The Teachers’ Retirement System of the State of Illinois (TRS) is issuing a request for proposal for a private equity consultant in the wake of heavy staff turnover at its current advisor, Pacific Corporate Group.
In a statement from the pension, Stan Rupnick, chief investment officer at TRS, said: “TRS is clearly disappointed in the recent events at PCG and the departure of our lead consultant at the firm. We want to ensure TRS employs the most capable advisors as it relates to our investment program.”
In the past three months, La Jolla, California-based PCG has lost seven managing directors. Most recently, David Scopelliti and Tom Keck, two recently hired professionals, were fired, according to sources close to the firm.
The turnover is related to PCG founder Christopher Bower’s reluctance to share equity in the firm and to meaningfully share strategic decision making authority, according to several former employees of PCG. A separate source close to PCG said the firm is carefully examining the compensation structure in place for employees.
TRS’ move to find a new private equity consultant is a further blow to the La Jolla firm. PCG has already lost the state of Washington’s business to rival advisor Capital Dynamics. Another PCG client, the state pension of Oregon, has issued its own RFP. An official with the New York State Common Retirement fund was recently quoted as saying he was “concerned and mentoring the situation” at PCG.
TRS has roughly $1.5 billion in private equity investments, or 4.1 percent of its total assets. A new asset allocation adopted this month by TRS’ board of trustees will increase the pensions target private equity allocation to 8 percent from 6 percent. According to the statement, “the [private equity] asset class is among the System’s best performers, with investment returns of 27.72 percent during the one year period ending September 30, 2006”.
Firms interested in submitting proposals to TRS must do so before January 17. The pension will appear before a February 15 board of trustees gathering.