Mark McComiskey, co-head of the buyout group at First Reserve Corp., will leave at the end of April in connection with management changes at the energy private-equity firm, according to a letter to limited partners.
The move by the Greenwich, Connecticut-based firm follows last week’s promotion of buyout co-head Alex Krueger to president and the expansion of the senior management team as part of succession planning, First Reserve said in the letter, a copy of which was obtained by Bloomberg News. McComiskey was chosen more than a year ago as part of the firm’s next generation of leaders.
“We appreciate Mark’s contributions and hope that we can work with Mark if the appropriate situation presents itself in the future,” the firm told clients.
As founders age, private-equity firms are making succession plans in an effort to reassure their investors, who typically lock up their money with teams for 10 years at a time. The co- founders of Silver Lake in Menlo Park, California, reduced their ownership stakes this year as part of a leadership transition, and the principals at Oaktree Capital Management LP in Los Angeles are shifting some responsibilities to the next generation as the firm prepares to go public.
First Reserve promoted nine employees to managing director and director in January. It appointed Claudi Santiago, formerly of General Electric Co., as chief operating officer in February. William Macaulay, chairman and chief executive officer, is keeping his role, the firm said last week.
The firm, founded in 1983, has raised more than $23 billion from clients, according to its website.
Early last year, First Reserve chose McComiskey, Krueger and Timothy Day as its next team of leaders by making them co- heads of the buyout group, said one of the firm’s investors, who asked not to be named because the moves weren’t publicly announced. Two other managing directors, Joe Bob Edwards and Hardy Murchison, left at the end of January 2011.
McComiskey, who has worked at First Reserve for almost eight years, joined as a vice president. He worked on deals involving CHC Helicopter Corp., Longview Power LLC, Torus Insurance Holdings Ltd. and Abengoa SA (ABG), according to the letter.
McComiskey’s departure will trigger a key-man event on its $7.8 billion fund that completed capital raising in 2006, First Reserve Fund XI LP, according to the letter. It will spark the same clause in the firm’s $9 billion fund from 2009, said the investor and another client, who asked not to be named because the information isn’t public.
A key-man provision is a common feature in private-equity investment contracts that governs what happens when managers considered essential leave a fund or change their role.
The departure of one or more key people can prompt an automatic suspension of investments from a fund or a decision by investors on whether to halt investments.
In this case, investors will decide this month whether to begin an orderly windup and liquidation of Fund XI and Fund XII or cancel future investments, a step known as a termination action.
Fund XI, which is about 95 percent invested, has the ability to make investments until Dec. 19 under the partnership agreement with clients, according to the letter. The fund has a maximum of $285 million available for additional investments, which would come in the form of follow-on money into the existing portfolio.
“Given the fund’s investment stage, and based on the strength and cohesiveness of the investment team, we recommend that you do not vote to take a termination action,” the firm said in the letter.
Backers of Fund XI include such public pension plans as the California Public Employees’ Retirement System, the nation’s largest; the California State Teachers’ Retirement System; and Los Angeles City Employees Retirement System.
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