Echo Street to Return Outside Capital to Investors in Funds

Gillian Tan and Hema Parmar, Bloomberg News

US dollar banknotes arranged for a photograph in Shah Alam, Malaysia, on Thursday, Oct. 19, 2023. The Malaysian ringgit fell to its lowest level since the Asian Financial Crisis as the currency was weighed by the dollar’s rise and a widening rate differential with the US. Photographer: Samsul Said/Bloomberg , Bloomberg

(Bloomberg) -- Echo Street Capital Management, the money manager founded by Greg Poole, is returning outside capital to fund investors, according to an email it sent to clients.

“I have decided to return outside capital to partners in the Echo Street funds,” the firm told clients in a message seen by Bloomberg News. “My decision to return capital is entirely personal. It is a bittersweet one as I am going to miss this relationship tremendously.”

Echo Street’s portfolio manager, George Panos, plans to launch a standalone, market-neutral fund, it said. Poole said he would invest in it, describing that as “an easy decision.”

Reached by phone, Panos had no immediate comment and referred inquiries to the firm’s general counsel, who didn’t immediately respond. The letter’s contents were confirmed by people familiar with the matter.

Poole, who started his career at Goldman Sachs Group Inc., founded Echo Street in 2002 at age 28 with less than $10 million in assets under management, according to the firm’s website. The money manager had roughly $11 billion at the end of October, a person with knowledge of the matter said, asking not to be identified discussing confidential information.

Echo Street has pivoted strategy a few times over its more than two decades. It eased away from its equity roots to focus on credit in the 2008 financial crisis. It later developed a quantamental approach to generate investment ideas. And after the pandemic sent prices swinging in 2020, it shifted away from its market-neutral strategy.

The firm’s Select fund is liquid, and capital will be returned “quickly,” according to the email. The Select Plus and New World funds have less than 3% of private-investment exposure and will maintain that until they achieve “future liquidity events.”

The email cited the “poor” history of failed attempts by other firms to pass leadership from founders to a new generation. “Echo Street’s transition, were it to happen, would be exposed to the risks revealed by similar transitions that have already occurred.”

Echo Street’s Select fund is up 15.5% so far this year, while Select Plus gained 17.3% and the New World fund returned 15.4%, according to the email.

Clients will receive most of their capital back by early January, and the rest later next year.

(Updates with fund performance in ninth paragraph.)