Principal Investment groups at BBs—background, exit opps, comp, etc?

Hi all,

Curious about the work that teams such as GS Principal Strategic Investments and JPM Strategic Investments do. Would a FIG IB background be helpful for these roles? Is the work comparable to corporate VC/growth equity (maybe like Paypal's fintech VC arm) and a respected exit opp post-banking? What does compensation look like? What role do these groups play in people's career trajectories?

 

IM is principal investment (it's just a mutual fund). IBD guys generally go to PE/private side of the bank, S&T guys much more likely to go the prop side of the bank, and then their are the in-between principalling that take from both sides of the banks. Ofcourse principalling is better, it is the buyside on the sellside (PE/HF) and that's what everyone wants to do in general. Still better pay on the buyside, the banks will never pay same $$'s to the principalling groups as the PE/HF's do

 

The PIA area is the private equity arm of a BB. Essentially, these group put up some balance sheet for focused opportunities.

Sometimes they do it alongside clients. Goldman Sachs PIA was apart of a larger successful bidding group for the TXU deal in 2006/7. Google search an article.

The hours are better because of the nature of the work. On the buy-side, you make the hours for the bankers. Consider the following: An acqusition client calls you the banker on christmas eve to let you know that they have recieved an offer that demands a response within two days....Merry Christmas.

Alternatively, it seems to be a little more predictable on the buy-side because since your buying things....you more in the driver seat than your advisors and bankers.

For a young person, remember you want to learn finance first, then investing. You might want to learn about as many transactions as possible and not only LBOs. The value is the experience which create exit opps. Executing the same type of transaction over and over again has a quality of diminishing marginal utility and also excerbates your risk in times of reorganizations. I'd hate to be the kid that only knew lbo models in this market. I'd probably be wishing I knew how to do FIG valuations for secondary equity/debt/mezz offerings. Build a foundation. Avoid the fads and Rat race. Manage your risk.

 
Arts:
The PIA area is the private equity arm of a BB. Essentially, these group put up some balance sheet for focused opportunities.

Sometimes they do it alongside clients. Goldman Sachs PIA was apart of a larger successful bidding group for the TXU deal in 2006/7. Google search an article.

The hours are better because of the nature of the work. On the buy-side, you make the hours for the bankers. Consider the following: An acqusition client calls you the banker on christmas eve to let you know that they have recieved an offer that demands a response within two days....Merry Christmas.

Alternatively, it seems to be a little more predictable on the buy-side because since your buying things....you more in the driver seat than your advisors and bankers.

For a young person, remember you want to learn finance first, then investing. You might want to learn about as many transactions as possible and not only LBOs. The value is the experience which create exit opps. Executing the same type of transaction over and over again has a quality of diminishing marginal utility and also excerbates your risk in times of reorganizations. I'd hate to be the kid that only knew lbo models in this market. I'd probably be wishing I knew how to do FIG valuations for secondary equity/debt/mezz offerings. Build a foundation. Avoid the fads and Rat race. Manage your risk.

Um, working with portfolio companies gets you a wide variety of experiences in finance. It's not like analysts at PE firms are only learning about LBOs. All of them are assigned porfolio companies where you're operating from (almost) a CFO perspective.

Plus, PE finance is no longer only about LBOs. There's a lot of creativity out there.

 

The intern from HBS left. The hours are 9am-late night. The head of the group is legendary, and you're going to get an amazing experience if you can get in.

They purchase pipelines or tolls and give it to the prop guys to trade, or they work to assist clients on various deals etc... They have a very strong reputation.

 

Goldman has also been burned very very badly. Also, its pretty difficult to get into most principal investment groups. A lot of them don't actually have an application process for undergrads- you have to be selected from among the pull of S & T ers.

 

I was told by a current 2nd year trader that at his BB, wherein the past they would pull the top traders into their prop groups, they now keep them on flow desks. They've also pulled the top exotic traders into groups like etf's and other more vanilla derivatives (this is for Equities). I wouldn't plan on working on a BB prop desk anytime soon.

 

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