Quadrangle Set To Recast Itself In Scandal's Wake

Nov 23 2010 | 2:11pm ET

Major changes are coming to Quadrangle Group, the private equity firm battered by its association with the pay-to-play scandal at New York State's public pension fund.

The New York-based firm is planning a top-to-bottom overhaul, including a new name, new leadership and a new investment focus, the New York Post reports. Quadrangle's rebirth could come within the next few weeks.

The firm has once again shelved plans—resurrected in April after Quadrangle agreed to pay $7 million to end an investigation into its role in the pay-to-play scandal—to raise its third p.e. fund. Its second fund's five-year investment period ends this year; Quadrangle is mulling whether to release investors from their commitments or use money for follow-up investments.

In addition, managing principal Andrew Frey will leave the firm by the end of the year, and Joshua Steiner, who co-founded the firm with Steven Rattner, will step back from day-to-day management. Principals Michael Huber and Peter Ezersky will oversee money management.

Quadangle is also still trying to sell itself, despite so far fruitless talks with potential buyers or investors including the Carlyle Group and Oaktree Capital Management. The firm, which manages $2.5 billion, is also considering selling a stake in itself.

The new Quadrangle is likely to be more focused on managing client assets in the near-term. The Post quoted a source familiar with the plan describing the change as one of "skill-set."

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