The strategy and day-to-day operations of La Jolla, California-based PCG Asset Management will now be administered by David Fann, a managing director with the firm since October 2006.
PCG AM spun out from Pacific Corporate Group in February as an independent firm, in which a handful of its 30-some employees will eventually own up to a 50 percent stake. The spin-out followed a series of departures by senior management last year – which sources say was due in part to PCG founder Christopher Bower’s unwillingness to extend ownership and control to employees.
“There’s nine of us that own stock in PCG AM, and it ranges from vice presidents to managing directors,” Fann told PEO. “We own right now 25 percent of the company and we expect to own another 25 percent.”
Within the next few years, Fann estimated, “equity will be issued to us for recruitment and retention purposes.”
The spin-out has been lauded by one of the firm’s most valuable clients, the California Public Employees Retirement System.
Bower said in a February 21st statement: “Many of our major and long-standing clients, including CalPERS, shared our view that it would be helpful to create an employee-owned organization that has dedicated professionals solely aimed at providing its clients with exceptional service and the best private equity fund investment advice.”
Continuous turnover among its senior investment professionals has worried some of PCG’s heavyweight clients. Following the exodus of five such executives last year, The Teachers’ Retirement System of the State of Illinois dropped the 28-year old gatekeeper in December. The Oregon Investment Council will decide in April whether to fire PCG, with whom it has had a 15-year relationship, and instead hire Philadelphia-based consultant Hamilton Lane.
The newly-appointed president and CEO, Fann, joined the firm after the latest series of departures. He’s accrued some 20 years of private equity experience that includes having served as a founding general partner of Inflection Equity Partners, a Palo Alto, California technology buyout firm, and having served as managing director at US Trust of New York, where he co-led the private equity division.
PCG AM also appointed as its board chairman Gerard Drummond, who has served as chairman of the Oregon Investment Council for 15 of the last 17 years.