I invest in GP-led secondaries, and it’s awesome.
hey,
I work at a fund focusing on GP-led secondaries and co-investments. Ive found quite few people on this forum who have questions about recruitment, comp etc. happy to answer any questions!
Jan 17, 2021Jan 17, 2021
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Comments (87)
Hi -
Hours per week at each level
Comp at each level
Thank you!
Your first question isnt really answerable..
Comp each level asso (junior level): £200-240k total cash comp + £2m carried interest allocation per fund (i.e each 3 yrs) investment manager (mid level): £300-£400k total cash £4-6m carried interest allocation per fund MD (Senior): £600-£1m total cash, +10m carried interest allocation per fund
*assumptions on CI made on a €750m fund with 10% carry
Thank for the answer on #2. On #1, how about a different frameowork... what % of weeks in a given year are in each of the hours ranges below:
* 40 - 60
* 60 - 80
* 80 - 100
* 100 +
I am trying to understand if this career has lifestyle at mid- and top- levels that is reasonable.
Also, what is culture like at your firm? Expectations of "always being on" on weekends?
Thanks again!
This is impressive comp for a £750M fund... I'd expect $225k-$250k for an associate at a $750M LBO fund in NY, with no carry. How's the vesting on that £2M?
do you happen to know what comp is like at BSP or Goldman PEG?
These comp figures are bullshit
This must be bullshit or your fund has no idea what they're supposed to pay?
These numbers seem extremely high for what I've seen from the secondaries figures I know. Secondaries were a great asset class 10 years ago, it's much more competitive now. I find it hard to believe an associate is making $300k+ cash with 2M+ in carry. Those would be borderline VP-esque figures at a mid sized PE fund here in the US. Maybe cash would be light, but $2M in carry would be right in line with a $1B sized fund.
The combo of generally lower pay across the pond and secondaries makes this extremely hard to believe. Happy to be proven wrong though, I just don't think this is right.
Edit: I saw a notification pop up on this and was giving it a little more thought. I did a little work in secondaries about 8-10 years ago, at that time secondaries were less popular and you could get some awesome pricing on things, I'm talking ~70/80 cents on the dollar for name brand funds. I caught up with an MD in the space a few months ago and he mentioned how crazy competitive it's gotten over the past couple of years. It sounds like there might be whitespace for smart investors and I do think the market for secondaries of different assets, such as employee options is growing, I find it tough to believe that there's so much money in the space that juniors are getting paid $300k+ cash plus significant equity. I don't think you're picking through Calpers portfolio and buying up their stake in Vista/KKR etc for 80 cents on the dollar anymore and then having that fund return 4x.
is your fund part of a broader PE firm? such as alpinvest with carlyle and strat partners with blackstone etc.
do most associates come from traditional IB backgrounds? how do you view analysts working in private capital advisory / secondary advisory?
what's associate comp and how does comp progress as you move up?
understand that MBAs are not required for the most part in the secondaries space, but if you wanted to get an MBA, would your firm sponsor you?
nope, new fund.
yes for gp-led secondaries its about analysing companies just as any pe role, so recruitment requires similar skillset, everyone in our team has IB experience.
asso comp is similar to asso comp at direct pe, but id say its easier and quicker to make significant wealth in gp led secondaries vs buyout, so much whitespace.
re MBA, not heard of any secondaries firm sponsoring MBA, especially not in Europe. Unless youre a lawyer trying to break into pe/ib etc I wouldnt touch an MBA, waste of money and more importantantly time (read: opportunity cost).
re:MBA, different culture in Europe i suppose - i'd love a 2 year vacation if my firm is willing to sponsor and take me back post-MBA haha
Thanks for taking questions:
Does your fund hire juniors mostly from post-IB/PE or other routes? I'd imagine knowing the deal process / running a model would be helpful for co-invests, but not sure exactly how often that skill set is used in your field and whether it's as useful for secondaries
How does your firm position itself to compete for LPs? Does your firm go on no fees/only carry basis?
What's your firm's investment mandate? Do you see your firm exploring other industries, moving up/down the market in a future fund?
What thought process goes into building a commingled fund? Do you design it with an existing LPs portfolio in mind?
In terms of exits, how often do people leave to the GP side vs. move to one of your clients? For those who stay, how would you describe the job stability relative to compensation?
Cheers!
How do you view private capital advisory / secondary advisory investment banking analysts in recruiting for buy-side secondaries?
