollo Management, Kohlberg Kravis Roberts & Co. and Warburg Pincus. —Mark Cecil