LevFin Exits? Private Credit vs Investing Across Debt and Equity

TLDR: you could do anything from liquid credit with leveraged loans and HY bonds (very likely given levfin skillset but seats are limited), direct lending (very likely), opportunistic (less likely without prior credit/buyside investment experience), distressed (least likely unless you have a restructuring background), other specialty credit (also unlikely unless you have the relevant background).

Breaking it down in more detail, private credit would typically encompass the following:

1. Direct Lending (senior secured loans, unitranche, subordinated/mezzanine debt)
   • Majority would be secured (backed by collateral) credit investments
   • Likely from levfin background
   • Probably good place to learn investing but not sure it’s a long-term career for everyone. Over time, you would be on the hook for sourcing deals which can be difficult + politics at play too
2. Distressed & Special Situations (opportunistic, turnaround, rescue financing, control strategies)
   • More interesting workflows and deemed 'sexiest'. Would definitely see more variability across cap structure
   • Less likely to get into as you would need prior buyside experience or restructuring background
   • Difficult nowadays to be profitable as a pure distressed/SS player. More often that a firm traditionally known for distressed combined this with some other performing credit strategy
3. Structured Credit & Asset Backed Lending (structuring CLOs, ABS, factoring)
   • Structuring is more technical and requires math/quant background
   • Not for me personally but very smart people and most quants I know usually get paid very well
4. Real Estate/Infrastructure Debt
   • Senior loans, construction loans, NPLs, project finance
   • Can be quite technical so if you have a related RE/infrastructure background it would help. From an employer’s perspective they probably don’t want to train someone on RE/infrastructure technicals (especially from associate level and above)
5. Specialty Finance
   • Venture debt, litigation finance (very interesting to me but you probably need a law degree as well), royalties
   • Quite niche so would assume you need some sort of prior investing experience to do these

Just for completeness, while you only mentioned private credit, I would suggest also looking at the public credit side which can be just as if not more lucrative: 

1. Liquid/Opportunistic Credit at CLO or HF (senior secured/unsecured loans, subordinated/HY bonds)
   • Just lazily bunching this together but each firm is different. Some firms blend a mix of opportunistic public strategies with private credit solutions so the distinction between public and private may not be 100% clear
   • Typically performing credit but there are firms that have a wider mandate. You will still deal with distressed and restructuring scenarios because not everything will be rosy
   • Quite likely if you are coming from a levfin background
   • Could do credit HFs straight from levfin but more likely after few years in a liquid credit seat
   • More meritocratic in my opinion as you can reap the rewards of a +10pt trade you made

On your last point, I believe credit firms typically offer off-cycle internships as they want someone who has previous IB/investing internships. Would assume the big MFs do have some summer analyst positions available, but this wouldn’t be suitable for someone looking for their first internship experience. From the firms’ perspective, it’d have to be an exceptional candidate.