Would love to know the answer to this
Would your firm (or other comparables) ever take a look at MBB consultants? Those numbers look super good, and I am quite bullish on the space in general too.
I would highlight that the OP's numbers (especially carried interest) are very generous. OP - that's really amazing you got to find the role you're in!
I personally have friends in the secondaries space at well-known shops in NYC, and some do pay the ~$220k-$240k number mentioned, but they do not receive any carry at all. The hours are a little better than buyout shops, but still long hours. Would say they still work 60-70 hours a week consistently, longer when trying to close a deal. Definitely weekend work as well.
The compensation difference between secondaries and buyout shops get larger as you progress throughout the ranks. This is because secondaries firms only charge 1/10 vs the 2/20+ that PE buyout shops charge. Regardless, great place to be in if you particularly enjoy the deal structuring part of finance. Also should mention that GP-led secondaries deals are as much work as regular buyout deals except maybe a little less diligence.
OP's numbers are mindblowing. He mentioned 200-240GBP which is 270-325k USD + 2.75m USD carry. The cash is in-line with MF direct PE pay for associates and the carry is equivalent to MM/UMM post-MBA direct PE. All with just a ~1bn usd fund that is working with just 10% carry (not 20% like in direct).
Good for you OP.
it all relative, everything depends on AUM per head, we are under 10 people in the investment team, so if we would do 2x (which is minimum threshold for any underwrite we do) thats 75m of carry that is split directly amongst the team, not sure how i see why this is more generous than others, it depends ok how many people are sharing the cake, and as I mentioned, we focus on GP-leds, we dont do vanilla secondariew which are super labourintensive and require larger teams (and returns arnt great tbh)
Plenty of friends at alpinvest/harbourvest.
Your numbers are 2x theirs. Congrats though!
What's double? The cash comp or carry? Is HarbourVest paying 1/2 of the $200-$225K cash comp that OP mentioned?
HV pays £77.5k as a base salary in London (Associate level)...
What does the day-to-day look like for an associate?
I'm quite familiar with the PE Secondaries space and comp at the associate level are more like the following:
-ASO 0/1: $125-175k all in (with some hitting low $200s and some even below that $125k number. I think the last total comp number I saw at Coller for a jr. associate was around the low $100s)
-ASO 2: $150-200k all in (again with some variations across firms)
-ASO 3: $175k-225k (again, there will be variations)
No idea where the OP works, but I guess they overpay for top talent. I know BX/Strat Partners pays better than most/all PE Secondaries firms, but the OP's employer tops BX by far
I confirm the figures above.
Do you know how GS PEG pays?
Heard BXSP pays close to 200K all in for Analyst 1
.
Analyst 1 at a secondaries shop it's already $150-70k all in....
There's a substantial difference in pays in secondaries. Don't be so narrow minded.
For secondaries, how do you determine value? What are appropriate level of returns? When discussing this product within the space, what are most important factors everyone cares about?
Thanks for the q&a.
1) how does GP led differ to LP led secondaries? I understand the two differences at a high level but in terms of the details how does it differ? I.e Do you do more in depth modelling? Is one harder than the other? Do hours differ? Does compensation differ?
2) how often are you on a live transaction? Do they occur more often than traditional PE? Also what do your hours look like when on a live deal and when not on a live deal?
3) what are your responsibilities / typical tasks when not on a live deal? Is it just actively looking for the next deal?
Any thoughts on secondaries teams of pensions? (e.g. CPP / GIC)
Lots of turnover at CPP in the senior ranks
Any idea what caused it? Seems like everyone ended up at good shops like Strategic Partners, Alpinvest and Whitehorse even though rumors I heard was that dealflow was weak and very skewed to passive LP portfolios.
Seems to be conflicting information on comp above. Can anyone please provide more color? Particularly interested in junior roles
Heard from a senior in the industry that pay in secondaries is not standardized like direct PE (e.g. fund of x size pay x). One reason for this is that some teams are started from FoF platforms while other teams (usually GP-led focused) composes of people with direct backgrounds.
Goddamn that is incredible comp, especially the carry.
Thoughts on emergence of firms such as Whitehorse in Canada looking at alternatives to secondaries? They've been fundraising like crazy over the past few years. Curious to see your views on how that is impacting the competitive landscape for secondary txns, if at all.
Not the OP, but can confirm that Whitehorse is an incredible place to be right now and is by far and away the leader in pref equity secondaries. That segment of the market has started to intersect a bit with the traditional secondaries and GP led players, but they have their niche and they dominate it.
