Say post-banking you find yourself in a ~5 BN credit fund that invests mostly in senior / mezz debt. How common or doable would it be to shift to a PE fund after a few years? I'd imagine the skill sets largely overlap (modeling / diligence, investment memos & committees). Clearly the credit investor has a fundamentally different risk tolerance. I guess what it boils down is trying to answer the following questions:
1 - Are you pigeonholed into being a "credit guy" even though skillsets may overlap?
2 - Is there meaningful comp difference at the mid-levels or senior levels (i.e. when carry kicks in) to justify a move?
3 - How commonly observed is this in the real world? If uncommon, is it because credit guys are generally content to stay put, or are there large barriers to entry?
Thanks
Not sure I agree with some of the sentiment on this thread. If you are in the credit investing arm of a big PE firm for example, id say that move is pretty easy if you’re interested in making the switch. At my MF I’ve seen it done several times although surprisingly most people in credit at these types of shops dont tend to want to make that move, so the sample size is small. Private credit / non-IG origination is primarily used for sponsor-backed transactions, LBOs making up a large chunk of that, so there is a high degree of relevancy between the workload itself and what goes into the investing decision. The credit fund that is taking down the financing portion of an LBO will conduct largely the same analyses as the PE firm investing in the equity when going to their respective investment commitees. Obviously the viewpoint will differ from both perspectives but the workload couldn’t be any more tangible. People tend to forget this point. Assuming you’re in a direct lending / private credit type of role, id say it is the most tangible job to PE itself given these circumstances.
If you are the lender financing the LBO, you also will have to be onboard with the Sponsor’s underlying equity strategy to ensure that will not create additional credit risk during your holding period. So within an investment commitee at a credit fund for this type of transaction, discussions around the sponsor thesis / rationale and how the PE firm intends to achieve that equity upside will be a large part of the credit discussion as well. This adds to the tangibility between the two positions.