Pacific Corp. Group to venture in hedges

NEW YORK (Reuters) - Pacific Corporate Group, a $20 billion fund specializing in private equity, is finalizing a venture with a specialty hedge fund to expand its insight into the debt markets, a senior official told the Reuters Hedge Funds and Private Equity Summit on Monday.

Monte Brem, managing director of La Jolla, California-based PCG, didn't disclose the name of the hedge fund or any terms of the deal at the Summit. He said the deal, which could be disclosed in a month, reflects the increased convergence of the two "alternative" asset classes.

"Really what we're looking for is for them to give us perspective on how the debt market is looking for various companies," said Brem, who is president of PCG Asset Management, one of two PCG divisions.

La Jolla, California-based PCG both advises institutional investors on private equity portfolios and also makes direct investments in companies, giving it leading edge insight into the equity markets.

Most buyouts, however, require substantial amounts of debt which is typically arranged by investment banks but syndicated to investors including hedge funds. Hence a link-up with an active fund in the debt markets could be beneficial, said Brem.

The move comes as more private equity firms are establishing hedge funds and more hedge funds are executing buyout deals as the formerly specialized investment funds look to broaden their appeal to investors. Now the trend is spreading to the fund-of-funds world to a lesser extent.

In 2004, for instance, PCG rival Hamilton Lane, a fund of funds, bought a controlling stake in Richcourt Group, a fund which invests in hedge funds.