Infrastructure: Straight into Buyside or stay in Investment Banking?
Recent grad here. I was extended two different offers (both in NY), one at a small PE shop focusing on renewable energy (~5 employees on Investment Team), something like $400m AUM with $1bn deployed cap, and the other was a DCM IG offer at a major Japanese balance-sheet-heavy bank (think Mizuho, SMBC, MUFG, etc.). I *want* to do the PE gig because I really enjoy Infra & Energy as a coverage group, especially renewables, although I'm concerned about exit opportunities given the firm's size and resiliency to market downturns. The DCM offer is at a bank that is also a top contender in Project Finance, a group that I interned in at a Canadian BB this past summer, although I'm not sure about lateral prospects at this new company. Salary aside (the PE gig pays slightly more base), which opportunity do you think would better prepare me for a role in infra PE down the road? Logically it would be the PE gig, but I'm trying to balance the value between a strong brand name (DCM offer) vs highly applicable experience (PE offer). For reference, my end goal is likely a role at a firm like D.E Shaw Renewable Investments (DESRI) or a GIP. Would really appreciate the insight :)
Fellow Canadian in infra here. My two cents is: go for the offer that has a better brand name.
Is the other offer from a Canadian big 5 or Japanese bank?
Read again
lol.
It took me a while to transition out of MM PE...
Would be easier to lateral with a stronger name. Also, there are infrastructure debt investment roles.
Honestly I don't think the DCM team of a Mizuho/SMBC type of bank is going to give you exceptional exit opps relative to the LMM PE role that is an exact match for the skill-set, job function and industry subsector you want to be in.
If the options were like Morgan Stanley's Project Finance team versus a LMM PE Fund, then I would say stick two years out at the BB because your exits will be phenomenal and plentiful afterward. But if we're just talking an average IB, I honestly think you'd get more looks coming from another Infra PE investment role.
It's not a perfect comparison, but I know a ton of people in the Real Estate Acquisitions world who started at really small/schmucky shops and were capable of up-tiering extremely easily because at the end of the day the skill set is the same regardless of how many zeros the deals you're working on have. If you work in DCM at Mizuho, well now you're in a position where you're trying to up-tier, switch to buy-side and switch to the equity side of the business all at once. I think it's easier to come from the LMM PE fund, so maybe at some point you try to up-tier, but you're not also trying to switch job functions & product type at the same time and all at once.
Thank you for sharing this. Out of curiosity, do you think it would be possible to do a LMM PE lateral to Infra Coverage at a BB, or would I only be competitive within the buyside?
I constantly see threads about the sellside -> buyside jump but never vice-versa, which is interesting because from what I've heard is that if you're exclusively looking at Megafunds from a BB, your WLB, comp, and career satisfaction is identical afterward (if not worse) assuming you don't make partner. Another thing that was drawing me to the DCM offer is because I can get my SIE, Series 7, and Series 63 at an analyst level to keep the sell-side window open, not sure how willing banks are to hire associate+ staff without these creds.
Edit: I should also note the LMM PE has a 6 month non-compete clause for assessing lateral prospects
The reason you don’t see threads about it is because no one would ever do it (exception obviously exist). At my current shop I’m treated like an adult, can go home whenever my work is done (work past midnight less than once a week) and have huge freedom to WFH when I want to. We are a small shop so even though I joined recently I feel like my thoughts are valued. The problems we solve can be quite interesting and I get a tonne of exposure to company management.
In banking even after 3 years I was being told off for using the wrong kind of light blue for a line graph.
100% agree with the poster above. Infra DCM at a Japanese bank is just not where you want to be for PE ops. The PE shop seems like a no brainer here.
On the series exam stuff, that is no problem if you want to go to banking, it takes a few weeks to get those credentials (you don't typically need the 7 for IB, the 3 you take are all very easy). As for the long-term PE versus IB debate, it's been done a million times on here. the WLB is generally better in PE (predictability and control, IB has none of that) and long-term comp is certainly better in PE. Not to say IB is a terrible career long term, but if you're sitting in an analyst role looking down the road towards MD, the burnout rate has got to be over 90%. IB is not really the most sustainable career path.
Also just as a note non-competes in the US are extraordinarily hard to enforce especially if you are an analyst and in NYC which has really tight laws. Doubt they'd find 6 months, open geography, etc reasonable / not undue hardship for a 25 year old. I wouldn't necessarily screw them on it because the infra world is small, but maybe you eventually leave on good terms and talk them down to 6 weeks or something. If you feel you have any room to negotiate, I'd needle HR a bit on that and see if they'd preemptively lower it. Obviously don't do that if you're not okay with them pulling the offer, but only if you're really worried about it you could express that
IB is much easier to land than PE, that’s why you don’t see any threads. The recent pay bumps did a decent job turning some heads back but the best and brightest stopped considering IB years ago at this point. Take a look at any of the HYPSM employment reports from the last several years. During COVID, banks actually had a hard time hiring people and it was leading to even more burnout in the industry.
Basically, you could easily move from your PE shop to the sellside with a little bit of networking after a year or a few years. FYI having the series exams done vs not won’t have any impact on your employability. All banks will just pay for you to take the exams after they hire you. Everyone just crams for the exams and then forgets everything a week later.
100% the LMM PE opp.
Voting for Clean Energy PE - no doubt it’s a small shop but your exit opps within clean energy is growing. Th growth rate of clean energy generation is rapid and the AUM of the small shop could easily 10x in a few years to 4Bn under the right strategy
This is terrible advice - feel bad for anybody who pays for your mentorship.
you obviously don’t work in energy - no energy shop is going to 10x AUM - especially small ones that lack credibility (literally anybody with a pulse can raise $1bn in clean energy rn)
OP - DM me the name of the firm or the fund as 1 of 3 similar sized funds and I’ll help you out via DM.
Can't PM because I'm a new user, but a similarly sized fund is New Energy Capital. Similar # of Investments, the same types of investments, and appears to be a similar amount of capital deployed (~$1bn).
Would you need to work in P&U/Renewables to get to an infra and clean energy buyside role? Or would any group in IB have a fair chance?
Apologise if my views are naive - I am currently in energy PE but i wouldn't disagree that smaller shops lack credibility. I am not in investor relations so i cant really comment if its easy to raise 1Bn.
I guess the OP must have decided on the offer by now - let us know how it goes
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