Bloomberg to withdraw $5bn from Quadrangle

A team at Quadrangle Group that manages $5 billion of New York City Mayor Michael Bloomberg's personal fortune will spin out and form an independent firm to continue managing the assets.  

 

Alice Ruth, the chief investment officer of QAM, leads the team that will spin out. Ruth's departure is the most recent of several high-profile losses Quadrangle has suffered in the past year. The firm's chief operating officer Douglas Kramer left in January to join Horizon Asset Management.

 

Steve Rattner, a co-founder of Quadrangle, left last year to join the administration of US President Barack Obama. Rattner headed a task force charged with restructuring the US auto industry. Rattner left the task force only six months later, in July, amid allegations that Quadrangle took part in a kick-back scandal related to investments from the New York State Common Retirement Fund. Neither Rattner nor Quadrangle has been accused of any wrongdoing.  

The spinout will allow Quadrangle to focus on its “core mission” of private equity investing”, the firm said in the letter. Quadrangle has long focused on private equity media investing, though the firm also launched two hedge funds. One of those funds was wound down, the other spun out. 

Quadrangle launched its asset management arm in 2008, specifically to manage Bloomberg’s assets. Bloomberg and Rattner are close friends, a relationship that is reportedly the reason Bloomberg selected the firm to manage a significant portion of his wealth. QAM will no longer operate after Bloomberg's assets have been withdrawn.

Rattner hired Ruth, formerly chief investment officer of the Gordon and Betty Moore Foundation, to lead QAM. Ruth had previously managed a $6 billion investment portfolio on behalf of Intel co-founder Gordon Moore. Before that, she was a senior managing director at Banc of America Securities/Montgomery Securities. 

In April, the comptroller of New York City began investigating whether Quadrangle “intentionally misled or deceived” city pension funds by not disclosing payments to an investment firm affiliated with one of the scandal’s alleged main culprits, Henry Morris. Cuomo’s office described Rattner as having spearheaded the relationship between New York Common and Quadrangle. 

The city pension funds committed $85 million to Quadrangle in 2005 and $40 million in 2006. At the time, Quadrangle never mentioned any relationship with Morris. Quadrangle also paid $150,000 to Morris company Searle for a $10 million investment with the Los Angeles Department of Fire and Police Pensions and did not disclose the payment until the Cuomo investigation became public earlier this year.

Jason Post, a spokesman for the mayor, said in a written statement that the split had nothing to do with the ongoing pension investigation or Quadrangle’s performance. 

“The fact that the Mayor will be hiring the same team Quadrangle put together to manage these funds shows how pleased he is with their performance, which has been excellent,” he said. “He has nothing but good things to say about the job Quadrangle has done.”