Stephen McCourt, co-CEO of Meketa Investment Group, anticipates that the company’s merge with Pension Consulting Alliance (PCA) will significantly enhance its private market endeavors, most notably the real estate asset class.
The companies announced the transaction Wednesday. The merger is expected to be funded mostly through equity and close within the first half of 2019, McCourt told CIO. The transaction will see the emboldened Meketa advising an aggregate $1.7 trillion in assets under management and over $100 billion in private market and real estate assets across a number of institutional investors, including large public pension plans such as the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS).
McCourt noted that inspiration for the merger came after the companies began to work with mutual clients. “Early in 2018, we began discussing if it made sense to join forces in some way,” McCourt told CIO. “Both of us saw mutual benefits in combining.
“In particular, where PCA has complementary experience is in the real estate area, which continues to be an important asset class for investors. Together, we will be a much more competitive platform in the marketplace for that market.”
McCourt and co-CEO Peter Woolley will manage the company following the merger, and Allan Emkin, founder and managing director of PCA, will serve on Meketa’s board of directors. PCA’s board members will become Meketa shareholders and equity will be offered to additional PCA employees as well.
“Joining together is a logical next step for both firms,” Emkin said in a statement, “as we have worked collaboratively on certain client relationships for many years and share a similar approach to capital markets and institutional investing.”
Emkin founded PCA in 1988 and has since grown the company to serve over 30 clients with collective assets under management totaling approximately $1.4 trillion. The company has historically advertised itself as “conflict-free” on its website given the absence of a direct investment arm.
However, McCourt noted that PCA’s merging into Meketa, which incorporates Meketa Fiduciary Management that employs an outsourced chief investment officer (OCIO) model, did not bring about any significant conflict-of-interest discussions during merger negotiations.
“My sense is that the opinion evolved over time…It wasn’t a meaningful topic at all [during our conversations],” McCourt said. “Over time, discretionary services have become a necessary part of any consulting business in certain market segments.”
“Our first and foremost goal is to do great work for our clients, part of that is to make sure we integrate the PCA organization really well over the next several months, and continuing to provide top-level service to our collective clients,” McCourt said. “At the end of the day it’s all about the people—consulting is all about attracting and retaining top talent at the company, and the ability to bring on 30 experienced individuals from a top-tier company like PCA is an excellent opportunity.”