PCG to divide and – hopefully – conquer

Amid recent staff turnover and the launch of an internationally focused subsidiary, the private equity advisory firm has separated its direct investment and institutional management arms into two different business units to create more operating focus.

La Jolla, California-based Pacific Corporate Group, one of the largest private equity investment advisors in the world with more than $20 billion (€15 billion) under management, has announced a reorganization of its business units into two distinct operations.

PCG founder and chief executive officer, Christopher Bower, will oversee the company’s direct investment arm, PCG Capital Partners, which manages approximately $700 million through two funds for growth capital and co-investment opportunities. Monte Brem, a former managing director and newly appointed president of the company, will run PCG Asset Management, administrator of more than $20 billion in private equity commitments for institutional investors. Both units will report to PCG’s board, which is made up of the company’s six partners, including Brem and Bower.


Bower

Brem noted that PCG had already notified all of its clients about the reorganisation and the response had been uniformly positive. “Not only has our activity become more global, our business lines have started to expand,” he noted. “We wanted to increase our focus and that’s something [our clients] see as a big benefit.”

A spokeswoman for the $60 billion Washington State Investment Board, one of PCG’s largest clients, declined to comment on the reorganization. PCG’s contract with the $60 billion pension fund expires in June and the board is expected to make a hiring decision later this year.

The theme and driving force is that our company has gotten bigger and the industry has become more global and complex. We needed to have more operating focus.

Monte Brem

The moves by PCG come on the heels of its launch of PCG International, a Washington, DC-based subsidiary that will focus on investments and advisory work in Western Europe, Australia and Japan. Earlier this month, PCG announced that it had hired three professionals, Steven Cowan and Gene Pohren of the Overseas Private Investment Corp. and Stephen O’Neill of Battery Kemble, to head its international effort.

Nevertheless, the firm has also lost a number of senior employees recently including:  former managing director Craig White, who left earlier this year; former PCG president Scott Tuck who stepped down last fall after less than 18 months on the job; and William Shiebler, former PCG chairman, who left in 2003 after a year at the firm. The firm has also experienced its fair share of turnover since Bower founded the company in 1979, having lost twelve managing directors and a number of junior professionals in the past ten years.

That said, the firm has overcome adversity before, surviving a re-evaluation by CalPERS in 1998. The $185 billion pension fund, the largest in the US, is still a PCG client today.