Financial Sponsors - the least technical group?
Lately been doing a lot of Zoom chats and research on financial sponsors group. From what I understand most of the sponsor group's work is LBO-financing or some type of debt financing, and the clients(GPs) typically provide their own models and DD reports.
Sounds to me almost like commercial banking as the work is pretty easy (though not light) since the banker can base almost all of their work off the materials prepared by the clients(model, DD, CIM, etc), and the focus is more on getting internal approvals (credit committee) + client relationships, and the work itself is therefore less technical. Is this an accurate understanding of FSGs or am I missing something crucial about what these groups do?
From my experience, yes. They operate hand in hand with our leveraged finance group on LBOs.
The MA team will run any sort of LBO model if we are buy-side and the sponsor team will hold the relationship and debt piece.
They also get asked to do one-off analyses by sponsors every now and then.
What sort of bank are you at? American BB?
For the life of me, I still don’t know what the sponsors group even does. They place well and have pretty good hours though, so seems like they’re winning.
If we are baking off to do a sell side for a sponsor asset, the coverage group runs the model and the majority of the pages. Once engaged, the coverage group does most of the CIM and MA helps models. When doing a sponsor buyside, most of the work is split between coverage and MA. When pitching assets to sponsors, the coverage group does almost all the work. When doing a dividend recap, usually it’s driven by coverage group and levfin. For baking off / executing on sponsor IPOs, the coverage group runs all of it.
Typically when trying to win sponsor business, the senior bankers in the financial sponsors group will just touch base with a partner at the sponsor to try to get more information and sus out our competitive positioning relative to other banks. How the juniors are involved in all of this, I have no idea...
Same question as above - what sort of bank are you at? Sponsors workstream varies widely between places from what I can tell
100% bank dependent. Impossible to give a blanket statement on sponsors groups across the street. Some groups hold pen on the entire process and model, other groups are just cross-staffed and help coverage.
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