Private Credit Exit Opportunities?
Hi all,
I'm joining a middle market direct lending firm (Golub/Antares/MidCap) as a private credit analyst and was wondering what exit opportunities there are from this type of role?
I started somewhere similar right out of school. The easiest transitions upward are going to be other credit and structured product roles on the private side, public credit investing (HF or credit fund, lines are kinda blurred anways), or PE. Admittedly the PE is kinda tough - I would get looks but for some reason everyone in PE thinks the PC skillset isn't entirely transferable. Having finally made it to PE after many years of trying, I don't get the doubt and think that PC investing is actually a great training ground for PE, but that's another rant. Downward exits could be PE cap mkts, LevFin, PC financing, DCM, more regular way IG or boring BBB type credit investing (think CLO).
I'm sure someone is going to take issue with what I called upward vs. downward exits so I'll just go ahead and caveat that it obviously depends on the specific role.
After working in both PC/PE are you happy with the move/if you could go back would you have done anything differently?
Tbh part of me misses private credit. I preferred the faster deals, less process oriented, and more focused on the essence of what I see as investing - making calls on different companies / industries. I also think the mindset is more intuitive to me - building a strong downside case and working up from there. PE on the other hand thinks differently and its a bit gutting when you work on a deal for months with lots of annoying process elements just for them to outbid you with more aggressive assumptions. I had my complaints too though (negotiating leverage / frothy market when I left, sometimes not as in-depth diligence as I would have liked because a competitive term for sponsors was diligence timeline) so I left for a distressed hedge fund. Parts of that were super interesting but I quickly realized that I really didn't want to dedicate my life to the bx court. So largely since I really don't know what I want to do, I went for PE like investing bc I think it has wider exits. At some point would love to go start something small myself in my industry, or otherwise just find a small shop / team I can work on somewhere outside of NY. Credit on the other hand, while my preference for investing, kina funnels me into NYC or maybe 2-3 other major markets continuing to credit invest till I get out.
PE cap markets is a downward exit? Being a senior in a cap markets team at a PE firm sounds like the dream.
If you can find the right situation I won't argue with that, could be super chill
bump
What PC firms recruit out of undergrad ?
All the mega funds/UMM firms, most of the asset management firms (PRU/nuveen/etc.) basically any firms that have an analyst program will 99% of the time have one for PC too.
PC is the ultimate exit
For anyone trying to enter now as an associate, much of the glory days are going to be behind you. Spreads are coming down and timelines for deals are shortening. There eventually will be a convergence with syndicated lending. A top quality asset prices within 150 bps of leveraged lending market at slightly higher leverage and that is tightening. The guys getting rich rich from PC are doing so because they own equity in their firm moreso than carry prospects.
Will it be a good career? Yes it will be but ultimately the convergence with LevFin banking is already starting to occur and there is a reason private credit is one of the only places senior bankers exit to on the buyside pretty frequently. There will be places that staff very leanly or have above average returns because they look at hairier assets but hours there will be higher but there are lifestyle implications associated with that too. Ultimately in private credit if at a large flow shop like an Ares, Golub, Antares etc your client is the PE firm given the industry is becoming more commoditized and spreads / fees are both coming down. If you are at one of the smaller guys that takes syndication pieces from a Golub, etc. your client is Golub.
There are outliers like junior capital providers, asset backed providers, and people who lend to hairier credits like an HPS or a TCW or Blue Torch which do have upside and aren’t as penetrated but ultimately performing credit is range bound and hard to have outsized upsize without basically being first (which the current roster of VPs+ have enjoyed).
At this point what is not commoditized? HFs via pod shops, PE for sure had its glory days. I think PC still has more room to run and is still in its honeymoon phase (im biased though). I dont neccessarily disagree with you, just think its a good place to be still.
Bruh what is left which isn't past its glory days at this point? PE/PC/HF/IB there's nothing left
PC isn't a performance fee game, it's a management fee game. The way you make money in PC is a ton of AUM and a lean team.
Agree and saw lots of this compression pre-covid when I was in PC. I think of it as a great strategy to own and a very good one to work in.
Similarly also work in large cap credit fund after doing banking, great hours and good comp but as others have pointed out markets getting quite competitive (spreads coming in, sponsors asking for everything).
For people who’ve moved to PE or more SSG / opportunistic credit, has the WLB trade off for potentially more interesting work (different deal angles, dynamics to extract more economics, complexity) paid off?
It seems like if you’re at a good platform with low cost capital its pretty low risk to be MD in credit (asset class itself less risky, can participate across many deals vs equity where only one bidder wins)
also interested
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