Fund Finance vs Corporate Banking
I am in a leadership development program at a super regional bank. It is coming time to exit the program and start a full time role. It looks like my placement option would be in TMT CB at this regional.
I applied for a few jobs externally over the summer mostly to see what was out there and, honestly, because deal flow had stalled severely leaving me with a lot of project and administrative work, which I was not enjoying.
I ended up hearing back from a multinational bank about a Fund Finance position I applied to without really knowing much about it. I just thought the job description looked interesting enough so I sent in my resume.
This Fund Finance product group solely provides NAV credit facilities and finances funds at the late stages of their lifecycle for add-on acquisitions, distributions, and/or other liquidity needs. They are also used to finance secondaries funds buying out LP interests. It all seemed pretty interesting so I went through the process and received the job offer. Now I am trying to decide if I should take this Fund Finance job or place out with TMT CB.
I am leaning to the Fund Finance job because, for one, I enjoy the structuring and execution work typically associated with product groups. Also, from what I researched on NAV lending, it is a hot product in a rapidly growing market. I have recently seen a good amount of institutional capital come into the market, with AllianceBernstein and AXA announcing this week that they are setting up credit funds providing NAV facilities. I think it could be exciting to get involved in a developing market that will continue to grow into the mainstream.
However, I have reason for pause. For one, I understand that Fund Finance is typically thought of as subscription credit lines, which seems very boring from what I understand. It is more of a paper pushing exercise because repayment falls on Limited Partners, aka the most credit worthy institutions that exist in the known world. I want to make sure that this NAV lending execution work is not simply a paper pushing exercise but conducive to some actual thoughtful analysis on a funds ability to repay. Also, I worry that this job might be so niche that I am pigeon holing myself into a career of fund finance. I suppose that is fine as long as I find the work interesting, but I want to make sure that I am learning transferable skills that I can use to find good exit opportunities. In terms of exit opportunities, it seems I would be limited to private credit funds offering NAV facilities.
In terms of the TMT CB job, I am curious on what the exit opportunities even are. Not much of the junior talent in the CB across the industry verticals where I work even look for any exit opportunities. They are really just focused on working the path to becoming relationship managers. TMT is a little better because they have senior talent who all graduated from BB banks doing investment banking coverage. It would be a good place to learn if I decide to stay, just not sure on what my goal would be if I do. Also worth mentioning that the bank lacks some critical infrastructure so a lot of the admin and operations work falls on the most junior members of the team. I am not sure if this is Company specific or just how regional banks work.
Curious if anyone has any advice on what I should be thinking about. What do people think of Fund Finance and NAV lending? Do you think it will grow rapidly? And what do you think about the TMT CB job? Would I be better off staying in a group that is thought of a typical banking or should I think about pursuing a specialized career in fund finance?
Based on the most helpful WSO content, it seems like you're in a bit of a pickle! Both Fund Finance and TMT Corporate Banking have their own unique advantages and challenges.
Fund Finance, particularly NAV lending, is indeed a rapidly growing market. It's a specialized field that involves structuring and execution work, which you mentioned you enjoy. However, you're right to consider the potential limitations. It's a niche field, and while it's growing, it could potentially limit your exit opportunities to primarily private credit funds offering NAV facilities.
On the other hand, TMT Corporate Banking is a more traditional banking role. It could provide a broader range of skills and potentially more diverse exit opportunities. However, you mentioned that the bank lacks some critical infrastructure, which could mean more administrative and operations work falling on you.
In terms of growth, both areas have potential. NAV lending is a hot product in a rapidly growing market, while TMT is a sector that is always evolving and expanding due to technological advancements.
Ultimately, the decision should come down to where you see your career heading and what kind of work you enjoy most. If you thrive in a more specialized, product-focused role and are excited about the growth of the NAV lending market, Fund Finance could be a great fit. If you prefer a more traditional banking role with a broader focus, TMT Corporate Banking might be the better choice.
Remember, there's no right or wrong choice here, only what aligns best with your career goals and personal interests. Good luck with your decision!
Sources: An Overview of Corporate Banking, Confused about the difference between Advisory/Corporate Finance/Investment Banking, Commercial Banking vs. Debt Fund
I would take the TMT CB role. Fund Finance is super niche + realistically banks apetite will be limited to subscription lines vs. more sexy products that PC covers
TMT CB will at least provide some opportunity to actually analyze the biz and the cap structure vs. reading borrowing bases of LP investors.
From my CB group (Big BS bank), I've seen people exit to DCM, LevFin, coverage IB, PC and CLOs (we did a lot of leveraged lending)
I would not be working with subscription lines in this group. The group solely originates and executes NAV (net asset value) credit facilities. The borrowing base is comprised of the underlying investments of the fund, i.e. portcos, rather than the LP interests. From my research, the product is somewhat new and only a few banks really offer it. So I understand that it is really niche, but do you think the skills are transferable? It seems more like ABL to me and sexier than subscription credit lines.
Also, the comp for the fund finance job is materially higher than the corporate banking job.
I do agree that it would limit my options to a PC exit opportunity if I chose the fund finance route, whereas CB is much more broad for exit ops. Ultimately, it is my goal to go for the PC exit opportunity so curious which route would get me there. I see your point that the fund finance job would not involve analyzing capital structure, or specialization in an industry vertical, which I would imagine is needed for a PC job.
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