February 21, 2007 07:00 AM Eastern Time
PCG Announces the Formation of Pacific Corporate Group Asset Management, LLC

Former Business Unit of Pacific Corporate Group Holdings, LLC is Established as a Separate, Independent, Employee-Owned Firm

Gerard K. Drummond, Robert H. Smith and Frank R. Kline Agree to Serve on New Firm’s Board of Directors

LA JOLLA, Calif.--(BUSINESS WIRE)--Pacific Corporate Group Holdings, LLC (“PCG”) today announced that Pacific Corporate Group Asset Management, which was formed in 2005 as a business unit of PCG, has been spun-off and re-established as a separate, independent, employee-owned firm.

Like its predecessor unit, the new firm, Pacific Corporate Group Asset Management, LLC (“PCG AM”), will focus solely on private equity investment advisory and consulting services for discretionary and non-discretionary clients. PCG AM, like the PCG-owned unit from which it originated, will oversee and/or advise on assets with a total value of approximately $15 billion on behalf of clients that include some of the world’s largest institutional private equity, leveraged buyout, and venture capital investors.

PCG AM will be headquartered in La Jolla, California, and will be owned by senior investment professionals including PCG’s founder, Christopher J. Bower. PCG AM’s management will report directly to its Board of Directors, which will include Mr. Bower. In addition to his role as a member of the PCG AM Board of Directors, Mr. Bower will continue in his role as Chief Executive Officer of PCG Capital Partners, an indirect affiliate of PCG AM engaged in direct investing and co-investing, and will serve as Managing Member of PCG Holdings, LLC.

PCG AM said that concurrent with its formation, three distinguished individuals have agreed to serve alongside Mr. Bower as independent members of the firm’s newly formed Board of Directors: Messrs. Gerard K. Drummond, Robert H. Smith and Frank R. Kline.

Mr. Gerard K. Drummond brings to PCG AM a distinguished career in public service and industry, having most recently served as Chairman of the Oregon Investment Council (OIC). The OIC oversees the management of the investment assets of the Oregon Public Employees’ Retirement Fund (OPERF), one of the world’s largest, oldest and most successful public pension fund investors in private equity. Mr. Drummond was first appointed by the Governor of Oregon to the OIC in 1987 and served as Chair from 1990 to 1999. He was re-appointed as a member of the OIC and served as its Chairman from 2001 to 2006. In other public service activities, Mr. Drummond was Chairman of Tri-Met, the Portland, Oregon, Area Public Transit Agency, from 1973 to 1985. In addition, Mr. Drummond was a Trustee and served as Chairman of the Investment Committee of Reed College. Mr. Drummond’s career in industry spans more than thirty years, beginning with his career as an Attorney at Law in a predecessor firm to what is now known as Stoel Rives in Portland, Oregon. In 1977, Mr. Drummond left the practice of law to form NERCO, Inc., a mining and resource company, where he served as Chairman and CEO from 1977 until the company’s acquisition by Rio Tinto in 1993. At the time of the sale, NERCO, Inc. was a Fortune 500 Company and was listed on the NYSE. Mr. Drummond has also served as a member of the boards of Pacificorp, Willamette Industries and Pacific Telecom.

Mr. Robert H. Smith is the former Chairman of the Board and CEO of Security Pacific Bank, which was the fifth-largest bank holding company when acquired by Bank of America in 1992. Upon completion of that transaction, Mr. Smith was named President and COO of Bank of America and a member of its Board of Directors. Most recently, Mr. Smith has served as a Partner of a Southern California investment and consulting firm. He currently serves on the Boards of Trustees of The University of Southern California and of Santa Clara University. He is also a member of the Executive Committee of the University of Southern California. Since 1987, Mr. Smith has also served as a member of the Board of Directors of Edison International (NYSE) and as its Lead Director. Mr. Smith is an Organizing and Founding Director of the Commerce National Bank and is the Chairman of the Board of Blue Healthcare Bank. He has also served on the boards of Pinkerton, Inc. and Oasis Residential, Inc., both NYSE-listed companies, as well as on the Board of Governors of the Pacific Exchange. He has also served as a member of the Market Oversight Committee of the U.S. Securities Exchange Commission, as a member of the board of The World Affairs Council, and as a Member of the Board of Directors of the California State Teachers’ Retirement System (CalSTERS).

Mr. Frank R. Kline is a successful venture capitalist with more than twenty-five years of experience in the financial services and venture capital industry. Mr. Kline is the founder and Managing Partner of Kline Hawkes & Co., a Los Angeles-based venture capital firm. He was previously the West Coast General Manager of the Lambda Funds and was a General Partner of Pacific Technology Venture Funds. Mr. Kline has served as a long-standing member of the Board of Governors of the National Association of Small Business Investment Companies (NASBIC). He served on the original 1990 panel that consulted with the United States Congress on the overhaul of the SBIC Program. In addition to PCG AM, Mr. Kline currently serves on the boards of directors of Cyallume Light Technology, Inc. and Rayne Corporation.

Christopher J. Bower, founder of PCG and the fourth member of PCG AM’s Board of Directors said: “The formation of PCG AM as a separate and independent legal entity creates a focused, client-centric private equity fund investment advisory and consulting firm. 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. As such, PCG AM is now well-positioned to serve its clients with commitment and dedication.

“The appointments of Messrs. Drummond, Smith and Kline will enable PCG AM’s ascent to the next level. Each is a highly experienced and successful business executive and investor who will bring important and valuable industry perspectives,” Mr. Bower said.

Mr. Leon Shahinian, Senior Investment Officer of the California Public Employees’ Retirement System (CalPERS), said: “We have had a long-standing relationship with PCG in which it has consistently generated outstanding returns for our System. We welcome the formation of PCG AM as a stand-alone, employee-owned entity. We believe that PCG AM’s formation is an extremely positive move and positions the firm well for the future.”

Mr. Drummond’s years of service as Chairman of one of the largest and longest-standing state public employee retirement fund investors in private equity will bring a valuable perspective of how public retirement systems view private equity and will help PCG AM better address their issues. This will help make PCG AM’s professionals better investment advisors and consultants to its public pension fund clients.

Mr. Kline’s years of experience as a venture capital and private equity investor will help PCG AM refine its investment process and help it become a better fund investor.

Mr. Smith’s broad-based board, community and business experience and his tenure as Chairman and CEO of Security Pacific Bank will bring PCG AM a level of experience and understanding covering a broad range of industries, managements and organizations, operating through multiple economic and regulatory environments.

Rob Feckner, President of CalPERS, said: “We have had a long-standing relationship with PCG and expect to continue our relationship for many years to come. We believe that PCG AM’s model for corporate governance, with its independent board of directors, is an important distinction that will advance the firm and its clients’ interests in the private equity industry.”

About Pacific Corporate Group Asset Management, LLC

Pacific Corporate Group Asset Management, LLC (“PCG AM”) is a separate, independent, employee-owned provider of private equity management and advisory services. With assets under management of more than $15 billion, PCG AM is a leader in the private equity industry based on providing innovative and customized solutions to private equity investors worldwide. As a research-driven, client-focused firm, PCG AM seeks to develop strong, long-term relationships by working one-on-one with a diverse group of clients. Its product offerings are structured to meet the unique needs of each investor, and are provided through discretionary, non-discretionary and project-oriented investment engagements. PCG AM also offers advisory and portfolio monitoring services.

About Pacific Corporate Group Holdings, LLC

Founded in 1979, Pacific Corporate Group Holdings, LLC (“PCG”) was one of the first firms to provide full-service private equity investment management services to sophisticated institutional investors. PCG will continue as an investment management firm targeting alternative investments.