GP stakes comp > traditional PE?
Any thoughts here from people currently in the industry? Is this a hidden gem in the world of finance?
Trending Content
Career Resources
WSO Free Modeling Series - Now Open Through
April 30, 2024
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
Bump
What gave you this impression? I suppose it's highly dependent what you're comparing, e.g. no GP secondary guy is going to make on par or more than someone at a MF/UMM, but will they be comped better than some LMM guys? Maybe.
High level, albeit simplified math. My understanding is that GP stakes is a very small world (ex. Basically 3 investors in this space. Dyal website lists 65 people, 50% of these are likely back and middle office.) For simplicity, let's assume 30 investment professionals. They invest in giant firms like HPS and 6th Street which raise billion dollar funds and Dyal get a percentage of those management fees (typically 1-2% management fee). Assuming 1.5% management fee on a $10B fund and Dyal gets 30% of that 1.5%, that's $45M per year on one fund with one asset manager. Divided across 30 people, that's $1.5M each (again, I realize this is high level and MDs get a larger %). Keep in mind this excludes carry, which Dyal would also get a cut of.
You realize these GP stakes are being done out of GP stakes funds right and not just off Dyal or BX or whatevers balance sheet right? Also Dyal / Blackstone / GS Petershill are all parts of publicly traded firms so management fees / carry dollars from the underlying Dyal funds are shared with the whole. I'd think about economics like a structured equity fund with a ton of profitable SAAS companies that throw off cash.
yeah, I think you overlooked that Dyal invests out of a fund, thus the $45m revenue share is on behalf of their investors. Of course they get a cut via carry, but what you're describing is the equivalent of saying that in normal PE to take one of their operating companies' FCF and divide that by the PE's firm investment professionals as the amount that would be paid to their IPs.
Bumping to get additional thoughts
Seems like the number of attractive targets for this strategy is already thin. Also not sure what skill set you build with such a simplistic yet esoteric concept
You pretty much need the same skillset as buying a bond. Gotta be the most boring part of PE.
Any comp figures?
.
Confirming GP stakes pay is more than traditional PE
Prove me wrong
It’s not. GP stakes junior comp is in the 200-250k range, and junior comp at an UMM/MF for PE is in the 325-375k range. Significant difference. There’s a reason not everyone is trying to get into GP stakes roles.
I just heard yesterday it was $275-$300k from a recruiter. Where are you getting your info from?
.
Iusto earum dolor et aut. Dignissimos nisi error at id deleniti eaque.
Qui voluptas omnis blanditiis iure explicabo sapiente culpa sit. Et perferendis consectetur unde aut.
Eum quia dolorem in asperiores. Necessitatibus officia omnis iure qui dolores libero eaque soluta. Quia doloremque numquam omnis doloribus aut distinctio libero. Assumenda dolores fugit voluptatem doloremque omnis beatae exercitationem.
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...