Fund Finance exit opps
Currently interviewing for a fund finance team within a bank. Will be both origination and execution of subscription lines and NAV facilities. Was wondering what the exit opps of such a team would be like, particularly into something like private credit (I think I would gain decent underwriting experience) but also elsewhere? How easy would it be to lateral to m&a if I end up hating it, as I realise it is quite a niche way to look at finance? Thanks
Based on the most helpful WSO content, here are some insights into exit opportunities from a fund finance team within a bank:
Exit Opportunities:
Private Credit:
Mergers & Acquisitions (M&A):
Additional Considerations:
Summary:
For more detailed discussions and personal experiences, you might want to explore specific threads on Wall Street Oasis related to fund finance and exit opportunities.
Sources: Credit Hedge Fund opportunities, Credit Hedge Fund opportunities, Golub Capital type direct lending fund, Private Debt/Direct Lending Exit Opps?, Leveraged Finance – 2017 Update
Anything ?
Interned at a bank with a strong fund finance group. My impression was that it is a really niche product group with limited (if any) need for financial modeling, since pretty much all of the clients are going to be large, IG-rated sponsors. Plus, I don't think any of these facilities would be underwritten for any kind of event-driven financing.
I would imagine it would be really tough to lateral into something like M&A or any traditional IBD team since the work and skillsets are going to be completely different. Given the work you'd be doing with sponsors and understanding of fund structures, things with GPs, LPs, etc, maybe it could be possible to move to something like LevFin, but even there the work would be apples to oranges.
What kind of analysis is done on the NAV financing side?
Tbh not sure since I didn't work in fund finance, but nothing 3 statement-related. Mostly seemed to be understanding credit, credit agreements, fund structures. If the goal is to move into IB, it probably isn't the best place to start out unless you don't have any other option. Seems like a pretty chill job tho.
Generalizing here, but high level would think of it like secondaries but with debt. NAV facilities can finance PE/credit/real assets/etc. funds, SMAs, continuation vehicles, etc. so you'd generally spend time on (1) structuring the deal and (2) underwriting the GP and the portfolio assets (level of depth on the assets depends on how concentrated or diverse the portfolio is).
This is the type of role that someone like me would love, but the typical young kid on wso would turn their nose at. Kind of the same way u look down on the poor white and Asian kids on this site, that’s how people would view fund finance from a prestige perspective.
And to be fair it’s probably not the best place to start your career if you have hopes of being a high roller in PE.
But if you’re just looking to break in and make average wall street money for easy work, fund finance is the place to be.
Basically, what these groups do is set up subscription facilities to large asset managers. It’s like a form of low risk bridge financing. These large managers have committed capital lines, but it is cumbersome and inefficient to keep going to your Laps and drawing on the money every time you need to buy or sell or do maintenance on something.
So they tap these subscription lines for a low cost way to access money. And these “bridge” lines are secured against these capital commitments from the asset managers investors or they can be secured against the assets in the funds / NAV of the fund.
It’s a low risk instrument for the banks, since the capital is committed already. You need to do some credit work on these investors I guess, but typically they are big time firms or rich people and these timeframe to pay back these lines is like 12 months, so not much of a risk.
And the managers like these instruments since they can let the GP invest at their own pace. Once it’s time to pay back the line, then they can draw upon their committed capital in one fell swoop.
Easy work for you, the analyst. I can’t imagine there are many fire drills or non-payment emergencies in fund finance land. On the flip side, if you stay in the group until associate 3 / vp 1, you’re likely pigeon holed in this boring, niche space.
And I’ve no idea what the comp ceiling is, but again you’re not working long hours, so who cares.
I'm basically after a "chill" job in finance so this pretty much fits the bill haha. Do you have any idea of the hours in fund finance?
Like anything in finance, hours and face time are driven by the boss of the group. So it just depends. But on average hours are not as brutal.
Would say the NAV financing portion is also a big part and more interesting. These guys get paid well, generate large pnl and typically have better hours than bankers. It’s a hidden gem imo.
What would the average hours be like?
OP feel free to PM me, have worked in fund finance
Fund finance folks at BBs are getting paid almost as much as IB. The question is how long will it last before the fin regulators decide to increase the risk weights on capital for such products, thereby killing its profitability? It will happen at some point.
Interesting, do you have any info on what comp is like and/or exit opps? Seems to be a career banker type role from the research I have done could be wrong though
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