The La Jolla, California-based gatekeeper has embraced yet another leadership structure following its purge by CalPERS. The latest line-up includes FINRA mediation expert and San Francisco political insider Ron Pelosi
It’s an unusual biography for a person listed second in the “Leadership” section of a private equity advisory firm’s website: “[A]ccomplished Financial Industry Regulatory Authority (FINRA) mediator. . . has served in a number of positions as a public official.”
But perhaps the unusual circumstances of Pacific Corporate Group call for the unusual skills of Ronald Pelosi, a San Francisco political insider and financial industry polymath who happens to be the brother-in-law of Nancy Pelosi, the Minority Leader of the United States House of Representatives.
La Jolla, California-based PCG is a veteran of the private equity gatekeeping industry and has been led since 1979 by Christopher Bower, a former public accountant who successfully gave the institutional investment market what it wanted – more and more private equity advice. PCG’s marquee client was the California Public Employees’ Retirement System, until recently. Late last year the nation’s largest pension decided to fire PCG as part of a house-cleaning exercise. The gatekeeper had been too close to disgraced placement agent Al Villalobos for CalPERS’ liking.
The CalPERS purge has been tumultuous for a firm that already has a history of high turnover. It was forced to divorce an international asset management unit, see the transfer of a clean-energy vehicle to rival advisor Capital Dynamics, and most recently, lost its mandate with Rhode Island’s public pension.
At least four former board members are now no longer listed on the firm’s website. They are:
Gerard Drummond, recently listed as the chairman and director of PCG Asset Management. He is the former chairman of the Oregon Investment Council, a PCG client.
Robert Smith, recently listed as a board member and head of the audit and compliance committee at PCG Asset Management. He is also the former chairman of the board and CEO of Security Pacific Bank.
Frank Kline, recently listed as a director of PCG Asset Management. He is a Los Angeles venture capitalist.
John Rutledge, recently listed as a director, independent director, and head of the compensation committee of PCG Asset Management. He is the founder of private equity firm Rutledge Capital.
Drummond, Smith and Kline were brought on board in 2007 to help oversee a newly “spun-out” PCG Asset Management, a move intended to transfer greater ownership of the firm to investment staff and thus slow the endemic turnover. Rutledge joined in 2008.
My phone call to PCG seeking clarity has not been returned.
Pelosi’s bio reads in part: “Mr. Pelosi brings to PCG Asset Management a distinguished career in business and public service. He has an extensive background in the securities industry, mutual funds, and private equity.” Among his other political accomplishments, Pelosi was a long-time president of the San Francisco board of supervisors. In addition to his congressional connection, he also is San Francisco Mayor Gavin Newsom’s uncle.
It is unclear what Pelosi’s ties are to Bower, or what his exact role will be at the firm. His only other listed PCG affiliation is as a member of the board of trustees of a 1998 fund of funds controlled by the firm.
There are two new names in the PCG website’s “Leadership” section: Haig Mardikian, a real estate investor and former president of the San Francisco Downtown Association, and William Sullivan, founder of a Washington DC-based private equity firm called Torch Hill Investment Partners, which invests in defense, intelligence and corporate security companies.
The firm’s “day to day” leadership remains with president and CEO David Fann, who was elevated to the position in 2007 following the departure of a wave of top professionals.
It is similarly unclear what the way forward is for PCG. It still counts among its clients heavyweights like Oregon, and the Illinois Teachers’ Retirement System. One suspects that business development has been hampered by the firm now being known as the gatekeeper that CalPERS fired. And yet if you set aside the political complexities and staff turnover, PCG’s investment performance has been, on balance, good. The firm issued a statement when the CalPERS news broke that read in part that it had “the successful opportunity to serve CalPERS as a fiduciary for over 20 years and has generated [results] in excess of 23% while producing over $3 billion in investment gains.”
The next incarnation of PCG may yet be the one that grows instead of shrinks. In private equity and politics, with alarming regularity, people written off for dead have a way of bouncing back.
No comments:
Post a Comment