Infrastructure PE vs Secondaries PE?

Based on the most helpful WSO content, here's a breakdown of Infrastructure PE vs. Secondaries PE for a post-MBA role:

1. Growth and Career Progression

• Infrastructure PE (SWFs like GIC, Temasek, ADIA):

  • SWFs are increasingly building direct investment teams, poaching talent from top firms. This indicates a shift towards more active investing, which can provide strong deal execution experience.
  • Career progression can be slower compared to traditional PE or secondaries, as SWFs often have a longer-duration mindset and less frequent turnover.
  • You may not get carry in the same way as at a GP, but there could be phantom equity or discretionary bonuses.

• Secondaries PE (Coller, NB, Warburg):

  • Secondaries roles are less intense compared to direct PE, as you're monitoring investments rather than actively managing post-close.
  • Career progression can be solid, but transitioning to direct PE is rare unless you're at a firm like Partners Group with internal mobility.
  • The work-life balance is generally better in secondaries, with partners often working fewer hours (e.g., ~50 hours/week).

2. Compensation

• Infrastructure PE:

  • Compensation at SWFs tends to be competitive but may lack the upside of carried interest seen in traditional PE or secondaries.
  • SWFs often have lower return requirements, which can impact overall comp potential.

• Secondaries PE:

  • Compensation is slightly discounted compared to traditional PE due to lower management fees, but the fee gap is offset by scalability.
  • Carry is typically lower (10-12.5% vs. 20% in direct PE), which can result in a significant wealth gap over time (e.g., $20M net worth in secondaries by 50 vs. $75M in direct PE).
  • However, junior talent at top secondaries shops is paid well, and bonuses can be significant.

3. Location (NYC)

• Both roles in NYC will provide access to top-tier deals and networking opportunities. However, secondaries shops like Coller and Warburg are more likely to have a stronger presence in NYC compared to SWFs, which may have more global or regional offices.

Key Trade-offs

• Infrastructure PE: Offers exposure to large-scale, long-term investments with a focus on stability and resilience. However, the compensation structure and slower career progression may be less appealing.
• Secondaries PE: Provides better work-life balance and a scalable business model, but with slightly lower comp and limited transition opportunities to direct PE.

If you're looking for a more dynamic, deal-driven environment with higher comp potential, secondaries might be the better choice. If you value stability, long-term investing, and are okay with slower progression, infrastructure PE at a SWF could be a great fit.

Sources: Secondaries Comp / Culture in 2023, Differences between Co-invest and Secondaries?, Overview of Infrastructure Private Equity, SoftBank Vision Fund / GIC / Temasek, Investment Banking to Private Equity - 6 Things You Should Know