Oregon expresses confidence in PCG AM

The Oregon Investment Council was briefed by PCG AM executives in the wake of PCG's firing by CalPERS this week and believes the firm has provided ‘expert’ and ‘independent’ analysis.

The Oregon Investment Council, which manages $65 billion in pension funds, has expressed its confidence in its private equity consultant PCG Asset Management after the firm was fired by the California Public Employees’ Retirement System.

PCG Asset Management executives briefed members of the OIC after the firm was fired by CalPERS, an OIC spokesperson said.

“There is confidence that Oregon has continued to receive expert and independent analysis. (The consulting arm of PCG that deals with Oregon is separate and insulated from the part of the company that raised concerns),” the spokesperson said.

OIC does not rely solely on consultants to vet potential investments, the spokesperson said. Potential investments are chosen through a “multi-tiered due diligence process” in which the state Treasurer evaluates a proposal, which is separately evaluated by the consultant.

“Then, any investment must pass muster with members of the OIC … and then negotiations and terms of every deal involve the Department of Justice,” the spokesperson said.

In September, OIC approved renewing its contract with PCG Asset Management for two years. PCG AM is set to be paid $900,000 in fees this year and $950,000 in fees next year. Under the contract, the OIC has the right to terminate the contract at will, the spokesperson said.

PCG was broken into three business units in a 2007 restructuring. PCG AM is led by David Fann, though PCG chief executive Christopher Bower serves on the PCG AM’s board.

PCG AM, which provides private equity consulting work for institutional investors, also works with the Rhode Island treasury, four New York City pensions, Illinois Teachers’ Retirement System and Oregon.

Earlier this week, CalPERS announced it was severing its relationship with PCG, which started in 1989. PCG is being relieved of its management of several fund of funds vehicles for the pension, including a $480 million clean-tech fund that will be managed by Capital Dynamics.

Also, PCG’s general private equity consultant contract expired in June, a CalPERS spokesperson told PEO.