I'm not knocking Whitehorse, since it has a good reputation in the market, but what's up with their returns? I'm genuinely curious, but just based on Preqin, they seem to be a bit off.
Have you seen their returns? Yikes
I work on the advisory side of GP secondaries. The main thing that we see is that there aren't enough people investing in the space.
The top few buyers control about half of the market which causes some price dislocation due to some lack of competition. Pretty much every reputable bank is poaching or starting secondary advisory if they don't have it. The biggest reason you see funds pop up or able to raise money so quickly is because of how fast they can deploy the capital. I've seen multi-billion dollar funds deploy 100% of their capital in 18 months. They keep fundraising because the market appetite is larger than the amount of investible capital in the space. There are a ton of fund of fund investors and secondary investors but there are only a few scaled platforms that are willing to take the lead on a GP-led secondary transaction.
Now that Guggenheim, Rothschild, Moelis, and Jefferies are getting into the advisory game expect the market to continue to grow. The more bankers that are out pitching GP-led secondary transactions, the more transactions that will happen. More GP-led appetite will just allow the secondary investors to keep raising larger and larger funds.
Curious what comp is like at advisors given the massive volume of deals lately.
bump on comp for secondary advisory side
At the top advisor, it's the same comp as traditional IB. Not sure if its the same other places.
Can somewhat corroborate the OPs seemingly ridiculous comp numbers for associates.
The market is growing extremely quickly, and the comp has reflected that for some players that are scaling quickly but still have room for headcount and fund size growth. As others have said, the well established players who span across secondaries (Coller, Landmark, Alpinvest, Strategic Partners, etc.) tend to be below buyout comp. But niche roles focused on GP secondaries are in very high demand.
As another data point, I am an associate at a similar firm to the OP (not the same one I infer based on details like fund size). Cash comp is $250-350k usd, carry of ~$1.5m/fund.
Are you based in NYC? If so, do you mind giving a rough ballpark of fund size? And does your firm strictly do just GP-leds?
Sorry, given it's a small world I'd rather not disclose for the sake of anonymity.
Is carry at the associate level common? Any info on comp for GS' secondaries team?
I'll just add more data for folks:
Work in the NYC office for a MF on their secondaries team (broad mandate - both LP-led and GP-led), and all-in it's ~$275k cash as a first year, more weighted on the bonus. Same salary as first years doing traditional LBOs.
Joined late 2020 and it's been crazy active, but overall lifestyle still better than my friends doing traditional PE.
is your background M&A at top firm? i'm doing PCA at a EVR/LAZ/PJT and wondering if that's a realistic exit
Hey man, can you clarify how the carry piece works for me? So you're allocated carry worth ~$1.5mm. Is that to say you're given XXbps of carry, which, based on projected returns, equals ~$1.5mm? And how does the vesting and everything work? Would you essentially think of it as an extra $150k per year, assuming a fund life of ten years? Thanks!
Hey! Thanks for starting this thread. Could you shed some light on what your recruiting process was like? Did you go through headhunters and/or was there a lot of personal networking? Any advice in general in terms of recruiting?
Secondly, when did you realize this type of industry/role was for you vs more traditional buy-side investing roles.
Thanks!
Hey, I recently created a post on this, but mainly the question is should I stay in PE (Pension fund LP, infra&energy) or pursuit IB? PE as an LP comp is lower than GPs so that I think could be a determinant factor, but also, as an LP I got direct contact with KKR, Blackstone, etc. I am currently in a GS process to IBD analyst.
Does your firm do co-invest or lead any deals or just act as an asset allocator?
I've recently started in a similar role and feel underpaid- any insights to comp?
Fucking crazy comp numbers what the fuck
Who are the best paying GP led secondaries firms?
Hi this is really insightful, I am an intern and I was just curious how I could learn more about Secondaries, what are some metrics in the space and are there any publications I can read.
Which IBs do you find have the best GP led deal flow? Jefferies? Evercore?
Jefferies is far too new to be considered here. There's also a difference between deal flow and deals that will actually be closed since this is the secondaries world.
jefferies = greenhill cogent + some senior guys from Laz/PJT
fair to say in 1-2 years they will be in the same league as EVR/LAZ/PJT
You gonna stick by those words after they landed a 5bn mandate from calprs?!
I'm looking at a Jeffries pitch book - they're already doing very well at gp leds in North America
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