Credit funds

Currently working on the credit side right now as a Sr Associate (ignore the username). On the comment by Principal - PE Other above, he/she could've definitely had a bad experience but a couple things to point out here: 

- The type of experience you have is a function of a few things, but primarily: size of firm/fund and investing mandate.

On the first, if you are a smaller shop (mind you "small" in the credit universe is not the same as "small" in the PE world - don't want to put numbers but smaller would gravitate more towards financing LMM/MM buyouts), then you will have more of an experience where you are treated like a commodity and less like a partner. Why? Well there's simply not as many firms out there at the moment that can provide large 9 figure unitranche or split lien facilities versus those that can help finance MM buyouts. Naturally, when you have less competition, it doesn't just become a game to find the lowest priced bid, but evolves more into which Company has the Capital to support growth initiatives in the future (i.e. DDTL, capital infusions, etc.), has docs that are best suited to the investment thesis, and has a supportive workouts / restructuring team that we can partner with in case the investment goes sideways. I personally have seen a few deals where the firm I was working for was picked despite it actually providing the highest priced bid due to one of the above reasons. 

On the latter, the broader the investment mandate, typically, the better the experience. The more junior in the capital structure, the more leverage on the business, means the more you have to see a view of the growth story rather than just asset coverage, or LTV as a senior lender. This usually means that Sponsors are more willing to share internal resources, analyses, models, etc., to get you on board. For example, I have been part of a transaction where my Company was part of the 4th lien and pref equity piece in a high growth Company - the modeling, the memo, analyses, was a lot different than investing in the 1L and the Sponsor was much more willing to share materials that would help us get over the line. 

This also goes beyond just which part of the cap structure you're in. For example, some MFs have credit teams that look at not only investing across the capital structure, but may include public and private investing or performing and distressed credits. Additionally, some firms provide capital to both sponsored and non-sponsored deals (the latter of which requires much deeper due diligence when you don't have a Sponsor's expertise to fall back on).  

- Investment Strategy and differentiation is also key. Working at a lender like Antares versus HPS are 2 different animals. Slight repetition of the point above but firms like HPS, Apollo, SPC, HIG & Comvest on the MM side, have historically differentiated themselves from the pack by looking at unique (not special or bankruptcy, unique) situations. Whereas the market (i.e. Antares, Golub, etc.) might fall into the L+400 range, they specifically target deals in the L+600 and above range. For example, HPS' credit line to Bombardier. Once again, bound to provide a much different, more rigorous experience. I know from friends that the firms above have a heavy reliance on data analysis and that their memos typically end up being almost as lengthy as some equity memos I've seen because they run their own industry calls, channel checks, etc. 

- To answer your question on prestige - in my opinion, the prestige of a career or field in finance is directly correlated to the the amount of $$ you can make over time. Why are HFs considered the holy grail for finance professionals and sought after the most? Because it has the potential for the most amount of $$, especially at a young age. The reason why so many people chase IB is to get into PE, and the reason why so many people chase PE is to potentially get into a HF. Obv all 3 fields can be very lucrative careers themselves but just to make a point. But how do you determine how much $$ you can make? Well that can be broken down to 2 factors: capital being deployed and returns being targeted. Yes PC, doesn't target returns that are as high as PE for example, but the capital deployed easily dwarfs the other segments of the buyside industry which is why PC compensates very well at the junior and senior levels. In fact, with the ability to lever deals 1:1, low double digit returns are becoming common place for firms that target higher yielding investments, whereas the returns for PE over the last few years have been stranded in the mid to late double digits with significantly more risk. That is why we see huge amounts of capital being allocated to PC across the board. It's a self fulfilling cycle: more capital, more compensation. And I can tell you now, some of the seniors I've met in PC (not billionaire founders) are extremely wealthy (like more than some of the partners I've met at smaller PE shops or BSD bankers - talking penthouses in New York and $20MM homes on Star Island). 

- Last point: and this one is just keeping it real - even if you are being treated as a financing product, I mean is that all so bad? Yes the average person in PC won't make as much money in PE, but your W/L balance is significantly better than your peers. You're playing in a much safer part of the capital structure, having to do much less work to diligence a deal, but most importantly, because of the less risky play, there's a much greater chance that you're going to be able cash your carry check. Def can't say the same in PE (people on WSO typically think the world is comprised only of uber high performing funds across the last few decades like H&F, Thoma, etc., and forget that there's a ton that have had subpar performance on the MM and MF level. What I find most amusing is when people here like to calculate potential carry assuming 2.0x or 2.5x MOIC - how many firms have been delivering that fund after fund lol - not many - and remember, carry is paid on any profit above your return hurdle).