EUROPE NEWS: Shake-up at CP Eaton

PERE September 2009: Two European professionals at US placement agent CP Eaton have left in recent weeks. The firm has been cost cutting, but the changes at CP Eaton mirror wider challenges in the capital raising industry. By Robin Marriott.

 These are not the easiest of times for placement agents, so it not surprising to see departures among the largest firms, CP Eaton included. Over the summer, the Connecticut-based firm lost two senior capital raisers in Europe, Anne Gales and Alex Walker.

learned Gales had departed the company on 10 August, while Walker left around two weeks prior to that for Hong Kong where he has joined a client. With fundraising slowing to a trickle, it is perhaps not that big a shock.

Gales: left in August

Gales joined CP Eaton in 2003 just at the beginning of aera that would see everlarger real estate, private equity and infrastructure vehicles raised, such as Alinda Infrastructure Fund I, which raised $3billion in June 2007.

As it turned out, that was the peak of the capital raising market and became CP Eaton’s calling card. The firm has been able to raise real estate and infrastructure funds since then, such as the Chinese urban development fund, Trophy Property Development, in April 2008, and O’Connor Capital Partners’ North American Property Partners II in September 2008.

But more recent mandates have struggled. One mandate that the European real estate team has been involved with, Moor Park Capital, involved raising its first true third party discretionary fund for the London-based firm, but since the credit crunch progress has been tough. PERE understands the target is closer to €600 million than the original €1.2 billion.

Walker was a much more recent addition to the London office than Gales, having joined in just February this year. He joined to

The assault on the fundraising industry has spurred the industry in the US to club together and present a united front.

focus upon capital raising and origination for private equity real estate investments and other real asset funds such as infrastructure, and was excited at the time to join. CP Eaton has had to cut costs in recent times and the departures do coincide with restructuring both its Europe and Asia operations.

Over the summer CP Eaton said Franklyn Chang would be heading European operations. Meanwhile, David Love was appointed head of the Asia business. Yet upheaval and cost cutting are not the sole preserve of CP Eaton – it is happening among many placement agents and indeed any private-equity related business generally. Citi has decided to jettison its third party fundraising business, while two of the most senior people at market leader, Credit Suisse, have left to start their own business.

These are unprecedented times for the placement agent industry. On top of everything else, regulations are being proposed in the US following a pay-to-play scandal involving “fixers” or “introducers” and the New York Common Retirement Fund. The assault on the fundraising industry has spurred the industry in the US to club together and present a united front. CP Eaton founder, Charles Eaton, is a member of the loose coalition to lobby lawmakers. Last month he told PERE some 35 percent of capital placed by it comes from US public pension funds.

A proposal from the Securities and Exchange Commission to ban interaction between thirdparty solicitors and government entities, including public pensions, could spell “the demise of many of the placement agents that work on a broad basis” raising capital on behalf of general partner clients, Eaton said.