Private Credit: Direct lending vs. Asset Backed Finance
Hello everyone!
I am currently hesitating between 2 offers in London:
1) 6 months internship at a MF brand name in a smaller team (Asset Backed Finance within Private Credit, think GSAM, Apollo, Oaktree, Ares) with uncertainty around conversion
2) Full-time offer at a shop in the top 10-15 in Europe doing however mostly vanilla direct lending with a bit of opportunistic deals and variety across the cap stack 2L, PIKs, (think Hayfin, Alcentra, Bridgepoint, Macquarie, Barings)
As of now, some pros and cons I see going for 1) vs. 2) are the following:
Pros:
-Asset backed finance massive growth area - All the big guys have teams - fastest growing niche in PC
-Brand name
Cons:
-Internship vs. full-time in such a competitive job market with sell-side lev fin etc wanting to enter PC space
-Asset backed finance dif. skillset vs. corporate / more niche
Main consideration being risk-adjusted outcome of those choices from a career/learning perspective considering a certain level of uncertainty regarding future goals in the credit space.
Curious to get any insights,
Many thanks!
Based on the most helpful WSO content, here are some insights to help you weigh your options between the two offers in London:
Offer 1: 6-Month Internship at a MF Brand Name (Asset Backed Finance within Private Credit)
Pros: - Massive Growth Area: Asset-backed finance is a rapidly growing niche within private credit. Major firms like GSAM, Apollo, Oaktree, and Ares are heavily investing in this area. - Brand Name: Working at a well-known firm can significantly boost your resume and open doors for future opportunities.
Cons: - Internship vs. Full-Time: The uncertainty of conversion to a full-time role can be risky, especially in a competitive job market where many are vying for positions in private credit. - Niche Skillset: Asset-backed finance requires a different skill set compared to corporate finance, which might limit your future opportunities if you decide to pivot.
Offer 2: Full-Time Offer at a Top 10-15 Shop in Europe (Vanilla Direct Lending)
Pros: - Full-Time Security: A full-time position provides job security and stability, which is crucial in a competitive market. - Variety of Deals: Exposure to a variety of deals across the capital stack (2L, PIKs) can provide a well-rounded experience and skill set.
Cons: - Less Prestigious Brand: While still reputable, the brand name may not carry the same weight as the MF brand names. - Vanilla Direct Lending: The focus on more straightforward direct lending might offer less excitement and fewer growth opportunities compared to asset-backed finance.
Main Consideration:
Additional Insights:
Good luck with your decision!
Sources: Private Credit out of undergraduate?, Career Advice out of Undergard - Development vs Investment, Credit Hedge Fund opportunities, Lending/LevFin vs. MM IBD vs PE summer internships, Q&A - research analyst at credit hedge fund
Some considerations:
1- It’s hard to justify giving up a FT offer, whatever the reason. Even if you slightly prefer AF (and you don’t really know since it’s your first job), think about the regret of losing a FT offer if in the end you actually don’t like AF
2- The shop makes all the difference. Hayfin / Bridgepoint are far superior than Alcentra for example. Barings had huge team issues recently. Culturally Apollo is much tougher than the rest. These are just some considerations which affect your choice. It’s much more important to choose a good place vs the asset class: if you are intellectually curious, you will end up liking any asset class.
Was in a similar situation. I recommend that you consider how deep your conviction level is in the growth of asset finance and your interest in the space. I agree that AF is the new growth area in PC. If you like the intellectual challenge of lending against a pool of assets and you are already in the space, I would just double down and crush it. If you want to get exposure to commercial analysis (i.e., how a company makes money) then and only then do direct lending. I would say that your job prospects depend on your own skillset and network - and you may have more opportunities if you stay in AF, develop good skills, and ride the growth wave for AF.
tldr - if you like AF stay in AF, if you want corporate exposure go to DL - you will have good job security either way. You may have more opportunity to advance quicker up the ranks in AF.
Do you have any opinions on ABL at a BB? Currently have a summer internship offer for one of GS/JPM/MS for ABL (sits within commercial banking)
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