Pros and Cons of the BB coverage groups
I'm interning at a BB this Summer and need to put forward preferences for coverage group rotations. I want to be as informed as possible on the pros and cons of TMT, Healthcare, NatRes, Industrials, FI, Consumer etc. Any stories or advice on how to pick a team would be much appreciated.
I guess the most important things would be:
- How you ended up in your team/ why you picked it
- How technical each team is (I've heard NatRes and FI require more complex valuations)
- Particularly interesting verticals within your team
- Buy-side exit ops
- Any random perks that come with specialising within your team
bump
I'm at a BB (non-GS/MS/JPM) in FIG and I hate it. See responses below:
so so true lol
I used to tell people during group placement process...dont meet with FIG, dont respond to them, dont even look them in the eye.
Basically when they place groups at most BBs, If you put a group top, and they put you top....its confirmed.
if FIG put you top, and no one puts you top (mostly mid for most groups), well...welcome to FIG.
You do not want them putting you top of their list
Before responding, what I would comment upfront is that this depends on bank - specifically you should care about dealflow, and aim to get into a team with strong MDs generating good dealflow.
Besides that Consumer, TMT, Industrials, and Healthcare are broadly the same in terms of the technicals and exit opportunities. Perhaps TMT is arguably better in exit opportunities as it lends itself more towards venture capital or startup type of destinations. In terms of technicals these are all fairly similar (there might be some nuances particularly in some sub-verticals, but it's generally multiples, LBOs, and DCFs.
You rightly point out that NatRes and FIG have more specific valuation methodologies. These aren't necessarily that hard, but just very niche, and for that reason can limit exit opportunities.
For my own part I live in Consumer. I don't think I need to explain why whisky distilleries and chocolate factories are more intuitively interesting verticals to study and site visits to attend than waste management companies and nursing home operators. But you might disagree. For me that's a "random perk". I picked it because of the dealflow point.
Any opinions on HC?
I would say it was recession proof pre-2020 (no COVID, no interest rates, lot of new policies) but not sure what I think of it now. I will say the exposure you get to healthcare within JPM is probably unmatched. Their industry events are legendary. One of my friends goes there as a rep for his company every year. He raves about the speakers and the investors he get to interact with.
If I'm a banker trying to exit into healthcare eventually on the buyside or corporate side, nothing tops JPM HC.
Between the coverage groups ex-Infra / NatRes / FIG, I'd choose based on (A) the dealflow at your particular bank, and (B) your interest, ahead of anything else. With only minor exceptions, the exit opportunities and valuation methodologies are broadly the same, and your own options will come down to your own talent and luck more than anything else.
Keep in mind I'm a Consumer banker, but HC is very broad (think pharmaceuticals to medical devices to nursing homes to biotech to consumer health to animal health), so there's a lot to keep you occupied. A lot of sponsor-owned assets and HC-focused funds so exits are fine and plentiful. There are even a lot of dedicated HC funds (both private equity and venture capital). Not a super technical team in terms of valuation (some off-piste stuff in biotech and when binary outcomes are involved like with phase 3 trials, but nothing too exotic). You'll have a few technical commercial aspects to learn (like regulatory approvals, trials, etc.), but ultimately bankers aren't supposed to be experts in the weeds of things, more to have a working level understanding.
If you get your kicks and giggles from telling yourself you're doing good for the world / humanity somehow I guess you can do that more in HC than other sectors I guess. In Consumer I've long since graduated beyond that
The Count has already covered this in the green Post.
Few things I would add:
1. steer clear of consumer if you are thinking of a sellside career. The consumer universe for coverage is extremely cyclical and the first to feel the hurt in deal flow in a downtime.
2. Bank reputation for certain sectors. No point doing a sector the bank is weak in.
3. Interest. Again only if its long term career wise but doing something that genuinely interests you sector wise will make your junior banker years far more bearable.
this sounds like citi. Industrials and LevFin are strong there, so I’d shoot for industrials
How on earth did you come to the conclusion that this was Citi? There is not a single clue besides "BB" that could point it towards Citi. Hahaha
i wasn’t aware of any other bb with a rotational ib program. i guess DB as well upon second thought
Pros of Consumer: Work with hot chicks
Cons of Consumer: Be gay and not able to appreciate hot chicks because C&R banking is a woman's job
Do NatRes
Reasoning?
We seem to be in the middle of a consolidation wave across the commods space - look at O&G, lith/batt metals, copper, etc. if your bank is good in the space could be a good time to go into a sector that not as many view positively - smaller deal teams too. Structural commods underinvestment is a great tailwind. Majors need to go down the curve and buy assets. Haven’t seen this in scale yet. Rates higher for longer - mining cos trade on low mults and are usually short duration.
If resources doesn’t interest you stay far away cos it’s technical - science background helps.
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