Debate: Private Credit vs IB Out of UG
Semi-target student working in private credit for junior year summer at a ~$15 billion fund. Is this a solid gig or should I gun for banking full time?
I could see myself enjoying the role/ asset class, but I also want to join a firm like BX, Ares, Fortress, etc one day and I’m afraid that IB is a near mandatory prerequisite.
What are your thoughts?
Bump
do what gives you butterflies in your stomach
Not the advice I was looking for, but hey I’ll take it!
I don’t think I understand the question, all the firms you just named have huge credit arms and having a summer internship at a $15b PE fund should definitely get you looks at the top guys for their credit platforms. Are you saying you want to go into traditional PE?
I’m doing private credit at $15 billion fund, but the role is considerably less sexy than say special situations lending at GSO. Should I shoot for IB full time if I want to expand my exit options to other credit strategies/ higher paying roles?
What kind of sexy special situations investing by GSO are you referring to? IIRC most of their investments nowadays are pretty standard, safer credit. Not that it’s not interesting, but curious to hear about what you know, or if their strategies have changed.
Personally, I think that if you are set on some sort of credit as a career path, then it’s not necessary to do the traditional IB route if you already have an opportunity at a sizable shop (I am biased as I did something similar and didn’t do the IB route). At a $15B firm or at the BX/Ares/etc, there are significant opportunities to make money. From there, you would then likely have a desirable resume for distressed lending/HF opportunities.
I would also note that I am offering this advise on the assumption that (1) you have a passion for private credit (and I don’t know how you can really answer that question until you have some sort of experience) and (2) that you are good at it. I saw your comment below that was asking where you could go to make $2mm+. No one is going to pay you that kind of money unless you are very good at what you do. But also, partners at funds smaller than the one you will be interning at are making that. When you talk about distressed hedge funds trading complex credit, you are getting into rarified air where there are very few seats. So I would keep you perspective wide while you are still in college.
Given this, your decision should also weigh the possibility in I-Banking you might find something else you like more than credit (and may be better at too). Banking still offers the opportunity to explore and choose from a variety of finance career options.
I don’t know if GSO actually engages in special sits. That was an off the cuff example to illustrate my point.
I’ll ask a more direct question. Is it feasible to make serious money (+$2MM per year) doing vanilla direct lending/ private credit, or should I rotate to IB and then gun for public credit HFs.
Pay at my current DL shop without IB experience is not great
Someone who has more info please chime in here, but I wouldn’t expect credit shops to underpay you your entire 20-30 year career because you didn’t do 1-3 years of IB. Just doesn’t make sense. Associate pay varies a lot from shop to shop and I have personally seen people without IB experience go to from smaller credit shops to top firms like BX.
Del
It sounds like you're probably thinking about it right. I did private credit out of undergrad and recently made the switch to more traditional PE. I went the credit route out of school because I didn't want to make the lifestyle trade-offs involved with IB (probably averaged ~70-80 hours a week at my prior firm, could have been a lot worse). If you're at a good shop, you preserve some flexibility, but you're not as broadly transferable as someone with good IB experience. Like the other commenter said, if you think you really enjoy credit, there's not a ton of reasons not to take it. Happy to answer questions if my experience is applicable.
How was the process of recruiting for PE as a PC analyst out of UG w/o IB experience? Was it easy to get looks and how did you get into processes?
Deleted
I'm not sure, but it's the hand I was dealt for the summer
Credit is a great career, but it will likely pigeon hole you to credit for the longer term. I've seen plenty of folks try to make the jump from credit to PE and it's a tough one. Unless you have a strong feeling that you love credit over everything else, I'd start a little broader and narrow down. Think of it this way, if you do a decent banking stint for a couple of years, you'll basically have options to go out and recruit for any credit fund you want, especially if you have a story around how you interned in credit and always loved it and want to go back. Credit isn't nearly as desirable as general PE for post analyst recruiting. Going the other way, you start in credit, realize it's not that exciting and you want to jump after 2/3 years, you're unlikely to get as many looks by PE funds as banking analyst as your M&A skillset won't be as strong.
With that being said, I feel like credit gets a lot of hate, but it's a great job and career. Work is interesting, not quite as crushing as PE, massive market opportunity, etc. So if you love the work and love the team, you could consider staying and just building out a career there. Not a bad option either.
My thoughts exactly. Thank you for sharing your perspective!
Landing a FT BB IB offer isn’t exactly a cake walk either and one needs to be realistic. I say go for it.
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