What's the Deal with Blackstone Tac Opps?
Hey All,
I'm beginning to panic.
I came from a top target and then a top BB (think GS / MS / JPM) to Blackstone Tac Opps last summer. During on cycle, I was told that I was mainly going to be focused on buyouts, with a little bit of cross-capital structure investing. I'm approaching my second year in the group and so far I have been mainly in non-convertible preferred deals that never close. Was originally thinking that this might be a function of the markets but all my colleagues in buyout have been looking at tons of full-control opportunities. In response to this, I've been trying to recruit for other positions but it seems like the only funds that will even consider my candidacy are top credit shops. I was able to land one interview at a L/S hedge fund and they really liked me. However, they were under the impression I was in classic buyout and given my deal experience, they mentioned that they would only be able to extend me a role with the credit investing PM.
Any advice would be great-- really getting worried here and very tired of going exclusively to credit committee. I did not sign up for a GSO experience! For context, I got an offer to return to banking as an AN3 in my old group or they will give me a year of credit to be an Associate in the direct lending group. What should I do?
I’m an incoming analyst out of a top target into the group and am really focused on the credit investing side of things. Was under the impression that’s what the group did? Have already started speaking to OakTree and SixthStreet ahead of oncycle in the fall
Former BX tac opps guy here. When I was there in 2014 we did lots of buyout in really cool industries but now that Blitzer made his money he saves all that for his personal investing (see his investments in 76ers, Devils, etc.) and lets his group focus on everything else. Think that now they mainly focus on credit investing but they are still a top group if that is what you're interested in.
The thing is I came in and was looking forward to getting some credit exposure since I think that makes you more nuanced as an investor. But not ALL credit! Everyday all I do is a daily update (corporate bond spreads, SOFR movement, manual pulls from 8-Ks of new debt offerings, etc.), capital structure benchmarking, and reviewing the buyout team's memos to see if we can provide direct lending. And before you say this is because I'm a bad Associate, this isn't an isolated thing-- this is every person in the group. We have absolutely nothing real in the pipeline and we're just spinning our wheels to find work. Sometimes they even make me manually mark up and redline NDAs since we don't get the resources of the buyout team.
From Top BB to paralegal. Ouch.
Honestly I kind of liked it and got a good setup for law school where I’m at now
I mean a ton of this is a function of markets and where they are at right now, right? TacOpps has a high return target, when rates were at zero it made sense for them to do buyouts / invest lower on the cap stack to reach that target. When you can get 15-20%+ unlevered IRR on debt / non-convertible pref deals, that's what you're going to spend most of your time on. We're also still early enough into the rate hikes that plenty of overlevered companies haven't hit true distress yet--once this happens, guessing there will be more opportunities on the full control buyout side.
Same pattern that you are observing within TacOpps is playing out on a more macro level with LP allocation--lots more money going into PC than PE.
This is precisely why Tac opps is such an awesome place to work and my dream job. When valuations are high right after COVID Tac opps pivoted to more preference equity like bain special situations so they didn't need to buy into the high valuations and uncertainty in the future with macro trends and inflation issues. They are now largely doing equity deals and other interesting funky things. You realise barely any deals got done over 2021-2023 across the large PE shops, especially where debt is? Tac opps was lucky because they had flexibility.
Blackstone tactical opportunities can move with the market. I wouldn't be so stressed it is one of the coolest jobs in finance you can get. You will do such a wide range of cool investing across many different types of capital and industries. Currently as I understand given there is a bit of risk in the market Blackstone Tactical Opportunities has shifted to more credit like/preference equity style investing, but recent deals now that things are more stable or equity/buyout focused.
Ipsam culpa nihil dolor doloremque. Voluptatum et ut quos debitis quod labore dolores. Amet maxime qui dolorem quaerat quod voluptatibus non.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...