1. How hard is it for a Lev. Fin. Associate at a top shop like BAML/JPM to exit to a credit fund like Oaktree or GSO?
2. What about exits to a BDC or private debt mezz. shop?
3. At the Associate level, is traditional M&A experience more valuable for credit buy-side?
4. Is sell-side credit research the best path out of the above to get into a credit fund?
Thanks in advance.
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1) Not hard-it's a (the?) major source of recruitment along with restructuring groups. 2) Even less hard-there are a lot of them, they're generically less selective than a GSO or an Oaktree (though note that GSO manages the Franklin Square BDC series and Oaktree has filed a shelf for a BDC) 3) Not really, in my opinion (Assuming you mean "more valuable [than something credit related]". I'm always surprised at the lack of understanding of credit technology from non-credit people, and by the associate level you'd better be able to read an indenture or credit agreement if you want to work at a credit manager. 4) No. Restructuring or a good lev-fin group are the best way. High-yield credit research is probably next best though-better than IG or equity research for example, or non-credit focused banking except maybe M&A, for the usual preftige and selectivity reasons.
Ah-I missed the "associate" part, poor reading skills on my part. The answer is basically the same as above but haircut for the usual "associates are less appealing than analysts" reasons. It also depends on the fund to an extent-some function on a very PE-ish model of hiring after analyst stints for two year associate programs and then either sticking around or b-school etc while others are more flexible in their hiring model. GSO and Oaktree both tend towards that end of the spectrum in my experience, but they are also large firms that hire people outside the usual analyst cycle too.
When we're looking for people in my group (credit group within a large multi-strategy fund) we consider lev fin, restructuring, and research (publishing and desk), both analyst and associate (as well as buyside obviously) but the bias tends to be towards buyside first, and then analysts and direct-promote associates.
I'm an analyst at one of the lev fin shops you mentioned, OP. I am going to a top credit fund after my analyst stint is up, and I received several great interview opportunities at PE firms and credit funds during the recruiting process. Maybe it's that our associates are more hush hush about the process, but I have not seen many of them interviewing at the same caliber funds.
We just had one of our best associates leave for a decent asset manager, but he's the only one I've seen so far. That could also be a function of not every associate pursuing that route, but it seems that if you were to actively chase these roles, you could end up at a pretty good AM, if not GSO/Oaktree/Sankaty etc.
The skills you pick up as an associate are phenomenal for these positions - it just comes down to how aggressively you want to pursue them and how well you are able to present the skills you've picked up. As an example, I asked one of the senior folks at my future employer how best I could maximize my second year as an analyst. His response: get as deep into the legal docs as possible. Be as involved in credit agreement/DON discussions as you can, try to learn from those brutal negative covenant comp drills, etc. Some of our best associates are not only soaking this stuff in, but actually playing a role in driving the credit agreement discussions on middle of the fairway pro rata and hy deals by their second or third years - that kind of understanding is exactly what these funds are looking for.
Best of luck
Very helpful - thank you.
What is pay progression like at a GSO/Oaktree if you enter as an Associate? Is it pretty comparable to IB until you hit VP or does the inflection point occur at a higher rung of the ladder?
I'd assume associates at GSO/Oaktree make similar money to other associates on the buyside. Could be wrong though and someone else more experienced may have better info.
The Oaktrees and GSOs of the world will be very similar to large-cap PE (those two are notoriously "PEish" in terms of titles, structure, etc).
From what I've seen and heard, most of the hedge funds that participate in general recruiting from banks are slightly back from the big PE shops-they make up ground with better life-style and higher chance of sticking around past two/three years. Variability/upside in bonus can be larger as well.
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