Pensions affirm support for PCG AM spin-out

Two public pensions systems in Oregon and Illinois are sticking with TorreyCove Capital Partners, which spun out from PCG Asset Management this month with the backing of Mitsubishi Corporation.

The Oregon Investment Council has pledged its support for the spin-out from Pacific Corporate Group Asset Management, called TorreyCove Capital Partners, which will remain the pension system's private equity consultant.

The investment council, which oversees $70 billion in pension assets, said the spin-out that was announced in October is a “positive” development. The spin-out, which is backed by Mitsubishi Corporation, closed Wednesday, according to a statement from Mitsubishi.

“The Oregon Investment Council and the state treasury were informed and updated about the structural changes, and we believe them to be positive,” a spokesperson for the OIC told Private Equity International. The pension spokesperson would not comment on whether the consulting contract has changed.

A spokesperson for PCG did not return a request for comment. Under the terms of the deal, Mitsubishi will own 80 percent of the spin-out, and management will retain the remaining 20 percent.

PCG AM had several contracts with US public pension systems at the time the spin-out was announced, including Oregon’s state pension system, the Illinois Teachers' Retirement System, and the New York City Public Employees' Retirement System. Illinois Teachers' said it will continue its relationship with TorreyCove, though would not comment whether the consulting contract has changed. Illinois Teachers’ renewed its contract with PCG AM last year.

The New York City Employees’ Retirement System did not return a call for comment.

PCG AM had shed clients over the past few years, including its anchor client, the California Public Employees’ Retirement System, which fired PCG last year amid allegations the firm had worked with a placement agent, Alfred Villalobos, who was under investigation by the California attorney general. Villalobos was once a member of the CalPERS' board.

After PCG was fired by CalPERS, Oregon expressed its support for PCG Asset Management. Last September, OIC approved renewing its contract with PCG AM for two years. PCG AM was set to be paid $900,000 in fees in 2010 and $950,000 in fees this year.