US - Massive upheavals in the transition management sector, including senior staff defections across the board, have prompted the US$35.4bn Teachers' Retirement System of Illinois (TRS) to re-tender its entire band of transition managers.
Global Pensions can exclusively reveal that recent big name movers include Ravi Goutam and Chris Barr, both vice presidents in Goldman Sachs’ transition management team, who have left to join Barclays Global Investors (BGI) as transition strategists in the firm’s US transition team.
This follows the defection of Kristi Mitchem, formerly MD, equity products group, Americas at Goldman Sachs, to BGI to head up US transition services in September 2005.
TRS’ roster of transition managers included State Street Global Markets, Goldman Sachs, Frank Russell Securities, Northern Trust Global Investors, Deutsche Bank Securities and Morgan Stanley.
TRS spokesperson Eva Goltermann said the fund would put its entire list of managers out to competition over concerns about senior level staff departures at the majority of its current managers.
She said: “TRS is seeking to rebid its list of trans-itional managers because of organisational changes within firms on the current roster. It’s become fairly common in the industry for experienced teams to move to competitor firms, in fact, there have been senior level staff depart from four out of six of the firms that now serve as our trans-itional managers.”
The US transition management arena has undergone rapid changes over the last 12 months.
Last year, Morgan Stanley was hit by the departures of Fred Fogg, formerly head of equity transition management, and Sarah Orsay, MD, partner and head of the pensions group, of which transition management is a component.
Fogg resurfaced last month as director and head of US transition management for Citigroup, a new position, while Orsay joined Goldman Sachs in 2005 as managing director of the pension services group. She was recently named head of the endowments and foundations coverage group, a new initiative in the derivatives division.
In addition, Deutsche lost Charlie Shaffer, global head of its transition management team in New York and Bill Stush, who worked under Shaffer, to Merrill Lynch in the first half of 2005.
Shaffer is currently managing director, co-head of the Merrill Lynch Transition Management Group, while Stush is director, North American head of transition management.
Michael Gardner, transition strategist at Frank Russell Securities, left last year to join Institutional Direct Inc (IDI), a wholly owned subsidiary of Bear Stearns, as senior managing director and head of transition services.
Although TRS has “relationships” with all the firms on its list, Goltermann said the fund had not had a chance to meet the new staff at these firms or “develop an understanding of their process or philosophies”.
It intends to keep its approved list of transition managers at six and current managers are invited to rebid for inclusion on the new list.
Deadline for tender is 24 March. TRS hopes to present the candidates to the board of trustees at its board meeting in May or August.
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